The podcast features Jim Manning, discussing his extensive real estate journey and its pivotal role in creating passive income. Throughout, the conversation emphasizes real estate as a bedrock for financial stability, distinct from conventional investments like the stock market. They highlight the benefits of establishing passive income streams through real estate investments and offer invaluable guidance to aspiring investors. The hosts provide actionable advice, underscoring the significance of financial freedom achieved via real estate-based passive income. Overall, the episode acts as a comprehensive resource, offering insights and practical tips for individuals aiming to leverage real estate for their financial well-being.
Connect with Jim Manning:
https://passivewealthshow.com/
FREE Real Estate Investing Tools & Resources:
https://www.cashflowsaga.com/links
Join The Waitlist For "Rental Property Investing 101":
https://tinyurl.com/k4vpbd5u
Connect with Jacob:
Instagram: https://www.instagram.com/cashflowsaga/
Website: https://www.cashflowsaga.com/
YouTube: https://www.youtube.com/@cashflowsaga
Twitter: https://twitter.com/cashflowsaga
Connect with Mike:
Instagram: https://www.instagram.com/realtormichaelmagno/
Website: https://themagnogroup.com/
YouTube: https://www.youtube.com/@realtormichaelmagno
The podcast features Jim Manning, discussing his extensive real estate journey and its pivotal role in creating passive income. Throughout, the conversation emphasizes real estate as a bedrock for financial stability, distinct from conventional investments like the stock market. They highlight the benefits of establishing passive income streams through real estate investments and offer invaluable guidance to aspiring investors. The hosts provide actionable advice, underscoring the significance of financial freedom achieved via real estate-based passive income. Overall, the episode acts as a comprehensive resource, offering insights and practical tips for individuals aiming to leverage real estate for their financial well-being.
Connect with Jim Manning:
https://passivewealthshow.com/
FREE Real Estate Investing Tools & Resources:
https://www.cashflowsaga.com/links
Join The Waitlist For "Rental Property Investing 101":
https://tinyurl.com/k4vpbd5u
Connect with Jacob:
Instagram: https://www.instagram.com/cashflowsaga/
Website: https://www.cashflowsaga.com/
YouTube: https://www.youtube.com/@cashflowsaga
Twitter: https://twitter.com/cashflowsaga
Connect with Mike:
Instagram: https://www.instagram.com/realtormichaelmagno/
Website: https://themagnogroup.com/
YouTube: https://www.youtube.com/@realtormichaelmagno
This is the Financial Freedom Fighters Podcast
jacob_audio:Welcome everybody to the financial freedom fighters podcast. I am your host Jacob Sandoval. we have some very very exciting news for our listeners today. We have our first guest You want to do the honors mike
mike_audio:Absolutely. Yeah. So, for everyone listening out there, we've got Jim Manning on the line with us today. I was fortunate enough to be invited onto Jim's, uh, previous podcast. So, that was my first foray into the. The podcast world myself. but, Jim, you're my gosh, you've got a huge background. You, you're an agent You've got your syndication business. You got four kids at home. I mean, you've got whole kinds of stuff going on. So why don't you just give us, you know, three or four minutes about you and we'll roll into it.
jim_audio:Yeah. So, Hey, Jim Manning's my name and, I've been investing in real estate for 15 years now. all told the teams have done, it's been about 3, 500 deals, throughout the years and, the journey has been a really good one. we started out, my very first job out of college was for a self made billionaire and the first week when I started working for him, I was like, this guy became my idol, you know, I was drinking a thousand dollar bottle of champagne and because I was in college, I was chugging it and not actually enjoying it because I just got out of college, right? And. I started idolizing this guy, like, wow, look at how, how attractive his girlfriend is. And this guy's whiter, he's whiter than he is tall. And he's you know, doesn't have any, any hair. Cause he's in his seventies, you know, and anyway, as the audience peeled back, what I learned about him was, he was completely and utterly miserable. he wasn't at all happy with his life. at an early age, it was such a blessing because what I learned is that, success should be measured by what you gave up to get it. so I was in corporate America looking for something that would give me the financial opportunities to make a lot of wealth. And I was studying different things like studying the stock market, studying, real estate investing and, and the concept of not only making a home for people and proving that little piece of the world, but having financial upside. So being able to do good for people and make a good amount of money and have a life in the process, be able to do all of those things really led me into real estate, gosh, when I was 23 years old, about 16 years ago.
mike_audio:Awesome. Awesome. Well, thanks for thanks for sharing that. I know that you've got how many investments now?
jim_audio:Yeah. I mean, it's a, it's a fair amount. We're operating a real estate fund that has, about 140 houses in it and, and that's, you know, we have other holdings and, and things as well.
