Is there a SHORTCUT TO WEALTH?
Shiloh LundahlPro Member
Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votesIs there a SHORTCUT TO WEALTH?
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Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
7yIn general shortcuts cost. Makes me think of the poor bas's buying seminar rah-rah programs for $30k, thinking that program is a shortcut. Most will be just $30k the wrong direction and can least afford the hit.
An old contributor had a signature in his posts. I woke after 40 years of working hard at REI and discovered I'd won the RE lottery. Overnight wealth. LOL
Truly short paths to wealth are achieved by the highly specialized inventors and business founders IMO. They are THE producers/suppliers/masters of their specific craft or product.
In terms of RE, the tortoise wins. Doesn't have to take forever, but shortcut is a dangerous word. IDEAL will prevail (Income, Debt pay-down & Depreciation, Equity , Appreciation, Leverage) but it takes time. A shortcut here is buying right something you know well.
35 Replies
- Rental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes7y
@David M. Fair enough. I guess we will really need to define what wealthy really means and what the standard length of time is to figure out if there’s a way to accomplish become wealthy in a shorter amount of time. But then the post becomes more practical and technical than philosophical.
- 7yDave FosterBusiness MemberQualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
@Shiloh Lundahl and while we're at it we probably ought to create a definition of "passive". Because I'm pretty sure that's a very misused word in real estate investing.
And if so then let me go full zen on you - Does passive income really create wealth or does earned wealth create the opportunity to generate passive income?
The 1031 Investor5137 Reviews - 7yGina SternPro MemberInvestor · Boca Raton, FL · Member since 2019 · 1k+ posts · 159 votes
@Shiloh Lundahl i truly believe there are no shortcuts to monetary wealth. Mostly it involves working smart and being dedicated to your cause. Confidence is key, this is built through building a solid knowledge base. It can only be acquired by putting in the time and setting attainable goals along the way.
- Member since 2016 · 13k+ posts · 12k+ votes7y
It can be done but in the most general terms not by plan.
There are short cuts to wealth. It obviously depends on what is meant by "short" and "wealth". My idea of wealth is likely far lower that many and that obvious has a impact on the question.
One could of course be getting a education and a high paying job. There are many young people on Wall Street I would consider wealthy. That in the right hands could take a individual to high wealth in the shortest period of time based on maintaining a extremely frugal life style for X years. Unfortunately very few graduates simply jump into high paying jobs. Even fewer quit when they achieve wealth. No shortcuts involve your basic working class individual. To go from nothing to wealth requires money to begin. This in itself is the slow factor. This should however not be a hurdle for someone of above average intelligence or with special business skills. Unfortunately most would also involve a considerable amount of "luck" or criminal activity. Luck consisting of being in the right place at the right time with the right idea.
One could also take up such activities as gambling. This today seems to be a shortcut but again still takes time to climb the later to success. In the terms of real estate speculating on appreciation also seems to have been a short cut in many markets. The biggest hurdle to these routes is actually getting out before you either lose your money or to access your money to actually have the wealth.
If you own real estate with high equity you are not wealthy to the point of stopping working as long as you hold that real estate. You are still working. Like farmers being land poor speculators must liquidate to realise their wealth. Unless of course you simply gauge wealth by net worth as opposed to income. Myself I gauge wealth based on income.
In a purely capitalist scenes it is neither easy or quick if one must work for it.
Or daddy works all his life building a legacy to pass on to his children, he dies, kids inherit and immediately liquidate the assets. Instant wealth. Unfortunattly dad usually dies after kids have spent a lifetime building their own lives and are often already retired themselves.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @David M.:
In order to contemplate a shortcut, one must first consider the standard expectation. So let's take a step back and first consider how long it normally takes to be wealthy. How long is that again?
over the years when this has been a question.. IE if you had X amount of net rental income how much would you need to quit your job and be free of the man.
you will get answers from 3k up.. with I think 90% of folks landing on 10k a month net..
But fast track to real wealth is simply to inherit it..
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes7y
In general shortcuts cost. Makes me think of the poor bas's buying seminar rah-rah programs for $30k, thinking that program is a shortcut. Most will be just $30k the wrong direction and can least afford the hit.
