CAIR 73: The Secret to Creating a Passive Income As A W2 Employee !!

In this episode, I have the opportunity to sit down with Christopher Nelson. A technology executive out of Silicon Valley who's figured out the secrets to helping you achieve passive income as a W-2 employee.

Grant
Hey, everybody, welcome to another episode of Financial Investing Radio. So today I have in the house with me, Mr. Dr. Why don't want to call you. Sophisticated, brilliant. Christopher Nelson is in the house here with me today. I love his subtitles technology executive real estate investor, author, podcast hosts and inventor of the space station. Was that right? Or did I get that right?

Christopher
I think you may have stretched on the space station. But I you know, space has always been a dream of mine. Right? I am a low tech tech technologist, a bit of a geek. So yes.

You can learn more here:

• Wealthward
• Thrive Community

Grant
Excellent. Excellent. Well, okay, so let's start with that. technologist geek. What does that mean? What? Tell me about your background?

Christopher
Yeah. So So my background, you know, interestingly enough, I started with just a love of technology, right? You know, I heard some people tell stories, the other day of how I think exploring and wanting to take apart, you know, televisions and, you know, anything remote controls, understand how they worked. And I just was fascinated, especially as the computer age started taking off. What can we do with these? So, you know, my thought was, I wanted to go to university and I wanted to learn how to become a software engineer, so studied very hard. And then when I went to my first internship junior year, with a large database company, and I was by myself working on this code, I started going crazy. I started thinking, what am I going to do? Like, I, I love this, I do not like this. And it was actually in a job fair that I met somebody who, who had a similar major who was working in technology consulting, he said, Hey, there's different things. It's not all you have to be a software engineer, I solve difficult technical problems with people moving businesses forward. And so that really, I mean, hit a lot of cylinders for me and took me off into technology, consulting, which is where I started my career.

Grant
That's awesome. I love that background. i It's funny, I didn't know that about you. I had a similar journey. I come through the technology world. But I ended up bouncing from doing my first startup right out of college. Because when you come out of college, I don't know if you know this, but you typically have all the answers, right? So so I jumped, I jumped right into startup, I'm gonna go solve these world problems. Clearly, everyone's having struggle with course, I failed miserably on my first startup. So then I jumped into the technology consulting world with back then one of the big six, you know, in Chicago doing some technology work. But yeah, it's funny, I jumped to the people side of it, also. And that, that was liberating for me, because if I spent all the time just and I love I still code today, don't tell anybody. But I use it as a tool to keep my brain active. But if I had to read every day, all day, I think I'd go crazy.

Christopher
Right? And, you know, it's, I actually tried to now actually take that message to people, kids graduating from college is the fact that you can actually be involved with technology. And it doesn't have to be this one way like we see, you know, again, media, movies presents this one view, but there's a lot of other things that you can do. And I found that it was great start to my career, to really get me launched. Give me a ton of skills. Give me a great background, because I did I went to work for Accenture, right that came out of one of the you know, the big six became the big four. Yeah, it was, you know, one of the big four back in the day. Well, well, we're constant names. 

Grant
Yeah, I did. KPMG. So there you go. Yeah, technology. There we go. Wow. Okay, which office were you located? Where were you?

Christopher
At San Francisco. I mean, I felt like that was a great opportunity because I while I was doing the tech consulting thing I did want to work for high tech, like I wanted to work for companies that were really, you know, moving the needle. And that's actually set me up. So about eight, nine years into my career, I realized that I had this great experience. And this is what I call in my book, Your career capital, which is a combination of your education, your experience and results. And I realized I could actually go trade this for equity in startup companies, because like you said, I've been working for these tech consulting companies, I got that figured out, right? Well, I went to work for my first startup, abject failure, right, I found myself and then a year nursing and Ulster having a bad boss. And I didn't know how I got there. But taking a step back, and I think a lot of us figure out pass through failure. And so I don't think we should fear that. And I realized I did not look like I did not think like an investor with my time. Like I'd been, you know, in the in the stock market investing since, you know, the 90s. But I had not thought like an investor with my time. So went back, put together a due diligence criteria started work in my network, what did people recommend? The next company I chose employee for 17, at a company called Splunk, in 2011, and up IPO in 2012, and it turned out to be a big win for my family.

