BiggerPockets Real Estate Podcast - 503: The Millionaire Formula: 10 Steps to Hit 7-Figure Net Worth (Part 1)

Episode Date: September 9, 2021

You probably know Brandon Turner and David Greene as multimillionaire real estate investors. What you may not know, is that a decade ago this was a very different story. Brandon didn’t grow up in a wealthy family, and by his 20s, had packed on about $20,000 of credit card debt while spending $1,000 more than he could afford each month. David grew up in a family where finances were a constant stressor, he later vowed to himself that he would never let money problems hurt him or the people he loves. Now, both Brandon and David have made the long journey from rags to riches, and through investing in real estate they were able to pull themselves up by their bootstraps and reach financial independence. Today, we talk through the first five (of ten) steps that helped Brandon and David reach this financial feat.  This is a great episode to take notes on, as becoming a millionaire is close to impossible without following most, if not all of these steps. While this episode isn’t entirely focused on real estate investing, a large part of being a successful real estate investor is financial intelligence. Even if you’ve made mistakes in the past with investments, debt, spending, or any other financial lever, following these ten steps will give you a solid framework to stair-step your way into millionaire status.  In This Episode We Cover How Brandon and David discovered their need for financial independence early in life  Thinking of money the same way you think about fitness and health Reaching huge financial milestones, even if you started out with extra obstacles Fighting lifestyle creep and never falling into the Ferrari trap  Building an income stream that is scalable, passive, and automated  The “stair-stepping” method that leads to massive wealth accumulation And So Much More! Links from the Show BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Youtube Channel The BiggerPockets Bookstore Alan Corey Gary Keller BiggerPockets Podcast 500: Robert Kiyosaki: America’s ‘Rich Dad’ Sees a Real Estate Crash Coming BiggerPockets Podcast 447: Create Your Dream Life in 3-5 Years Using Vivid Visions with Cameron Herold BiggerPockets Podcast 461: Defeating the “Enemy of Success” with Steven Pressfield (The War of Art) GoBundance YNAB (You Need A Budget) Mint Open Door Capital Email Your Questions: [e-mail] Check the full show notes here: https://www.biggerpockets.com/show503 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 503. Like, it's going to be harder to become a millionaire than it was for you and I. It's just a fact where we can't change the fact that we can't change the past. All we can do is look forward and say, hey, these rules helped us. They'll help you regardless of where you started from. I believe these will help you. You're listening to Bigger Pockets Radio. Simplifying real estate for investors large and small.

If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. What's going on everyone? It's Brennan Turner, host of the Bigger Pockets podcast here with my co-host, Mr. David, multimillionaire Green. What's up, buddy? How you doing?

That's sort of a rough nickname. I know you meant nice things, but let's not have everyone run around and say, oh, there goes the multi-millionaire. I had to come up with something at the last second. I was like, oh, no, what's today's show about? It's about becoming a millionaire. Let's do that one. I'll work on a...

I know where you came from. I just don't want everyone thinking I'm like, Scrooge McDucks, swimming in my bin of gold coins. Well, I don't know, man. You literally have a room in your house filled with gold coins that you dive into. So I don't know, man. Well, because I'm so mature and benevolent, I only do it once a week. I limit myself.

That's true. That's true. That's true. You keep yourself limited. So good man. Well, today's show is all about the things that made us. a millionaire and I want to preface a show with this. Like, Millionaire is a buzzword, right?

We're using it for a reason because I wanted you to click on this video or this podcast and you want you to watch this thing. What we're really talking about here is financial independence or freedom or any of these buzzy words. That basically means the ability to do what you want, when you want, how you want, where you want with whoever you want. Like, there's so much, like, I remember it was like, like, I'll give my story here in a nutshell that we'll get to a quick tip and everything else.

But I worked at a, you know, a cold stone creamery. I had a scoop and ice cream. Had a bunch of student loan debt. Had a bunch of credit card debt. Didn't know what I was doing. I worked at a bank for like $12 an hour, $13 an hour. I hated every second. It was staring at the clock.

And that was the life that I like led. And every Sunday night, I just pit in my stomach of like, I don't want to do this again. I don't want to do this again the next day. And it was painful. And now on the other side of it, despite how much like, yes, millionaire, but really what I'm saying, like on the other side of that where I get to kind of do what I want, where I want, where I want, when I want, when I want, how I want and who went with whoever I want. Like now I live in Hawaii and, you know, do a lot of fun, cool stuff.

Like, it's just so much better. And I'm not saying money fixes all your problems, but it's just much better. David, maybe in a quick nutshell, give us your story. Like, because I know you've been through a similar journey. You were not born wealthy. Yeah. When I grew up, my parents fought really bad. And every little kid who grows up in a household like that, it kind of impacts them.

And a lot of the fights were about money. So my mom would go to my dad and say, hey, can I, David wants this GI Joe and my dad would scream at her for asking. And then she would have to come tell me no. And I'd feel terrible because I basically like my desire for that GI Joe sent me. my mom to the chopping block. And I just made this agreement with myself a young age. I will never, ever, ever let money become a stumbling block in my life. I will have enough money that I can have whatever I need and what I want. And I'm not going to let it hurt people. And as I grew, I saw money

led to so many fights. It leads to so much pain. We often criticize people that have a lot of money and say, oh, look how bad they became. And it's true. A lot of the time that does happen. At the same time, lack of money causes people to do really bad things too. If you think about any time you've been desperate, which lack of money can create, you were not the best version of you. I'm telling you, I've seen agents on my team that were down for the cause and great attitude, and then they hit financial hardship and all of a sudden greed just comes out of people from the fear of not having enough. So to me, having enough money that you can be comfortable and not have to be afraid. Am I going to get a flat tire? If my kid needs something, am I going to give it to him?

