Creating Passive Income for Retirement with Private Lending

 Welcome to the episode. I'm excited to speak with Jim Manning. And so, Jim, tell us a little bit about yourself and what sparks your passion. Hey, thanks for having me on the podcast. I really appreciate it. I grew up with a Jesuit education that at the, the Jesuits. Pounded in your, your head, Hey, be a man for others. And my first job out of college was the exact opposite of that. I was pushing paperwork for an insurance company and there wasn't any sort of value behind what I was doing. I wasn't really helping anyone. I could do a great job pushing paperwork one month and my boss wouldn't notice. I could do a terrible job the next month. And my boss wouldn't notice. I was trying to figure out what the next chapter and I fell in love with the idea of real estate investing, because if you take a property that needs work and you fix it up while you're improving that. Little piece of the world, right? And there's a tangible value to creating a home for a family. And so I kind of fell in love with that concept. I liked the financial upside to being able to invest into something, you know, maybe you buy it at a discount. And then when I sell it and make a nice profit on it, so it was kind of like Hey, I'd love to solve some problems, provide some value for the world and get paid while I do it. So started out doing that and built it up to about three projects. And then the co founder Ryan Wessels and myself, figured out that if we use other people's money, To invest in real estate, we can scale and grow a whole lot quicker than if we're just using our own. And so we had a core group of about six individuals that began lending us a hundred percent of the purchase price and a hundred percent of the repairs on properties. And this for them was an amazing opportunity because if you lend money on real estate what that does for you is it makes you a real estate investor and it helps you generate passive income. Without doing any of the work. So all the things you see online about how amazing passive income can be through real estate. Well, it's a strategy called private lending. That actually is in my opinion, the most passive and the best way to get passive income out of any of the other strategies I've ever seen. It involves just stroking a check and then letting someone else do all the work for you. And so we built it from there. At one point we grew the company and the amount of flips we were doing up to, I think about 250 homes that we owned in 2017 and we've done several thousand deals since. The. Financial partners that we brought on. It's one of our kind of claims to fame, so to speak, is that it's been 100 percent success rated generating these individuals passive income and what we've promised them regardless of the deal was a winner or a loser. So that that's kind of the, the history of the career. The interesting thing that happened to us though was I remember we ended up running into a partner his name's Jason. And Jason Said, Hey, I have a home ownership program that I'm doing. Would you guys like to help people be homeowners? And I remember thinking, well, yeah, that's kind of cool. Giving someone a shot that maybe otherwise wouldn't have it. Let's do it. And then a year goes by and I'm talking with a friend who starts to outline all the reasons why homeownerships amazing when people become homeowners their net worth is on average 400 percent higher. You're more likely to vote more like violent crime goes down. And so it's like a single lever that we can pull that can impact our community at a really high level. And I went home and I remember sitting on my screened in porch and a beautiful summer night, 70 degrees. I'm from St. Louis. I had the Cardinal game on. This was when the Cardinals were good and fun to watch. And I remember being in my happy place and unfortunately being absolutely miserable. I'm like, well, why am I miserable? Like I said, I want to be a man for others. I'm, I mean, I'm doing this home ownership thing. I have a beautiful family amazing wife. Like everything is great on that front. Live in a, live in a wonderful home. Work is like I founded this business and that's the business now that I could sell to someone else. Like, it's not like just relying on my own back and yet I felt completely unfulfilled. Then as I was thinking more about the conversation that I had with my friend on the importance of homeownership, I realized that, oh my goodness, the program that we have developed right now is it's People only 3 percent of people are on track to actually become a homeowner. And what I realized on this was that I had created an amazing investment strategy for myself and for my business partners to be able to thrive on. But the summit, there was a couple of flaws in our program that people weren't going to be able to succeed at any sort of significant level level. So through a lot of soul searching. We made the decision that, Hey, no, we're going to actually, we're going to really work on having a mission driven business and really work on turning these families into homeowners and set a significantly higher bar than 3 percent and, work on impacting. Working on our impact investments and also, yeah, we can make some money while we do it. Cause home ownership shouldn't be free. It's not a, this isn't an attendance prize trophy or anything like that, we need to set it up in a way so people can succeed and we can really feel good about the legacy that we leave behind. I remember I was 15 years, 16, 17 years into this, I remember kind of getting a little bit stale. Things were getting a little stale. I was getting a little bit tired, having like that burnt out feeling. And then now as it's shifted I feel like I'm like a 20 year old kid again. I feel like I'm going after something that's like a higher calling and purpose. And it's just been a wonderful thing to to be a part of something that's, that's just bigger than myself or, or Ryan, the co founder and really trying to, to help people at a, at a bigger way has been, it's been an amazing thing. That's a great story. And I know others are probably in their same, position and their career and they're thinking, oh my gosh, like what am I doing here and what I'm getting this. So hopefully that'll inspire them to maybe look and find a shift or something. I know you have a statement that says