$300k Villa vs $300k SaaS

Hey builders!

Today, I’m not writing this newsletter from France. Because I just landed in Bali! 🏖️

I’m not here on vacation, although I’d love to! I’m here to sell my villa I bought here 18 months ago for about $300k.

I know what you’re thinking… I’ll show you the villa. Here you go:

“But Tibo, why are you selling?“

Good question.

I will buy a new SaaS with that money.

Before taking this decision, I compared a $300k villa and a $300k SaaS.

Here is it 👇

$300k Villa

The place is super dreamy, with everything you could ever need. A great investment by all means.

Cost: $300k leased for 25 years

Cash inflow: $4k/mo

Maintenance costs and salaries: $1k/mo

Pros:

• Stable property

• Appreciating asset (is it?)

• Future value is somewhat predictable

• Very high yield (10-14%) as compared to the vest

Cons:

• There’s always something to fix (plumbing, lighting, 10 other things)

• No exponential growth

• Can be destroyed by fire or earthquake (can’t get an insurance for that in Bali)

• My break-even point comes in 10 years

• Low leverage opportunity

Don’t get me wrong, this is a great investment. This villa is a must-have in almost every portfolio.

But that’s not me.

I’d rather work on a business now that I’ve officially concluded the Tweet Hunter and Taplio deal (I don’t work on those anymore).

Here’s what the SaaS looks like:

$300k SaaS

You can get a lot of good software in this price range. And if you can pull certain levers in the business, you can scale it to the moon.

Cost: $300k (complete ownership)

Cash inflow: $5k-$6k

Maintainance and salaries: A lot. sometimes even $5k/mo

Pros:

• Best leverage (that’s why I love software)

• I have an edge because of my distribution

• Infinite scale and no income cap

• Product market fit achieved (that’s why it’s doing $5k/mo)

Cons:

• Need active work on it, no passive income

• If this can scale to infinity, it can also go down to zero

• Need to build a core team and overhaul the complete business

Honestly, these are the risks I’m willing to take.

I know my strengths and weaknesses. And I know that I suck at real estate. I don’t enjoy it.

What I do enjoy is being in the trenches, building what the customers want.

And that’s why I took this decision.

I don’t know if it’s the right one. But I know it’s right for me.

What do you think about this? Anything I missed that I should consider?

Feel free to DM me on X (Twitter) @tibo_maker or reply to this email 👇

Tweet of the week

Set your own standards. And live up to them.

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See you next Thursday!

Keep building

Tibo 💻