Due to the recent upsurge in the popularity of mergers and acquisitions, an increasing number of real estate investors have taken interest in buying business cashflow as a real estate alternative and a lucrative new opportunity to diversify assets. Yet the problem is that until now, most assets haven’t been accessible to everyday investors. The reason why is that historically an individual may have needed access to either private connections or $5M+ to get into these opportunities. This is why I’m incredibly excited to introduce you to The Disrupt Method and how you can tap into one of the fastest-growing markets in the world, yet maintain a low-risk profile with downside protection.
The increased demand for finding alternatives to traditional investments has been aggressive in the wake of a 20% down economy in 2022. With an increased awareness (due to the internet) regarding the modern accessibility and democratization of creating generational wealth, investors are looking for new buckets to place their capital into, knowing that better-than-market returns have to exist somewhere.
In a nutshell, this is incredibly exciting for an investor looking to diversify their portfolios and buy into a stable sector that will always be an important backbone of society. For those interested in worldwide growth opportunities, these assets also give you the rare opportunity for worldwide expansion. With compounded year-over-year growth.
In the modern world, you also have the ability to not just invest in physical businesses that are already profitable and have cash flow, but also ones that have the upside of being routed digitally. This gives investors the safety of real estate, through diversification, with the upside of e-commerce, through digital, worldwide exposure for growth opportunities. It is the difference between an Airbnb, you are capped at renting out 30 nights a month, and with a hypothetical “online” Airbnb, you could rent out 120 times a month.
BENEFITS OF INVESTING INTO CASH-FLOWING BUSINESSES
Premium cash-flowing business assets are the #1 alternative to traditional real estate for accredited & institutional investors. Here’s why.
Passive Investments
The passive investment structure allows real estate investors to own these assets hands-off as:
The passive investor also gets to profit from an established brand and experienced management structures, time, expertise, and credit.
Time: When you are a passive investor, once you fund your investment, the extent of your time commitment is essentially cashing your monthly or quarterly distributions. This may sound too good to be true but this is a reality for many passive investors in the US.
Expertise: Leveraging other people’s expertise and having established management run these assets for you, allows you to own these assets completely hands-off. While still making consistent cash flow and maintaining a low-risk profile.
Debt: Buying a profitable business can offer the benefit of having a steady stream of income to pay off debt (and recap faster than properties), while real estate may offer the benefit of potential appreciation in value to pay off debt. Businesses allow you to take advantage of high cash flow while still enjoying long-term appreciation.
Liability: Because passive investors are investing in passive ownership shares of an LLC, which does not grant them decision-making power, their liability exposure is usually completely eliminated.
Diversification: Because passive investors leverage other people’s time and expertise, they are able to diversify into buying business cashflow without prior knowledge or experience in the industry. This also gives real estate investors a great new way to prevent themselves from being over-allocated in just one asset class and mitigate their risk.
Intellectual Property/Patents/Goodwill: The resell benefits of Intellectual Property/Patents/Goodwill in a business include the ability to generate revenue through licensing or reselling the rights to strategic buyers who are willing to pay a premium, as well as the ability to attract investors by demonstrating the company’s ability to innovate and create valuable products or services. This is much more difficult to do in real estate unless creating a luxury hotel chain/etc.
E-commerce exposure for global expansion opportunities: Now this is absolutely huge, and gives premium businesses incredible growth prospects over the next decade. This also allows these assets to tap into a global 5.7 Trillion dollar e-commerce industry, and continue to scale worldwide. The difference is traditional real estate assets and physical locations alone don’t give you the level of diversification these global companies and brands can. Compared to real estate this global exposure also removes the cap on the upside, there is no cap on rent, and there is no cap on monthly cash flow.
Tax Strategies/Depreciation: Buying a profitable business can offer benefits such as the ability to take advantage of tax strategies such as cost segregation, bonus depreciation, and Section 179 expensing, which can allow for faster write-off of expenses and lower overall taxes. We can also leverage Section 1202 Qualified Small Business Stock to allow up to Ten Million Dollars ($10,000,000.00) per investor, capital gains tax and investment income tax-free through the SPV. In real estate you only have the option to defer not eliminate your taxes (1031 exchange)