The Outrageously SIMPLE Way To Get Rich: Create Leveraged Income

I freaking hate the words passive income I hate it because when most people hear those words they get this mental image of money just flowing into their bank account while they sit on some beach and Bali sipping on my ties six months of youtubing and all he does is lie now there is no such thing as truly passive income all income no matter how passive it does require some level of effort on your part some forms of income just require less than others now I promise you this is going to be unlike any other passive

income video you've ever seen in it we're gonna learn a new way to think about making money we'll learn about the four most important types of Leverage we can use to make a ton of money and yes I will actually share with you four passive income ideas to help me make 125 000 last month that you can start implementing right now [Music] foreign [Music] somewhere on the spectrum between passive and active the real question isn't whether or not your income is passive but to what degree is your income passive or put another way how passive

is your income and the thing determining how passive or active an income source is is a little thing called Leverage so let's erase this idea of passive or active income from our minds and instead we're going to replace it with a new term that's going to fundamentally change how we approach the money making game I'm calling it leveraged income now the goal of Leverage is I Define it here is to increase our output per unit of input so that means we put the same amount in and that could be time energy resources but we get

more out or in this case more money and when it comes to making money there are four types of Leverage that we have to understand they are labor Capital technology and media so let's take it from the top the first form of money making Leverage is labor of the four types of Leverage this is by far the least efficient and unfortunately it's also the one that most of us have been taught to pursue our entire lives which is why most people are just not winning the money game now within labor leverage there's actually two levels

the first is your labor and the second is other people's labor your labor in particular is the absolute lowest leverage way to make money and what people refer to as exchanging your time for money the reason this is so inefficient is because you're trading your time in a one-to-one manner for instance when I was working in the bike shop at REI I was paid an hourly rate for every one hour I worked I received the same amount of money if I wasn't clocked in and doing work I wasn't making money now on the spectrum of

active versus passive this is just about as active as it gets and you priority know this but you're not going to win the money game playing this sway because you only have so many hours in the day to trade and there's probably a cap on how much somebody is going to be willing to pay you for one hour of your time unfortunately this is the way that most of us were taught to make money since we were little kids which is why most people believe that the goal is just to go out and get a

nice high-paying job but the problem is the money stops coming in the moment you stop working so heaven forbid you get hit by a bus or a loved one Falls ill and you have to stay home and take care of them or maybe you just decide you want to spend more time with the family and go on vacation travel the world if your only income is a result of exchanging your labor for money then you will probably never be able to stop working for money now the second level of labor Leverage is far more effective

when it comes to making money it's other people's labor see you can only produce and sell so many widgets in a day which puts a cap on how much you can make but if you can get somebody else to come work with you then you're able to produce and sell two or three or four times as many widgets huzzah now here's another example from my own life the first business I was involved in was a window washing company in the beginning it was just me and a buddy going around knocking on doors and washing windows

on a really good day we could maybe get through three houses worth of Windows we charge about 15 bucks a window and the average house had around 20 windows so all told that's three hundred dollars of Revenue per house and around 900 a day and that's about the best we could do just trading our time for money to break through to that next level we had to start hiring so you fast forward a year and we had a crew of 15 split into three squads watching around six houses a day and bringing in just over

a million dollars in Revenue per year that's a number that would have been simply impossible to hit without all those extra hands now here's something interesting about Labor leverage despite hate being the most inefficient form of money making leverage it happens to be the one that carries the most status in the general Public's eye for instance if you're at a party and somebody asks you about your company what do you think is going to impress them more if you say I have a thousand employees or I have 10. despite the fact that the team of

10 if utilizing the right forms of Leverage which we're going to talk about here in just a second they could be vastly more profitable than the other organization that's maybe just relying on pure labor it personally took me a long time to figure this out because you get a bit of an ego stroke as you're hiring people and you think yeah this is obviously the way you grow a big company but the truth is labor leverage comes with massive inefficiencies the biggest and most obvious one is communication see metcash law states that the value of

a network is proportional to the square of the number of connected users of the system for instance if we've only got two telephones there's only one connection to be made if however we have five telephones then we can make 10 connections and if we have 12 telephones then the number jumps up to 66 total connections you can see just how quickly the complexity of communication expands with each new individual added to the team now metcalf's law is typically used when talking about the value of a digital Network like a social media platform for instance where

the platform itself becomes more valuable with the addition of each new user but if we apply this law to our business then we can quickly see just how complicated everything gets as we add new people to the team and this complexity often means that as the business owner you spend less and less time thinking about the product and the customer experience and more time just sitting in meetings trying to herd cats and get everybody on the same page or at minimum just getting everybody to read the same damn book if that sounds like your worst

