As you know, I’m excited about alternative investments like peer-to-peer lending. And if your aim is to replace your income, I think it makes sense to invest for cash flow.
This week’s Side Hustle Show guest argues when you want something in other areas of your life, you go out and buy it: a pair of shoes, a computer, a new car. You don’t make it from scratch!
So why are we so insistent on building income from scratch? He says there’s a faster way, and that’s to “buy” assets that are already generating positive cash flow.
In the stock market, that could be something like dividend stocks.
In the real estate world, the common example is a rental property where the rent exceeds your mortgage and insurance. Like Elizabeth Colegrove explained in episode 148, you’re happy to get a 14-20% cash-on-cash return.
But in the world of digital real estate — online businesses and income-producing websites — the ROI figures are much more attractive. Think 30-100% cash-on-cash returns.
Naturally, these investments are riskier, but have some advantages as well. Namely, no problem tenants, leaky toilets, or rodent infestations.
Ace Chapman is the go-to guy when it comes to evaluating these deals and making them happen. He’s bought and sold more than 100 different Internet businesses, and stops by The Side Hustle Show to give us an inside look at his criteria, process, and advice for people getting started.
Don’t have the budget to buy an online business? You can use my free video course and start your own on the cheap.
Free Bonus: Download Ace’s Top Business Buying Tips
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Quotable:
“It’s not about buying a business; it’s about building a business of buying businesses.” –@acechapman <– click to tweet!
Learn:
- Ace’s favorite marketplaces for sourcing potential investments, plus his “hidden market” strategy.
- The initial investment he suggests for people getting into this business.
- Some creative financing and deal structure options to minimize your out of pocket costs.
- How he looks for areas of growth opportunity in each deal he evaluates.
- His takeaways from 3 deals that backfired.
- Some resources to help with your due diligence.
- Ace’s #1 tip for Side Hustle Nation.
Links:
- PortfolioSharks.com
- The Ace Formula: How to Buy a Business
- WebEquityShow.com | Due Diligence episode
- EmpireFlippers.com | My interview with Justin on The Side Hustle Show
- BizBuySell.com
- Flippa.com
- PartnersEquityFund.com
- Post-mortem of my money-losing Empire Flippers deal
What do you think? Viable side hustle for you? Could you replace your current income by buying a business like Ace suggests?
Download the Free PDF "Highlight Reel" from this Episode
With all of my guest's top tips and resources included.
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Survival knife, I wonder if that’s Spencer Haws site. Sounds interesting!
I was wondering the same thing!
I respect Ace Chapman but his advice is too general. In my opinion he does not give any concrete steps. I heard the word “deal” about 100 times. I do applaud his”go get ’em” altitude and in the end that’s noteworthy as any successful salesman (woman) could attest to.
Appreciate that feedback Matk. Maybe we should do a follow-up where we go step-by-step through a real-life sale.
It’s not that hard. Buy a website that’s making money and do things to make it more money. The easiest thing would be to bring it more web traffic. More complicated things would be to add products or whatever.
Thanks Nick for the interview with Ace. Listening to the do’s and dont’s of buying a business only confirm what I have come to realize within the last year. I hated my corporate job so much that in September 2011 I bought my way out by purchasing an existing lawn and landscape business. Almost 5 years to the date I have made zero money, have cashed out my 401k from my previous employer and put thousands of dollars from savings back into the business. It is has been such a frustrating and messed up journey that I am in the process of writing a book about it. The common thread throughout the book however is I purchased a business that does not fit my skills or personality. I am at a major crossroads in this journey and I know what I would like to do. I would like to punt this thing back to the bank and lick my wounds and take valuable lessons away as Ace talks about in the Podcast. However with a balance still of over $155k on my SBA Loan that is not an option at this point.
Ouch Dan! Thanks for sharing the downside to this strategy. Please feel free to post a link to your book here when it’s done.
I love what Ace says. The internet is replete with all types of real estate. It just depends on what you are trying to accomplish. #FastMoneyVentures
I just recently purchased my first digital real-estate business. It’s only been a week now and I have drummed up some leads but nothing too concrete. I loved hear someone who has made such a killing at this because it only adds to my fire. I hope to be able to one day say I made it and turn around and inspire more people like myself.
Great post. The best thing about digital real estate is that it’s a great way to test out a business idea without major risk/expense. I am constantly amazed at the folks who make financial killings doing it – some great examples cited above.