Getting to $100M networth

Real Estate Professional · Las Vegas, NV · Member since 2013 · 225 posts · 74 votes

Okay, now for a ridiculous, hypothetical question.

What's away to theoretically get to 100 mil in net assets. Assume this is for a "young" person who has several decades to reap the rewards of salary, compounded returns, going back to school, take advantage of several boom/bust cycles etc.

I think it's very possible if one lives frugally, has a solid job and invests prudently to get enough passive income to live off of in 20 years. But buy and hold will only take you so far. You'll probably need outside money to get far. Plus buy commercial property, deal with non-conventional loans.

I've read the big money is made in appreciation.

What type of skillset would someone need to cultivate? Anyone can get a conventional 30 yr. But I'm sure with the more complex financial instruments, creative financing, etc. is going to require more people and presentation skills?

Again, this is a ridiculous, hypothetical question.

Thanks!

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Derek Carroll

Syndicator and Fund Manager · Victor, NY · Member since 2012 · 760 posts · 345 votes

12y

I'm going to be the optimist here and say that it absolutely is possible. You don't need an IVY league degree nor do you need to come from wealth. Real estate always has been and always will be the most direct path to accumulating wealth, and lots of it. So go out there and acquire more! I work with many people whose net worth exceeds your goals and who amassed their fortune in 15-25 years. It absolutely is possible. Here's how: You must be focused, work hard, make sacrifices and take calculated but prudent risk. You'll get both lucky and unlucky along the way but make sure you learn from both your successes and your mistakes. Make every deal push your comfort zone just a little further. Don't be afraid to jump into the unknown and then figure it out along the way. You're going to need to do some form larger deals. Likely commercial. Pick a niche and kill it. Become the expert and make it know that you are. Be the person that everyone thinks of first when they come across a deal that fits your strategy. You're not going to do it on your own. Get partners. Partners to bring you deals. Partners to invest with you. Partners that you can learn from. Leverage their money, knowledge, experience and connections. Most of all, ironically, you can't be in this for the money. Especially if wealth is new to you then you'll stop long before you reach $100m. As soon as you feel well off and comfortable in life it will be easy to step back and start taking life easy. There aren't a whole lot of experiences that you can have at $100m in net worth that you can't have at $25m. You need to be in this because you love it. Love chasing deals, creating value, helping people and communities or some other motivating factor outside of money. If you love it you'll keep doing it long after most would have stopped and parked themselves on the beach.

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Account Closed
Residential Real Estate Broker · Birmingham, MI · Member since 2014 · 179 posts · 54 votes
12y
Probably a remote possibility to build a $100m in a lifetime of real-estate unless you have a few stroke of luck moments. e.g. Sterling buys Clippers for $18m after successful RE investing in LA in the 80's and it's worth $2b 30 years later. You would have a better probability (still remote) accumulating that much wealth being a Stanford MBA and working in Silicon Valley or being a Harvard MBA working in PE or a hedge fund. That's my take on the odds without crunching any numbers-- perspectives may vary.
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Account Closed
Residential Real Estate Broker · Birmingham, MI · Member since 2014 · 179 posts · 54 votes
12y
Start with $10m as an aspirational goal and revise as needed : ) As i said, pure skill I don't think can get you there--so it doesn't seem necessary to define what that skill set looks like. It would take a bit of luck in addition to skill without a doubt.
0 Reply
Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
12y
1) Build a track record as fast as you can so people have the confidence to invest with you
2) Only do great deals. Focus on return on investment and don't accept mediocre deals.
3) Take advantage of market cycles. If you are young you should be able to benefit from 2 15-20 year cycles. That is where the real money is made.
17 Reply
Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y
Luck, plain and simple. Sorry.
Hard work and making good choices is an essential part of accumulating a vast fortune. Combine those with diligent saving and making good investment choices (hard) can get you to a nest egg on the order of 10-20 times your peak annual earnings.
How did I get that 10-20 number? Math. Say you make $100K a year for 30 years. You save 20% each year and invest it at a 7% compound return. After 30 years you will have $1.89 million or 18.9 times your annual salary. Drop the savings rate to 10% and you accumulate $945K. Save every penny and you accumulate $9.45 million, but you have nothing to live on.
The problem with that calculation is that most folks start at a lower salary. That's a lower amount for the compound interest to work on. And young folks tend to not save as much. Later in life your earnings increase but you have fewer and fewer years for the compound interest to accumulate.
To get to a really huge figure you need to do something out of the ordinary. Invent something. Build a big business. Build a small business and sell it to a big one. All that has a big element of just plain luck. You have to have the right idea at the right time and pitch that to the right people. Lots of folks try that. A few have exactly the right set of circumstances. Most have something just a little off and fall by the wayside.
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Alex Silang
OP
Real Estate Professional · Las Vegas, NV · Member since 2013 · 225 posts · 74 votes
12y
Originally posted by @Ned Carey:

