Has anyone worked with Tardus Wealth Strategies?
Rental Property Investor · Billerica, MA · Member since 2022 · 30 posts · 27 votes
Has anyone worked with Tardus Wealth Strategies?
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Member since 2022 · 8 posts · 34 votes
4yQuote from @Jorge Borges:
Hello BiggerPockets members. Love his community.
Have anyone of you hired Tardus for wealth coaching? They are the creators of the Income Snowball (i.e. Income Snowball, a system of investing in which a person can create self-sustaining passive income). I'm looking to find unbiased reviews of their service.
Thanks!
Hey Jorge,
I'm a Tardus client since April of 2022 and I'll BLUF this, bottom line up front, for you. Absolutely worth it. Their fee, 5k. I'm projected to get 18% of Cash on Cash return after my first year. I'm fully committed in getting to a finical freedom date in 10 years or less. Meaning I've redirected 90% of my current retirement saving into this new way of building assets.
Now for the why. My finical journey started in Nov of 2021 when I finished reading Rich Dad Poor Dad, by Robert Kiyosaki. That changed my whole mindset on how I looked at money and what I was doing. I am your typical white collar, white male, upper middle class who works in tech. I'm a saver, which Kiyosaki calls losers. That lead me to talking to a co-worker who introduced me to CFT, Cash flow tactics.
Now I spent $500 on CFT, and I walked away from that company because the message was we've all been lied to. I felt they lean on 'fear' marketing a bit to much. Main message is the accumulation method, ie 401k, is all a lie and doesn't work. It does work, many people have retired from this method, but it takes 40+ years and its main stream and, in my opinion, what I think is the easy path. But what I walked away from CFT was 2 things.
First CFT showed me that I can 'retire' by replacing my income in a passive manner. They are big Kiyosaki fans. They showed me the 'how' to do what Kiyosaki talked about. Where as Robert, only talked about they What. I didn't understand just from reading Rich Dad Poor Dad, on how to do what he talked about, CFT provided that education.
Secondly, I was introduced to the 'Vault' by CFT. A place to store your money where it can be safe, reduce risk, grow tax free, and be highly leverage. This Vault I come to find is also called, IBC, Infinity banking concept. Thus lead me down another rabbit whole.
I spent a couple months reading and learning about IBC, which requires a whole life insurance policy. If you want to learn more, I would recommend the following reading: The AND Asset, and Becoming your own Banking. The first is a great intro, persuasive book, and outlines why IBC is a good thing. Becoming your own banking, is written by the man who's credited in coming up with the Infinity Banking Concept, Nelson Nash. He dives deep into it but can be a bit dry. This gave me the understanding of how to use leverage or OPM, other peoples money. This gave me a tool to utilize, and dip into for down payments for rentals I was planning on buying. As suc in learning about this concept and understanding that I needed to replace my current income with Assets that can produce cash for me to replace my income, I become a BiggerPockets member to learn about how to buy Real Estate.
I was planning to buy my first property in April of this year, 2022. In my education I came across a company, Rent2Retirement a turn key company. This was in March of 2022, 1 month before my deadline goal of buying a property. As such they had a YouTube podcast/video with a women named Tanisha from Tardus. I liked what I heard: A way to start building passive income to replace your current w-2 income with this thing called a Income Snowball. So I checked them out.
What I really liked was I didn't need to be sold on the concept of why to do this. But how they did it was honestly something I tried 9 years ago, becoming a lender. Where you invest and get your amortization principle and interest payments back on a monthly basis. But there is a very big difference from what I did in 2013, from what Tardus has taught me and that I'm doing now.
In 2013 I invested in a company called Lending Tree, a peer2peer lending. Basically you invest 10k which buys you into about 300 different notes. Thus, decreasing your investment risk of a defaults because you're only putting in $25-50 per loan. But there are many other investment tools you can use. The key is Leverage and the amortization of payments coming back monthly, and/or quarterly at the latest.
For example, I'm leveraging lets say 12k from my HELOC (but once I get my IBC policy setup, I'll be using this) to put into a peer2peer lending, Prosper. This is giving me roughly $540 a month payment. This money is going back to pay back my HELOC loan. But I'm also putting in my own money to the HELOC, $2400 a month. So that's $2940 to pay back the 12k. That's going to take ~4 months. Once that is done we do it again. Giving a new monthly payment of $540 that goes back to paying off the HELOC which speeds up the process. It Snowballs on the repayments. And their 'system' the patent is the key on how/where to start and when to increase these amounts over time. Not only that, but it's this new way of thinking, they are retraining me on really how to do what I read by Kiyosaki. I just bought a car, so now how do I go about the best way utilizing these 'assets' I've bought/invested into to pay for this car? They have thought me how to go about this while continuing to snowball my way to finical freedom. And this includes buying real estate next year. After I get my base, what they call fast burning fuel (these peer2peer loans), started. Because then I'll be doing larger amounts which I can put towards down payments for homes.
