Most people have one way of making money. They work.
The money comes in, it covers the life, and whatever is left over sits in a checking account waiting to be spent. A single engine prop plane.
I want to show you what it looks like to add a second engine. Then a third. A jet powered wealth creation model.
Here's the machine.
Engine one is a rental property.
You buy one house. A tenant moves in and pays rent that covers the mortgage, the taxes, the insurance, and the upkeep, plus a little cash flow every month. That little bit on top is where everything starts.
In the analysis I ran recently on a real property, that surplus was about $500 a month in year one. Not nothing. But a number most people glance at and dismiss. Interestingly, the rent rises over time while the mortgage payment stays fixed, so that little bit of cash flow grows every year, while the tenant pays down your loan and the house is appreciating, going up in value every year.
That's a good engine on its own. But it's just the first one.
Engine two is dividend stocks.
Then that cash flow powers the 2nd engine. That $500 a month never touches your checking account. The day the rent clears, it moves automatically into a brokerage account and buys shares of companies that pay dividends. 4% to 6% a year, paid to you in cash, just for holding them.
And those dividends don't get spent either. They buy more shares, which pay more dividends, which buy more shares. Money your tenant handed you is now earning money of its own, on its own schedule, without you lifting a finger.
Two engines now. Both powering wealth creation. Neither one is your paycheck.
Engine three is covered calls.
This is the one most people have never heard of, so stay with me, because it's simpler than it sounds.
Once you own enough shares, you can sell what's called a covered call against them. In plain terms, someone pays you cash today for the right to buy your shares at a higher price later. Most of the time they never do. You just collect the payment and do it again next month.
Think of it as charging rent on stocks you already own. It layers another few percent a year on top of the dividends, from shares that were bought with cash your tenant paid you, on a property you may have barely thought about since closing.
Three engines. A house, the stocks it feeds, and the income from ‘renting’ those stocks. Each one handing fuel to the next, and not one dollar of it coming out of your salary.
That's the whole idea behind Asset Accelerator. We create assets and let the gains do multiple jobs. A system where each asset builds the next in the background, while you go on living your life.
Now, here's the part I'm most excited to share with you.
Reading about a machine is one thing. Seeing it run on your own numbers is another.
So I built you a calculator. It's called the Cash Flow Machine, and it lets you plug in a real rental property and watch all three engines work together over time. Change the down payment. Adjust the rent. Set the dividend yield. Turn the covered calls on and off. Watch what the whole thing produces in 3 years, 5 years, and 10.
It's free, there's nothing to buy, and you don't need to be an expert to use it. Just plug in numbers and watch the machine run. Better yet, if you have a rental property you’re looking at, use this to plug in those numbers.
Try it here: cash-flow-machine.assetaccelerator.com
Play with it for 10 minutes. Change one number and see what happens. I think once you see your own version of the machine running, you'll never look at that almost overlookable $500 in cash flow the same again.
Then think - what if I had 5 of these over the next few years, all plugged into the same jet engine.
Would retirement look and feel any different?
Next week, I'll go deeper on the initial investment property, because the most common question I get is: what if I don't have the down payment for a rental in the first place? There are more ways into that first property than most people realize, and I'll walk through them.
For now, run the numbers.
Write the song.
— Jim
P.S. The calculator started as something I built for myself on a weekend, just to see the three engines working together in one place. It turned out to be the clearest way I've found to explain any of this. If you build a scenario that surprises you, hit reply and tell me. I read every one.