Grant
Yeah, that's absolutely cool. Yeah, Splunk, boy, they have done a great thing for the industry. It's funny, united, similar routes, I, after I did my KPMG route for a number of years, I had this itch to get out to Silicon Valley. And so I was chatting with this startup company out there. And, and I said, my wife, you know, I'm just gonna fly out, you know, we're in Chicago, the time's gonna fly I just checked, probably won't do this, right. Uh, probably, but I just gotta go check them out. And of course, I get in there. I'm talking with them. And after several hours of whiteboarding and brain, brain exciting things, they go, do you want to, you know, come join us? And I'm like, Oh, I think the answer is yes. You know, and I remember being on the phone in the little conference. You know, maybe my mind's changed. You know, I think we're switching. We're moving out here. Yeah, I did several startups out there as well. And those course weren't much different. So you know, you need to have that first one that kicks you in the teeth, right? And it's like, okay, wait a minute. You do, you do?

Christopher
And I think sometimes, right? It is, you know, those those learnings that help like anything else, right? I mean, this is where I'm trying to now build this thesis and conversation around, it's an investment of your time. So sometimes you go, you get skin in the game, and it's not the right thing. But then does that mean you stop investing altogether? No, you go and adjust your lens and you you go, and you get feedback, and then you go, and you do it again. And maybe this time you say, I'm just gonna, in my head, I may sign a four year contract, maybe let me just do two years, see what's there and track it as they go along. You're going to also be looking at those quarterly meetings, when they're giving readouts a lot differently, you're going to look at the market a lot differently and say, What can I do with my time?

Grant
So I think that's one of the cool things that I noticed about you when I was reviewing your profile. And it was this, it was not just let me go after doing this startup. But it was to leverage what I'm getting out of this either equity opportunities, but to move it into some passive opportunities. And I think that was, for me a real Aha, like, you know, earlier in my career, I wasn't even thinking that right? I'm doing the various startup companies. I'm like, go, go, go, go go. And you think you've got all this endless energy. And at some point, you think that way, but what I love is a year connecting the dots from take that energy and translate it into this passive mechanism that's going to benefit you. So I don't want to steal your thunder. But talk more about...

Christopher
Well, well, what led me to that is it was actually that first IPO. So all of a sudden, you know, I'll never forget that day was you know, April 18 2012. Phenomenal day. And but the most memorable moment wasn't this big party, the fact that it went out double what we thought it was, was when I went home that night, my pregnant wife is sitting there, she asked me two questions. She says, When can we get the money and when can we buy the house? And I had no answers. And I literally went into the next room and started emotionally, you know, falling apart a little What I didn't realize is I was experiencing what's called a sudden wealth event, which is sudden wealth syndrome, which is a psychological syndrome that when you have these things you feel lonely, depressed, stressed out. If you're not prepared. You're not and I wasn't like I'd fought so hard to get there like most of us do. I wasn't prepared aired in so what I found grant is that many people aren't prepared like they like and I literally have been interviewing a lot of people from my book a lot of technology in place. And they will. I heard Mark Cuban say like you have to work for equity if you want to get ahead or, you know, I heard Gary Vee or somebody, Robert Kiyosaki gives them the idea that they want to be an owner. They go get it, and then that's it. They stop. And so my experience was okay, now we got this. I was okay. How do we now start getting this? You know, because I was tired during the six month lockout period, over 90% of your wealth and a single stock. I'm telling you, man, like I ate a ton of Tom's during that time, like you do. Yeah. Yeah. So it was really been this plan of, you know, how do we start moving it into something passive? How do we get it to that, you know, Kiyosaki goal. And so as we were doing that, as we were, you know, scouring the earth in the Bay Area, trying to understand it, we started getting exposed to real estate syndications, we started getting exposed to crowdfunding. And we realized that we had to get sharp on the math, we need to really understand how to do diligence, how to, how to invest. And, you know, we went on a journey of where we figured out how to start getting some skin in the game that, you know, was something that we could afford that we could afford to lose, and start really understanding those types of investments. And as we started seeing more and more success, other people started raising their hands, because we were very excited, we would talk about what we're doing. We always feel, you know, with our children with our friends, we should talk about careers and money. Like we should just have the conversation in an appropriate way. Not in a braggadocious way. But in a What are you doing? What are we doing? Because if we don't talk about it, you know, like you do here? Yeah, we don't do anything is people who sit on it. Yeah. Yeah.

