To be taken with a grain of salt:

Your cash reserves are limiting you.

Person A makes $1,000,000 per year and keeps $750k in cash.

Person B makes $1,000,000 per year, spends $250k and dumps $750k in asset base.

Apply leverage @ 75% LTV = $3M assets.
Over first 12 months here’s what happens:

- $3M turns into $3.2M conservative.
- Debt structured correctly reduces $2.25M to $2.1M
- $200k bump on assets has no debt, pure net worth
- Cash flow created @ 8% on $750k = $60k bump
All in first 12 months = $385k+ and $750k protected against assets.

Off $750k that’s 51% growth rate.

Compound over 5 yrs and you will hate yourself for hoarding cash while players strategically DEPLOY cash.
This is a difficult thing to grasp because it feels safe to hang onto everything but it is counterproductive.

I keep 10% - 15% of my annual earnings in cash and deploy the rest strategically.
MORAL OF THE STORY:

Cash is a tool to be USED not hoarded.
Growth mindset 👑

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More from @taylorawelch

17 Jun
If you play the game correctly right now, 5 yrs from now everything in your life is free.

One such way to play “correctly” = WHOLE LIFE. Rich ppl use whole life / IULs not term.

Term is short term coverage. Permanent coverage = long term asset.

🏆 $10mm policy (cont’d)
= $3mm funded over ~10 yrs

That’s $300k/yr for 10 yrs with IRR in the middle after the 4-5 yr mark.

🏆 5 yrs in = $1.5mm “cash value” producing 6% per year

BUT - permanent coverage is a store of value not just a return vehicle. Which means…
🏆 90% of your cash value can be loaned against for ~3-5% interest.

Do the math…

90% of $1.5mm = $1.35mm @ ~4% interest = $54k annual cost.

But $1.5mm earning 6% = $90k earned.

You’re loaning money against itself and the true interest rate is negative.
Read 4 tweets
17 Jun
Rules for becoming financially independent:

🏆 Live on ~50% of what you make

Bankers have two terms/levers on this: “cashflow” (income) and “burn” (expenses). Increase cashflow or decrease burn to get down to 50%.
🏆 Invest 100% of what’s left

Don’t ask “what percentage should I invest,” instead ask:

“What do I need to live on,” then put 100% of what’s left into securing assets.
🏆 Don’t spend your passive cashflows

Build up reserves. 3 yrs. 5 yrs. 7 yrs. Let the accounts fill up until you have as much coming in from assets as you do from your time.
Read 5 tweets
16 Jun
To the timid and the fearful:

A day will come when the one thing you will wish for above anything else is the opportunity to go back and do it different.

You will crave, with every fiber of your soul, for the impossible chance to go back & to change things.
You'll dream what it could've been like to be stronger.. what it could've felt like to have courage, to risk something for a worthy cause.

You'll fight off feelings of regret from wasting years of the only life you will ever have while other people went for it.
You will remember ALL the memories, of when you swore you were doing what was "safe" and "prudent" but really you were weak and simply afraid of losing.

In your attempt to never lose you will ensure your greatest loss of all time: having never actually lived...
Read 7 tweets
15 Jun
8% annual yield is not even that good…

It is the lowest bar you can set, any of the top indexes will do 8.

Let’s go higher
$2mm building with 12 renters in it…

Building is a 6 cap and NOI is $120k PRE debt service.

Find a building where market supports rent escalation if proper renovations are done.

Reno costs $300k and rent escalations + expense reduction bumps NOI to $200k.
Now the building is valued at $3.3m.

Lender gives you 70% of it ($2.3m) and you paid $2m.

Total capital in the deal: $0
Total return: $300k lump sum + $200k/yr

What’s your return ratio now?
Hint: not 8%
Read 4 tweets
14 Jun
Let me see if I can teach this in a thread…

$0 to $10M 🚀

My journey (x4) and the “ins” and “outs” of how to go from bootstrapped 6-figures to multiple 8-figure empires without using VC.

Easier DONE than SAID — so wish me luck…
✅ ACQUISITION, ECONOMICS, DELIVERY

Everything comes down to those 3 things. Three levers. Pulled correctly = rapid scale, healthy margins & good will delivered to prevent the downside of scale: reputation.

You CAN scale too fast, and you lose raving fans from poor product.
🏆 Sell first, built later…

Our first business had sales (3 of them) before we ever lifted a finger to build the product. Modern examples are modeling, think car deposits (new Ford electric, Cybertruck, etc).

Validate FIRST. Build SECOND.
Read 17 tweets
14 Jun
$10m allocation in buckets:

▶️ $5m @ 75% LTV = $20m single family property @ $200k per unit = 100 units

▶️ Avg cashflow per door after debt service = $500/mo x100 = $600k annual + debt pay down & equity increase

▶️ $2m funded whole life @ 6% tax free = $120k

Cont’d
$120k tax free is equivalent of $170k if taxable income

▶️ $3m spread across index (50%) and development/turnkey funds, reit, or PPM (50%) @ avg 8.5% annual = $255k annual

TOTAL income: $975k/yr
Cash on cash return of 9.7% yr 1

Carry forward without touching for 15 yrs and assets are worth $48M (more than double) and after debt service, income is

-$1.4m on property
-$150k on insurance
-$255k on indexes and variable fund

$1.8m on $10m invested.
Read 4 tweets

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