Passive Income Is A Lie

Markian records this episode live from a hotel room in Indianapolis — mid property tour, mid investor meetings — and delivers one of the most honest takes on passive income you'll hear.

The premise: passive income is the biggest lie in entrepreneurship. The context: this is coming from the founder of Active Duty Passive Income.

In this episode, Markian unpacks the myth vs. the reality. He walks through his 56-unit apartment complex — $3,500/month on roughly 3.5 hours of work — and his 72-unit deal acquired in 2025 with a GP team. He explains why real estate can absolutely produce passive-like returns, but why the risk, the decisions, and the guarantees behind those returns are anything but passive.

He also shares the origin of the ADPI name — the couch in San Diego, the green Marine Corps notebook, and the moment "Active Duty Passive Income" clicked as a play on words that stuck.

Honest. Specific. No hype.

Most military investors don’t struggle because they lack information.

They struggle because they’re doing it alone.

The Military Multifamily Academy (MMA) is a 14-week program designed to help service members learn commercial real estate by actually working real deals with a team.

No theory.

No guesswork.

Just execution.

If you’re ready to stop watching and start building, learn more here:

activedutypassiveincome.com/mma

Transcript

Speaker 0:00

Hey there, ADPI. I am on the road, and this is the first time I'm doing a podcast where I'm literally on the road. I'm... If you're watching the video, you'll see that I'm in, you know, some random hotel room, nothing special, by the airport in Indianapolis, touring my properties here with some of my investors. We actually just wrapped up, and I'm back in the hotel room, and I gotta keep recording our podcast. And this episode is actually very timely for what is going on right now in my life. My investments are requiring some active participation. And what this episode is about is why passive income is the biggest lie in entrepreneurship. And a lot of you are probably like, "Wait a second. Wait, Markian, you... Didn't you name the ADPI? Like, doesn't that stand for Active Duty Passive Income?" Yes, it does. You're absolutely right. So this is gonna be a very interesting episode because I'm gonna explain why passive income is absolutely a thing and why it's also the biggest lie. And, um, yeah, we're, we're gonna have fun with this, and I'm gonna give you the reality, the raw reality of how it's worked out in my life and what it has done for me, what it means to me, and how it has changed my life. Um, so yeah, without further ado, I got some notes on my phone just to make sure I hit all the high points. Um, and if you, this is the first time you're listening to this, if you're part of the military, veteran, service, retiree, military spouse, and you like talking about increasing your income, growing your wealth, changing your life for the better, um, then do me a favor. Just give us a little bit of a donation, not in the form of money, but just by hitting the share button or liking, subscribing. Any form of, uh, that type of contribution to our mission of impacting three million military families means the world to us. Um, our team is incredibly dedicated and passionate about helping military, um, in investing, in real estate, in entrepreneurship, and all that kind of stuff, and it would, again, it would mean the world to us. All right. Without further ado, let's continue talking about passive income. So first of all, I wanna say that passive income is absolutely a real thing. Okay? It is, it is a real thing, but the problem is, is that a lot of people misrepresent things that are not passive as being passive. That's a huge problem. Um, a lot of things are over-hyped out there in social media. A lot of, uh, oh, just, you know, all you have to do is, like, do this one thing, and all of a sudden you're gonna be getting mailbox money or checks into your, you know, deposited right into your account, and it's gonna be easy peasy lemon squeezy. Absolutely couldn't be further from the truth. Most things are never gonna be that way. There are certain things that are absolutely, you know, truly passive, like for example- You investing money in, I don't know, a treasury bond that's getting like 4 or 5%. Um, you maybe writing a, I don't know, some amazing song and then next thing you know you're collecting royalties from it, right? But especially I think the songwriting, like, or being a movie star and collecting royalties on something, um, like that's very rare. That's few and far between. And so if you recognize that that might not be in the cards for you, right, then you have to think about how can you actually create meaningful wealth, and the reality is, is that most passive opportunities aren't going to create a lot of wealth. What you wanna do is you want to create a lot of value and wealth and then invest in things