Grant
You do, you do sit on it. Absolutely. So. So tell me about I think I saw something that you wrote. "From No Dough to IPO". I love that.

Christopher
Yeah. And so this is, this is the first book that I'm writing. And it's really going to be a playbook on how to tech employees think like an investor when trading their time and talent for equity. Right. And I want it you know, you said it grant like, nobody gave us the playbook. Right, we had to go in there. And we had a trip over our own shoelaces, you know, get beat up, figure this thing out. I you know, I have interviewed people in my network who have done three or four IPOs serially, I've interviewed people that have never done anything pre they've all been in post companies, and they get these companies public, and they take them from, you know, 500 million to a couple billion dollars. And they've gotten tremendous wealth, already liquid the whole time. And I've turned it around and put it into a framework so that w two employees can really be time investors and say, you know, for myself, I had lost a small business. That was my side hustle, I was broke in, I realized I had to go and work for startup companies if I wanted to get ahead. And I think many people are trying to figure out, how do they leverage their skills, their time and their talent to do that? I wanted to put it out into a book that says, here's how you actually set yourself up. Here's how you negotiate for the equity. And then once you get it, what do you do you need to plan protect, and then you need to start producing passive income.

Grant
So that framework that you've alluded to, and obviously it's in your book and what it is that you provide in terms of services to others? Sure. In that framework, how far does your organization get involved in terms of taking people through that and applying it as a good go all the way through into the real estate piece itself? Or tell me more about that?

Christopher
Well, so I mean, the book is really launching the education platform. So right now the book is really the key anchor, we are looking to follow with some online training that people can do. And we're considering some coaching programs. But yeah, I mean, getting back to the origin story is that this this endeavor started from us doing done for you investments for technology employees, my wife and I who were actively investing in, you know, multifamily in ATMs and mobile home parks. We were asked by our friends to help start creating some vehicles for them because they wanted the success they didn't want to go put it together. So that's how Welford capital was born five years ago was in in an effort to help technology employees and you know, we're the lead investor, we're leading with our families dollars, we're creating a model portfolio that's based on where we've taken our tech equity and how now we've put it to work in real estate with our my wife and I shared goal the goal of getting to $300,000 of passive income a year.

Grant
Yeah, that's awesome to get to that. Point, what's the trajectory? Like? And I? I'm sure part of the answer is how much you're putting into it financially. But in order to in order for someone to get to some, I guess what I would call, in fact, I was watching on your YouTube channel use an interesting phrase I'm looking at right here. It was something like, yeah, you wanted to get to a point where your passive income could overcome your W two income, you made that video. So I realized that's gonna vary by person. But yeah, sure range like, Is it A, is that a two year or five year journey? What does that look like?

