Commercial real estate faces into a new tomorrow. The property market may be in limbo, but the office and industrial sector should pull through this period
I want to be worth 10 million someday, I’m 32 now with my whole life ahead of me, what is the best way to go about this?
There are a surprising amount of horrible answers to this question. It’s no surprise considering that probably none of these people have or are worth $10M (or in the right mindset to obtain it) – but it’d be nice if people at least obtained solid, proven information that could actually help answer your question.
And there are two starting points to your question:
- Don’t listen to (almost) anyone that hasn’t done what you’re trying to do. It’s the same as getting medical advice from an accountant – completely irrelevant. However, also keep in mind that some of those on the same journey as you and who are just as curious and hungry for the facts behind how that much money is earned, may In fact know some useful and information about how to obtain that goal. Since they are pursuing it just like you are, they probably have a solid knowledge base. But the majority of people don’t have a clue about how to get that much money.
- The information you need to know to get you to your goal is already out there. It’s just hidden away in books, articles, a few courses and in the brains of a bunch of people who’ve already done it – living and deceased. It also exists in the form of living proof. Clearly there is a way to make that much money and more sense there are quite a few people walking around among us who have done it. Here in Silicon Valley for example, I literally meet the people and see these deals happen.
Now – for the actual answer. First, start by…
3. Picking your number. Aim as high as you can until it starts to seem a little silly or scary. Then choose that number. It takes the same amount of “sweat equity” to achieve $10M as it does to achieve $100M. It’s just a matter of choosing a wealth vehicle that can scale. “The first million is the hardest” after all. But also note that it often takes different methods to achieve your number as your number gets higher. That’s why they also say “What got you here might not always get you there.” But just know that $10–500M is definitely feasible. I live in Silicon Valley and can personally verify people receive paydays of this size – and it happens frequently. Like, a new person every couple of months. I personally know two people that did. (And there is more info at the end of this answer on how to pick your number.)
4. Begin learning. So let’s say I picked $300M. Start to work backwards and learn more about the methods in which people have achieved $300M. More than likely you’ll notice a pattern or trend – most people who achieve wealth (sans inheritance and windfalls etc.) do it through one of pretty much three ways since the beginning of time. Investing, real estate or business.
Sure you could be a super high paid athlete model musician etc. but your actual control over your odds are slim. Your body, age, race, location etc. plus general politics and factors of pure probability have more sway in whether or not that happens. (And notice how no Hollywood celebrity or athlete is in the top 20 richest of all time).
FUN FACT: Go google a list of the richest people – in any country, or the world, or of all-time. Yes you’ll get a few conquerors and kings in there from the old days, but primarily, it’s business, investments, real estate – these are the primary wealth vehicles. I am not even kidding.
Richest of all time >>
Richest in the World 2019 >> (Mostly Business peeps)
Richest people in the US 2019 >> (Mostly Business peeps… see a trend?)
(*Note that there are no celebrities, actors/actresses, models, musicians or athletes in any of those lists or the top 50 of them. Let that sink in…)
Also, most rich people funnel real estate or business earnings into their investment accounts for various tax and interest purposes – hence they legally pay stupidly low taxes and have more money to use to make more money (i.e: Trump). Take your barely-taxed profits and pour it into biz, real estate or investments to make money literally multiply = win. Compounding interest investments are like debt except you make more money over time instead of lose it. Moving on…
5a. Pick a wealth vehicle and master it. So you’re in your thirties? Cool. So that means you have at least a decade to go all-out at this, right? Great. That should be enough tile to make significant progress or meet your goal entirely if you learn-do-fail-repeat quickly. Should take less than 12 years. I know some who’ve done it in 18 months. Entrepreneurs say give it at least 5 years and few people do it for ~10 years without seeing significant a payday. People who’ve ran and scaled their company for between 8–15 years are usually the ones that come out with OBSCENE numbers when they sell their company (look upbeing acquires by LinkedIn for $1.5 BILLION. And she owned most if not all of the company! 🤯)
Anyway, next choose one of those three wealth vehicles to learn about. You’ll more than likely more naturally gravitate towards one. Again, they are (1) entrepreneurship (so learn about the stages of a company, how wealth is achieved thru exits or IPOs, fund raising, customer development etc).
