Creating your first $15,000 with $1,000 over a period of 90 days
Making money in an uncertain environment is not impossible. Earning significant money with a little is always possible.
Creating wealth starts with your first milestone. Even the most impoverished person gets $1,000 back on their tax return. Would you like to grow $1,000 to $10,000? Would you like a scalable philosophy to apply to $10,000? Want to grow $10,000 to $100,000? What works at $1,000 works at $10,000. What works at $10,000 works at $100,000.
It is possible to take $1,000 to $15,000 without doing what looks like “All on Red”.
I had the privilege of managing a $43,500 budget over the course of 2019 to exceed $750,000 in year end value. There was no gamble, no high risk, & no get rich quick scheme applied. The philosophy was based on capturing equity value prior to a fully completed product.
The risk was judging if one person would follow through on their signed piece of paper. No one can guarantee performance but a signed contract obligating a solvent party to perform is enough to motivate many.
I knew how to identify the asset in a disassembled state, help with the construction, appraise it by a certified valuation expert, and audit it with a Certified Public Accountant to Generally Acceptable Accounting Standards (GAAS). The result was a return that cannot be quantified for the individual who participated in the investment.
The philosophy is rooted in acquiring equity in an asset before it is eligible to report its maturing value.
Sound complicated? Not really. Let’s walk through it.
IDENTIFYING ASSETS — THE CONCEPT
Assets conventionally hold tangible values. Think of a house. A house has timber, steel, nickel, brass and other raw materials. These materials have intrinsic value. When the house is unorganized there is nothing but raw materials. These materials have value in themselves but do individually amount to a completed house value.
Like a house an equity asset can be acquired when it is nothing more than raw materials. The trick is recognizing what raw materials build a valuable enterprise.
The concept is to find a disassembled product, contribute to its assembly, and trust a licensed / certified professional to shoulder most of the cost.
IDENTIFYING ASSETS — THE 1ST STEP: WHAT IS IT?
The first step is to identify an entity with no operating history. I use the term “entity” because we are not looking for a “company”. We are looking for a unique incorporated entity. The term “start-up” comes to mind. You do not want any start-up. As a matter of fact, you do not want any start-up that operates with the public. The start-up you look for is one that looks to focus exclusively on “Accredited Investors”.
Before I respond to the obvious “I only have $1,000 bucks and I don’t have an existing net-worth of 1mm excluding my residence,” let’s just focus on how to identify assets.
The entity should be organized as a Limited Partnership. Limited Partnerships have obligation to pass through their entire earnings to Limited Partners. More importantly Limited Partnerships are entities designed to be things like “Hedge Funds”, “Private Funds”, “Real Estate Investment Trusts — REITs”, or “Master Limited Partnerships — MLPs”. Collectively these entities are called “Funds” or “Unit Trusts”.
IDENTIFYING ASSETS — THE 2ND STEP: HOW WILL IT BE WORTH ANYTHING?
Funds are designed to appreciate something called Net Asset Value (NAV). When a Fund first starts out it is nothing but a set of documents with a goal. A Fund has a NAV of $0 before anything is put in it. The price per unit of a Fund is quite low when it first starts.
The fund documentation needs to focus exclusively on acquiring assets. The assets must be tangible assets with intrinsic value. The fund must acquire tangible assets at discount. The growth strategy will not work with speculative oil exploration, tech plays, or any form trading strategies. You should not confuse future value with guess work market value. This strategy only works with proven asset targets worth something today.
The fund can focus on acquiring 1) mortgages (must be something called Agency Paper — i.e. government guaranteed), 2) fixed income products (investment grade bond), 3) real estate, 4) proven oil reserves, 5) assayed and known mineral deposits, or 6) secured debt instruments (think promissory notes with tangible collateral above what is owed).
The Fund must also have something called an “Anchor Investor”. Without an “Anchor Investor” this strategy does not work.
IDENTIFYING ASSETS — THE 3RD STEP: DOING A FRIENDS AND FAMILY ROUND WITH THE GENERAL PARTNER
There is always a 1% General Partner to every Fund. The General Partner pays for the costs to organize the Fund. The Friends & Family round is not with the Fund it is with the General Partner who will manage the Fund. The General Partner always owns 1% of the fund.
The Fund must be in a position where it is about to “launch”. There is a little offering rule called Rule 506(b) which permits no more than 35 unaccredited investors. Remember I told you could find a place to put $1,000 for Accredited Investors only? The key to this strategy is you must offer to contribute money for “Hard Costs”.
Hard Costs are: 1) Incorporation, 2) Legal Fees, 3) Accounting Fees, 4) CPA Auditor Fees, 5) CFA/AFA Valuation Fees, 6) Organization Documents.
The General Partner should be organized as a Limited Liability Company or Corporation. The General Partners should be wholly owned by professionals carrying licenses and/or certifications. The General Partner is typically run by 1) Attorney, 2) Certified Public Accountant, 3) Financial Planner, 4) Investment Advisor, 5) Financial Analyst or 6) Any of the five (5) before who just recently retired / stopped practicing after a long successful stint.