1) Build a track record as fast as you can so people have the confidence to invest with you
I'm guessing if someone invests along aside with you, you take a %? Any idea what amount is typical?
0 Reply
Mike H.
Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
12y
$100 miln net worth is like winning the lottery. Your best bet is to try to come up with some new facebook. :-)

I don't see any way you can do it unless you have a salary in the 200k to 300k range and you have some sort of stock options where you work.
A regular shmoe isn't going to come up with a net worth of 100 million dollars unless they have the luck of winning the lottery. Not unless you say you're starting with 5 million or something similar.
1 Reply
Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
12y
It is a matter of what you can negotiate and the needs and expectations of the investor.
There is no "Typical" the range is from 4%-18%. I bet that is not very helpful is it?
For what it is worth I have rentals where I am borrowing at 10% and 12%.
1 Reply
Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
12y
Using John's numbers except with a 20% return every year comes out to about 28 Million. Pretty good but in addition to being almost impossible to achieve it is still a long way away form 100Million.
So we have told you it is impossible - go out and prove us wrong!
Good luck young man
3 Reply
Douglas Dowell
Denver, CO · Member since 2012 · 350 posts · 175 votes
12y
I agree with @Account Closed ...its all about mindset, vehicle selection, right mentors, and some accurate signal recognition.
The smarter we work....the luckier we get.
2 Reply
Winston Spence
Real Estate Investor · Waterbury, CT · Member since 2012 · 117 posts · 19 votes
12y
@Alex Silang
Preparedness + Opportunity = Luck!
Best of luck in your future
3 Reply
J ScottPro Member
Moderator
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
12y
I would start by going to a top-tier business school (Harvard, Stanford, Wharton, etc) -- that will give you BY FAR the biggest leg-up on building a 9-figure business.
The rest is pretty much ridiculous amounts of hard work plus at least a little bit of luck (the harder you work, the less luck is involved, but without at least some luck, it ain't gonna happen)...
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1 Reply
Thomas Mitchell
Wholesaler · East, TX · Member since 2012 · 88 posts · 61 votes
12y
I think you need a highly sought-after product or an idea. A better mouse trap, or an idea like the iphone. I think 100M is pretty tough to get in real estate alone unless you are doing skyscraper deals in NYC or LA. Though, I love Donald Trump's book "The Art of the Deal." He made 250M on one deal before the shovels even hit the ground. Excellent book I would recommend to anyone interested in real estate. It took him 2 years to put it together and it looked like it was going to fall apart several times.
2 Reply
Anthony GaydenPro Member
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
12y
@Alex Silang I like the fact that you think big. I like to think big as well.
I believe that if your goal is to reach $100,000,000 in net worth, we have to start off with setting other goals first. I suggest that you read the book The Millionaire Real Estate Investor. It actually lays out plans for those like you and I who want to reach the very pinnacle of success.
The first thing is to think a million, then buy a million dollars worth of property, then make a million dollars worth of equity in your real estate investments, then earn a million dollars a year from your real estate investments. I know that is still short of your goal of $100,000,000 in net worth, but it is still the path you will have to take.
Right now I am in the process of Buying a Million dollars worth of real estate. After I buy a million, I will put all of my efforts into having a million dollars worth of equity, which will come from either completely paying off the real estate that I own, or using the income from the properties to buy more. The ultimate goal of course being to make $1,000,000 a year in income solely from my investments. There are many ways to do this in real estate, and many examples are outlined in the book.
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7 Reply
Anthony GaydenPro Member
Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
12y
Originally posted by @Thomas Mitchell:

