The United States has the most number of millionaires per square mile. You can be one, too, if you adapt to the financial habits these rich people have. On today’s show, Robert Orfino encourages us to be millionaires in smart ways through real estate investments. He talks about some trends that are happening and how the economy is being very good according to the book called The Millionaire Next Door. He lets us in on the factors responsible for these millionaire trends and more.
Listen to the podcast here:
Millionaire Trends with Co-Host Robert Orfino
Let’s talk about some trends that are happening. We talk about the economy being very good here––regardless if you love him or you hate him. Yes, we’re talking about the POTUS. This president is certainly sitting over the top of some good economic news.
What does that mean?
People have better jobs and more disposable income. They can save and invest more now. Once again, the United States of America leads the world in the number of millionaires we create. New York City is the #1 spot for millionaires––the most millionaires per square mile. After some research into the minds of the average millionaire, I wanted to talk a little bit about them and see if this fits into your lifestyle.
Very much like The Millionaire Next Door book that came out, Business Insider did a little article on it with the author and some of the data they had collected. It’s telling, and we liked the article because it validates the things we’ve been talking about.
Let’s break this down.
Most millionaires don’t handle that life-work balance well at the beginning. It gets better over time. I know that’s something as an entrepreneur you’re thrown at all the time––that life-work balance. I get it, and everyone seems to get it. We all understand the concept, but growing wealth and focusing on your entrepreneurial efforts takes focus. We break it down every time we do the goal-setting webinar.
At the end of the day, an individual who has a full-time job has about nineteen hours a week to start this whole entrepreneurial, real estate investing, wealth-building path.
Nineteen hours a week is not a lot to work with. Most of us will spend that time mindlessly. What all these videos are telling you––Gary Vee––all these guys out there, they’re all telling you to take that 19 and make it 25 and focus.
Certainly, it becomes difficult if you’re a dad with three kids and a wife, or a mom with no husband and two kids. That’s challenging because that nineteen hours has been sucked away already, but have no fear. This stuff still works. Most millionaires have more income, but it’s not always that way. Most of them start off like everyone else, minimum wage, a little bit above minimum wage, and just working. There’s usually some sort of trip somewhere in their late 30s, early 40s…where all of a sudden they can start saving.
They Save Their Income
Here’s another shocker, millionaires save lots of money. Some of them have budgets they live by, but not religiously. The article says that most of them understand where their money goes, but they don’t have a rigorous budget. They stick to basic buying trends.
Do you remember The Millionaire Next Door? Most millionaires bought their suits at Sears or JCPenney. They have good suits. That’s where they went. They were not Armani. They were not Brooks Brothers. They’re going to Sears and JCPenney’s. They’re buying three suits, and what they spent their money on included good shoes, as well as a good $400 pair of Italian shoes that could be cobbled, used and kept over the life of their business career.
We always recommend understanding where your money goes, and then try and live a conservative life. Once millionaires have those savings, they invest it. Most millionaires invest in real estate. Sometimes in a passive way, sometimes in an active way, but they’re definitely saving their income, then taking it and putting it into real estate. You might have heard me and Jason talk about that once or twice.Income does not equal wealth. Click To Tweet
When they do spend money, the trend says that millionaires travel. It’s not expensive watches, cigars, wine, any of that stuff. That’s the guilty pleasure of most millionaires in this country: they travel. Some of them will go to Disney World––there’s a good hotel. Others will find themselves in the desert.
They Check Their Portfolios And Accounts Everyday
Here’s a shocker: They check their portfolios and their accounts every day. Even though we’re told, “Put the money in there. Don’t worry about it and just forget it. Check it once a year, twice a year.” They check it every day. They’re not drawn into the need to shift their money around or shift their wealth. They monitor frequently and change very infrequently. It was pretty shocking to me that people were monitoring every day.
They Invest In Low-Cost Funds
The other thing that they do with their money when they do invest (and it’s not in real estate)––they invest in low-cost funds. If they’re going to put their money in the stock market, it’s going to be a low-cost fund or a low-cost brokerage.
You’re seeing the trend here.
They’re frugal. Most millionaires in this country are not driving Lambos. They’re not rolling around on a bed of cash. They’re not taking a picture of the check and posting it on Facebook. Those are the people we love to work with. I had a great meeting with a couple who came in. They said, “We did our quick little net worth calculation. We’re somewhere around $1.5 million, $1.6 million.” I was like, “#Winning. That’s awesome. Let’s get some residual income going in. Let’s get it somewhat passive through real estate and let’s pick up some properties. Let’s play with this little portion over here and let’s get this done.”
