Author: jwithrow

In this fourth part of our passive income Q&A series, we’re diving into advanced strategies — from using options for cash flow to building safe, scalable real estate portfolios — all while protecting your wealth and simplifying your business structure.

How to get passive income from option strategies?

A. Great question. The best way to generate income using options is to systematically sell uncovered puts and/or covered calls.

For those not familiar with options, they represent a contract to buy or sell 100 shares of the underlying stock. 

When we buy an option, we pay a premium up front, and then the value of our option contract can go up or down based on how the underlying stock moves. BUT, our option contract gradually loses value over time as it approaches expiration. 

That being the case, sometimes we can lose money even though the stock moved slightly in our direction. That’s incredibly frustrating.

This is why I believe selling options is the way to go. 

Continue reading “Passive Income Q&A: Top Survey Answers Part Four”

In this third installment of our passive income Q&A series, we’re diving deeper into your top questions about building financial freedom with real estate, gold, and Bitcoin — practical strategies to create lasting wealth beyond the traditional monetary system.

How do we create financial freedom outside of the corrupt monetary system?

A. I love this question. It’s clearly coming from a libertarian angle. And in a world where price inflation is raging, it’s more important than ever before.

My answer here is a little bit nuanced. It starts with a strategic asset allocation model that includes both gold and Bitcoin.

I see both gold and Bitcoin as market-based money. Both are outside of the control of government and the central banks of the world. Nobody can duplicate or debase them.

Now, the powers that be can certainly manipulate the dollar-based price of both gold and Bitcoin. And they do. But if we hold both assets in self-custody, nobody can stop us from using them.

Continue reading “Passive Income Q&A: Top Survey Answers Part Three”

In this second part of our passive income Q&A series, we’re tackling even more of your top questions about building reliable residual income with real estate investing — so you can escape the rat race and create lasting financial freedom.

How Much Money Do You Need to Start Passive Income?

Q. What is the minimum amount that you can start with in your system?

Q. How to generate passive income when you don’t have a lot of money?

Q. How fast can you start making passive monthly income? Can I start with $500 and start getting $10 a month in passive income in the next month?

A. All great questions. 

Lenders require us to put at least 20% down on rental properties. So the minimum amount we need to start depends on the purchase price of the first property we want to buy. 

To quantify this, we have properties available anywhere from $80,000 to $750,000. We can get started with properties on the low end of that range for somewhere between $16,000 and $20,000.

That said, we also have alternative strategies we use to help us produce residual income streams while we are saving up for real estate down payments. I have used one of these strategies to consistently generate an annual return of 9.2% with no market risk. 

Starting with $500, you could earn your first passive income payments in the first month – then compound from there.

Continue reading “Passive Income Q&A: Top Survey Questions Part Two”

This is the first part of our ongoing Q&A series where we tackle your biggest questions about passive income, building financial freedom, and using real estate investing to escape the rat race for good.

The Big Picture – How Our Passive Income System Works

Q. Can you make the system clear? I lose my way in complexity… thank you.

A. If I had to describe our passive income system in three steps, they would be:

• Understanding the macro environment
• Building financial security with a diversified asset portfolio
• Generating residual income through a scalable real estate and mortgage note investing strategy

We start with an honest assessment of the monetary system and the ongoing macroeconomic climate. This provides us with understanding.

Then we build a strategic portfolio of reserve assets. This portfolio will leverage our understanding of the macro climate. It provides us with financial security.

And in The Phoenician League, we help everyone craft their own customized asset portfolio with specific investments. We provide consistent updates on our investments as well.

From there we build a passive income portfolio. We use rental real estate as our vehicle. The tax advantages are just too good to pass up.

We also get members matched up with ideal rental properties and all the professionals they need to manage these properties and their overall portfolio.

Our goal is help everybody build a passive income portfolio that throws of $10,000 a month in extra income. And we have a systematic method for adding the properties we need to make this happen.

How to Negotiate a Great Real Estate Deal

Q. How do you negotiate a good deal on a property?

A. We invest through a nationwide real estate network. The network’s brokers have relationships with new home builders and local rehabbers in every market that we invest in.

For the home builders, selling properties through our network is much easier than listing on the MLS and hosting retail buyers all day. They can simply move homes much faster by selling to investors.

The same goes for the rehabbers. Having the ability to sell into our network allows them to move properties consistently. That’s critical for their business.