nightmare as it does mine then you'll want to consider other ways of making money by utilizing one of the other three forms of Leverage the second of which is capital leverage and this is the way that the majority of wealth was created in the previous Century by Finance fanciers like JP Morgan or investors like Warren Buffett in this form of Leverage our goal is to make our money work harder for us than we work for it we've got a fancy word for Capital leverage that pretty much everybody's familiar with it's called investing and this is

the form of Leverage Warren Buffett had in mind when he said if you can't find a way to make money in your sleep then you will work until you die now with capital leverage there are actually two levels just like with labor leverage there's your money and then there's other people's money the greatest fortunes of the 20th century were made utilizing other people's money and you can do this too but we're going to circle back to that in just a second first let's talk about creating Capital leveraged income with your own money now chances are

good you're probably already doing this if you've got a 401k a Roth IRA or you're invest in the stock market maybe at some bonds or some crypto or maybe you've Angel invested into like a tech startup then you have your money out there working for you awesome but there's a problem with this form of Leverage though namely unless you're investing in highly speculative opportunities like Angel Investing into that Tech startup the chances of generating massively outsized returns are fairly low given how much risk is involved so most people simply take their actively earned labor income

from a W-2 and they put it into relatively stable opportunities like a Index Fund in the stock market generating maybe 10 percent a year now 10 is great but you probably only have so much of your own money that you can put to work right which means if you want to live solely off the fruits of your Capital leveraged income you're going to have to have access to really large sums of money let's break it down with some numbers if you're making a hundred thousand dollars a year right now and you want to generate that

much in capital leveraged income so you can achieve the ultimate goal that everybody has called Financial Freedom then you're going to need a minimum of a million dollars generating a 10 annual return so you can generate enough passive income to leave your job without having to decrease your quality of life and by the way that one million dollar market a 10 rate of return is highly optimistic in reality you probably need closer to two million dollars to maintain the same standard of life but I'm using this example to paint a picture of just how hard

it can be to get to Financial Freedom relying on just your own capital and the reason for that again is you probably only have so much money of your own to work with but that doesn't mean we should just entirely give up on Capital leverage because again this is how so many great fortunes were created in the previous century and you can too they did this by leveraging OPM or in other words other people's money now the great thing about other people's money is that there's a lot of it out there and most people lack

the time energy and knowledge necessary to allocate the capital themselves and so they take their money and they give it to investment professionals or fund managers General Partners or founders of businesses for them to allocate here's two examples of using other people's money that my private Equity Real Estate firm utilizes right now first we use the banks money by taking out a mortgage for 75 percent of the purchase price of an apartment building so just to use Simple numbers let's say we want to buy a million dollar apartment building instead of using a million dollars

of our own money we go to the bank for financing and they give us a loan for 75 percent of the purchase price or in this example seven hundred and fifty thousand dollars they do this because they earn an interest rate on that mortgage of let's say five percent now here's a really interesting thing the money that the bank is giving us as a loan it's not actually theirs it's their depositors see the bank might give people like you and me a three percent interest rate for keeping our money in their savings account so that

they can turn around and lend that same money to businesses like mine where the bank can earn five percent they pay you and me the deposit are three percent for our savings account and they keep two percent all for themselves and they never had to put a dollar of their own money on the line see what I mean about the power of using other people's money okay so back to the original example with our apartment building for a million dollars so we got a loan for 750 000 which means we can now buy this building

by only putting up two hundred and fifty thousand dollars of our own money and this is a really powerful form of Leverage for Building Wealth because we're acquiring valuable cash generating assets despite perhaps not having a full million dollars to buy the building outright ourselves okay so that's the first type of capital leverage that my company utilizes in acquiring real estate but there's a second form which we use to fund the down payment or that 250 000 that the bank expects us to come to the closing table with this we do by raising capital from

private investors or other private Equity groups in exchange for them giving us Capital these investors expect some pretty juicy returns often north of 15 and 20 percent which are returns that would be very difficult to achieve on the open market and this in a nutshell is how we've acquired nearly a hundred million dollars of real estate over the past three years now this was a grand simplification of a complex topic if you're interested in learning more I encourage you to check out our real estate Focus Channel at multifamily investing made simple but I wanted to

share this because Capital Leverage is one of the most powerful ways of producing incredible income the downside is you have to have some highly specialized skills that would incentivize investors in capital allocators to give you their money but if you can develop those skills the sky's the limit for your leveraged earning potential but truthfully given the direction the world has been moving in the recent years I'm actually way more excited about the last two forms of leveraged income I'm going to share with you because the barrier to entry here is so low but the potential

