How to Transition from Active to Passive Investing While Running a Business with Joe Fairless

0:01Boom! Shake the room, Fire Nation! JLD here and welcome to Entrepreneurs on Fire, the only daily show interviewing the world's top entrepreneurs seven days a week. Today, we'll be breaking down how to transition from active to passive investing while running a business. To drop these vibe bombs, I brought to Joe Fairless in the EO Fire studios. Joe is the co-founder of Ashcroft Capital, manages$2.7 billion in apartment communities, founder of the longest-running daily real estate podcast, and has a mantra, live to give. And today, Fire Nation will talk about why entrepreneurs struggle to build true passive income, the secret to shift from active wealth to passive wealth, and rethinking both time and money and how it can unlock freedom and oh, so much more.

0:43And a big thank you for sponsoring today's episode goes to Joe and our sponsors. Is now the time to grow a successful business? Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring football star Tim Tebow and President Trump's son, Eric Trump at thrivetimeshow.com slash EO fire. Again, request life changing tickets today at thrivetimeshow.com slash EO fire. Joe, say what's up to fire nation and share something that you believe about becoming successful that most people disagree with. Looking forward to our conversation. And I'd say, you know, one, one piece of advice I hear that I don't agree with is how you do one thing is how you do everything.

1:28And I've, I found that that's in my, from my experience, that's not the case, uh, because, uh, I am, when I'm into something, I'm into it and I'm all in, but if I'm not into something, uh, I'm just not gonna, not, not gonna, uh, really participate much and put a lot of focus in it. Uh, so I, I don't agree with that advice that is commonly said. I'm the same way. I am really good at like two things in this world. And I'm really bad at tons of things in this world, period, end of story. Because where I put my focus, where I put my reps, that's where I get good. So Fire Nation, where are you putting your reps?

2:08Now, today we're talking about how to transition from active to passive investing while running a business. Because let's be honest, most of us right now, we're running a business. And Joe, it's no secret that entrepreneurs struggle to build true passive income. But the question we have to ask is, why? Why do we struggle? As an entrepreneur in the early days, I was focused on doing activities that were not scalable, but needed to be done. And I was very hands-on on things. And that mentality can lead to later not being as focused on the passive side of things because it's just not how we're wired as much because we're wired to do things, get things done, be actively involved.

3:00And so I think it's the mentality that entrepreneurs have. I've definitely seen that to be the case as well. And Fire Nation, that's why Joe is going to to reveal something to us right now. He's going to reveal the secret to successfully shifting from active wealth to passive wealth. Joe, take it away. The key is to leverage partnerships. I don't think from my experience, you're gonna be able to take the bark out of the dog, right? Like we're all still, we're all, if we're entrepreneurs, we're going to be active. We're going to want to still build things, create things. And so the key is to find the right partners that are doing things that can help us create and grow our wealth whenever we're still building what we're building.

3:51That's really powerful. Can you give us a specific example of how you've done this in the real world? I've got two businesses as an entrepreneur. One is my best ever brand where it's commercial real estate advice for commercial real estate investors and real estate investors. And there's a conference, podcasts, all sorts of stuff. The other is a multifamily syndication company where I buy apartment buildings and we partner with investors. And so what I've done from a passive side with that context in mind is, you know, I've come across through those active involvements of my commercial real estate business.

4:37I've come across people who I'd like to invest with because I've learned things from them along the way too. And so I'm currently a passive investor in over a hundred deals with other people. And actually it's probably about because I invest in multiple deals with people. So it's probably about 60 different operators, not 100, but it's over 100 deals as a passive investor. And so it's allowed me, the active involvement of my business as an entrepreneur has allowed me to vet out passive opportunities along the way because I feel like I have a good sense of what works, what doesn't work. And it allows me to branch out.

5:24So I do multifamily, but it allows me to branch out passively with other multifamily operators and other markets that I might not be in or investors who or other operators who invest in office or retail or industrial. This is powerful stuff, Fire Nation. And Joe, one thing that you believe is that rethinking both time and money can lock in freedom. Tell us more about this. If you rethink time and money, it's hard for entrepreneurs, at least from my experience, to really think about time and not being actively involved as much and eating up a lot of our time with that active involvement. But if we rethink it, it starts by how you value your time or valuing your time as much or more than your money.

6:15If we value our time as much or more than our money, then we are able to flip the script on our thought process and thinking about more passive income, being focused on more passive income and thinking, okay, well, I'm actively working to accomplish these things so I can passively invest. and then that will eventually, hopefully, supplant my need for the active income because I'm passively investing on the side. Now, just like above, can you also give us a real world example of what this would actually look like in real life? A high income earning W-2 professional who has a side gig perhaps. Um, well the high income earning W2 professional, uh, let's say they're, they're a software engineer.