I think you need a highly sought-after product or an idea. A better mouse trap, or an idea like the iphone. I think 100M is pretty tough to get in real estate alone unless you are doing skyscraper deals in NYC or LA. Though, I love Donald Trump's book "The Art of the Deal." He made 250M on one deal before the shovels even hit the ground. Excellent book I would recommend to anyone interested in real estate. It took him 2 years to put it together and it looked like it was going to fall apart several times.
I disagree. I think that there is far more money to be made in suburban construction than in skyscraper deals. The majority of the population live in suburban areas. You don't need to invent the next facebook, that is a fantasy perpetuated by tv. The truth is that the majority of Entreprenuers become wealthy doing things that aren't exciting.
If I told the average person that they could reach your goal of becoming a multimillionaire by owning trailer parks, they would probably laugh, but it is true.
Thinking that you need to create the next cool product or create some new cool website to reach success is flawed thinking. Thinking that the only way to make money in real estate is building condos in Manhattan is flawed thinking as well.
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7 Reply
Derek Carroll
Syndicator and Fund Manager · Victor, NY · Member since 2012 · 760 posts · 345 votes
12y
I'm going to be the optimist here and say that it absolutely is possible. You don't need an IVY league degree nor do you need to come from wealth. Real estate always has been and always will be the most direct path to accumulating wealth, and lots of it. So go out there and acquire more! I work with many people whose net worth exceeds your goals and who amassed their fortune in 15-25 years. It absolutely is possible. Here's how: You must be focused, work hard, make sacrifices and take calculated but prudent risk. You'll get both lucky and unlucky along the way but make sure you learn from both your successes and your mistakes. Make every deal push your comfort zone just a little further. Don't be afraid to jump into the unknown and then figure it out along the way. You're going to need to do some form larger deals. Likely commercial. Pick a niche and kill it. Become the expert and make it know that you are. Be the person that everyone thinks of first when they come across a deal that fits your strategy. You're not going to do it on your own. Get partners. Partners to bring you deals. Partners to invest with you. Partners that you can learn from. Leverage their money, knowledge, experience and connections. Most of all, ironically, you can't be in this for the money. Especially if wealth is new to you then you'll stop long before you reach $100m. As soon as you feel well off and comfortable in life it will be easy to step back and start taking life easy. There aren't a whole lot of experiences that you can have at $100m in net worth that you can't have at $25m. You need to be in this because you love it. Love chasing deals, creating value, helping people and communities or some other motivating factor outside of money. If you love it you'll keep doing it long after most would have stopped and parked themselves on the beach.
21 Reply
Bryan Hancock
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
12y
There is certainly an element of luck to making vast fortunes when starting from scratch, but hard work plays a big role too. Venture opportunities have HUGE dispersion in returns. Those that make it big make thousands of times more than the mediocre projects. Inventing something and turning it into a profitable business is a classical way to make that much money.
For real estate you absolutely can get there, but you have to be willing to take on a lot of risk to do so. The question is whether or not the ego needed to get to that figure merits the risk you have to take to obtain the number. If you really need that much money you can risk losing it all by trying to get to the higher number.
By far the most important skillset is learning to raise and organize money. Those that can do this well can take down much bigger projects that will allow them to make much bigger profits. There is a reason that top business students disproportionately select to work in private equity firms, hedge funds, etc. Many of the people that get out of these schools and go work for these companies really don't know how to run funds of their own and thus never acquire the true skillsets needed to do their own thing.
Spend time studying securities law and learning to sell your track record. Learn to work with investors and deliver great risk-adjusted returns. Be honest and trustworthy. Follow through on your commitments. Don't lie, cheat, steal, or tolerate those that do. Own up to your mistakes and do your best to be overly transparent. Treat your investors well and earn their referrals. Be the best at what you do, deliver for your investors, and you can absolutely achieve the $100M goal in a lifetime.
7 Reply
Nicholas DeLouisa Jr
Massapequa, NY · Member since 2010 · 53 posts · 13 votes
12y
Originally posted by @Thomas Mitchell:

