All About Passive Income and How to Get It | EW011


All about passive income and how to get it. Epic Wealth through passive income cash flow real estate investing is the path to financial freedom. Epic Wealth podcast, epic wealth fundEpic Wealth shatters the relationship between time and money. Discover why trading time for money is not sustainable and find ways you can experience a life free of financial worry.  Learn how to build your passive income portfolio for financial freedom through real estate investing.

Explore why you must begin to consider yourself a manager of managers so that you can free yourself from the time constraint of the day-to-day grind. Epic Wealth is here to help. Consider the possibilities in passive income.

What You Will Learn About Passive Income and How to Get It:

  • How you can shatter the relationship between time and money
  • The power of passive income to create Epic Wealth
  • Why trading time for money is not sustainable
  • How your choices will make or break your ability to build wealth
  • Ways you can experience a life free of financial worry
  • Essential market needs that create investor opportunity
  • How your fears about your future are holding you back
  • How you can avoid being enslaved to your job and escape the rat race


Read the Transcript:

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Narrator: This is Theriault Media. It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. You don’t have a money problem. You have an idea problem. Welcome to the final frontier where the average person has a legitimate shot at creating epic wealth. Your host, Matt Theriault.
Matt Theriault: Hello! Hello, and welcome to the Creating Epic Wealth Show, the revolutionary new money show disguised as a real estate show. As real estate, it's the final frontier where the average person has a legitimate shot at creating epic wealth. You really just don't have a chance at any sort of financial freedom unless you incorporate real estate into your financial plan, and if you just don't have the time to do it, nor the desire to take on all of the heavy lifting, then this is just the show for you. Glad you found us.
Now, imagine this. You catch a plane to Italy, Greece, Peru, Argentina. You spend weeks on end reveling in the sand and the surf, you taste new foods, you discover new music, you spot wildlife that you've only seen on TV. You don't check email once the entire time that you're there. Hell, you're having the time of your life that you forget to even post photos to Facebook. You're profoundly offline like it's 1969.
You return to the United States, you go and you check your bank balance, and you notice something. You notice that it has grown while you've been abroad. You've returned from your extended trip with more money than you had when you left. Sound like a fantasy? This can be a reality. It really can, if you create passive income. Passive income, what is it? I mean, what is it really? Many people have an idea of what it is. I mean, it's right there in the word there, the description. It's passive, right? It's their idea of what it is versus what it actually is that can frustrate the most flexible, patient, understanding, and resilient people.
What is it? Well, passive income, it's income that finds its way to your bank account while you're doing something else other than working, like sleeping, or eating ice cream, or eating ice cream while you're sleeping. When you're collecting passive income, your money is working harder than you are. Notice that I didn't exclude "your work" from the description. It's just working harder than you are working. More on that shortly.
What happens is your income, it essentially loses correlation to your hours. At any job, regardless of the income that it pays, there's a relationship between time and money. Active income requires an exchange of time for money. Active income, in our society, it's the state of affairs when it comes to making a living. You can hear it. You hear it daily reverberating in everyday conversation. Like, "She makes $80,000 a year," or, "I charge $200 per hour," or, "He earns $4,000 per month." These statements, they reflect a connection between time and money. The more hours you log at the office, the more money you make.
Passive income completely shatters this relationship. See, time is limited. Money is infinite. Time is precious, and it's in short supply. It's not going to last forever. Money, however, is abundant. So, trading time for money, it's unsustainable. Of course, unless you're Kim Kardashian, or the offspring of a Kennedy, or even the offspring of a Kardashian, you're forced to exchange time for dollars in the beginning. But, it's just a stepping stone.
Trading time for money, it's a temporary situation. It's not permanent unless you'd like it to be. Because, you do have a choice, right? I didn't think so. Exchanging time for dollars is probably not going to be your decision, if you have a choice, and you do have a choice. Passive income, residual income, cash flow, it goes by many names. The idea of passive income, it's very encouraging. It's one that alludes to a life free of financial worry.
Further, the concept of passive income, it's logical, and it's easy to understand. So, with all that said, how could the pursuit of this simple income model leave so many baffled and demoralized? The investment world. It can be a discouraging landscape to navigate of which a number of obstacles, and vehicles, and players can hinder your progress. The wide array of interruptions and distractions that you can encounter when it comes to your financial future have you constantly questioning your current investments and your current efforts. "Am I doing the right thing? Is this the best I can do? Will my current investments even get me to where I want to go? If so, will they get me there in time?"