It allows you to be a better version of yourself, that you're more giving. You can be more in tune with other people's needs and that's one of the reasons it's such a worthwhile goal to pursue yeah good and stuff man so yeah that's what today's show is all about we're going to go through a bunch of different tips we've got 10 here i think we'll probably end up making this a two-part show because david and i don't know how to keep things succinct uh but we're going to talk about these 10 different habits or traits or skills that we have developed that made us millionaires like this is not like hypothetical like this should help you like this is like all we're saying is these 10 things that we're going to talk about and actually we have bonus number 11 on there too they literally like they legitimately and literally

help David and I become millionaires. We are millionaires because of these things. And that's what we're going to be teaching you today. So we'll get into that in just a moment. Go ahead. Please. Let me add one disclaimer before we go. There are many people that have, I don't know what you want to call it, psychological hangups when it comes to money. There's guilt associated with having money. There's guilt associated with wanting money. A lot of that societal is kind of trendy right now to criticize the rich. But if you're someone who struggles with that, at the same time, you feel the pull inside to own real estate and want control of your finances and you're just stuck in this place. My challenge to you would be to ask yourself to change the way you look at money.

Instead of it being a resource that is supposed to be equally spread around, that instead you look at it more like building wealth is like building fitness. Nobody criticizes someone who really cares about their health. Nobody criticizes someone who wants to be in really good shape who monitors what they eat and when they eat and how they eat and what they do for exercise. No one says, why are you just in the gym sweating really hard all day long? There's more to life than just being healthy, right? That doesn't happen.

So for those that are struggling with that, just hear the word millionaire and kind of cringe, don't look at it like millionaire. Look at it like six pack or something, right? Like if you wouldn't have a problem with somebody pursuing fitness, you shouldn't have a problem with them pursuing health. And you will find that the principles that lead to each are very, very similar. Yeah. I love that you brought that up because it is money is a skill set.

This is one thing, of all the things I wish I would have been taught at a younger age. This is probably one of the biggest, and that is money is not a lottery. It's not, yeah, some people win a lottery, but like building wealth is literally a series of steps and skills. Like, becoming wealthy is just like, it's a, I don't say a game because some people get offended about that. And I'll say it's kind of a game. Like, you can learn how to play the game. It's a game in the sense. There are rules. There are rules. And if you follow those rules, just like with fitness, you probably get the results you want. Now, are there obscure reasons why you wouldn't get the results that you want? Sure, of course. Just like there's obscure reasons why,

even if you diet and exercise well, you still not be in shape. There are some weird body things. But 99.9% of the time, if you follow like the 10 rules that we're going to lay out today, you're going to be just fine. You're going to get there and it's going to be an amazing life afterwards. I hope so anyway. Unless you're a dirt bag, then you're going to be a bigger dirt bag, in which case, turn this off. Yes.

And the same goes for fitness, right? You see, yeah, everyone knows that person that got really hot and they just became a complete narcissist, right? Like that, it happens with everything, not just with money. I also want to acknowledge that there are people who come. from a background where they are behind the eight ball. They do not have the advantages that other people have when it comes to money, just like with fitness. There are people that were raised like you, Brandon, you came from a house where salad,

at dinner meant like, what, like fruit salad, right? Yeah, yeah. Snicker salad. Snicker salad, right? They put like candy bars and say, well, we're having salad with our dinner. There was dessert. My growing up was. Desert every night.

So you came from a place when it came to fitness of not a good background. You were not taught the rules of fitness from your family. That doesn't mean you should sit and cry and say it's not fair to me because I didn't have good upbringing and I didn't have advantages other people did. It actually means you had to try harder in your pursuit of fitness. And that's what this is about. This is acknowledging there are people that do not have the same privileges as others. And that means they need to try harder. They need more of this information.

They need to be listening to this more frequently. They need more focus because less people in their circle are going to be supportive of them. And that's the spirit of this whole like, do you want to be a millionaire episode where? it's coming from. Yeah, I like that you said that man. That's good because like, yeah, it sucks. We acknowledge that it sucks. Like for some people born in this country, it sucks more than it's been. Like, it's going to be harder to become a millionaire than it was for you and I. It's just a fact where we can't change the fact that we can't change the past. All we can do is look forward and say, hey, these rules helped us. They'll help you regardless of where you started from. I believe these

will help you. So with that said, let's get into today's show. But first, let's get to today's quick tip. Tip. Tip. Quick tip. I'm going to go with this one. I've got a book on multi-family real estate coming out here in just a few short weeks. It's going to be the biggest real estate book launch that we've ever done at Bigger Pockets. I hope we've already got like over 5,000 pre-orders. I would love to get that to 10,000 and just kind of know that. Had we launched this through a traditional publisher, I maybe could have gotten a bestseller. I mean, we won't. We get a bestseller because that's not launched through a traditional publisher, but, you know, mentally it would make me feel pretty good. So if you want to do that, and I think the books are

good. I think they'll help people become a millionaire. It's called the multifamily millionaire volume one and two. You can pre-order it at biggerpockets.com slash store. Cool. at that slash store. We all joke that rentals are passive, but if you're spending nights matching receipts or guessing what a property earned last month, that's not passive at all. Baselaine fixes that part of landlording, the financial chaos. Their banking and AI bookkeeping system automatically tags every transaction, updates cash flow insights in real time, and builds the reports you need for tax season.

