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But I want to walk you through it because it looks okay

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But as you show as I show you the framework that I use test four four lenses that I look at investments through

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You'll see more and more why it wasn't good

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Welcome to the game where we talk about how to get more customers how to make more progress

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And how to keep them longer and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe

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One of the deals I did 60 days ago

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pays me a hundred thousand dollars a month in passive income just by being the bank

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And so what I want to show you in this video is how I find these deals how I structure these deals and

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One thing to make sure that you don't do because actually one of the CEOs of the companies in our portfolio

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Actually reach out to me because he got an email from his wealth advisor

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I'm gonna use quotes here because it was almost borderline on ethical what the deal looked like

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But I want to walk you through it because it looks okay

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But as you show as I show you the framework that I use test four four lenses that I look at investments through

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You'll see more and more why it wasn't good and then at the end

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I'll show you what what was good and the deal that actually made this happen all right

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So the deal that his advisor I sent him was hey

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We've got a business that wants four hundred and fifty thousand dollars, right four hundred fifty K to invest in their startup

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Okay, so we're sending this money to a startup just in case you're curious. It's a little bit risky

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All right, we'll get into that in a second

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So four hundred fifty thousand to a startup and he said they're willing to pay you

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ten percent

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per year and

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They're gonna pay this at the end of twelve months. All right, which means at the end of twelve months

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He's going to get four hundred and fifty thousand plus

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45k all right that is what the

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Return is going to be all right, and so they were like hey, can you break this down?

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They're like it didn't sound like a good deal

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But we kind of want you to walk us through it all right, and so

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Here's how you should think about these investments all right number one is

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Yield all right, which is how much money cash flow is coming to me every single month all right

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That is one way that you look at the investment the next way is capital preservation which is

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How likely am I am I gonna be preserving my capital that my money is going to come back to me all right

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All of these are on a scale so it's not like a guest. No, it's more like to what extent all right the next one

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Is tax advantage all right, so if I if I do this investment is this going to cost me a lot tax wise right something

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That's treated as capital gains versus something that's income is gonna be have a better tax treatment and then finally

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You've got equity growth all right, so does the thing that I am buying or putting my money in become more valuable all right

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So when you're looking at any kind of investment or anywhere to put your money look through this lens of one two three four

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Think okay to what extent is my capital being preserved to what extent am I getting the yield what are my tax advantages and my growing

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All right, and so I walked them through this exact same process them. So let's look at this deal that you got all right

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So capital preservation box one

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Well, they're this is going to a startup and they're saying they're not gonna pay you anything at all and then at the very end

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They're gonna give you 495,000 at the end, right 450 plus 45,000

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How likely do I think it's happening with a startup? I would put that as an a

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No, probably not like it yield was I'm gonna get 10% okay, that's cash flow kind of good, but for a for a debt deal

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Probably not great, all right, because we're gonna compare this to is that like if you look at indexes like the S&P

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I don't even know what it was last year, but I'm guessing it was really good

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There's probably 20% something like that last year and so literally

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Having a hundred percent capital preservation and having a 20% increase in equities, which is here, right?

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You'd have a better return there, but this one has no increase in equities because we're not participating on the upside

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We're just participating on the downside, which by the way when you ever do money lending

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All you get is guaranteed cash and you participate on the downside

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So you really need to make sure the downsides get all right, and then the fourth box here is tax advantage

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These guys make good money and so I was like 10% I was like you're gonna get taxed at

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45% right of that 10% which really means your effective increase is gonna be 5.5%

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All right, that's how much you're actually gonna make on this deal after taxes

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That's like barely enough to cover inflation and so they're saying risk

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$450,000 to barely cover inflation not participate in the upside at all be tax disadvantage and

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And to this with a startup so that you're very unlikely to have your capital preserved right so like this is borderline on ethical

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How bad this deal is and so what I want to do now if you guys are good with it is I'll show you the flip side

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Which is the deal that I just did

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About 60 days ago. All right, so here's how this deal worked

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I wrote a note for 2.5 million dollars, all right

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To secure a building out of foreclosure, all right, so somebody emailed me and said hey

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I found this building is two it's 2.5 million dollars. That's how much I can buy it for and I said okay

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Well tell me more about this deal. So we're going through the same framework. All right, so we've got a capital preservation. We've got yield

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We've got tax and we've got

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We've got

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Most nation real quick if you are a business owner that has a big old business and wants to get to a much bigger business

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Going to 50 $100 million plus we would love to talk to you