Conclusion, Tardus truly gave me a way to not be overwhelmed with trying to buy 15+ rentals to get to finical freedom, but gave me a greater understanding how to put everything I was learning together. Now I'm building my initial passive income streams from an easier standpoint with amortization lending, understanding how to let my assets buy my liabilities, and how to grow into adding rentals later, or other type of investments. Because there isn't just one way, there are many ways, and they are helping me find what works for me. My only wish at times, and honestly in the first couple months, I wanted to meet more with my success coach because I'm a bit impatient. But now I think I've overcome some of my 'unknowns' and I'm getting into a groove. They have weekly group meetings you can attended but you'll have to ask general questions, nothing specific to your use case. They also have a ton of resources you have access to once you sign up.
Hope this helps you and others.
150 Replies
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
Quote from @Peter Fife:
---- 6 month update ----
I still feel the same as I did when I posted this, I'm pretty happy with the service they provide. I'm currently projected to earn 15% for my first year. Below is my tracking spreadsheet I've been keeping.
I'm only showing the lower half of the totals. There are several rows above where I track each one of my investments, and what I receive above. Figured I'd just show the bottom line so to speak.
* Flip Payments = Personal cash + all loan repayments received
* Income Received = All Loan repayments (this includes payments from my Own capital I put in upfront, so I'm getting my principle back)
* Passive Income received = True passive income from the leverage concept. Not my own capital, so all principle and interest are counted
* Interest paid = what I'm paying in interest from the loans
* Monthly CoC = Earned / Invested for that month only. Not something to be looked at monthly but kinda fun
* Loan Balance = Due to buying a car, giving extra to church, and kitchen remodel I needed a way to track my loan pay down progressGray shading is future/projected - listed only on interest & Loan balance. End of month I true up the actuals.
---
My current projected invested amount is ~100k for the year where the Passive income received is ~15k which gives me a Cash on Cash of 15% This is my first year and I've been told this is higher than normal CoC. The reason I think is I jumped-started with ~40k up front, but that's my own capital that I'm getting back in the Income Received row, which is why I'm not counting that as passive income. However, it's giving me those extra payment amounts to pay off the other loans faster.
Since these loans are 3-5 years, they will continue to pay over that time while I continue to build the 'snowball.'
My only complaints are these
1) The upfront 30 min meetings you get once a month are not enough. However, by 5-6 months I'm pretty comfortable and 30 mins seem to be enough time, but stills feel rushed.
2) I wish they would have some of their weekly meetings for '6-12' month clients. New clients tend to come to most of the meetings where I'm not getting a lot out of them, and wanting to hear more from those in my time line.
3) This is totally screwing with my YNAB method rule of giving every dollar a job. I'm now focused on putting my true expenses, those yearly expenses, into the process and then pulling the money when needed. I'm losing track of what I've saved for and how much. So struggling to figure that part out.
Your graph is too small to read, but CoC is not an accurate measure when lending money. Lets say I lend someone $100k and in the first year I get $51k back and in year 2 I get 51k back, each year I got a 51% CoC but at end of day I made less than 1%.
Look at it this way, would you rather have 6% interest only over 4 years with a balloon or 8% amortized loan pay back. Most people will go the 8% but reality is you will make more money on the 6%. Why? Because the 8% is only on the principal that gets reduced each month and when that principal comes back in the door, its not getting reinvested immediately. If you are reinvesting it (highly unlikely), the time you are spending doing the work could be put to much better use.As an example, a 10k investment at 6% over 4 years will give you $2400 in interest. The amortized loan will give you $1718. The payment would be $244/mo. To reinvest that $244 each month (assuming your still getting 8%) will yield you an additional $1.62/mo. How much time are you spending to put an extra $1.62 in your pocket?
7e investments53 Reviews - Member since 2022 · 8 posts · 34 votes3y
@Chris Seveney - thanks for the response and unsure why the pict is so small. As with mastering anything is only when you can teach it right. So let me try to explain with what I currently understand.
What you state is right IF I was lending my own capital. Which I'm not. Then you may say it's an arbitrage deal, where I'm borrowing at 4% and trying to get an 8% return. That isn't this case either. The process is to leverage from a line of credit (LOC) -> invest -> put own capital towards LOC payoff while receiving amortization payments back. Thus your return is the full principle and interest once you pay off the loan.
Example:
10K is your LOC. You invest and receive ~300 a month for 4 years. You pay 2k of your own money each month. Therefore you're paying off the LOC at 2300 each month. That takes you ~4.4 months to pay off. Thus you've put ~8,700 of your own money towards the 10k. The interest you're paying in those 4 months is is minimal, and is a different type of interest rate vs amortization interest you're getting. If if you're paying more on the LOC side, you still come out ahead. I watched a webinar around that one. So for the rest of the 3.8 years you're getting a full ~300 of passive income.
Now do it all over again but since you're getting that previous $300 you're now paying $2600 which cuts the time down again. Now there is a point where you must increase the LOC loan to continue this process, and this is where their snowball calculator comes into play.
Quote from @Peter Fife:
@Chris Seveney - thanks for the response and unsure why the pict is so small. As with mastering anything is only when you can teach it right. So let me try to explain with what I currently understand.
What you state is right IF I was lending my own capital. Which I'm not. Then you may say it's an arbitrage deal, where I'm borrowing at 4% and trying to get an 8% return. That isn't this case either. The process is to leverage from a line of credit (LOC) -> invest -> put own capital towards LOC payoff while receiving amortization payments back. Thus your return is the full principle and interest once you pay off the loan.
