Top 10 Takeaways - Podcast 432 - 4 Steps to Become a Millionaire
BP Podcast 432: From $0 To $1,000,000 in 5 Years: 4 Steps To Gain Millionaire Net Worth With Brandon and David
Edited by Brandon Accomando
- What sets apart millionaires from those chasing millions
It’s not like once you hit a net worth of a million dollars or you hit success, now you just turn into a jerk like a werewolf at midnight. I would say a millionaire is not someone who is better than other people or has more value than other people. That’s another thing I definitely don’t think so. I don’t think that a millionaire develops inherent value when they hit that number. What I’m saying is they don’t actually become a different kind of person. You stay the same person you were regardless of your bank account. One thing that I’ve noticed many times, I would say almost every one of the millionaires that I know did not start that way. They were not raised rich. They didn’t start rich. Now, some people do start rich and they keep their money. Some people start rich and they lose all their money. But most of the millionaires I know started with a bunch of student loan debt, a bunch of credit card debt, didn't know what they were doing, trying to build something, but they had some of the traits we're going to talk about today. I would say number one, or I guess number three or four, whatever number you said, they are not born with it. I honestly say that they’re not naturally gifted. I know so many millionaires who don’t have high IQs. They don’t have some unnatural giftedness to focus where everyone else in the world is like trying to do 10 things at once. They’re still sucked into Facebook and Instagram and TikTok and Snapchat. They still have all the same weaknesses that everyone else has. They just have the things we’re going to talk about today. Then last thing I have is they weren’t just lucky in almost every case. I don’t know any lottery winners at all. I don’t know anybody who got in just at the right time at the right place on some business IPO and made tons of money.
- What being a millionaire really means
You have to understand that when we talk about being a millionaire, what we’re talking about is being very good at something that matters to you. Whether that’s fitness, whether that’s money, that could just be developing a great personality. It could be being a great friend, it could be building a great non-profit. You’re not always tracking your success in those areas and money but there are fitness millionaires, so to speak. That’s something that I like to just make sure we highlight because there’s people out there that would be completely on board if someone was teaching them how to be more fit, but recoil at the thought of, oh, well, just because I don’t have a million dollars doesn’t mean that I don’t matter. That’s not what this is about. This is about people that have mastered certain traits that led to them having a lot of success. Because on this podcast, most of you listening want to have more success financially and you want to do it through real estate, we are going to share with you what we have learned those people do, and maybe even some stories about how we’ve seen this put into action.
- 4 common traits of millionaires
Number one, millionaires are decisive. Now I know Brandon, you have some really good content to share on this that I literally watched in your life when we sat on your lanai one day and you just said, “You know what, I’m sick of it. I’m just going to go to mobile home parks because I don’t want to talk about it anymore.” That led to Open Door Capital so that’s a steal of your shine. I know that’s where you’re going to go. What I want to say about this is that I have watched my own personality and other people’s personalities become more decisive as we became more successful. It was like watching your muscles get bigger when you lift more weights. I would say that’s how important being decisive is because I recognize the need to be decisive when I got into situations where I had more success and I wanted to get more than that. This is incredibly important. If you’re somebody who isn’t decisive or you’ve struggled with decisiveness, it’s very important to take that on. Momentum is one of the most powerful forces. Maybe force is a good word. These are like four forces. I don’t know. But momentum is one of those powerful forces in the entire world. An example of that would be a train. If you imagine a train, the amount of work and effort and steam and whatever, that it takes to get the train moving one mile an hour. It’s a lot, it’s a tremendous amount, moves very slow. If you had a train going 95 miles an hour, that obstacle would not be standing in your path. A lot of what you and I are even doing in our businesses right now isn’t so much planning the details of how we are going to execute what we have planned in the future. It is building the momentum, then once we’ve got it, we can come up with the plan pretty easily and when you have so much momentum, it tends to be a great plan. Once you start taking these little bits of action, you might be taking the wrong action. You might be taking an action that’s not actually helping you get any closer. How would you know that you are on or you’re not? That brings us to the third thing and that is tracking. So tracking in other words is our way of, you could also say analysis or accountability to yourself. What are you going to do? It doesn’t necessarily mean you’re on a piece of paper with a pencil, but tracking is just keeping track of what you’re doing. That means everything from your budget. How much money exactly are you spending every month and how much are you bringing in. Knowing that will automatically improve your financial position. It’s the one thing you can do right now to dramatically increase your financial position today and in the future, is just to know exactly what you’re spending and exactly how much you’re bringing in. It’s like magic. As soon as you know that, you will start spending less or comparatively or saving more, just by knowing those things. The fourth trait, scale things, step, whatever you want to call it is what we call mastery. When I say mastery, what I’m referring to is the various activities you do to become world-class, to become an expert. Because in today’s economy, especially in real estate, you cannot be just mediocre forever and hope to succeed. Maybe you buy a couple of properties and let them pay off over 30 or 40 years. Yes, you will become successful over 30 or 40 years. But if you want to do this whole millionaire journey in five years, six years, four years, you got to be good. What we mean by mastery, it’s a process of becoming increasingly better. You’re never going to become a master, but mastery is a verb. It’s an action you do. You’re continually finding things you can do to become better and better and better.