They bought a nice little duplex.
They’re Focused On Their Goals
The other thing about millionaires is that when they do have a goal and they’re focused on it, they understand the time. Most of them were right where you are at now if you’re not a millionaire. I don’t care where you’re at, zero, negative. They’re right where you’re at and they run this seven to nine-year run of saving, of getting a better job, of working two jobs, of getting into the mix.
They’re investing in real estate, slow at first, more aggressively later on, taking advantage of every retirement scheme in front of them. On the average of $250,000 worth of income, most of them are living off of $90,000. That means about 60% of their income after taxes is going into investing.
They’re able to create that million dollars’ worth of wealth in a very short amount of time because they’ve put effort into their careers. They are able to rise up in their organizations. They take advantage of every investment scheme, every matching dollar. We talk about that all the time.
If the company is offering you the matching, take it.
They start investing in real estate and somewhere between seven to ten years, they find themselves sitting in that million-dollar category with assets that are producing income and with assets that are appreciating real estate. That’s how they build wealth.
Income does not equal wealth.
If you make $250,000 a year and you spend $250,000 a year, you’re not creating wealth. If you make $100,000 a year and you spend $110,000 a year, you’re not creating wealth. If you make $40,000 a year and you’re spending $50,000 a year, you’re not creating wealth, you’re creating debt. If you make $40,000 a year and you only spend $20,000 and you save the rest, like my buddy the Uber driver. $48,000 a year as an Uber driver, save $30,000 of that and was able to buy a three-unit out in Beaumont. By doing those little things, that’s how you start accumulating wealth.Most people who are successful at real estate investing were successful at something else before. Click To Tweet
We have a question, “How many of those people who show up to those REIA clubs would succeed, retire early and all that stuff?” I think the numbers show it’s about 10%, and that’s just a best guess because what happens is those gurus are not confident enough to track the success of their students. We don’t know the data.
I told this story many times. The reason why I’m with Jason Bible and very happy. Tom Perry is my friend and I have tremendous amount of respect for those guys. They tracked the action of their students. It’s something that I have used with people to track, “Here’s the checklist. Let me know when these seven things are done.” They come to me a few months later and say, “This isn’t working.” I go back to the checklist and say, “You stopped halfway through.” Tracking those efforts and your goals is critically important in this industry.
I think here’s the dirty secret. Most people who are successful at real estate investing were successful at something else before.
It’s probably three out of four people who stand up and say, “Look at this guy, he’s got 100 properties,” or “Look at him, he’s flipping twenty houses a year.” They were probably successful somewhere else. I’ve got a good friend up in New Jersey. He’s destroying it up in that market, doing incredibly well in that market. He’s fantastic in everything he does.
Prior to coming to real estate, he was also a very successful marketer and salesperson. We talk about, “If you’re going to learn two skills in this business, make it marketing and sales.” Be able to do that kitchen table close and understand how market trends work so that you can capitalize on the trends in the market so that you can get leads. Those two things are critical skills, which leads us to one of the traits that these millionaires do.
They Develop New Skills
They spend at least twenty minutes every day or they try to spend twenty minutes every day developing a new skill. That can simply be listening to a book on tape, reading a book, doing some practice.
I’ve said it over and over to people and they don’t quite get it: It’s the skill that translates to success, not the knowledge.
Meaning, I can know every rule and everything there is to know about football, but I’m not suiting up for the New York Giants. Developing those skills are critical, and you could do it with 20 to 30 minutes a day. You have nineteen hours a week! You can absolutely develop new skills. In this business, if it’s going to be anything, it’s going to be sales and/or marketing.
They’re Into Sales And/Or Marketing
You don’t need to figure out the skill on how to swing a hammer. It’s going to be sales and/or marketing. People that have become millionaires, made themselves millionaires, or worked up to become millionaires spend about twenty minutes a day working on a new skill.
These are the people we’re looking for.
We want successful individuals who are making six figures as an individual or $150,000-plus as a couple, have money in the bank, a good credit score to join our mastermind. We’re looking for that all the time. What’s happening is most of the people who are joining the masterminds are already millionaires.
What they’re deficient in is that most of their money is in the stock market, 401(k)s, a couple of different bank accounts, in maybe one property, and now are saying, “How do we shift this? I know that I need real estate. I know that it’s an appreciable asset. I know I can also make cash from it. How do I make the leap from 401(k) and all this good stuff over here and diversify over there?”
