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.
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