that are more passive. So if you can do something that might be riskier but creates wealth very quickly and then slowly over time put it into less risky things that are more passive so you don't have to trade your time for that money even if those returns are less than the riskier, more active things, that's kind of what I'm doing. That's kind of what a lot of people are doing. I mean, even if you're just a stock investor, you'll hear people say this early on. It's a similar model. Uh, like anybody... Like when I was growing up, all the advice I always heard was like, "Yeah, when you're younger, put it in aggressive stocks," right? More stocks, less bonds, like when I was trying to balance out my portfolio in my Roth IRA or whatnot. And then later on you want to, like, start, you know, putting it in more bonds 'cause you, you don't want your, your, your portfolio to jump around too much, right? 'Cause you're preparing kind of for, for your retirement someday, and it would be scary to be on a rollercoaster where your portfolio s- has massive shifts and swings. So similar I think in passive income in real estate and entrepreneurship, when you're young it's good to take the bigger risks. Now, let's talk about Um, let's talk about those passive income opportunities. So like even in the, "Hey, I'm just gonna put my money in a treasury bond," you had to probably actively work on creating that value, right? That money didn't just, nine times out of 10, it didn't just land in your lap. Uh, I mean, obviously there are things like that you might h- I mean, heck, you might, you might get given some money, I don't know, in a will, right? You might, somebody might gift you some money. Uh, something might just land in your lap. That does happen, but those are few and far between. For the most part, most people have to work very hard, very actively to generate, uh, income by creating value, to generate money and wealth by creating value in the world. That's typically how it works. And then, and only then can you then take advantage of the more passive, truly passive opportunities. Like even the example of writing a song and collecting royalties on that. You probably had to spend, I don't know, at least 10,000 hours learning how to be a good musician before you were able to write a song and produce a song that would then give you royalties forever. So I like to think of real estate in that way. I like to think of business in that way. You have to roll up your sleeves early on to create an asset that becomes more passive the, the more you actively manage and build it to become more passive. And not everybody is really good, honestly, at making assets, businesses more passive. A lot of times people get sucked into the business and end up working more in the business and actually making it a very active business and investment than they want it to be. And that's definitely happened to me. I think a lot of entrepreneurs, like they get sucked into things because they can't imagine anybody else being able to take care of their businesses. And I'll, I'll tell you how I was able to do that for myself, okay? 'Cause there are a few investments I have that are truly a lot more passive than they ever were, and I would say qualify as the, you know, as that golden goose of like passive income, right? Um, but it wasn't easy to get there. And the common phrase that I like to use now, I can't remember where I heard it, so I can't quote the person or credit them, but is you have to actively manage your passive investments. Or as I like to think about it in another way, is you have to actively build your passive assets to produce the passive returns or the more passive returns. Um- Yeah, so just checking my notes here. There, there's basically a very active phase where you have to create that value first. And a lot of times value isn't necessarily, oh, like something just is inherently more valuable or something starts producing more money. You have to invest in people. You have to build systems, things that are thankless, but then eventually, slowly but surely start producing later, right? You start feeling this compounding trickling effect. Um, there's this analogy that I love, especially since it relates to real estate, is if you see a skyscraper getting built, the reality is, is that for the first many, many months or years, it was getting built underground. There was foundation that was getting built underground, very hard, laborious work. And then all of a sudden, by the time you see it emerge and pop out of, uh, onto the surface, that's already been-- the, the most of the hardest work has already been done. And then it just... And then all of a sudden it seemingly people say like, "Oh, everything's just popping up like mushrooms, like things are just growing everywhere. This city is expanding," blah, blah, blah. But so much work was getting put into like the zoning, the permitting, the planning, the engineering, the