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You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. I think that's all I got then. Now I think it's time to get to the list of how to become a millionaire. Anything you want to add before we get started, David? I'm really excited about this. I would say as you're listening to this episode, this is going to be a lot of content.

There's no way around it. Now, that's good. But it's easy for your mind to wander at a certain point. If you catch yourself, just thinking about other stuff, it's okay to pause it, listen to it later. Like your brain has a limit of what it can do just like your body does before it needs a break. So I often find that when my focus starts to wander, I just need to let that muscle sort of cover and I do something else while it's recovering. That's a great point. I'd also recommend taking notes if you can. When you take notes, you'll remember more of what you learned. Also, they did

a study at one point. I don't remember who did it, but I read this one. So they did a study that on like how people remember things. It's like people, some people remember, you know, whatever, it's like 20% of what you read, 15% of what you blah, blah, blah. It's like that whole thing we've all heard before. But what the study basically said is the number one best way to remember something is to think you have to teach it later, is to read something or to consume something. And with the assumption, that you're going to have to teach it later. So starting right now, get yourself in that mindset that I'm going to have to teach my wife. I'm going to teach my husband.

I'm going to teach my kids. I'm going to teach my church. I'm going to teach whoever, you know, some kid down the road. I'm going to teach them these topics. Get yourself in that mindset. And this stuff will not just like go in your ear and out your ear, but it'll internalize in your soul and make it easier to work these habits in your own life on a day-to-day basis. So there's a little hack for you.

All right. Let's get to the tips. Number one. The first thing we have here is aim for a. target. I know it's a little bit of a fluffy one, and we're going to start with a little bit of a fluffy one. We'll get more tangible here in a second. But what I mean by that is most people don't become millionaires on accident. Myself, definitely. I read a book when I was younger by Alan Corey, who's actually been a guest on the show before. He wrote a book called A Million

Bucks by 30. And I remember reading that book. I got it from my library. I was even like too poor to buy a book. I got it from my library. And I remember thinking, I want to be a millionaire by 30. And I, when I was 30 years old is when I crossed. So I don't know if I made it by 30, but at 30, I crossed the million dollar mark. And so I'm not saying like I wrote down that goal every morning and said my affirmations that I will be a millionaire by 30. But in my head, that was always a target I was going to hit. And I remember when I was 20 years old telling my wife when we were just dating at them.

I was like, yeah, I'm going to be a millionaire someday. Like, we're going to be a millionaire. Like I'm not even remotely like confused about that topic. I will be one. Now, I don't know if it's going to take me two years or 10 years or 20 years, but the target was always there at a broad level. David, is that kind of how you looked at it as well? or did you just think that wealth was not attainable?

And you stumbled across it. I knew I wanted it, but I definitely never sat down and said, I want to be a millionaire. I found out I was a millionaire by accident. So I had no idea that I was when I had been a millionaire for a good period of time before I realized that it was when I joined Gobundance. And they basically said, you have to start tracking your net worth. And originally I thought that is so stupid and egotistical. It wasn't until later that I realized, well, I track my results in the gym. I tracked myself on the scale.

I track the number of like arrests I made or whatever. Whatever I'm doing, I'm looking at trying to gauge how well I'm doing and it keeps you on track. But for some reason, I had that notion that tracking net worth was only about ego. And I realized it was like 1.35 like way back in the day. And I just thought like something shifted in me that I now identified myself as a millionaire. And it seems silly, but it made a huge difference. I spent money differently.

I had more confidence. That had a lot to do with me actually going to apply to beyond the bigger. Pockets podcast as a guest, which obviously opened a lot of doors for me. So I realize I need to be setting, like having more targets out there because I don't, I'm not a person that struggles with putting effort into something. I definitely need to know where I'm putting that effort into. And so that started a trend of developing different targets in different areas of my life and then realizing like, hey, if I could become a millionaire, I could do this other stuff too. Yeah, that makes a lot of sense. And you know, I want to call out one thing that I've seen

you do in your life and I mean call out in a good way like five years ago you and I yeah probably about five years ago now you and I were hanging around right after we met we're hanging around a wahu Hawaii and we're driving I remember on that like elevated highway that's like super cool I remember right where we were and I remember you telling me like you were just getting into real estate being a real estate agent and you were telling me all this cool stuff about like Gary Keller that you learned and reading the millionaire real estate agent and all that and you were like getting going with it but you said yeah I want to be a millionaire real estate agent like make a million dollars a year as a real estate agent in the next three years I remember you or five years

I think you said. And I remember just thinking at the time, like, that was such a cool, like, you knew where you were headed. Like, you didn't, you just like, I want to be an agent, like a mediocre agent. Like, I'm going to go make $50,000 a year as an agent. Like, most people get into real estate agents and they just think I'm going to make 50 grand. You had a target and you were like, like, I'm not going to be an agent if I'm going to make $50 or $100 a year.

Like, I want to make money. And then, like, I don't even think it took as long as you had set a goal for, but you did it. Now you're a killer real estate agent and one of the top in the country. And I think it's because you had a target. So that's what I think almost all millioners. I know they have a target and they go for it just like that. You know, you said that and I started looking through the list of stuff we're going to get into.

And many of the things we're going to describe played a huge role in how that specific goal ended coming about, which is actually kind of exciting because it proves this stuff works. Like number eight is a big reason why we were even talking about that topic together. So yeah, thank you very much for saying that you played a big role. And okay, that's David's target. Well, David, why don't you do this and what about that? You know, here's another point. By having a target, you allow people to help you. Once you realize what David wants, you knew what kind of advice to give me and then how to

guide and push me. Yeah, that's so good. We talked about that on the episode we did. We recorded episode of the podcast with Cameron Herald. I'm not exactly sure what number was, but I'll say if I can find it. But Cameron Herald wrote a book called Vivid Vision. And it made a big impact on my life, that book, really changed my life because it let me set a big target from my real estate company called Open Door Capital.

