How Would/Do You Turn Excess Cash Into Wealth?

cybersage said:

Jazzc is right, those numbers are not easy to achieve.

Payday lending can hit these numbers (at least in my state) and still avoid usury caps however. I believe my state allows these companies to lend at a rate of $15.50/$100 (so 15.5%) but the term period can be between 2 weeks and 35 days. I believe with this you get near 800% return over a year; but this does not factor people who default on the loans and the costs of collection. I've looked into doing this business in my state but my other business partners won't allow it (these businesses can be harmful to a person's reputation). In my state payday lending requires that the business owner have at least 30k in a bank account to make these micro loans. I must say that this type of business is not hard to get into, but is pretty regulated and it usually requires someone that can navigate those regs to stay above water (and not get on the wrong side of the law). Where I live, I see payday loan shops all over the place, and now gold buying shops are popping up, as are smoke shops.

I also saw a news report on one of the big online gold buyers and they usually end up paying between 25-40% of melt value, which means the margins are huge; and if you have a good relationship with your refiner, your TAT could be relatively quick. With both these businesses it takes money to make money (that is why people always say the first million is the hardest to make).



A business is certainly one way to spend that extra money to make more money, but it can also end up costing you that money and your time. If you plan to go into any type of business, having a solid business plan is important because it can allow you to work out some kinks/bugs that you'd mess up otherwise which ends up costing $$$. This includes figuring out your costs of doing business (fixed & variable), figuring out how the particular business is regulated (and thus how you have to operate it), and having a marketing plan (IM will help, but you have to use other forms of marketing too). However, once you get those small businesses running on autopilot (or as close as possible) then all that hard work does pay off. Also, once you've built one offline business, then you have a recipe to duplicate where you can setup multiple locations of the same business; I'm involved in a business with 5 locations and I can honestly tell you that the first was much harder to get going than the fifth.



This is the point that leads to a bad reputation and thus why it is something I won't get into personally. I can see both arguments with regard to payday lending because the payday lending industry is regulated, so that the lenders cannot lend more than 25% of a person's paycheck (again, this applies only to my state, as I havent bothered to look elsewhere). Thus if you make $800 every paycheck, the most the lender can give you is a $200 loan where you will pay back $231 after two to five weeks. Are there better sources of credit available? absolutely, but many of these places serve a need which doesn't exists everywhere (this doesn't even hit the fact that many people that utilize payday lending don't have bank accounts and use these places to cash their checks).

Microlending is a hot business and along the same lines of credit as payday lending (at least in my mind), and the returns are very good. I've seen large companies getting into microlending in less progressed countries giving microloans with 100% interest/year and I believe they are doing a good thing. I've seen instances where business owners in other countries were lent $1000 for their business and that was enough for them to get started and change their life. The crazy thing is that when you look at the rate of default on these types of loans, it is extremely small (typically less than 10% for microlending).

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cybersage said:

I should have also discussed real estate briefly, because I saw that in your OP. I like real estate as an investment, but in the US the real estate market hasn't been as good as it was pre-08. Before 2008, credit was given out very freely by the banks and you could leverage yourself beyond what you could actually afford (by several multiples in some instances). Now it is a little harder to get credit and thus get into real estate. This is where you have to get creative, because honestly you don't need a bank to help you purchase real estate; although a having a bank ready to finance you or having the cash to buy the property affords you more options with regard to how you purchase the real estate. You can enter into a real estate contract, a lease to purchase option, owner financing, and other such means of financing a property (some of which may not even get reported to your credit!). I know people who have leveraged themselves out millions in real estate using alternative/creative financing.

The problem comes when you have to manage all these properties. It can be a real headache to deal with tenants much less many different tenants. You will have to get the rental filled whenever somebody vacates, get stuff fixed, etc; this is when you hire a rental management company to handle that for you.

With any of the businesses discussed you can always play the IM card and get additional traffic for your offline businesses.

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IamNRE said:

Great discussion!

Lending out money seems like a good way to make money, but I think it can get tricky if done offline. I think online is a bit more wild wild west and setting up a logbook loan firm (lending money and holding the title of people's cars as collateral) can be done with relatively easy and not be too worried about regulators (at least not in UK).

Real estate is another great option, if you buy land and get planing permission to build duplexes/apartments then you can just rent them out for 5-10 years (you can hire a company to manage everything) and sell them for a NICE profit.

But for best returns I think offering something online is the best route, because of the cost it takes to manage, set up and the earnings potential (when you have world wide customers).

What ever you do, make sure you remember these 5 principles;

1) Offer something that people NEED.
2) Set up something that won't take too much TIME to manage once set up.
3) Make sure its SCALABLE (i.e with the internet you can serve the whole world, where as a small offline shop can only serve the local area .... unless you can open a "duplicate" shop else where the way McDonalds/StarBucks have done).
4) Make sure you have CONTROL over what happens in the business, i.e Don't be dependent on Google/FB for Traffic, Don't depend on CPA networks for advertisers willing to pay for your leads. Otherwise you will find yourself banned from CPA networks, punished by "penguin" or some other none sense!
5) Make sure its not an EVENT - i.e you don't want any old Joe Blow to be able to copy your business model in 1 weekend and be able to compete with you. If you set up something that is a process then you can be sure that you won't have a lot of newbie coming along and saturating the market for you.

Read/listen to this ebook/audio book for more wealth building principles.

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IamNRE said:

Great discussion!

Lending out money seems like a good way to make money, but I think it can get tricky if done offline. I think online is a bit more wild wild west and setting up a logbook loan firm (lending money and holding the title of people's cars as collateral) can be done with relatively easy and not be too worried about regulators (at least not in UK).

Real estate is another great option, if you buy land and get planing permission to build duplexes/apartments then you can just rent them out for 5-10 years (you can hire a company to manage everything) and sell them for a NICE profit.

But for best returns I think offering something online is the best route, because of the cost it takes to manage, set up and the earnings potential (when you have world wide customers).

What ever you do, make sure you remember these 5 principles;

1) Offer something that people NEED.
2) Set up something that won't take too much TIME to manage once set up.
3) Make sure its SCALABLE (i.e with the internet you can serve the whole world, where as a small offline shop can only serve the local area .... unless you can open a "duplicate" shop else where the way McDonalds/StarBucks have done).
4) Make sure you have CONTROL over what happens in the business, i.e Don't be dependent on Google/FB for Traffic, Don't depend on CPA networks for advertisers willing to pay for your leads. Otherwise you will find yourself banned from CPA networks, punished by "penguin" or some other none sense!
5) Make sure its not an EVENT - i.e you don't want any old Joe Blow to be able to copy your business model in 1 weekend and be able to compete with you. If you set up something that is a process then you can be sure that you won't have a lot of newbie coming along and saturating the market for you.

Read/listen to this

Click to expand...