foundation work. Everything had, so much had to be done before you got to experience the beauty of, you know, just the, the, the most vertical aspect of it being built and then everybody enjoying seeing it on the, you know, on the skiddy-- on the cityscape and horizon Um, let me just take a quick pause and go back to, like, why was ADPI called Active Duty Passive Income? Isn't that kind of gimmicky or whatnot? Okay, let me just tell you where the, where the name came from. Um, first of all, ADPI focuses on real estate investing. If you're new to this podcast, maybe you don't know that, but we... That is our foot in the door, no pun intended, into entrepreneurship. I think a lot of military can be really good at entrepreneurship if they kind of, um, rediscover that, I did a previous episode on this, that wild bone in their body, the thing that was more comfortable with risk, the reason why they first signed up for the military in the first place. A lot of military can be really good at entrepreneurship. Um, and so our, our entire community focuses on real estate as being the way that kind of get... lets you ease into it, because it's something that's a little bit more understandable. Everybody needs a place to live. We all have probably rented something at some point. So there, the elements of it are a little bit more just we're familiar with it. And so ADPI, um, the name happened for a few different reasons. One, I caught the bug to get into entrepreneurship because I bought into the social media hype of, of passive income, to be quite honest. I was like, "Oh, I love this idea of, like, sitting on an island and doing nothing, collecting rent checks". Um, I had a rude awakening early on, like, "Oh, it's not that easy", right? Um, but I also started listening to a podcast called SPI, Smart Passive Income, by a guy named Pat Flynn. Absolutely love the guy, super transparent, very real, very down-to-earth, and he... I related to him a lot because he started his businesses as online businesses, and I w- I've always been a computer nerd. I had my computer science and IT degree. So I was like, "Ooh, maybe I can build b- uh, websites". And I saw them as being kind of like this internet real estate, right? Where you create these websites, and they start generating passive income. That's how Pat Flynn got his start. Um, I believe one of his first very successful websites was about how to start a food truck. And so that just... He'd had so many visitors, and he had so many affiliate links on his website that that started creating a lot of residual income for him. Um, so anyways, that's where I kind of got that idea. And then I read Rich Dad Poor Dad, and I started realizing, wait a second, passive income actually is a real thing as far as, like, the IRS and the tax code goes. There's actually a difference between passive income and active income and how the IRS treats it. And I'm not gonna get into that too far, but I started realizing, okay, there's, there's not only, like, the gimmicky hype phrase or, or type of passive income, but there's also real passive income in terms of how I- the IRS taxes it and treats it. So that's another thing. And then I remember this is where the name actually came from. It's like all these things, like I was inspired by SBI, I was, um, learning about passive income and what, you know, the real passive income, and then the hype passive income. And, uh, I read also "4-Hour Workweek" and all this kind of stuff. And I was sitting on my couch... I'll never forget this. I was sitting on my couch in San Diego, California, on 13th and Market. We were renting an apartment there. I believe Katya, uh, my wife, she was in Ukraine at the time, I think. I think she was visiting family. This was before the war. And I was sitting there with one of those green monster notebooks that they give you in the Marine Corps, and I was just, like, doodling and writing notes and, like, trying to think of a name for what I wanted to do. And what I wanted to do was I wanted to share my entrepreneurial journey with the world. And actually, let me unravel that a little bit more. The reason why I wanted to do that is because that's how my brain worked. I knew that the only way I'd be able to push myself into being successful in anything is if I had real or artificial peer pressure on me. I needed to do it out in the open so that people would... I, I, I do- I hate disappointing people, so I needed to do it out in the open so people would see what I was doing, and then they would expect me to be successful. And I knew that that would actually push me to do the thing in the first place. So I was like, "Okay, I need to document the things that I wanna do." I hated the fact that I didn't invest in real estate when I was in flight school. I hated the fact that I was dissuaded from doing that. I hated the fact that I missed out on buying my first four-bedroom house when I was in Pensacola and, and I didn't house hack properly. 