Example:
10K is your LOC. You invest and receive ~300 a month for 4 years. You pay 2k of your own money each month. Therefore you're paying off the LOC at 2300 each month. That takes you ~4.4 months to pay off. Thus you've put ~8,700 of your own money towards the 10k. The interest you're paying in those 4 months is is minimal, and is a different type of interest rate vs amortization interest you're getting. If if you're paying more on the LOC side, you still come out ahead. I watched a webinar around that one. So for the rest of the 3.8 years you're getting a full ~300 of passive income.
Now do it all over again but since you're getting that previous $300 you're now paying $2600 which cuts the time down again. Now there is a point where you must increase the LOC loan to continue this process, and this is where their snowball calculator comes into play.
Using borrowed money to lend to another party does not change the parameters of what your CoC is for that loan. How are you figuring the 2K you pay each month from your "own money" into the return calculation?
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. I will use that number as a reference:
2. Your LOC at 4% over 10 year am. period is $101/mo payment.
3. You pay $2,000 a month back + payment so in your case $2300
4. So after 5 months you:
a. taken a LOC of $10k but repaid it with $8k of cash and $2k of the invested money.
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
You are getting lets say the $253/month for 36 months though....
Welp - thats only $8,855 which gets you an $855 return over the 3 years.
If you put $8,000 in a T-bill at 4% during that time you would have $8,960...
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
7e investments53 Reviews - Member since 2022 · 6 posts · 5 votes3y
Quote from @Chris Seveney:
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. I will use that number as a reference:
2. Your LOC at 4% over 10 year am. period is $101/mo payment.
3. You pay $2,000 a month back + payment so in your case $2300
4. So after 5 months you:
a. taken a LOC of $10k but repaid it with $8k of cash and $2k of the invested money.
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
You are getting lets say the $253/month for 36 months though....
Welp - thats only $8,855 which gets you an $855 return over the 3 years.
If you put $8,000 in a T-bill at 4% during that time you would have $8,960...
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
You start layering investments.
- Member since 2022 · 8 posts · 34 votes3y
Quote from @Chris Seveney:
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. .....
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
....
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
Chris thanks for the great questions, and I hope I didn't give the impression I thought you where a 'crack-head' as you stated. I'm a newbie at this, not my full time job, just trying to do something better than doing nothing ;)
Yes you're correct for this ONE investment, but I believe the point isn't doing it only once, it's the layering over time. This isn't a get rich quick thing... it takes time to build this up. AND it's recommended to layer in longer term monthly type of payments, like rentals. So over time you start putting in less, while getting more out of it.
To your point around T-bills, I'm not close to an expert around any of this, but that vehicle ties up the investment until maturity correct? The purpose of this type of method is to gain an income stream on a monthly basis, which t-bills don't do. Yes you can latter them on a monthly basis.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3yNo I did not think you thought I was a crackhead :).
Quote from @Peter Fife:
Quote from @Chris Seveney:
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. .....
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
....
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
Chris thanks for the great questions, and I hope I didn't give the impression I thought you where a 'crack-head' as you stated. I'm a newbie at this, not my full time job, just trying to do something better than doing nothing ;)
Yes you're correct for this ONE investment, but I believe the point isn't doing it only once, it's the layering over time. This isn't a get rich quick thing... it takes time to build this up. AND it's recommended to layer in longer term monthly type of payments, like rentals. So over time you start putting in less, while getting more out of it.
To your point around T-bills, I'm not close to an expert around any of this, but that vehicle ties up the investment until maturity correct? The purpose of this type of method is to gain an income stream on a monthly basis, which t-bills don't do. Yes you can latter them on a monthly basis.
For me, I know nothing of this company, nor commenting on them specifically, but just commenting on the numbers that are thrown out there and trying to evaluate if this is something to consider. But when I look at the numbers, arbitraging your HELOC is common. You borrower at a lower rate to invest in something higher. Its no different than should I pay cash for my car that I can finance at 4% or invest it at 8%. Well of course you should invest the money vs. paying cash. Having some debt is not a bad thing (unless you are Dave Ramsey follower).
When I look at what is tossed around in this forum, it does not seem worth it because you get such low principal back every month that you cannot reinvest, and even if you could its time consuming. I used T-bills as an example as something that is pretty much guaranteed and low interest.
I could take $8,000 of my money (or $2k per month) - not touch my HELOC and invest it in something for the same period of time and get 2-3x the interest is what I am alluding too and I am curious if people that do these types of programs evaluate the numbers comparing them to other investments or just are sold on Cash on Cash, which on a loan is the WORST way to evaluate your returns.7e investments53 Reviews - Saint Paul, MN · Member since 2016 · 23 posts · 24 votes3y
@Chris Seveney - This is where I am at with this concept...is it worth my time vs. dropping my own money into a 10% interest investment that locks up my principal but pays monthly interest (which I can find right now).
I am not a Tardus client, but I did take a $5,500 LOC plus $500 of my own capital and invested it with Prosper. I will pay off the LOC using my own funds by the end of December or in 2.5 months. So then at the end of December I should take another $5,500 LOC and invest that with Prosper, using the money from the first 6k investment with the money from the next investment plus my own funds...yada, yada, yada...I think everyone understands this part.
