It made $288,000. It returned about 37%. And we'd never do it again.
For 74 months, my partner Russ and I owned and ran a short-term rental business.
Here are the actual numbers.
We put in roughly $364,000, most of it over the first 18 months.
Over the full 74 months, it brought in about $650,000.
That's a little over $288,000 of income.
Run the math and the IRR works out to around 37%.
If you're reading this, that probably sounds like a pretty good deal.
Here's the part nobody knows: we would never do it again.
That sounds crazy, right?
Usually when someone tells you about an investment they regret, it's because they lost money.
We didn't lose money. We made money.
But making money doesn't make it right.
I've watched this happen over and over. Someone gets lucky on a deal. Then they make the biggest mistake of all: they double down on something without knowing why it worked.
So here's what I want you to take from this:
Don't only ask, "Did the investment make money?" Ask, "Do I have a reliable process I can confidently repeat?"
First, our August numbers
Every month for the last 74 months, Russ and I have reported our passive income in public.
August came in at $56,402 gross and a little over $38,000 net.
Today I want to use one of our own investments to show you how we look at every deal now.
Three things to walk away with:
1. Just because an investment made money doesn't mean it was a good investment.
2. Just because someone else is making money doing something doesn't mean you should, or even could, do the same thing. What works for us might be completely wrong for you.
3. This is the one that got us. A profitable investment can actually move you further from financial freedom, because cash flow and passive income are not always the same thing.
By the end, you'll know how to run any deal through three questions: fit, risk and outcome.
We call it our Golden Filter.
What we actually did
For the record: Russ was the short-term rental guy. I was not.
I had a long-term rental. Russ looked at it and said, "Bro, this will work. Trust me."
So I counted the cost. If all we had at risk was the furniture, and months went by with nobody renting it, we'd be out the furniture. That's it. And I had a fallback: go back to long-term or sell the property.
The very first month, it rented for over $2,000. More than any month I'd had it rented in almost 15 years.
Russ's response? "All right, let's triple down."
Here's the model we scaled. It's called rental arbitrage. Instead of buying the real estate, we'd go to an apartment complex in Birmingham, Alabama and sign a long-term lease.
Lease: maybe $2,000 a month
Buy furniture and outfit the whole unit
Gross: $4,000 to $5,000 a month
Take out utilities, rent, platform fees and cleaning fees, and what's left is your net cash flow
We went from one unit to about 10 in four months. That pushed our passive income over $5,000 a month for the very first time.
Then our operator jumped in, and we built out to about 27 units over roughly 18 months.
The upside of arbitrage: you control a lot of units without a ton of money tied up in down payments.
The downside: you don't own any of the real estate. So a lot can change underneath you.
Hold on to that.
It worked. It just wasn't smooth.
I want to be fair to this deal. A lot of it was good.
At its peak, it brought in $20,000 to $30,000 some months.
But there were plenty of months where it lost money. It was never a smooth, reliable passive income machine.
And here's the part entrepreneurs need to hear, because entrepreneurs make optimistic investors:
For the first 41 months, we were just getting our own capital back. No profit until roughly three and a half years in.
How long until you get all your money back? Most people never ask.
Then regulations around short-term rentals started changing in Birmingham. To keep scaling, we'd have had to put in a lot more money and take a lot more risk.
So after more than three years, we sold the business to our operator on owner-finance terms.
Look only at the spreadsheet and you'd say, "What's wrong with that?"
That's exactly why we built the Golden Filter. And this deal fails it.
Filter #1: Fit
Does this investment actually fit you? That's your Investor DNA.
Russ and I are very different investors. I'm the brake pedal. Russ is the gas pedal.
My DNA wants predictable, steady cash flow. I want to know where the return comes from and what happens next month.
Short-term rentals are the opposite:
Nightly rates change
Occupancy swings
Airbnb keeps changing its algorithm
Someone can run the same model next door and you've got new competition
Cities keep adding regulations
Now, part of it did fit Russ. He loved the business side, the marketing, the ability to influence the outcome.
But today we have a hard and fast rule in our buy box: don't start any more businesses. Only buy cash-flowing ones.
This was a startup. If that rule had been in our buy box back then, we wouldn't have done the deal.