upside is nearly infinite the first one is technology leverage or more specifically digital technology leverage the most obvious opportunity here is in the world of coding and programming just think about Google Facebook Microsoft or apple all of these companies were built on the back of Code and Technology the amount of Leverage that you can generate from a piece of software that's nothing more than a few lines of code is truly mind-boggling just think a 16 year old who speaks code has a laptop and access to the internet could create an app from their parents basement

that changes the face of the world how crazy is that if Capital leverage was the dominant form of wealth creation in the 20th century then so far in the 21st century the big winner has undoubtedly been technology and here's the craziest part of all you don't even really need to speak the language of machines to benefit from this form of Leverage last year I created a digital product in one afternoon and then I was able to take that one product and sell it to hundreds of people each of them were able to get the same

exact product and experience instantaneously with no additional work for me so in one day I sold twenty thousand dollars worth of that product at a 98 margin that is a crazy amount of Leverage that's literally available to everybody with a computer and internet access just think about how ridiculous that is for a second like the amount of opportunity available to you and me right now at this moment in time is something that our parents and their parents just never could have imagined in their wildest dreams but despite how exciting technology is as a way of

generating ridiculous amounts of leveraged income it's not even the one I'm most excited about see I saved my personal favorite for last which is the one we're using right now at this very moment it's media leverage so let's rewind the clock 100 years if in 1923 you had a message you wanted to get out to the world or we wanted to share your story the only options available to you were really the newspaper books or the radio if you couldn't get one of the Dozen newspapers publishing houses or radio stations that controlled the majority of

distribution at that time to run your story then your ability to create an audience at new liked and trust you would depend on you actually going from town to town to town to deliver your message you fast forward 50 years and now we had television but still the same problem persisted all major media distribution fell into the hands of a few Gatekeepers like ABC NBC CBS well that's all changed now thanks to the internet and things like smartphones YouTube podcasts and social media at large it has never been easier for people just like you and

me to reach a million people with our message no matter how weird or esoteric or Niche that message is and if you can find people who resonate with your message and then build an audience or Community around that message then Translating that attention or those eyeballs into meaningful amounts of leveraged income is incredibly easy through things like affiliate marketing or paid advertising just selling your own products and services now the reason I love media leverage the most is because you can utilize it by just being you and sharing your personal story your battles one and

your Lessons Learned and the real beauty of just being you is that you are irreplaceable with every other form of Leverage we've discussed you can be replaced or disrupted by competitors but not when you use media leverage to amplify your voice just think of Joe Rogan as a perfect example of a person who has built a media Empire Worth close to a billion dollars just by being himself and distributing his message via technologies that are almost free to use and available to literally all of us and the great thing for Joe is there's only one

of them he can't be replaced now creating a personal brand is just one way of utilizing media leverage but there are countless others that don't necessarily require you to be front and center for instance one of the previous companies I had a hand in building was Escape climbing which we grew by putting how awesome educational and entertaining content on Instagram and YouTube which attracted people to our company though not necessarily to us as individuals and that company is actually a really good example of a business effectively utilizing all four forms of leveraged income as we

had 15 employees labor leverage significant amounts of our own Capital funding the business Capital leverage we moved a ton of product on Amazon technology leverage and we did it by spreading our message on social media media leverage pretty cool huh so now that you understand the four types of Leverage we can use to make money I'm going to give you four leveraged income ideas that you could start implementing right now to create passive income first up is exactly how I started my wealth building Journey a Services business for me it was window washing which was

actually a really great way to get started because I had to learn so many valuable skills that have served me really well through my entrepreneurial journey in particular you'll learn sale sales marketing product design Customer Service hiring training and fulfillment truly if you can Master those skills you're gonna be unstoppable the other reason I really love window washing is because it requires very little upfront investment a couple hundred dollars on cleaning supplies and a ladder and you're pretty much good to go another really good option though is to consider a landscaping business seriously just look

around you at how much grass and yard everybody has then ask yourself who really wants to deal with mowing in the hot heat raking leaves in the fall or shoveling in the winter see a couple of years ago actually one of my students who was in college at the time he started a landscaping business with a couple buddies in their spare time by the end of that summer they were doing twenty thousand dollars a month in top line revenue when they graduated they just turned around and sold the company for a nice little profit and

