Passive Income Strategies

Episode 979: Passive Income Strategies, with Mitch Stephen

Passive income strategies are very durable, even during the pandemic. Learn from Mitch Stephen how to develop your own passive income strategies.

Passive income strategies are really helpful not just for businesses but for individuals as well. If you’re still developing one of your own, stay tuned in to this podcast and let our guest expert, Mitch Stephen, enlighten you.

Mitch Stephen has been a self-employed real estate investor for 25+ years. His real estate investing career started at the age of 23 when he read “Nothing Down” by Robert Allen.

Mitch Stephen has purchased well over 2,000 houses in and around his hometown of San Antonio, TX. Mitch is a high school graduate who never stopped learning. Books, CDs, seminars, and webinars were his classroom.

Today he specializes in owner financing properties to individuals left behind by traditional lending institutions and giving new life to properties that scar their neighborhoods.

He has perfected a method of achieving cash-flow through passive income strategies without having to be a landlord and without having to rehab properties. He’s mastered the art of raising private money and the classic “Nothing Down” deal.

He has pioneered the idea that you don’t have to give discounts to sell your notes.

A passionate speaker who delivers the message of integrity first and profits second; an expert at keeping it simple and explaining, in plain English, the theories that made him financially independent. He is always an inspiration to those around him.

What you will learn in this episode about passive income strategies:

• How Mitch’s real estate business is structured, and why his passive income strategies are durable and flexible enough to succeed during the pandemic
• Why Mitch believes wealth comes from chaos, and why focusing on helping people has been the key to excelling during challenging times
• How Mitch and his team have adapted to the changes brought about by the pandemic such as people not wanting potentially infectious strangers in their homes
• How Mitch learned that fixing the houses he bought was time-consuming and wasn’t really adding value, and why he structures his deals to be the “bank”, not a landlord
• How navigating the challenges of the 2008 real estate market crash taught Mitch valuable lessons he is using to get through the global pandemic
• Why Mitch made the strategic decision to keep his business in his local San Antonio market rather than expanding outward
• How Mitch has structured his business using passive income strategies into three different segments: one-time cash events, temporary cash deals, and forever cash deals
• How Mitch began coaching others in his method, and how he has built out the coaching side of his business over time
• Why Mitch does the investing and coaching work he does beyond just making money, and how his efforts benefit himself, new homeowners, and communities at large

How to Connect with Mitch Stephen:

• Website: https://1000houses.com/
• LinkedIn: www.linkedin.com/in/mitch-stephen-0b32491b/
• Facebook: www.facebook.com/1000Houses/
• Twitter: @Mitch_Stephen
• Listen to this podcast from Mitch regarding passive income strategies and how you can get there

Additional Resources:

• Sell With Authority by Drew McLellan and Stephen Woessner: https://amzn.to/39y7x13
• Predictive ROI Free Resource Library: https://predictiveroi.com/resources/
• Stephen Woessner’s LinkedIn: www.linkedin.com/in/stephenwoessner/
• Check out this related podcast on passive income strategies with Joey Mure and Russ Morgan

 

 

 

Passive Income Strategies: Full Episode Transcript 

 

Get ready to find your recipe for success and learn passive income strategies from America’s top business owners here at Onward Nation with your host, Stephen Woessner.

 

Good morning. I’m Stephen Woessner, CEO of Predictive ROI and your host for Onward Nation, where I interview today’s top business owners so we can learn their recipe for success, how they built and how they scaled their business. And if you’ve been listening to the podcast for a while now, you’ve likely heard me share with you a variety of different research sources, examples, and stories of how business owners, just like you, made progressive decisions during the last six recessions.

 

And then they pivoted toward the silver linings that they saw, and then came roaring out the other side of their respective recession and in many cases, in far stronger position than how they went in. And they were far stronger than their competitors. The data is on your side, Onward Nation, and they’re able to do that because they have the courage to make progressive decisions.

 

If you want to take a deep dive into some of the research and some of the examples that I’ve shared, just go to PredictiveROI.com/resources and you’ll be able to access the full training I shared recently along with the full slide deck. And I think it’s like 199 slides. So it’s very, very meaty. 

 

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Passive Income Strategies: Mitch Stephen’s Introduction

 

So for today’s episode, we’re going to spend some time with Mitch Stephen, who now is a four time alum here Onward Nation and a real estate investor, an expert who exemplifies what I just described over the last 20 years investing in real estate. It is fair to say that he has seen it all. He’s seen the ups. He has seen the downs. He has seen the recessions. Heck, he’s even seen the Great Recession in 2008 and 2009.