mike_audio:Yeah, I just wanted to get. I just wanted to give some context to those who are listening, you know, that may have zero deals or one deal or two deals. just to show the power of time, right?
jim_audio:yeah. And like, and here's the deal guys, like if you're newer, just starting out, don't get discouraged if you hear me say, Oh, well we bought 140 houses in the last few months. Right. I didn't actually do any deals in my first 18 months. it took me 18 months to do my first deal. So if you have zero experience, compare yourself to me when I was first starting out and, not what we have going on now. because it's been a 15 year body of work,
jacob_audio:Jim real quick. So you talked about buying 140 houses with a fund. the majority of our listeners here, you know, are looking to kind of be, active real estate investors or do their first deal. Can we break down for the listeners? What that kind of looks like, obviously doing a fund or a syndication and how that's a very different approach to investing.
jim_audio:yeah. So, I think that the biggest thing is, is to be self aware. you can invest in real estate and invest into real estate funds and disindication deals, if you have money, if you have the treasure, but you don't necessarily have like the time to do that. Right. so you're able to invest in and get true passive income. and still being able to focus on your job. the first step that I really recommend people do is, is that they, do an honest evaluation of themselves and, and where they're at. So when I started out in real estate, I needed to be an active investor because I didn't have any, I had, 10, 000 I had saved up from my first job. And I use that as like a little bit of money to get me going and to start, To start flipping houses and wholesaling houses was the path that I started out on. if I was 39 year old Jim and a doctor or a small business owner, you know, already making really good income, I don't need to be a wholesaler. I don't need to be a rehabber because I already have an income source. So at that point I can, I have a couple options. Buy some rentals and manage them myself, or I can invest into these fund structures and let another team do all of the work for me. it's important to like slow down a little bit and then make an assessment of, where you're at.
mike_audio:yeah, nice, nice. obviously we were talking before we started recording about the market, right. can you touch a little bit on, why that's important in today's economy? Cause I mean, people turn on the news, they read about the bonds and you know, all these other wild things that no one really pays attention to until now and why that's important and how that can affect their, their futures.
jim_audio:Yeah. With different markets. they're really what I've learned is, is that there's different opportunities that come up. it's not necessarily if you see a headline that's scary, it's not necessarily the time to say, Oh, well maybe real estate's not the right time for me. that's not the case at all. I, I got started in 2006 and literally everyone said, why would you ever be thinking about real estate real estate? Isn't it collapsing right now? what are you thinking? And I was like, well, I want to get really good at it now. So when it turns back around, we can go on a run. And what I learned about that environment. was there was opportunities and money and deals to be had, even in that environment because one of the best things about real estate is, it's a house that someone lives in and everyone has to live in it. It's a real tangible asset in the real world. Right. and because of that, when people have life events happen, like it doesn't matter if it's a bad time to sell your property. If you inherited a house and you can't afford to leave it vacant on your own, on your own dime, like, you need to sell that property. So there's going to be some market opportunities, no matter what the market is.
mike_audio:Right. that's a great point that you bring up getting, you know, getting into the real estate game when you did, because you've, you know, you've lived that cycle. for a lot of our listeners, I mean, I lived through it just as a homeowner and somebody who had a job that was. That I lost during that, you know, I didn't get into real estate until 2016. And, you know, Jacob's only gotten into real estate here in the last two years. So, it's important for our, our listeners to hear that, it's not all doom and gloom, like they read about on CNN.
jim_audio:Yeah, that's right. And I mean, what's going on with the market right now is, interest rates have gone up, but when interest rates go up, That doesn't necessarily mean home prices are going to follow and go down suddenly. so in price interest rates going up is there's more of a correlation with the amount of units that gets sold in a given year go down, that's directly related. And what I mean by that is if a market's used to selling 10, 000 houses in a year. And we're down 30%. you might see a headline saying real estate's down 30 percent and the knee jerk is, Oh my gosh, is my home value down 30%? But that's not really what that's talking about. What it's talking about is there's 10, 000 houses that were sold last year. And then now there's only 7, 000 houses that were sold this year. So. that's really what's happening because as for every buyer that exits, exits the market, there's a homeowner that's saying, Hey, you know, we're not going to do it. We're not going to move yet. We're going to wait and sell the property later because we don't have to move.
mike_audio:yeah, that's a, that's a, that's another great point. we talked about that in a, in a previous episode, the lock in effect that we're seeing right now on the market. we, we went over some statistics from my local market about where it's at over the last five years and the inventory has fallen off a cliff. And, you know, we're seeing that everywhere, you know, my market this year is actually up prices are up like eight to 10 percent depending on, on the area, whereas in the San Francisco Bay area, it's one of the areas that actually did go down, this year, like where Jacob's at.
