Content of the material
- If You Don’t Win the Birth Lottery, You’ll Have To Earn It Yourself
- About Mark
- Why does real estate produce so many millionaires?
- About the Author
- Self-made millionaires all share the same goal
- Perception Versus Reality
- Types of millionaires
- 2. The Dreamers path
- Surprisingly Simple Ways to Become a Millionaire
- 1. Work smarter and harder than your competition.
- 2. Learn from your mistakes and move on.
- 3. Build something new that you would love – and be sure to experiment.
- 4. Learn to budget – or at least get help doing so.
- 6. Don’t believe discouraging people.
- 7. Save some of your income for a rainy day.
- Other Ways to Hustle in Real Estate
If You Don’t Win the Birth Lottery, You’ll Have To Earn It Yourself
Every millionaire in America falls into one of two categories: those who are self-made and those who became rich through that oh-so-important original roll of the dice when they were born into money. The latter, of course, is the easier of the two options — but it’s not the most common.
Make Your Money Work Better for You
According to the 2021 Wealth-X World Ultra Wealth Report, the vast majority of ultra-high net worth (UHNW) individuals — those worth at least $30 million — are self-made, 72%, to be exact. Granted, that percentage is for the entire world, not just the United States, but America is the land of UHNW individuals.
And of these individuals, 101,240 of them live in the United States. The next closest competitor, China, is home to fewer than 30,000 despite the country’s enormous population advantage. The U.S. hosts three of the world’s top five UHNW cities (New York, Los Angeles and Chicago) and six of the top 10 (add on San Francisco, Washington, D.C. and Dallas).
I am a Real Estate Agent, Entrepreneur, an author and a Real Estate Investor. I am the founder of InvestFourMore, Managing Broker of Blue Steel Real EstateDon’t forget to follow @InvestFourMore on Youtube
Why does real estate produce so many millionaires?
Many people will argue that stocks or mutual funds are a much better investment than real estate because the average gain of the stock market is higher than the average gain of housing prices over the last 100 years. However, when you invest in real estate or even buy a house to live in, the wealth you are gaining is not as simple as the increase in the value of the home.
- Leverage: Most people get a loan when they buy a house. Getting a loan increases your returns if housing prices increase. If you buy a house for $300,000 and it increases in value to $360,000, that is a 20 percent increase in value. But if you only put $10,000 down on the property, then you actually made a 600 percent increase on your investment.
- Buy below market: When I buy houses I do not pay retail value, I want a great deal and you can do that with real estate. Many houses can be bought for less than they are worth if the seller is motivated, the home needs repairs, or for many other reasons. On my rental properties and fix and flips I usually pay at least 20 percent below market value. As soon I buy the house I increase my net worth by the discount I got on the property.
- Cash flow: Owning rental properties is not all about the value of the home increasing. In fact, I pay more attention to the cash flow my properties make me, not appreciation. My first rental properties made me about $400 a month. That is not a ton of money, but when you buy multiple properties that money begins to add up.
- Equity pay down: When you use leverage to buy rental properties you are paying down the balance of the loan every month. Depending on the type of loan you get, you could pay off the house in 30 years, 15 years or sooner if you want to pay off the loan early.
- Tax advantages: Real estate has awesome tax advantages for your personal house and for investment properties. In some cases, you can make money on cash flow every month and pay no taxes thanks to depreciation. You can also use a 1031 exchange to defer taxes on sales.
Buying one rental property and holding it for 30 years may not make you a millionaire. Actually, it most likely would make you a millionaire thanks to inflation, but being a millionaire in 30 years will not be the same as being a millionaire today. If you can buy multiple properties over time that are great deals you can become a millionaire rather quickly. You don’t even have to have a lot of money to start with.
About the Author
Andrew Lisa has been writing professionally since 2001. An award-winning writer, Andrew was formerly one of the youngest nationally distributed columnists for the largest newspaper syndicate in the country, the Gannett News Service. He worked as the business section editor for amNewYork, the most widely distributed newspaper in Manhattan, and worked as a copy editor for TheStreet.com, a financial publication in the heart of Wall Street’s investment community in New York City.
Self-made millionaires all share the same goal
While all the money habits we’ve discussed so far contribute in significant ways to a millionaire’s success, one common behavior stands out above all the others: saving.
All the self-made millionaires in Corley’s study made a habit of saving 10-20% of their income before making their first million dollars. Comparing that to the average American savings rate of about 8% makes it easy to see how saving money results in accumulated wealth.
Perception Versus Reality
Overall, The National Study of Millionaires showed a dramatic difference between how Americans think wealthy people get their money and how they actually earn and spend their money.
The majority of the millionaires in the study said they earned their money through long-term investing. When it comes to spending, millionaires used a common tool for saving money: a shopping list. According to responses, 85% of participants in The National Study of Millionaires rely on a grocery list to some degree.