And so I set a goal of $50 million of real estate and I wanted to own a thousand units in three years. We reached that goal in less than half the time. and it's because, like, I had a very clear target to aim for, and therefore I could work backwards. Now, some people, like, I'm a little meticulous with some of my goals. Like, some of my goals are more general. Like, I want to write a kid's book someday. I want to write, you know, I would love to have a New York Times bestseller. But I'm not actively working towards those on a regular, like, hardcore basis. Here's what I mean by that. There are goals that I have, yeah, that are like ambitions. I would love to do that someday. I would love to have a kid's book.

I would love to have a plane, a jet, right? And then there are goals that I, and, again, this is not everybody, but I get super focused. And every single day, I work backwards toward that. I mean, I have an entire journal that I put together for myself. And then later we sold it on bigger pockets. We still sell it. It's called the intention journal. And it's literally designed to take your vision of where you're going down to an annual goal,

down to a quarterly target, down to a weekly, like, benchmark. Like, this is what I'm going to do this week. We call it the weekly battle plan. And then even to a daily, like this is what I'm going to accomplish today, down to a, this is my next step, my next most actionable steps. What this journal does is it takes a big goal and breaks it down to what do I need to do right now that'll take me less than five minutes. Like that mentality of that like bulldog, like going at it with hard.

It's exhausting and I don't do it with all my goals. But the ones that really matter to me, like I treat it. I mean, I treat it exactly like that. I treat it like a business and it's very important. So anyway, not everyone does that. Not everyone's on board with that. But it's been a huge improvement in my life is when I go after a goal with just that ferocity. tends to happen way more than had I not.

So anyway. You know, and the important thing is that you have a target, but what I think, Brandon, that you're highlighting here is that different people's brains work differently,

and so different tools or resources are more applicable. I'm not a journaler. I don't get anything out of it. It actually frustrates me. I don't remember anything that I wrote down in previous journals. So when I hear about the attention journal,

I know, well, that's not really my thing. However, for people like Brandon, whose brains are going in a million different directions all the time, which I think is probably the majority of people. I think less people are like me that are maybe naturally focused on like stuff

and I need someone to bring my attention somewhere else. The journal helps you take all this crazy energy and focus it like a laser beam into one thing. It continually brings you back to what you're trying to do so that all of this good intention, which I think all of our listeners have. They all want to take over the world and do something great. They just don't know how. Well, the journal can be a way that like you get that Iron Man, Tony Stark, like, focus laser coming right out of your chest, boom on your goal.

And it helps keep you on track. That's a great example. You said Iron Man, but I'm going to replace it with another type of Iron Man, right? Like an actual Iron Man, like a running Iron Man, right, like triathlon. Like that's what it feels like when I'm hardcore going after a goal is it's like I'm training for a triathlon. I'm going like every day. I'm tracking my runs. I'm checking my bike.

My swim. I'm looking at my times. I hire a coach. I like do all that. Like when I did a triathlon, I did all that stuff because that mattered to me was to cross that finish line. That's what goals. setting is to me, but I can't do with every goal because you will just burn out. It's an exhausting thing.

But if something's important to you and you feel yourself like, oh man, yeah, financial freedom's important to me and I want to be a millionaire, but I haven't taken any action on this thing in three weeks. I signed up for Bigger Pockets Pro and I said I was going to analyze a bunch of real estate deals. I haven't analyzed any. Or I got a real estate license, but I haven't cold called a single person, even though I know I need to. If that's you, then maybe you need to be the type that sits down and writes your goal out every morning and writes down, this is the thing I'm going to do to accomplish that today because really like most go I've said this before and we'll move on I don't want to stress this point too much but most goals that you have most big achievements in life whether it's

becoming a multi-millionaire whether it's improving your relationship with your spouse whether it's being a better parent everything you want to go for is a series of like little tiny five-minute simple tasks everything is just a series of them there's just usually a lot of them and so what we do as people is we tend to like we don't define what it is our goal is we don't have the target like we're talking about here with this tip number one we don't have the target And then more importantly is we don't take the little steps to get to the target. We just have the target and that's it. We don't work backwards and say, oh, yeah, I guess all I need to do is analyze a deal next.

Well, that's the next thing. So that's why having the target's important, but also working backwards to say, like, okay, I've not worked on this in a while. That's stupid. Let me define what that next thing is and let me go ahead and do it. You know, I'd like to kind of wrap this up with a little bow for whoever's listening, right? Number one is aim for a target, but there's different ways to do it. So Brandon, we've said he likes to journal.

