Do I have to add those $45000 to my income and then I pay taxes and my ordinary tax bracket wiil be the $45000 plus my work income, do I get taxed twice?

I think the author was kinda over exaggerating to make a point to us ordinary folks that compounding makes us 'rich' but the real wealthy people did not become real wealthy via stock market but by founding their companies. 

Short term gains are taxed at your ordinary rate.Active income, though, is always taxed at your ordinary rate.

For instance, if the cash value exceeds the total premiums paid, the excess amount is taxable as ordinary income.Risk of Policy Lapse: If the policyholder cannot maintain premium payments, the policy can lapse, resulting in the loss of the death benefit and potential tax liabilities on the cash value.

@Ashish Acharya and @Dmitriy Fomichenko  thanks for the responses.Currently, we are using the schedule C plan to fund the solo 401k, however, income on Schedule C gets taxed as ordinary income, which is a huge hit.Follow my thought process here for a moment:I form a separate LLC taxed as an S-Corp, lets call it XYZ. 

Private lending is passive but in terms of taxes "ordinary income" and you cannot cancel out with passive losses that you get when you are an equity holder of real estate. 

To ensure you can apply the tax deductions against ordinary/active income, you have to materially participate in the STR business.

@Eric AndrekopoulosHe could also sell them and not have to worry about if the borrower is paying or not - put the funds in a deferred sales trust and invest it in something less risky (not levered at 90% which is probably what it would be seller financed) and not pay ordinary income but have it taxed at qualified dividend.There is a reason why 99% of loans are originated by banks and not by sellers.

@Kim LeJeuneI have to assume that it was a rental house, as opposed to your personal residence or a flip.Each monthly payment has 3 components: interest - taxable as ordinary incomereturn of your principal - not taxablecapital gain - taxable at various ratesYour down payment has components #2 and #3.Interest should come from an amortization table. 

So, the profits (generically, sales price minus cost basis or prucahse price) are taxed as ordinary income also subject to self employment tax.Sale of an investment property, i.e. one that was rented, is considered capital gains.It is your intent of the property that signifies which taxation applies.