first comes family and then comes financial freedom. So what does that mean and how does that help listeners? I really think we need to measure our success by what we give up to get it, and if you are working let's say you're an engineer or a doctor or you're self employed , a variety of things. And you're working hard, you're making good quality money. And you kind of like what you're doing. It's not miserable. You like, you feel like you're doing what you're supposed to be doing. Well the knee jerk way to then become quote unquote financial freedom for free for most of us is okay, well, I'm going to start buying some rentals and I'm going to, you know, maybe do a property flip. And I need to figure out how to do it. The right contractors and everything like that. What's cool about the real world though is, you know, it's not always completely reliant on what I myself, Jim Manning, or what you can do. A lot of times if we get creative, what we figure out is that. We can leverage other people's time, right? And so, like I mentioned, the private lending is an amazing strategy, so, if you decide, hey, I really like what I'm doing. I'm making good enough money to have a surplus to invest. Well, why not put my money to work for me? Rather than me be the one that ends up doing all of the work. And in that case becoming a private lender is that it allows you to be a real estate investor with just stroking a check and then not having to figure out all the things that it takes place to be a successful real estate investor, right. And then generate some passive income and let other people do the work for you. So the importance behind that is if you know what you're doing as an investor, you probably can make a higher return doing all the work yourself, but is it worth it? Is it worth having a second full time job to be able to put this into place? Is it worth missing kids, family events or missing weekend basketball games for for your son or daughter? And you know, getting kind of crystal clear on that. And a lot of people think, well, that's what I have to do. If I want to be financially free, well maybe, or maybe you can double down on your existing career, create more income or more of a surplus and then find other mechanisms to invest in. Like the private lending or there's real estate funds out there too. Get good at deploying your money, having it go out and work for you. And then creating that financial freedom through other people's effort. It's so much better to have somebody else be the landlord, you know, make sure that check's coming in, taking care of those repairs. Definitely good advice. Okay. So an individual wants to invest in property. Would be different than an individual who wants to invest in the stock market, stocks or bonds or something. How would somebody know that? Why would they want to invest in property as a private lender taking those part shares? Why they would choose that? Oh yeah, good question. So I can just tell you from my perspective and why I like real estate and why I'm more of a real estate guy than the overall market. The stock market, what's interesting about it is that It's really only valuable. Like if I own a hundred dollars of Apple stock, well, it's only valuable to me. If I, when I sell it and assuming someone else has a hundred dollars that they're willing to pay for it, or hopefully 200 down the road, right? The value happens when the stock gets sold. So there's a lot of things not in your control. When you have the perceived value of a stock. For example, when my dad, my dad did was a traditional investor did what the financial industry taught him to do. And in the seventies COVID happened and the stock market started going crazy and he got incredibly unsettled by it. And to the point where he confided in me that he was afraid of running out of money before he died, even though. You know, he really did a great job of saving money and living beneath his means. And, and that unsettlement unfortunately is unavoidable. Like if a hundred percent of your net worth is tied to the public markets. What's nice about real estate is what's one, it's one of the shelters, one of the basic human needs that we have. It's a tangible asset in the real world. So regardless if there's a war, regardless, if there's a virus, regardless of, there's a recession it's a diversification out of that arena and into a hard asset. And that can be a really nice thing. Even if. The U. S. dollar fails because of all this crypto stuff, and then we go into a different currency. Well, if you have that hard asset, well, you just collect rent a different way at that point. You don't have to, worry about some of that. To me, it also like having profits from an investment, like the passive income from private lending, for example, it can be a really powerful thing too, because it's generating an income that then you can do something with. So I can only live off that Apple stock if I'm retired and I don't have other income when I sell some of the Apple stock and I'm not in control whether it's up or down when I sell that stock, right? Whereas if I have something that's income producing, that's a tangible value. Well, at one point, if I have enough investments that produce me income, I can completely replace my income. When I replace my income, well Now I can retire if I can replace it as a 40 year old and I have income coming in from investments. Well, you know, you could live another 60, 70 years and be retired the whole time because your investments are out there producing you a value. That's outpacing the expenses that you're making on a monthly basis. So to me, because of the diversification and because of the value of having income come in from the investments, I, I absolutely love it. I am. 95 plus percent of my net worth. Is in real estate. You have to find what works for you. That's what works for me. Yeah, no, that was a great, great explanation. Because I know some clients are like, well, should I invest in real estate? And I'm like, it's really up to you. And, you know, so hopefully your story resonated with some individuals. Now if they're pondering, like, yeah, I think that's what I want to do. I want to quote try it out. How do they go about that? What should they do? Yeah, I mean, I would say evaluating. Like how much money you have to invest and depending on what you have or don't have, like there's different