That's the whole point of a buy box. It takes the emotion out. It's why Warren Buffett can look at 100 deals and throw out 98 of them fast. If it doesn't fit the box, he doesn't do the deal.
Filter #2: Risk
Remember when I said the only thing at risk was the furniture?
Looking back, it was more than that.
We were also on the hook for the leases. Some ran 12 to 18 months. If a location didn't work, we still owed the rent.
And we had no collateral. No property to fall back on.
What did we own? Beds. TVs. Couches. Pots and pans. Everything that's worth less the minute you walk out of the store.
They say real estate is like a bad haircut: hold on long enough and it works itself out. We didn't own the real estate. We were dependent on one thing: the Airbnb rental rate.
The second risk was the operator.
Today, when we talk to an operator, we want their track record. How many have they taken full cycle, start to finish?
Here, nobody had. We were starting a business from scratch, and none of us had done it before.
We paid about $25,000 to train our operator. He'd run a successful renovation business before, and he had the right Culture Index profile for the seat. But we were still putting an unproven person into a brand-new deal.
Deals don't create passive income. People do.
Honestly? It was a ridiculous blessing that it worked out.
Risk management isn't about predicting what will happen. It's about planning for the downside. Great investors say, "Tell me every way this can fail." Optimistic entrepreneurs say, "Tell me how this works for us."
Filter #3: Outcome
This was one of our biggest lessons. Today the question is: how do we get a dollar to do multiple jobs? How many ways can this deal win?
This business had exactly one way to win: cash flow. The rental rate had to beat our expenses, because we owned nothing underneath it.
Compare that to owning the property:
Appreciation on the real estate
Depreciation, which helps offset expenses, and from a tax perspective could have offset some of our active income
More exits. If short-term didn't work, switch to mid-term or long-term
Late in the game, our operator started co-hosting: managing units without being responsible for the lease or the furniture. Making money without capital. That was smart.
But we figured it out at the end, not the beginning. Years into the experiment.
That's the difference between starting a business, where you have to figure everything out, and buying an existing one.
And when we sold, the furniture was worth maybe 50% of what we paid for it. Our money was tied up in stuff losing value every single day.
We want the opposite: something we own that can go up in value while it pays us.
The 3 questions before you wire $1
So here's the honest answer to "Did we follow a process we could confidently repeat?"
No.
It didn't fit our Investor DNA. It broke our buy box. It carried risks we didn't need to take. It only gave us one way to win. And it took more of our time than we ever wanted to give it.
If you're looking at a deal right now, ask these:
1. Fit. Does this fit your Investor DNA? Your buy box? How much time do you actually want to put into it?
2. Risk. How do I lose all my money? Is there collateral? Who's the operator, and how many of these have they taken full cycle? What assumptions is the business plan built on, and how many of them does the operator actually control?
3. Outcome. How do I win? Is cash flow the only way, or is there appreciation, or tax benefits I'm not thinking about? If plan A doesn't work, what's plan B?
If you're thinking, "I've never written any of this down," that's normal.
Most investors see the deal first and then decide if they like it.
Do it the other way around. Know your Investor DNA. Build your buy box. Have a process every deal has to flow through before you ever wire $1.
Want to see how close you actually are to financial freedom?
👉 Take the free Financial Freedom Quiz here
If you want to hear Russ and me argue through the whole story, the full video is here.
Sometimes the best lesson doesn't come from losing money. It comes from making money and realizing you still wouldn't do it again.
Talk soon,
Joey Muré
Wealth Without Wall Street
P.S. This is exactly what we do inside the Passive Income Lab. We don't hand you deals. In fact, we don't provide any. We make you the kind of investor who can look at any opportunity for the rest of your life and say "that's for me," or, just as important, "that's not for me." Learn about the Passive Income Lab here
P.P.S. Stop trading your time for a paycheck. Join us at the free Financial Freedom Summit on October 22nd, 2026, and learn how to make your passive income outpace your monthly expenses. Save your seat here
DISCLOSURE: Wealth Without Wall Street provides educational and informational content only and does not provide legal, tax, financial, or investment advice. Any examples or case studies are illustrative and not a promise or guarantee of results. Earnings or income statements (if any) are not typical, and your results will vary based on factors such as your effort, experience, market conditions, and business decisions. You are responsible for your own actions and outcomes.
You can also read this article on our Substack.