Or (2) real estate investment types (getting into multi family, single family, fixer uppers, flipping or commercial real estate, creating a holding company, creating a global commercial conglomerate, using other people’s money, working with banks, securing private financing, etc).
Or learn about (3) investing (what stock values are high and low and why, what industries and markets are doing well and why, buying/selling, etc and especially what a hedge fund is and how to start one). Spend a solid year just learning this stuff. If you can go to school for it, cool – but it’s not necessary. If people spend four years learning this in school you should at least spend one year learning it on your own (or ideally be a lifelong learner so you can be an authority expert on it and then get paid even more to write books, teach classes at universities, make online courses or get paid to fill out auditoriums and to teach it to others when you’re an old guru someday). Start by going to a library or buy some highly-validated-by-experts books on Amazon and begin studying like you’re in college all over again (without any slacking).
KEY POINT: The best in your chosen wealth vehicle, by the way, have probably either already written a book on your vehicle or have a recommended reading list. Read. These. Books. It tells you how they did it. So just read that, then do that.
That being said, I’ve even saved you some work and found some links for you:
Who’s a badass? Warren Buffet. “When Warren Buffett started his investing career, he would read 600, 750, or 1,000.”
What do they read?
• The Intelligent Investor, by Benjamin Graham
• Security Analysis, by Benjamin Graham and David L. Dodd
• Common Stocks and Uncommon Profits, by Philip Fisher
Final Note: Full listof Buffet’s reading list. Note also that Buffet didn’t necessarily make his money directly and solely from investing, but it’s more so that he invest-ed in businesses as well as the usual stocks, bonds etc. Read more about his backstory to learn how he got to where he is now.
Who’s a badass? A lot of the peoplelike Donald Bren, Grant Cardone, Donald Trump. Bren started in his LATE FIFTIES and still became a billionaire, btw.
What do they read? Hard to find those particular people’s reading lists, but top 3 most-mentioned, well-reviewed books online currently are…
• Brandon Turner
• , Gary Keller and others
• Ken McElroy
Final note: “While most of us can only aspire to reach the level of wealth these individuals have achieved, their success highlights the larger trend that real estate investing is one of the most consistent paths to long-term financial success. By relying on the same core principles of hard work, sound underwriting, and discipline all of us have the chance to build our own mini .” But since the badasses in real estate (billionaires) tend to all be running a real estate company, it’s technically in the business/entrepreneurship sector. So to make the jump between being an individual investor in RE and running an RE business may require different knowledge and skills. So if you’re aiming for the latter, it’s best to study the educational backgrounds of those chairmen, founders etc. of billion-dollar RE companies to see what they learned, where and how. Additional article of note is and discusses the “how they did it” in brief bio format.
Who’s a badass? There are way too many to list. John D. Rockefeller, Andrew Carnegie, Jeff Bezos, Cornelius Vanderbilt, Sam Walton, Larry Ellison, Michael Bloomberg, The Koch Brothers, Amancio Ortega, Jack Ma, Carl Icahn, Bill Gates, Henry Ford.
What do they read? Many different books, but to learn what they know, try these.
• , Eric Ries
• by ben horowitz
, Ray Dalio
• by Jason Fried
by Peter Thiel
by Bill George
There are some books that everyone mentions even though they don’t teach me how to specifically do anything – they’re more mentality/mindset books, but because they’re so heavily touted, I’m just gonna include them here:
Think and Grow Rich by Napoleon Hill
The 7 Habits of Highly Effective People by Stephen Covey
How to Win Friends and Influence People by Dale Carnegie
Crushing It! by Gary Vaynerchuk (not sure I’d vouch for this one, personally, but it appears on everyone’s lists)
The Four Hour Workweek by Tim Ferriss (this has legit how-to information in it, but it’s mostly known for the mindset and approach aspect of entrepreneurship)
The $100 Startup by Chris Guillebeau (kind of the same as Four Hour work week)
Final note: The thing to note here is that there were a lot of entrepreneurs who made it off one single product/company/service, and others who started multiple successful companies (called “serial entrepreneurs”). Some worked decades to get their wealth, some worked less than a decade. Some created never-before-seen, world-changing products. Some entered heavily competitive industries with behemoth companies practically monopolizing the industry. So what’s the takeaway amidst all this? There’s no one “right” industry or product. Instead, focus on what makes successful companies work on a fundamental level, in a variety of market and global economic situations while gaining the key skills needed to lead a company through the fire towards a brighter tomorrow.