Christopher
Well, I think to your point, Grant, it depends on, you know, how much you can deploy, I really think that it is a five year plus journey. For most people, I think that if you have if you're sitting on a ton of dry powder, right, if you've had, you know, a couple of exits, you know, still it's gonna take time to deploy that capital. Right. And this is what I tell people is, if you walked in, you know, with $10 million, you would not want to put that into a single real estate investment, because then you're going to have the same thing you should if you're sitting in the single tech stock, you're gonna be not diversified. Right? So I think on average, it's, it's, it's a five year journey to really start making some impact. And this is why, you know, I want to go upstream to people earlier in their careers thinking about it, because my honest belief is that if I can free technology employees from having to work for a W two, many of them still want to make an impact. And this is the conversation I love having is if you didn't have to work for money, what would you do? You know, eight out of 10 tech employees don't say I'm gonna go travel the world, they'd be like, I want to solve this problem, or I want to fix that problem. And that, to me, is is really powerful in our community, right, as a technology employees is how can we unleash that power, and allow people to do the impact work and not be focusing just on the survival work?

Grant
So I have a fundamental question for you, when I saw that your focus was on the tech space employee. I'm assuming this could apply to any sort of w two employee? Or is there something about what you're doing that says, This is really relevant to a tech space employee?

Christopher
Well, so the reality is, is, you know, I want to be able to speak into my people, my focus, my niche is focused on technology employees that I really understand, I understand, you know, their concerns, I understand, you know, you know, how it is, it's a very high paced, fast paced lifestyle. And so, in. So that's where, like, my writing my books, and everything is very much focused on how do I help these people and try and pay it forward, if you will. Now, on the real estate side, it's interesting that I've been very focused on technology and plays in helping them however, different people relate to the story, right? I mean, I have people that come in and say, Oh, I've I've gotten equity, it hasn't been in tech. Can I invest with you? Of course, you can, you know, or, interestingly enough, I had a jockey that reached out and wanted to get a call and said, I actually won this big stakes race. That was my big one. And I went through the sudden wealth event, I really related to what you were talking about that, can I invest with you? And so of course, I'm open to everyone participating in our investments, but I just feel really nobody feels sorry for somebody who goes through the sudden wealth event, right, you know, works in an IPO, all of a sudden, you get a multiple seven figure, payday, nobody feels sorry for them. But those people still struggle. A lot of us, myself included, didn't come from money, had no idea what to do with it. Yeah. Right. And so it's really, you know, in my mind that I want to really help and lean back into my community, because as I mentioned before, like I think that that community, financially independent will actually then turn around and bring some huge benefits to to everybody.

Grant
I can relate with that, I grew up milking cows and hauling hay. So yeah, that was that was that was the foundation of that. So I'm interested in your thoughts around because one of the cool things I saw that you did was you're helping people think through their career paths, and with everything that's taken place with COVID and the impact to the workforce and and even what people are expecting from their jobs today and how that changed. The mindsets changed. How is that impacting the things that you're doing?

Christopher
Well, I think it's creating more opportunities, right? I think coming post COVID I mean, it was in the middle of COVID. I ended up going back to work for another technology company. I had a very interesting offer. And it was for an all remote company that was built all remote they came it was developed all remote in 2011. And it had an An amazing trajectory and amazing story. And it was important for me to really experienced that because I think that the future of technology employment, while I know a lot of people are being brought back into the office, I think it will truly, ultimately become hybrid, that where you're going to have office time to connect, you're going to have a lot of home time. What this allows for, you know, I think certain roles, certain specialized roles is the ability to make tech money and live in the low cost, you know, income or a low cost of living areas. Yeah, that wouldn't change. It is in this to me provides opportunity to what to save more to invest more, right? There's this whole concept of people talk about lifestyle by design, well, what if you designed your lifestyle to invest more, and I mean, this is what, you know, really motivated us to leave the Bay Area, come to Austin, Texas, in 2017, where, at that point, we got in here at a much lower price point, we are able to sell our house in the Bay Area, get some single family homes and this home, so we're able to now more passive income, right, but lower our overall cost of living so that then we can invest more, I think there's going to be more of that type of opportunity. I think that, you know, there, people are going to be able to have much more flexibility in that geography, which I think creates more overall opportunities.

