Passive Income Ideas: The MFM Guide to Making Money While You Sleep
An engineer at a gaming company once watched his employer sell a franchise of mobile games. One title—old, nearly forgotten—went to a buyer for 3 million in profit since acquisition.
The story challenges the prevailing narrative about passive income. Most advice involves hustle: build an audience, launch a course, automate your fulfillment. But the engineer’s approach was different. He did not create. He acquired. And then he stepped back.
On My First Million, Sam Parr and Shaan Puri have spent hundreds of hours dissecting what it actually takes to generate income without trading time for money. Their conclusions are more nuanced than the internet gurus suggest—and more attainable than the skeptics believe.
What Is Passive Income (Really)?
The term itself is misleading. Shaan Puri addresses this directly when a listener asked about reaching $10,000 per month in passive income:
“If your goal is really 10K a month, a job will probably get you there, but if let’s take that off the table for a second—I would just do a productized service.” — The Easiest Way To Make $10,000/Month In Passive Income
The statement is counterintuitive but honest. Truly passive income—the kind that requires no ongoing effort—typically comes from only two sources: significant capital or significant prior work. Everything else exists on a spectrum of involvement.
The podcast distinguishes three tiers:
Truly Passive: Index funds, bonds, dividend stocks. Returns of 4-10% annually. Near-zero effort after initial investment. But the math is unforgiving—you need 50,000 per year at 5%.
Semi-Passive: Real estate with property managers, franchises with hired operators. Returns of 12-25% annually. Five to ten hours per month of oversight. This is where the ultra-wealthy actually deploy their capital.
Active but Leveraged: Productized services with a team, content businesses with systems. Returns of 100,000+ monthly. Ten to twenty hours per week, but scalable beyond personal time.
Most people who say they want passive income actually want the third category with the effort level of the first. That gap explains why so few achieve it.
The Frameworks: Defining Your Number
Before discussing strategies, the podcast guests consistently emphasize one prerequisite: knowing what “enough” actually means.
The Enough Framework
Andrew Wilkinson, who built Tiny into a portfolio worth hundreds of millions, breaks the journey into three stages:
- Launchpad: Generate roughly $250,000 per year in passive income. This is the threshold to quit your job and gain freedom.
- Enough: Calculate the annual spend required for your dream life. Multiply by 20. That is your target net worth.
- Life’s Work: Discover intrinsic activities that create meaning independent of money.
Shaan applied this personally. His “Enough” number was $6 million. He used it as a password for years—a daily reminder of the target. Most people never do the math. They chase more without defining what more means.
The 2% Rule
Michael Sonnenfeldt, founder of Tiger 21 (a peer network of investors with average net worth exceeding $100 million), offers a different framework:
“We have a rule at Tiger which I think is the most important rule—the 2% rule. If you can live on 2% of your assets or less, then you’re in a safety zone.”
The math clarifies what safety requires. Living on 5 million in assets. Living on 15 million. The rule ensures your portfolio can compound even while funding your lifestyle.
The Last Dollar Framework
Shaan adds a psychological dimension with what he calls the “Last Dollar” framework. The concept is simple: you have already earned the last dollar you will ever spend. Somewhere in your future earnings, one dollar will be the final one you use. Everything after that is surplus you will leave behind.
The reframe changes behavior. Instead of maximizing lifetime earnings, it suggests optimizing for when passive income covers expenses. That is the moment you become, by his definition, rich.
How the Ultra-Wealthy Actually Invest
The Tiger 21 data is instructive because it reveals what people do once they have options—not what they say while building.
According to Sonnenfeldt, members with average net worth above $100 million allocate their assets as follows:
| Asset Class | Allocation |
|---|---|
| Real Estate | 27-28% |
| Public Equity | 24-26% |
| Private Equity | 21-24% |
| Cash | 11-13% |
| Fixed Income | 7% |
| Crypto/Gold | 1-2% each |
Real estate is the largest allocation—more than any other single category. The reason is not maximum returns but durability:
“Real estate is the gift that keeps on giving. Your child can be less than brilliant and still know how to collect the rent. When you own a great piece of real estate, the tenants have to pay the rent even when you’re playing golf.” — Michael Sonnenfeldt, Behind The Scenes Of The Billionaires’ Mastermind
The statement explains something that confuses high-achieving entrepreneurs. Real estate returns are modest compared to successful startups. But real estate tolerates mediocrity. It transfers across generations without requiring genius from heirs. It produces income without demanding attention. For wealth preservation rather than wealth creation, these traits matter more than IRR.