An old contributor had a signature in his posts. I woke after 40 years of working hard at REI and discovered I'd won the RE lottery. Overnight wealth. LOL
Truly short paths to wealth are achieved by the highly specialized inventors and business founders IMO. They are THE producers/suppliers/masters of their specific craft or product.
In terms of RE, the tortoise wins. Doesn't have to take forever, but shortcut is a dangerous word. IDEAL will prevail (Income, Debt pay-down & Depreciation, Equity , Appreciation, Leverage) but it takes time. A shortcut here is buying right something you know well.
- Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes7y
Sure...the fastest shortcut other than inheritance is to play the Lottery. The trick is, it only works out about once in every 350 millions attempts. Hey, you asked for a shortcut.... you never specified how often it actually has to work! ;-)
I'm going to play along and not belabor the point that as citizens of the USA, even the "poorest" of us are already wealthy by world-wide and historic standards...
You defined wealthy as not having to work a regular job ever again. Okay. To meet minimum living expenses (food, housing, clothing, basic transportation, and medical care) in my town of Springfield, MO, you would need around $2,000 / month ($24,000 / year) income. That is easily achievable by saving a nest egg of around $300,000 and investing it conservatively in a portfolio of stocks and/or real estate that throws off about 8% cash on cash. If you're debt free and own a modest home, you could probably live on about $1300-$1500/month. Food is cheap. Lots of free entertainment. Minimal transportation needs since you don't "have" to go anywhere. Medical care and insurance is heavily subsidized based on low income, not personal wealth. Source: www.healthinsurance.org/obamacare/will-you-receive...
The average household income in my town is $40,000 take home after taxes. So if you as an average person can live the $24,000 / year lifestyle, you have $16,000/year to invest. Use the same 8% fund discussed earlier, you'd have your $300,000 in about 11-15 years depending on market performance. Start at age 22....retire forever in your mid 30s. That seems pretty short to me.
There is a website called retireearlylifestyle.com that chronicles the journey of a couple who retired in their late 30s and are now on their 3rd decade of living financially independent. Fascinating reading for anyone who wants an up-close look.
But I also agree with others that $2000 / year probably isn't going to satisfy folks who want to be "wealthy." We have an incorrect view of wealth in our country, in that you can ask most people at any annual income level below 8 figures if they are wealthy, and they will say "No...." They are either "comfortable" or "well off" but it's only the folks who make MORE than me who are wealthy. This tells me that to most people wealth is a never ending pursuit to hit the next level. This is why it's crucial to figure out what's really important early on or you'll spend your life in a never ending question to beat the guy/gal who is the next level above you. It's like the worst ever game of Dungeons & Dragons...someone is always 1 level higher....
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Erik W.:
Sure...the fastest shortcut other than inheritance is to play the Lottery. The trick is, it only works out about once in every 350 millions attempts. Hey, you asked for a shortcut.... you never specified how often it actually has to work! ;-)
I'm going to play along and not belabor the point that as citizens of the USA, even the "poorest" of us are already wealthy by world-wide and historic standards...
You defined wealthy as not having to work a regular job ever again. Okay. To meet minimum living expenses (food, housing, clothing, basic transportation, and medical care) in my town of Springfield, MO, you would need around $2,000 / month ($24,000 / year) income. That is easily achievable by saving a nest egg of around $300,000 and investing it conservatively in a portfolio of stocks and/or real estate that throws off about 8% cash on cash. If you're debt free and own a modest home, you could probably live on about $1300-$1500/month. Food is cheap. Lots of free entertainment. Minimal transportation needs since you don't "have" to go anywhere. Medical care and insurance is heavily subsidized based on low income, not personal wealth. Source: www.healthinsurance.org/obamacare/will-you-receive...
The average household income in my town is $40,000 take home after taxes. So if you as an average person can live the $24,000 / year lifestyle, you have $16,000/year to invest. Use the same 8% fund discussed earlier, you'd have your $300,000 in about 11-15 years depending on market performance. Start at age 22....retire forever in your mid 30s. That seems pretty short to me.
There is a website called retireearlylifestyle.com that chronicles the journey of a couple who retired in their late 30s and are now on their 3rd decade of living financially independent. Fascinating reading for anyone who wants an up-close look.