jim_audio:Yeah. So, so when you have a, buy and hold strategy in particular right now is a wonderful opportunity to buy a hold on to as much as we possibly can get our hands on. So that's like why we even have the fund structure as our team was doing more deals than what we could afford on our own to keep. there's a lot of fun structures out there right now that are just trying to just buy and gobble up and hold on to as much as we possibly can. And then what does that do for the overall market? Well. It makes inventory even harder to come by and makes it even shorter to come by. So it becomes this, this interesting environment, that for me as a long term investor, now I used to flip houses more, that I really like. I, I, we're viewing this as a, just a, a wonderful opportunity to, to buy and hold onto as much as we possibly can.
jacob_audio:yeah, for sure. so I did want to talk a little bit about your podcast, So you have the passive wealth show, which I understand you're doing a little bit of rebranding, talk to us a little bit about that what you're trying to accomplish and some of the subject matter and the topics,
jim_audio:Yeah. So I'm gearing it towards people that, they have treasure. They've like figured out how to generate income. and they like real estate. They want to invest in real estate, but they're not quite sure. What to do, how to proceed what I'm trying to accomplish with it is to share stories and share, share education on how do you invest into different syndication or different real estate funds? What are some really good strategies? We talk about private lending. we're going, we go into some lease purchase structures, different strategies that you can do, and how do you identify what the different risk profiles are between these opportunities? And the overarching message that I'd like people to hear is that you can, is that you can invest into real estate and have it be a truly passive income and that you don't have to be a professional landlord. You don't have to, develop the skills to find a deal to negotiate anything like that. if you develop the skills of a passive investor. And so we talk a lot about that.
jacob_audio:What are some of those skills? If we can kind of go a little bit deeper in the skills of being a passive investor and also maybe some tips, right? I think there are a lot of syndications out there. I think if you're looking at the news right now, there are some syndications that aren't doing so well. and so how does one say I'm a tech worker in the San Francisco Bay area. Maybe I don't have time to kind of buy and manage a property myself, but I do want to jump into the world syndication. What should I be looking for? in terms of how I should be evaluating these opportunities that are available to me.
jim_audio:Absolutely. Great question. I have a free course that's almost ready, that will be coming on our website, passivewellshow. com that, goes into this in more detail. but one of the first steps is that I think you need to identify. And get clear on, what your goals are and what you're looking to accomplish. and then once you know that you can start to look at, what's the risk profile of an investment. Am I going to go for a home run that can get me a crazy high return and I'm okay with losing everything? Or am I more of a conservative investor that, is looking for some quality returns and, and returns that can outpace what the, the normal stock market's doing? but I want, I wanna, I wanna make sure I get my money back. So when you get clear around that, then what you can do is start to, identify, opportunities and, and, and there's ways to find these deals and there's ways to, look through who's operating the fund, how much experience. Do they have, and then how much does the investment opportunity make sense? So, I had an opportunity to invest into an oil fracking company. and the returns on paper were just phenomenal. And I got really lucky because one of my rules is that I want to be very clear and feel like I have an understanding of the investment and I never quite got there on that investment. And that investment ended up, not working out. It ended up being a huge flop, where a lot of people lost a lot of money. so I think that's an important thing to just be aware of is make sure that you, uh, it's something that you, you can wrap your head around and, and understand as an investment.
jacob_audio:tell us a little bit more about your kind of local market. So are you in St. Louis? Is that, is that correct?
jim_audio:That's right. Yeah. We're in St. Louis, Missouri. and it's a Midwestern city. And one of the advantages with Midwestern cities is the ups aren't as up and the downs aren't as down. So it's, it's a very predictable, market that, we see, we see a lot of investors on, on a worldwide level, come in and, and want to invest into our, into our area actually, and it's a big part of it is that predictability.
jacob_audio:What are, some of the things to know, you know, Mike, obviously expert in Cleveland and I've been investing in Cleveland a little bit now, and there's like certain things that, you know, you predominantly want to stay on the West side if you're not on the suburbs and things like that. So what are the kind of, What are the, the local market, knowledge points for someone thinking about investing in, in St. Louis.
jim_audio:Yeah. I mean, the, the price points of the areas. if you just start to study the different price points that will give you an indication of, you know, is this an A, B or C neighborhood? is it a war zone versus, versus a much more solid area? the area itself overall is, is a very stable, The majority over 90 percent of the areas over 95 percent of the areas, I wouldn't call like a war zone type of area, that would be, difficult to invest in to, to succeed. I don't think it's necessarily any different than, other Midwestern cities. it's pretty predictable and straightforward.