5b. This includes studying the heroes (and failures) of that vehicle. Once you’ve picked a vehicle, study both those who’ve achieved wealth (or failed to) in your chosen wealth vehicle, and study how their numbers and process worked out (I.e: “I’m learning that creating a company with X ARR might sell for at least X to certain types of entities if XY are in place.” and also, “but apparently if start a company and it does well, but then I do X and then Y happens I can apparently get voted out of my own company and get screwed out of any money like X person did, Yikes.” etc.)
And again – streamline your studies by starting with two types of people to study
1. The top 2–10 in your wealth vehicle type (to get an idea of the patterns that exist among them)
2. The most well-known case studies of documented failures (so you know what most not to do).
5c. Pick an industry/sector/market to dominate. You’ll then be looking to begin taking action within your chosen vehicle (business, real estate, investing) because studying forever sucks. Go figure out which sector/market/industry looks ripe for domination.
Will you buy X multiplex properties in a certain region until net worth or cash flow hits a certain number?
Will you invest in companies within a certain sector or with a type of business structure poised for high growth in the next ten years?
Will you start a business in the FinTech field and look to get acquired or IPO?
Whatever you choose you should now be well-equipped with the core knowledge of how to succeed in that field. Now it’s time to stop studying (so much) and make stuff happen. Take things one step at a time. Instead of saying “But I don’t know how to do XYZ.” immediately follow that up with, “Wait – how does someone go about doing XYZ?” and keep moving forward.
6. Keep trying and don’t give up. What you’ll find when you start diving into all the studying portion of this process is that the notable successful people in your wealth vehicle will say similar things.
One thing that’s been repeated – even over all three vehicles – is the importance of being patient, learning from failure and other people, working with smart people, and most importantly/frequently not giving up.
I see this all the time, in every entrepreneur autobiography, in every investor approach, in every Forbes or Inc or Money article from interviewed success story entrepreneurs, from every YouTube video of successful people saying how they did it, and in every real estate mogul’s history. They messed up a few times at first but eventually got it right. The messing up ends up being what MADE them get it right. The obstacle is the way. You don’t not accomplish your goal because you fail. You didn’t meet your goal because you stopped trying to reach it.
Michael Jordan once said “I just practiced and practiced until it wasn’t any longer about how to do it right – I practiced until I couldn’t get it wrong.” << THIS IS THE WAY TO THINK. Get so good at real estate/business/investing that you can’t get it wrong.
It seems that these top tier individuals noted their success to that fact almost every time. Which makes sense – if you let failure crush you, you ruin the opportunity (< key word there) to learn and make progress from it, making success that much more possible in the future. Because now you’ve learned one more thing not to do.
Thats it really.
Now all this nonsense about keeping expenses low, marrying rich, starting some lame side hustle to make only $1000 a month and put it in a CD account, making out your 401k – is all such middle-class, air-brained, basic level cliche advice. It’s the same stuff being spouted by all the tv pundits (who by the way, aren’t worth $10M+ usually). This is all because…
Most of the time, the middle class can only give you lessons about how to successfully be and remain middle class.
It’s all they know so you can’t actually blame them. But let’s take a moment to discuss what middle-class folks will commonly tell you and why it’s actually bad advice…
- Making budget, cutting extra spending, don’t live downtown, no fancy car, don’t eat out, don’t travel etc.
Doesn’t answer how to get money – only answers on how not to lose it. Clearly it’s best to not waste money – this should be common sense.
- Money in high interest savings account.