- Developing crystal clear criteria for investing in real estate
Now in real estate, one of the ways I encourage people to be decisive is something known as the crystal clear criteria, the CCC. There’s a big component of my new book that’s coming out later this year in 2021. It’s going to be called The Multi-Family Millionaire. I’m not selling it now or anything like that, but it’s a big piece of that book where we talk about this crystal clear criteria and that is, to be crystal clear, be decisive. I would give yourself on these five things, give yourself a week to decide and then no more time. Give yourself a deadline. Number one, location. Where are you going to invest? Number two, what property type are you going to buy? Number three, what condition are you going to buy it in? Number four, what price range are you going to buy it in? Number five, what makes it a good deal? I call that profitability. What would make it a good deal? I'll add number six here because this isn't just for multifamily or rental property owners, is what strategy are you going to employ? Those six things, so what strategy, the price range, the profitability, the condition, the location and the property type. If you were decisive and you made your decision on that in your real estate journey, is there any doubt going forward that you’re going to succeed? At least if you start there, you make a clear decision, now you can get people around you to help you. Now you can tell other people what you’re looking at. They can however find it for you. Now you can cater your marketing toward that thing.
- Building momentum as a new real estate investor
Let’s look at the pieces that they’ll need. They want to buy real estate, they’re going to need capital. Can they save capital, can they make capital or can they borrow capital? The first piece that they’re going to have to figure out. They come up with a plan working backwards to do that. Then they're going to need a strategy. What market am I going to be in? Am I going for cashflow? Am I going for equity to later turn it into cashflow. Their time horizon will help determine that. Then they're going to need resources. What people am I going to use? If you've got a five-year window of time, that's a long time to start getting to know people in the industry and finding out who you're going to want to be on your team. The first piece I would say is get your budget under control. Know that you are saving a good amount of money and you’re making a good amount of money because you’re going to want that capital to go put into real estate. You should be tracking that and watching it grow. As you’ve built up a good amount of money that you’re saving, it gets easier to save money. This is what I’ve found. When I’m saving money every single month, like when I was in college, I was saving $500 a week. The longer I save $500 a week, the more fun it became to save. Can I get to 600 this week? Can I save 700 this week? Working overtime wasn’t as hard. I had momentum in that area of life. It became much easier to do. What was the other piece? Oh, they have to pick their market. Start asking other people, where are you finding success? Where are their properties that are available? As you know what market you’re in, then you’ve got a team in that area and you’re building capital, it’s as simple as recognizing what’s the best opportunity for me. What’s my most important next step and putting properties in contract. You’ll buy your first one. Don’t buy 10 at one time. Buy a property, manage it, stop and look and see what went well or what didn’t go well. On the next deal, you try to do the things that went well again and you try to avoid the things that didn’t go well. On your third deal, you’re going to be a little bit more refined.
- The importance of raising standards over time to achieve more
Today’s quick tip is be consciously aware of raising your standards at anything you want to have a better result in. Just stuff that I’ve learned about human life is we all tend to say, when something good comes my way, then I will give a better effort. It can be anything. But good things tend to come to people that have gone the other way. If you’re single and you don’t want to be single, don’t say I will dress better when there’s a special somebody in my life. Start dressing better right now, raise your standard in that area and watch what you’ll attract.
- Why tracking your personal AND business life can merge to benefit your entire life
If you’re not tracking something, what you’re indirectly saying is I don’t really care about it. You could say that to me, David, you don’t care about what you eat because you’re not telling anyone that, I wouldn’t be able to argue with you. If you want to be able to save more money, you need to be budgeting and you need to know what’s coming in and what’s going out. What you will inevitably find when you start doing that, is that you start looking for ways to make more money and looking for ways to save more money to increase that spread every month. Then what I’ve found is that once the desire to save more money hits me, the obstacles that were getting in my way from earning more start to seem less imposing. That scary conversation with your boss that you’ve been putting off because you don’t want them to say, no, you can’t get a raise, doesn’t seem as scary when you’re looking at that shift into a different department where maybe you go from working in operations into sales. Oh God, but it’s commissioned. I don’t know. Becomes a lot less scary when you’re really driven. Tracking your budget is 100% the first thing. You also want to track the actions that you are taking that are leading to you being successful. I don’t know a millionaire who can’t tell me what they’re doing in their business and how often they do it to get the result they want. It’s just hardwired into their minds. If you asked a professional bodybuilder, what are you eating, they’ve got it down to a science. This many ounces or grams of this kind of food, and then I do these exercises on this day. Most of them track it in a notebook when they get there. It’s very specific because your brain needs to know how hard you should be pushing. If you say, hey, I can do 10 reps of 200 pounds, it’s very easy. Your goal is to get to either 11 reps or 205 pounds that you could do 10 times. You have a very clear path that you should walk on. If you’re not tracking, it’s easy to start to believe, while I’m working out, what more am I supposed to be doing? The more specific you can get, I would say the better.
