Passive Income, Aggressive Retirement

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🎯 The Book in 3 Sentences

💡 Key Takeaways

Traditional retirement strategies may not be effective in today’s changing landscape.
Prioritize time over money and seek passive income streams.
Factors to consider when evaluating passive income streams are scalability, controllability & regulation, investment, marketability, and passivity.
Royalty income from literary or artistic work, minerals, patents, copyrights, and trademarks can provide passive income.
Book publishing through self-publishing is recommended for beginners.
Portfolio income from dividends, interest, investments, and capital gains requires financial investment rather than time investment.
REITs and crowdfunded real estate (eREITs) offer opportunities for portfolio income.
Coin-operated machines like vending machines, ATMs, and arcade games can generate passive income.
Rental income from traditional or short-term rentals, parking garages, and warehouses can be lucrative.
House hacking, the BRRRR method, and live-in flipping are strategies for real estate investment.
Analyze properties based on the 1% rule and calculate metrics like cash flow, cash on-cash ROI, and capitalization rate.

✏ Top Quotes

Passive income is maintained with little to no work; it’s not built with little to no work.

Don’t make the mistake of thinking that just because you have a great product, people will buy it. No, no, NO. You have to figure out how to make people WANT to buy it.

There have been more millionaires made in real estate than in any other venture in the history of time.

Passive income isn’t all about quitting your job. It’s about freedom. flexibility, and financial independence.

📝 Summary + Notes

Section 1: Introducing the Secret to financial independence

Saving an enormous nest egg and retiring at age 65 would was a reasonable thing to do in the past.
A lot of things have changed since 1950:
- Household expenses: homes are now 3 times bigger, so we spend more money on them.
- Lifestyle pressure: because of the internet we want to copy the success, money, and beauty of others.
- Life expectancy: average retirement years were 8 years then vs 19 now.
- Social security and pensions are almost extinct.
- Hours worked per week: The 40-hour workweek feels more oppressive than ever before.
Saving money by decreasing expenses is inefficient.
By working we trade 5 days of work for 2 days of freedom and 49 weeks for 3.
You could become ill and not be able to fully enjoy retirement.
Time is more important than money.
Trade money for time.
Factors to evaluate one passive income stream:
- Scalability. Can it be produced or offered en masse?
- Controllability & Regulation. It’s essential that your passive income won’t be regulated by things that are outside your control.
- Investment. What the upfront investment is. in time and money.
- Marketability. Is there a need for it?
- Passivity. How much work must you do to maintain the income stream?

Section 2: Royalty income

Royalty categories:
- People use or view your literary or artistic work.
- People access minerals on your land.
You can earn royalties from patents, copyrights, and trademarks.
Create once, and continue to sell over and over again, forever.
Scalability: High.
Controllability & Regulation: Low.
Investment: Lots of time.
Marketability: Depends.
Passivity: Wide range; potentially high.

Finding a marketable idea is crucial for success in royalties.

Your first order of business is a brainstorming session.
- What are you passionate about? What are you really good at doing?
- What do people come to you for help with? What advice do people seek you out for?
- What makes you unique? What expertise do you have that others typically don’t?
And then, how will you add a unique twist to offer something in the marketplace that isn’t currently offered?
Verify the ideas by conducting extensive market research.
- Join some Facebook groups related to your idea and ask questions or make a poll to get some feedback.
- Create surveys online for free with SurveyMonkey and send them out to your network.
Do some research on the platform in which you will be offering your product.
- For books on Amazon go to “Product Details” to get information about the book’s sales ranking.
- The year the work was created. Are all the search results outdated?
- The length of any content-driven work. Are shorter or longer selling more?
- The number of search results in your category.
- The reviews. Why do people like or dislike this work?
- The price.

Book publishing.

Finding a traditional publisher vs self-publishing:
- It’s not easy and fast to find a publisher.
- They have control over most things, like content and cover.
- Self-publishing needs more money and involves risk.
Self-publishing is recommended. Edit the book, design the cover, and format it on Amazon’s KDP.
Music, photography, software, and app royalties are for professionals. Not easy and rewarding for newcomers.
Selling downloadable content is another royalty passive income idea.
Print-on-demand is a number game. You have to upload a lot of designs per month.
Selling online courses follows the same principles as book publishing.

Basic marketing strategies.

Tell close people about your product.
Start a social media following. Start a Facebook Page, Instagram, and Twitter account and post updates and content.
Join Facebook groups for research.
Consider advertising to reach your target audience.
Market your product locally.
For content creators with a small or no following, for a short period of time, when you first release the product, offer it for free.
Before you launch, you’ll want to assemble your </b>launch group</b>.
- Offer perks like early access to your product or exclusive insider content.
- Ask to try out and use your product (at a discount!), leave a review, and share the word on social media.

Section 3: Portfolio income

Portfolio income is from dividends, interest, investments, and capital gains.
Requires quite the opposite of the time-intensive royalty income stream: it requires money.
Scalability: not applicable.
Controllability & Regulation: Low.
Investment: Lots of money, no time.
Marketability: not applicable.
Passivity: High.

REITs.

