Why I love buying businesses 10x vs Real Estate 🥊

A standoff - why I think now is the time for SMB not RE...

#dontatme
#1 Ummmm, overhyped market anyone?
No one is great at predicting highs or lows. Including us

BUT

Is this commercial RE prices chart higher than Bezo's rocket?
#2 What about residential, you say?

Pick a city, just about any city. Want some coffee w/ that frothy market?
#3 Maybe I'm wrong and RE goes up foreverrrrr

SUPPLY & DEMAND IS YOUR FRIEND IN BIZ BUYING

Record number of US small businesses for sale as more Boomers retire, and more people tire from their long grind of starting a business to scaling it.
#4 Most people don't know sh*t about M&A

I certainly didn't till I was in finance.

They don’t know you can:

Use an SBA loan to finance entire purchase

Use seller financing to put lil to no $ down

Use value added work to get equity w/o a cash/loan exchange
#5 Prediction is in the next 20 years we will think of buying small businesses like we do buying income properties.

We are just ahead of the game.

@Flippa @BizBuySell will be future MLS of SMB
#6 Get Passive Income w/ RE they say...

Cough cough... the average income property owner makes $400 a month

- or less than $5,000 a year for all the broken pipes, sketchy tenants, lightbulbs out, and wear and tear on the house.

Is that really worth it?
#7 No free lunch.

Listen neither strategy is without work.

But I'll take my $67k a year laundromat over your $5k a year multi-fam just about any day. 😅
Alright trolls: disclaimer- I own RE. I love RE.

Heck, one of my partners 20+ years buying RE.

BUT - It is not the income-generating machine people think it is unless you have lots o $.

And we got plenty of homies singing it's praises, I'm here for the flip side.

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More from @Codie_Sanchez

26 Jul
I've been investing for 13+ years.

The single most important thing to investing well?

What I wish I knew in the beginning?

DEAL STRUCTURE: 5 things to know a 🧵
#1 Dealflow is great, but structuring is KING.

Doing a deal w/o knowing structuring is like signing a prenup w/o reading it.

When you structure a deal you need to understand the terms and where you have leverage. Here are some easy places to start:
#2 Term sheet is ONLY the starting point.

Would you go to a swap meet & not negotiate?
Don't invest in a company w/o negotiating.

If you LOVE a startup, go ask an investors w/ 10+ years experience, how's the structure look? Could I protect my downside or increase upside?
Read 9 tweets
24 Jul
What I wish I knew as an investor 20 years ago??

Speak your truth... even if your lips tremble.

The deals I could have saved $52M+ on:

If I wasn’t so scared... a🧵
In finance MD typically stands for:

Most D*ckish.
Mr Don’t
IDK but managing directors to analysts were the worst

I underwrote a CPG deal, and saw more holes than cheddar cheese.

Presented the findings.... and got told by 2 MD's to pound sand.
What happened?

That company went on to raise:
$52 million dollars
Burn all of it
Return nothing

Is it bad to say I told you so at that moment? Ya....
Read 9 tweets
22 Jul
How Lebron ACTUALLY became the NBA's 1st billionaire?

Spoiler it was not through dribbling.

It’s through EQUITY in normal biz's not fancy endorsements...

A 🧵...
James does do endorsements...

- aka Give me money and I talk about your product
- he’s bigger on ownership w/ equity

So if you want to do a deal with Lebron - you gotta give him skin in the game.

My favorite way to do deals.

Wanna know wha he owns?
#1 Doubles down on wha the knows.

SPORTS.
- Part owner of the Boston Red Sox AND Liverpool Football club
Read 9 tweets
21 Jul
Uber: Valued at $85 billion, loses $500 million per year

My Laundromat: Bought for $100k, nets $67k per year
If you’re into businesses that actually cashflow…

Free newsletter for ya:
contrarianthinking.co
Couple tricks to make this happen:
1) off market deals (go door knock most won’t)

2) don’t buy RE w/ it but lock in 10-12 year lease

3) find your angle - I’m a local community member, and usually leave their name on the door sellers like that
Read 5 tweets
20 Jul
I was horrified to get on twitter & be public; scared to get trolled, mess up.

In finance, we get rich quietly & quietly judge "internet gurus."

But, I did it anyway, & let me tell you a secret.

I do more deals, make $$$, & have more fun than ever...
Trolls Don't Matter:
#1 If you have no prof pic, 20 or less buds & you spitting nonsense at people online. I couldn't care less about you.

I get told daily I'm a liar, or wrong, or am I really worth x, or did y.

It's part of the game if you want to be in the arena.
#2 I've never met a troll in real life.

Maybe they only hang under bridges?

Instead, twitter has 100x'd my network of people I would have never met if I just played in private equity.

Magic happens when people meet from different walks.
Read 6 tweets
19 Jul
"What do I want to do for a living?"

is the WORST question you can ask yourself in your career...

Here's why..
You are not going to DO anything for the rest of your life.

Average length of a gig is 3-4 years.

Think about what you are interested in NEXT, not forever.
Does anyone really know the answer to that question?

I hardly know what I want for dinner. (Sorry hubs)

Don't trap yourself.

When you ask a singular question with only one answer, you immediately limit your options.
Read 7 tweets

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