Our mastermind will provide a lot of that insight for people! Those are the ones who are already successful. They are husband and wife. They’re massively successful in the oil industry, doing better than fine. They’re winning. They want to take those winning assets and move them over here into real estate. They come and they work with Jason and me. The guy who started with nothing? He got out of prison and became a real estate tycoon––it’s a very rare tale.
As Jason says, “They usually make movies out of them.”
We know people with that exact story, but it’s tough. The skills that those people work on are sales and marketing. You sit down with that person, you’re think to yourself, “This guy is a sales guy.” Within a few minutes of the conversation you adjust, “This guy is sales and he’s good” because those are the skills they practice. Those are the ones they worked on. They have that high “I” in the DISC (Dominance, Influence, Steadiness, Conscientious) profile. One day, we’ll go over DISC. People who are transitioning into that millionaire status spend twenty minutes working on a skill they need to improve.
They Have Multiple Income Streams
Here’s the other thing, most of them have two incomes or multiple streams of income. That’s the thing we keep talking about. Gary Keller’s The One Thing, just focuses on one thing: You being a millionaire. I’m doing just fine. We have multiple streams of income around the central goal.
I always tell people, “Come to me when you don’t have $100,000. You don’t have good credit. You don’t have any of that stuff.” I tell people, “Real estate is not the place to start. The place to start is go sell candles or something.” There’s some sort of multilevel marketing out there.” They give you tremendous amounts of coaching, support, free websites and all this other stuff. Usually, the startup is under $500.
You come to me off the street and say, “I want to be wealthy. I want to do all this stuff.”
I’ll ask, “What skills do you have? Where are you at with your assets? Where are you at with your financial portfolio?” and it looks bad. I’m going to say, “Go join something.” I’m now with a company called Banner Season. Go talk to me about Banner Season. Let me show you how to make some income using Banner Season because Banner Season is going to provide you with training and they’re going to provide you with support. Real estate, you’re going to have to keep paying for that over and over. In an MLM world, it’s provided. What you’re going to work on with those guys, sales and marketing.
As the economy rises, there are going to be more millionaires. We’ll talk about some of the trends we see with them, as well as a few other trends on how to become a millionaire and what these people are applying to get there. What I thought was interesting was how they always have multiple sources of income. I’m not a big multilevel guy. I joined one or two. I drive around a free Jeep because of one. I’m not complaining. I joined another one that makes a lot of sense in the things that we do, but I’m not hustling. I’m not doing this super Saturday, everyone clapping, but what I do is I study their marketing program.
I go through every single line. I was like, “That’s interesting. That’s how they’re doing it.” There’s a lot to learn there. I’m not sitting here pitching you pills, lotions and magic powders. What I am saying is that a lot of these organizations have a very well designed and a lot of money behind their marketing and sales. If you don’t know marketing and sales, then it might be good to join an organization that is all about marketing and sales. Take those skills once they’re developed and then apply them to real estate. If you’re going to jump in and you don’t have any skills or knowledge about it, you might want to start somewhere else. Most of the people that we find are very successful have been successful somewhere else and they’re just coming over.
They’re Building Networks
Here’s another one. Millionaires understand the power of their network. They’re always building networks. That’s going to be Casey Everhart coming up here. We talked about saving to invest. They liked to start saving in an automatic process. The Pumpkin Plan, if you ever read that book, they are automatically saving money. They’re taking money out of their bank account or out of their paycheck before it even gets to their bank account. They will step outside of their comfort zone. That’s a big one. For most people, that’s the tough one.
We live in the greatest nation ever. Our comfort zone here is very comfortable. You’ve got to be hungry for things. We’ve got to be able to push ourselves out. There is a thing that Tony Robbins does and I watched his videos, I’ve listened to his tapes and all that stuff. I haven’t been to one of his events. I haven’t walked on fire. I’m not going to get into it. You can pay a lot of money so that you can claim that you work for Tony Robbins, which is one of the things I don’t like about it. He came up with the six core needs of individuals, which I thought was very interesting. I love to listen to that bit. They’re at the opposite ends of the spectrum.
Certainty Versus Variety
One of the things he talks about is variety and certainty. Meaning I’m okay with the unknown versus I do not like the unknown. There comes the point here in our world where you can be a real estate investor and not an entrepreneur.