Here is the reality of the investment - when you drop 5k or 10k into Prosper it does not fund all at once...it takes 2-3 weeks to find enough $25 loans and/or you can overweight yourself in higher risk (HR) loans to do it faster...but you are not receiving the payments nice and neat on the 1st of the month...they are spread out...do you like record keeping? I don't.
Also, out of the 250+ loans I have with Prosper 6 (YES, SIX) are already late...within the first 1-2 months...so let's just assume that $150 is lost (if someone cannot make their first one or two loan payments I doubt they will make the next 3-5 years worth of payments)...so out of the 6k I initially invested my Prosper account is currently worth $6,142 and change (and I have not removed a penny from the initial 6k invested). So in reality, I've made $142...luckily I have extra cash and was able to make those LOC payments without taking the Prosper money...but I cannot imagine going into my account and transferring the money out of Prosper to my bank every day over a 2-4 week span...unless you "skip" the initial month and let the cash build up...the point...it's tedious as F*&K to manage. Did I mention I don't like bookkeeping?
Another example - I had money with Donut -an app where you can invest cash and earn interest in DeFi...well, I was earning anywhere from 5-8% (sounds great, right), until one of their partners got caught up in the FTX collapse and now those funds are frozen and I may or may not get them back. Point - things on paper (or patents) don't always work that way in the real world.
So, will I become a Tardus client, no...if I am paying someone $5,500 you better be doing this for me. I see it as paying my CPA $5,500 per year to do my taxes and then having them "educate" me on how to do them myself instead of actually doing my taxes.
I may try a few more "flips" just for fun, but I also have money invested in Groundfloor, Fundrise, and other income-generating investments to compare (and those ones I spend little to no time on).
Finally, my big concern was always defaults and income loss...if I have more than 6 defaults (which I am sure I will), or more importantly, I lose my income...I do not want to be stuck with a high-interest LOC (hence why I started with $5,500 and not 10k). The response I received from Tardus when I asked about this was "we can help you make adjustments" but unless they can replace my income, I really don't see how the patented calculation can replace my income (unless you are already at the tail-end of the snowball).
I am truly happy for the people who have tried it and have had a positive experience to date. I hope their success continues!
- Real Estate Broker · DFW · Member since 2015 · 350 posts · 270 votes3y
Quote from @Chris Seveney:
No I did not think you thought I was a crackhead :).Quote from @Peter Fife:
Quote from @Chris Seveney:
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. .....
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
....
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
Chris thanks for the great questions, and I hope I didn't give the impression I thought you where a 'crack-head' as you stated. I'm a newbie at this, not my full time job, just trying to do something better than doing nothing ;)
Yes you're correct for this ONE investment, but I believe the point isn't doing it only once, it's the layering over time. This isn't a get rich quick thing... it takes time to build this up. AND it's recommended to layer in longer term monthly type of payments, like rentals. So over time you start putting in less, while getting more out of it.
To your point around T-bills, I'm not close to an expert around any of this, but that vehicle ties up the investment until maturity correct? The purpose of this type of method is to gain an income stream on a monthly basis, which t-bills don't do. Yes you can latter them on a monthly basis.
For me, I know nothing of this company, nor commenting on them specifically, but just commenting on the numbers that are thrown out there and trying to evaluate if this is something to consider. But when I look at the numbers, arbitraging your HELOC is common. You borrower at a lower rate to invest in something higher. Its no different than should I pay cash for my car that I can finance at 4% or invest it at 8%. Well of course you should invest the money vs. paying cash. Having some debt is not a bad thing (unless you are Dave Ramsey follower).
When I look at what is tossed around in this forum, it does not seem worth it because you get such low principal back every month that you cannot reinvest, and even if you could its time consuming. I used T-bills as an example as something that is pretty much guaranteed and low interest.
I could take $8,000 of my money (or $2k per month) - not touch my HELOC and invest it in something for the same period of time and get 2-3x the interest is what I am alluding too and I am curious if people that do these types of programs evaluate the numbers comparing them to other investments or just are sold on Cash on Cash, which on a loan is the WORST way to evaluate your returns.This is the way i'm understanding it as well... Plus factoring in the 5k or whatever number that is you are paying for "coaching" it just seems like you have to be in this thing for a long *** time to make significant money WHILE assuming a much higher level of risk.
@Denver McClure Would be curious at your take on this if you have heard about it.
- 3yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
What the adherents of this program lack in understanding of investment finance is startling. One says the interest he receives IS A DIFFERENT KIND OF INTEREST than the interest he pays? Really. Another excludes money he pays out of his monthly wages toward paying off the HELOC from the investment basis when calculating his "ROI". Another throws around the made up terms like "snowball" and "infinite" as if they have some magical power to rewrite the rules of finance. They all seem to be fascinated by, and inexperienced and unknowledgeable about the concept of compound interest. I get the distinct impression that these folks genuinely think that this rather mundane arbitrage program, coupled with forced savings, and placed into a very high cost insurance product wrapper earns 20% ROI when in actuality they're looking at about 1/3 of that. Maybe.