 

But I shouldn’t even say but. And through it all, he has made progressive decisions. He has smartly doubled down and has continued to build his business year over year. Over 2000 houses he has purchased in the last couple of decades. And because of that, he will be well-positioned to come roaring out the other side of this recession, too.

 

But there’s another reason why I invited Mitch to come back for an encore. As a business owner, you need to be thinking of ways in investment strategies to get the cash out of your business before you spend it on something else so that you can build your wealth outside of your business. Yes, we are all hoping for that rainy day that somebody with a big briefcase full of money is going to walk in your front door, or call you, or drop you an email and say, hey, I want to buy your business.

 

But for the vast majority of business owners, that never comes. You need to be prepared. So my guess is there’s going to be several golden nuggets during this conversation today with Mitch that he’s going to share. This is going to pique your interest about how real estate could be one of those strategies for you, which, of course, could be one of those progressive decisions that I’m hinting that you consider taking and making.

 

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Passive Income Strategies: Mitch’s Background

 

So without further ado, welcome back to Onward Nation, Mitch. Thanks for having me, Steven. Always great to be here. Well, it is always great to have you here. My friend. You are so generous with your insights and wisdom, for which I am grateful. Because it’s been a little bit of time, about a year and a half maybe, since we’ve done our last interview actually bring us up to speed, which I know is like a really big topic given all the dynamics of 2020, but bring us up to speed with what’s new in your business.

 

And then, we’ll start diving into some of the more progressive decisions and maybe some of the opportunities that you see, the silver linings that you see in the market. So bring us up to speed first. Well, the thing that’s new with everybody’s businesses, of course, was COVID, right? So no one really knew what was going to happen.

 

Again, the strategy that I employ, which is I borrow money from private lenders to buy my properties, and then I mark them up maybe close to two times, and then I sell or finance them to my buyers at 30-year fixed mortgages. And it’s a very durable, different kind of income. You’re not a landlord. You’re the bank.

 

And so it’s not your air conditioner if it breaks, or it’s not your hot water heater. You’re just, you know, you’re just the bank and you just expect to get your mortgage payment. So it frees you up a lot. But, you know, no one knew exactly what would happen during this latest form of chaos. You know, I always say wealth comes from chaos.

 

And it’s never been more true than the Great Recession back in 2008. And it’s never been more true now than with COVID. I mean, it just seems like when there’s chaos, the real coyotes and I like to call, you know, the entrepreneurs out there, the badasses, the ones that have run on instinct. They know when to shift.

 

They’re like coyotes, man, is there anything to eat? Here we go. Walk over to someone else’s ranch. We’re going to find something to eat. You know, we’re going to eat, you know. You know, there’s no water here. We’re going to go someplace where there’s water. We’ll travel back and forth or whatever. We’re going to figure it out. So, we did the same thing here, just the main thing with COVID was you just had to believe in a way to do it.

 

You could list all the ways and everything you were told not that you couldn’t do, but you had to say, okay, well, these are the things I can’t do now. What are the things I can do? And how am I going to do it? So, you know, a lot of people got run out of business or ran themselves out of business mentally because they shut down.

 

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Passive Income Strategies: The Challenges During COVID

 

So that left bigger openings for the coyotes and then the coyotes, like me and my friends, we started to network and talk and figure out how we’re going to buy houses and sell houses under the current conditions. And we did. Now, it was tough. A lot of people didn’t want you in their home. You know, selling was, I mean, let me say this, acquiring properties got a little tougher because people didn’t want you in their house.

 

They don’t want strangers in the house. Oh, because of, like, the transmission of Covid. Yes. Okay. Got it. Yeah, yeah. The transmission. So, but we just had to up our efforts in other departments where I didn’t have to be in your house. It was just a house you owned. You know, you’re not even there. I just need to walk in it and see what it is.

 

So we just started formulating how to get around these things. But as usual, we’re going to hold our own during this very difficult time. In the recessions, we boomed. We actually exploded in Covid. We were able to hold our own and not really decrease much or increase much, but stay status quo just by networking in and, you know, finding out where they move the cheese.

 

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Passive Income Strategies: The Coyote Metaphor

 

So okay, that is awesome. And even just as we’re getting started here, that’s a really healthy dose of perspective. And because there’s also some really great golden nuggets in there about how you guys tweaked and did things a little bit differently. Love the coyote metaphor, by the way, of all the time that you and I have spent together both on the show and at your ranch, I’ve never heard you use that metaphor before, and it’s awesome.

