If We Had To Start Again To Build Generational Wealth WITHOUT Having To Spend Millions Of Dollars In Property, This Is What We Would Do…
What would we do today if we had to start again and build generational wealth?
We wouldn’t recommend quitting your job. We also wouldn’t recommend spending millions in property.
Instead, we would recommend doing what Robert Kiyosaki of Rich Dad Poor Dad recommends: Become an investor and business owner. But not in the traditional sense.
Today, we’re going to cover how you can build real wealth without taking on massive financial risk or going into huge debts with the banks – and how you can get started for just $5000.
Click below to hear what we would do if we had to start again or read the article below.
Liz Raad: What if you can’t afford property? Or what if you’re maxed out and you can’t actually buy any more property to grow your wealth?
Today, we want to share what we would do if we were starting again from scratch. What would we do if we couldn’t afford to get into the property market and wanted to generate wealth in our lifetime?
We’re in a strange time in the world at the moment with all investments actually, aren’t we? Not just with property.
Matt Raad: It’s a common topic we’re getting asked about at the moment. We have a lot of real estate investors in our community and it seems like everyone’s just maxing out. Or maybe you’re starting out and looking at real estate thinking, “A million dollars to buy that!?”
Liz: That’s a lot of debt for an investment. We’re not even talking about buying your own home here.
What is the true cost of investing in real estate?
Matt: A lot of us like the idea of owning a portfolio of assets of which to generate significant wealth over the long term.
An interesting stat I found recently from the ATO is that less than 0.5% of the Australian population own more than three real estate investment properties.
Liz: So, we’re talking the top percent of the top percent make their wealth through property. But what do the rest of us do?
Matt: I know real estate generates a lot of wealth, right?
Liz: It definitely does.
Matt: But who are these people who own a portfolio of real estate? There’s not very many, less than 99% of Aussies. And I’m sure it’s the same around the world.
Also, $1-2 million to go into debt is a lot of risk on your wealth generation.
Liz: It is, and it’s very draining too. And there are also stats coming out now about how much property actually costs. Once you get into that high debt level to even sustain that property, you’re almost going backwards.
Matt: Plus there is land tax.
I speak on a lot of podcasts about this topic in America. And I know in certain states in the US, the taxes there can be really good. But in some states they’re not so good.
Here in Australia, particularly if you’re in Victoria, apparently there real estate investors are really getting hit up with some massive taxes.
Liz: So, you’re all coming to Queensland! 🙂
Matt: Yes, so you’re all coming up to Queensland and driving up the property prices here.
How can you take control of your own wealth creation?
Liz: We’ve also got a share market that’s pretty volatile at the moment. Who knows which way that’s going to go? So, what can we do?
Something that Matt and I believed in from when we were very young is that we need to take things into our own hands. We wanted to invest in things, learn, gain experience and knowledge around the things we actually have some control over.
You might call me a control freak…
Matt: I was just going to make a joke about that! You’re not a control freak or perfectionist.
Liz: No, but I want to be in charge of my own destiny. And I do believe that this is one of the keys to generating wealth in your lifetime, especially if you’re not starting with a high level of wealth to begin with.
But even if you are, and you want to generate significant wealth to retire well or to pass on a legacy to your kids, then you need to do some active things to make that wealth grow quickly enough within your lifetime.
1./ Invest in assets you can afford & where you can influence their growth
Liz: You need to find assets you have some input in so that you can actually influence their growth. You’re not just at the whim of the growth of the markets, you can actively do something about it too.
Now in property you could do that. You can buy development blocks and do all sorts of cool stuff. But unless you’ve got the cash or borrowing capacity to be able to do that, it’s something that’s out of reach for a lot of Australians now, which I think is something that’s really coming to the fore.
What do young Australians do if they want to generate wealth? I read somewhere it’s going to be impossible for the vast majority of Australians to even save for a deposit in their lifetime. That’s sad and very scary. It cuts a lot of people out of that marketplace.
2./ Invest in assets that generate cash flow & easy to leverage
Liz: So, what can you do instead? When we were young, one of our mentors said to us, “First things first.” And this is where I think a lot of people get it around the wrong way. The first thing you need to do is to get your cash flow sorted.
