Real Estate Investing Basics

This One Thing Separates the Rich From the Poor

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Brandon Turner, co-host of the BiggerPockets Podcast, sat down with fix and flip investor Tarl Yarber to talk about the one thing that differentiates the rich from the poor. 

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In life, when I see wealthy people, what I’ve always found is that wealthy people know how to make money because they recognize it as a skill.

People complain that there’s rich people and there’s poor people in the world. But it’s the same as complaining that somebody’s good at basketball. Yeah, they’re probably good if they’re out there shooting hoops every single day.

What Separates the Rich From the Poor?

If someone’s good at cooking, that’s not a magical thing. It’s not like someone’s born good at cooking.

Truly successful wealth-builders recognize wealth is a skill. They intentionally learn it.

Some people don’t think it’s a skill worth learning. They don’t think you should learn how to build wealth or how to be successful.

This might be because we were raised to think money’s bad or to not think about it all or that we shouldn’t be selfish. But really it’s a skill like any other.

Somebody asked me the other day why I’ve been financially successful. I just said, “Because I learned how to do it. I practiced. I practiced a lot, while people were practicing other things, like guitar.”

Related: Are You Choosing to be Poor?

Others were practicing photography. They’re probably really good at photography if they spent 12 years doing it or guitar if they spent 12 years doing it.

Tarl responded, “I would agree fully. That’s the same thing for us.”

He added that, if you took most people who are self-made—and stripped all their wealth from them and everything they had—they would probably end up right back where they are.

Even if they changed something or did something differently, they would still use their brain, and in a few years, they’d be right back where they are.

“Because it’s a skill that they have internally, that they’ve developed. They weren’t born with it as much as most people think,” Tarl concluded.

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Do you agree or disagree that wealth-building is a learned skill?

Weigh-in with a comment below. 