'Cause when I learned all this stuff, it, like, just blew my mind. And so I was, like, just about to write this book called "Military House Hacking," uh, basically a manifesto to all the things I wish I would've done, and I was just thinking through all these names. And then I realized, wait a second, active and passive. I'm active duty, so active duty, passive income. Ooh, play on words, ADPI. That kinda has a nice ring to it. And I, I just remember jumping up, uh, uh, jumping up from my couch with excitement 'cause it just, it struck me like a lightning bolt. I was like, "Oh my gosh, this is a great name." And maybe you guys don't think that, that's fine, but I loved it. I liked it a lot at the time. I thought it was clever. And so I immediately wrote it down, and I wrote it down on the cover of the notebook, and I remember being made fun of it a little bit in my squadron. I just wrote active duty. I just scribbled it on with a pen, active duty, passive income. I immediately went and bought the domain name. I started... and I started writing in the blog. And then I started a Facebook group, and it kinda started from there. Now- What I, uh, what I began to realize was that the passive income that I wanted needed a lot... I, I-- The only way I could accelerate it to be a meaningful amount is I needed to put a lot of work in to grow the passive residual income, whatever you wanna call it, to be of an amount that mattered to me, to be of a- of consequence, something that I would actually change my life. And so I-- My first passive investment was I bought a three-bedroom, two-bath with a partner. We went 50/50. It was a turnkey property, and it started making me, like, 200 bucks a month. Pretty awesome, because it was completely passive. The property manager was awesome. I didn't have to do anything. I just got a monthly statement, and cash ended up in my account. It was beautiful. Truly almost as passive as real estate can get, right? But it was only 200 bucks. It wasn't even that. It was, like, 180 when I first started So it was really not a consequential amount. And so I was like, "Well, I need to get into something bigger." So I was like, "Okay, I need to do, I don't know, apartment complexes, I guess." I read ABCs of Real Estate Investing, I read Wheelbarrow Profits, and I started listening to Rod Khleif's podcast, and I was like, "Holy moly, this is how I can get to where I wanna be much quicker." 'Cause I also, at the same time, started realizing that, hey, maybe I'm not gonna do 20 years. And hey, I don't know that if I... that I really want somebody to tell me what to do when I get out of the military. I wanna be my own boss. So I was like, "I really need to figure out how to create more income." Um, and so I, I got into apartment complexes, and let me just tell you before I dive into that too much further, right now, the first apartment co-complex I bought when I was, I think I was a s- maybe I was still a second lieutenant or, actually, no, I was already a first lieutenant when I closed on it. Uh, and I was in San Diego at the time, stationed at Miramar. That 56-unit apartment complex I still own, right? Some of the ones that I syndicated with investors, I already went full cycle on, meaning, like, I've sold, um, and I don't own them anymore, unfortunately. But this one I still own. And this one I bought with my parents. They were my first investors, so to speak. And we split it up like a typical syndication would. I own about a third, and they own two thirds. And that is making both of us now collectively $10,500. So to me, I get 3,500, they get 7,000 every single month passively into our pockets. Now, let's dive-- Let's, let's, let's unravel the passive part. I have to put more work into it than they do because they came up with the money. They are truly, like, passive investors on this deal. I am the manager of the manager. I am the asset manager, uh, is what it's called. And so I... Basically, think of me as, like, the investor owner operator or, like, the general manager of the property. I have a boots on the ground property manager who does the leasing and the managing and the collections of the, the, the evictions and all that kind of stuff of the tenants, but I manage her, and we have a tremendously awesome relationship. All I have to do is spend about, and I'm just gonna use this number 'cause it will make sense with the other number, I have to spend maybe three to four hours. So let's just call it three and a half hours a month on average. That is very little time. And I make $3,500, mostly tax deferred, directly into my personal bank account every single month. So really, the hours I spend on this property are worth about $1,000 an hour So I don't know about you, I would count that as pretty dang passive. Now, that doesn't even include the fact that this property has increased my net worth by seven figures, and, um, we're about to do our second cash-out