then they just moved on to other endeavors but seriously this is a fantastic way to make some leveraged income but it's not the end game for me I took the profits from my early businesses and combined it with capital leverage to go out and buy real estate which is the second leveraged income idea I have for you in particular regular house hacking now this is where you buy a small multi-family property something like a duplex or a Triplex and you're going to live in one unit while renting out the others and this is going to

have the effect of lowering your cost of living your renters are going to pay off your mortgage and potentially put some cash flow into your pocket each month now this might not be super viable depending on where you live in the world but here in the US we have something called The FHA loan which is for first-time home buyers and there's two really great things about this product first you don't have to have fantastic credit when I bought my first property my credit was in the low 600s so definitely not great but it didn't hold

me back second with the FHA loan you only need three and a half percent for the down payment so here's how that looked on my first property I bought a Triplex for 246 500 but I only had to bring around 7 500 to the closing table now it's important to note that I also had ten thousand dollars set aside in reserve just in case something happened with the property but the important thing to know is that I was into this property all told for twenty thousand dollars and the really crazy thing about this property is

that nine months later it had appreciated for 125 000 more than what I paid for it so I utilized what's known as a HELOC or a home equity line of credit to extract that Equity from the first building and I used it to go buy a second this right here is known as increasing your velocity of capital and it can truly be a game changing strategy that's more accessible than you might even realize okay next up in our leveraged income ideas is a really interesting one because theoretically the only thing you need to be good

at is sales and digital marketing it's called affiliate marketing and here's just one way you can make it work for you now the gist of affiliate marketing is that you find a product that you really like and then you go to the seller you work at a commission that you earn every single time you send them a customer it's great for the company with the product because they're getting customers and it's great for you because you don't have to worry about product design customer service or fulfillment all you've got to worry about is mastering how

to drive traffic that converts into sales here's one Avenue you could pursue and I have friends who have done incredibly well with just this one truthfully if I was starting all over from scratch with nothing but my current skill set and a thousand dollars this is probably where I would start with that said you're going to need to be skilled in a few areas to make this one work but those skills are very worth acquiring regardless of what you plan on doing in life okay so here's what you do step by step first go to

somebody who has an online course or a digital product that you really love and that you know can bring people value you go to that Creator and you work out an affiliate deal where maybe you get 20 of every customer you send their way that ends up buying the course if the course sells for a hundred dollars then you make 20. the next part in the equation is to build a landing page this is the place you're going to drive your traffic and if it's designed properly it's going to convert leads into Happy paying customers

for an example what this might look like I'm going to drop a link for the landing page to my hyper Focus master class in the description below so just go through that to get some ideas and figure out what you need to have okay so once you have your landing page you now need to drive traffic and the quickest way to do this in my experience is through Facebook and Instagram paid advertising so you're going to go over to Facebook you're going to create some ads and then you're going to drive traffic to your landing

page when you get your ads and landing pages dialed in you could easily afford to pay ten dollars per customer in advertising costs knowing that you're going to make twice that on the back end then it's just a matter of scaling your ad budget now with all that said the variable here that's going to determine your success and failure is how good you are at designing a landing page your copywriting skills and your understanding of paid advertising luckily the internet is full of free resources on all of these topics so just get out there and

start learning and last but not least on our list of leveraged income ideas is to create a media Empire okay so maybe that's a bit traumatic but I truly believe everybody has a unique story to share and if you can just tap into that story and figure out how to share it with the world in an authentic way that delivers value to the audience then you can create tremendous amount of passive income these three areas of my own media Empire have served me really well YouTube podcasts and books now of all the forms of leveraged

income this is the one that will take by far the most time and energy on the front end to get the flywheel going but if you stick with it and you stay consistent over a long enough period of time it can also potentially be the biggest and I really don't want to gloss over how hard this one can be to get meaningful traction for myself I'd been creating videos writing books and articles recording podcasts I've been doing it all for years before anybody really started paying attention in the beginning it's definitely going to feel like

a waste of time but the skills and abilities you're developing along the way those are the key to your success so don't fixate on the number of downloads you're getting on the podcast or how many likes you're getting on a video those will come with time as you continue to level up but if you stick with it if you keep iterating you keep improving then of all the forms of Leverage we've discussed in this video I think you'll find that media Leverage is going to be the most rewarding and I'm not necessarily just talking about

from a monetary perspective truly the conversations and relationships which come as a result of building your own platform and engaging with an amazing audience just like yourself well that truly is worth more than all the passive income in the world so with that said thank you so much for being here and being a part of this amazing Community if you got any value out of this and you're not already a part of the community well let's change that go down there hit the Subscribe button and we'll see you in the next video but until then

stay hyper focused my friend foreign [Music]