 

Yeah, well, I got it, you know, I rarely invent anything. I heard one of my, one of my good banker friends said, you’re like a frickin coyote. And I thought, well, you know what? I’ll take that. You know, I don’t care what anybody. She didn’t say it like it was very complimentary, but, you know, coyotes are hard to exterminate.

 

Yeah. They’re resilient. Yeah. So I’ll take it. Okay. So let’s go back through a couple of things there because there were several really, good lessons that I think we ought to tease out. And the first one is wealth comes from chaos. So, tell us a little bit more about why you believe that so strongly. Why you believe that to be true? 

 

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Passive Income Strategies: Walk Into Problematic Situations

 

Well, first of all, in all, transparency, I didn’t invent that. It’s from an anonymous source, but I took it as my own because I looked at where and how I make my money, where and how the people at Meyer make their money. And the ones that do the best are walking into situations that are problematic.

 

And then they’re giving solutions. They’re finding solutions to the problem. The bigger the problems are, or the more rampant the problem is in an industry or an area, the better you stand to fare. If you can figure out how to help people solve those problems. So wealth comes from chaos. Just as I’m looking for the chaos. I mean, you know, if there’s a ton of foreclosures, then I have a chance to help people.

 

If there’s a Covid and people are losing their houses or are struggling to keep their houses, then I have a lot of opportunities now. Sometimes, there are losers. But I like it best when I walk in the door to say, I don’t know if I can help. You are not keeping this house, but let me do my damnedest to try to keep the house.

 

And then, if any of the things I come up with or any of the ways I come up with so you can keep this house there, just don’t. They’re not for you or they won’t work for you. Then after we’ve exhausted all that, maybe I’ll talk to you about selling the house. If you’re going to have to sell it to someone, maybe you could sell it to me.

 

But I go in the door trying to help people all the time. And I think that’s been a big difference in my, it was a shift about five years into my career. I quit trying to buy houses and I started to help people. And. Yeah, and I remember you emphasizing that so much in your course, art of owner financing when you always had the emphasis, like somebody trying to learn your system, learn your model and all of that. You were putting so much emphasis on the homeowner and how you could be helpful or how you could teach people to be helpful in those situations. It involves a lot of creativity, but it really is problem-solving, right? Yeah. 

 

And I know from all my years of experience that I’m really only going to be able to help a certain amount of people have a certain niche part. But I gotta go in there and see if they fill that niche first, and if I can help them do that, then I’ll do that.

 

And, you know, there’s 3 or 4 or five, maybe six ways to help a person keep their house. But if they don’t have the wherewithal in those six ideas, the only one I know then they gotta sell their house to someone before they lose it. So then we’ll carry on the conversation after that.

 

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Passive Income Strategies: Wealth Comes From Chaos

 

Well, I love this piece. wealth comes from chaos. Great. mindset lesson, if you don’t mind me putting it in that category. So let’s think about what you would just said about, you know, looking at a house. People were concerned, didn’t want you in the house because of, you know, COVID and concerns about, you know, transmission.

 

But that makes me think that when you were talking about that, that maybe there’s a lesson in here for Onward Nation that and I don’t mean like literally going into other people’s houses. What I mean is that you look for ways to change the business. Or maybe this was a tweak, but how can we still see the house without, you know, being while being respectful for people’s concerns?

 

And so that was about doing the business in a different way, which then made it more friendly. Right, more helpful. So like but that was a big decision to have to make now? Wasn’t hardly I mean, we had to make the decision where we were going to sit at home and do nothing, because MLS listings were down by two thirds, because no one wanted a stranger in their house.

 

Foreclosures and evictions were postponed for now. It’s been going on for six months. You know, you can’t. The courthouse has been shut down. In our county, we couldn’t foreclose on anyone. We couldn’t evict anyone, and neither could anyone else. So no one was getting forced out of their home to cause problems. Everyone was just kind of hunkered down.

 

Some people were hunkered down and getting free rent. Other people’s were hunkered down and not being able to collect rent. But either way, they were hunkered down and they weren’t moving. And so we had to start finding, ways to go find properties that didn’t have those issues, like abandoned houses that were vacant and abandoned. You know, we started doubling down to find those.

 

We took a left turn right out of houses into there wasn’t enough of those houses. So we started going into mobile homes with land, and we figured out how to find enough properties that us walking in, wasn’t going to affect anybody because there was no one there, you know. They were just sitting there decaying. And so we just focused on that.

