Being a millionaire doesn’t mean a whole lot. There is something like 7.5 million - millionaires in America. Net worth is absolutely the most worthless number in the world. Liquid cash is what matters. According to Forbes, Donald Trump has a net worth of 2.6 billion but makes an annual income of 44 million. Where as Oprah Winfrey is worth just over 1 billion but makes an annual income of 225 million.
So for liquid cash, Real Estate sucks. That’s why I currently don’t own any rental properties but rather do quite a few, very quick rehabs every month.
When holding RE you can’t have your cake and eat it to (atleast not all of it).
My point is why have a cake if you can’t eat it? Just my .02
seems that on a board that is obviously dominated by people who have never done a SINGLE deal, it isn't that unreasonable to wonder, 'hey, is there more than like 10 guys here who are actually making lots of money?'
JD - you broke the code! On any real estate board, MLM board, or any other get-rich-quick scheme board, you will find tons of newbies and only a very few people who are actually living off of their business. That is true here. As I said in a previous post, I had been busy for a few weeks and hadn’t been posting or reading the board. When I got back, it seemed that the entire board had turned over. All the old newbies had given up and disappeared and there were a whole new crop of newbies (like you) posting.
Without giving the names, I can tell you with certainty that there are several people on this board who are millionaires - meaning that they have $1,000,000 in equity. When you are very young and poor, $1,000,000 seems like a lot of money, but it really is not. How hard is it to build a million in equity? It is easy.
Let’s say that you’re doing rental properties. If you average buying at a $20,000 discount on each property, you only need 50 rentals to have a million dollars. Could you do 10 a year for 5 years? EASILY!!! Could you do 20 a year? Yes, but more difficult.
As I said earlier, I think your plan is badly flawed. At your planned pace of one a year, you’ll probably never even be able to live off the proceeds let alone run a significant business.
I’ve done over 40 deals in the past 2 1/2 years. I don’t do much advertising (other than a small classified ad); I don’t have a website or even any signs; I don’t have “We Buy Houses” on my truck; I don’t specialize in any one strategy; and I have done a lot of deals through a local realtor. In short - very boring!
Here’s how my latest deal unfolded. I got a call from my realtor who also works at a modular home company. Someone had purchased a new modular and wanted to put it on the property that they already owned. The problem was that the owner already had a doublewide in the same spot and needed to sell the doublewide fast. The doublewide had to be moved. My realtor asked if I was interested? I negotiated a purchase price of $10,000 with the owner carrying a note for 5 years at 6.5% (no money out of my pocket). The doublewide is a 3br, 2 ba in almost new condition.
The realtor was getting her commission from the sale of the modular and didn’t want anything for giving me this deal. Her only concern was to move the doublewide so that her modular deal would go through. I gave her $500 cash for the lead anyway as I believe in rewarding her efforts and I want her to keep calling me with deals in the future. (Don’t be greedy).
Here are the numbers for this deal:
Doublewide - $10,000
Land - $15,000 (I had a spare acre from another deal so I didn’t really have this expense)
Move doublewide to new location and set up - $4,000
Materials for foundation, electric service, water service, and septic system - $6,500 (I’ll provide the labor myself)
Referral Fee to Realtor - $500
Grand total - $36,000
This will appraise for $95,000 when completed. I know that because I have another one just like it on the acre next to this one. I’ll rent it for $700 per month. My increase in equity - $59,000.
Only 20 deals like this would give you a net worth of almost $1,200,000. However, the cash flow from 20 properties like this would not allow you to live like a millionaire!!!