He gave a great, great dissertation right there on why that. that works for him. I prefer maybe like what I would say, like as a mastermind approach. I like to surround myself with other people and being in their presence for whatever reason helps me stay focused on the goals and keeps me motivated. So maybe there's a thing where I know someone's going to say, hey, how's it going with whatever? And if I've skipped doing that for three weeks, I'm going to feel bad. So being in that group of people, which we're going to get to later in the show. But how do you know which one is for you? That's what I'm trying to get to. So if you're the person who tends to track a lot of different things. You jump from the Instagram that teaches you how to trade in

4x into cryptocurrency methods, right? And then you say, I want to get my real estate license, but I think I also want to be a loan officer and I also want to flip houses. And you are interested in so many things and you know you could do all of them, but you don't actually make any significant progress in any of them. You may be the journal person, okay? If you're the type of person who just keeps going to the same thing and you know this is what I want to do. Like I said, I want to be an agent that makes a million dollars in a year. You need to get around people that are doing that. That may be more important than just getting a journalist to get around other people that are going to maybe like, what's the word I'm looking for? Kind of show you the way. For me, when I watch, I could just

be confused. Like, I know I want to do this, but I don't know how. And then I get around someone else and I watch them do it and it just clicks. Oh, that's all I got to do. I could do that. And then I take off. It's like very similar in Jiu-Jitsu probably, Brandon, when you first learn the triangle. You're like, there's all this confusing stuff, right? Like escaping the bounce and trying to take control and transitions and it's just so much for your brain to learn. But for some reason, when you learn the triangle, it just clicked and you're like, oh, I can do that, right? In the middle of chaos, I can remember that movement. And so boom, you developed a really good triangle. Life kind of does that to you. You've got all this chaos going on inside your head,

and then you have that moment of clarity and like, it makes sense to you. So that's how I would advise the people if they're having a hard time figuring out their target is ask yourself, your struggle? Is it that you don't take action on something that you know or that you're taking action on 500 different things and you're not getting anywhere? That's really good, man. Hey, and I don't want this whole section to be a plug for the journal. So honestly, you don't have to use it. You could write it down on a piece of paper every day. But I will say this is when you buy the journal, like from BiggerPockets. I think it's BiggerPockets.com slash store. You can get there. When you get that, it also includes, we actually automatically just for free include access to a mastermind

with other people who are doing the same thing. And when I mean mastermind, all we do is we take people who have bought the journal, and then we put you in a group with other people who have bought the journal. And so that way you can meet together on your own, like over Zoom or whatever, over a phone call every couple weeks. It's kind of a self-organizing thing, but we just kind of facilitate the organization of that. So we'll put you in a group. So again, if you go to bigger pockets.com, that store, you'll get it there. So there you go. That's actually a very smart idea that you guys did that because you're sort of hitting both angles there. That's what I want to do. Yeah, because some people are daily journal people and some people are just like, hey, I want to meet every other week with a group of people.

and I'm going to tell them what I'm going to do this next week, and then they're going to hold me accountable to it. And that's been a huge impact on my life, having those groups. So it includes both. All right, moving on number two. This is actually huge and something that's not talked about enough. And that is having a scalable income source. If you want to become a millionaire,

we could even start of this episode talking about this. If you want to be a millionaire, fine. Start when you're 20, stick $100 a month in the stock market, and by the time you're 65, you'll be a millionaire. That's not what we're talking about today. Like really it's like how to become a millionaire way faster. And so having a scalable income source is number two. And that means having a stream of income that you can directly influence to climb.

If you are a school teacher, there's nothing you can do to make more money. There's really not much. Maybe you go get your master's and you go from making $38,000 a year to $48,000 a year. But come on. Like it's almost irrelevant. I'm not saying you shouldn't be a teacher. We need teachers. We need firefighters.

We need cops. We need all those people. but they're not scalable income sources. So how can you build a scalable income source? And it could be your primary job. Like you leave your job to become a, for example, a real estate agent. The better you are as a real estate agent, the more money you make. Or maybe you become a loan officer.

The better you are at your job, the more money you make. Or maybe it's a side hustle. Maybe you start a SaaS company on the side, like a software company on the side. Or maybe you do something. You start a tutoring business. And when I say scalable, what I mean is literally like the ability to make it as big as you can dream. Doing tutoring on the side is not a scalable income source. Yes, you can make more money, and I'm not saying you shouldn't do that for extra money if you need the extra money.

But it's also not scalable because you, okay, fine. Now you have your 40-hour job and you spend another 20 hours a week doing tutoring for 20 bucks an hour. Great, you make an extra 1,500 or whatever it is a month. And that's it. It's not scalable to big levels. So, David, what are some examples of scalable business? I mentioned a couple like real estate agent and loan officer. Anything else you can think of in there? Well, the first thing we should highlight about this is that it works if you're passionate about it, the follow your fire thing. Okay. Like, it's good. You like real estate. So many people that listen to this podcast love real estate like we do. You and I, Brandon, no matter what we do, we always come back to real estate. Can you

agree? It's like our first love, right? Like you married your first love and I'm still dating mine, which is real estate. But there's more than one way to be involved in it. So all the people that are like, I'm going to quit my job and be a full-time investor. That is not necessarily the only way to pursue your love of real estate. And it's definitely not something you have to do right off the back. You can break this into steps, right? Like scalable, achievable goals. So for me, I loved real estate. I made enough money from my investments that I could have quit and had my bills paid for. But it wasn't the life I wanted. And more importantly, it wasn't to me the potential that I had. I knew I could be bigger. And it was fun trying to grow something bigger.