refinance of anywhere between 800,000 and a million dollars tax-free, and I intend to continue doing that every three to five years. It's truly an incredible investment that we made. It has been life-changing. I mean, it makes my parents more than my dad's W-2 salary. You probably heard me say that a million times if you listened to my previous podcast. I'm just trying to reiterate all this in case you're new so you understand. And again, this was just the first deal I did. I just love highlighting it because, um, a lot of the elements of it, uh, are, are-- go so well with the lessons I'm trying to teach Now, let me give you an example of another property. This one is a 72 unit, 10 minutes away from the property I just talked about, so it's a little bit bigger. I just bought it last year in 2025. At the end of tw- it was like, uh, August, end of August is when we closed on it. I own effectively about 12% of the entire property because I had to raise money from a lot of investors, give them a big portion, just like I did with the other one, and also I have, uh, a general partnership team that's helping me a- manage the asset together. So I'm-- it's not all on my shoulders. So about two-thirds of what our portion is, right? Our portion is 30% of the deal. The investors get 70% of the deal. So about two-thirds of that I had to give up, of, of our 30%, so two-thirds of our 30% I had to give up to, um, my team so that they're incentivized to help me so that I get to not spend a ridiculous amount of time on it, and we kind of like spread, spread that workload. Um, could I have maybe done the things that they're doing now? Yes, but I didn't want to. I have to weigh the pros and cons, and I'm always playing a... I try to optimize how much value and money my hours create. And I knew that sharing the general partnership with team members, which is what ADPI teaches, is the way to build the greatest momentum and to be able to acquire more properties and actually get it to be really life-changing long term. And so, um, for example, I'm not... I, I... I'm great with numbers, but I'm not, like, a true spreadsheet underwriter kind of person. That's not my forte. Um, it would take me 10 times longer than it does my team, and so I gladly gave them equity to do that with us, right? And so on and so forth. I, I can go on and on and on and on for this. Now, so this property will probably create, I don't know, half a million dollars within the first three years of net worth added to me. So like if in three years if we sold it, I'd probably net like $500,000. That's pretty incredible, right? Maybe 400, something like that, right? Pretty incredible. Um, and right now I'm making nothing from it, right? Because we're, we're prioritizing our investors, and we, we were still like renovating and ramping it up, so it wasn't like profiting a huge amount, but it's already ahead of schedule, you know, and eventually I'll probably make, I don't know, one or two thousand dollars a month from it. Um, and on top of that, the equity that it's creating, the value that it's gonna produce for me if we ever do sell it. And I spend maybe double the amount of time on this that I do on my other apartment complex. So maybe like seven or eight hours is what I spend on it. Um, and again, if you think about it, seven or eight hours every single, um, month times, you know, three or four years for it to then produce half a million bucks, that's still a pretty dang good deal, wouldn't you say? And, um, not to mention there's other things that compound with this. I am now building a team. I am now getting better at this type of investment. I, um, am going to be able to acquire more of these in this area and get even more out of those than I did out of this one. Like, every next deal is gonna have further economy of scale and, and I'm gonna be able to create more layers of redundancy in the management to where it becomes more and more passive. Uh, even though again, it's never fully passive. It's just, um, I'm actively investing my time now into building the systems and hiring the right people and investing my time into those people so that they, um, take care of my passive investments. Uh, I'm not sure if that's really painting the picture perfectly, but any kind of business that I have been in, there's been times where I have found that I've had to jump in kind of unexpectedly. That's kind of the-- that's kind of where the real misnomer or the real lie of passive income comes in, is like you might have to, like, answer a phone call in the middle of the night and find out that something terrible happened, and you have to do an insurance claim and all this crazy stuff, and it really stresses you out, and then it might really affect your bottom line for a long time. And that's something that nobody will prepare you for. That is a level of stress that not everybody wants to or can handle. And that's where-- Here's where I really want to hone in on