jacob_audio:I was listening to a couple of your podcast episodes and there was one that I particularly liked. You had a very nice framework with how you kind of broke down, how to think about making an early investment. So let's say I'm somebody earlier on in. You know, my kind of journey, I'm in my early twenties and I have 10, 000, 20, 000. And I'm just thinking about what do I invest into? you said if you're early on in your career, the best investment you can initially make, especially earlier on is the investment in yourself. And I like that because I feel like it's, it's so true, right? Maybe you do take that 10, 000 and some of it, you are like buying courses or coaching or different things like that to gain that awareness, to understand like, okay, what do I want to do Where do I want to go? the ROI you're going to get on the investment in yourself is always going to outpace any investment whatsoever.
jim_audio:the education and the courses are invaluable because you can learn from other people's mistakes and then not make them. There's nothing more tragic than doing, than doing something that should have been done in the first place. Like if you, you know, if you buy a house because you didn't know how to assess it properly, spend six months repairing it and fixing it up, and then you lose a little bit of money, that was a really expensive lesson, right? Now, here's the deal. If you get to a point where all you're doing is studying and you're not actually doing anything, all that information is just going in one ear and it's going to go out the other. And you're not going to come to really know real estate investing and have a knowledge of it until you actually get in there and start getting your, getting a little bit dirty. education without implementation is, is entertainment. let's go back to why I only did one deal in my first 18 months. My natural state of being is that I will think and analyze and study and study and study. Because I was afraid, I was afraid of what was going to happen. I was afraid of messing up. So at a certain point, that analysis paralysis, like I got a certain point, some courage is needed and you just have to take that leap of faith.
mike_audio:I think an important part of that you mentioned it earlier is identifying the who, you have to find those people that can help you along the way. like for my first flip, right? I didn't know what I was doing. I had no money and someone gave me the money and I split the profits and it worked out. But, you know, like you said, you have to eventually, you have to make that jump.
jim_audio:That's right. Yeah. And it's terrifying. I was terrified about it and. You know what, like, I mean, I've had some deals where we've done great on, I've had some deals that I've learned a lot from, and at the end of the day, you, you're either going to win or you're going to learn. That's, that's the way I look at it.
jacob_audio:that's a great segue, Jim, we'd love to talk about, I think, obviously learning from experiences, as you mentioned, you know, probably the most valuable, can you, give us like the highlights of one deal where you learned a ton, but maybe it wasn't such a great deal in hindsight.
jim_audio:The deals, okay, so early in my career I had the opportunity, the ball was moving So we were a couple years in so we had been making money and we had Crossed that threshold to be able to do more than one deal at a time So we were wholesaling some properties buying and selling the same day And then we were remodeling, some properties as well, but we didn't have enough capital at that point and resources, to do more than two at a time. so, we had a decision to make on a couple of properties. there was a property that, imagine, walking into a home, like with the very normal first floor layout, really nice, but then going down into the basement. And when you go down, there's a 20 feet foot ceiling of stone as if you're in like a speakeasy back in the day, And it just has this like amazing feel to it. Just like such a cool like basement. Okay. So that property was one of the properties that we had. And then the other property we had, was a property that was in a nice area that both locations were very similar. but the property was on a flat ish lot, but it was at like the bottom of like a cereal bowl. so the front yard and the backyard and when water hit the ground, both went to the house and the foundation and there was foundation issues and there was water issues in the basement. When we did our analysis of what the property's values were, or realtor speak CMAs, right? when we did those. We thought, okay, the house with the foundation issues, based on price per square foot, we're going to make another extra 30, 000 over the house with a nice basement and what we're buying that on. So let's wholesale the house, the cool house with the basement and let's, rehab the house with the foundation issues and price per square foot. We had it all lined up. Thought we were, thought we were making the right decision. We did a 10, 000 wholesale flip on the property with a nice basement. And, that flipper ended up making 90, 000 on that deal because it has something unique that was special. That was really awesome. Right. And then the house at the foundation issues, we ended up, breaking even on that deal. So. it's so like, if you look at deals and structures, like, there is some common sense involved in it. Okay, I have one basement that's really cool and I have another basement that, that has issues. And when you have those foundation issues, if you're just doing a price per square foot analysis, buyers will go into that property and even if the foundation is fully fixed a lot of buyers can get scared of that. And so, and then when they get scared of it, you're lowering your buyer pool, which means you're gonna have to lower the price until someone's willing to say, Oh, okay, this is a good deal. I get it logically the house is secure. It's not going to fall over. I'm okay with buying it. so that was a hard lesson that we learned.
mike_audio:I had a house that I bought last year on a, on, and it was on a busy road and I thought, ah, but I got a, I got a good enough deal and, I ended up selling it and making a little bit, but yeah, it did not go. As well as I had hoped
jim_audio:So, so you can, if you can find other houses, like on that busy road, like you can get it to where you're not like deducting on the valuation of it. but yeah, I mean, that's just something, yeah, that's definitely something to be careful at. If, as you guys are starting your journey on a very common mistake that investors are making every day, especially the ones that aren't as experienced.