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has taught millions of people how to find, finance, and manage real estate investments. Brandon began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, Brandon is the managing member at Open Door Capital. With nearly 300 units across four states under his belt, he continues to invest in real estate while also showing others the power and impact of financial freedom.
    Marissa Quick
    Replied over 1 year ago
    I think its easier for people to blame the system as being unfair than to admit they dont have the discipline and determination to make better choices. We are not rich by any means but with a highschool diploma, one income, five kids and a marriage that started out tens of thousands of dollars in debt we are closing on our second investment rental in two months. If we can do it anybody can. But you have to be willing to learn and sacrifice. We read constantly and have 1 used paid off car, smaller cheaper house (kids can sleep stacked like cord wood, this I know), never had a smart phone, never paid for cable or even netflix, go to things when they are free, make all our meals at home from scratch and pack lunches. Its hard. We go without things that most people think they just *have* to have. Just those small sacrifices are the difference between investing and not. Our generation needs to stop thinking of themselves as a victim and take agency.
    Sera Berk
    Replied over 1 year ago
    How sad that you have this attitude and believe it's about having discipline. It's unfortunate that people like you comfort yourselves with ideas like this. Does it help you sleep at night?
    Marissa Quick
    Replied over 1 year ago
    I would be interested to see what you think one needs to be successful or to break away from the paycheck to paycheck mentality. Like another poster said, I don't know you so I can only make a judgement on what I see from your post but you seem very hostile. I often encounter people who feel they don't have enough money to invest (in real estate or otherwise) so they feel they can't improve their conditions. But generally they have made and continue to make financial decisions that cost them. Like i pointed out earlier, we had nothing but debt. My husband was raised below the poverty line with lunch assistance and WIC and two parents working multiple jobs to make ends meet. Until last year he had nothing but a highschool diploma. We raise 5 kids on one income. Before we moved we were in a 1032 sqft house, with 5 kids. Because we saved the difference. We have a $10 cell phone plan and a used old cell phone. Because we saved the difference. We wait for the library to get that new movie. Because we saved the difference. We share 1 beat up paid off minivan. Because we saved the difference. We have 1 ten year old lap top because we saved the difference. I cant think of the last time we went out to eat or even grilled a steak at home. Because we saved the difference. So yes, I sleep very well at night. Because through grit, hard work, sacrifice, devotion, love, and a whole lot of Jesus we are getting closer to that 1 million net worth. But these are my family's choices. This is what my husband and I wanted to do with our life. I would never think to have animosity towards our neighbor when they do get a big house, go out to eat or buy that fancy car. That is their choice. I hope you can learn to be more comfortable with your choices, and if not have the determination to change them. Chhange your choices change your life. Good lick!
    Marissa Quick
    Replied over 1 year ago
    Oops, meant to say good luck. Bad typeo.
    Michael King Rental Property Investor from St. Louis, MO
    Replied over 1 year ago
    The sad thing here Sera is that you have someone describing how she did it, with great sacrifice, and you're not able to contribute anything useful. Was there a point to you even posting? I think she has done a stellar job with her means to become an investor, and we should all look up to someone who's achieved something with less.
    Mary E Copas
    Replied over 1 year ago
    Godspeed. Hopefully your kids will learn your work ethic.
    Chris Wilkening from Flushing, New York
    Replied over 1 year ago
    Gold
    Sera Berk
    Replied over 1 year ago
    Why are you perpetuating the false idea that this is the only difference between rich and poor people? It's a lie developers and landlords tell themselves so they don't feel guilty for what they do to others. Greed. Greed. Greed.
    Marissa Quick
    Replied over 1 year ago
    Where would anyone live without landlords and developers? I don't understand painting an entire sector as evil.
    Bill Plymouth Real Estate Agent from Philadelphia, PA
    Replied over 1 year ago
    @sera berk what do you think it is that makes people wealthy?
    Joseph M. Rental Property Investor from Sacramento Area, CA
    Replied over 1 year ago
    @Sera Berk: I do not know you and you do not know me. What you are saying, I am guessing, stems from either ignorance or frustration. Maybe both? Ignorance in that you may be new, young or not well educated. All of those can be changed with some focus on your part. Frustration could stem from that fact that you have failed in life (personal, business or both) and due that failure, you now blame everyone else instead of looking inward. Either way, you could not be farther from the truth. Most, not all, but most wealthy people were NOT handed wealth. THEY CREATED IT and it took a lot of time, effort and RISK! So, before you go out and make gross generalizations regarding wealth creation and the wealthy (or people trying to become wealthy), you should look at your own situation. As for your opening comment: "It's unfortunate that people like you comfort yourselves with ideas like this. Does it help you sleep at night? " For me, what comforts me and makes me sleep at night in my new plush king-size bed is that people like you pay ME rent on a monthly basis.
    Wanda Eichelberger
    Replied over 1 year ago
    Is r There any one out there that started investing at a later age, like 50 year old and was able to be pretty successful at property investing? If so please let me know. Thanks
    Michael King Rental Property Investor from St. Louis, MO
    Replied over 1 year ago
    I found myself as an accidental investor at 46. The house I bought for my family, while in my budget, was 'too small' for my wife (1700 feet with 2 kids). Rather than sell it and take a big old hit, I decided to rent it out. And it was an instant success, with the same tenants in it from day 1. Then I actively looked for another. Then I built one. Then an 18 month hiatus from buying houses, and the 3 continued to do remarkably well (all in the same area). So I just closed on another 2 this month. I'm lucky that I have a job where I've been able to write my own paycheck through extra shifts and have double my salary the last couple of years. That's coming to an end though, and with a little bit of perseverance I'll be able to buy another 2 in the next 6-8 months.
    Marissa Quick
    Replied over 1 year ago