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And if you like that

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We'd like to hear more about it go to acquisition.com and you can plan anywhere on the page and talk to one of our team and see if we can help you get there

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So in this in this situation

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He then said

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I have four offers

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On the building already between 5.1 and 5.6 million

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All right, and I was like okay, so now I know that this is reasonable

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He sent me the offers over so I knew that they were good on top of that they had taken the top guy

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And this guy had put $300,000 in earnest money down meaning he had committed to doing the deal as soon as he as soon as it comes available

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All right, so we have a real buyer lined up at 5.6 million

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Sounds good so far and this building is worth 2.5 so I'm thinking cap refrigeration if if for some reason this deal goes through

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I've got three other people who've said they've been willing to give more than twice as much money as I'm buying this for all right

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Pretty good now mind you. I'm not buying the building. I'm the bank here. I'm the one lending the money to the guy

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All right, now he's gonna make good money on this. He's gonna

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Get two and a half billion. That's not his money

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And then he's gonna sell it for 5.1 to 5.6 in this case 5.6 and he's gonna end up making 2.1 million on this deal

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Minus whatever my fee is for just applying the money now on top of that I asked to have a personal guarantee

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From him and the partner all right, so just in case these three offers fall through on top of the fourth offer with the earnest money

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I got personal guarantees by both the buyers of the building all right

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So this is how I wanted to make sure that my capital is preserved so I'm like cool check now

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Do I participate in any of the equity of this of this business? The answer is no

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I don't have any equity participation from a tax perspective if they're just gonna pay me a yield

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Which is exactly how I structured it

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What am I gonna have bad tax treatment you bet your ass? I am

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It's gonna be treated as regular income

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So it's gotta be really worth it for me on the yield side

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And so the way that I wrote the note is I get 48%

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to 96% per year

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You're like how can you achieve you know, uh returns like that

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If you look for right that's the simple answer right and the more deals you do the more people know that you have money that you can do deals

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And then the more they reach out to you right and if there's not a lot of people who can just snap that and just throw out

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Two and a half million dollars and so you get on a higher and higher list if you get access to different deals

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All right, that's the short answer

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So what they're doing here is that means that I'm getting 4% per month

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All right, I have to do the math on two and a half million 4% per month is a hundred thousand dollars

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Per month now you might wondering why would anyone pay that this is a bridge loan

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This is a short-term loan it's called hard money lending private lending private placement different things like that

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But they need money fast and so they can't go through a normal process because they got a steel on this building right?

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How many times do you get a building for two and a half that's worth five

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Immediately right not many and so they need someone can immediately provide liquidity and in exchange

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They pay a higher rate now. They're not planning on holding the money for the whole year

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But if I do multiple deals like this then I can effectively get a rate that's comparable to this over the time period of the year

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All right, so 4% per month that's a hundred thousand dollars a month

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Their plan holding time was going to be 60 days

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I gave them 90 days at this which means in the minimum carry meaning if they did it in two in 24 hours

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I still get two months of minimum carry meeting if I'm going to do the steel

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I have to make at least two hundred thousand dollars on just sending the wire and then getting the money back

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Even if it takes a day like it doesn't matter all right, so I set up a minimum carry for that

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Of of times too

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I'm giving it up to 90 days where they can continue to pay if it's like 65 days

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It still rolls into three months right which means that I may make three times this right which is three hundred thousand dollars

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And so sometimes when people are like why aren't you selling stuff on this channel

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It's because I don't really care

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And so hopefully this makes sense to you if you're thinking if someone emails you

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God, I hope they don't email you

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But if someone emails you a deal that looks like this one run the other way and you know question and morals and ethics

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Because either they're absolutely had absolutely have no idea what they're doing

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Or they're expecting that you have no idea what you're doing

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And so that is why I'm making this video so that you don't do a deal like this you think through it through within

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these

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These four levels and there is a point because I know I'm going to get this question

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Well at what percentage is it worth getting the yield which is this fourth box here right

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Well, I'm going to get taxed on this right at my after tax rate on this is going to be like 27% return

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So for me 27% return still makes sense after taxes and everything

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So that that deal makes sense

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But it has to be really really good for me because I have a ton of income

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So I'm going to get taxed at the highest bracket if it's any kind of regular income type deal and so

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If you're going to do a deal like this you have to make sure that it makes sense all right

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So hopefully that makes sense to you guys hope you enjoyed that

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Like subscribe all that stuff and I'll see you guys next video

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You