Scarlett 2i2 USB-7:If you want to be a successful real estate investor, you have to know how to run the numbers. You can download my free rental property calculator and deal analysis guide by heading to cashflowsaga. com slash tools. Again, that's cashflowsaga. com slash tools. Now back to the show.
jim_audio:here's the deal. Like that's, if you're flipping houses, if you're, if your exit is, Hey, I'm going to hold onto this for 30 or 40 years, it's an opportunity to turn into a vacation rental or, our favorites is the lease purchase structure.
jacob_audio:Can you break Can you break that down for us, Jim, the lease purchase?
jim_audio:Yeah. so the lease purchase deals, are one of the ways we found that is like, like really high quality returns with like with limited risk with lower risk. So when we started out and I'll explain how they are here in a second. But when we started out. we were house flippers and at one point we ramped up to where we had over 120 houses at the same time that we were flipping and, we were rocking and rolling on that. but whenever you're doing it at that volume, we created an environment where, we were making good money on deals, but then we were turning around and just investing it into the next house and it became this hamster wheel. Like a success that we were trying to do more deals to make more money, but we just kind of started spending because our expenses were raising at the same level that our profits were raising. And now we were just doing all of this extra work. Right. And when you flip a house in a short window, like a six month window, you're very reliant on the market, not shifting or hopefully it's getting a little bit better and the homes are appreciating. So we did that for a number of years or a high volume for about 10 years on just the flip strategy And because of like the risks involved in that we started seeking out. Okay, like like how can we make similar money as a flip? with dramatically less risk and that's where the lease purchase structure came in So the lease purchase structure, the exits longer, you can, you can do these, lease purchase structures in a, for a longterm buy and hold. You can structure the deal for 30 years if you want to. okay, what is the lease purchase deal? Let me start that. So instead of putting just a regular tenant in a property, what you do is you find a person, that, can't necessarily get a traditional loan, for whatever reason. but they have the money and they can afford to buy a property. And then you go to them and you say, Hey. This is a 300, 000 home. Will you give us 30, 000, a 10 percent down payment for this property? And then as you go through this process with us and your lease purchasing this house, if the roof is leaking or if the plumbers plumbing's leaking any sort of repairs and maintenance, that's your responsibility because you are, you are in an ownership structure in this deal. Your lease purchasing this from us, we're acting as your bank, not your landlord. Okay. So we're automatically lowering our, risk profile because like now we can be very certain on the predictable returns that are coming up. Also, if someone gives you all that down payment money, they're a lot less likely to, to damage the property. They're a lot less likely to, not uphold their end of the bargain. Okay. So, not every one of our deals, we get 10%. Sometimes we get 3 percent on these lease purchases. That's our, 3 percent are, the minimum that we, that we take to put people in. but what we fell in love with is, is like, wow, we can have pretty solid flip ask income. And we can have very predictable long term returns, that we can, that we can predict out and then generate cash flow on and we, yeah, we've, we fell in love with the model. So we, we then shifted, what we do from all of these house flips. Into these, lease purchase structures. It's taken us several years to do it. but then that started going so well that we then opened up a real estate fund to, to allow, people to kind of invest with us and our team. And, and so we can kind of continue to scale it and, and, rock and roll with it.
jacob_audio:Okay. Interesting. Yeah, no, that's fascinating. How difficult is it to find these people that are interested in these kinds of lease purchase structures versus a normal kind of tenant is it was that difficult to do at first?
