By this time, I had some money invested in a franchise development company. During the company’s Christmas party, I met a few of the Five Guys Burgers franchisees (Five Guys Burgers & Fries is one of the hottest burger franchises that started in Northern Virginia). They told me they were hiring an experienced multi-unit restaurant operator who would run the business, they would fund it, and count the passive income.
Bingo! That’s exactly what I wanted: passive income. Because the Five Guys Burgers franchise was no longer available in my area, I went with the next best thing: an up-and-coming pizza franchise.
I was going to bet big on passive income. My plan was to deploy my entire net worth into this pizza franchise. I thought I had enough to fund three to five restaurants, which would then cover my living expenses and fund additional units. I had a 20-unit plan, and I set the plan in motion.
I hired an experienced restaurant operator, signed a franchise agreement and lease, and opened my first pizza restaurant in April 2006. Within the next six months, I had bought out another franchisee, turned his store around, and built and opened our third location. Over the next twelve months, I built one more restaurant and bought another two, and I increased sales between 25% and 50% in just a few months.
It turned out I was pretty good at this.
And then the recession hit.
Sales plummeted, and two stores began losing money 먹튀검증사이트. I had no choice but to sell both locations at the worst time in history to sell ANYTHING, especially restaurants that were losing money.
Welcome to entrepreneurship, Michael!
By 2009, things had stabilized, but by 2013 I realized that our profit margins had been slowly shrinking, and I could no longer afford my multi-unit restaurant operator. With a heavy heart, I had to let him go and manage the restaurants myself. That was not something I had planned for or even wanted. So much for passive income!
Despite my best efforts to turn things around, the slow downward grind continued, and nothing I did made a difference. I decided to sell all of the restaurants, but I didn’t realize how long that would take. It took me nearly two years to sell all of them, and at rock-bottom, all-cash prices. A restaurant that cost $300,000 to open sold for all cash for around $40,000.
It was gut-wrenching.
What was worse was the ever-increasing negative cash flow. I was losing $10,000 a month and exhausting all possible lines of credits. I estimate that I was three months away from losing everything. Fortunately, I sold the first restaurant, and then a second, which cut the bleeding and put some money in my pocket to extend the runway.
This particular experiment, while educational, cost me nearly everything.

During this time, I was also searching for the perfect investment on the real estate side.
After reading Rich Dad Poor Dad in 2004, I had decided to dabble in real estate investing. I had signed up with a local wholesaling mentor, who taught me how to market for deals. After my first postcard campaign, I acquired two deals from the same out-of-state owner. Within six months, I had renovated and re-sold those two properties for a $110,000 profit. By working part-time on these two house flips, I made as much as my entire salary at the software company.
It blew my mind. Still, I knew that the real money was in commercial real estate.
I continued to flip a few more houses, but everything was pointing to apartment buildings as a way to create passive income and long-term wealth. In 2007, I attended a boot camp and immediately started calling brokers in Texas and sending letters to property owners. I educated myself. I developed financial models. I analyzed deals. I called property managers and lenders.
After nine months of activity, I finally got a verbal agreement on an 82-unit property in College Station, Texas. By this point, I had probably looked at 120 deals, so I knew it was a good deal. It was a light value-add opportunity. It needed some landscaping and TLC, but most importantly, the rents were about $125 under market and expenses were high. The property manager felt very confident about making this property shine.
The problem was, I was building and buying restaurants. I knew that if I did this deal, I would have to travel to Texas and spend some time there. I couldn’t do both. After some deliberation, I decided to put the whole real estate thing on hold to focus on the restaurants.