 

And then we moved to raw land because no one needed to show me, you know, what an acre looks like. I could look at it really practically on Google Earth and you know, and view it not even really have didn’t have to go anywhere and walk on it. So we just switched, you know, what we were trying to buy.

 

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Passive Income Strategies: Putting Up Houses for Sale

 

So were the rates of return on these three new pieces. When you mentioned vacant, abandoned mobile homes with land and then turns out they’re higher. Turns out they’re higher than we ever did. And we may never go back. you know, I everything in my life happens that way. I learned about buy it, don’t fix it, sell it.

 

When I had so many houses, I couldn’t fix them all during the Great Recession. Right. In 2008, I used to fix every house that I sold, even though I was selling it on a 30 year financing. Then one day when the recession hit, I had 45 foreclosures in a short period of time, and my crew could only handle about four foreclosures, I mean, four rehabs at a time.

 

And I had 45 vacant houses, just like by the time I get through these 45 houses, doing four houses at a time, I’ll be broke. So I guess I’m going to have to put up these houses for sale. With the broken windows in the one hinge, you know, the door hanging from one hinge and and the cat and the dog doo-doo on the carpet.

 

I guess I’m just going to have to put them up for sale and owner finance them like that, because I can’t get to them. And by the time I finished like 12 houses, I sold all of them. And that’s when I said to myself, why in the hell have I been fixing every house? So today I have, like you say, like I have 15 houses in my inventory.

 

Four of them are getting worked on. The other 11 are up for sale right now. I’ll sell half of those 11 before I even get because I’m the financier. So I am the underwriter who gets to make the loan, and it’s my house. And so I just finance the house and the hole in the roof to whoever wants to fix it.

 

You can’t do that with a FHA loan or a new home loan buyer. They got to fix those houses before they can sell them and get financing and so that’s what you mean by being the bank, because you are literally in that scenario as you just described the bank. Yeah, I bought the house with OPM, I own it.

 

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Passive Income Strategies: Making It Tax-Free

 

There’s a first lien on it to my lender. OPM being other people’s money. Other people’s money. So there’s a first lien on there to my private lender, which could be anybody. You it could be anybody who has a retirement plan and is tired of gambling in the stock market or, or anybody’s got some extra cash laying around and they want to make 8 or 9 or 10% and have a real piece of collateral to as a backup.

 

You know, that’s not okay. So, you know, I just want to make sure that we’re getting that piece. So are you saying that, let’s say, me as a business owner, if I had a self-directed IRA, I could invest in that? Yeah. If you had an IRA and you were interested, I would teach you how to self-directed, you know, like tax free, a company like taxfreefuture.com.

 

And they’ll move it out of the, it’s a nontaxable event. You roll over your retirement funds in the into a kind of account called self-directed, which you get to decide where you put the money, not the guy who’s on lands on Wall Street or not the people running your company, you know, and then you get to decide.

 

And one of the things you’re allowed to do is you are allowed to loan your money to people like me. And then it’s a secure investment because it’s backed up by the deed to the property. Right. Yeah. You get a first lien on my property and my commitment is I’ll never borrow more than 65% of what I can sell or finance that property for.

 

So if I could sell or finance or 100,000, then the most I’m ever going to borrow from my private lender is 65,000. That’s just the most I don’t even go. I don’t even go to the most. I average 58% loan to value. So I average only borrowing 58,000 on a property that I can sell for 100. And so that’s a pretty secure position for my lender, you know, okay.

 

And secure because there is great equity in the property. You’re not a fool. You’re not like leveraging all of these houses. It’s not like a house of cards business model. No, no, it’s very strong. I built my whole reputation. I’ve policed myself for almost two and a half decades. I never borrow over 65%. If I want a house and I want to pay 70% of its owner finance value, then I got to bring 5% myself.

 

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Passive Income Strategies: Creating a Contingency Plan

 

So the table I never leverage over 65% at the time of the transaction. So, one of the things that have made me successful through the good times and the bad times is it would take catastrophic events to sink my machine. I mean, literally catastrophic. Yeah. So let’s go back to the being the bank because I want to make sure that we get this golden nugget intact.

 

It sounds like, previous business model where you weren’t the bank, the landlord. Yeah, right. And then that put so much pressure on you that it forced you to discover. I mean, there was pain and suffering in that process, but it forced you to discover this new model, which is infinitely better. But had you not gone through the pain and suffering to get there, you would have never known what was on the other side.