jim_audio:it was a lift. so the interesting thing is, is that like on our properties we get, on average over 70 inquiries like through the marketing that we have, but it took us, took us a solid 18 months of that being our one, like our biggest main priority as a company. To figure out the marketing systems and the, like the people are out there. but it's, it was a lift to be able to, to, to set everything up to, to, to then be able to do that. but they are out there. There's, there's a lot of people, that this is a, this is a huge win for. we had a deal where... We are at the end of the third year, our client was, or I'm sorry, our client is a doctor and the doctor came to us saying, Hey, I entered into this because I was in the middle of a divorce and my wife couldn't get my ex wife to sign a marital waiver. now I'm at the end of this term. I'm ready to cash you guys out of the deal because that's in the past. Okay. So, so, but when we entered into that deal, we had a very low interest rate cause this was before interest rates started spiking up. So we said, okay, well you can cash us out of the deal if you want. Or like what interest rate are you going to, going to get for this cash out? Oh, I'm going to get a 7. 3%. Okay, do you have any extra down payment money? Would you want to buy down our rate with us? How about we give you a seven percent interest rate and you give us 75k? for um You know to kind of buy down this rate You're going to save hundreds of thousands of dollars with a lower rate over the next 30 years. And then we're going to we're going to make more money and everybody. It's just a huge win win. he looked at and said, Absolutely. You guys are going. Why would I go if you guys get me a lower rate? Why wouldn't I just have you guys be our bank? So we structure that one with us. This was a grand slam deal. Not every deal is a grand like this. Right. So full disclaimer there. but on this one, yeah, I mean, we're cash flowing at over 2000 bucks a month, by, by keeping him in the deal. And we got all that down payment money, as well. So, so that's, that one's an absolutely grand slam and the best. The best thing about it is, is, is he's winning at a high level, too. So we did a really good service for him, too.
mike_audio:with rates where they're at, you could actually flip the script a little bit and be lower than what they could get, you know, just, just to keep that coming in. Right. So that's where it's, that's, it's very fascinating.
jim_audio:Yeah, absolutely. Yeah. So it's, yeah, I mean, to pull off what we did, I mean, it was a lift is maybe a eight and a half out of 10 to like get it all set up. But now that it's set up, the predictability and the lower risk of what we're doing, has been a huge blessing for us. And, for the people with us, it's, there's nothing like passive income guys. There's nothing like that recurring revenue. That's a beautiful thing.
jacob_audio:Jim, you kind of touched on this, but, so you started out your career, flipping wholesaling, kind of pumping money back into the business. how did you transition then to buying 140 houses and kind of structuring syndications? Obviously this is a 15 year career and it didn't happen overnight, but kind of maybe paint that picture for the audience of like, what that type of progression was It looks like to be kind of in the position where you're at today.
jim_audio:Absolutely. So here's the thing. we didn't do 120 houses, at the same time, like overnight. This was like, we were like seven years into the business, something like that. Okay. So like there, there was a whole body of work leading up to it. so we got to the point where we could do, three houses at a time. And what we did is we would go to private individuals, And we would say, Hey, do you want to, do you want to give us a loan, uh, lend it on real estate and we'll pay you, I think at the time we were doing an 8 percent return for our private lenders. We'll pay you 8%. And, will you give us a hundred percent of the purchase price and then we're going to pay to fix it up. And, and, uh, so you're going to have a very good loan to value ratio on this because, you know, we're going to have skin in the game too. And took a lot of, we had a couple of people that, that gave us a shot because, like, I'm from a middle class family. I've been given a lot. I've been given more than most people have. But I started, you know, I started out after college, at zero, which is an incredible gift that my family was able to give me. They, they deserve a tremendous amount of credit for that because that's so much better than, than many of us, right? but, like, I didn't have, like, The money and I didn't have a corporate job to be able to get a normal loan. so we had to get really resourceful. So because I didn't have the money, I had to find someone that had the money that was willing to give us a shot. And we had a couple of people give us a shot. We were able to build and take profits and then put them into future deals. that structure though limited us because we could only do as many deals as money we had, to foot to fund the repairs. So then a light bulb went off like, well, these people, like we've been working with them for a few years now. I wonder if they would trust if they would trust us to just give us 100 percent of the purchase and 100 percent of the repairs. Because if they do that, The amount of deals we can do is only limited to the amount of money we can raise. It's not limited by the amount of money that we have. Okay. So when we, then when we flipped to that, then that started, you know, then there was another, several, you know, so that was maybe our third year or our fourth year when we shifted to that model. And then there was another, there was a ramp up, there was a several year ramp up that led to, to, to doing all of the, all of those deals.
jacob_audio:And, and tell us now about your, your, your syndication business now. and what are, what are kind of some of the goals of your syndication right now? And like, who are the people that you're working with and what are the deals that, you know, you're considering for your syndication and things like that?
jim_audio:Yeah. So, um, so on these type of structures, depending on how it's set up, there is, there's a term called like accredited investors. And what that means is that you're making 200, 000 a year by yourself and income or 300, 000 as like a family. or you have, maybe it's not, you maybe don't have income, but maybe you have a net worth or it's a million dollar net worth outside of your personal residence. so the, a lot of our people are, you know, maybe like a doctor or an attorney or a small business owner, that really needs another income stream and see some of the volatility in the market, the stock market and says, okay, well, maybe I should diversify and get some passive income to one day replace my So. so that's a lot of the typical people that, will kind of have, have came to us and, and, and learn more about our strategies and what we have going on.