options available for you. I have a course on the, on my podcast passive wealth show. com. And basically teaches if you want to start investing into real estate funds, it's a free course that will break down what are different requirements, what what are different things to look for and different risk factors to be aware of. And to me, if you do want to go the passive route there's a skill set and there's some knowledge there to be able to identify and be a successful passive investor. How about the leverage of investing through other people and through other companies? It's so powerful. And there's an evolution of cash flow and, and an evolution of investors. And it always tends to end with someone that's really good at investing into other companies and to other. assets like real estate, that's, that's going to be the biggest upside that anyone has, to earn financial returns. Yeah. Good to know. So you put on the forum when you applied to the podcast that you worked for a self made billionaire. Now you told us a little bit about working and it wasn't passionate, but what I want to ask from that experience Working with somebody who is a billionaire, right? That's, we always, as a child, young, you know, the more money we have, the better off we're going to be. But what did you learn from that experience and working for that individual? And how did that shape your financial journey? Yeah. It was a couple week journey as an intern for the individual. And the internship was different in that, we went to his personal residence and we labeled his wine collection. And this guy's wine collection was so, so large that, I don't know how many millions it was, but it took two guys 60 plus hours a week for two full weeks to just take a bottle out of his wine collection, print out a label, stick the label on and put the wine bottle back in. At one point I had 50, 000 in my hands, so this guy had unbelievable wealth. And the first week I really started to idolize him because I met, his gorgeous inner twenties girlfriend and, being fresh out of college. I remember thinking, wow, this girl's like really good looking and this guy's wider than he is tall. And, you know, like, oh man, the things that you can get, I guess, if you work your tail off. Right. And what I realized though as the second week was winding down. Was that he was unfulfilled and unhappy. The more I got to know him, the more I realized that, his daughters barely want anything to do with them. They hardly want to talk to them. I just didn't quite have the family relationships there and it was kind of like the life of the party, but. You know, they didn't necessarily have anybody close to 'em. And what I realized in that was that the dark side of entrepreneurship and starting your own business is like , you can succeed and succeed at a big level, but like at what cost? And in his case, here's a guy that gained everything financially, but lost everything important in the process. So. What I decided to do was get into entrepreneurship, but do it in a way that that I don't have to sacrifice everything in the process. And if I end up being, my net worth ends up getting hurt a little bit with a few less zeros, but I have the things that are most important intact. I'll be just fine. You know, there's a certain point where enough is enough. And I haven't always been in that headspace. There's been times in my life where I've been out of whack and gone after money for money's sake and made that mistake, even though I learned it. You know, before I started this journey every time I kind of get into that space you know, I, I just kind of get myself into trouble and start to have that nagging feeling that I'm missing something. And then when I get back into the, okay, I'm going to. value my family. I'm going to make sure I have good quality relationships with my kids. Yes, I'm going to do something that provides an impact and a positive benefit. I'm going to, you know, we're going to create homeowners and give these amazing americans a shot. That maybe life's thrown him a curve ball. And but you know, I'm going to do it in a way that honors, you know, my faith, my relationship with God, do it in a way that honors my, my wife and my kids and my family and my friendships. And and also kind of go for that impact too, but but do it in a way that has the priorities in the right order., yeah, very good. Yeah. Thank you for sharing. I was just really interested in that. And it's like, you know, we meet so many different people and we see something on it's from outside looking in, it can appear one way, but really, when you get down to it, you've got to be true to who you are. So if listeners are interested in investing, especially if they are somebody who maybe hasn't felt like they could get that first home purchased, or maybe they're barely scrimping by with that first home, how do they connect with you and what do they expect? Yeah. So if you just go to the past passivewellshow. com, I think there's a, there's a, Call button or something like that. You'll figure it out like a contact us button and you can access our, our team's schedule that way. And just fill out kind of like what your needs are and, and happy to help. If it, heck, even if it's talking with me, I'll, I'll help or if it's talking with one of my other team members. But yeah, we help people invest into real estate passively. If I can help you guys in any way, I, I would love to, I, I've had a lot of people help me along the way to, to get to where I am and, you know, it's kind of my time to, to pay it back. So, yeah, I like that. Thank you for your time and listeners. All those links will be down in the show notes. Remember he talked about there being a course as well. So go explore that at least just do a call if you're really interested. And Jim, do you have any one last piece of advice for listeners? You know, I said it earlier, but I'll just say it again measure your success by what you had to give up to get it, think about it that way. maybe there's like this crazy good business idea, but if it means, you know, saying goodbye to your kids and your, your family, like, you know, think about it, contemplate it, like take your time with it. Don't just jump and go after it right away with reckless abandon. And I think that's just an important. Thing to keep your radar up on. Very good advice. So again, thank you, Jim.