So to me, there was a step in between being a full-time investor and that was being a real estate agent. So as I worked my job, like the non-scalable one, which was police officer, which actually is a side note, was somewhat scalable because you had overtime opportunity. So if you're a nurse or you're some type of a position that you can work overtime, you have a form of scalable thing. It's just not as good as when you're the business owner. Becoming a real estate agent made me a business owner. And then I realized, ooh, this is actually something I could scale just like in my portfolio. You know, I could get clients and then have other people show them houses. And I sort of built the system I'm building that involves, you know, it's a different way of doing real

estate where you have one mastermind that understands how to advise the client and other people doing different parts of the job that they couldn't play the mastermind role. They don't understand it that good, but they can definitely do the part they love, which is making people happy, giving them gifts, talking to them, opening doors. And I kind of created an ecosystem where that could grow. That's incredibly scalable. I can put David Green teams in all these different cities throughout the country, which eventually is going to be the goal to do that. And kind of what I want to highlight is that it didn't have to be all or nothing. It wasn't, I work my job or I'm a full-time investor. There was this step in between that actually made it really easy and opened up even more

doors. Now, your original question was, what are some other jobs? I believe you said that are scalable, right? So first off, anything commission based. I like to look at the mentality of being an agent, and I don't say this is a job, okay? It is an opportunity to earn a commission. That's the best way to look at it. I have the right to earn a commission on a transaction. That's what a license is. It is not a job. And if I choose to take the actions that will lead to me earning a commission, then I can. And there's no one that can stop me in this world. There's nothing that forces me to be in the office for 40 hours a week either. A lot of people don't realize that I was a cop and an agent for about a year and a half before I left being a police officer. I cut back on my overtime. I replaced it with being an agent. And Friday, Saturday, and Sunday is when I would

show houses and do the majority of agent work. And Monday through Thursday, I would, my shift started at two in the afternoon. So I'd get all my work done before I went into work. And I just did both of them, right? I didn't have some of the obligations other people have, like a family. So I had more time. But you could easily, I don't want to say easily, you could make it work where you can do both of those. And I didn't switch into the full commission until after I had like sort of ramped up and I had thing's going. So a loan officer, a real estate agent, a home inspector, a home appraiser, any form of like construction that you could be as big as being a general contractor and running a business or as small as being a subcontractor, even a handyman. And you just kind of get involved

in the world of real estate through serving other people and you learn being in that environment while making extra money. Am I missing anything here, Brandon? No, that's really good. I want to point out like a, not an analogy, but an example of like when I said earlier, doing tutoring doesn't necessarily to still give you a scalable business. It gives you additional income, right? I guess here's the shift in thinking that me and David have had that have made us millionaires. And part of this will come back to later in the episode or next week's episode. But this idea of instead of thinking I'm going to tutor 20 hours a week for an extra $400 a week or whatever the number is, what if instead you thought in terms of I'm going to hire some tutors and I'm going to create a tutoring brand in my area and I'm going to have a

building where kids can go to tutor and I'm going to own that business because now that is a scalable tutoring business versus I'm going to go tutor. And so that's, I just want to make that quick point of if you can create some side hustle. And again, like David said, it doesn't have to be your full time gig at the beginning. You can, you can step into it slowly. But some way to make more money. But thinking that way of like not I'm going to do the work. And this is really going back to Kiyosaki's, right?

Kiyosaki's whole cash full quadrant. The first quadrant is there are people who are employed. Like I work as a doctor. There are people who are self-employed. I own the doctor company. Or I own like, I guess maybe the tutor is. better example that I work as a teacher or self-employed. I'm a tutor after school. I help kids. And then there's the business owner, which is I own a tutoring business and I hire tutors.

And they are all working for dollars per hour. But I'm the business owner. I can work as much or as little as I want. And then the fourth quadrant is investor where I invest in a tutoring company. Like that's what I want to do. I want to invest in a tutoring company. That usually comes once you have money though to make you like next level wealthy. Well, you also want to have been in that environment for long enough to know what a good person or business to invest in would be. It's similar to being like a hard money lender. That's the best place to be. But if you never flipped houses or you don't know how real estate works, how do you know

what deals to lend on? How do you protect your investment? You need some knowledge about that niche itself. That's why people tend to move through the quadrants. They start with employed, move to self-employed in their similar industry. They move from there into a business owner and then move into investor. The cool thing is you don't have to do that. You could start with business owner if you wanted to.

It helps to know the industry, obviously, which is why most people. people move from either employee to self-employ or employed to business. Yeah. And when we get to number five, people will have a better understanding of how that would apply in the example we just described. Yeah, there you go. All right. Well, that was, so again, scalable income sources, find a way to generate more money.

Just to give you guys a background of our story a little bit. So I flipped houses is one of the things I did to increase my income. So I'd buy houses, fix them up and sell them. I made money that way. I also bought rental properties that produced cash flow. We'll go to talk about that here in just a minute. But it gave me more and more income. Every time I bought a property, it's like a little oil well generating more profits for me.

I wrote books. In fact, a lot of my income comes from the fact that I wrote, what, six books now, seven books, something like that. And I get royalty off the books every single month. I don't work for it. Every time I've wrote a book, it makes more money every month. It's pretty great. Now, again, I'm in a position that I can write a book and make a lot of money. You're probably not.

Most authors don't make anything. So again, look at your life and think, where's my unique position? Where's my unfair advantage? For me, it was that. And today, it's open door capital. I do, I started a real estate firm that invest in mobile home parks. and apartments. And so that is a scalable income source for me. Now, when we say unfair advantage, don't hear this is something unethical. Okay. That's just the word we're using to describe.

If you have bigger shoulders, spend more time like on your physique with your shoulders, right? Like you don't want to skip leg day for your overall fitness, but there are things where if that's not your niche, then you don't put as much attention into it. That's a word like, where are you, like Brandon, we just described uses the triangle because he has incredibly long legs and arms. it's easy for him to pull that off. That makes way more sense than the guy you wrestle like your traditional wrestler who doesn't have a neck, his jaw connects to his shoulders. You know those kind of people and it's very, like they're very defensive, strong people

when you're in combat against them. They're going to have a different style. That's all we're saying. Look at your advantages. Brandon has an unfair advantage with his length. So he uses it. That same length can hurt him in other parts of Jiu-Jitsu, right? Just like your unfair advantage in life can hurt you in other areas.

