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I’m talking with Tardus CEO and President Tanisha Souza to address a tough topic many agents face: How to get out of credit card debt, start carving a path to financial freedom, and escape the rollercoaster ride of commissions. Everyone craves a fixed income from a nine-to-five job.
By the time Souza graduated from law school, she was in six figures of debt. She spent six years working with a team of Harvard mathematicians to develop and systematize a method for building wealth. The result is a “snowball of revenue.”
In fact, Income Snowball is so effective at helping users generate cash flow and get out of debt that Souza patented In 2014.
What is revenue snowballing?
According to Souza’s patent, the revenue snowball is:
“A system and method that provides predictable income, leveraged income, and excess cash inflows by linking checking accounts to revolving lines of credit (L/Cs) and transferring funds back and forth between letters of credit and other Revenue Source. The system and method uses computers running software programs to automate”.
Souza said that when she created Income Snowball, “I wanted to borrow money to invest, leverage cash flow and take advantage of high-income investments.”
Financial coaching – not financial advice
Tardus is a wealth coaching company—they do not provide specific investment advice. However, they do show you how to apply their model to find the right investments for you.
“One of the things that sets Tardus apart is that we’re agnostic about investing. We’re not recommending that you buy this or that because we’re going to get some sort of commission or referral fee or kickback,” Souza said. “We stay neutral and walk them through their investment criteria to make sure it’s right for them.”
NOTE: No matter which type of investment you are considering, always consult your CPA or tax advisor before investing.
Getting Started: What level of risk are you willing to take?
When Taddous starts working with coaching clients, they ask them to conduct a risk assessment. This provides Tardus coaches with feedback on the client’s individual risk tolerance. It also provides a framework to help clients make more informed decisions about potential investments based on their financial goals.
Understanding the Revenue Snowball: Key Concepts
In order to better understand revenue snowballing, you must first become familiar with the following terms.
Leverage
When you buy a home with 20% down and finance the other 80%, you create leverage. In other words, the rate at which your home appreciates depends on the entire purchase price, not the amount of your down payment. Google artificial intelligence Define leverage as:
“A strategy that utilizes borrowed capital or financial instruments to increase the potential return on an investment. The goal is to pay only a portion of the property’s value in exchange for the ability to generate income or value from it.
cash flow
When most real estate professionals think of “cash flow,” we usually think of owning investment properties that generate income. “Cash flow” is the amount of money you keep every month after paying all your expenses (mortgage, taxes, insurance, repairs, vacancy, etc.).
There’s a second way to think about cash flow when you have an amortizing loan that generates a monthly return of principal and interest to the lender. ChatGPT is described like this:
“When you receive amortization payments from a lender, cash flow refers to the periodic payments you receive that include interest and principal repayments on the loan you made. In this case, cash flow consists of a portion of the loan principal and The interest income generated by the loan.
Revolving credits, fully amortizing mortgages, and auto loans are all examples of this type of cash flow for lenders.
line of credit (HELOC, One-stop mortgage loanrevolving commercial credit line)
To take advantage of the income snowball, you must use a revolving line of credit to swap back and forth between your line of credit and your investments. Souza says you can use a credit card, but that’s the least effective way to capitalize on your income snowball.
Since my husband is a Tardus coaching client, we used an All-in-One Mortgage (7% Simple Rate) as a letter of credit to transfer funds back and forth between the AIO Mortgage account and investments.
“Fast Burning Fuels vs. Slow Burning Fuels”
Souza used an analogy between racing cars and regular cars to explain the difference between what she calls “fast-burning fuels” and “slow-burning fuels.” Just like you would never put regular gasoline in a race car or racing fuel in a regular car, you must have the right type of “fuel” for the income snowball to work.
Quick Burn Fuel is a short-term (12 months to five years) investment with a fully amortizing loan that provides regular returns of principal and interest.
“As an investor, I want these investments to be of shorter duration because that will give me more returns,” Souza said.
“Stacking”
Income Snowball’s “stack feature” can significantly accelerate your returns by increasing your leverage. In our case we are using Groundfloor as a fast burning fuel. Su Zha explained it this way.
“Yes, it’s principal and interest, but since you’re buying it with someone else’s money in the first place, it provides you with a lot of income that helps you pay off the leverage faster and make your next investment,” Souza said.
“Every time you make your next leveraged investment, you actually get a discount even if the total amount you invest remains the same.”
