Deaton Equity Partners

Stop Trading Your Time for Money

– And Start Creating Passive Income –

Take a brief moment with me and imagine this…

You wake up on a normal workday morning and, checking your emails as you so often do first thing every morning, you notice an impromptu meeting with the boss has been scheduled for early this morning. After quickly getting ready for your day, you commute to the office (whether you drive in or log on from the home office). Popping into the boss’s meeting room, you notice HR is present. Uh-oh you think, as your stomach flips. That’s not usually a great sign.

Within the first couple of sentences, you hear the words “we have to let you go”.  Your blood rushes to your ears and anything said after that is lost. You’ve just been laid off. If you’re lucky, maybe there’s a couple of months of severance pay. Otherwise, that’s the last paycheck for a while.

“But we just upgraded the lease on our cars. What about the kids? Christmas? Health insurance? Ugh. Why haven’t we been saving more. How am I going to break this to my wife?”

This situation plays out all too often.

The rich don’t work for money. They make their money work for them. – Robert Kiyosak

Now let’s imagine an alternative scenario – one in which you’ve been leveraging your money…   

Over the last couple of years you’ve regularly put aside some of your paycheck, as well as taking a nice portion of those bonuses that have come in, and invested passively in real estate. Those investments have built up into an envious and steady income stream and you’ve even reinvested most of the returns and a couple of the larger cash distributions from refinancing events into additional real estate deals – compounding your gains. 

Ironically enough, of late you’ve actually been considering submitting your notice to the boss in order to spend more time with the family while the kids are still around and to work on that passion project that you’ve been dreaming of for what seems like ages now. This is just the nudge you’ve needed – a relief!  And you’ll even come out with some severance to fund the latest real estate deal you’ve been analyzing.  This day couldn’t get much better!  Time to call the wife and invite her to a celebratory lunch!

The three Types of Income

 

Active Income: is a wage from your employer and requires your activity in exchange for money.  When you stop, the income stops. Time for Money.

Residual Income: means you receive money after the work is done. For example, an author invests time upfront into a book and then receives residual income on the subsequent sales.

Passive Income: is earned with very little effort and continues flowing even when you aren’t working. Real estate investments are one of the most stable and high-returning sources of passive income.

Now remember the job loss scenario? In that scenario where you’ve built passive income on the side, although you lose your active salary, you still have income.

Social norms guide most people into active income jobs where they get stuck trading their time for money. Wealthy people implement a different approach.  They don’t trade their time for money.  They have learned to make their money work for them!

Financial freedom is achieved when your earned passive income allows you to live without relying on your active income.

INVESTING INSTOCKS VS. REAL ESTATE

Historically, the stock market returns about 8% annually, which means $100,000 would produce roughly $8,000 per year. That’s only $667 per month.

To replace an income of $3,000 per month, you’d need $36,000 per year, which would be 8% of $450,000.

However, with real estate, $100,000 could buy a $400,000 rental home. How? Through leverage.

Leverage means the bank brings $300,000 to the table.

You put in 25%, the bank puts in 75%, and you earn 100% of the profits.

A $400,000 home renting for $3,600 with a mortgage of $2,100 would net you $1,500 per month. Theoretically, 2 investments of this size could replace a $3,000 monthly income.

The total rental income plus $25,000 in additional equity (based on 5% annual appreciation) equals $43,000, or 43% return in just one year.

“BUT I DON’T WANT TO BE A LANDLORD!”

While the numbers for real estate sure look enticing, for many people being a landlord does not. As they say in the rental business – tenants, termites and toilets. No thank you!

This is where, instead, you can join a small team to acquire real estate and leave the property management to the professionals.

When investing $100,000 in real estate syndication, it’s quite common to earn $8,000 per year (8%), similar to the stock market. This 8% comes in the form of cash distributions, also known as ‘cash on cash returns’.

However, the powerful opportunity lies in the sale of the asset. Syndications usually hold property investments for about 5 years. During this time, building improvements are made, which directly drive up the overall value of the asset, and the general market value typically rises.

Upon the sale, it is common that you receive $160,000 (your initial investment of $100,000 plus $60,000 in profit). This, plus the passive income of $8,000 per year (totaling $40,000), equals $200,000, which is a 20% average annual return. Just putting a few of those investments together over time (or upfront) can generate a tremendous passive income cash flow stream.

SO THIS IS WHERE I SUGGEST YOU QUIT!!!

Quit:

  • Trading your precious time for a paycheck
  • Working on someone else’s plan
  • Paying so much in taxes
  • Missing out on your dreams, time with your family and adventures
  • Putting off your future!

Take action today and start building up your passive income road to freedom.

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