Before you start investing in heavy assets and taking on huge debt, the first thing you need to do is really learn how to generate a bucket load of cash flow. A great way to do that is to have small assets that are nimble, fast, and easy to grow. They should be easy to leverage and relatively easy to buy and sell.
Matt: And they should be easy to add value to.
Liz: Yes, that’s also very important.
Matt: I’m sure you know Matt & Liz Raad’s story. We love businesses for the really high cash flow they can generate for you. And we basically buy and renovate businesses.
We’re really good at picking businesses that we can renovate and generate cash flow reasonably quickly, just like our property friends do. But there is one other massively important thing that we’re building.
Should I invest in business or real estate?
…And why do you need to back yourself with an online business?
Matt: We’re a little bit older than when we first learned how to do this. We’ve been doing this for a long time, and the benefit we’ve found is that things compound.
And so, just like traditional real estate, over a long time we’ve created a highly valuable asset value. Now, I understand that real estate compounds, but it’s no use if you can’t buy multiple properties because they’re worth millions of dollars.
If you’re new to this, you need to be thinking of businesses as highly valuable assets. Robert Kiyosaki really nailed this concept many years ago in his book Rich Dad, Poor Dad. I read this book again recently, and gosh it’s good. There are so many benefits to businesses as there is to real estate and shares etc.
Liz: Yes, so the way we had to generate and grow our cash flow quickly was through business.
Common issues with investing in traditional businesses
Liz: We invested a lot in stock and products etc. We had manufacturing businesses and wholesale distribution businesses and businesses that required us to buy products to resell or manufacture products.
But all of that was really hard on our cash flow. And it took us a really long time to manage that.
Matt: It actually took us many years, over a decade. It wasn’t a “get rich quick” thing, it actually took us a long time to do it.
And, as we all know, I don’t care whether you’re just starting out or a high net worth person, it is a lot tricker today with the banks. Today, we couldn’t do what we did back in those days with the way we were able to get loans from the banks.
In the good old days, we got to know the bank manager because it was a small country town, and the manager would just write you the loan. Those days are gone.
We also took massive risks because we didn’t have kids at the time. And we had no real assets behind us other than our businesses.
Liz: We just bet on ourselves.
Matt: Yes, and we geared right up, we took a bet on ourselves.
What is the alternative to investing in businesses today?
Matt: But what we would recommend today is to take a bet on yourself, rather than financially. In other words, you take a bet on yourself time-wise.
I’ve shared this recently on some of my private coaching calls with our younger clients. They’re saying to me, “How the heck do I do this?” They’re stressing out. Should they be buying an investment property?
Now, I’m not allowed to give financial advice, but I would say, “I’m going to set a vision for my life, for the next 10 years. Think a little bit longer term here. I’m going to back myself. And in terms of going for it, I’m going to give it a crack for 12 months and see what I can do.”
And so, it’s not about borrowing heaps of money. It’s just let’s see if I can buy some smaller sized assets for cash. You have to have some money to make money. But get started and learn how to buy and sell businesses and just see if you like it.
In particular, we love online businesses because you can purchase a great little website (starter website) for under $5,000, and just have a crack at it.
4 benefits of investing in online website businesses
Liz: We have the ability to buy these online businesses that are much more nimble and easier to renovate compared to what we were having to do when we were starting out in traditional business. And so, there are four really big benefits that I wanted to share with you.
Benefit #1 – Learn invaluable digital skills through purchasing a small online business
Liz: First of all, like you just said, Matt, the number one benefit is low cost. For under $5,000 you can purchase a little business asset and start your renovation journey. And you can be building on your digital skills.
The author of the book “Diary of a CEO”, Steve Bartlett, expressed this really well. He said that there’s a progression through your wealth journey. And the first two parts of that progression are knowledge and skills. And that’s where you can now buy a small asset and learn from it. You can gain invaluable knowledge.
Obviously that’s what we teach people. We help them shortcut and get all the knowledge straight up rather than having to search around and figure it out yourself.
Matt: Don’t make the mistakes that we made, learn the good stuff.
Liz: Yes, so gain that knowledge. And then the next step is applying it. You’ll need to go out there and buy yourself a little asset to put that knowledge into action.
Benefit #2 – Online businesses provide leverage
Liz: Once you start putting your knowledge into action, the next stage is to start networking, finding other people who can help you. Because people are the keepers of your dreams. It is amazing what will happen when you get out there and network with people.