The General Partner managers should carry Error’s & Omission (E&O) Insurance for “Private Equity”. This protects you against fraud and material misstatements.
It typically costs anywhere between $20,000 — $50,000 in Hard Costs to set up a Fund. The range I just disclosed is true if the General Partner has connections. Retail costs can go up to $150,000 if the General Partner managers have no favor banks.
These costs are always handled by the General Partner to justify future equity in the Fund.
In a best case scenario $1,000 is worth 5% of the General Partner and .75% in a worst-case scenario.
IDENTIFYING ASSETS: THE 4TH STEP: FIGURING OUT IF THE GENERAL PARTNER HAS AN ANCHOR INVESTOR FOR THE FUND
This step is simple and straight forward. You must figure out if the General Partner has someone with money or assets ready to go. If the answer is yes figure out how much. In my project case I discovered a General Partner who had a 75mm USD investor ready to go.
IDENTIFYING ASSETS: THE 5TH STEP: PUTTING MONEY INTO A GENERAL PARTNER BEFORE THE LIMITED PARTNER HAS A CHANCE TO INVEST
This step is the crucial step of the process. This step is also where risk is. If the General Partner fails to solicit their investor to put money into a Fund the 0.75% to 5.00% you own indirectly is worth nothing. The opposite applies. If the General Partner’s investor simply puts money into the Fund your contribution can be worth a whole lot.
UNDERSTANDING VALUE FOR TAKING THE RISK
To put things in prospective I will illustrate $1,000 in my personal project scenario. I was contracted to set up a private Fund. The total cost (outside my fees) was around $47,500 for the General Partner. When it was all said and done if someone would have put in $1,000 (towards hard costs) they would have owned 2.1% of the General Partner. The General Partner was successful in soliciting the investor.
The General Partner ended up owning 1% of 75mm. That made the General Partner instantly worth 750,000 USD over a 90 day period.
Investing into hard costs of a prospective Fund’s General Partner means a person who invested $1,000 would have seen their investment go to $15,750 in 90 days.
This is a 1500% return in 90 days. True story.
Last I checked, the investor was pleased with the investment strategy and has plans to allocate another 250mm. If the further investment comment is true, and the investor does not get scared by the market the hypothetical $1,000 investor will climb to $68,250 over a one (1) year period. Want the Punch Line? This story just happened at the height of Corona outbreak.
OPPORTUNITY CAN CREATE VAST WEALTH
Opportunity requires knowledge of what you’re doing. Do not be scared off by high returns under structured approaches. It is not a scam to make more than 100% on your money. 100% returns are double edge swords. As high of a return as it can be — you must also understand that these strategies are always 50/50 at best. If you are comfortable playing those odds than this is a game for you.
This is a story of success. For every story of success there are ten more about failure.
Anything scalable is a philosophy worth ascribing to. The philosophy I lay out demonstrates how an individual can climb from a dark abyss to a shining mountain top with as little as $1,000. Despite the darkness there is light if you look above.
This is my world. My world is not for the feint at heart. Conservatives will shy away but those willing to aggressively pursue their goals with eyes “wide open” have a chance.
Remember, every Superbowl Champion or NBA Champion was never called “Conservative”.
Figure out if you want to sit on the bench, watch from the stands or become MVP. More importantly follow me on Medium or subscribe to my newsletter to learn more insightful advice on how real life situations actually happen. I’m not a story book teller. Wealth is value not money. Money is always attracted to wealth.
To your knowledge success!
About Christopher: Christopher Knight Lopez is a Professional Entrepreneur. Christopher has opened over 7 businesses in his 14-year career. Christopher’s purpose is to take advantage of various market-driven opportunities. Christopher is a certified Master Project Manager (MPM), Master Financial Planner (MFP) and Accredited Financial Analyst (AFA). Christopher previously held his Series 65 securities license. Christopher also has his General Lines — Life, Accident, Health & HMO. Christopher has managed a combined 286mm USD in reported Assets Under Management & Assets Under Advisement. Christopher has work experience in 29 countries, raised over 50mm USD for various businesses, and grossed over 8.0mm in his personal career. Christopher worked in the highly technical industries of: biotechnology, finance, securities, manufacturing, real estate, and residential mortgages. Christopher is a United States Air Force Veteran. Christopher has a passion for family, competitive sports, fishing, martial arts and advocacy for entrepreneurs. Christopher provides self-help classes for up-and-coming entrepreneurs. Christopher’s passion to mentor comes from belief that entrepreneurs need guidance. The world is full of conflicting information about entrepreneur identity. See more at www.christopherklopez.com.
Disclaimer: This information is not meant to be a form of investment advice or financial advice. Do not apply this situation to your own personal circumstance. Various risks include: business risk, investment risk, political risk, and other risks. This information is for informational and educational purposes only. Please do not reach out to the author for any investment strategies or philosophies. Please consult your own financial advisor or legal advisor for your own circumstance. Not a recommendation or endorsement of any kind.