A lot of people confuse that sometimes. It’s okay to want certainty and be a real estate investor, but if you want certainty, it’s very difficult to be an entrepreneur. You can have certainty, some degree of it, in real estate investing, knowing that, “The market trends do this. This is what we’re trying to duplicate in our efforts.” There are no guarantees. Real estate is always risky, but there is some certainty in that we know that most of the time, real estate goes up. In some places in this country, it goes down. We look at Houston. We look at the trends and we say, “This is a good market.” That certainty, so people can do some real estate investing and feel comfortable in that. It’s like, “I’m going to invest in Coke,” and most of the time the Coke stock goes up. “I’m going to invest in Disney,” and Disney stock goes up. The stock market in general goes up. Is there any guarantee that you’re going to be able to take your money out on the day that you need it and it’s gone up? There’s no guarantee at all.
It’s the same thing in real estate. For those who are looking for the variety, those who want to get out into that marketplace and discover the unknown, that’s more of an entrepreneurial trait. A lot of real estate investors are put into a room that’s run by entrepreneurs. That’s when you get, “Check out my Lambo. I’m on a private jet. Look at me I’m crushing it like Gary Vee. Look at this, I’m great.” I get it. That’s self-promotion. That’s marketing. That’s conference in a marketplace. I get all of it. I don’t necessarily like it, but I get it.
People come into these rooms and they’re like, “I’m not interested in doing that. I can barely drive an automatic. How am I going to drive an eight-speed Lambo?” We put these people into these rooms with that whole, “You could do this. You can be like Gary Vee. You could be like this guy. You could crush it. You got to go see Ryan over here and see this guy.” You’re like, “I’m ready to deploy about $250,000 and use leverage to get five properties that hopefully will create about $500,000 worth of wealth over the next few years.” They’re walking into the wrong room. You have to understand and I would tell you to look at those six core needs of individuals and find that video out there. Understand it as you’re heading your progress down this trail and understand that, “I may not need variety. I may not need to be an entrepreneur, but I certainly do need some security and I want to do that in real estate.”
We’re trying to make this point here that about 10% of any given room you’re in is going to be successful over a long time in a long haul in real estate. Some people get into wholesaling, some people get into flipping and that is a very short run. 99% of those people are out of that business after a few years, most after year one because it’s not easy. It requires massive amounts of discipline, massive amounts of capital and they move out. The people that are buying and holding have a better opportunity and statistically to be more successful and the people that are buying and holding are usually successful somewhere else and they’re just coming to this room. What I think is a lot of these people can. We talk about these rooms, these REIA clubs. Understand that most of them are doing promoting. They’re promotion rooms because anyone who gets up on a stage in a real estate club, the promoter, the organizer gets half of whatever is sold in that room. That’s a business model. That’s what they make. It’s perfectly fine. I’ve been introduced to a lot of great people that way and not so good people, but it’s a promotion model when we talk about these real estate rooms. Some are high and might say, “We don’t let any of those guys in there,” but all they’re doing is promoting themselves. They’re still just promoting.Understanding where your money goes and living a conservative life is one way for you to be a millionaire. Click To Tweet
There’s an organization in California and they may not let people sell from their room, but they are selling in that room for sure like National REIA, except it’s pretty overt. Go to the back, take out your credit card, fill out the form, you’re buying. All those rooms are about promoting and so are ours. Jason and I promote the things that we do. There’s nothing wrong with it. If they give away good knowledge and they’re teaching you more about the backhand than about how great tennis is, that’s the room you want to be in. What happens is you get these people who are like, “I’m pretty darn successful,” and all of a sudden I’m in this room where everyone is cheering, jumping up and down, clapping, “I’m going to be a millionaire. I got to go to Alabama and get people to lease option on a $5,000 home and I got to do that 150 times a year. I got to find private money and I got to find agents to work with me. I got to buy this special program and I got to do this.” Wait a minute, I have a job. I work at Exxon. I’m doing well. I don’t want to keep all my money in my 401(k). What am I doing in this room?
That’s what our rooms are about. That’s what the American Real Estate Meetup is. That’s what Jason and I do, Mr. Texas Real Estate. You’re in the wrong room for most of you. I highly recommend that you take a look at the six core needs that Tony Robbins developed. It’s pretty spot-on for a lot of it. It’s hard to peg any one person with any one category, but we talked about certainty versus variety. If you’re in that room with entrepreneurs and we’re going to do this. Certainty is, “I want to find a good neighborhood that’s appreciating that I can make a little cash and over a few years hopefully double my investment.”
Significance Versus Love And Connection
There are other ones that are significance versus love and connection. That’s a big one. I read that everywhere. That is Facebook. There are two types of people on Facebook, people that are promoting themselves and the people that are looking for connections. I usually block most of the self-promoters.