As such, these professionals are willing to work with us on pricing and concessions much more so than they otherwise would be. Whatever they lose in margin, they know they’ll make up on volume. If they can sell into our investment network, that is. We have strict criteria.

Because of this, our network’s brokers can negotiate great investment property deals on our behalf. Every rental must produce strong cash flow and meet strict criteria.

Is Passive Income Really Passive?

Q. Is income truly passive? How much maintenance work is required?

A. This is a great question. Can income truly be passive? Don’t you have to do something for it?

From my perspective, our approach to building cash flow with real estate makes it as passive as it could possibly be. That’s because we have professionals in our network who handle every aspect of the transaction and property management for us.

That said, it does require a little bit of work. But not much. Most weeks I spend no more than ten minutes on my real estate portfolio.

These ten minutes consist of bookkeeping and corresponding with property managers. Of course I also go over the property management report every month.

We talk about exactly how to handle these items in our program.

Meanwhile, the rent checks just show up in the bank, month in and month out.

How Do Taxes Work with Rental Income?

Q. Will you include tax strategies so we can safeguard our earnings?

A. Absolutely! This is the beauty of using real estate as our cash flow vehicle. The tax code treats rental real estate extremely favorably. We talk about this a lot in our program.

By default we should not owe taxes on our passive rental income. That’s just utilizing standard deductions and straight-line depreciation.

We also teach advanced real estate tax strategies in our program for bigger savings.

Will Passive Income Bump Me Into a Higher Tax Bracket?

Q. Won’t I get put in a higher tax bracket?

A. Not with our approach. Real estate is incredibly tax-efficient. We cover how to use depreciation and other strategies to keep your overall tax bracket lower.

What’s the IRS Difference Between Active vs Passive Income?

Q. What is the difference between different types of income according to the IRS? And how are they taxed differently?

A. Another great question. This one ties in with the previous.

Please know that the great CPAs in our network would break down this answer in even more detail than I will today. But I’ll give you what I believe is the most relevant answer for our purposes.

The IRS puts “active” and “passive” income in different buckets. And the two buckets are isolated from one another by default.

Active income refers to W2 income and any income we receive from businesses that require day-to-day activity.

Passive income is income that comes from our rental properties, limited partnerships (syndications), and any other source that doesn’t require day-to-day activity from us personally.

To me, what’s important here isn’t the tax rate.

The key is that we can’t use passive losses to offset active income or vice versa. This plays a major role in our tax planning.

For example, let’s say our real estate generated $10,000 a year in cash flow. And with our deductions and depreciation, we show $12,000 in expenses. That wipes out our tax liability and produces a loss of $2,000.

We then carry over this loss to the next year. That way it’s available to us to offset future passive income.

This all may sound complicated… but that’s why we have great CPAs in our network. We don’t have to worry about any of this – our CPA firm will handle it for us.

Now, keep in mind that the IRS says we cannot use this $2,000 passive loss to offset active income. It can only offset passive income.

That is, unless we employ some expert tax strategy. There is a way to cross the arbitrary barrier and use passive losses to offset our active income.

This strategy takes some advanced planning. And it requires us to meet strict IRS qualifications. But to me, it’s the equivalent of modern-day alchemy for those who can pull it off. It’s an incredibly powerful tool to eradicate our tax burden.

I don’t have the space to dive into the details around this strategy today. But we absolutely discuss it in length within our core content in The Phoenician League.

Okay, we’ll leave it here for today. Please be on the lookout for part two of our Q&A series tomorrow.

-Joe Withrow

Passive Income FAQ

How does your passive income system work in simple terms?

Our approach has three steps: understanding the macro environment, building a strategic portfolio of reserve assets for financial security, and then creating passive income streams — mainly with rental real estate. We also match people with the right properties and trusted professionals so they can scale up to $10,000 per month in extra income.

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How do you negotiate good deals on rental properties?

We invest through a nationwide network of brokers who have strong relationships with builders and rehabbers. They’re motivated to work with us on pricing and concessions because our network can move properties quickly. Every deal must meet our strict cash flow criteria to ensure solid returns.

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Is passive income really passive?

With our system, passive income is about as hands-off as it gets. Our network handles all aspects of transactions and property management. Most people spend about ten minutes a week on bookkeeping and communicating with managers, while the rent checks roll in every month.

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Are there tax strategies included to safeguard earnings?

Yes! Real estate has amazing tax benefits. Used correctly, we shouldn’t owe any taxes on our rental income. Plus, there are advanced strategies to offset other forms of income. We cover all of this in our program and connect members with top CPAs who specialize in real estate.