The other issue is that the adherents, or maybe more appropriately zealots, have no clue as to how to conduct a due diligence review of an investment program. In a previous post I quoted from the company’s website that apparently both the “advisor” and the investment representative are compensated solely on commission, based on sales. You know, like any other INSURANCE PRODUCT. When an “advisor” is paid commission to sell a product he is not an advisor, he is a salesman.
- Investor · Orlando, FL · Member since 2014 · 110 posts · 90 votes3y
Quote from @Lane Kawaoka:
Better to use your infinite banking than a heloc since a bank can pull your loan at anypoint.
Or you could utilize both like I do and know that you always have a way to create a float of your funds.
- Homeowner · MT · Member since 2022 · 17 posts · 16 votes3y
@Davis Hanai and @Kris Moulton,
I just started with Tardus. Still getting my Income Snowball set up, but I wanted to ask your opinion, would you set it up under a business LLC, since eventually that money will go into buying real estate for slow burning fuel or would you just set up your investments under a personal account? I keep going back and forth about this. I haven't really been able to get anyone's opinion on it.
Thanks for your input!
- Member since 2021 · 3 posts · 24 votes3y
@Iris Olivas I think I have seen both ways it to be done. I believe most people do the income snowball as a personal thing since they get personal line of credits or IBC policies, but I think it can be done both ways.
- Homeowner · MT · Member since 2022 · 17 posts · 16 votes3y
Quote from @Davis Hanai:
@Iris Olivas I think I have seen both ways it to be done. I believe most people do the income snowball as a personal thing since they get personal line of credits or IBC policies, but I think it can be done both ways.
Thanks for your response! :)
- Member since 2020 · 2 posts · 0 votes3y
Quote from @Chris Seveney:
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. I will use that number as a reference:
2. Your LOC at 4% over 10 year am. period is $101/mo payment.
3. You pay $2,000 a month back + payment so in your case $2300
4. So after 5 months you:
a. taken a LOC of $10k but repaid it with $8k of cash and $2k of the invested money.
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
You are getting lets say the $253/month for 36 months though....
Welp - thats only $8,855 which gets you an $855 return over the 3 years.
If you put $8,000 in a T-bill at 4% during that time you would have $8,960...
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
Thank you Chris for taking the time to elaborate on your observations. I think your thought process makes a lot of sense, especially when it comes to how much more you could yield with interest only vs short-term P&I payments. If I may, I'd like to build a bit more on @Clint Vanderlinden's point on layering
Using the same assumptions:
- $10k LOC at 10% over 4 years (~$253 / month)
- $2k / month contribution
Scenario 1: Only one short-term investment
You break this down very well, and I'll only add that we are using 4 years and not 3 years. It would take $10k / ($2k + $253) = 4.44 months to pay off the LOC. If we wanted to round up to 5 months you would really need $10k - $253*5 = $8,735 out of pocket.
If we stopped right there and decided to cash out until maturity we'd be looking at 43 additional payments of $253 / month since we already used 5. That would mean a return of $253*43 - $8735 = $2144, which translates to a yield of 12.49% over that period (plugged those numbers into 10bii) or a CoC of $2,144 / $253*43 = 20% +/- a few basis points to account for cost of capital.
By using this system we got about a 2%-3% improvement from the original 10%. What happens if we decide to reinvest?
Scenario 2: Two short-term investments:
Let's start another short-term investment with the same terms, except this time we get $2k + $253 + $253 = $2,506 / month to go to town. That means we can pay off the LOC in $10k / $2506 = 4 months. Out-of-pocket is $10k - 4*$506 = $7,976.
If we stop here and collect to maturity we have 43 - 4 = 39 payments left on the 1st investment and 48 - 4 = 44 payments left on this new investment. That translates to a return of $253*(39 + 44) - ($8,735 + $7,976) = $4,288. On JUST the 2nd investment, 10bii computes a 19% yield when N=44, PV=7976, and PMT=253. Overall CoC would be 4288 / ($8,735 + $7,976) = 26% +/- a few basis points account for cost of capital.
By adding just one more investment we see a 6% increase in total CoC with only a 4 month additional lead time to full collection (negligible impact from time-value of money) and a ~6.5% increase in yield for the subsequent investment.
Final Thoughts
Following the math suggests that doing more short-term investments makes the performance metrics exponentially better over time, and on their own their own they are still akin to modest although not Earth shattering returns.
I add these details from the context of being a Tardus client for the past year. I welcome and encourage anyone on the forum to chime in if I may have misrepresented anything, but this has been my mental model after spending countless hours running through different scenarios.
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesI dont have a heloc personally but just curious are they all fixed rate / or are some of them variable when rates rise the interest rate rises or when rates fall the interest rates fall.
Quote from @Alexander Greene:
Quote from @Chris Seveney:
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. I will use that number as a reference:
2. Your LOC at 4% over 10 year am. period is $101/mo payment.
3. You pay $2,000 a month back + payment so in your case $2300
4. So after 5 months you:
a. taken a LOC of $10k but repaid it with $8k of cash and $2k of the invested money.
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
You are getting lets say the $253/month for 36 months though....
Welp - thats only $8,855 which gets you an $855 return over the 3 years.