Donald Trump's book "The Art of the Deal." ... Excellent book I would recommend to anyone interested in real estate."
Hard work + a nearly supernatural level of dedication and focus + a huge pair = a billionaire
2 Reply
Brandon Hall
Investor · Vilas, NC · Member since 2013 · 19 posts · 7 votes
12y
@Alex Silang Manny Koshbin is close. Started from nothing in the early 90s and now has a net worth north of 70 million. He did it through real estate but says you've got to make the switch to commercial to get figures like that. Here are the links to his book and personal site.
http://www.amazon.com/Manny-Khoshbins-Contrarian-P...
http://khoshbin.com/
1 Reply
Account Closed
Investor · San Jose, CA · Member since 2012 · 2k+ posts · 3k+ votes
12y
Alex,
A lot of great answers above. As you can see, there are many ways to get there. No doubt you need some luck along the way though.
Based on my model, you need to accumulate and leverage up to $25M worth of real estate in your early years. If history is any indication for the San Francisco Bay Area, these assets will be free & clear in 30 years and you will have +$100M worth of real estate assets.
Even at 5% net yield, that's $5M worth of rental income per year. Back out inflation, it is equivalent to $1.25M/year now. I guess a lot of people can live quite comfortable with that kind of income.
Is it doable? No doubt. With some luck and a good game plan, you have a chance of getting there. I might get there in 30 years, but I still need some luck. Winning a lottery would definitely help though.
Good luck to all of us.
4 Reply
Rick H.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
12y
Great thread. What's so special about $100M? Is that a magic number?
Let's work this backwards. What is it you really desire? Financial independence? Freedom from fear of lack? Personal autonomy?
I felt a little guilty because I have a beautiful ranch in San Diego that, frankly, I don't spend much time at. Those who know me have heard the story of how I bought the land from the founder of a large national chain of restaurants. My neighbors include some very high profile people who seek privacy.
One neighbor, full-time residents who bought their ranch after winning the California lotto, are the same folks that get interviewed by TV shows as the (rare) example of people with new found wealth who haven't squandered it or have not ended up worse for their gain.
Attracting wealth is really not all that elusive. Solve other people's problems, create a clear vision and share some of what you find. Abundance is all around each and every one of us.
My point is that, in actuality, you can live like a king, have everything you want and more (materially) on much less than $100M. Finding a sense of balance, that is priceless.
8 Reply
Bryan L.
Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
12y
Why? I mean, why so much money? One can have a really great life with a hellofalot less money.
2 Reply
Rocky V.
Rental Property Investor · Arlington, TX · Member since 2012 · 788 posts · 640 votes
12y
Baby steps, my friend.
1 Reply
Ahmad H.
Rental Property Investor · New York, NY · Member since 2013 · 136 posts · 101 votes
12y
Start young, save, leverage reasonably and repeat the cycle.
I would say from early 20s to mid 30s do real estate and safer investments until you have enough safe income to survive without a job.
Then from mid 30s devote your full time to look into riskier investments like betting on a certain stock or opening a business or funding a start-up.
Be worldly and open to investing anywhere, if you limit yourself to the US for real estate cycles you might get two in a lifetime but if you are also open to other countries you can get 4 or 5 cycles. Maybe bet on Africa for appreciation, also be willing to invest in China when the real estate market bottoms out there.
Network, read, listen, and devote your attention to something and you'll do fine.
2 Reply
Peter GrossoPro Member
Real Estate Agent · Farmingville, NY · Member since 2014 · 164 posts · 37 votes
12y
Start with a net worth of a billion...
2 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y
@Alex Silang Those that I personally know with 8 figure plus net worths got them in a few ways.
1. inheritance
2. took their company public when stock was unrestricted sold and cashed in.
3. inherited family business and sold it to a public company ( think Garbage)
4. created company that leverged up many partners and bought path of progress RE
5. Got into bigger deals keep rolling up into larger deals and got very fortunate to bring in pristine equity partners.
I personally do not know anyone who got anywhere this kind of net worth making 200 to 500k a year and just saving or investing modestly IE 8 to 9 % a year.
The of course there is the right place and right time hit a home run deal but those are in the same space as the lottery
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