 

Yeah, again, another example that plays right into the topic of this part, this podcast, is I had a bunch of rental houses and on paper, I was supposed to clear $300 a house between what I owed and what I was collecting. Okay. And I had 25 houses, so I’m supposed to make on paper, it looks like I’m supposed to make 7500 bucks.

 

Of course, not even I was that naive to think that I was going to collect it all. So I put, you know, 15 or 20% contingency, and I’m still supposed to clear, you know, I was just hoping to clear at least 50% because at the time, my overhead was $3,500 a month, and I could quit my job if I could get 3500 a month coming in.

 

But I didn’t even make that much. As a matter of fact, I think I was upside down because people were tearing my tenants, moved in, tore my house down, and left. And then I hired a coach and he took the last $10,000 I had to my name, and he showed me how to get $7,500 coming in.

 

And then I had nothing. I had nothing to pay out from it because it wasn’t my property anymore. So when I collected the mortgage payment, there was nothing to rob me of it after the check cleared. So now I shortly after that I sold out. He taught me how to sell all my houses with a down payment and then make a mortgage.

 

That was pretty much equal to what they were paying in rent. I didn’t even believe in the system that much. I collected 30 about $3,000. This was 20 years ago on houses I was buying for 35,000 to $40,000. Okay, okay. 25 years ago in San Antonio. So I was collecting about 10% down was was around 3000 a house.

 

I had 25 houses. So I sold them all was seller financing with 3000 down. I had 75,000 in the bank, which was my money, three 3000 down times, 25 houses. And then they started sending their mortgage payments, and I was clearing 7500 between what I owed and what I was collecting. And that money stuck because if anything broke or anyone moved out, I mean, it really wasn’t my house.

 

And and people who buy houses move in, fix them up and stay, you know, they actually add on porches and patios and concrete drives and landscaping and pools and, and replace all the windows with state of the art insulated windows. And they, you know, they actually repaint my house. 

 

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Passive Income Strategies: Foreclosing A House

 

I never had anyone repaint my rent house. No one said, hey, come on over. I want to show you what I did to your house. You know, except the only at one time when the fire department calls me, they call me. They wanted me to show you what the people did to my house. Because that’s important. Because you as the bank, if you ever did get into an issue where you had to evict them, then they’ve improved the value while they were there, right?

 

Well, I wouldn’t be evicting them. I would be foreclosing or foreclose. I’m a mortgage holder. Yeah. So thank you. Yeah. You gotta watch this right now. You’re up. Okay. So if you ever had to foreclose on them, the asset value has been improved, right? Yeah. So that same house back 20 years ago, if I was a landlord, the rent was 650 and I was getting 650 as a nonrefundable deposit.

 

You can’t fix anything for 650. I mean, you can’t even replace the carpet. And that’s the first thing to go. Right? So, you know, these are still only 1213 hundred square foot houses. I never built fancy houses and always deal in Walmart houses for Walmart people. My thought process is if you can’t afford to live in my house, then you can’t afford to live in any house because my principal interest, taxes and insurance payment is very close to what you pay for rent right across the street in the same kind of house.

 

That’s why my model is so successful. I back into the rents to establish my price. So I already know everyone in that neighborhood who’s renting can afford my house because they’re already paying what I’m charging per month. The only separator is do you want a house bad enough to come up with a 10% minimum down payment? Well, okay.

 

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Passive Income Strategies: Planting Your Flag of Authority

 

So that leads us into another golden nugget lesson here for Onward Nation. So Onward. You know that, we talk a lot about planting your flag of authority. And there are three essentials to doing that. one is to have a great niche and serve that niche and really drill deep and build a depth of expertise in and around that niche.

 

And I’m going to loop this back to Mitch here in just a second. Next is to have a point of view. Mitch actually just shared his point of view with you when he talked about Walmart houses. As far as being able to have the view of, you know what, that’s not my market, but this is my market, and this is why I’ve decided to serve this market.

 

And then don’t be a one trick Pony Creek content that establishes your authority in your market image has done that in spades for years. So let’s come back to the niche piece, because you’ve already shared with us about point of view, but you also recognized as you’re building the business that you’re going to do this deep in San Antonio, your home town.

 

Now, does the model work outside of San Antonio? Of course, it does. You teach a lot of people how to do this, which we’ll get to in a minute. But you decided for very good reasons, which I’d like for you to share with Onward Nation, why you decided to be super committed to San Antonio and not try to do this in a different market?