Mike
i don’t intend to do nothing besides just getting a new property each year, that is just part of what i want to do, and is the first part. i will always need a place to stay, so i would like to be in one that i can make both a place to stay and an investment, i guess it was dumb of me to even imply that i know waht i will do specifically after my first one. i have tried the zero down approach, and it was consuming all of my time, money, and was not working. i had to put it on hold and regroup. i do intend to try other things, but i wouldn’t even begin to tell you waht they woudl be now as i am still learning a ton.
and back to being a millionaire… if you have a million dollars, how can you not be set for life? i mean you could buy a great income property and just live off of it. seems so simple to me, i don’t know why people are making it out to be so meaningless to be a millionaire. it doesn’t matter if there are a lot of millionaires, i don’t really care what other people have. i’m not gonna bother to whip out the financial calculator, but even at modest cap rates and slightly high expenses, a million dollar income property produces a very livable cash flow, assuming you wanted to do NOTHING, and just leech off your property (if anyone is quick with numbers or feels like grabbing their calc and doing it let’s see a rough NOI, i bet it’s 40-60K, using about 10% cap and 45% expenses.)
that may not be a ton to a lot of people, but if you grew up sharing an apartment, and you could then own a building like the one you lived in, and choose (not that i would) to just do nothing, you would still make a decent income. of course if you made a mill why on earth would you just stop and live off taht income for your life…
(by the way, do people put a lot of stock in kiyosaki here? i mean that book had some notable ideas/principles, but seemed a little, well, out there. i dunno maybe it’s just me. love think &grow rich tho)
JD,
You are right on in your analysis of a one million dollar investment property. The investor would make in the neighborhood of $40K-$60K per year just as you said. That is exactly why I said a million dollars wasn’t much money. In my opinion, a $40K to $60K income per year is very marginal (downright low). Considering today’s cost of living, you can’t live very well on that amount of money. And in my opinion, you would definitely not be set for life making 40 grand. (A family could not even live comfortably in most areas on $40K).
That is why I said cash flow is King. Equity won’t pay the bills. So, how much cash flow would you need to LIVE like a millionaire? I’d say $500,000 per year in most rural areas and more in the big cities. Of course the big question is what does it mean to live like a millionaire?
Mike
living like a millionaire is really more of an opinionated approach. have you ever read ‘the millionaire next door’? very interesting book, i’d definitely recommend it.
honestly, i know lots of people who live like millionaires (whose net worth is rarely more than a couple hundred thousand, if even that), and a few (uhh… two, haha) millionaires in real life. aside from 1 of them having nice cars (lexus mostly), you would never ever tell they were millionaires unless you were talking business with them. they don’t piss away cash, they live below what they can afford. they live very comfortably (the one with the cars is not just 1M$ tho, if he were i can’t imagine him still getting cars as frequently as he does)
anyways, i’m definitely not saying it is my goal to have 1M and stop or anything. but, a million dollars isn’t enough to live like a king, however you will have security. that’s why i am saying having a million isn’t really ‘meaningless’. if you save your whole life and are very cheap and finally get a million, that security probably wasn’t worth the time and effort, but who knows. if you’re a millionaire at 40, well, that’s pretty cool stuff.
Infowell, You ask me to define old age and youth. Some people get there faster than others. My point is that they should do like you have done and smell the roses along the way. Don’t live like a miser and say you are going to let your hair hang out when you get old.
I’ve never been to the Caribbean (yet)–much less 4 times in a year! I must be slummin cause, in the last 5 years…I’ve only been to Maui & Oahu twice, Kona & Kauai once, and Puerto Villarta, Mazatlan & Cabo San Lucas once. I’ve taken two fishing trips out of San Diego, I’ve been to Denver, Salt Lake City, Los Angeles, San Francisco, Sacremento, Palm Springs and Lake Tahoe. I’ve visited the Grand Canyon & Las Vegas three times. I’ve been to Hot August nights in Reno, and stayed @ Ross Lake Floating resort in the Northern Cascades. I’ve been to the NBA, MLB, & NFL playoffs, and vacationed in the San Juan Islands on numerous occasions. My overnighters & day trips are too numerous to count.You are what jdeity was asking about. You are rich. Give jdeity some inspiration. You are the man!!
(wasn’t looking for inspiration, was really trying to verify whether or not the people with a lot of posts who seem to totally know their stuff are actually very successful. still is kind of inspiring to see others with cash tho…)
“that’s why i am saying having a million isn’t really ‘meaningless’.”
And you’d be right!
It gives you options, and the more options one has in life…the better.
You could always sell & move from San Diego to someplace less expensive in the country–or out of country for that matter–and live like a King (that’s one option).