If you put $8,000 in a T-bill at 4% during that time you would have $8,960...
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
Thank you Chris for taking the time to elaborate on your observations. I think your thought process makes a lot of sense, especially when it comes to how much more you could yield with interest only vs short-term P&I payments. If I may, I'd like to build a bit more on @Clint Vanderlinden's point on layering
Using the same assumptions:
- $10k LOC at 10% over 4 years (~$253 / month)
- $2k / month contribution
Scenario 1: Only one short-term investment
You break this down very well, and I'll only add that we are using 4 years and not 3 years. It would take $10k / ($2k + $253) = 4.44 months to pay off the LOC. If we wanted to round up to 5 months you would really need $10k - $253*5 = $8,735 out of pocket.
If we stopped right there and decided to cash out until maturity we'd be looking at 43 additional payments of $253 / month since we already used 5. That would mean a return of $253*43 - $8735 = $2144, which translates to a yield of 12.49% over that period (plugged those numbers into 10bii) or a CoC of $2,144 / $253*43 = 20% +/- a few basis points to account for cost of capital.
By using this system we got about a 2%-3% improvement from the original 10%. What happens if we decide to reinvest?
Scenario 2: Two short-term investments:
Let's start another short-term investment with the same terms, except this time we get $2k + $253 + $253 = $2,506 / month to go to town. That means we can pay off the LOC in $10k / $2506 = 4 months. Out-of-pocket is $10k - 4*$506 = $7,976.
If we stop here and collect to maturity we have 43 - 4 = 39 payments left on the 1st investment and 48 - 4 = 44 payments left on this new investment. That translates to a return of $253*(39 + 44) - ($8,735 + $7,976) = $4,288. On JUST the 2nd investment, 10bii computes a 19% yield when N=44, PV=7976, and PMT=253. Overall CoC would be 4288 / ($8,735 + $7,976) = 26% +/- a few basis points account for cost of capital.
By adding just one more investment we see a 6% increase in total CoC with only a 4 month additional lead time to full collection (negligible impact from time-value of money) and a ~6.5% increase in yield for the subsequent investment.
Final Thoughts
Following the math suggests that doing more short-term investments makes the performance metrics exponentially better over time, and on their own their own they are still akin to modest although not Earth shattering returns.
I add these details from the context of being a Tardus client for the past year. I welcome and encourage anyone on the forum to chime in if I may have misrepresented anything, but this has been my mental model after spending countless hours running through different scenarios.
- Member since 2020 · 2 posts · 0 votes3y
Quote from @Jay Hinrichs:
I dont have a heloc personally but just curious are they all fixed rate / or are some of them variable when rates rise the interest rate rises or when rates fall the interest rates fall.Quote from @Alexander Greene:
Quote from @Chris Seveney:
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. I will use that number as a reference:
2. Your LOC at 4% over 10 year am. period is $101/mo payment.
3. You pay $2,000 a month back + payment so in your case $2300
4. So after 5 months you:
a. taken a LOC of $10k but repaid it with $8k of cash and $2k of the invested money.
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
You are getting lets say the $253/month for 36 months though....
Welp - thats only $8,855 which gets you an $855 return over the 3 years.
If you put $8,000 in a T-bill at 4% during that time you would have $8,960...
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
Thank you Chris for taking the time to elaborate on your observations. I think your thought process makes a lot of sense, especially when it comes to how much more you could yield with interest only vs short-term P&I payments. If I may, I'd like to build a bit more on @Clint Vanderlinden's point on layering
Using the same assumptions:
- $10k LOC at 10% over 4 years (~$253 / month)
- $2k / month contribution
Scenario 1: Only one short-term investment
You break this down very well, and I'll only add that we are using 4 years and not 3 years. It would take $10k / ($2k + $253) = 4.44 months to pay off the LOC. If we wanted to round up to 5 months you would really need $10k - $253*5 = $8,735 out of pocket.
If we stopped right there and decided to cash out until maturity we'd be looking at 43 additional payments of $253 / month since we already used 5. That would mean a return of $253*43 - $8735 = $2144, which translates to a yield of 12.49% over that period (plugged those numbers into 10bii) or a CoC of $2,144 / $253*43 = 20% +/- a few basis points to account for cost of capital.
By using this system we got about a 2%-3% improvement from the original 10%. What happens if we decide to reinvest?
Scenario 2: Two short-term investments:
Let's start another short-term investment with the same terms, except this time we get $2k + $253 + $253 = $2,506 / month to go to town. That means we can pay off the LOC in $10k / $2506 = 4 months. Out-of-pocket is $10k - 4*$506 = $7,976.
If we stop here and collect to maturity we have 43 - 4 = 39 payments left on the 1st investment and 48 - 4 = 44 payments left on this new investment. That translates to a return of $253*(39 + 44) - ($8,735 + $7,976) = $4,288. On JUST the 2nd investment, 10bii computes a 19% yield when N=44, PV=7976, and PMT=253. Overall CoC would be 4288 / ($8,735 + $7,976) = 26% +/- a few basis points account for cost of capital.
By adding just one more investment we see a 6% increase in total CoC with only a 4 month additional lead time to full collection (negligible impact from time-value of money) and a ~6.5% increase in yield for the subsequent investment.