jacob_audio:Yeah. Yeah. I'm going to pitch you a question here, Jim. you obviously very passionate about helping people, kind of achieve that passive income, but it's not something in my experience that is very top of mind for people, especially people kind of. In my field, working in the tech industry, you know, very concerned about stock options and the stock market and continuing to increase their income over time, but really not paying any mind to the end game, right? The retirement, just thinking that the high income is always going to be there. So what is your talk track kind of like as you meet all these types of individuals kind of throughout your life that maybe aren't thinking about passive income in the way that. We are a real estate investors kind of typically think about it. Like, what do you say, what are you saying to, those
jim_audio:yeah. So, so it's interesting is, is I used to care about, did I get a 10 percent return or a 20 percent return or, and what's my net worth and, you know, like, what is it? And, uh, the reality is that there isn't. A nest egg or a net worth that's big enough. And what I mean by that is like, think about it in the business world. Blockbuster got up to over a 5 billion valuation and then the market shifted on them. They went into a negative cashflow position because of Netflix and the market shift. And then a few years later, they don't even exist anymore. Okay. What happens to every single one of us when we are working? We have income. And then we all individually go through a market shift and that is into retirement. So passive income is actually cash in your bank account. That's not a promise. If you had a million dollars with Blockbuster, that's a promise that that's worth something. Market shifts. Now it's not worth anything. If I have passive income coming in, especially if it's backed by real estate and asset that people have to live in, Now I have, I have money coming in and then I can get to financial freedom and I can have that retirement that at the end of the day, we'll have something that's left over for the next generation as well. I'm a cash flow guy. I think it's more powerful like having passive income and cash flow is, Is really everything. It's everything in business. A business doesn't matter how big the balance sheet is. If you're in a negative enough cash flow, it's going to go under and our personal finances are exactly the same way.
jacob_audio:yeah, yeah, absolutely. in, in your podcast, you said it, like you said, a cashflow problem, plain and simple, right? Retirement is a cashflow problem. So how do we solve That That problem?
jim_audio:that's right. And what's happened for me is, I've had real estate as my foundation. And then it's set up and then that foundation allows me if I want to take a risk, like I put some money into a pharmaceutical company that might be a thousand X return and I might lose everything from it. And I don't care if I lose everything because I already have my foundation in place. My house has that set up so I can take those risks. So like if we're only looking at the returns that we're getting, I think we're ignoring that, that, that. That there's different purposes for different parts of your net worth. Just the same way our bodies, our eyes do one thing, our hands do one thing. when you're talking about your financial welfare, a foundation of a house that I believe real estate's the best for a foundation, not like bonds or anything like that. And then you can, you can stack on it and then you can start to do other things. But, but the, but you're only going to be as strong as your foundation.
mike_audio:very powerful the way you put that. you know, the, the whole promise thing with the correlation of Blockbuster. I was like, it just, it really hits it. It really hits home. It really hits home. So I think it's very powerful for people out there listening.
jacob_audio:Yeah. Yeah, definitely. and I want to kind of reemphasize the point that you were making earlier, which is it's so important to just, and I think this is why the concept of financial freedom is so important in general is the fact that achieving even just a base level of financial freedom of just like, Hey, I have enough passive income coming in to cover my essential expenses. Like even that base, Level of freedom opens up so many opportunities for you. Maybe you don't need to be that tech worker that has to make 200, 000 a year because you have your base level expenses kind of covered. You can make a choose a completely different career because you don't need that high income anymore. because you have, like you said, Jim, that foundation. And so I think one thing I want to stress, and like, we're all very passionate about that, but I think that's one thing people don't think about is that it's not necessarily just making money for money's sake, but it's really the freedom component that it affords you and, and a whole different life path that it opens up for you. If you're able to. Achieve it.
jim_audio:So, so I talked to an individual that works for a tech company. You've heard of one of the big boys and she, is high, high level in it. She's making, she's making a million dollars a year and she has millions of dollars of stocks within this company and she confided in me. She said, Hey, I really want to be a life coach. I'm kind of miserable at what I'm doing. And she heard that worse in the millions. But she, she's created these, these golden handcuffs for her that she's not able to get out of because she's only been investing into these, into the stock market, into the promise of the valuation of those and doesn't have real estate coming in for the passive income that could actually free her until to living the exact life that she wants.