Passive Income Strategies from MFM
The podcast has explored dozens of approaches. Several recur across episodes with consistent evidence.
Real Estate: The Foundation Strategy
Moiz Ali, who sold Native Deodorant to Procter & Gamble for $100 million, deployed his proceeds into 50 rental units—single-family homes, duplexes, and fourplexes. His returns have been 12-14% without leverage. He plans to never sell. His children will inherit the properties.
The reasoning is practical rather than romantic:
“It’s a ‘Daisy’ mentality—it cash flows and it’s immune to Facebook ad prices. It affords my lifestyle so I don’t have to dip into capital. I’m terrified of the balance going down.”
Ali keeps 25-30 million in directly owned real estate, and roughly $10 million each in private equity, startups, public stocks, and real estate limited partnerships. The diversification is deliberate. After building wealth through a single concentrated bet, he prioritizes preservation over growth.
Franchising: The Overlooked Millionaire Factory
The statistic is striking enough to repeat: more millionaires have been created through franchising than from all players who have ever competed in the NFL, combined.
A franchise consultant named Alex appeared on the podcast and made the investment case explicit:
“A real estate investor would be jumping up and down about 12-16% IRR. A franchisee is upset if they’re not north of 25% IRR.”
Franchising represents 8% of U.S. GDP—roughly $800 billion flowing through 4,000 brands annually. Yet it remains nearly invisible in mainstream business media. The opportunity persists partly because the work is unglamorous and partly because the returns sound implausible.
One example illustrates the passive potential. Another Nine is an indoor golf simulator franchise—fully unattended, no employees, no food service. According to Alex, a single unit generates just under 750,000 in relatively passive income.
The extreme case is Cal Gulapali, a former investment banker who started with two Orange Theory locations in 2018. He now operates 120 locations across eight brands with a system of brand COOs, district managers, and general managers. The revenue likely exceeds $500 million annually. He is a franchisee, not a franchisor—a distinction that surprises people who assume the parent company captures most value.
Productized Services: The Practical Path to $10K/Month
When pressed for the most accessible route to meaningful passive income, Shaan consistently recommends productized services. The model involves packaging a specific service for a specific niche at a flat monthly fee.
“Find one niche and figure out how to help them make more money. You tell them, ‘I’ll make your website convert 1% better for a flat fee of $4,000 a month.’ That 1% is worth 10x more than that to them.”
The approach works because it transforms variable consulting into predictable recurring revenue. Over time, operators can hire contractors to do the delivery while retaining the client relationship. It is not passive in the early stages, but it can become semi-passive with the right systems.
Content Arbitrage: The $10 Million Soap Opera Blog
Sam Parr tells a story that illustrates what happens when marketing sophistication meets an underserved niche:
“My buddy Ramon sold a soap opera blog for 10,000/Month](https://youtube.com/watch?v=the_easiest_way_to_make_10000m&t=1275)
Ramon built an audience in a category he did not care about, monetized through advertising, and exited for eight figures. The lesson is not about soap operas. It is about the difference between passion and opportunity. Sometimes they overlap. Often they do not. The people who build passive income choose opportunity.
RV Parks: Recession-Proof Cash Flow
A guest named Chris, described as a serial side hustler, explained his preference:
“RV parks. I like my RV parks. You don’t maintain the units, just the infrastructure. It’s a hedge against the economy. When economy is good, millennials and boomers are traveling. When it tanks, people live there full-time.”
His specific case study: purchased for 1.2 million in annual net profit and is worth approximately $15 million.
The insight is structural. Unlike apartments, RV park owners do not maintain the units—tenants own their vehicles. Unlike hotels, occupancy remains stable because economic downturns convert vacationers into residents. The combination creates resilience that most real estate lacks.
The Sticker Shock Problem
One pattern emerges repeatedly when entrepreneurs sell their businesses: the passive earnings from invested proceeds are dramatically lower than what the business generated.