But I also agree with others that $2000 / year probably isn't going to satisfy folks who want to be "wealthy." We have an incorrect view of wealth in our country, in that you can ask most people at any annual income level below 8 figures if they are wealthy, and they will say "No...." They are either "comfortable" or "well off" but it's only the folks who make MORE than me who are wealthy. This tells me that to most people wealth is a never ending pursuit to hit the next level. This is why it's crucial to figure out what's really important early on or you'll spend your life in a never ending question to beat the guy/gal who is the next level above you. It's like the worst ever game of Dungeons & Dragons...someone is always 1 level higher....
the main issue and the reality that most dont get is when you get older health insurance for self employed will be a good portion of that 2k.. my health insurance and i have a company plan so its a little cheaper IE i have some employees on the plan.. but just my wife and I pay a little over 1500 a month JUST for health insurance.. not sure when medicad and medicare or what have you kick in.. but you need gap insurance for those.. I cant fathom how anyone could live on 2k a month frankly and do anything but hang at their house.
And i own my retirement home already free and clear but that still costs close to 750 a month all said and done with no mortgage. Ergo retirement is not in my lexicon.. and if i want to quit investing and building then I will just broker real estate since I grew up doing that..
- Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes7y
@Jay Hinrichs, that's a fair point. I turned 43 a few months ago, but I still recall feeling the "ouch" 3 years ago when I saw my 20-year term life insurance premium sky rocket once the end of the term went past age 60. I changed that to a policy that will expire when I turn 60 vs. keeps renewing annually past 60. So yes, your point about the increasing costs of health insurance as we age are well-taken and noted.
Regarding costs for health insurance: I don't know if you followed the link I provided, but the site says that if you earn between 100 and 400 percent of the Federal Poverty level, you can get most, if not ALL, of your ACA policy paid for via subsidies. Just a quick snippet to tease your information taste buds....
.
*********************************************"Those subsidies can be used to offset the premiums for any metal-level plan in the exchange. Because the subsidies are so large, some enrollees can get free Bronze plans, or Gold plans that are less expensive than Silver plans. According to an analysis by the Kaiser Family Foundation, 4.2 million uninsured Americans would be eligible for free Bronze plans for 2019....For 2019 coverage, that upper income cap is $48,560 for a single person and $100,400 for a family of four.
*********************************************
That's right: you can qualify for a subsidy making 6 figures... But you better not make $100,401!
Bottom line is if you strategically adjust your income you qualify for a ton of Govt-paid programs, one of which is healthcare insurance. It becomes very low cost and/or no cost to you, then all you have to worry about is meeting the deductible. And if all else fails...show up at the ER because by law they cannot refuse to serve you.
People like you and I probably won't every qualify for a dime because we'd have to reduce our income drastically, and we wouldn't to do that just to freeload off the tax base. But in the spirit of this post that asked how quick could you get to the point where you never have to work again... driving down income would be a major strategy.
The biggest three expenses: housing, healthcare, and taxes. Reduce/eliminate those costs, and $2,000 goes long way in South West Missouri!
- Lender · Pensacola, FL · Member since 2017 · 658 posts · 626 votes7y
Ask a New Yorker how to get to Carnegie Hall and the answer is practice, practice, practice.
Ask a BiggerPockets member how to build wealth and the answer is execute, execute, execute.
- Rental Property Investor · AZ · Member since 2018 · 212 posts · 183 votes7y
I think the only “shortcut” worth taking is leverage.
I’m not wealthy until my kids are out of the house.
That day is my retirement date.
Youngest is about to turn 2. So I have time to grow until then.
- Investor · Las Vegas, NV · Member since 2017 · 321 posts · 524 votes7y
One angle to this would be those who bought at the bottom of what became a rapidly appreciating market. Certainly not overnight, but those who were able to buy upwards of $500k-$1,000,000+ worth of property in Southern Cali, Vegas, Denver, etc. back in 2010, probably saw their net worth double or triple in the following 9 years.
I consider $1mm as 'wealthy' so that's my metric for this exercise. Many people in appreciating markets probably gained $500k+ of equity on just pure appreciation.
