Income Extraction Systems

Most people have a goal to build wealth.

This desire leads them to buy assets hoping that the market value of the assets they own increases as time passes.

These assets include real estate, stocks, bonds, index funds, mutual funds, businesses and more.

The reality is that many assets aren’t very valuable on a stand alone basis.

Wealth typically flows from the income generated by the asset. Wealth flows from the underlying business housed inside the asset.

It’s not the building that’s valuable, it’s the income extraction system used inside the building. A building housing a McDonald’s isn’t very valuable without McDonald’s “income extraction system.”

This idea suggests that the “income extraction system” utilized by the asset is really the critical component, not the actual asset itself.

More importantly, this idea gives us the opportunity to improve our investment results by focusing on (and comparing) different “income extraction systems.”

When I started my real estate brokerage back in 2003, I copied all the other brokerages trying to represent traditional buyers and sellers. This extraction system provided average results just like most real estate brokerages.

However, when I changed the “income extraction system” I was utilizing inside the brokerage, everything else changed. This change included starting a membership, specializing with investors, offering new services for investors, and more.

I added new “income extraction systems” inside the asset and this change in System(s) brought more wealth.

For assets that you own or control, consider the “income extraction system” you’re utilizing. Whether you realize it or not, you’re using an “income extraction system.”

Simply look at the income generated by your assets and you’ll be able to see the effectiveness of the System you’re using.