Types of millionaires
In his study, Corley identified three major types of self-made millionaires:
These millionaires make money by first accumulating a wealth of knowledge and skills to become experts in their field.
The big company climber
This type of millionaire accumulates their wealth by spending several decades working their way up the ranks of a publicly held company.
To succeed as entrepreneurs, these millionaires work tirelessly to overcome obstacles and failures before finally making it big.
2. The Dreamers path
Approximately 28% of the folks in my study were Dreamers, and they accumulated an average net worth of $7.4 million — far more than any of the other groups — over a period of about 12 years.
All of them told me that pursuing their dreams was one of the most rewarding things they had done in their lives. They loved what they did for a living, and their passion showed up in their bank accounts.
Those who want to take this path, however, must be willing to work long hours and able to handle financial stress. The Dreamers in my study worked more than 61 hours per week before finally achieving their dreams. Weekends and vacations were almost non-existent.
Trying to make ends meet was not easy. At first, getting a steady paycheck was "nearly impossible," one Dreamer said. It was even harder for those who had families to support. To finance their dreams, some decided to put off buying a home, while others dipped into their retirement savings.
If you're risk-averse, this path may not be for you.
Surprisingly Simple Ways to Become a Millionaire
Simple tasks are not always easy tasks. If I were to hand you a spoon and ask that you dig a hole nine feet down into packed soil, that’d be pretty straightforward and simple but it certainly wouldn’t be easy.
Likewise, you’ll find some of these simple ways to be just that – simple but not easy. But come on, you’re tenacious enough for the job, right?
Jaime Tardy, author of Eventual Millionaire who has interviewed hundreds of millionaires has this to add , “One of the main traits of a millionaire is perseverance. The ability to KEEP GOING in the face of adversity even when the finish line is very far away.”
One last thing. Remember that many of these tips are surprisingly simple, don’t underestimate their effectiveness just because you’ve “heard that one before.” Put these babies to good use and watch your millionaire potential soar!
1. Work smarter and harder than your competition
Identify your competition. How hard are they working? What are some differentiators you can bring to your workplace or market?
Start by working smarter. There’s no use in working harder if your work isn’t effective at producing income – you’ll be spinning your wheels.
There’s no sense in selling ice cream cones on your front lawn in the dead of winter. Instead, set up a booth at the park in the sizzling summertime – you get the idea! Simple, commonsense changes can greatly improve your effectiveness.
Work harder than others are willing. We’ve all seen the guy or gal at the office who works harder than anyone else. Maybe they’re a little nerdy or a little too interested in their job – or are they?
Maybe they’re onto something. After all, aren’t they the ones getting the promotions? Aren’t they the ones who become the office linchpins?
I remember when began my career with A.G. Edwards & Sons in 2002, I was in a training class of around 55 people. After completing training a year later, our class was reduced to less than half. My fifth anniversary mark? Only five of us were left.
Most failed. Why? Because they weren’t willing to put in the hard work required.
I beg you to not be afraid of hard work. Not only will your boss feel better about what you’re doing for them – you will too.
I’m not afraid to die on a treadmill. I will not be outworked. You may be more talented than me. You might be smarter than me. And you may be better looking than me. But if we get on a treadmill together, you are going to get off first or I’m going to die. It’s really that simple. I’m not going to be outworked. – Will Smith, Actor
2. Learn from your mistakes and move on
Everyone makes them. I do, you do, we all do.
And believe me, I’ve made some pitiful mistakes.
Would you get suckered into two multi-level companies that go nowhere? Would you throw $8,000 into an online business venture only to lose it all? Those are just a couple of several investment mistakes I’ve made with my money.
Mistakes are difficult to swallow. I think our first gut reaction as human beings to the realization we messed up is to shift blame – to others or to circumstances.
The very best way forward is to admit we fumbled the ball. Are you willing to admit when you make mistakes?
Some people, when faced with their own inadequacies, beat themselves up. And you know what that does? It paralyzes them from making the decisions they need to make to achieve success.
It’s important to remember that . . . .
Only those who are asleep make no mistakes. – Ingvar Kamprad, Founder of IKEA
So, take the simple step to fess up and move on. Yes, it’s simpler than you think – especially once you have practice. If you are still in the middle of a debt mistake one of the best things you can do is to stop paying interest by transferring your balance over to a 0% APR credit card. This will free you up to hammer down on that debt instead of paying big interest payments.
Millionaires don’t give up because of a few silly mistakes. They press on toward the goal.
3. Build something new that you would love – and be sure to experiment
You can read book after book about how to research what your customers will love, and by the time you deliver it, they’ll already be bored with it.
If you’re the entrepreneurial type – I know I am – make sure to work on projects you can get excited about!
Chances are, if you create something that you’d use and love, others will too.