7:10Um, they might create something, some sort of, of software program that they can then sell and monetize on the side. And then that can eventually create mailbox money or passive income. And then as that takes off, then they can either do more of that or they can find other people, other partners that they could partner with and then continue to grow that income. So Fire Nation, I really hope you're understanding this process about transitioning from active to passive investing while running a business. And we have a lot more to talk about around this topic when we get back from thanking our sponsors.

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10:03So Joe, as I think you can tell, I really love real world examples because that makes our listeners just, it gives them the opportunity, I should say, to really connect and to put themselves in that real world scenario and actually see what it could look like. So share some real examples of balancing a business while acquiring passive income. What does that look like? My approach has been to acquire the money to grow those businesses and then to simply put that money towards other deals. And here's a key to this, is the beauty of the passive income partnerships can be that it also, in addition to creating passive income, it can also help you create more income on your entrepreneurial side, whatever you're focused on.

10:58And so I'll give you a specific example where, you know, if in my industry, if I'm building my apartment syndication company or when I'm building that, well, if I'm investing with other operators in other markets, then I'm learning from them what markets are working, what type of class, what type of properties are generating the best income, the best returns, what kind of business model, Is it development? Is it bill to rent? Is it a value add, heavy value add, you know, whatever? Is it triple net lease? So as a passive investor, I'm getting a lot of information from these investments that I can then apply to my active investing, not only from a strategy standpoint, but also from a communication standpoint.

11:56You know, in my active business, I have investors. And so on the passive side, I'm able to read the communication from all these different investments that these operators have. And then I can determine, hey, they're good communicators. They're bad communicators. I like this. I don't like this. And then I can help make my business even better. So as entrepreneurs, not only can we benefit from passive income just because it's more money in our bank account, but we can find a way to take what we're learning from our passive investments experience and then apply it to our active business and make more money actively too.

12:36So sometimes we miss things that are staring us right in the face, just smack dab there in front of us. So how do we know when a great passive investment opportunity presents itself? What are we looking for? I'd say number one would be track record. And, uh, yeah, I know some, um, pretty successful, um, venture capitalists, uh, and they won't invest with a, a group if they haven't already had an exit. And that's just a rule that they have. And so one thing that could be a quick, uh, disqualifier for opportunities is has this person successfully done this before and exited already? So that's one.

13:21But then two would be simply understanding the business model. Does it make intuitive sense to you? Do you get it? If you don't get it, that doesn't mean it's not a bad investment, but it might not be the right investment for you. I think it's important to be able to simply explain what you invested in and to understand it. So I'd say those are a couple things that come to mind. Now, I'm a simple guy. I like simple things. So really take us down this path of the simplest way to start building passive income today. Whatever you're doing currently as an active entrepreneur, as someone building something, I would look at what you're doing and then I would identify what are some ways that I can invest passively in this industry or a similar type of industry.

14:21Because what that does is it gives you a shortcut to assessing out if it's a good passive opportunity because you'll be able to bring your category expertise to the potential passive investment. So for mine, a specific example for me, it's pretty simple. I actively invest in apartment buildings. Therefore, I can competently look at passive investments into apartment buildings pretty quickly and pretty well. And so I think leveraging whatever your area of expertise is and seeing what type of other passive investment opportunities there are in that area. So Joe, you talked about a lot today when it comes to passive income.

15:12Our whole focus today was transitioning from active to passive income investing while running a business. So if there was one thing that our listeners could walk away with knowledge-wise from this conversation, what would that one thing be? Time is the most precious resource that we have. And as we are actively building our business, it's important to be mindful of the time that we're investing in it and to be able to, while we're investing our time in the business to grow it, to also have something working on the side to help us create that passive income while we're building the active income.

15:53Joe, if Fire Nation wanted to connect with you, wanted to learn more of what you have going on, what is your call to action for our listeners today? You can go to ashcroftcapital.com and look up my firm, Ashcroft Capital. We have over 100 testimonials from our accredited investors who invest with us. Fire Nation, you're the average of the five people you spend the most time with. You've been hanging out with JF and JLD today, so keep up the heat. And for links to everything we talked about, visit eofire.com. Just type Joe in the search bar. The show notes page will pop right up. And Joe, thank you for sharing your truth, your knowledge, your value with Fire Nation today.

16:32For that, we salute you, brother, and we'll catch you on the flip side. Enjoyed our conversation. Thanks, everyone. Hey, Fire Nation, a huge thank you to our sponsors and Joe for sponsoring today's episode. And Fire Nation, are you an entrepreneur on fire who is looking to share your amazing message with the world? If yes, we are now accepting applications to entrepreneurs on fire. To learn more about becoming a guest, visit eofire.com slash guest, eofire.com slash guest. And I'll catch you there or I'll catch you on the flip side. Is now the time to grow a successful business? Attend the world's highest rated business growth workshop taught personally by Clay Clark and now featuring football star Tim Tebow and President Trump's son, Eric Trump at thrivetimeshow.com slash eofire.

17:17Again, request life-changing tickets today at thrivetimeshow.com slash EO fire.