No Such Thing as A Passive Investment - Ask Cardi B

 

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No Such Thing as Passive Investing

Hello Family. I wanted to share a quick post about investing, hell about life. There is no such thing as passive investing. If you've ever heard the phrase there is no free lunch, it is true and you should understand this concept. Everything - I repeat everything in life requires work to achieve the end goal. I can't think of a moment in life where I got something in return that did not require work, some elbow grease, or my blood, sweat or tears.

Quick Examples:

~ Getting a Job - Requires work, training, patience, principles

~ A friendship or relationship - Requires work, good listening, patience, principles

~ Investing - Requires research, training, and patience, principles

So when you hear the phrase "passive investing", realize you're being sold a myth. It's a very high likelihood whoever is preaching that passive investing is attempting to MAKE MONEY OFF YOU! I've always said...if it is free you're the product. Passive investing is a term that was created for tax purposes to describe how active you are in the day-to-day activities of the business. However, my definition of a passive investment is simple. I like to define a passive investment as a scenario where my goal is to earn income by handing over my money to someone else to grow in exchange for ownership in their asset -- such as stock, oil field, or real estate. Please pay attention to these key words -- handing money over in exchange for ownership in SOMEONE ELSE'S business. They do the work, and you get residual or passive income. Look into the DJ Envy debacle. People handed over money to a "business partner", Cesar Pena, who dealt in real estate, and they got swindled. Now DJ Envy is walking back his involvement as he promoted this business partner on his radio show, and they held real estate investment seminars. By my definition, these people that got swindled missed an opportunity to legally define their ownership in a way that protected their investment, performed stronger due diligence, and held this business partner honest by performing annual audits of their investment. In business, I support my cybersecurity client by ensuring their legal agreements are airtight, we prefer to do business with well-established players that can explain the processes in detail and allow us to audit their business independently. Further, we ask that they get audited annually by a reputable independent audit firm and we demand the right to see the report (and we're not just talking financial audits). We need proof about how the business works.

Any asset you purchase and receive income from IS NOT passive in my book. Let me tell you why --- because it requires WORK. What the fake advertisers of passive income investing don't tell you is owning a home requires big time work. When I list my property for rent, I must advertise it, receive calls about the listings, pre-screen tenants (some unrealistic), show the property, determine the price, conduct tenant checks, sign leases, clean the property, collect rent, answer questions, fix repairs, answer questions, and stress over unpaid rent.

Need proof - I just rent an article summarizing Cardi B's response to managing a real estate rental. In short, she said:

"We have tenants that have paid f&cking rent for like 9 months!"

"You know what? Don't even f&cking take them to court because we just be so f&cking tired"

In response to her Airbnb in the Dominican Republic:

"Always something! Please! I don't want properties as a gift"

Need more proof - I just spent a week in the Windy City, Chicago. Speaking with 2 people remind me of why you have to be on your A-Game. Here's what we discussed:

Person 1 -- "My tenant wasn't paying rent, further I later found out they were sub-leasing it out on Airbnb. I had to officially provide then a notice to vacate, changed the locked, and kicked them out."

Person 2 -- "I'm preparing to sell my rental. It's been tough lately and currently dealing with an eviction."

Now do these investments sound passive to you. Cardi just realized what we all understand has investors --it takes work. I spend most of my energy screening well, so I don't have to deal with bad tenants. But life happens, you need good legal documents, a lawyer who can handle evictions and you need to have good communication to keep tenants happy and so you stay compliant with local housing laws. 

I own real estate, businesses, and invest and trust me NOTHING about any of these investments is passive. So, I hope this episode of keepin' it real, helps you realize you have to work hard to reap the rewards.

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