Those thoughts and questions, if those aren't enough to drive you absolutely batty, every place you turn for some sort of financial advice, whether it be an investment magazine, a website, or an expert TV personality, your Spidey sense, it's activated by inauthenticity and notions of downright conspiracy. Hell, your own financial planner seems more of an insurance salesman out for her own best interests than anything resembling a source of helpful information.
Face it. You're tired of being sold, you're tired of being misled. The frustration continues as you have limited time, not to mention little desire to take your investing into your own hands. You've already got a career, you've got a family, you've got enough responsibilities as it is. Who has the time to maneuver through the vast body of investment options to find the right ones for you, the right ones for your situation, the right ones that are going to get you to your goals?
Ultimately, your biggest fear of never being able to escape the rat race, that's a serious concern, and it's a concern that seems like, "Wow, it's coming true. I might not ever be able to escape." Will you ever get any time for yourself to do what you want? Yeah, you're not alone. You're not alone, and you know what's even better or might give you more comfort? It's not your fault. All you want are some investments that are easy to understand and confidence that they're going to produce right at or maybe even above market averages.
You don't want much. Just maybe right at or above market averages. You want options, you want the facts, you want someone competent that you can trust to take on all of that heavy lifting of finding, and informing, and managing your investments for you. Even if you just had one new option to add to your portfolio that met your criteria that was going to get you to where you want to be and the time you want to be there, that would be refreshing progress, just one new option that was going to perform.
Fundamentally, you aspire to an investment portfolio that produces a steady stream of consistent passive income that will grant you the free time for the more important things in life, things other than work. At a certain point in life, time is more important than money, and it's passive income that will buy you that time like nothing else.
You know, the term "rat race", we use it frequently here on the show, and it's a metaphor for a person's situation in which they find themselves financially trapped by their circumstances, and regardless of the amount of effort they put forth, the best that they seem to do is stand still. That's the best that they do is just stand still. The financial obligations that we could elect over the course of our lives such as mortgage, rent, car expenses, doctor bills, student loans, daycare, insurance, activities for the kids, braces, and countless other expenses that can render us enslaved to our jobs.
In a recent survey by Forbes Magazine, 56% of Americans say that they have less than $1,000 in their checking and savings accounts combined - less than $1,000. 76% of Americans are living paycheck to paycheck, and that serious risk of financial ruin, should just the slightest thing in their lives go awry, the highest paying jobs of society often aren't enough to escape the rat race either. As a result, people tend to stick with jobs they dislike for fear of jumping out of the frying pan and into the fire. With very few exceptions, it's the pursuit of active income that keeps us in the rat race.
Active income, it comes as a direct result of our efforts. You know the phrase "exchanging time for dollars", that's frequently used to describe active income. This can be seen in wages, salaries, and self-employed service providers like lawyers, and doctors, and real estate agents, and commission sales people. Now, there's a minute percentage of society who's compensated with vast amounts of money, like a corporate CEO, professional athletes, rock stars, celebrities.
Earning a high active income typically requires dedication, talent, favor, timing, and a certain amount of just good fortune, but that's beyond most people. As good as this type of active income can be though, it's still limited, because no matter how much money one gets paid, they still need to show up to work to earn it. Note the 78% of NFL athletes, and 60% of NBA athletes that run out of money within just a few years after their playing days are over.
Passive income is when you continue to get paid after the work is done. This includes royalties from books, movies or songs, and also income that comes from real estate or business investments where you don't actually have to be present to earn it. For example, Bill Gates is still making a residual income from Microsoft even though he hasn't worked there for years. The idea of building wealth through passive income, it has an understandable appeal, especially for those concerned about whether or not they'll be able to save enough from their work earnings to meet their retirement goals.
For example, to generate just $5,000 a month in retirement income from a portfolio, you'd have to amass about $1.2 million, assuming a 5% withdraw rate, and even then, you better hope you don't live one day past 20 years in your retirement, because then your money's going to be gone. You know, Investopedia defines passive income as earnings and individual derives from an investment, limited partnership, or other enterprise in which he or she is not actively involved. Popular culture, however, defines it as any money you earn while sitting on a beach sipping margaritas.
So, which one is it? Or, is it neither? I'll tell you right after this.

