The Rich Look like Beggars, and the Beggars
Look like Kings
By: Jon Morrow
If you saw my father on a normal day, you'd feel sorry for him.
His clothes are worn and coated with a mosaic of dirt, paint, and
other unidentifiables. His boots are solid blocks of mud. His head
is covered with a worn-out baseball cap, usually soaked in sweat.
You'd think he was a beggar. But he's not. He's one of the
wealthiest and fastest growing landowners in northern Mississippi.
Movies and television have created a stereotype of the millionaire,
and like most stereotypes, it's completely false. Rich people don't
drive fancy cars, live in mansions, or cart around entourages of
sexy playthings.
They know better. As one of my most successful mentors told me,
"Getting rich is not about how much money spend, but about how much
money you keep."
To illustrate, here are some comments from my investors:
A car payment? Why, I can't remember the last time I made
one.
About a year ago, my father invited all of our investors to a
private conference in his home near Memphis, TN. You've never seen
so many rich people. If you tallied up the net worth of everyone in
the room, I'm sure you'd go well over $100 million.
When I drove up to the house though, all I could do was laugh.
Looking at all of the cars in the driveway, you'd think you were at
a retirement home. The newest car in the driveway was from 1998. The
majority of them were models from the 80s... and older. None of them
were freshly detailed or flashy. You would have never guessed that
all of them were owned by millionaires.
Talking to the investors about them was also interesting. I didn't
ask everyone about their car, but the few I talked with told me
they'd paid for the car in full a long time ago. They were also
focused on regularly maintaining the car. Performance was just as
important as price.
Buy a mansion? God no. Who needs all that space?
Knowing how to leverage their money and tax benefits, you'd think
millionaire real estate investors would live in huge houses. But
you'd be fooled, once again. Most of the millionaires I know live in
modest houses in good neighborhoods. The average value is probably
around $300,000.
They also own the houses debt free. Usually, they bought their house
years ago for a steal in a good area, and then they lived there
while it appreciated. To properly leverage their equity, they keep
credit lines open, so they can take advantage of short-term
opportunities.
Wear a suit? No, I prefer to work in my underwear
Through a series of coincidences over the years, I've learned that
nearly all of my investors work in their underwear or pajamas. When
they're forced to leave the house, they usually wear sweats or
khakis. During the past five years, I've never seen one of them
wearing a suit.
They have three reasons:
Cost. Dry cleaning is expensive. You save money by
dressing down.
Practicality. Investors deal with a wide range of less
fortunate people that distrust people in suits.
Comfort. Suits are uncomfortable, so unless you have to
impress your banker, stay comfortable.
The Moral of the Story: Live like a Millionaire and You'll
Become One
Not surprisingly, the most successful real estate investors I know
are the most frugal people I know. I'm not talking about being
miserly either. They live exceptionally well, but they do it with
less money and more attention to practicality than pizzazz. If you
want to get rich, act like them. Start living below your means and
you'll see your wealth grow much faster.
Also, I've learned to be suspicious of people driving fancy cars and
living in huge houses. While some are genuinely wealthy, most are in
debt up to their eyeballs. They're usually insecure people, trying
desperately to convince everyone they're rich. To use a metaphor:
You can judge a book by it's cover, but remember, the classics are
rarely new and shiny. Their faded covers are evidence of their
survival and their tattered pages were created by the hands of
countless loving fans.
Author Bio
Jon Morrow is the owner of Real Estate... Answered, a web site that
answers dozens of questions about
real
estate investment for free. He also manages over $20 million of
real estate investments in three states, focusing on luxury homes
and multimillion dollar transactions.