Returns are laughable. Have been for a good decade. Either put your money in the S&P 500 (lazy way to make 7% avg.) or learn how to actually invest and turn it into way more money. (*S&P500’s 7% average over the last like 100 years seems low, but when you just made $50M and it’s making you $3.5M per year while you do absolutely nothing, that’s not so bad. This is part of a longer discussion about nest egg building but another day.)
- Increasing income using a JOB.
OMG no. You’re trading time for dollars. A job is only ever good enough to keep you afloat (or at the very most, stunt on your middle-class broke ass friends) but not make you rich. Even highest paid people getting $1M per year still need ten years (at a 100% savings rate btw) to get to $10M. So clearly a job (which stands for Just Over Broke) isn’t the answer.
- Use hobbies as income source.
Only if it’s extremely passive and can replace a full-time job salary with minimal effort (1–2 years max of business building) OR can scale into a multi-million dollar situation where you can sell your company for $$$.
- Get rid of stuff laying around. Sell it!
Unless you have stuff worth hundreds of thousands of dollars laying around (beanie babies?), no. This is dumb.
- IRA, 401K, Regular investing account.
Also dumb. You have a limited max you can contribute. Your employer usually controls what funds are chosen. You have no control. This is middle-class mentality stuff here. Proof: who ever earned tens of millions because of their 401K or IRA?
- Marry for money.
Not worth the trouble. Sacrificing quality of life and freedom for money is not a good trade-off. Also, this is just simply a pathetic method to use whatsoever. Ew. Also, this typically goes horribly wrong – google search how many times this doesn’t work out because someone gets killed, someone gets sued, someone gets ruined for life, how after 30 years of “marriage” someone doesn’t get the inheritance they thought because it goes to the rich dead person’s cat etc.
- Shun social media
Doesn’t answer how to get money – only how to not waste time. Useless.
- Don’t care about money – just be happy on your journey in life!
Now screw this bullshit mentality. If I hear this one more time, I swear I’m gonna go ballistic. Not caring about money is real cool and stuff until you’re in the hospital and can’t pay medical bills. Cool until you’re 68 and can’t retire yet. Cool until you want to buy a house, have some kids, be married and NOT have to struggle a bit to make ends meet. Cool until you get sued and have to pay somebody’s lawyer and/or medical bills. Cool until you get tired of working the same job for 30 years just to make someone else rich (Executives and founders). Cool until you’re too old to work and if you do people hit you with that age discrimination. This is one of the dumbest things I tend to hear. I even hear it from rich people themselves…
“The best way to get rich is to not care about the money.”
– Random entrepreneur guru
Are you kidding me? If that’s what they believed the guy/girl would’ve started a non-profit instead of a for-profit entity. Caring about money is a vital part of it all. (**He/she probably means to say don’t focus on making money, focus on making a good business/product etc. but if that’s the case then say that.)
The above is what the middle-class will tell you. However, actual wealthy people have a higher level of specialized knowledge in key areas. And they have so much money they don’t have to worry about expenses, 401ks/IRAs, rent increases and all that shit because they’re rich.
Why the Rich Don’t Care to Educate You on Getting Rich
They already made a ton of money through selling a company or shares in a company they invested in, put that money into real estate investments and/or a safe index fund and then let that money multiply for many generations until it gets put into a trust fund. (<< This is how trust fund kids are created by the way). Their job is done. The entire future family lineage is set for life, free from ever having to work (until someone squanders the fortune). Time to enjoy life now.
And the middle-class comment mentioned earlier about shunning social media because it’s distracting is ironic. Because the (smart) rich people don’t see it as a distraction – it’s a huge liability. They don’t want anyone to know they’re rich lest their kids get kidnapped or they get targeted by someone trying to marry rich (see above point #7 – they stay under radar to avoid gold diggers, schemers, thieves and those looking for a quick buck through lawsuit). *Also search for “growing up rich” experiences on Quora – you can find manyabout having a security wagon 24/7 so they don’t get kidnapped. Mo’ money mo’ problems.