jacob_audio:And, I, I think that's like a problem. A lot of people face. Right. They, they rely on their 401k. They rely maybe on their stock portfolios. Maybe they've been investing in the S and P 500 for some time. But unless you have an inordinate amount of money in the 401k or the S and P 500, or you're a sophisticated dividend investor, that cashflow is not going to be enough to live off of.
jim_audio:the, the nest egg doesn't solve the cashflow problem. Now here's the cool part though, is a lot of people don't know this. You can take retirement account money and invest in a real estate or passive income. We work with a lot of people to do that. So, so, and then that's the other thing is, is like the financial industry, they're programming us, okay, well, you have to, to take this retirement account money and put it into the stock market or put, you know, put it into these mutual funds and, and, and all of that, and a real estate's a class you can invest in with that account. A lot of people don't know that.
jacob_audio:Yeah. Yeah, definitely. it's, it's one, it's one problem. I'm, I'm sure I'm going to be solving pretty soon with my parents and their retirement. Cause they weren't big real estate investors, but you know, they, they did the traditional retirement thing, but I'm like, we gotta, we gotta solve the cashflow problem. Now we gotta solve the cashflow problem now. So it's one that's very, very top of mind for me. I have one question, one more question for, for you, Jim. What, what advice would you give to just the beginning investor at the very beginning of their financial freedom journey? what advice and what wisdom would you kind of impart onto them, Jim?
jim_audio:Set a goal, get clear on why you're doing it, and then just pursue it recklessly. I hit my head a couple of years into the business and I had a, like a major health thing and, we were having, we're having ups, we were making money and then we were, we were very inconsistent and, my now wife really supported me in that moment and I got so crystal clear. I was like, you know what? I don't have the money to buy like a ring to buy her the ring that she needs. I'm going to marry this woman. I'm going to, I'm going to, I'm just, I'm going to hustle. I will, I'm going to find a way to make this happen. And that was the first deal that we leapfrogged from doing like 10 deals a year, and we went up to like 50 that year, but I got so crystal clear on like why I was doing it. And I didn't care if I had to put my head first through a wall, if I had to go around it, under, dig a hole and go under the obstacle, like I was going to find a way. And when you hit your head and have two seizures like I did, I wasn't even allowed to drive and I was able to figure this out. So, so if you get like that crystal clear, all the BS excuses go away. And then it's just about getting it done. And if you're not getting it done, how do you get better to get it done? It really becomes that simple.
mike_audio:Jim, I just want to say thank you again for, you know, taking some time out of your busy day to, to, come on our show. So once again, thank you very much for, for your time and your enthusiasm today and all the information that you shared with, you know, with us and with our listeners, I'm over here making notes for myself. I mean, it's, it was very. Very, very impactful today.
jacob_audio:yeah. Jim, for, for, for all the listeners out there, if they want to kind of get connected with you, if they want to learn about the ways in which you can help them kind of build passive income, how can they reach out to you?
jim_audio:absolutely. So, uh, passivewealthshow. com is our website. And, we have a couple free courses that we're working on. One's on passive income. And I went through the last 3, 500 deals that we've done. And I came up with my three favorite ways to generate 100% Passive income. and like what the, what my favorite ways are. We have a course on being a passive investor. Like, like how do you figure it out? How do you find clarity around if that's what you should be doing or, or being an active investor. and then finally there is a link on there to, set up a time to, to meet and, either myself or, or a team member will just hop on the call and. And have a conversation with you. And, you know, it's funny as some people prefer to kind of like learn and, and research first. So we have the courses. Other people say, Hey, I just can I talk to you for 20 minutes? And, and, I've had a lot of people help me over the years. Guys, that's a big part of it. I've had a lot of luck. I've had a lot of, amazing things happen. you know, even on the spiritual front, a lot of, a lot of support on that front too. if I can help anybody in any way, I'm, I'm happy to do that. So, yeah, so don't hesitate to, to connect with me and, and, and love to, love to help
jacob_audio:Thank you. Thank you so much, Jim. Again, that is passive wealth show. com. Go and check that out. Set up a time to check out the free courses, set up a time to talk to Jim and his team. and yeah, just learn a little bit more about passive income, Mike, where can they, where can people reach out to, to connect with you as
mike_audio:So on the socials, you can find me at Realtor Michael Magno on Instagram, or email, Michael at the Magno group. com. those are the two best ways to get ahold of me.
jacob_audio:Awesome. And I am at cashflow saga. So on all socials that is at cashflow saga and my real estate investing blog is cashflow saga. com. So that is the episode, ladies and gentlemen, I'm signing off. We'll see you next episode.
mike_audio:See ya.