Grant
Yeah, definitely see the the change there with that. And in fact, having so many people shift and move around the country right now you see this sort of exodus from some of the coasts, you know, coming in to the Central part, companies, large companies that we've seen, of course, moved out of places like California and such, you've talked about in your material that I reviewed, on your YouTube channel, some of the reasons to invest in real estate, and why you picked that as an avenue for doing this. There's obviously lots of places certainly crypto which has, of course, been kicked in the teeth, you know, recently, but, but why why real estate, he touched on that.

Christopher
I would say the most compelling reason right now, to be investing in real estate is the income by like, a lot of, you know, asset classes do not provide, you know, to me, there's there's the construct of a investment that says I made for income. Income to me is not a growth vehicle that says I'm going to take your money and expand it know, an income vehicle, like real estate, or like what we used to have in the bond market, you know, pre 2008 is, I am going to preserve your capital, potentially increase that, and I'm going to give you returns on top of that. I think that real estate is the place where then you have a hard asset behind it, that again, gives you you know, those those multiple benefits, I know that, you know, four ways to make money in real estate, right, there's the cashflow, there's the appreciation, there's the equity pay down, and then guess what the tax benefits as well, right? We know that we need a lot less real estate money to duplicate w two or where we want to be with w two income because of the fact that we don't need as much because you get a lot of the depreciation, you really get, you know, good tax planner going there. You know, you can you can reduce that. But this is where, you know, I don't see any other vehicle right now that's going toe to toe that can preserve capital and put cash in your pocket.

Grant
Yeah. What are your thoughts about current trajectory, you know, around interest rates and potential soft landings of the real estate market? Is that create any concerns for you?

Christopher
I mean, it definitely creates concerns. I mean, I think that a lot of the the increase in interest rates has slowed down a lot of the transactions on the real estate front. I know that for, you know, multifamily, you know, partners that we have here in Central Texas, you know, there's just a real long pause, like, where's this going to land? And I know, a lot of, you know, investments that were in process, you know, now have have stopped because, I mean, just negotiations because the rates are moving so quickly. I do believe that, you know, this increase in interest rates will do what, you know, the government is looking to, which is going to slow down, cool it off, prices are going to have to start ratcheting down to excuse me move the market forward. But however, in real estate, there are opportunities to buy I know that I'm very bullish right now in the mobile home market. I know also in the self storage market, there still are a lot of opportunities because the fact that those industries have not been standardized, let's say like multifamily, or a lot of you know of some other commercial properties as well, there still are real buying opportunities there. And so I think if you stick to the fundamentals of Buy low, get something that's cash flowing very well, there, then is the opportunity to still make money.

Grant
Is there a particular asset class real estate that you enjoy more than the others and mobile homes? Is the multifamily? Do you? Is there a particular place people should start, you know, when they think about this?

Christopher
Well, I mean, I think everybody should start with with the fundamentals. So there's a, a book that I recommend to everybody, it's what every real estate investor needs to know about cash flow by Frank gallon le, and it's a math book, and it gives you the fundamentals. And you go online, you get a spreadsheet, and you understand the math, not complicated, but that's where everyone should start. And it gives you a breadth of asset classes. For me right now, I am bullish, and my partners and I are acquiring in the mobile home park space because of the fact that it's a scarce asset class, scarce meaning that's in high demand. And for the demand, they're not making any more. So that means that if you look at, you know, I have a chart that I share with people that the net operating income of mobile home parks has been steady up into the right since before the year 2000, because of this whole thing that, you know, when you have a scarce asset class, that is going to force appreciation. The other thing is, you know, there's there's a lot of inefficiencies, and a lot of, you know, mom and pops that are baby boomers that are looking to get out right now. So, you know, with a good operations team, there's, there's a buying opportunity. And I do want to I think one of my partner said the other day, and I love this piece of advice to say when when times are good, you want to be in affordable housing, when times are bad, you really want to be in affordable housing. Well said, yeah, right. I like that. I literally wrote it down. As soon as it says, I go, that's gold, that isn't that is good.