 

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Passive Income Strategies: Carving Out Areas That Won’t Work

 

Well, it doesn’t work in every market. And few things do. I mean, you know, in California, a 1300-square-foot house is $650,000. And you can’t get anyone out if they don’t want to go because the laws are more in the tenant’s favor than the actual person who loaned the money or who owns the house.

 

Technically. So yeah, there’s you got to carve out some areas that won’t work, but mostly it works in places where there are affordable houses, you know, affordable houses being under 300,000. There’s a lot of houses under 300,000 and that’s not everywhere. Then you have to go. And, I mean, it wouldn’t work if you lived in a population of a town that was 25,000 people.

 

I mean, I live in San Antonio, Texas, population 1.7 million, maybe 2.2 million, if you include some surrounding areas or some incorporated cities. So, you know, there’s enough people dying. Wealth comes from chaos. People dying, divorcing, transferring, winning the lottery. I mean, good events can cause chaos in getting a promotion and having them move. You know, it’s not always a negative event that causes chaos.

 

There could be some very positive things that caused chaos. My favorite houses to buy are when people have won the lottery or had an inheritance windfall, and they just don’t care anymore because they don’t have to care anymore. So I, that answers your question well enough there though those. Well but I think you’ve decided to double down in San Antonio because it’s your hometown, you know, the market.

 

Right. And doing seller financing and having that closeness and proximity was an advantage in your application of the model. Right. Well it was two things twofold. One is I did go outside of my city to try this in places like Corpus and Dallas and Houston, and what I found was every culture is different, every city council, every the rules, the regs, the, you know, you get off into the unknown.

 

You know, I went to Corpus, which is on the coast of Texas. I said, you know, it needs a roof for roofs, about 2500 bucks on that house. I knew. Well, I come back. Apparently, I forgot that we’re in a hurricane zone, and you need hurricane straps and a whole different rated roof. And so the roof is 7000.

 

It’s not 2500. So, you know, you’re like, oh, no. So that and plus, you know, I have about as we’re talking right now, I have about $26 million that I owe my private lenders out on the streets. And it’s all out in on the first of the month. I’m going to write a check for 8 or 9 or 10% on to for to pay for using $26 million this month.

 

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Passive Income Strategies: Keeping Your Collateral Close

 

And to protect those folks, I had to keep my collateral close to me in case the fit hit the fan. I could know my culture, know my workers, know my everything, and get out there and roll my sleeves up and defend them with every fiber in my body. If I was spread out all over the nation, it’d be impossible.

 

It’d be impossible. So the main reason I stayed close and tight was to defend my private lenders. If I ever needed to, well, in doing that, in going deep into that niche, into that geography, but also strategically, you’ve built a moat. You’ve built some defense around the business and market share too. I mean, what is the total now like 2200 houses now or something like that?

 

Yeah, 20, 200 houses. But you know, their homesteads, most of them, and they don’t, you know, they pay off whenever they want to. I have I cannot disallow someone to pay off their homestead to be against the law. Right. So it’s hard to even build up. I’ve been trying to get to like 500 notes that I collect, but every time I buy or create ten more notes, you know, 3 or 4 drop down.

 

So it’s hard to build this into a big bulky machine. It’s too big just because of attrition. People, everyone dreams of having a paid for a house. So therefore the mortgages I’m trying to collect are kind of targeted by the people that pay them. You know, they want to pay them off. And I have to move my forever cash strategy into a different business.

 

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Passive Income Strategies: Putting Your Cash into Something Else

 

So I make money flipping houses, you know, one time cash events where I buy a house, fix it or don’t fix it, but I sell it for cash. You know, one sale, it’s over. I’m done with that house. Then there’s temporary cash. events. Which is like I sell a house with owner financing. I get 10,000 down and I make a $500 a month positive cash flow.

 

But the average mortgage in America lasts about seven and a half years. Maybe in the economic areas that I work in, maybe it’s ten years because these people are a little less likely just a straight-out refi. But they still sell their houses through realtors and whenever they got to move on and stuff. So I take the money I make from one-time cash events and temporary cash events.

 

And then I got a buy in to a forever cash event, which is I buy self-storage units, boat storages and mini storages as my forever cash. When I say forever, it means once I buy those facilities and I own them, I’m renting out those little cubicles for people to put their household goods or put their boat in.

