When I was working full-time in the corporate world, I was always frustrated because it never felt like I had anything to show for my 60-hour work weeks. Yes, I was receiving a paycheck every two weeks. Each paycheck would quickly be consumed by our mortgage payments, car payments, utilities, taxes and all the other expenses of life.
The reality is I would work for two weeks and get a paycheck. To get another paycheck, I had to work for two more weeks. It really felt like I was on a never-ending hamster wheel without an ability to get off.
Worky get checky.
No worky, no checky.
My dog gets a treat when she does what I ask her to do. When I would go to work, I would get a treat (check) because I did what I was told to do.
Seneca, who was a complete Badass, wrote the following about work and money:
“Am I to pile them up in total forgetfulness of the frailty of human
existence? What is the purpose of my labors going to be? See, this
day’s my last – or maybe it isn’t, but it’s not so far away from it.”
What is the purpose of my labor?
Seneca is reminding us that life is short and we should really think about the purpose of our work. Most of us work for money.
Well, if we’re going to work for money, shouldn’t we engineer our work to deliver more money? More money may allow us to work less, giving us some of our precious time back
Due to my frustration of being treated like a dog and earning a treat every two weeks for good behavior, I decided to invest in rental real estate.
My plan was to acquire an asset that would provide monthly income that didn’t require my labor. I wanted to get paid at my corporate job AND from my rental real estate. My first investment was a two-family home. This way, I would be getting paid four times every month. Two paychecks and two rent checks. This worked out well, so I bought a few more rental properties.
Here’s how things looked
Worky get checky!
No worky, get checky!
No worky, get more checkies!
One thing led to another, and I ended up becoming a real estate agent helping others invest in real estate. I loved real estate. I loved finding deals and analyzing the numbers. I absolutely hated my full-time accounting job even though I was on the “coveted” partner track.
Within a few years of having my real estate license, I took the big leap and became a full-time real estate agent working for a small brokerage. Guess what happened?
The exact same paycheck situation appeared again. I would sell a home and earn a commission check. This commission check would quickly be consumed by our mortgage payments, car payments, utilities, taxes and all the other expenses of life. The only way I would get another commission check was to… go sell another home.
Saley Get Checky
No Saley -> No Checky
So I decided to start using my commission checks from sales to buy manufactured homes. These homes could be purchased for cash. I could then resell these homes with financing and create a monthly income stream. This strategy allowed me to turned one commission check into fifty or sixty monthly checks.
My next attempt to get paid without having to work for money was to write a book. I realized authors worked one time to write the book, and then they got to collect recurring future income with every book sold. The problem I soon realized was that books aren’t very profitable. Only a small percentage of authors make significant incomes from their recurring book sales. I wasn’t one of those authors! Unfortunately, I didn’t write a steamy romance novel. I wrote a book on how to invest in real estate. 🙁
If I remember correctly, the biggest royalty check I received from my first publisher was for $89.00. If I figured out my hourly rate from writing the book, I would estimate I made less than $2.00 an hour. Even worse, if I didn’t constantly promote the book, it didn’t sell. The reality was there isn’t much recurring income from the average book.
When writing a book didn’t work, I decided to start my own real estate brokerage. I realized that I could hire real estate agents to sell homes for the brokerage. When they sold a home, my company would earn a commission check not requiring my labor. My thinking was if I had five agents who sold 10 homes a year, my business would collect a portion of 50 commission checks. None of these sales would require my labor. My labor would be hiring and training the agents. If I did my work properly, I would set myself up for many future checks. This actually worked!
Slowly but surely, I built this company up from zero sales to 300 annual sales. I hired some amazing agents and taught them how to add value and sell a lot of homes. My agents were averaging seven to eight monthly sales each and every month.
My company, which I owned 100%, was generating $1,400,000 in revenue and I wasn’t selling any homes myself. I finally escaped the: work-> check, work-> check – hamster wheel.
At the time, a significant portion of my net worth was tied up in this company I built. To unlock this wealth, I decided to sell my company. I sold my company for seven figures. Instead of getting one big check, I financed a large portion of the sale so that I could get dozens and dozens of future monthly checks.
I was applying the same strategy – turn one check into multiple checks. I actually try to apply this strategy to everything I do.
Here’s the critically important question we should consider:
How many times am I being paid for my labor?
Am I being paid once, twice, or 12 times a year?
If we really drill down into the solution for escaping the work -> check hamster wheel, we’ll see that the solution always requires the labor of OTHER people.
If you own a rental property, the family living in the rental property goes to work to send you a check. You work once and then receive a check every month going forward.
The same basic idea can be found in my real estate brokerage. The agents I recruited and trained worked for the business. Once they were up and running, my business collected five to seven large checks each month from their labor. Multiply this times X number of agents and things get interesting.
Think about Jeff Bezos for a minute. He is one of the richest people in the world. Does he profit from the labor of others? How about Warren Buffett… does he profit from the labor of others? Yes, they both do.
It’s virtually impossible to break the work -> check cycle without leveraging the labor of other people. Yes, this may sound harsh, but it’s the truth.
We have two basic options for deploying the labor of others to our advantage:
- Invest into assets that generate monthly income from the
labor of others.
- Buy or create businesses that generate monthly income
from labor of others.
And truth be told, the absolute best strategy is to buy or create a business profiting from the labor of others and then reinvest the profits into assets that provide monthly income through the labor of others
A few examples of businesses that provide recurring income through the labor of others:
Real estate brokerage.
Money management/hedge fund.
Membership based businesses.
A few examples of investments that provide recurring income through the labor of others:
Rental real estate.
Stocks offering monthly dividends.
This all leads to the second important question we should all consider:
How many people are going to work for me this month?
Is it just you,? Or just you and your spouse? If so, you’ve got to take action and arrange things to profit from the work of others.
When you start on a similar journey, understand that it isn’t easy. You’ll make many mistakes. You’ll work on ideas and opportunities that won’t be profitable. I certainly have. However, over time, your skills improve. You get better, and sooner or later you develop the ability to get paid multiple times for all work that you do.
More importantly, these recurring income opportunities do compound over time. Here’s how it looks:
Work -> Check
No Work -> Check
Work -> Check, Check,
No Work -> Check, Check, Check
Work -> Check, Check, Check, Check
No Work -> Check, Check, Check, Check, Check, Check
In fact, compound monthly checks flow from compound monthly labor. This is how it looked for me over the years:
Pay Check -> Rental Real Estate, Rental Real Estate
Commission Check -> Rental Real Estate, Rental Real Estate, Manufactured Home, Manufactured Home, Manufactured Home
Commission Check -> Real Estate Brokerage, Rental Real Estate, Rental Real Estate, Manufactured Home, Manufactured Home Real Estate Brokerage -> Commissions Earned Through Agents, Rental Real Estate, Rental Real Estate, Manufactured Home, Manufactured Home, Membership Income
Today, I do my best to avoid opportunities where I’ll only get paid once. If I do accept a one-time income opportunity, I’m immediately thinking about how to invest the one-time check in order to turn it into multiple future checks. The more you think about this and the more ways you structure things to benefit from the labor of others, the faster your financial situation will improve.
Here’s a 3-step system you might consider:
- Buy rental real estate.
- Use the income from rental real estate to start a business with recurring income.
- Use the income from the business to buy more rental real estate.