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Will passive income push me into a higher tax bracket?

Not with our approach. Real estate is so tax-advantaged that, when structured properly, rental income usually isn’t taxed at all. In some cases, we can even use depreciation and other strategies to lower our overall tax bracket.

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What’s the difference between active and passive income according to the IRS?

Active income is your salary or business income you actively work for. Passive income comes from rental properties or other sources that don’t require daily activity. The IRS separates these two buckets, so losses in one can’t offset income in the other — unless you use advanced strategies that we teach in our core content.

P.S. Don’t forget that The Phoenician League is currently open to new members.

And for those who join us this week, we’re taking 25% off our normal membership rate. Just use coupon code member25 at the checkout page to claim your discount.

For more information, just go here: The Phoenician League Membership Page

The temperature has dipped below freezing up here in the mountains of Virginia. The first snow flurries of the season will happen in the morning. And Weather.com tells me that tomorrow night’s low will be precisely zero degrees Fahrenheit.

That can mean only one thing. The holiday season is here.

And in the holiday spirit, I would like to share with you my two favorite holiday traditions. They involve gold and spiked eggnog.

Every year at this time I buy my two kids physical gold and silver coins. And I write each of them a heartfelt note to go along with the gifts. The note is dated so that maybe one day they will come across them again and have fond memories of their childhood.

Continue reading “My Two Favorite Holiday Traditions”

We talked about the Fed’s silent coup yesterday. It stems from the battle between the New York banking interests and the old-world European power structure.

What this battle is really about is control over the engines of finance.

As the Austrian economists have pointed out, the fractional reserve banking system allows the commercial banks to pyramid credit on top of base money at a 10-to-1 ratio.

This effectively gives the commercial banks the ability to create money from nothing as well. The central banks aren’t the only money-printing game in town.

And this allows the banks to determine what gets financed and what doesn’t. There’s an immense amount of power in this.

For example, should we finance oil exploration and small-module nuclear reactors… or acres upon acres of windmills and solar farms?

Should we finance small local farms… or push all agriculture into a few multinational corporations?

The ability to aggregate and allocate capital is absolutely critical to modern civilization. Those who control the engines of finance have an outsized ability to shape our world.

And here’s the thing – there’s fierce competition among the commercial banks. This ensures that each bank strives to make good credit decisions. Most of the time, anyway.

The better their loans perform, the more money, power, and influence they accumulate. So they want to finance promising companies and projects.

The European Deep State wants to usurp this power for themselves.

And they want to eliminate all competition so that there are no consequences for poor decisions. This would allow them to favor pet projects specifically designed to restructure society according to their aims.

That’s the heart of their “stakeholder capitalism”. That’s what the “Great Reset” is all about.

So the battle is on.

The Fed’s aggressive actions this year have been about beating back the old-world European powers. The “combatting inflation” meme was just a cover story.

And this is why the Fed is not going to pivot any time soon. It’s going to get the Federal Funds Rate back up between six and seven percent.

And I think they are content to let it stay there. The Fed isn’t raising rates now just to cut them dramatically later. Those days are over.

That means we’re living through an incredible macroeconomic shift. The Fed is not going to support the U.S. stock market anymore.

We better tailor our investment approach accordingly. What’s worked well for the last thirty years will not work so well going forward.

The solution? Strategic asset allocation.

More information right here: Finance for Freedom Masterclass

The Federal Reserve (the Fed) executed a silent coup this year.

Fed Chair Jerome Powell and President of the New York Fed John Williams successfully replaced the London Interbank Offered Rate (LIBOR) with the Secured Overnight Financing Rate (SOFR) here in the U.S.

SOFR is now the benchmark interest rate for dollar-denominated loans and derivatives. That means it influences other dollar-based interest rates.

LIBOR previously held that role. And the key here is that LIBOR was heavily manipulated. We know that definitively thanks to one of the investigations into the 2008 financial crisis.

So for as long as U.S. rates were tied to LIBOR, European banks had some influence on monetary policy in the U.S.

In other words, the Fed was trapped in a box. If it tried to raise rates while LIBOR was still the benchmark, the European Central Bank (ECB) and the large European banks could have manipulated LIBOR lower.

That would ensure long-term rates could not rise too much, regardless of where the Fed set its target rate. Thus, the Fed wasn’t in the driver’s seat.

That’s why what happened this year was a silent coup. The Fed was determined to raise rates. And ousting LIBOR was the only way to do it.