Final Thoughts
Following the math suggests that doing more short-term investments makes the performance metrics exponentially better over time, and on their own their own they are still akin to modest although not Earth shattering returns.
I add these details from the context of being a Tardus client for the past year. I welcome and encourage anyone on the forum to chime in if I may have misrepresented anything, but this has been my mental model after spending countless hours running through different scenarios.
Im assuming youre asking about the line of credit? If so thatd be entirely product dependent. Dont have to use a heloc per se. That just happens to be a convenient example.
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Alexander Greene:
Quote from @Jay Hinrichs:
I dont have a heloc personally but just curious are they all fixed rate / or are some of them variable when rates rise the interest rate rises or when rates fall the interest rates fall.Quote from @Alexander Greene:
Quote from @Chris Seveney:
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. I will use that number as a reference:
2. Your LOC at 4% over 10 year am. period is $101/mo payment.
3. You pay $2,000 a month back + payment so in your case $2300
4. So after 5 months you:
a. taken a LOC of $10k but repaid it with $8k of cash and $2k of the invested money.
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
You are getting lets say the $253/month for 36 months though....
Welp - thats only $8,855 which gets you an $855 return over the 3 years.
If you put $8,000 in a T-bill at 4% during that time you would have $8,960...
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
Thank you Chris for taking the time to elaborate on your observations. I think your thought process makes a lot of sense, especially when it comes to how much more you could yield with interest only vs short-term P&I payments. If I may, I'd like to build a bit more on @Clint Vanderlinden's point on layering
Using the same assumptions:
- $10k LOC at 10% over 4 years (~$253 / month)
- $2k / month contribution
Scenario 1: Only one short-term investment
You break this down very well, and I'll only add that we are using 4 years and not 3 years. It would take $10k / ($2k + $253) = 4.44 months to pay off the LOC. If we wanted to round up to 5 months you would really need $10k - $253*5 = $8,735 out of pocket.
If we stopped right there and decided to cash out until maturity we'd be looking at 43 additional payments of $253 / month since we already used 5. That would mean a return of $253*43 - $8735 = $2144, which translates to a yield of 12.49% over that period (plugged those numbers into 10bii) or a CoC of $2,144 / $253*43 = 20% +/- a few basis points to account for cost of capital.
By using this system we got about a 2%-3% improvement from the original 10%. What happens if we decide to reinvest?
Scenario 2: Two short-term investments:
Let's start another short-term investment with the same terms, except this time we get $2k + $253 + $253 = $2,506 / month to go to town. That means we can pay off the LOC in $10k / $2506 = 4 months. Out-of-pocket is $10k - 4*$506 = $7,976.
If we stop here and collect to maturity we have 43 - 4 = 39 payments left on the 1st investment and 48 - 4 = 44 payments left on this new investment. That translates to a return of $253*(39 + 44) - ($8,735 + $7,976) = $4,288. On JUST the 2nd investment, 10bii computes a 19% yield when N=44, PV=7976, and PMT=253. Overall CoC would be 4288 / ($8,735 + $7,976) = 26% +/- a few basis points account for cost of capital.
By adding just one more investment we see a 6% increase in total CoC with only a 4 month additional lead time to full collection (negligible impact from time-value of money) and a ~6.5% increase in yield for the subsequent investment.
Final Thoughts
Following the math suggests that doing more short-term investments makes the performance metrics exponentially better over time, and on their own their own they are still akin to modest although not Earth shattering returns.
I add these details from the context of being a Tardus client for the past year. I welcome and encourage anyone on the forum to chime in if I may have misrepresented anything, but this has been my mental model after spending countless hours running through different scenarios.
Im assuming youre asking about the line of credit? If so thatd be entirely product dependent. Dont have to use a heloc per se. That just happens to be a convenient example.
just curious when you lock into a longer term return and banking on a certain cost of capital if your rates rise thats a bummer. this is whats happening to many who have guidance lines from banks or construction loans all of those are tied to prime. - Member since 2022 · 3 posts · 2 votes3y
We have worked with them for over a year and are blown away and love it. I was very skeptical in the beginning but it works. The way you change your thinking about investing really is a game changer.
- Member since 2023 · 10 posts · 7 votes3y
Quote from @Anthony Ng:
I just started with them. Going through my first flip. It is an interest arbitrage in the beginning. I haven't had my next meeting yet, but I guess through enough arbitrages, it accelerates the time it takes to get a down payment on a rental.
Hello, already planned a consultation meeting with them. If you can, is it possible to offer up some numbers? Specifically on how much money you started with, how long did you need to do intrest arbitrage before your flip, and how much money did you need for your flip? Trying to determine risk before committing to them.
- Homeowner · MT · Member since 2022 · 17 posts · 16 votes3yIt all depends on how much income you have available each month, after you've paid all your bills. You should be having a second consultation with them to determine those numbers. They will be able to tell you what your flip size should be according to how much extra cash you have each month. Hope that helps!
Quote from @Alex Gerondale:
Quote from @Anthony Ng:
I just started with them. Going through my first flip. It is an interest arbitrage in the beginning. I haven't had my next meeting yet, but I guess through enough arbitrages, it accelerates the time it takes to get a down payment on a rental.
