How Much Money can you make with a Nickel?
A nickel is not a lot of money these days. When I was a kid I could buy 5 pieces of bubble gum or one of those oversized flavored wax lips. But today you can’t buy much for a nickel.
I have, I believe, discovered the very best use available for the nickel investment (other than giving it to your children to toss into a wishing well or some fountain at Disney World). Did you know that with a nickel you could purchase $1.00 worth of credit card debt? Where else are you going to get a 200% discount? And with 4,000 nickels ($200.00) you could purchase an account with an unpaid principle balance (not even including any of that juicy interest) of $4,000.00?!
And with the right system that you could expect to settle that $4,000.00 account for around $2,600.00 (+-10%) thereby creating a passive income stream that could last as long as two years!
Credit card debt in America is an on-going and horrendous problem. Of course a lot depends on which side of the debt you’re on. If you are on the side that owes the money (a/k/a the Debtor) often times it can be an uphill struggle to keep up.
If, on the other hand, you are owed the money (a/k/a the Creditor) it can be somewhat promising as well as profitable.
Credit card companies sell credit card debt in an effort to manage their receivables. Most credit card originators are not set up to collect very delinquent (90-120 days) credit card debt. Therefore they have a plan to reduce their debt by employing a series of collection agencies and selling any uncollected debt to the buying public. Let’s face it, credit card companies want to originate credit not collect it.
A cottage industry has sprung up over the past 15 years to purchase and collect on the “charged-off” credit card debt. Some of the companies involved in the purchase and collection of this type of debt are, well, huge. They employ 1000’s of employees and collectors and have collections in the millions of dollars each year.
I endorse this method of creating wealth for two reasons; 1.) This passive income beats the hay out of real estate rentals because there is less liability, and far more profit-per-dollar invested and, 2.) You can get started with very little entry capital. An investment of $5000.00 (which can purchase up to $100,000.00 worth of credit card debt) can return up to $65,000.00 in less than three years if worked properly! It even works great within a group of like-minded investors, friends or family.
Charged-off credit card collection is a staple of my proactive investment portfolio. It creates the highest returns for the least amount of energy. I put a lot of my nickels in this type of investment and I suggest you consider it as well.
Let’s take a look at how some other investments compare with charged-off credit card debt collection;
The Stock Market
I’ve never invested in stocks except for when Lou Dobbs said on the business news one Wednesday evening in 1984 to buy JC Penny and American Express. I purchased them both the next day and lost them in my divorce 3 years later so I really can’t say how well or poorly they did.
However, I know just a wee bit about investing in stocks and I can still make a strong argument against owning them as compared to credit card charge-offs. Please remember that I am using a very proactive model because I am a control freak. Not every investor is as proactive as I am, nor should they be.
Below find a list of arguments against owning stock vs. owning and collecting on charged-off credit card debt.
- You must enter the market at par (or 100% of the stocks current value)
- Outside influences can cause fluctuation in investment value
- You have no control of market swings or the actions of other investors
- You have no way to influence the market price of your investment
- You must remain in your investment for a long period of time to ride out market and price variations.
Real Estate Investments
Having purchased over 1900 properties from foreclosure auctioneers across the nation, this is an investment vehicle that I am extremely qualified to discuss. I performed due diligence, title work, established a value and a high bid number, work every exit strategy available and ultimately sold or rented each one (bar a few but that’s a story for another day).
- Entry into real estate investment usually takes either qualifying for an institutional mortgage, coughing-up a portion of the profit to a hard money lender or paying hard-money interest (usually in the neighborhood of 16-18% here in Florida); or you can write a check.
- Even the best deal will only provide you with a below market purchase of 30-40%. And how repeatable are these types of transactions? Once or twice a year?
- There is heavy competition on all but a few of the best deals. This will cause the entry (or acquisition) price to go up.
- The liability of owning real property- real estate taxes, property insurance, commissions, closing costs, non-qualifying buyers, lying mortgage brokers, and the biggest offender of the real estate investment- TENANTS
- Any income provided by this investment must be pulled out of the deal like teeth.
Investing in real estate is a hard, competitive, risky and time-consuming business. There are better ways to grow passive income streams.
Charged-off Credit Card Debt Collection
This form of investing can provide the educated investor with high returns and stratospheric ROI’s. The passive stream with multiply exponentially with the investors experience.
- Low entry cost versus value (up to 95% discount)
- Earn up to a 65% return on your investment
- There is no competition as you work an account by yourself with no other investors driving up the price.
- You establish your personal settlement guidelines and procedures
- You can provide proactive influence which can add directly to the ultimate collect ability of the account
- Even if the defendant misses their court appearance you still walk away with a (very powerful) final judgment
- The income stream is extremely passive.