Online businesses can be run in your own time, so you don’t have to quit your job
Matt: This is the other beautiful thing about buying online businesses.
If I was going to start again, I’d back myself and my skills. I’m not saying to quit your job to back yourself for the next 12 months, but I’m saying get serious about this. Put some money behind it. Buy a couple little sites like Liz is saying.
I know a lot of our audience are already investing in shares and real estate, but what’s the worst that could happen? Okay, you might miss your 12-month window of buying some shares or real estate. But go for 12 months and see if you like it.
And I know a lot of people reading this are already making significant money, but keep your job during that time. You commit to doing this in the evenings in your Jimmy Jams.
Liz: Yes, and that’s benefit number two, which is leverage. These online business assets are very leveraged. You don’t have to show up every day.
You don’t have to turn up at nine o’clock in the morning and go home at five o’clock at night. You can work on it for a couple of hours in the evening and then you can go on a holiday, you can take a month off, etc. It’s up to you.
This was a big benefit back in the day when we were thinking of what to do. Part of what we wanted to create was leveraging and the ability to choose how we spent our time. And so, online assets allow you to do that because they run themselves.
A lot of it is actually about planning, then executing, and then having people who can help you execute that stuff. We call it GSD – Get Stuff Done. Online businesses are very leveraged in terms of time.
Benefit #3 – Online businesses can achieve fast growth
Liz: The other point of leverage is the fast growth. The sort of assets we tend to buy online are content-based websites. These are websites that give information and provide help for people. They guide them through buying decisions that explore a particular niche, topic, or passion.
These sites are typically monetized with things like:
- Advertising
- Digital (educational) products
- Referral programs, e.g through Amazon or Affiliates.
Matt: It can be services too, such as selling leads.
Liz: Yes, our websites are basically lead generators or advertising billboards. They’re very leveraged.
What to look for when buying websites for fast growth
Liz: When we’re looking for websites to buy, we’re looking for opportunities. We’re looking for really good quality assets. For example, a good quality site that someone passionate about the niche has built but has either given up on it, or they didn’t know how to monetise it properly.
And we’re looking for simple sites. They provide easy opportunities to turn around very quickly. One of the first things we do is change the monetisation.
A great example of this is our students, Dave and Connor, who changed the monetisation on their site and doubled the website income within months! And this happens over and over again for a lot of our students.
Matt: I should mention Dave and Connor were real estate investors. When they bought the site, it was making US$300,000. So, comparing it to real estate, the website cost them $1 million.
But when they changed the monetisation, the income grew to $600,000. Dave, who normally invests in commercial real estate in America, was just blown away by that.
You’ve got to understand there is more risk with businesses to a degree, but this is why we’re saying to back yourself for 12 months and learn how to do this.
Liz: And get good at it.
Matt: You need to buy small to start out safe. Don’t go straight out and purchase a $1 million website. That wouldn’t be smart and we don’t recommend that at all. We don’t want you rushing out there.
Just buy small sites under $5,000 and learn how to fix them up. They might be making $200, etc. so work on getting them up to making $2,000 etc.
Examples of students who have increased the cash flow of their online business
Matt: We’ve had plenty of students who have applied what they learned to increase the monetisation of their websites.
For example, Nathan and Alexa purchased a small gardening site that was making $400, and is now making $4,000 a month. And they’re not even gardeners!
Annette bought a travel site, with the same sort of thing. The site cost $5,000 and was making about $1,000 a month.
So, there are lots of sites out there under $5,000 that make okay side income and that you can learn off. And you can hit some big wins with them. Just like Lisa who bought a site for $2,000, which now makes $30,000 some months, especially leading up to Christmas, just from selling leads.
So, as you can see from these examples, you can hit some big wins, even with small $5,000 websites.
Benefit #4 – Online businesses can provide fast cash flow
…IF you know how to add value to them…
Liz: The other thing to mention is you can de-risk with knowledge. That’s the point. You can buy low and learn how to add value.
“To generate huge wealth within your lifetime, you need to learn a strategy of how to add value fairly quickly to assets so that you can either buy and sell them or buy and hold them for cashflow.” – Liz Raad, eBusiness Institute
And if you think about it, that’s what huge property developers do. They just have a system for buying a block of land, adding certain developments to them, or adding value in some way.