In our case, we paid the same amount each month into an all-in-one mortgage with the goal of saving for our first reinvestment. However, it will take us less time to reach this amount because we will now add the principal and interest paid to us by Groundfloor on top of our new deposit. As of the time this column was paid off, a total of 12 of our 66 loans had been paid off. At the end of each loan, we add that principal and interest to the amount of our monthly payment.
Using Souza’s calculator, we currently estimate that we will have enough savings to make a second investment in August 2024.
Let’s say we pay off eight more loans before reinvesting in August:
- This would leave us with 46 loans still active in the first “stack”.
- Assuming that when we reinvest, we will receive the same number of new loans as the first investment (66), then in August we will have a total of 112 loans, with 46 remaining in the first tranche and new in the second tranche 66 loans.
“With every new investment, your cash flow increases significantly. For example, the initial investment [first stack], potentially generating $310 per month. The second investment may grow to $620, and within a year it may grow to $900. “That’s why we call it the revenue snowball.”
3 scenes
Souza described three common client types they work with at Tardus.
Client has significant credit card debt
Tardus takes a two-pronged approach to solving this problem. An important part of their coaching is helping clients become more efficient at managing their money. This involves having clients conduct a detailed analysis of their current expenses and then looking for ways to reduce those expenses where possible.
If a customer is struggling with credit card debt, the Tardus model can still work as long as they have some cash flow or savings. Souza describes their approach to targeting this type of clientele, which is typically commission-based:
“We use a method called ‘artificial cash flow’ to make the whole system work, where we do a 70-30 or 60-40 split. Our calculator can determine the optimal split for a specific individual,” Souza said. in other words,
“You’re paying off some of the leverage and then repurposing it to buy a lot of new investments while paying off the debt. When you keep doing that, you’re going to get a little faster each time.
Make your first investment
Whether you’re a first-time investor or a seasoned investor, it’s important to have a plan A, B, and C if your investment doesn’t perform as expected. In fact, one of the most important pieces of advice is to never invest money that you cannot afford to lose.
“Much of the guidance we provide involves how to identify an investment that meets the ‘fast-burning fuel’ requirement, how to determine whether it is a good investment, and what not to do,” Souza said.
“If it doesn’t work, then how do you change from one investment to the next, or how do you do multiple investments with the same leverage.”
Suza then outlined several suggestions on how to position and evaluate whether a particular investment is a good choice.
- Start by conducting a risk tolerance assessment to determine the type of investment that is best for you. For example, someone with a higher risk tolerance may be willing to take on more risk in exchange for higher returns. “If your return on investment is higher, you’ll achieve financial freedom faster,” Souza said.
- Establish criteria for the type of investment you want to make and whether it will be a fast-burning or slow-burning fuel. Once you write this down, it will be easier for you to decide which investments will be the best choice for you.
- Generate a list of due diligence questions used to evaluate each investment before investing. (If this was a real estate transaction, this would include evaluating the location, cash flow, verifying rental records, property condition, tax rate, whether the property is controlled or separately metered, etc.)
“Our coaches will help you plan all of this to help you more quickly filter out what works best for you,” Souza said. This strategy works for both fast and slow-burning fuels (long-term investments, syndicates, etc.).
Experienced investors
When Taddous first starts working with coaching clients, they analyze in detail an investor’s current holdings to determine whether they are fast-burning fuel or slow-burning fuel.
“Let’s say an investor has four or five single-family homes for rent and one of them is underperforming. Our coaches might ask, ‘What would you do if your investment didn’t perform as expected based on your criteria? ’” Su Zha said.
“So, what does this mean to that client? Is the tenant not paying rent for three months or is the roof in need of $15,000 in repairs? When they write down their own standards, they are more willing to exchange the property for one that better meets their written standards. thing.
Suza also explained that perhaps investors might want to consolidate the four single-family homes into one larger property. In this case, they will have to establish a new set of criteria to once again determine what is best for them.
Does the revenue snowball model work?
according to Latest website, 92% of their more than 7,000 customers achieved their goals of coming to Tardus in just four years. Additionally, if the Tardus system does not refund at least the amount required to cover your coaching fee, they will issue a full refund.
Souza’s final piece of advice is to have a plan and establish an investing system – having a system in place will give you a huge advantage, no matter the market or type of investment.
Bernice Ross, President and CEO Brokerage UP and Real Estate Coaching Network, and founder of RealEstateWealthForWomen.com is a national speaker, author, and trainer with more than 1,500 published articles.