Of course, this begs the question – why?

Continue reading “The Fed’s Silent Coup… And What It Means for Our Investment Strategy“

The invasion of artificial intelligence (AI) is upon us.

The tech industry is buzzing about an AI called ChatGPT right now. This is a conversational AI that can also write stories, essays, and emails upon command.

Naturally curious, I gave ChatGPT a spin. To see what it could do, I asked the AI to write an email comparing real estate investing to investing in the stock market.

Here’s what it came up with:

Dear Reader,

When it comes to investing, many individuals are looking for ways to maximize their return on investment.

When deciding between real estate and stocks, it is important to understand the differences in terms of returns. In this email we will discuss four returns associated with real estate investments, as well as how they compare to stock investments.

When investing in real estate, investors can look forward to four main returns: cash flow, equity build-up, tax benefits, and appreciation. 

Cash flow refers to the income earned through a property’s rental payments or other sources of income generated from a property.

Equity build-up occurs when an investor pays off the mortgage or pays additional money toward principle. The equity build-up increases over time until the entire loan is paid off and any remaining funds are kept by the investor in addition to any profits made from selling the property.

Tax benefits refer to deductions that can be applied against rental income earned from an investment property such as depreciation expenses or interest paid on a loan used for purchase.

Finally, appreciation refers to increases in market value of a property that can be realized through capital gains when you sell it at a higher price than what was initially paid for it.

In comparison, stocks offer only two main types of returns: dividends and gains of appreciation.

Dividends are payments made by corporations that own stocks which are distributed amongst shareholders of those stocks in proportion with each shareholder’s ownership stake. Therefore larger shareholders receive more dividend income than smaller ones proportionately.

Capital gains refer to profits gained from buying low and selling high – meaning if you buy stocks at a lower price and then sell them at a higher one you have realized a profit through capital gain tax implications.

On the other hand if these same actions result in selling at a lower price than what was initially paid for them then there will be capital losses incurred instead. 

Thus investors who invest in stocks cannot benefit from cash flow or tax benefits whereas investors who invest in real estate can benefit from all four types of returns mentioned previously: cash flow, equity build-up, tax benefits and appreciation resulting from capital gains.

Thank you for taking the time to read this email comparing real estate investing with stock investing!

Hopefully this summary has helped shed some light on how these two differ not only quantitatively but also qualitatively speaking so that you may make an informed decision regarding your own investments based upon your individual goals and preferences!

All the best wishes with your investments!

There we have it. The AI spit this out in about five seconds.

As far as the content goes, ChatGPT is pretty spot-on with its comparison. The AI’s writing style could use a bit of work though. Its readability score is much higher than I typically shoot for.

Still, this is pretty impressive.

Going forward we won’t be able to know whether what we’re reading was written by a human or an AI. There’s something a little unsettling about that.

The good news is, we don’t have to deal with AI’s when investing in real estate. And for those looking for a great system that makes building passive income with real estate simple, check out our new program right here:

Rental Real Estate Accelerator

The Rich don’t work for money.

That was one of the key lessons from Robert Kiyosaki’s popular book Rich Dad, Poor Dad. And it made perfect sense to me…

I first read Rich Dad, Poor Dad about twenty years ago. I was living on the sixth floor of a college dorm at the time. And I got the book from a guy right down the hall. He told me I absolutely had to read it.

He was right. The book opened my mind to an entirely new world of possibilities.

After all, Kiyosaki made it sound easy. Don’t get a job. Buy rental properties and build passive income instead. What’s not to like?

But there was a problem…

Continue reading “The Cash Flow Vision”

I’ve got a bone to pick with Black Friday.

I spent the weekend wading through all the marketing emails that hit my inbox. I bet you did too.

Black Friday early sales… day-of sales… last chance sales… I lost count of how many there were.

Then, at a certain point, the headlines flipped. Now it was time for Cyber Monday sales. So I waded through all those emails too.

Of course, I don’t have any problem with these emails. I understand. I try to send out a couple emails every week myself.

But here’s the thing – the whole concept underlying Black Friday is a problem. That’s because it perpetuates the most common misconception we have around money.

It’s the consumerist view of money. The idea that the whole point of making money is to spend it on stuff. And then if we can make “good money”, we can buy even nicer stuff.

So many people view money in this way.

And as a result, they live their life on a treadmill. Constantly working for money… buying stuff… and working for more money.

I think it’s time we flipped the script.

Continue reading “What Black Friday Gets Wrong”