It could be rezoning it and then redeveloping it or whatever it is. Or at a very basic level, you buy properties that need a kitchen, a bathroom, a paint job, and a tidy up. You’re adding value and instantly, you’re de-risking. You’re lowering a risk by increasing value very quickly.
Fast growth is one of those things that is really good to look for in an asset that you want to increase its value. The ability to get relatively fast jumps in value is by the things that you do to it. And that’s something we learned over time. We realised, “Okay, we need assets that we can grow fast, otherwise we’re never going to get there.”
Matt: And we wanted cash flow.
Liz: Yes, so business cash flow is phenomenally higher compared to real estate and shares and all that sort of stuff.
Now, as Matt said, obviously the risk in business is generally the knowledge and skill risk. You’ve got to learn how to pick a good one and what to do with it when you get it.
Matt: You need to learn how to do due diligence, and how to renovate the asset.
Focus your online skills based on what you’re good at
Liz: Once you have that skill, it becomes quite interesting how our clients all find their own path. They all find either a niche or a specific strategy that they get really good at. And then they just target buying websites for that specific thing because they know they can add value in that asset. They’ve got this specialist knowledge.
And isn’t it interesting? I can’t remember who said it, but “The rarer the skill, the higher you’re paid”.
Knowing how to do due diligence and how to add value is one of those skills that is super rare. And you’ll notice the world’s richest people, that’s what they know how to do. They know how to value assets and add value.
How to increase your cash flow without having to quit your job
Matt: I know for you real estate investors, you’re going to say the world’s richest people all own real estate. True. But guess what else they all own? Businesses. Don’t kid yourself. And we can do this again, while starting out safe.
Liz: Yes, and here’s the other element that I’m really excited about for our younger audience. Learning this kind of skill means that if you can’t save your way to a deposit, then this is potentially a way that you can.
Hopefully you can gain skills and knowledge to be able to add value to a different asset class so that you can save for a house deposit.
1./ Increase the value of your digital assets by flipping up
Liz: If you think about it, and a lot of our students do this, they flip up their websites. Joe started with a $1,000 website, and sold for $2,000. Then he bought a $3,000 website and sold that for $8,000. Then he bought a $20,000 website and sold it. He just flipped up and up and up.
Matt: And at that point he quit his job.
Liz: Yes, he did.
Matt: Joe is now the world’s highest rated broker on the Flippa platform. And he started with us doing exactly that as a young guy, straight out of university.
He didn’t really know where he was going with his career. So, he just started doing this as a side hustle while he was a clerk for the government.
And so, he just got his skillset and he’s set a goal. What I alluded to earlier is setting that vision is so important. It was really impressive watching Joe’s journey. He had learned from us the power of setting a vision. He said, “Matt, I want to quit my job. I’m not happy working for the government here.”
So, he achieved this by flipping up websites, which took him a few years. It wasn’t an overnight success because he was still working full-time.
2./ Purchase small websites that have the opportunity to grow
Liz: Interestingly, we were on Flippa just last night, looking for websites between $1,000 – $5,000. And we found several that were really good candidates.
Matt: More than several. There were over 100.
Liz: Yes, but there were several that I really honed in on and thought, “Yes, I could do something with that. There’s an opportunity there to double.”
In particular, there was one in the education niche, which I really liked.
I was also recently speaking to a Digital Investor student about a site for sale in a caravan niche for under $5,000. That was a really nice site, and it could generate beautiful leads for caravaning. Not the actual travelling around, but for the caravans themselves. These are nice sites for selling a big asset because you get a really nice affiliate commission for it.
How online businesses can help you create generational wealth
Liz: So, if we had to start again, I’d be straight onto the Flippa platform. Back yourself.
Matt: Don’t quit your job, but learn how to do this as a side hustle. I guess that’s the new phrase that’s out there, isn’t it?
Liz: Yes, find assets that you can add value to and build wealth. Build the cash flow and assets that you can then sell to either flip up or generate deposits for other assets.
Matt: All without taking on massive financial risk by going into huge debts with the banks. That’s what I love, online businesses are great for that.
Liz: Yes, and you can do it debt free. That’s what we would do if we had to start again.
Matt: And if you want a bit more detail on the actual strategy and see working examples, make sure you check out our free masterclass.
