10/31/2024
Did you know that top financial advisors often won’t take clients with under $500,000 to invest? I knew this, but hadn’t experienced their “vetting process”—until now.
A month ago, I got an unexpected text inviting me to an “Informational Dinner” at The Keg in Chandler, AZ.
The pitch?
“Have you lost money in market downturns? Come learn how to find safety.” I was curious and had to check it out.
Here’s what I learned:
Their Target Client: Business owners with $500,000 to invest.
Their “Safe” Strategy: ETFs with a mix of U.S. Treasury bonds, investment-grade corporate bonds, and dividend-focused equities
Expected Return: 6-8% over 25 years; they claimed anyone promising more was misleading.
At the one-on-one meeting after I heard the offer I was direct and said “I regularly earn my investors 8-10% lending on my investment properties.” His response? “I can’t match that; 6% is what I like to target maybe 7%.” He ended the meeting—thanked me for coming, and I left.
My Takeaway:
Only 15% of U.S. households have $500,000 to invest.
The irony? Anyone can buy similar ETFs online without an advisor. Warren Buffett strongly advocates for investing in ETFs or index funds tied to the S&P 500 passively. Why do these folks pay the 1-2% to an advisor that gets paid if the investment is up or down?
All this proves one thing to me: safety or return “of” capital is often more important than return “on” capital.
But these ETF investments don’t guarantee returns, they aren’t collateralized with a hard assets, and don’t provide monthly cash flow.
To generate income, you’d need to “kill the golden goose” by selling off assets monthly.
What if....
You could achieve similar returns with monthly cash flow, backed by real estate as collateral, and with the flexibility to choose short- or long-term investments?
While there are no guarantees here either, a hard asset protects your investment—complete with a lender's title insurance policy securing your lien position and a hazard insurance policy safeguarding the property itself.
Over the past 18 months, I’m pleased to report that some of my capital investors are receiving steady monthly payments set to continue for years, while others are focused on growth and plan to reinvest as we refinance or flip some of the properties.
In full transparency, there were a few challenging moments along the way, but valuable lessons were learned, and I’m ready to move forward with my next round of properties for 2025.
So what’s my favorite asset class?
Affordable homes typically in the Southeast under $100K that need only quick repairs (not full rehabs), allowing me to seller-finance or joint venture with a local fix and flipper on an affordable home, creating immediate cash flow within a couple of months.
Sound interesting? Let’s talk!