So if it's going to be a weakness somewhere, make sure you're taking advantage of the strengths it offers. That's a great point. Again, one example of that would maybe be, again, if you're a teacher, you have an unfair advantage in that you know lots of parents and students, you know who's struggling.

So becoming a tutor gives you a leg up. Becoming an owning a tutoring business, you're going to be way more successful that tutoring business than I am, who's never been a teacher, and I don't know any of the kids in school. I don't know any of that stuff, right? So you're an unfair advantage versus if you're like,

I'm a teacher, I'm going to build a scalable business. I guess I'm going to go sell sunglasses, right? Like, there's no advantage you have to sell sunglasses than anybody else. So look to your unfair advantage and try to build a scalable business within that. Yeah, we actually talk about more about that with tip number six when we talk about synergy, but we'll get to that later. We're also going to talk about if you want to write books. Tip number nine will show you the path to get there.

Yeah, so all that's coming. They all kind of tie into each other, don't they? I didn't even think about that as we were making this list. When I bought my first rental, I thought collecting rent would be the hard part. Nope. The admin crushed me. Every night was receipts, tax forms, and checking who was laid on. rent. I kept thinking if this is one unit, how do people run 10? Base Lane changed that.

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It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending my money. like it's a sport while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest

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Again, that's biggerpockets.com slash dominion. Well, let's move on to number three, because now, ideally, you are having some scalable form of income. By the way, that tip number two, that's not like an overnight thing. It takes time to figure out your thing and then to get good at it. We'll talk about that later about getting good at stuff. but hopefully by this point you've got scalable income coming in. Maybe you're working overtime like David said or maybe you're even if you're just tutoring for an extra $1,600 a month.

Fine. Tip number three applies here. Fight lifestyle creep. David, can you explain what that is? Yeah. So, you know, I mentioned that I have a mastermind and I really hype three components of wealth building. To me, I've simplified it to offense, defense, and investing.

Okay. Offense is how much money you make. Scalable income source number two has a lot to do with how you increase your offense. It's very similar. Investing is pretty self-evident. It's just what you invest, the difference between what you make and what you spent, what you kept that's investing. Well, what you spent is your defense.

And what we're talking about here is most of the time, if you want to become a millionaire, you have to focus on defense first. If you don't, all the money you make, you will just lose. You won't have anything left over to invest. And it's that delta that you have left over to invest. It's actually going to move the needle when it comes to becoming a millionaire, which will be number four. We're going to get into how that applies.

So lifestyle creep is this phenomenon that the most. more you make, the more you feel justified to spend. And what happens is you increase your lifestyle, which could really just be described as you increase your comfort level as your income goes up. So it's kind of like the basketball team or the sports team that is scoring a lot of points. And so that means they think they don't have to play defense. And you score a lot of points and you're like, we're crushing it. You don't pay attention to the fact the other team is scoring a lot of points too. And you're not actually getting ahead. And the discipline to resist that is very difficult. It sneaks up on you. It's the carbon monoxide of wealth building, man. It kills you

before you even realize you're doing it. I'm going to come out and tell you guys, in full transparency, if you follow people on Instagram or YouTube, so many of them are not nearly as wealthy as they are portraying yourself. They are making good money, and that does not mean they are building wealth. That money is flying out the door just as fast as it comes in. And oftentimes, the stuff that causes to fly out the door is what drew you to them. That's the dangerous thing, is you see the Ferraris that they're driving. You think, I want to have that. That Ferrari is what makes that person less likely to save money and then a worse role model for you to be following, right? Like, that's sort of the danger. David, I work hard. I deserve a nice car. I make an extra $10,000 a month now from my

side hustle. Why can't I have all the nice cars and the nice house or the nice everything? Like, I deserve it, don't I? Well, you can have all that, but all that means is that that hard work you did just bought you a Ferrari. It didn't get you anything else. It didn't get you wealthy. Right? That Ferrari is what you chose as your reward or that bigger house or whatever you wanted. And so you can't now complain about how hard you work if you then go dump your money into something like that. You chose to reward yourself with the temporary gratification that comes from these things as opposed to what Brandon and I think is a better target to aim at, which is getting your time back, getting your freedom back, being able to say, I'm not going to work this job that I don't like. Like you said you were

watching the clock. You hated working at the bank, okay? You didn't say I'm going to stop working. You said, I'm going to work as something I'd like. I'm going to write books. I'm going to host a podcast. I'm going to buy real estate. I'm going to have fun. I'm going to do open door capital. That was your reward for fighting lifestyle creep is you got to now have a better overall life.

You could have that Ferrari but be stuck in the bank watching the clock and overall you're not any happier. Yeah. And by the way, don't take this as David and I saying you shouldn't have lattes and you got to save every single penny. We're not actually penny pinchers, neither of David or I. I mean, David, you're probably even more frugal than I am. But I'm not a frugal person. But I want to introduce you to a concept like all like the, 50% principle. And it basically says, look, if you make an extra $10,000 a month from something,

I'll actually give you two frameworks for thinking this way. The first one, 50% principle says if you make an extra $5,000 a month from your job raise, like you just got to raise at work for $5,000 a month, then if you want to increase your lifestyle, just don't do it more than 50% of whatever your increase was. So you went from making $80,000 a year to $100,000 a year. Great. Don't spend an extra $20,000 a year. Spend an extra $10. Take that other $10 and save it, like at most. And if you can do less, if you can stay on the 80 and save all 20, well, you're going to a way better life. But if you want a lifestyle creep, which you naturally will, and we all naturally do it, right? My very first, like, Heather and I got together, we would sleep in our little

Toyota Camry on the side of the road on road trips, because that's what we could afford. And that's what we were fine with. And then we started staying at Motel 6s and then, uh, or in a, what, Super 8 motels, right? And then that went to like, we got really rich and we started staying at like a Hilton, right, or whatever. And then now like, I stay at four seasons. I don't mean bad an I. I'm going to go at the Disney Alani Resort over on Oahu, like $900 a night, whatever. I wouldn't stay any more or less than that. That's lifestyle creep. It's totally true.

