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Businessmann or Dealmaker? Which way is faster to real wealth?

Cruze

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Sep 6, 2016
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Hey,
a provocatively subject title, I know.

In your opinion, which way is faster AND your favorite way to real wealth?
Trough a own business, with employees and grow step for step or trough dealmaking (fix & flip or e.g. invest in different businesses, real estate)?

Make you deals happen or growing with your business?
Are you Carl Icahn or Steve Jobs? :D

Im very interesting in your answers...especially @Kak and @SteveO :)

Greez!
 

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Kak

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Businessman that makes big deals!

I have not done the fix and flip stuff, but I have some minor real estate experience. I want to get really big with real estate as time goes on. Particularly large apartment complexes.

I also work with the government we go after large contracts.

I also work with large oil and gas companiee we go after large contracts.

So yeah. Deals maker and businessman.
 

Late Bloomer

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Cruze, have you read MJ's books? He has a lot to say about Process vs. Event.

A single deal is an Event that can make someone extremely wealthy for life.

But, it usually takes a lifetime in the Process of building a business, or building dealmaking capability, to be able to make that big deal.

The single largest deal I know of, is that Intel paid AMD $1.5 Billion in a bank wire transfer, for "the day we settle all family business." But, there was decades of history before that massive payment happened.
 

Rich Wood

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Jun 17, 2018
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From my perspective - owning a business gives you the opportunity to do big deals. For example I have a VC friend who got in on the ground floor of a recent unicorn business, and now has sold a large portion of his stake, and moved the money to a real estate fund in a large A Type property - dishing off 10-12% per year in perpetuity. Not VC type returns, but comfortable lifestyle returns. Both opportunities would not have come unless he had his businesses.
I work very hard in my business (every day), and utilize excess cash flow to do deals on the side.
I maintain a decent working cap in the business, leverage credit lines where necessary, but maintain that every year I need to be doing at least 5-6 bigger deals, whether they be flipping properties, buying into REIT's, doing development deals myself etc, angel investing, or other transactions.
I work in the business to pay the wages (cover the needs of the home), and then use the deals to generate my and my other partners future financial freedom.
Unfortunately, I think to many entrepreneurs think that the only way to get liquidity from their business is to sell it someday, "big payout" but that day never comes, and they never get the big deal or payout, and they die on the vine, or the next gen gets all the benefit of the hard work. I believe you business should be like a gift giving train, where once a quarter, it can carve out profit that you can re-invest elsewhere (possibly not as high as an ROI as your own company) but more passive in nature with longer term upside potential.
Think of it as a VC would, where there are liquidity events all the time, and yet you get to still retain equity in your business.
So ultimately, I say do both be a deal maker and an entrepreneur.
 
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Cruze

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Hey! Thanks for your answers.

I know, that you need money for big deals (and a network). My idea was not to make money through deals without own business or money. I have already 2 business.

Its only interest me whats your favorite way. I know people, who hate deals and love her own business. And vice versa.
 

Kak

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I missed the question... You asked what makes real wealth faster.

What is your definition of real wealth?

Being wealthy by the world standards, a few million net worth, I would say deal making honestly. More cash ends up in your bank account sooner. One-off real estate deals are a great way to use leverage, get your hands dirty and make more money than a job.

However, if you define real wealth like I do, mid 8 figures plus... Most people do this through owning a company, a company that can afford to grow from the inside out, and can afford resources.
 
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Cruze

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OK, we have different definitions of real wealth :D
5 million net worth is for me real wealth. But maybe my goals to small. ;-)

My question in my first post was only because Im interesting what other people do. Pure inquisitiveness.
 

Late Bloomer

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every year I need to be doing at least 5-6 bigger deals, whether they be flipping properties, buying into REIT's, doing development deals myself etc, angel investing, or other transactions.
Rich, thanks for a really interesting post! Do you have some systematic way to search out these bigger deals? Or do they come through serendipity, as you work on your main business?
 

Bdenner64

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How can one be in business without making deals? If someone gives you their money, time, cookies or anything else it is because a deal was made.

The area in which you make deals whether it's government contracts, REI, etc. are just different businesses.
 
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Cruze

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How can one be in business without making deals? If someone gives you their money, time, cookies or anything else it is because a deal was made.

The area in which you make deals whether it's government contracts, REI, etc. are just different businesses.
Sure, but I see it different: when I sell someone an product from by business on Amazon, it isnt a "deal" for me. It is business as usual.

But when I buy a company A and sell this company to company B, or buy 5 apartments off-market und sell them later separate....that are deals in my opinion.
 

jcvlds

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Sure, but I see it different: when I sell someone an product from by business on Amazon, it isnt a "deal" for me. It is business as usual.

But when I buy a company A and sell this company to company B, or buy 5 apartments off-market und sell them later separate....that are deals in my opinion.
Just because the amount of $ involved is larger does not mean it is not a 'deal'.

Your Amazon business are 'deals' but in much smaller proportion. You bought a product from a manufacturer from $1 and then sell for $10. Deal.
You buy a company for $1M and then sell for $10M. Deal.
 

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Cruze

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I dont know the words in englisch for that. In German we call this: Korinthenkacker

I think everyone understand what I mean and you only don't want to understand me. But that´s ok.
 

Rich Wood

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Rich, thanks for a really interesting post! Do you have some systematic way to search out these bigger deals? Or do they come through serendipity, as you work on your main business?
Thank you for the question.

I read a lot of business articles, and am constantly tracking local news stories. I am especially interested in tech trends in my area, real estate opportunities.

I was listening to MJ's book today, the fastlane, and he writes about, when everyone rushes in the market it becomes saturated, and he is traditionally rushing out. I put together my deals through a combination of micro-economic items.

For example, in Utah, the state is building a brand-new airport, a new state prison, and a new in-land port, all within about 10 miles of each other. I am looking at land-deals in the corridor for the near term opportunity to use the land for service center development, to service these new major developments.

I am also looking at what services are not being provided to new residential communities, and seek out ways to develop commercial properties that can provide these services. I work with the city development centers, the city councils, and also the planning and zoning committees to assess opportunities.

I'm always looking at un-developed areas, and thinking about best use options.
 

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