Imagine this scenario: I hire you to work for me and say I’d like you to start in sixty days. You accept and move into town. You work for two weeks. I’ve told you your rate and explained you’ll get paid every two weeks. But two weeks roll around and you don’t get a check.
What question would be on your mind? Probably, “Where’s my money?” And you have every right to ask that. Demanding your income is within your rights.
In my Triple “X” Factor, I define the first X as related to your work income, or Level 1 Income. I define the second X as related to your investment income, or Level 2 Income. We think nothing about demanding income when it comes to Level 1 Income. But with Level 2, we back down.
Let me challenge this. You must demand income on your investments as your first priority. I would say that the question of income is one of the first questions you should ask in any investment that you make.
The financial industry says we’ll use the Buy-and-Hold strategy, buy stock or invest in a mutual fund, and hold over ten years. But if it’s the money that you are personally investing, you never want to get too far removed from that income coming in from that investment. We must push the investment to begin to pay us now. I’ll invest in Nephew Johnny’s restaurant and give him $50,000. But I need to find out how this thing that I’m doing is going to pay me.
Now here’s the thing. You want to graduate from just buying and selling to producing income without selling. It’s the difference from picking fruit from a tree and chopping it down. You didn’t kill the tree so it will produce next year. You don’t have to go back and replant. You still have to tend to and manage the tree, pray for it, but you don’t have to start over.
Here’s where real estate is awesome. You can rent out! It is income without selling. You have to sell stocks for income whereas in real estate you can rent. You don’t have to replant the tree each time. The best way to function at Level 2 is to have your investments pay you a consistent income. And to do that, you need to demand income as a priority.
Clarification: I do think there are great things about learning to buy and sell, invest in stocks, buy-and-hold. But I really think real estate has a special place when it comes to developing your Level 2 Income.
What is something that intimidates you when it comes to starting out in real estate?
This teaching is a part of my Money Mastery Series, which will be available for sale for 24 hours on Cyber Monday, December 1st!
Join me next week as I continue off of this blog in discussing investment income!