Moreover if you’ve got a million in equity in a Roth 401k Self-Directed retirement account…I’d say you’re pretty well set.
-Info
“You are what jdeity was asking about. You are rich. Give jdeity some inspiration. You are the man!!”
I forgot Portland, and Boise, and 4 days on the Beach in Ocean Shores! (I must be getting old 
)
“Give jdeity some inspiration.”
Think & grow rich is one of the best books I’ve ever read…changed my life & the way I see the world.
Have you studied Options (?) Lease/Options (?) and Assignment of Contracts (?)
If not…it’s a hell of a use of leverage - the fastest get rich quick scheme I’m aware of (but it takes time 
)
-Info
Rich is relative…there’s a lot more to being rich than just financial independence. Good health & good relations with people are just two other components.
I can’t belive I am going to agree here.
WOW we agree on this.
Big difference between making a living and making a life!
Man Robb, all that fishing is messing you all up!!!
LOL…
Keith
Must be that glass of $cash$ kool-aid I had! LOL
“Man Robb, all that fishing is messing you all up!!!”
Fishing?..did you say fishing?
I’ve got fresh Sea Bass, Pacific Barracuda, Benita & Scorpion Fish fillets in the freezer!
We fished off San Diego Sunday afternoon and flew em in on ice to Seattle on Monday morning. Battered up some Sea Bass that very night…yummy!
I’m gonna try to get a fishing trip in next summer in Alaska, and we’re already planning some sport fishing off Maui Feb./March '08.
-Mike
See Fishing can make friends out of anyone…
We caught 11 Trout this weekend in our HOA lake the smallest was 14 inches and the largest is 19.5.
My friend is starting a charter boat business in Alaska.
jdeity listen to these guys. They have what you are looking for.
I thought you were there arent you the young guy on the right?
LOL!
Biggest fish I ever caught was a 5’11" Black tip shark in Gulf Port Mississippi…
So now here is a question to bring us back to RE…
What is better the money in REI or the Fishing trips it allows?
I say the fishing trips.
“See Fishing can make friends out of anyone…”
Let’s not be hasty.
But here’s a secret spot you might find interesting; www.rosslakefloatingresort.com - book ahead of time in the summer. Lake’s 22 miles long, secluded & full of Rainbow’s.
“What is better the money in REI or the Fishing trips it allows?”
Mel Gibson as William Wallace in the movie Braveheart - FREEEEEEDOM!
“Biggest fish I ever caught was a 5’11” Black tip shark in Gulf Port Mississippi…"
Rent a House Boat on the Columbia River & go Sturgeon fishing…you’ll beat your record…and the meat’s to die for!
-Info
I fished out of Homer Alaska last summer for hailbut. Everyone on the boat caught their limit (2 a day). Next time we are going in the evening and come back after midnight (still daylight in the summer) so we can bring back 4 each.
http://www.homeralaska.org/
How do millionaires live? The book mentioned above “The Millionaire Next Door” by Thomas Stanley might open your eyes.
One of the millionaires that I know personally would start his morning off by taking a walk down to the county park next to the lake he lived on to pick up aluminum cans! This guy had thousands of dollars of positive cash flow coming in each month. He made most of his money in real estate. But he does what ever he wants to including saving aluminum cans. He has always paid cash for every vehicle he purchased and never used a credit card.
Having a net worth in excessive of 1 million is nice but if your don’t have a positive cash flow, you are broke. I just work on improving the PCF, my net worth increases automatically.
“But he does what ever he wants to including saving aluminum cans.”
Funny how we’re all different…I like emptying aluminum cans and then discarding them!
“Having a net worth in excessive of 1 million is nice but if your don’t have a positive cash flow, you are broke.”
I’ve got an acceptable cash flow from occasionally working (my wife works more–20-25 hrs. a week).
The net worth is building in a Roth 401k Self Directed Retirement Account. I can borrow against it…retire early…or continue to grow it.
We’re all different but, I believe in working hard & smart while you’re young & enjoying the fruits of your labor when you retire (with a Roth 401k…that could be as early as 55).
-Info