- Understanding the stack
The stack is a concept where if you’re having trouble building momentum, wow, this is all coming together so good, isn’t it? You buy a house. What I recommend is people start with a house hack. That is the easiest way to get yourself into real estate investing. Once you’ve bought a house hack, then you buy an investment property. Once you’ve got that, you buy a duplex, then you buy a fourplex, and this is every year. The next year you’d buy an eightplex and you buy a 16. Your jumps are big enough that they’re challenging, but they’re not so big that you would drown. To go from 16 units to 32 is challenging but it’s manageable. Not go from 16 to 700 or something in the next step. Well, I don’t need to go into with another jiu-jitsu analogy for that one. But that is how you ensure that you are improving. You’re always taking on a bigger challenge which will force you to get better and that’s a very important components of developing mastery. What’s cool about the whole stack thing too is it’s like you buy that house hack, you gain a little bit of knowledge and confidence. Then you buy that house by itself, and now you’ve got more knowledge and experience and confidence and you got other people going, “Oh, look at that guy. He’s investing in real estate. Look at her. She’s making progress.” Then you buy the duplex and don’t get caught up on the exact numbers here, people. But now you gain even more.
- 4 stages of mastery that will make you millions
The first is referred to as being unconsciously incompetent. That’s when you don’t know what you don’t know. That’s how everyone’s starting off is, is they want to get into real estate investing but they don’t even know where to start. They don’t know if it’s easier, if it’s hard, there’s no way to know. The next stage is you are consciously incompetent, which means I’m aware that I don’t know anything. But that’s good because now you know where to start. You know you’re incompetent and you know what areas of knowledge you need to gain. The third step is consciously competent. This is where the plane is now up in the air but you’re still flying it. You can do a good job but it takes your own focus. It takes a lot of effort to make sure things go well. Then the fourth step is unconsciously competent. This is where you’ve done it so many times that you don’t even have to think about it. The plane is on autopilot. It is flying itself. These are the guys that you see that are blindfolding themselves, wrestling with somebody in jiu-jitsu and winning every time. They are so good, they could just tell from feel what the other person is doing. What my recommendation would be is to ask yourself, where are you here, and what would you need to do to get from one step to the next? You’re not going to get out of unconsciously incompetent the first step if you don’t start taking some kind of action. If I never got on the mat with you and Jerry, I don’t know if I can do jiu-jitsu or not and I don’t know what I even need to learn. I might think I could beat a black belt if I’ve never done it. You could actually get hurt in life if you’re walking around unconsciously incompetent, and investing is not different. You can jump in and put money into somebody else’s deal, having no idea if it’s a good deal or they’re a good person, hoping it works out. That is not how you should be investing. Work yourself through those four stages and understand that mastery is something that millionaires all strive for and there’s no reason everybody listening shouldn’t be doing the same.
- Staying the course to achieve success
Number one, you’re never going to know what to do with the whole way. You’ll never know. If you’re driving down the road and it’s foggy, you can’t see a mile down the road. You don’t always know what’s even 100 feet down the road. The most important thing though is not to pull over. That would be silly, as to pull over on the side of the road and wait for the fog to go away. The fog is not going to go away. Instead, if you just keep driving and keep asking, well, what does that next step? What is the most important next step? I don’t know what to do next. Okay, well I wonder if I know anybody who would know what to do next? Is there a real estate agent I can talk to? Is there a real estate investor I could talk to? Is there a world’s largest real estate forum that’s 100% free to post on it 24/7 where tens of thousands of people hanging out every single week called BiggerPockets. Could I post the question there? Oh yeah. I guess I could. Everything has an answer. It’s all there. The only thing that stops people is that lack of decisiveness and that lack of thinking like what’s the most important next step. If you just did those two things, ask what’s next and then be decisive about what you came up with, you’re going to get through any fall, you’re going to bust through any barrier, even if you don’t know the angels out.