But trust me – you better believe there are events, conferences and small meetings between rich friends happening every day about how to maximize gains, reduce risk, reduce taxation etc. You’re just not in their world so you all you can do is hear about it second-hand. It takes $10k to get into those types of events. They know you can’t pay it but then again it isn’t for your type anyway. And they won’t stop and teach (the art of getting rich) to the middle-classes because they’re usually too busy running or starting their next venture, in a meeting with their wealth manager or just living life and have no obligation or time available to help you (unless it can make them more money).
And those people that do help you are usually what we call “investors”. They’ll help you get rich if you can help them get or stay richer. And I don’t blame them.
So I’m hoping you see the pattern now. Why the rich hang with the rich. Why the middle-class and poor hate on the rich. Why the rich don’t reach a hand out to us on the lower rungs (and why they honestly don’t have to). How the rich got rich in the first place, how they stay rich and the math behind it, etc.
Remember – the rich aren’t going around telling others how to get rich. They don’t have to – they figure anyone who wants it bad enough can’t be stopped from getting it because all the information on how to get disgustingly rich is out there. All the proof is in the pudding. Copy what they do. Study what they study. Do what they do. Hangout where they hangout if possible. Observe their behavior and decisions. It’s all out there in plain sight. And there are trends – common patterns and themes to all of these people’s successes.
*EDIT: Actually, I guess some rich people truly don’t want poor people to know this stuff. See below. (I wasn’t trying to go this far but I just randomly stumbled up on this a few minutes ago, ha.)
Plus, a few rich folks are actually nice, kind people helpful enough to write a book or article (even!!) on how to actually succeed in this stuff – no bs. But only those who’ve been methodical about their self education can point out the solid info from the “guru” fluff, and use that information to level up.
*Hint: books are way better than the internet for reading up on this stuff. Get offline.
And lastly, I’ll cover more on what I said earlier about finding your number…
More Detail On How to Come Up With Your Number
First, heavily consider why you even want to get rich. List out only your strongest reasons. This will serve as motivation when you feel like quitting but also help you be sure that you’re pursuing wealth for valid, long-term reasons.
Next, make a list that contains everything you want (that money can buy). Go nuts. Then, write out all of the real-world implications of those things on the list. So if you want a vacation home that’s great – but in reality you’ll need to also write down that you need a property manager, home insurance and other stuff for it. For your main residence you’d pay for the house but also closing costs, property tax, house insurance and so on. Do this for all items on your list and be specific.
Now separate everything listed into two columns – recurring costs and one-time costs. One-time costs would be purchased upfront with your wealth. Recurring costs come out of your nest egg (which I’ll explain in a second) and may be monthly or yearly (things like utilities, home insurance).
So for the sake of (rough) example…
House in Manhattan, NYC: $15M (one-time)
Property taxes: $10k per year (recurring)
Utilities (i.e. heating your huge house 24/7): $800 per month/$9,600 per year (recurring)
Landscaper: $800 per month/$9,600 per year (recurring)
Internet, TV, Spotify etc.: $500 per month/$6K per year (recurring)
Car A: $200k (one-time)
Car B: $180k (one-time)
Auto insurance: ~$1k per year (recurring)
Auto Maintenance: $5k per year (recurring)
Groceries: $3000 per month/$36K per year (recurring)
Therapist: $1000 per month/$12K per year (recurring)
New Wardrobe: $10,000 (one-time)
Gym Membership: $200 per month$2,400 per year (recurring)
Country Club: $1000 per month/$12K per year (recurring)
Cleaning Service: $500 per month/$6K per year (recurring)
2 Luxury Vacations: $150k (flexible)
Now – your total amount you’ll need to earn is the sum of both cost types – recurring and one-time (and flexible). Add up your costs like below.
TOTAL (recurring): $250,600
TOTAL (one-time): $15.4M
TOTAL (adjustable): $150k vacation x2
So then your number you shoot for will have to cover all this. All the one-time purchases as well as the recurring costs which will be taken out of your nest egg (to be discussed in a bit). So then your number, based on the above, is…
Again – $15.4M comes off the top of that just to cover one-time purchases.
The rest ($10,015,000) is what we call your nest egg which is what you’ll live off of. But how, you ask? I’ll explain.
(*I know I’m covering complicated economics and leaving out particulars in broad strokes but bear with me.)
