IC elesson: What Would a Millionaire Do?

I’m getting increasingly alarmed by the way the real estate investment business is being co-opted by infomarketers who are intent upon maximizing their own bank balances by blaring the message that it’s possible to make a ton of money in real estate without

1. Working very hard
   2. Understanding much beyond the very basics or
   3. Taking on any risk, responsibilities, or entanglements of any kind.

I’m alarmed partly because this message is so loud, and so consistent that it’s starting to become a meme in our business. I’m hearing group leaders—who should know better, and whose job it is to ground their members in reality—starting to repeat the message. I’m hearing enormous discontent from people who ARE making good money about how they’re working too hard and it’s taking too long. And, of course, there’s the usual chorus of lost newbies singing the “I got the software, I installed it, but it’s not doing deals for me like they said it would” song.

I’m also concerned because the message is reaching people, politicians, and the media OUTSIDE of our industry. The impression with which it leaves them is that real estate entrepreneurs—and particularly flippers of various sorts—are out to make a quick buck without doing anything for it, and without regard to the interests of their buyers, sellers, or the communities in which they work.

And I’m alarmed partly because the message is just plain wrong—and that telling the truth is met with scorn in almost every forum in which it’s spoken. And the truth is, if you want achieve actual financial independence (which is different than being a high-income self-employed person), you’ll have to do real work, study hard, and, at some point, “entangle” yourself. In our business, the truly wealthy own income-producing assets, which means that at some point, they’ve probably taken on some debt, some risk, and some responsibility for the long-term management of those assets.

Say, “If you want to be really, truly financially independent, it’s a long-term process, and it’s a lot of effort on SOMEONE’S part”, and you’ll be shouted down by a bevy of self-styled gurus (and their wannbe successful students) insisting that they work mere minutes a day, make more money than Bill Gates, and live the high life year in and year out. And that, by the way, if you’re not doing the same, you’re a relic of real estate pre-history, back in the day when people didn’t know what people know now about how to automate everything. And for only $5,000, they can mentor you and you can be successful, like they are.

But ask yourself this: how many millionaire wholesalers, or retailers, do you know? In fact, how many do you know that, if they spent a year in Europe (or in a coma) would have ANY income or assets left when they came back? How many do you know that could stop working tomorrow, and live for the rest of their lives on the income from their business, and never have to worry about money again?

The answer, in my fairly extensive real estate experience, is “none”. Yes, I know some real estate millionaires who wholesale, or retail, houses. And I know many who got their start that way. But I know exactly zero who ONLY use the cash strategies, and who have only EVER used them.

People I know who’ve been successful building lifetime wealth, as in, “I’m not worried about going into the nursing home because I own the nursing home” kind of wealth, as in “well and truly out of the rat race” wealth, will all tell you that they did 3 things to do it:

1. They worked hard, and for decade or more
2. They bought long-term assets, meaning that they took on risk in the form of financing and responsibilities in the form of management of that asset.
3. They took a strong intellectual interest in the business, and over time, came to understand it at a level much deeper than the surface level that the typical “hustler” cares about

So, assuming that your long-term goal is not to work in your own wholesaling/retailing business forever and ever, I think it’s important to start challenging what you’ve been taught and what you hear with the question, “What would a millionaire do?”.

When someone tells you that owning rentals, or investing your own cash in income-producing assets, is for suckers, ask, “Hmmmm…is that what a millionaire would think?”

When you hear that you should fake-it-til-you-make-it by financing a $60,000 car with which to impress sellers, ask, “Would a millionaire do that?”

When you have an opportunity to flip a property and spend the money, or flip it in your IRA where you can’t touch the money for 20 years (but you get to keep all of it, because there are no taxes), which would a millionaire choose?

When you’re looking at the pile of cash you just earned wholesaling a deal and wondering whether to blow it on a 10 day family vacation to Disneyworld, or to use it to cut 10 years off the mortgage on a rental house, or to invest in that seminar (and take the kids to see the grandparents for vacation), WWMD?

And when you’re thinking about blowing off that real estate association meeting tonight, because you’re whipped and there’s something good on the tube, ask yourself—would a millionaire be more interested in increasing the depth of their network and their knowledge, or in vegging out in front of the TV?

You’ll have lots of chances to make the decision that someone looking for high income and short-term rewards would make, or to make the harder, less-immediately-pleasant decision that thousands of real estate millionaires have had to make before you.

Do what you like, but be aware that real estate millionaires are created by work, persistence, and  a lot of little, in-the-moment choices, not by a handful of home run deals that fall into their laps. Even if you don’t make those choices, you should be doing it intentionally, not out of habit, or bad training, or just not knowing what a millionaire would do.