How wealthy people avoid paying taxes..my new plan

How I got here…

21: Graduated Vanderbilt in 3 years Magna Cum Laude, and took a fancy consulting job.
23 yrs old: Left my fancy consulting job to start a business (a gym).
24 yrs old: Opened 5 gym locations.
26 yrs old: Closed down 6th gym. Lost everything.
26 yrs old: Got back to launching gyms (launched 33). Then, lost everything for a 2nd time.
26 yrs old: In desperation, started licensing model as a hail mary. It worked.
27 yrs old: "Gym Launch" does $3M profit the next 6 months. Then $17M profit next 12 months.
28 yrs old: Started Prestige Labs. $20M the first year.
29 yrs old: Launched ALAN, a software company for agencies to work leads for customers. Scaled to $1.7mmo within 6 months.
31 yrs old: Sold 75% of UseAlan to a strategic buyer in an all stock deal.
31 yrs old: Sold 66% of Gym Launch & Prestige Labs at $46.2M valuation in all-cash deal to American Pacific Group. (you can google it)
32 yrs old: Started making free content showing how we grow companies to make real business education accessible to everyone (and) to attract business owners to invest or scale their businesses.

Today: Our portfolio now does $200M/yr between 10 companies. The largest doing $100M/yr the smallest doing $5M per year. Our ownership varies between 20% and 100% ownership of the companies. Many of them we invested in early and helped grow (which is how we make our money - not youtube videos).

To all the gladiators in the arena, we’re all in the middle of writing our own stories. The worse the monsters, the more epic the story.

You either get an epic outcome or an epic story. Both mean you win.

Keep crushing. May your desires be greater than your obstacles.

Never quit,

Alex

*FULL DISCLOSURE*
I make content to make money - just - on a longer time horizon than most. I want to build trust with business owners so we can find the best ones and help them scale. And if they’re awesome, write them a check and go all the way as partners.

[michaelmckay]

Zero salary. Leverage equity. Live off loans. No taxes. Thanks for sharing.

[borisp]

Two major issues with this. First, this is assuming that the business grows. As you said, a lot of things have happened over the last few years and anyone that had a business decline will tell you it is much better without leverage. In your example, run through a scenario where the $1M business declines by 20-30% in value. You will have loan covenants which will likely be triggered requiring you to pay back the load in part or in full. Then you may be forced to generate cash from sale of equity in this business at a terrible time, or get the cash elsewhere. Second problem is that taking out loans against equity is fine, but the loans will need to be paid at some point. Just because they are equity backed, doesn't mean that they aren't repaid. When it is time to repay them, you will have to sell the equity, which is when the capital gain is realized and you are on the hook for taxes. Now there is a unique element in real estate which allows you to roll over your gains into a new property, which comes with its own issues, but most other business types don't have that luxury. Basically unwinding the equity-backed loans with significant capital gains is very costly from a tax perspective. Elon Musk is a good example. Several years ago he took out personal loans backed by his Tesla stock, and he recently had to sell stock to pay back to loans. Therefore he simply delayed paying taxes. He is paying $11B in taxes in 2021, although not all of that is to cover his equity back loans. In his case he was fortunate that Tesla stock price increased from the issuance of the loan to today, so there was no covenants triggered and holding on to the stock created significant gains. However, is Tesla stock would have declined significantly from the time of the loan issuance, he would be in a very bad place. He would be forced to sell his equity at a very weak valuation.

[rodrigues]

brother that's actually genius, so many times I've heard the same thing about getting a loan against the business, in order to save taxes and everything, but by actually comparing it directly to selling a partial stake in the business, its so fkn clear how good the benefit is. thanks heaps Alex

[htsyami]

Alex, your advice is adding the greatest value to my entrepreneurial life (by orders of magnitude) relative to anything else on YouTube. Thanks! Keep being awesome!

[RyanPineda]

I just dropped a video on this subject today. I've been watching you so much recently that I'm now unknowingly emulating your moves lol.

[johncmm]

Top level mentor for free. What a world. Thanks Alex!

[nathanthomson]

I like your thinking Alex. I am keen to hear more on this subject particularly around risk mitigation if a loan is called and what is a suitable loan to value ratio for a business. Debt is great but it can become a hungry beast, particularly in lean times.

[MarketingHarry]

So much value for free. Thanks, Alex. Always enjoy your videos 👍

[sgazzz]

This is the way....loans agains existing assets ❤

[hunterrayfitness]

It's nuts that Alex is relatively unknown.I feel truly lucky to know about him and hear how he thinks

[christheideaguy]

Wow! Another 🔥🔥🔥 video. I’m building my next SAAS to exit … this brought some needed perspective. Thx
for the content.

[jessiebrown]

Thanks for the content! We have about a million dollars equity in our business. We are ready to exit because We have not been able to find another dentist that wants to move to our remote mountain town in Colorado. And we are ready for a change of pace and more time with family...
QUESTION- If we leverage the company, and THEN sell it...It defeats the purpose right? Because we will then be taxed on the entire amount anyway is that correct?

[canaldrip]

You also get a note at low interest for longer period that is getting errored at 6% per annum times 15 years. That things almost value less.

[sharozekashif]

For anyone watching this video. This beginning 'exit' analogy in this video does not apply to Tech companies(I say this with experience), with tech companies your exits are often 100x the profit the company is making and it's 100% worth it even after taxes and costs. I am sure Alex is not referring to those kinds of business exits. As always love the video

[blindguymcsqueezy]

I started reading $100m offer today, you're helping me so much Alex. I just want to tell you im one of your initial subscribers. A 24 y o guy with no business success YET, you give me faith and actual knowledge and most importantly, not another stupid course!

[hiyouseemcool]

Great video but please what is the bandaid for?

[Andy-lulh]

where and how do you get the loans? ty

[TradersHelpingTraders]

Lets go brother! Best channel on youtube.

[anthonyca]

Where does the income to pay back the loans come from? Isn't that taxed before the interest is paid?

[lastcaptain]

How do you find loan service providers that provide asset backed loans? And is there a minimum amount needed in total assets before most loan providers will even look at your request? How does this work within a self directed 401k? Thanks