Millionaires understand that some of the best ideas don’t come out of costly research, they come out of a passion for making the world a better place.
Also, remember to experiment. Have fun! Some of my best ideas come out of experimentation.
In 1945, Percy Spencer experimented with a new vacuum tube while doing research for the Raytheon Corporation. He popped popcorn and melted a candy bar, and saw the great potential for this process which eventually culminated into the advent of the microwave.
Tim Cook, the CEO of Apple recently explained in an interview with Charlie Rose that it’s more difficult to edit than it is to create something entirely new. But I’ve learned that sometimes creating something new can be the best way forward to becoming a millionaire.
One of the things that I’ve been most excited about building is my blog. My financial planning practice was growing at a steady rate but after I launched GoodFinancialCents.com in 2008 my practice and revenue have grown significantly. Some of that is a direct result of getting new clients to my practice while the other more surprising revenue source has been directly from the blog.
A combination of advertising revenue and introduction to new business opportunities (because my name and face are all over the web) have been a huge blessing.
Here’s the thing you have to realize though: I KNEW NOTHING ABOUT BLOGGING.
That’s right. The launching of my blog was a total experiment and still is today. I’m always testing different ways to monetize and build my brand. Experimenting is the fun part!
You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new. – Steve Jobs, Former CEO of Apple
4. Learn to budget – or at least get help doing so
You know that I hate budgeting. Thankfully, my wife budgets like a pro.
Here’s a tip from one of the financial greats (a millionaire, to say the least):
Rule No.1: Never lose money. Rule No.2: Never forget rule No.1. – Warren Buffett, CEO of Berkshire Hathaway
If you don’t budget, I promise you’ll lose money to overspending.
Want to make yourself sick? Count up how much you’re spending on eating out, clothing, gadgets, and other delights and write it down. Then, start budgeting. After a year, look at how much you’re spending and compare with your initial count.
Yikes. Try not to lose your lunch.
A hugely important part of budgeting is ensuring you’re spending less than you’re making. And the only way to do that friends, is to track everything.
If you’re not a spreadsheets-kind-of-person, that’s okay. Just make sure you have some help.
6. Don’t believe discouraging people
As soon as you accept that you’re not going to become a millionaire, you probably won’t – you’ll settle for the ordinary.
Your beliefs about your future matter a whole lot, and will – in part – help determine your future.
After all, your beliefs affect your actions, and your actions affect your outcomes.
When you listen to discouraging people, you’re letting them accomplish their goal – to drag you down and ensure you don’t surpass their success. No good.
Instead, I suggest you prove them wrong – but be humble about it. Your results will speak louder than your words, I promise you.
I just love it when people say I can’t do it, there’s nothing that makes me feel better because all my life, people have said that I wasn’t going to make it. – Ted Turner, Founder of CNN
7. Save some of your income for a rainy day
If you’ve lived on this planet for any considerable number of years, you know that bad stuff happens.
Not only that, sometimes several bad things happen all at the same time. Talk about knockout power!
That’s why I recommend that you save some of your income for a rainy day.
Medical emergencies can last years.
Trees go through roofs.
Jobs can be lost.
Don’t get caught without an emergency fund. You hear?
What does this have to do with becoming a millionaire? I’ll tell you.
If you have an emergency and don’t have some liquid cash saved up in a savings account like one from Capital One 360, you’re likely to either go into debt (bad idea) or borrow from family members (very bad idea).
Don’t be the guy that owes his parents.
Don’t be the couple that drowns in debt.
Think of debt as the polar opposite of investing. Instead of you investing in companies, companies are investing in you – looking to make as much profit as possible by pulling it out of your wallet. It’s bad news people.
According to many experts, you should have around three to six months of expenses in your emergency fund – in bad times, I recommend you shoot for eight months.
Other Ways to Hustle in Real Estate
There are other ways to increase the rental income, too.
If a home has a basement, convert it into a separate rental unit. The same can be done with a garage, too. Make sure that it is legal to do so; and do it right, following all the applicable rules and regulation for the jurisdiction. In doing this, more rental income is produced from the property.
Like anything in life, the more you get into real estate investing and the more experienced you become, the easier it will be in the future.
After establishing yourself with a lender, financing for future buys will be much simpler. Real estate agents will also bring more deals your way when they are confident that you will buy. You will also find out that others want to invest with you after you have a profitable record in real estate. It will also become much less difficult to attract tenants through word-of-mouth from present or previous renters. You will also be able to determine which type of real estate investing you prefer, such as renting to students in a college town or leasing out rooms.
No matter which type of real investing works out to be your favorite, now is the time to begin. It is much better to make a mortgage payment to the bank rather than send the rent check to a landlord. It is vital in all investing opportunities to acquire assets and hold on for the long-term. As history has proven, with real estate it can be especially rewarding to those who start at a young age.
What are your thoughts about getting started with real estate early?