Create Unfair Advantage

JC Project Freedom Capitalist without capital

This article is with continuation from the learning from the book “How to be a Capitalist without Capital” (you can read previous post here). Unfair does not mean dishonest. The specific persuasion method is to sell based on fear. When we fear something, we will do anything to fix the fear. Don’t try to persuade using reason, it will put you in disadvantage. The key to tell a story that taps into fear.

Other methods of selling based on fear:
– Fear of Missing Out => Use this tactic on anything that won’t be around forever
– Fear of Unknown => “What if” thinking
– Fear for Your Life
– Fear for Your Health
– Fear of Losing Freedom
– Fear of Loneliness
– Fear of Failure
Fear is a powerful persuader. It is the most powerful motivator you can use. One of the reasons you lose negotiation is when you fear you are going to lose the negotiation. That’s why it is important to negotiate when the fear does not exist.

Batch Time

Every time you switch tasks it takes five to ten minutes to reengage with the thing you were doing beforehand. If you switch tasks ten times during the day, that’s one hundred minutes, or almost two hours of productivity you lose every day. That is why the world’s most efficient people batch time. This is the huge advantage over others who let distractions rule them. Delicate blocks of time to one task or project. No switching to do little things in between. If you have multiple big projects going, batch time by days instead of hours.

Hidden Money

Rich Dad Poor Dad will tell you a liability is something that is negative cash flow every month such as your house, car and boat. The difference during his era and ours will be the sharing economy. Because of this, we can turn everything into a cash machine. Monetize your current assets, use the money to build new project to create more money when it is up and running.

Invest in Real Estate

This part is more US centric but the theory can be applied to local market as well. The author’s key concern was the time spent on property management which later he found out can be outsourced. The key is finding something you can afford to buy that will generate enough income after pay your monthly expenses. The author will do real estate deal by knocking on the house door to meet homeowners before they go on listing. It gets him better prices and uncovers details such as what kind of renters occupying the place, who is staying in the neighborhood, whether there are renters. His take is to buy within 10 miles from universities so that there’s always a rental market. Start by searching an area you feel you can afford and knock on doors. Meet the owners and earmark your ideal neighbourhoods and study the numbers. Next, figure out how much you can make from the rental, how much it will cost you to buy the house and how to get a better deal.

It is possible to buy real estate with no money down by analyze different funding partners who can put money. If you have a family member who loan you the mortgage amount, they will make you put no money down whereas a bank requires you to put down payment. The suggestion is to provide the family member with a higher loan amount than fixed deposit rates. Ask the seller to loan you money after the deal is done. Ask the owner of property management company you will use to loan after the deal. All these are about the mindset. There was a discussion on even in a scenario where you are losing money in terms of cash flow, which means your cost (mortgage, management fees, repairs, etc) are higher than your rental income is still worth pursuing because you are gaining equity in the property with each mortgage payment. I agree with this on the context that the loss is minimum and there is continuous rental income.

Spot Businesses to Buy for Very Little Money

The key non-negotiable rule to buy is pursue businesses that have a natural unfair advantage.
1. Digital over brick-and-mortar
2. No employees
3. Already-established user base
4. Have a monopoly over a distribution channel
Free apps and web extensions are perfect buys for beginners. Buy free digital properties with huge user base, hire a Toptal developer to put up a pay wall that appears after a certain number of times of usage. Reinvest the income from this business to buy other companies.

The process goes like this:
1. Inquiry
2. Offer and negotiations
3. Letter of Intent – LOI then lead to NDA
4. Due Diligence – Post NDA, scour their books and internal systems. Discover liabilities to leverage to decrease the purchase price or renegotiate deal points.
Ask these great questions:
– How long do customers stay with you on average?
– How are you getting customers?
– What does the average customers pay you per month?
– Is there any any customer that makes up more than 10 percent of your revenue?

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