You can see the people that are looking for the connections, “Look at my child.” They’re not promoting themselves or “This is cool. We like this. We did this.” Isn’t that funny? That’s looking for connections versus “Everybody, look at me.”
Growth Versus Contribution
The other two are growth versus contribution. I have been in that growth mode for a very long time and it is a fault of mine that I don’t contribute enough to my community, to my country. In my mind, I’ve convinced myself that redoing these neighborhoods is a service and it is, but I need to spend more time giving back to the community. One of the things I’ll be doing is looking for some good nonprofits to start working with. I think I found one up in Cypress. It’s a no-kill animal shelter. Those are the balances; certainty versus variety, significance versus love and connections, growth versus contribution. I am in full growth mode. I tell everyone, “I’ve got a few years left in this business. I’ve got to go.” After that, then it’s all about contribution. It’s okay to put your head down, do what you got to do financially, get your goal setting. After that, you have a little bit more balance. Can I ever leave real estate? No, I can’t leave.
Jason and I talk about a ten, thirteen-year plan internally. I know that year nine and year ten, I’m still going to be around here. It may not be in the capacity I’m doing now. For you, a little self-actualization, a little self-analyzing, understanding that, “I don’t necessarily need to be in this room. I want to be in this room. I want to go sit with Robert, Jason or these other people who are focused on creating wealth and not so much cash.” There’s a lot of these rooms that are about money now and there are a few rooms that are about wealth over time. I’m asking you to think, but for sure the Jet Lending event at the Redneck Country Club is about wealth over time. Richard and Eddie are on stage every single month and they’re talking about wealth over time. There’s another room in this town and you figure it out where they’re up there talking about making $10,000 this month. If you’re looking to invest and create a portfolio, the rooms that are constantly talking about cash in your pocket are probably not the ones to go to. You want to be in the rooms like the Redneck Country Club, like our clubs where we talk about wealth over time. We have a little small apartment meetup with nothing but wealth over time.
We have a meetup in The Woodlands, the Sugar Land meetup, wealth over time. One of our meetups down south near Dickinson, that’s more about cash. That’s more about wholesaling and flipping because that market has got a lot of good deals down there. We try and react. For the most part, Jason and I are talking about wealth over time, not cash in your pocket. Trust me, Jason and I, we’re broke, but it’s a good broke. I’m dead serious. He called from some rest stop somewhere and he said, “How are we doing?” I’m like, “We’ve got to come up with another $50,000. We’ve got to figure this thing out over here. I think we can do this way. We’re good to go. We got a plan, go.” We’re always hungry for the cash to keep growing our wealth. We’re not the other way around. We’re not constantly showing people how to make $5,000, $3,000. We can do that. We have enough plans, enough products and enough understanding of this market on how to create cash, but our cash goes to wealth. Understand there are two different rooms in this town, ones that talk about cash and ones that talk about wealth.
We’re looking for people for our mastermind. If you’re an individual who makes about $100,000 a year, has $25,000 to $40,000 in the bank, has good credit and you’re ready to start buying real estate, then I think we have a group for you. You can text us at (281) 401-9008. That’s the mastermind. If you’re a couple making over $150,000 a year with $40,000 or so in the bank, good credit, then I think we have a group for you. These are the people that we’re attracting. We’re telling everyone who we’re looking for and they’re coming to us. They’re moving. Most of you who aren’t in the mastermind, we’re going to give you a little preview opportunity. We want you to reach out to us.It's the skill that translates to success, not the knowledge. Click To Tweet
If you’re focused on wealth, there are certain things you’re going to need to do. You’re going to need to understand who you are. Understand some of your weaknesses. You’re still going to have to have good negotiation skills. You’re going to have to focus a little bit on sales. Not a lot like the entrepreneur, but a little bit. Certainly, there’s enough books and videos out there where twenty minutes a day focusing on your marketing and sales skills. It should not be difficult. Download Audible. Text me at (281) 401-9008 and I’ll give you a couple of books to download. That’s going to talk about generating wealth. That’s how you become a millionaire.
The whole, “Look how much cash I have. I’m wholesaling. Look at all this money.” That’s great and I appreciate that and that’s awesome. I also know that most of those people are out of business in a few years. Most of them shift their business model, usually around year three. Some of them start investing here, some of them move on. Some of them figure out, “I’m good at marketing. I’m now going to be a marketing guru.” That’s not us. We’re about building wealth, having a good job, working on our skills, watching our expenses, saving money, taking that money that we saved then deploying it into real estate. If that’s you, we want to talk. We want to work together. Hopefully, you found a little bit of this helpful. We’ll be back. Thanks a lot for reading.