Hello, already planned a consultation meeting with them. If you can, is it possible to offer up some numbers? Specifically on how much money you started with, how long did you need to do intrest arbitrage before your flip, and how much money did you need for your flip? Trying to determine risk before committing to them.
- Member since 2023 · 10 posts · 7 votes3y
Quote from @Iris Olivas:
It all depends on how much income you have available each month, after you've paid all your bills. You should be having a second consultation with them to determine those numbers. They will be able to tell you what your flip size should be according to how much extra cash you have each month. Hope that helps!Quote from @Alex Gerondale:
Quote from @Anthony Ng:
I just started with them. Going through my first flip. It is an interest arbitrage in the beginning. I haven't had my next meeting yet, but I guess through enough arbitrages, it accelerates the time it takes to get a down payment on a rental.
Hello, already planned a consultation meeting with them. If you can, is it possible to offer up some numbers? Specifically on how much money you started with, how long did you need to do intrest arbitrage before your flip, and how much money did you need for your flip? Trying to determine risk before committing to them.
I travel for work, so I'm not taking out a HELOC because I don't own a home. Nor am I comfortable with opening a Personal Line Of Credit based on advice from people I just met. They would need to prove their system works before I take such a high risk.
I have 23k in capitol to invest, originally saved for a home, and would be willing to put up 10k for their system to test the waters. I also make 3k a month in cash flow after paying the bills.
I'm guessing my "snowball" as they call it would be built faster without having to pay down intrest on a debt. However, P2P lending sounds like a high risk of default. Would it not be safer to do this snowball with morgage notes?
- Member since 2023 · 10 posts · 7 votes3yHello Chris, quick question, to my understanding morgage notes are safer then P2P lending because they are tied to the assets. Do morgage notes also have lower intrest? Is the advocacy for Tartus using P2P lending because they have higher intrest returns, but higher risk. Should people in general avoid P2P lending?
Quote from @Chris Seveney:
OK. So let me understand this:
1. You take $10k out of a LOC and invest it and get 19% interest ($300/mo for 4 years). Not sure where you are getting 19% interest. 10% interest is $253/mo which I would think be more in line. I will use that number as a reference:
2. Your LOC at 4% over 10 year am. period is $101/mo payment.
3. You pay $2,000 a month back + payment so in your case $2300
4. So after 5 months you:
a. taken a LOC of $10k but repaid it with $8k of cash and $2k of the invested money.
SO AT THAT STAGE:
You are $8,000 out of pocket - Correct?
You are getting lets say the $253/month for 36 months though....
Welp - thats only $8,855 which gets you an $855 return over the 3 years.
If you put $8,000 in a T-bill at 4% during that time you would have $8,960...
What am I missing? Getting P&I payments (and paying ordinary income on it), will NEVER yield a better return than interest only.
Sidenote: I am a note investor and play in this space as my full time job, so I am not some crackhead.
- Homeowner · MT · Member since 2022 · 17 posts · 16 votes3y
Quote from @Alex Gerondale:
Quote from @Iris Olivas:
It all depends on how much income you have available each month, after you've paid all your bills. You should be having a second consultation with them to determine those numbers. They will be able to tell you what your flip size should be according to how much extra cash you have each month. Hope that helps!Quote from @Alex Gerondale:
Quote from @Anthony Ng:
I just started with them. Going through my first flip. It is an interest arbitrage in the beginning. I haven't had my next meeting yet, but I guess through enough arbitrages, it accelerates the time it takes to get a down payment on a rental.
Hello, already planned a consultation meeting with them. If you can, is it possible to offer up some numbers? Specifically on how much money you started with, how long did you need to do intrest arbitrage before your flip, and how much money did you need for your flip? Trying to determine risk before committing to them.
I travel for work, so I'm not taking out a HELOC because I don't own a home. Nor am I comfortable with opening a Personal Line Of Credit based on advice from people I just met. They would need to prove their system works before I take such a high risk.
I have 23k in capitol to invest, originally saved for a home, and would be willing to put up 10k for their system to test the waters. I also make 3k a month in cash flow after paying the bills.
I'm guessing my "snowball" as they call it would be built faster without having to pay down intrest on a debt. However, P2P lending sounds like a high risk of default. Would it not be safer to do this snowball with morgage notes?
The reason you would want to use a LOC vs just your own money is leverage and the velocity of paying down the LOC quickly; that is where the magic happens. Let's just say your flip side is $10k. You borrow that money and pay it down, and borrow it again, pay it down, over and over. So you are able to use that $10k many times, and you're able to that much faster than if you were just using your savings. By using your savings, you will be depleting that reservoir of money, and after 2 flips your snowball would fizzle out. Some debt can be good debt, if you are using it to purchase assets. It's all about a mind shift and seeing money in a different way. I hope you decide to try it!
Quote from @Anthony Ng:
I just started with them. Going through my first flip. It is an interest arbitrage in the beginning. I haven't had my next meeting yet, but I guess through enough arbitrages, it accelerates the time it takes to get a down payment on a rental.
My first post in the forums. 2 years since the post and enough time for a few flips? How has this worked for you so far ?
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