the whole passive income argument A lot of times it's not so much that your time isn't, um, optimized. Like, like, the, like, especially with real estate, like you might spend very little time. Like I just described three and a half hours on something that makes me three and a half thousand dollars cash every single month. Plus it's grown my net worth by a million bucks. Like, gosh, that sounds like a great deal, right? And it is. But what isn't that simple and what is missing in that equation is that I have a tremendous amount of risk and decision-making on my shoulders. So the risk is, is that I have a multimillion dollar loan that I am guaranteeing. So if something goes wrong, I'm on the hook, not anybody else. I'm the sole guarantor of a multimillion dollar loan. Not everybody's comfortable with that level of risk. If I-- So I have to be willing to bet on myself to manage my m- property manager and, and be confident that things are going to turn out well to, to take on that level of a loan. Like that is a, you know-- That's might sound scary to some of y'all. To me, I'm like incredibly comfortable with it at this point. Um, and then there's the decisions. Like I, we, we have to come up with like, you know, I don't know, 10, $20,000 decisions sometimes in a matter of minutes. Like, okay, what, what's the next thing we're gonna do? What are we gonna renovate? Well, what are we gonna do about this insurance claim? Like those three and a half hours are sometimes in a month, are sometimes jam packed with incredibly consequential decisions that ultimately the buck stops with me on making those. And if I make the wrong decision, that could be millions of dollars or maybe just a few thousand dollars or whatever. And I don't-- Sometimes you don't know until you really learn the business well enough. And, um, that's where, that's where I feel like passive income is a lie. Because even if it is, I mean, by all, by all measures as far as how much time you have to put into it, a very passive thing. With business and real estate, you're still going to have to take a very, um, active role in the decision making. And some of those decisions Um, I don't know how else w- like, but they are weighty. They are difficult. It might stress you out more than spending 12 hours-- A five-minute decision might stress you out more than spending 12 hours of hard work. That's where... And that's not easy to describe. That's not really easy to explain on social media, you know what I mean? You really have to, like, um... So that's why I'm trying to do a good job now, and I hope I am. Um, so yeah, that's all I got. Look, if you wanna get into business or real estate investing or whatnot, uh, and you wanna do it at scale, and you wanna do it faster, and you wanna have it align with what your skill set is, and you want to basically leverage and outsource, um, the ne- the needed skills to those who have them, if you, if maybe that's not your thing, um, then, then I do recommend maybe apartment complexes are a great place to start. That's what we love at ADPi, but you can start anywhere, right? Um, I don't know. You can go buy a laundromat. You can go start a, uh, a Shopify store. It doesn't, it d- doesn't matter what you decide to do. Um, but I do like real estate because it's tied to an asset that will always be needed. People will always need a place to live. And there's, you know, the tax benefits, the fact that you're, you're now outsourcing to your tenants to pay off the loan that's in your name. That's incredible. Um, the fact that the better you operate it, the more its value goes up, right? Uh, especially with commercial real estate, like large apartment complexes. It's no longer, like, what's going on in the market so much, although that also affects it, but it's more like how well are you operating it and h- which determines how much money that business, right, the real estate business makes, which d- which that's what determines the value. Um, and yeah, and if you don't know, we run these cohort classes where there's groups learning how to do this particular business together. And if you're watching this on YouTube, I'm sure it's in the description, there's a link where you can, like, fill out an application. We need to make sure you're in the military. And then there's, like, a quiz and a, and a, and a recording of me going through this soup to nuts, so you can, uh, do that and jump on a call with our team if you, if you decide that this is for you, uh, right? And then if you're, um, listening to this podcast, just go check out the show notes here. Um, and that's all I got for you. So hopefully that made sense. That's my position on passive income versus active income. Um, if you want me to do... If you want me to dive deeper in any of those aspects, please leave a comment. And again, please do give us a donation of liking and sharing and subscribing. This was Markian Sich with ADPi. I'll see you guys later. Bye.