$100k a month PASSIVE I am the BANK | Ep 309
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How did Alex Hormozi structure a deal to earn $100k a month in passive income?
But I want to walk you through it because it looks okay, but as I show you the framework that I use, which has four lenses that I look at investments through, you'll see more and more why it wasn't good.
What are the four lenses to evaluate an investment deal?
Welcome to the game where we talk about how to get more customers, how to make more per customer, and how to keep them longer, and the many failures and lessons we have learned along the way. I hope you enjoy and subscribe. One of the deals I did 60 days ago pays me $100,000 a month in passive income just by being the bank.
What makes a deal high-priced and successful according to Alex?
And so what I want to show you in this video is how I find these deals, how I structure these deals. And one thing to make sure that you don't do, because actually one of the CEOs of the companies in our portfolio actually reached out to me because he had gotten an email from his wealth advisor. I'm going to use quotes here because it was almost borderline unethical what the deal looked like.
How can more deals lead to more opportunities in business?
But I want to walk you through it because it looks okay. But as I show you the framework that I use, which has four lenses that I look at investments through, you'll see more and more why it wasn't good. And then at the end, I'll show you what was good and the deal that actually made this happen.
What should you consider regarding capital preservation in investments?
So the deal that his advisor sent him was, hey, we've got a business that wants $450,000, $450K, to invest in their startup. So we're sending this money to a startup.
How do tax advantages impact the profitability of an investment?
Just in case you're curious, it's a little bit risky. We'll get into that in a second.
What is the importance of yield in evaluating investment opportunities?
So $450,000 to a startup. And he said, they're willing to pay you 10% per year.
How can you determine if an investment deal is unethical or risky?
And they're going to pay this at the end of 12 months. Which means at the end of 12 months, he's going to get $450,000 plus... That is what the return is going to be. They were like, hey, can you break this down? It didn't sound like a good deal, but we kind of want you to walk us through it. Here's how you should think about these investments. Number one is... yield, which is how much money cash flow is coming to me every single month. That is one way that you look at the investment. The next way is capital preservation, which is how likely am I going to be preserving my capital, that my money is going to come back to me. All of these are on a scale, so it's not like a yes, no, it's more like to what extent.
The next one is is tax advantage, all right? So if I do this investment, is this going to cost me a lot tax-wise, right? Something that's treated as capital gains versus something that's income is gonna have a better tax treatment. And then finally, 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? 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, and think, okay, to what extent is my capital being preserved? To what extent am I getting the yield? What are my tax advantages? Am I growing? I walked them through this exact same process. Let's look at this deal that you got.
Capital preservation, box one. This is going to a startup and they're saying they're not going to pay you anything at all. Then at the very end, they're going to give you $495,000 at the end. $450,000 plus $45,000. How likely do I think that's happening with a startup? I would put that as an eh. No, probably not likely. Yield-wise. I'm gonna get 10%. Okay, that's cash flow. Kind of good, but for a debt deal, probably not great. All right, because what we're gonna compare this to is that like, if you look at indexes like the S&P, I don't even know what it was last year, but I'm guessing it was really good. It was probably 20%, something like that last year. And so literally having 100% capital preservation and having a 20% increase in equities, which is here, right?
You'd have a better return there. But this one has no increase in equities because we're not participating on the upside. We're just participating on the downside, which by the way, when you ever do money lending, all you get is guaranteed cash and you participate on the downside.
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Chapters
8 chapters
1
How did Alex Hormozi structure a deal to earn $100k a month in passive income?
0:00–0:10
2
What are the four lenses to evaluate an investment deal?
0:10–0:27
3
What makes a deal high-priced and successful according to Alex?
0:27–0:43
4
How can more deals lead to more opportunities in business?
0:43–0:58
5
What should you consider regarding capital preservation in investments?
0:58–1:13
6
How do tax advantages impact the profitability of an investment?
1:13–1:17
7
What is the importance of yield in evaluating investment opportunities?
1:17–1:25
8
How can you determine if an investment deal is unethical or risky?
1:25–10:31