Grant
I picked up that wealth word is a verb. That's one of the things that I discovered in reviewing what you're doing. Tell me more about this verb. And what I mean by that is, I'm trying to relate it to those that are listening, where they may or may not be in the tech space. But let's say you're in the tech space, and they're early in their careers, and they're thinking, How do I get started? What do I do next? What's the verb? Right? What's the action that I should do? What I start doing differently?

Christopher
Well, and so the whole concept is always be moving towards wealth. And this is always just having your eyes and I do have spec. So you know, having your investor lens on. And so I think that, if it's in your W-2 job, you know, it really is then how can you work for equity? How can you get a piece of ownership and this, you know, I call it Kiyosaki is bridge, like he doesn't call it out in his book, because he sort of has, you're the employee and the owner over here, there's this gap. But equity when you're able to get, you know, again, can that be in technology companies? Sure, could you, you know, I know people work in private equity companies, they get staked there, you know, and other public companies, you can too. But if you're working for equity, and you have salary, you know, a bonus, and you have this equity, what I always tell people, then you can live on your salary, you can party with your bonus, and you invest all your equity, you know, that then gives you this additional capacity to be able to start investing. And then, you know, as you and I both know, on the investing front, it's how do you stay diversified? How do you have a portfolio that's fit for your lifestyle, and you have goals, and you're working on it? And to me, you know, in my wife and I created this word, you know, sitting around and trying to think of how can we create this word that really encourages people to just be thinking about moving towards wealth, which could be your health, right? You want to be taking care of your health, you want to be taking care of your mind, you know, because wealth to us is an abundance of resources. And that can be you know, energy, it can be, you know, a network, right networking with people is moving towards wealth. So, that was really the spirit behind it.

Grant
That's awesome. I love that now if someone wanted to learn more about you and your organization, what you're providing where do they go? How do they find this?

Christopher
Well, they can go to Wealthward.com. That is my core website where they can go learn more about what we do and get time on my calendar. They want to understand what we're doing in the mobile home park space, that is ThriveCommunity.fund. There they can go see a free webinar of you know, really how we're, we're, we're really doing something very really interesting in that space and have this blue ocean concept. And then tech careers and money talk. That is my podcast I'm recording episodes gonna be launching in September. But that's tech careers and money talk where, you know, like yourself, I'm facilitating this conversation in the corner of tech careers, you know, and really, there'll be a Tuesday episode. That's all about how you build and grow your career. How do you go from individual contributor to manager, there's going to be a lot of strategy, there's going to be a lot of interviews and use cases, then Thursday's money day, right? We want to bring in stock options, lawyers, what do you need to be looking for when you're negotiating for equity? How do you generate passive income? How do you buy houses in high cost of living areas? Right? We want to really speak into all the problems and challenges that people have and in hear from people who've been successful.

Grant
What a fun journey. I look forward to listening to what you're doing on your podcast. That's really awesome.

Christopher
Well, yeah, and I mean, it sounds like, it sounds like you're gonna be a guest too, because little did I know about your secret tech background. Like I think we got some, some stuff to talk about.

Grant
Oh, yeah. Like I said, at the beginning, three in Silicon Valley sold them all IBM acquired one of them. So I spent some time as an executive, they're definitely bounced out of that world.

Christopher
Yeah, I'm ready. Yeah, I'll be on the other side of the mic. I'll be asking the questions. There you go.

Grant
That's right. Good stuff. Christopher, this has been a pleasure. Any last comments you'd like to share with our listeners?

Christopher
Well, I think, you know, what I always like to share with everybody is just the fact that, you know, if you ensure that you are taking time, energy capacity to focus on this building your wealth, I think there's a true opportunity to, you know, live a life that is sustainable, and you can actually design it yourself. So that's my encouragement.

Grant
Why don't they teach this in school?

Christopher
Well, they may soon enough, I'm I'm working on that curriculum to say.

Grant
I think you're the one to put that curriculum together. 
So that's right. Yes. Hey, thanks for joining everybody. Thanks for listening to this episode of Financial Investing radio and until next time, reach out to Christopher Nelson.

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