    Wanda, I think its never to late to be successful. You might have to be a little more creative but there are opportunities abound once you know how to look for them.
    Mauricio Aranibar from Spring, Texas
    Replied over 1 year ago
    I think what Sera Berk is trying to say is that there isn't just one thing that separates the rich from the poor as the article's title and content implies. I do agree that there are many more things that separate the rich from the poor. I myself am fortunate to have "self-made" parents that helped me get a good education which in turn helped me to earn a better living than I otherwise could have. However, I'm also trying to get out of the rat race now by investing in rental properties, slowly but surely, I hope. I personally don't think there's such a thing as self-made people, but that's probably another more philosophical topic. We all are connected in a way and some are luckier than others, some come out on top, some come out at the bottom. But we can always keep trying to move up in the world, and at the same time helping the less fortunate in any way we can. Having said that I do get a lot of helpful info from BiggerPockets so thank you. Sometimes I sleep ok at night, sometimes I don't. If I can't sleep and I need to be well rested for the next day, I may take an ativan but I haven't had to do that in about 8 months or so...
    Jason Quero Real Estate Broker from Delray Beach
    Replied over 1 year ago
    Well put Brandon. It is a testament as well even with yourself having written over 520+ articles as well. Thank you for the message & reminder. Be well my friend.
    Jo Kinal Flipper/Rehabber from Los Angeles, CA
    Replied over 1 year ago
    Self made people look at every opportunity to turn something around no matter what odds are against them. I'm the youngest of 5 kids in a working class family with very little to take care of 5 kids. I didn't want to live lean so I started doing any odd job I could when I was as young as 9 yrs old. I have worked every job out there and always worked when others are watching tv or sleeping late. Becoming successful or at least building a decent life yourself is a frame of mind. I can and I will. You are never too old to start learning something new and building new possibilities for yourself. No excuses.
    Jhon Restrepo
    Replied over 1 year ago
    Sometimes we made ourselves victims of the sistem, beacause we envy those that were able to beat it and suceed.
    Chad McLeod
    Replied over 1 year ago
    I definitely agree with the premise of this article. As a real life example, I used to work for a local mortgage lender who went bankrupt. A lot of people just assumed the owner was done. Nope. Just started a new business and is back where he was. Also, there are 2 other traits I would add -- intellectual curiosity and fearlessness. I think asking questions for clarity is good, but many people, myself included, have a tendency to put up mental roadblocks instead of just going for it.
    Mary Schnurr Rental Property Investor from orlando, fl
    Replied over 1 year ago
    Wanda, I started investing at age 55, buying SFH buy and hold, and have done well. I moved money from "safe" banks to real estate, and am pleased with the results.
    Susan Maneck Investor from Jackson, Mississippi
    Replied over 1 year ago
    Unfortunately the poor have the least financial education. And because they don't have this education, they resort to predatory lenders, etc. Also, people who work have to have cell phones and cars if they live in an area with no good public transportation or even bike lanes. These are not luxuries. A landline might be a luxury today, but not a cell phone. You often cannot get a job or hold one without it. And as landlords how many of us are willing to rent out small houses to people who plan to 'stack' them with lots of kids? I'm a professor and a government employee. I was happy with what I had and my benefits, until the recession when I saw my retirement funds blow up (temporarily as it turned out.) That's when I got serious about investing in real estate. Turned out I was good at it, but I wouldn't have a PhD if my intelligence was just average. I really wish we would stop bashing the working class on this forum, without whom we wouldn't have all this money! Instead, let's try and educate them about how money works. My dream has always been to turn my tenants into homeowners. And by the way, I'm still happy with my regular job and this last year, after three hospitalizations, I'm even more happy that I have excellent benefits!
    Richard Heilman
    Replied over 1 year ago
    How is it "bashing" the working class to say that they could be doing better for themselves? It's a good thing when I am struggling for success with something and I find out I am doing something wrong. That is something I can fix or at least work on.
    Casey Rollins
    Replied over 1 year ago
    It's not necessarily bashing, but very judgmental. Sure they could be "doing better" in your eyes, but maybe they have struggles you know nothing about. The majority of working class people are working very mind-numbing jobs and feel powerless (I know because my father is a factory worker) to change their situation. Sometimes people just don't make enough money to pay all of their bills, despite working. Probably because we don't have a living wage in this country. I know that raising the minimum wage straight up hurts small companies, but we could always base the wage companies need to pay off of gross profits or something to protect them. The point is, we have inequality built into our system. Why not include financial education in public schools? That is a way to help that doesn't seem controversial to me.
    Carrie Doan from Cincinnati, Ohio
    Replied over 1 year ago
    I resonate with this on a personal level and appreciate how Brandon is sending a message of encouragement toward honing the skill of wealth-building. And yet, to say that wealth creation is this simple and brush such a broad stroke on how to achieve it seems inaccurate. I can't help but wonder what the tone of this article would be were it written by one from another gender, race, or socioeconomic status. Having worked with homeless women and children, I know firsthand that wealth creation is not always a viable option for all people. Trauma, which breeds mental illness, in addition to a lack of social support and education all create tremendous roadblocks that the average white American cannot relate to. To simply tell another to "pull yourself up by the bootstraps" fails to see the wider span of challenge that many are working against. While certainly it is not impossible for someone to work their way towards wealth from a place of poverty, I think it Is important to consider how many of us had the way paved for us that, quite frankly, many in this country do not have the privilege to receive. I think it would be wise to acknowledge that there is more to the picture than "this one thing that separates the rich from the poor."
    Casey Rollins
    Replied over 1 year ago