How the nest egg works is that if you put a stash of money ($10,015,000 in this case) into a low-risk, low-yield index fund account it will predictably make on average a 7% return (based on historical performance of such funds since the early 1900s.) So that amount grows 7% per year, but you’re keeping three of that 7% in the account so that your money continues to grow over time (via compound interest) while simultaneously rising with inflation (which is 3%).
The remaining 4% (of that 7%) is what you live off of quarterly in the form of dividends, which basically means when your account grows every 3 months, you’ll take a small chunk of that growth and cash it out to live off of.
So your $10,015,000 mentioned earlier will generate 701,050K (=7%) per year, with this amount growing even more over time. Finally, you’ll use $250,600 (or 4 of that 7%) to cover your recurring costs and adjustable vacation costs.
Keep in mind that none of this factors into whether you create another company, sell any real estate assets you own, or consider any other investments you’d want to make in other companies as an angel investor, etc. Now that you have money you have a chance to make even more (and pay less taxes). This is how the rich do it.
Anyway, all of this economic money info comes from a combination of multiple articles and sources I’ve read over time, particularly three sources from super smart financial bloggers. They typically stress living frugally and making a million or two from just working for 10–15 years and using the “4% withdrawal rule” if you plan to be a middle-class person. Sources are below:
Personally, I’d rather spend 10–15 years making $100M rather than be capped at a salary no matter what and face potential layoff. To each their own though.
So long story long, you choose a wealth vehicle, get really good at it over the course of a 2–15 year period, then sell the company or cash out the real estate or stock portfolio worth a certain amount, put that money in a low-risk, low-yield index fund so it stays safe, live off the interest of your nest egg and you’re good to go. Done and done.
This is what trust funds are, btw – basically funds with certain rules in place to protect a family’s wealth and divide the dividends among family members if certain criteria are met, etc. So if you see a, it means there is a giant nest egg funding their lifestyle. Some
Lastly – there is no way to get rich quickly unless you do it through highly questionable, possibly illegal and probably immoral methods.
I say stop hating on the rich and just become it. Nobody’s holding you back if you want it bad enough. Getting rich is just a matter of wanting it badly enough and working smart/hard enough for it over a sustained period of time. That’s how life works – you put the work in, don’t quit, work smart and you’ll get it. Whether that’s a fit body, get a job, learn piano or make $500 million dollars.
Anyway, just wanted to share what I’ve learned.
P.S: I’m admittedly not a millionaire, but I (1) at least have been studying in, precise fashion, other successful entrepreneurs, as I have a similar goal as you do – and I’ve learned shit tons just in the past few months. And (2) I also know a few crazy-rich people at different life stages who’ve told (and shown) me how it all works. It’s honestly simple stuff. Most people just don’t do it because the norm in life is to be average and content with being average and not work hard (or rather, people work hard but for the stupidest, temporary things).
P.S.S: Make sure you actually WANT to be rich. Really think about it. Why do you want to be rich? Do you want fancy things? Why? Dig deep and question yourself and your motives. You’ll save yourself a lot of trouble if you can figure out beforehand that you really don’t care about being rich. If you realize you don’t have any strong “why” that’s fine – you saved yourself some trouble. But if you uncover really strong “whys” then this will be what you remember to get you through the tough times of amassing a fortune – because apparently there will be tough times.
I personally sat down one time and looked at thebecause I was curious – what was it that struck a chord with me? Was I jealous? Was I baffled? Disgusted? After digging and dissecting what is is these kids are actually doing in life I realized I had the right idea – it’s all just fluff and stuff. The cars, clothes, jewelry etc. are okay but what I wanted was the freedom for me and generations after me to do what they want and not be tied down to a job. I want no limits. I want opportunity that couldn’t be afforded without money. I want price tags to never be a factor to me. I want to prove that I can reach a certain level of success, comfort and privilege – and I damn sure don’t want to be average. I also realize that money isn’t everything and love my family, friends, my health and helping others – which requires very little money.
Be happy with where you are at now, but strive for more if you want to see what you’re made of. Find your motivators and your “why” now, before you start on this path and be sure you know what’s important to you.