 

And that business goes on until I say it stops. And that’s why I have to move into my wealth, into a forever cash plan, which is really smart, Onward Nation. So just looping back to what I mentioned in the introduction of this episode before we started talking. So even Mitch, who’s in the business of real estate, and I’m mentioning that you as a business owner need to be thinking about how are you going to take cash out of your business and get it into something else?

 

Just in case somebody doesn’t buy your business? And we just heard Mitch is doing the same thing. He’s still in the real estate space, but in a different category for a different purpose. Right, Mitch? Yeah. So, and I’m also in the lending business myself because I can’t buy as many facilities as I want. Yeah, as you can imagine, some of these boat, many storage facilities right now during this boom in real estate, they’re going for four and 5% cap rates.

 

I mean, there’s not really anyone giving those out as a deal right now. So I’m even taking some of the money I have left over and I’m loaning it to my competitors who don’t have money because I understand their product. If they don’t know how to fix that house, I do, and I, and I, you know, if I don’t get paid, I’ll go get the house and I’ll fix it.

 

Learn from Mitch on how to make passive income strategies from his podcast

 

Passive Income Strategies: Go For Minimal Risk

 

So I lend my money and I buy storages. That’s what I do with my money. That’s what I’m asking people, you know, maybe people here in this, you’ve got money stacked up and you’re disappointed in a 1% seed rate at your bank, and you’re scared to death to hang out any longer in the stock market because, you know, everything that goes up has to come down.

 

Then I have a viable option, you know, make 8 or 9 or 10% and, you know, I just did a loan the other day. All I asked for was 40% of what the property was worth. That’s all I asked for was 40%. I mean, there’s always a way to fail, and it’s actually against the law for me to guarantee anything.

 

But the risk is so minimal on a deal where you loan $40,000 on 100,000 our house, or you loan $100,000 on a $400,000 house, it’s pretty hard. Something catastrophic would have to happen. And maybe if that catastrophic event happened, your paper money or your stock would be worth nothing way before that, right? Right. I just counting on the day that little bitty brick houses for you and me aren’t worth anything.

 

Then it doesn’t matter where you had your money. It’s not worth anything. We’re picking up guns and we’re going somewhere.

 

Maybe we’ll start colonizing the moon at that point. Yeah, right. I’m just saying. So, I borrow money in and deal in Walmart houses for Walmart people. Because if you can’t live in my houses, then you can’t even afford the rent across the street. Right. And if that ever happens where no one wants to buy these houses, then maybe they’ll team up in 2 or 3 families, will move into one house.

 

But when that evaporates, we’re probably picking up guns and going somewhere or we don’t even exist anymore. Let’s think of, another, I think, opportunity for Onward Nation to learn from you. And that is, you know, you were in this business for quite some time really perfecting this model. And then, at some point, somebody said to you, hey, could you teach me how to do that?

 

And then all of a sudden you’d built this really cool business, and now people wanted to learn from you, and it didn’t happen, like immediately and in and then you’ve built this other business to this educational side, to your business. And there are many Onward Nation business owners who are excellent at what they do. And they’ve been doing it for a long time.

 

Learn from Mitch on how to make passive income strategies from his podcast

 

Passive Income Strategies: Helping People Change Their Lives

 

So I want to make sure that we open their, broaden their horizons, if you will, so they can see this is a potential silver lining as well, because they may have you have opportunities to teach, like you have done. So how did that start for you? I, at one point, you’ve heard the story.

 

Everyone’s like, well, I retired for a year or so or two years and like, the heck with that, right? I was so bored I didn’t know what to do. I made it, like eight months and money wasn’t my issue. So I had to have a higher reason to do whatever it is I was going to do. I even started giving away my coaching for the longest time, but I wasn’t receiving the reward I needed because the people that were taking advantage of my free offer were not doing anything, and therefore I was not getting my reward.

 

What I needed was the emotional reward of helping other people change their lives for the better. And specifically, you know, Dale Ramsey does the primal scream when people get debt free around my educational company. We ring the bell when people fire their boss or have a conversation with their employer to let them know that they’re no longer needed.

 

When they become independent because they got enough money coming in, they don’t need a job. And that’s what I get my high off of. And that’s the higher reason I have to make another million dollars in the next five minutes. You can ship it to me right now. It’s not going to change what I eat.

 

It’s not going to change what I wear. It’s not going to change what I drive. It’s not going to change who I hang out with. It’s not going to change anything. So I had to start charging to find the people that would commit to the level that I could get my emotional reward, where I could get them out of their job, where they could get themselves out of their job.