Additionally, many people hit it really big in crypto and experienced a 2 year run of turning less than $50k into $1mm. This is probably the best answer for shortcut to wealth. Someone who jumped on a massive appreciation train with a reasonable amount of money ($50k - $100k or more) and saw that investment 10x in a matter of a few years. - Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes7y
If you accept the premise that smart and diligent work could lead to a shortcut in wealth you might be right!
In my 20's in age I was usually looking for the one fast and easy way to wealth. As I became older it became clear that dedication and constant learning and accpeting it's not going to be easy helped make the most progress.
The herds chase what appears to be (easy pie in the sky) stuff and is generally why they are in the same place or worse financially decade after decade.
- 7yAlexander FelicePro MemberGuy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
Sure, first step be born in America
Second, don't make any egregiously terrible mistakes in your childhood and young adulthood (prison, drug addictions, outrageous debt)
Third, take reasonable risk in areas and industries that are in growth
Fourth, don't expect it to be SUPER fast (1-3 years)
For centuries social mobility was just not a possibility. This is the pretty much the first generation of people who can become ultra rich at a young age. Wealth building 200 years ago was a slow and treacherous prospect, these days 20 years can net you a million dollars without excessive starting resources and without breaking your back. If you do have high starting resources and are willing to work hard then that can be much faster. So by comparison to the past the fact that so many people have the ability to create generational wealth so easily just by showing up is quite the shortcut. Most people in America who never build wealth is purely because of their lousy choices.
TLDR; don't be a moron, live below your means, work reasonably hard = wealthy in a few years
- Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes7y
I don’t hang out with a lot of multi millionaires on a daily basis but I do personally know a few of them and in my dealings with these people I consider “ wealthy “ I have found a startling discovery that I never noticed until recently when we have conversations. I have found the more I hang around them the more I begin to see they are not super intelligent or any faster at catching on than me . They don’t seem to have any special business acumen or savvy investing insights that I don’t have . They don’t appear to be overly bright or able to solve problems better than me but there are some common traits they do have that I’ve picked up on :
. -They are very frugal in their personal lives but very aggressive in their business lives . ( cheapskates)
- they are much more willing to take risks in business than the average person is ( bravado)
- they are disciplined in their daily lives ( anal )
- they did simple investments and just repeated the process or built on it over and over through the years
( investing for dummies)
- Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes7y
I hope not because that means I did it all wrong.
- Investor · Rochester, NY · Member since 2017 · 206 posts · 175 votes7y
Yes. Hustle.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Mike Dymski:
I hope not because that means I did it all wrong.
YUP its a long game.. as it relates to building wealth through real estate solely. Really the big pay days I see is when they sell their company.. Friend of mine sold his Garbage company for an obscene amount that type of thing. Also becoming the President or top player in a publicly traded company and getting that golden parachute works too.. know a few of those..
- 7yDanny RandazzoPro MemberApartment Syndicator · Charleston, SC · Member since 2016 · 973 posts · 728 votes
@Shiloh Lundahl check out the book called millionaire fast lane by MJ and you’ll get some good ideas for ways to move faster
- Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes7y
@Shiloh Lundahl. I haven’t seen anyone post the obvious answer to this question.. so I’ll give it. Yes there’s an easy short cut. Inherit all your money.
- Lewisville, TX · Member since 2015 · 341 posts · 264 votes7y
@Spencer Cornelia
I like the example, but I feel the crypto winners were really rare outside of very early adopters & many didn’t invest anywhere near $50k. Also a $100k purchase in Denver during 2010 is today probably worth $250k not a 1/2 million to million.
- Real Estate Investor · Orlando, FL · Member since 2011 · 5 posts · 1 vote7y
To me, it is about having a mentor. Most of us are better off than our parents because their paved the way for us. A mentor, a true one- can help a pupil tremendously. Who says that your network is your net-worth? Association is paramount to getting ahead of the game. A group like Bigger Pockets is a good example of great association and network...
- Tampa, FL · Member since 2018 · 51 posts · 53 votes7y
Originally posted by @Shiloh Lundahl:
Many people invest in real estate in order to create passive income and eventually become wealthy enough to not have to work a regular job for the rest of their lives.
I want to pose a philosophical question. Is there a shortcut to wealth?
Absolutely. The FASTEST shortcut to true wealth is canceling cable TV and disassociating from as much what does not matter, as fast as possible.
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