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Now, back to creating your Epic Wealth.

Alrighty. We left off with Investopedia's definition of passive income as earnings and individual derives from an investment, limited partnership, or other enterprise in which he or she is not actively involved. We talked about what popular culture's definition is. They see it much differently, as any money you earn while sitting on a beach sipping margaritas.
In reality, it falls somewhere in between the two. Defining passive income as the money you earn from a project or an investment after you've made an initial contribution of time or money. Most that pursue passive income think that it's all about getting something for nothing. Passive income, it has a "get rich easy" appeal to it, right? But, in the end, it still involves work. Now, the majority of work is up front, but the work, it never really stops. You know, countless people have tried to create passive income streams only to be surprised and frustrated by the amount of work, cash, and/or time that it does take. For passive income to be the most passive it can be, to get to the literal sense of the word "passive" you're going to have to think of yourself as a manager of managers.
For example, Richard Branson doesn't run any of the 400-plus companies that he started, but he reviews the numbers regularly to ensure proper performance of those companies, and then he calls the CEO if he's got any questions or concerns. Whether you are a tight enough business like Sir Richard Branson or a lowly landlord just getting started with one single duplex, passive income does not mean uninvolved income. It's this misconception right here that lies at the center of the frustrated investor's frustration.
So, now that this myth about passive income, now that it's been revealed, don't throw in the towel just yet. Don't throw in the towel and revert to your old ways. Don't give up in the pursuit of your passive income dreams now that the veil has been lifted. Although the term "passive" is not literal, passive income will still get you much closer to financial freedom than toiling away for active income ever will.
So, how do you do it? How do you build passive income? Well, the key idea here is leverage. You must be able to leverage other people's time or other people's money in order to create passive income. Back to Richard Branson, he can run 400-plus companies because he isn't actually running any of them at all. His CEOs are. So, again, think of yourself as a manager of managers. Think of yourself as the CEO of your business. The more you do, the more passive your income will feel, the more passive it will be.
Your sustainable passive income, it's going to be a result of you creating, or acquiring a product or a service that people will continue to purchase from you on a regular basis long after the work it took to put it all together is done. Here's some examples. Some examples of passive income, they include the aforementioned royalties from books, from movies, songs, software, inventions, as well as the internet marketing of information and affiliate products and dividend yielding stocks and bonds.
But, dialing in on just the right products, just the right service, or just the right investment with the predictability, the stability, and the longevity to support you into your golden years, that's no small feat. Further, I think it goes without saying that the insane amount of upfront work and study required prior to your income actually becoming passive, that's not going to happen overnight.
So, with regard to looking for stability and longevity, let's look at humans' basic needs because there's stability there. There's longevity there. They need this; humans need this. Like, stuff like food, clothing, and shelter. Those inherently embody the necessary demand required for long-term passive income. Additionally, they're really easy to understand. I like simple. I like simple because if it's too confusing, we know what a confused mind does, right? A confused mind does nothing. If it's simple, if it's clear, and if your mind is clear and focused, you can produce results.
The sustainable aspect of passive income from these sources exists by humans replenishing and maintaining these needs regularly, and unless the need for food, clothing, and shelter somehow go out of fashion, the passive income derived from these needs can provide for not only you, but for your future generations, and future, future generations. So, let's look at these. Let's look at food first. We've all heard the failure rates of the restaurant business. They are upwards of 90%, right? Yeah, it's a terrible business. Well, that number's actually a little bit inflated. It's actually wrong. It's not 90%.
According to recent studies, the failure rate, it's closer to 59% within the first three years. But still, that's basically a 60% failure rate, and those aren't the type of odds most people are comfortable with when it comes to their financial future. Not to mention, it takes pretty specialized knowledge, experience, and somewhat of an extraordinary effort and financial backing to turn a restaurant into a passive income machine.
Now, with regard to clothing, the Bureau of Labor Statistics rate the garment industry, with regard to design, wholesale, and retail, one of the top 10 riskiest businesses to start. As last year's pleated skirts, they might have looked great on you, but your customers, they didn't find them so flattering. Clothing is risky. It only takes one slow season to leave you buried in inventory. Most entrepreneurs, they just don't have the reserves to survive such a season, especially in the beginning, let alone when times are good, they don't have the marketing budget to compete with the giants like Nordstrom, Macy's, Urban Outfitters, and GAP.
So, with success in the industries of food and clothing being such long shots, shelter is what most people are left with as their best option for creating passive income. It's this perspective that gives credence to real estate being touted as the final frontier where the average person has a legitimate shot at creating real wealth. Real estate is simple, and in comparison to previously mentioned options, the barrier to entry is low with regard to price and experience.
A life-changing passive income can be created relatively quickly. It's no wonder that real estate has created more wealth than any other industry or investment vehicle, and the fact that 74% of the nation's wealthiest 1% either made their money or parked their money in real estate, that should be a very compelling clue. So, just in case now that the "get rich quick" alarm just went off in your head, understand that real estate is not about getting rich quickly. Although it is a quicker vehicle to riches than the alternatives available to most people, it's about getting rich permanently. You've heard my story.
I'll share another. The story of a client of mine, Michelle. She's out of San Diego, and when we met probably five or six years ago, she was working as a personal assistant to a CEO, and to say the least, she wasn't fulfilled. She saw no real future there other than just being a higher-paid assistant at some point. I think the word "slay" was actually brought up in our initial conversation. She had just read the book "Rich Dad Poor Dad", and she was inspired by the idea of passive income, and that's what the book does.
It inspires people and it basically renders them certifiably unemployable. This book, it certainly turned my life around, but if there's a place where it falls short for most people, it's the how-to part. It gets you all excited about a new way of living, but it leaves you hanging a little bit with what there is to do with your new enlightened state, and that's when Michelle found me and she hired me. I walked her through a process of just reducing expenses and inquiring and increasing her passive income, and just recently, she sent me an email sharing how she finally did it. Her monthly passive income has officially surpassed her monthly expenses and she's no longer working as an assistant. Love it. I love those stories.
But, enough about her. I mean, she's great, and enough about her, and enough about me, but let's talk about you, and we're going to do that right after this.

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Matt: That's it for today. We'll pick up from where we left off right here next week. See you then.

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