    Thank you for bringing up mental illness. I have seen it destroy many people's lives, as someone who has been hospitalized four times over the years. I am lucky enough to be ambitious despite my illness, but know what it is like to suffer so badly you can't work. It is a real thing. This is why social supports like SSDI exist, and should. What sort of society doesn't support its disabled?
    Deanna Opgenort Rental Property Investor from San Diego, CA
    Replied over 1 year ago
    I don't think everyone can become "wealthy" in the 3-homes-and-a-Rolls sense of it. I DO think that everyone has the option of choosing between "wealthier" and "less wealthy" versions of themselves, based on the decisions they make. Every financial choice we make has a consequence. Smoke? @$2k/year of your after-tax income just went away. As far as "Sera Berk"....meh. Quite frankly, looks like a fake identity/troll to me.
    Richard Heilman
    Replied over 1 year ago
    I like to compare wealth to physique For most people it kinda goes by default, some people are naturally thin due to genetics and others struggle with being overweight their whole lives. The naturally thin generally DO have better eating habits than the chronically overweight but generally their life doesn't revolve around diet and exercise. But almost anyone of any body type could be a bodybuilder if they were intentional and ate, slept, and breathed doing what it took to get to their goal. The same is true with wealth, we are all unequal in all sorts of ways and start in different places, but if you are intentional about it you can become wealthier than you were.
    Casey Rollins
    Replied over 1 year ago
    Wealth management is a learned skill, and I agree that some people put a lot of effort into it. But let's not forget that the majority of people who read this website were born with functional families and wealth. I grew up in a literal shack in the forest with two parents with undiagnosed mental illness, and didn't always have running water or power. I was saddle with $75K student loan debt as soon as a graduated, despite me being salutatorian of my class and receiving numerous scholarships. Now, I also have a Master's in biomedical science so I got a degree that is useful. I have only owned one property, a condo in an affluent city in SoCal, and am currently renting in NH because a string of bad health has led me back to my roots. I guess what I'm saying is don't take for granted things like having your parents pay for your college. Or your parents having health insurance that doesn't have a $12k deductible. I have excellent credit and am financially secure because of the choices I made to research investing (stocks and real estate), but not everybody has those opportunities. The only reason all 4 of my sisters and I were able to attend college is because of a program designed for at risk youth that helps them get into college by paying for things like college applications and the SATs and AP tests. These are expenses that those who were born in middle class take for granted that they are able to pay, while those in poverty or near-poverty are more concerned with day to day expenses like food and gas. So while wealth management is a skill, you still need a baseline of functionality in order to even begin the journey. So if you have had a cushy upbringing, get off your high horse and acknowledge that some of us have had it a whole hell of a lot harder than you and perhaps have compassion for those who struggle.
    Don Taylor New to Real Estate from Raleigh, NC
    Replied over 1 year ago
    Great article
    Richard Heilman
    Replied over 1 year ago
    Playing piano is a skill... The fact that some people grow up in households that dont own a piano, whose parents can't afford lessons, and dont know anyone who plays, definitely has an effect on whether they become a great pianist. Some people may even be born with deformed fingers. ...the point is none of these thing makes playing piano not a skill. Same is true of building wealth.
    Vincent Miller Investor from Williston, VT
    Replied over 1 year ago
    Casey Rollins, thank you for providing that perspective. Although I grew up lower middle class, my family was very supportive and provided me with incentives to become educated beyond high school. Additionally, they did a great job at making me believe that I can accomplish anything I set my mind to and were financially responsible role models. I often forget that not all families are that stable or provide high quality examples. I am grateful for what my life has presented me with.
    Wenda Kennedy JD from Nikiski, Alaska
    Replied over 1 year ago
    You're right. Making money is a whole set of skills. It starts with the exact skill of saying no. The trick is to know when to say yes and then run with an opportunity.
    Kristin Feerst from Merchantville, NJ
    Replied over 1 year ago
    Yes, financial education is a skill and building wealth takes patience and persistence. No, there is not just one thing that separates the rich from the poor. The bootstrapping myth of social mobility has been dispelled. Of course there are always exceptions as some commentators have pointed out, but their examples are anecdotal. For anyone here interested in the REAL reasons behind income inequality in this country I recommend the recent article in The Atlantic about Raj Chetty. Raj is a professor of Economics at Harvard and his data driven approach to understanding the root cause of the American opportunity gap has uncovered some ugly truths about our society. Spoiler alert: The separation between rich and poor has nothing to do with the poor being lazy and unwilling to learn. article link: https://www.theatlantic.com/magazine/archive/2019/08/raj-chettys-american-dream/592804/
    James Barnhart Rental Property Investor from Deland, FL
    Replied over 1 year ago
    Actually, the difference between being well off and being poor does have a lot to do with attitude. My sisters and I grew up in a Children’s Home, and we new nothing about money, but learned good values. Later on, I had a good boss that owned rental homes back in the 1970’s and he saw that I was curious, so he taught and encouraged me to do what he did. I delivered pizzas, did odd jobs, and joined the Coast Guard Reserve to earn extra income, so I could buy houses. Back then, you could assume FHA and VA mortgages without qualifying, so that’s what I did. Those became rental homes. In the past 10 years, we did several fix and flips also. I made a couple of mistakes along the way, and wish there was Bigger Pockets then, so maybe I would have made some better decisions. But, that’s part of life, I guess. I read everything I could about becoming successful, and drove old trucks and kept my expenses as low as possible. I married a wonderful wife that raised her 2 sons on just her income, so she understood what being thrifty was, and we thought alike. So, we have a nice retired life now, but we still have a few rentals that we maintain and manage. We have helped some tenants buy a home when they thought they never could. We enjoy helping others now. I encourage the people that think successful people are “greedy”, to think again. There is no shame in wanting a better life, and working to get it.