 

Learn from Mitch on how to make passive income strategies from his podcast

 

Passive Income Strategies: Making Homeowners Out of Renters

 

But, little kind of psychological. I didn’t make it up, and I don’t I wish it weren’t true, but the people that put up a financial commitment are more likely to give me what I need, which is to see them succeed and to be able to write down, you know, today it’s been 300 people so far that quit their job, you know, in the 301.

 

And I believe me, I write them down. I’m watching, that’s my whole reason for doing this. And I also like the venue that I’m in because I’m teaching people how to make homeowners out of renters. You think those people are better off? They are the neighborhoods move from rental neighborhoods to neighborhoods where most of the houses are owned.

 

You think that neighborhoods better off the tax basis for the tax assessment on that property went from 25,000 to $150,000. You think the municipalities are better off? You know, they’re collecting more money in taxes because the houses are now not crack houses. They’re livable, viable houses. And it goes on and on and on and on. So there was all these higher reasons why I wanted to do this.

 

And, last but not least, I’ll give you a very sobering reason. And I’m not. Yeah, I guess it’s okay. I always wonder about seeing this. But then I just like being transparent. You know what? A man with a lot of money and a lot of energy and nothing but time on his hands. You know what happens to that guy?

 

You think some good stuff happens soon, or some bad stuff might happen to that guy? He has nothing but time. He’s got all the money he needs in the world and nothing to do. What? You know, I needed to stay busy for a lot of other reasons. Two very personal reasons. You know, I need to stay focused, stay engaged, and be involved on a daily basis.

 

And last but not least, I get smarter, too, because when you talk to smart people or you talk to innovators, you talk to people with an imagination. I learn things about my business I didn’t know because I’m the teacher and I get to see what happened to students when they did something I never would have thought of doing.

 

And sometimes that happens. That was bad. That happened to him, and sometimes it’s good. So then I’m able to warn people. I’ve seen this happen before, I haven’t done it, but I saw three people do it. The same thing happen every three times. You know, they got a hole in their boat and they sank. And then other times I can say I watch five people do this so far.

 

And when they did it, they went up in their income and they solidified some things in their life they needed to do. So I can coach that way. And I’m getting to take in all this data myself. I’m getting paid to take in this data. It makes perfect sense. That is awesome. It makes perfect sense, you know, so being an educator, gets me my most emotional reward, keeps me on top of my game and keeps me out of trouble.

 

Learn from Mitch on how to make passive income strategies from his podcast

 

Passive Income Strategies: Connecting with Mitch

 

This has been great, my friend. I’m so grateful, for your insights and wisdom, as always. And I know we covered a lot. But before we go in, close out and say goodbye, and any final advice, any recommendations that you think we might have missed? And then please tell Onward Nation the best way to connect with you, Mitch.

 

Well, you know, I have a podcast 1000houses.com. I’m launching a new podcast called Hometown Real Estate Heroes where someone else will interview, but I’ll host the local people that are doing big guns, that are doing good things that are being successful. The scrappy, you know, he’s not famous, he’s not a billionaire.

 

But he’s an entrepreneur and he’s doing way good enough. He’s really providing for his family. He’s over the top. He’s way above average. And we’re looking to talk to those peoplealso who have a three book series, My Life in a Thousand Houses. And probably the best way to find out about all this stuff is just go to 1000houses.com, and everything’s there.

 

I have a lot of free stuff there too. So I’ve been I’ve been chastised by a lot of gurus out there saying I’m giving away the farm. I don’t care. Well, Onward Nation, no matter how many notes you took or how often you go back and relisten to Mitch’s words of wisdom, which I sure hope that you do.

 

The key is you have to take the golden nuggets. You have to take the recipe, the blueprint. He gave you some really great ideas. You have to take them and apply them into your business right away and accelerate your results. And Mitch, we all have the same 86,400 seconds in a day. And I am grateful, my friend, that you came back now for the fourth time, to help us get better, to be our mentor and guide, to help us move our businesses onward to that next level.

 

Thank you so much, my friend. Well, you’re doing a great job on teaching passive income strategies. You’re reaching a lot of people I know because I talk to a lot of people and you’re doing a good job. You’re reaching people that may have taken a long time to get the news, you know, and everyone receives things different. So you have a way of putting it. And a lot of people are connecting with that. 

 

This episode is complete. So head over to OnwardNation.com for show notes and more food to fuel your ambition. Continue to find your recipe for success here at Onward Nation.

 

Learn from Mitch on how to make passive income strategies from his podcast