viernes, 14 de julio de 2017

Cuarta entrega: 4 de 5 - Mike Dillard

Part 4: How To Build REAL Wealth And Passive Income...

One of the biggest challenges you’ll face as an entrepreneur, is learning how to responsibly use the money your business starts to make.

Going from $5,000/Mo in income, to $50K/Mo is amazing, but it will require you to make some significant mental adjustments, or you could quickly find yourself a slave to an expensive new lifestyle.

Making money and creating financial freedom are two completely different things

I’ve had to learn this lesson the hard way over the course of my career, so today I want to prevent you from making the same mistake, and answer an incredibly important question you need to ask yourself… 

“What are you going to do with the money your business makes?”

Should you buy a fancy new car? An expensive house? Diamonds or a new watch?

Or should you invest it, and of so, in what?

If you want to build real wealth and actual financial independence, the smart answer is to invest that money, and to invest it in assets that produce real passive income.

So today I’m going to walk you through an investment that I’ve personally made, but before I do that, I want to point out why this strategy is so important to your financial security and prosperity by comparing it to what most other people do.

If you look at the typical American family or retirement strategy, it sounds something like this…

You work your tail off for 40 years, putting money into a savings account or a mutual fund or an IRA or 401(k). 

And you do this with one objective in mind... To build a big enough nest egg to sustain you for the rest of your life once you retire, around the age of 60 or 65.

Basically you have 40 years to build up this nice, big, shiny pile of cash that you now have to live off of, which means it slowly declines every single month. 

When that retirement day comes, what you have, is what you have, and now you have to guess how much longer you’re going to live and how much money you’re going to need to buy food and pay for health insurance, car insurance, and everything else that you’re going to need to sustain yourself.

In order to pay your monthly expenses, you must consume the money that you’ve accumulated, which means every single month you get more poor.

Think about that… Every single month, your level of poverty and financial insecurity gets worse.

So what would happen to your business if you pursued it with the same strategy?

If you stopped selling products and producing income today, but your business expenses continued?

You’d go bankrupt.

So the official retirement plan for 99% of American’s is literally, insolvency.

Do you see how ridiculous and backwards that is?

Obviously, we’re going to say, “screw that” and we’re going to do the exact opposite.

Our goal is build a business that produces cash, and then use that cash to invest in assets that produce more cash on a passive basis every single month.

So let me walk you through a real world example of how I’ve done that so you can do the same if you’d like...

First and foremost, we need to find an asset to invest in that does two things…

First, it has to produce cash flow, and second it has to reduce taxes which is going to become a very important part of our strategy.

That basically leaves us with three options...

Rental real estate, such as a multi-family property, or commercial office space.

You have oil and gas investments which have cash flow components and tax advantages.

And then you have small businesses like car washes, billboards, laundromats, etc.

The next thing that we’re going to do is make sure that finding and managing these investments takes as little of our time as possible.


Because the single biggest return on investment you can make as an entrepreneur is your own company.

As an example, if you take the $3.2 million dollars in revenue my last company made in its very first week of business, and you divided that revenue by the start up costs that I incurred to create and start that company, there’s no way another investment could even come close to that kind of return.
My startup costs to build the website and produce the first set of video lessons was about $10,000 dollars, which means my ROI within the first 7 days of launching that company, was 32,000%.

You can’t get a return like that anywhere else in that short of a time period, outside of starting your own company, so we want to make sure that that’s where our time continues to stay focused.

One of Warren Buffett’s most famous quotes is, “Invest in what you know”.

Well as an entrepreneur, I’m not a master when it comes to real estate or oil and gas, or the stock market, but I am a master when it comes to building businesses that produce cash flow.

That’s why I need to stay focused on my business 100% of the time and why you need to do the same.

If you don’t have the time or the desire to learn and master investment strategies like real estate, what do you do?

Well, it’s very simple... You acquire a team of people who have.

I found the best real estate investors that I could find several years ago and I invested my money with them.

So in reality, I’m not investing in an apartment complex, I’m investing in people, their track record, and their level of expertise because they are the ones that are going to go out and invest my money.

So, the two best firms that I found when it comes to this, and that I’ve done business with is Thrive here in Austin, run by my friends JP and Adrian.

And M.C. Companies out of Scottsdale, which is run by my good friend Ken McElroy, who many of you will recognize from his work with Robert Kiyosaki and the Rich Dad Team.

Here’s a picture of the very first apartment that I ever invested in..
This was with JP and Adrian and it’s called Hidden Oaks, down in San Antonio Texas.

Now there are basically two requirements that you have to meet in order to invest in a firm like JP’s or Ken’s...

The first is that you have to be an accredited investor. To be an accredited investor, you need to have a net worth of at least one million dollars, (which does not include the value of your primary residence), or you have to have an income of at least 200,000 dollars per year for the last two years.

If you meet either one of these qualifications, you’re considered accredited.

The second qualification that you’ll need is the ability to meet their minimum investment requirement for a share in a deal which is typically $100,000 dollars.

What if you don’t have a $100,000? What if you’re not accredited yet?

That simply means that you’re in a position right now where you need to spend a 100% of your time and energy on growing your business and building your income until you reach that point. (And I can definitely help you do that).

Nonetheless, this information is extremely important to you right now even if you don’t have the money, because it’s going to help you create the right kind of goal down the road.

So, how did the project go? How did that investment work out?

Very well…

In fact, I ended up writing them a check for a share in the complex for a $100,000, and overthe next two years I made $32,000 in profit.

That’s obviously a 32% return, or as I like to think of it, an extra $16,000 per year in passive income.

And beyond a few hours to review the deal and sign the papers, I didn’t have to spend a single minute of my time making that money.

This allowed me to stay 100% focused on my number one investment, which is once again, my business.

So let’s say that you’re really happy with these results, and you re-invest that $132K back into another apartment complex.

For simplicity’s sake, we’ll keep the same ROI of 16% per year.

So at the end of Year 1, you’re going to have $153,120 dollars.

By the end of year 5, you’ll have $277,245.

By year 10, you’ll have $582,309.

By year 20, that $132,000 has turned into $2,568,820.

Your ROI, (or passive income) in year 21 would be $411,000+ per year.

Now you’re making money and living a fantastic lifestyle, instead of spending money and getting increasingly stressed with every check that you write.

This kind of information, combined with contacts like JP and Adrian, is THE difference between achieving a life of true financial freedom, and just making more money that gets spent on toys and liabilities.

Tomorrow we'll dive into Part 5, so stay tuned!

- Mike Dillard