"Passive income isn’t just about money it’s about reducing stress and gaining the freedom to live life on your terms."

Rise Capital Investments

How We Pay Our Bills on Passive Income: Two-Year Update

Since we have retired (laid off? fired?) from the corporate W-2 two years ago, our only income has been from the investments we collected during the 5 years since our previous layoff.

A week before Thanksgiving 2017, a layoff left us unemployed and terrified. But after vowing to never be vulnerable to one stream of income again, another layoff almost 5 years to the day again a week before Thanksgiving 2022 left us funemployed and ready to start our own business!

We started a fund offering the same investments we use to fund our retirement to our friends and associates, and it balances consistent cash flow with growth and tax benefits through offering both private real estate loans and occasional private real estate equity ownership.

Because a capital fund does not yield immediate income (we only make money when our investors make money and AFTER all expenses are paid,) having passive income allowed us to start a business while being very patient for any profits, as well as able to focus on sound business foundations without sacrificing fundamentals for short-term income needs.

Here we review each of our criteria for setting lifestyle goals and plans on how to fund them.

→Watch the full webinar/podcast HERE

What Has Changed, and What Hasn't?

Cash Flow vs. Returns: Repositioning for Financial Freedom

When it comes to retirement planning, many of us dream about escaping the 9-to-5 grind and living a life on a beach or organic farm somewhere.

But for those of us navigating the real estate investment landscape, the path to financial freedom isn't always a straight line. This year, we’ve had to make some strategic adjustments to ensure we’re not only growing our wealth but also creating sustainable, passive income.

Here’s a look at how we’ve repositioned our investments and redefined our goals for 2024:

Get Clear on Your Goals—Before It’s Too Late

This year threw a few curveballs our way, and like many of you, we found ourselves reevaluating what really matters. We never expected to be facing life changes so soon, but we used these moments to get crystal clear on what we want our financial future to look like.

At the top of our list was financial security. While we had been heavily focused on building our net worth, we realized that net worth alone wouldn’t keep the lights on. That’s where the shift from returns to cash flow came into play. We needed a steady income that allowed us to pay the bills, reduce stress, and most importantly, give us the flexibility to work when and if we wanted.

Repositioning Assets for Passive Income

One of the biggest moves we made was selling our personal home and moving into our rental property. This wasn’t just about cutting costs—it was a strategic decision to free up equity. We used the tax exemption from the sale of our home to reinvest those profits into hard money loans on multiple properties.

We also took a more intentional approach to our equity investments, ensuring we held just enough to offset tax depreciation while focusing more heavily on debt investments. This repositioning allowed us to generate reliable, consistent cash flow while still benefiting from the tax advantages of real estate.

Determining Your Retirement Goals

Retirement looks different for everyone. For some, it’s about traveling the world. For others, it’s starting a new business or spending more time with family. For us, we wanted to retire earlier, which meant slashing expenses and prioritizing flexibility over luxury.

We focused on cutting down our big-ticket expenses—housing, food, and transportation—rather than stressing over small indulgences like that daily latte. By reducing overhead, we found the freedom to continue building active income streams that support our long-term passive investing goals.

The Benefits of Passive Income

Passive income has been a game-changer for us. It’s not just about the money—it’s about reducing financial stress and retiring on our own terms. When you’re not worrying about bills, you can spend more time on the things that matter: family, adventures, and giving back to the community.

Our passive income streams, primarily generated through real estate, allow us to have a lifestyle that many dream of: working when we want and having the flexibility to slow down as needed. This freedom wouldn’t have been possible if we hadn’t shifted our focus to cash flow.

How to Generate Cash Flow for Retirement

Creating cash flow isn’t just about finding the right deals; it’s about being intentional with your lifestyle and investment choices. We made sure to invest as much as we could from our active income, while also being mindful of the lifestyle we want to lead now and in the future.

Our advice? Focus on investments that generate cash flow. While high returns can be tempting, they often come with greater risks. With a solid foundation of cash-flowing investments, you can afford to take more risks elsewhere or play it safe, depending on your goals.

Diversify with Debt and Equity

One of the key lessons we’ve learned is the importance of diversification. Our portfolio includes both debt and equity investments, each serving a different purpose. Debt investments, like hard money loans, provide consistent, reliable income at 10-12% on 1st lien loans, while occasional but higher risk equity investments offer the potential for higher returns and tax benefits through depreciation.

We always keep an eye on the balance between risk and reward. While debt investments ensure we’re getting paid first, equity investments allow us to share in profits (and occasionally losses) as business partners. This diversified approach helps us maintain stability while also leaving room for growth.

Your Next Steps

If you’re aiming for early retirement or just looking to create more financial freedom, take a moment to reassess your strategy. Ask yourself: What are my retirement goals? Am I prioritizing cash flow, or am I chasing returns without a stable income base? The key is to strike a balance that aligns with your long-term vision and lifestyle.

Whether you’re looking to retire early or simply want to create more flexibility in your life, passive income streams can give you the freedom to live life on your terms, just as it did for us in 2022.

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