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  • Rick Martin

WHAT IF THAT SECURE 9 to 5 ISN'T SO SECURE? Start Creating Passive Income Streams.


It's not you, it's me...

I recall a day at a particular place that I freelanced at, in another life. There was a meeting called to make a big announcement about the direction of the company. Everyone gathered around replete with curiosity. “Everyone… we have some exciting news! We have merged with company XWZ, and with their data-driven capabilities, we are going to venture to new heights! Now, unfortunately, not everyone here is going to join us on this journey." Uh oh, wait a second. I felt terrible for my W-2 comrades. Those that were not coming along for the ride were tapped on the shoulder. They were then unceremoniously escorted out of the building. The guise of having that "secure" paycheck crumbled within a three-minute announcement. If they were lucky, some got a four-week severance, but beyond that, you're on your own. Don't let the door hit you on the way out. Have you ever had a similar experience?


Unfortunately, this is the reality for many who have unexpectedly lost a job for one reason or another.


Now, let’s rewind the clock. Let’s say that while you were fully employed, you knew that unforeseen catastrophic events like losing your job were a possibility. Instead of putting all your money into savings, you leverage your money to make more money.

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

That’s right, you can (and should) make your money work for you. And no, I’m not talking about the pithy 1% interest you’re getting in your savings account or that seemingly lofty 3% that your CDs are promising. With inflation hovering at over 2%, that means your savings account is actually losing money. How’s that for irony?


At those numbers, your money is working at minimum wage, and we want our money to work at CEO levels of income, amirite? I’m talking about creating multiple streams of passive income, so you’ll continue to have money coming in, even if you’re not working.

Three Types of Income


There are three types of income:

  • Active

  • Residual

  • Passive

For most people, the majority of their income is active, which is the kind that comes in the form of a paycheck every two weeks. But for the wealthy? Most of their income comes through the latter two categories.


Active Income


Active income is income that you have to actively work for, hence the name. The moment you stop, the income stops too. Your day job falls into this category, as well as any side gigs in which you've paid for the work you do and no more.


Residual Income


Residual income, on the other hand, is money that comes in after the work is done. For example, if you write a book, you would receive residual income for every book sold.


Passive Income


Passive income is the king of all incomes. Passive income is money that comes in with very little, if any, effort on your part, and continues coming in even when you don’t work. Some people affectionately call this “mailbox money.” Investing in real estate is one of the most effective and stable sources of passive income.


Remember the job loss scenario? Let’s say that you’d built multiple streams of passive income while you were fully employed. Your salary was $5,000 per month, and your passive income brings in $3,000 per month.


Sure, now that you’ve been laid off, your total monthly income now drops from $8,000 to $3,000, but the key is, you still have money coming in. While it may not be enough for that daily five-dollar latte, it can slow the burn of your emergency fund.


And if you were really savvy and built up $5,000 per month in passive income, then you would have all your bills covered, and then the world becomes your oyster.


Investing in Stocks vs. Real Estate


At this point, you might be thinking, well, I’ve got a good amount of money in stocks and mutual funds, and they generate passive income, right? Sort of, but as we know, we can lose that investment quickly, as it rides it's emotional ups and downs.


Historically, the stock market returns about 8% annually. So if you invest $100,000, you would receive roughly $8,000 per year in dividends (When you take out taxes, fees, and account for volatility, it reduces to under 3%, but let’s keep it at 8% to make things simple)..


$8,000 a year? That’s only $667 per month. I thought we were talking about $3,000 per month.


To reach $3,000 per month, that would be $36,000 per year, which would be 8% of…calculator please…$450,000. So you would need $450,000 worth of stocks to get an annual payout of about $36,000.


Not bad, but we can do better. How? Let’s look outside of Wall Street, toward Main Street- investing in real estate.


Here’s the difference real estate can make. With that same $100,000, you could buy a $400,000 rental home. How? And this is where the main differentiator between stocks and real estate comes in.


The bank brings $300,000 to the table.

That’s right, you put in 25%, the bank puts in 75%, and guess who gets 100% of the returns? You guessed it, they go right into your pocket.


A $400,000 rental home renting for $3,600 and a mortgage of $2,100 per month would net you $1,500 per month, which is half of our hypothetical $3,000 per month in passive income. So theoretically, you could invest $200,000 in $800,000 worth of rental homes and be at your $3,000 of passive income per month mark.


And, this doesn’t even count the appreciation of your homes. Nationally, the average annual appreciation is about 5%, which means you’re building about 5% equity in your homes each year. If you had a $400,000 rental home appreciating at 5% per year, while simultaneously paying down the amount you owe the bank (remember, your tenants, not you, are doing that through the rent they’re paying), in just one year, you would have gained about $25,000 in equity.

Altogether, the $1,500 per month in net rental income comes out to $18,000 per year. Combine that with the $25,000 in additional equity, and you have a one-year return of $43,000, or 43% on your $100,000 investment.


But I Don’t Want to Be a Landlord


For most, hunting for the right properties and markets, managing tenants – some crazy by the way – and unclogging toilets, does not seem appealing. The numbers look enticing, but being a landlord does not. This is where, instead, you join a small team to acquire real estate.


When investing $100,000 in real estate syndication, it's feasible to earn $8,000 per year (8%), similar to the stock market. However, the real opportunity lies in the ​sale of the asset. Syndications hold the property for about 5 years. During this time, building improvements are made, and the land market value typically rises.


Upon the sale, you receive anywhere from $140,000 to $160,000 ($40 - $60,000 in profit). This, plus the passive income of $8,000 per year (totaling $40,000), equals $180,000 to $200,000, which is a 18% - 20% average annual return.


During this mind-altering pandemic, my work slowed down to a crawl. What if I depended on that income for my family and me? Damn, talk about stress. Fortunately, I devised a passive income plan that continues to grow. It has my back when other's don't. I thought, maybe, this crisis was going to eliminate a good portion of that income, but multifamily, is once again, showing itself to be a recession, resistant asset class. Yes, people will always need a roof over their heads.

That faithful day, I wanted to go tap on the other shoulder of some of my colleagues and say, hey, there is another way. You don't have to settle for this BS. Unfortunately for them, they were too late getting started. Don't let that be the case for you.


In fact, hot off the presses, you can download for free, The Comprehensive Quick-Start Guide to Investing in Syndications. This will get you up and running quickly, touching on the most crucial aspects of investing in syndications. When you are ready, most definitely join The Fortress Federation Investor Club to be first in line for our investment opportunities.


However, if, while you’re working your job, you’re able to create some passive streams of income, whether through investing in stocks, real estate, or otherwise, you’ll be ready if and when that day ever comes.


And if this has piqued your interest and you’d like to learn more, we highly recommend this little purple book and joining the Fortress Federation Investor Club to learn about passive real estate investment opportunities.

Do you want to get off the treadmill, and get to that early retirement? Sign up below and receive a free copy of The Comprehensive Quick-Start Guide to Investing in Syndications.