They own a portfolio of income-producing real estate assets that you can invest in, and then you earn a share of the income produced by the properties.
They offer diversification, liquidity, and tax advantages.

Crowdfunded Real Estate.

They offer eREITs where you are investing directly in tangible real estate, while with a REIT, you are investing in a corporation that manages a portfolio of real estate.
eREITs are not publicly traded, so they are less liquid than REITs.
You can only buy and sell them via Fundrise itself, meaning it can take over a month to redeem your shares and liquidate.

Section 4: Coin-operated machines

You set up the space, invest in the machines, and then sit back and let people pay to use them.
Scalability: Low.
Controllability & Regulation: Medium.
Investment: Depends on the machine.
Marketability: Depends on demand.
Passivity: Depends on the machine and the number of machines.

Vending machines, ATMs, and arcade games.

Do market research, find a location, negotiate an agreement with the owner of the site, buy and install the machine, and begin collecting revenue.

Car wash and laundromat.

Requires a lot of initial capital. Go with portfolio income instead, using that money.

Section 5: Ads and E-commerce

Scalability: High.
Controllability & Regulation: Low.
Investment: Expect a decent time investment and sometimes a small capital investment.
Marketability: Depends.
Passivity: Both advertising and dropshipping can be passive in certain circumstances.

Affiliate Marketing.

Provide links to products. When someone buys through your link, you get a small profit.
Use Amazon Associates or other services like ShareASale, Affiliate Window (AWIN), and MaxBounty.
It requires a lot of followers and thus time to start generating enough income.

Advertising.

Requires an even larger, more engaged following than affiliate marketing.
Basic components: keywords, driving traffic to your site, and search engine optimization (SEO).
Google Adsense is a program that lets web owners and bloggers display ads on their websites and get paid.

Dropshipping.

It enables you to sell products without having to invest thousands of dollars in inventory.
Shopify is one of the most popular websites to start with dropshipping.
One can sell existing products from a dropshipping wholesaler.
Or invent his own product and have it manufactured and dropshipped.

Section 6: Rental income

Scalability: Low.
Controllability & Regulation: Medium.
Investment: Depends.
Marketability: If your rental property is competitive, it will rent.
Passivity: High.
Rental income possibilities:
- Long-term traditional rentals.
- Short-term rentals using Airbnb.
- Parking garages.
- Warehouses.
Investing in rental properties gives you three huge financial benefits:
- Cash flow or passive income.
- Equity: your tenant is basically paying your mortgage (and more), and often real estate appreciates over time.
- Tax benefits.
Leveraging means you’re using borrowed money to generate an even higher profit.
Leveraging makes it possible for more people to own real estate.

House hacking.

When you buy a multifamily property, live in one unit as the primary residence and rent the rest.
Owner-occupants get the lowest interest rates and the lowest down payment requirements.
A live-in flip is where you buy a single-family house that needs a lot of work, fix it up while living there for two years, and sell it for a profit.
Most mortgage companies require that you live in the property as your primary residence for 1-2 years.
To avoid paying capital gains taxes when selling a house, you must live in the house for two out of the last five years.

BRRRR method: Buy, Rehab, Rent, Refinance, Repeat.

This is where someone buys, renovates, and rents a property, and then refinances it in order to pull out equity. That equity is then used to purchase the next property.

Looking for properties.

Parameters: location, price, property type, condition.
Build a team. At the very least, you should find a trustworthy realtor, lender, and insurance agent.
Short sales & pre-foreclosures: A short sale may happen when someone is underwater on their home, meaning they owe more on the mortgage than the home is worth.
Auctions: When it’s too late for a homeowner to do a short sale, their house may be put up for auction in a foreclosure sale.
REO: When a bank fails to sell a foreclosure at auction, then they typically take ownership, and it becomes a Real Estate Owned (REO) property. The lender will then try to sell it themselves.
Probate: When a homeowner dies, the property is either inherited or goes through probate, requiring access to a courthouse list or a purchased lead.
Bandit Signs: Before placing bandit signs, review local regulations, then use them strategically to attract motivated sellers in your target area.
Networking
Expired Listings: Search the expired and canceled listings on the Multiple Listing Service and reach out to the listing agent.

Analyzing the property.

The 1% rule: for every $100,000 in price, the property should generate $1,000 per month in rental income.
Estimate all of your monthly expenses:
- Mortgage Payment
- Property taxes
- Insurance
- Utilities, if paid by the owner
- Homeowners Association fee or condo fee
- Maintenance and repair
- Capital investment (a portion of money set aside each month for larger investments over time like a new roof or HVAC)
- Vacancy (your property won’t be rented 100% of the time so you must account for the gaps between tenants; a reasonable estimate is 8%)
- Property management

Metrics for real estate investment.

Monthly cash flow: your rent minus all of your costs.
Cash on cash ROI = (Annual cash flow) / (Total initial investment)
- Your total initial investment will consist of your down payment, inspection, appraisal, closing costs, renovations, and any other money you put into the property to get it ready to rent.
Capitalization rate = (Annual cash flow) / (Property value)

Section 7: Now what?

Know your monthly expenses.
Determine your ideal life.
Figure out how your time is spent.
Don’t limit yourself by your beliefs.