Sonnenfeldt quantifies the gap: a business making 20 million. After taxes, the entrepreneur has 320,000 annually. The earning power dropped by 90%.
This math explains why many founders regret selling—not because the price was unfair, but because they underestimated how much income their business provided relative to capital markets. It also explains why Andrew Wilkinson prefers “Door 3”: hiring a CEO, retaining ownership, and collecting distributions without operational involvement. The option requires sufficient profit to fund management, but it preserves the income engine that sale would destroy.
The Shift from Moonshots to Execution
Shaan Puri spent ten years failing at twelve different companies before his fortunes changed. In the seven years since, he has gone five-for-five. His explanation focuses on project selection:
“In the 10 years of failure, I tried 12 different companies. In the seven years since, I’ve gone five for five. The difference is project selection. I stopped chasing moonshots and now I choose projects that just require execution.”
The insight applies directly to passive income. The strategies that sound most exciting—cryptocurrency, angel investing, viral content—also have the worst odds. The strategies that sound pedestrian—rental properties, franchise locations, productized services—have the most predictable outcomes.
Andrew Wilkinson makes a similar point with an analogy: angel investing is roulette, buying cash-flowing businesses is poker. Roulette is fun and high-status, but the odds are poor. Poker rewards skill and better odds allow for consistent winning.
FAQ: Passive Income Questions Answered
How much money do I need to live on passive income?
The 2% rule provides guidance: take your desired annual spending and multiply by 50. If you want 5 million. If you want 2.5 million. These numbers assume conservative investment returns and indefinite sustainability. More aggressive approaches—real estate, franchises—can produce the same income from less capital at the cost of more involvement.
What is the easiest passive income to start?
Shaan Puri argues that productized services are the most accessible path to $10,000 per month. Unlike newsletters or e-commerce, they do not require audience-building or product development. You package a skill (SEO, email marketing, lead generation) for a specific niche and charge a flat monthly fee. The business is not passive initially, but it can become semi-passive as you hire contractors for delivery.
Is passive income a myth?
Partially. Truly passive income—requiring zero ongoing effort—exists only through significant capital (dividends, bonds) or previous work (royalties, acquired assets). Most “passive” income sources still require oversight. The achievable goal is not zero work but decoupling income from hours worked. That decoupling is real and attainable.
What do millionaires invest in for passive income?
Tiger 21 data shows ultra-wealthy investors allocate 27-28% to real estate—their largest single category. The reason is not maximum returns but durability: real estate survives economic cycles, transfers across generations, and produces income without demanding genius. After real estate, allocations favor public equity (24-26%) and private equity (21-24%).
How do I calculate my “enough” number?
Andrew Wilkinson’s formula: take your dream annual spending and multiply by 20. If you want to spend 4 million. This assumes 5% withdrawal rates. More conservative approaches use 25x or 33x multipliers. The number itself matters less than having one—most people chase “more” without defining what it means.
Sources & Episodes
- Month In Passive Income — Productized services, content arbitrage, soap opera blog case study
- How I Made My First $1M - The Andrew Wilkinson Story — Enough framework, Launchpad concept, 20% lifestyle rule
- The “Boring” Business Model Making Regular People Millionaires — Franchising economics, Another Nine case study, 25% IRR benchmark
- Behind The Scenes Of The Billionaires’ Mastermind (TIGER 21) | Michael Sonnenfeldt Interview — Asset allocation, 2% rule, sticker shock formula
- Moiz Ali On Selling His Natural Deodorant To P&G For $100M, Investing In Manscaped, & Holding Cash — Post-exit allocation, 50-unit real estate portfolio
- I Failed 12 Times Before Making My First Million (Here’s Every Failure) — Last Dollar framework, moonshots vs. execution
- day From These Side Hustles You’ve Never Heard Of — RV parks, seasonal businesses, TinyCo acquisition
- [[episodes/8_profitable_side_hustles_for_|8 Profitable Side Hustles For The Halloween & Christmas Season (#381)]] — Seasonal income, holiday lights business
Related: Financial Freedom | Franchising | Real Estate Investing | Boring Businesses | Andrew Wilkinson | Tiger 21 | The Enough Framework | Sam Parr | Shaan Puri | Side Hustles | Building to Sell