But I didn't creep my lifestyle up at the same rate at which I creeped my income. And so that's what I'm trying to get at here is it's okay to have nice things if you want them. Just don't climb at the same rate at what you're earning. And a second framework to think about this is if you want to creep your lifestyle, fine, creep your lifestyle based on your passive income, not your active income. Right? In other words, yeah, you make $10,000.

a month because you're doing your tutoring business, great. Don't spend that. Dump that into what we're going to talk about here. Number four, actually, I mean, when we just lead into it right now is number four, buy, I mean, let's, let's sum up the three ways that we're recommending we fight lifestyle creep. Number one is the 50% rule, right? Can you recap what that was? 50% principle, not rule, because there's another, there's another 50% rule. I don't want to confuse people. It says don't increase your expenses. You're spending more than 50% of what your income came in. So that's one. governor, you can put on your own greed to keep it under control.

The next would be increase your lifestyle in accord with your passive income, which is kind of the way that I do mine. If I want to spend money, I have to increase passive income, which means I have to increase active income and I have to play better defense. So I have more left over to invest, which ultimately leads some more money that I can then spend freely. Okay. That's your second option. Your third, it would be what Michael McCalla, which addresses in profit first, where you say, okay, my goal is to save this much money every month and invest it into real estate. So if I'm going to make 10,000, I will spend 4,000. I have 6,000 left over. My goal is to spend 4,000 in real estate. That gives

you 2,000 that you can attribute to lifestyle creep. So those are all different ways that you can approach this same goal for different personalities, kind of like we talked about the mastermind role versus the journal model of how you set a target. But the point is to prevent yourself from just willy-nilly throwing money around because now you're making more. And that brings us into number four brand there there we go nice transition number four then therefore is by therefore therefore therefore therefore therefore buy assets with your extra income now this is a very rich dad poor ad kind of a thought but like buy assets not liabilities especially with all that extra income so for example your teacher making $50,000 a year you know gives you make good money for a teacher and then

you start a side business that does tutoring for kids and it's been hard and you spend a couple years building it and finally are at the point where you're bringing in an extra $10,000 every month in profit from that business. Now, of course, you're going to save some of that money or make you paying taxes, but let's just simple. You get an extra 10K a month coming in. Great. Save that 10K a month every month and every three months you've got 30 grand.

That will buy you a rental house, at least somewhere in the Midwest, right? So every three months, you can buy another rental property. Or maybe it's stocks. If you want to buy asset, you can buy the stock market if you want to. Or maybe it's another asset of some kind. But the idea being you buy assets that go up in value and hopefully produce, monthly profit as well. That's why we like real estate because real estate you get the long-term appreciation. You get the value going up over time, but you also get monthly income. So imagine then

every three months with that extra money you made from your tutoring business, you dump that into a rental house. Now rental house now makes you $300 a month in cash flow. And you might be thinking, well, what I mean, 300 bucks in cash flow? Come on, I'm making 10 grand a month in profit from my business. Why not just continue the business? Well, you should make the business worth $50, $100,000 a month. Great. But business is unpredictable. Business can shut down. The economy can change and business can shut down. People stop doing tutoring because the economy change.

Like a lot of things can happen in business. And yes, real estate's not the most risk-free way in the world to make money, but people always need a place to live. And you buy a nice, stable house in a nice, decent area, and you rent that thing out and make $300 a month a month. Great. Then three months later, you buy another one. There's another $300.

Then a year later, you know, three months later, another one. Now at the end of the year, you're up to $1,200 a month in cash flow. And that's passive income. to stay with you and likely go up over time as rents go up while your mortgage is getting paid down. So now you're taking all the profits you're making from your business, you're dumping them into assets that produce monthly revenue and have the ability to go up and value dramatically over time. I don't add to that. I would say that this one here, number four, buy assets with the extra income, is the hinge that swings your wealth building door. It is the most important part.

In fact, I would say all 10 or all nine other ones are all geared towards making the money. this one possible. That is how important this is. And because it is the most important one is also the one that will be the most difficult to achieve, all the things that will stop you from achieving success will rob you of number four. They will take away the money that you will need to buy the assets. They will make it hard to focus on the actions you need to take to buy the assets. They will create a mindset of fear so that you don't want to go buy these assets. Every form of resistance that you're ever going to get. Like what was the, I'm sorry, I'm blinking on the author's name. Yes, Stephen Pressfield's book, right?

Which was the book that talks about resistance? Yeah, the war of art. The war of art. He talks about this part of your head that just sabotages you that tells you don't engage, don't fight. It will send all of its soldiers to this one. It does not want you buying these assets. And so what I liken it to is if you use a fitness analogy, your diet is the hardest part and also the most important part of the whole thing.

If it was up to me, I would bust my butt harder than most people will ever work out. if I could just eat whatever I wanted. And I've tried to do that for so long and it never worked, right? In fact, what I found is when I got my diet under control, I stopped. I was also working out way less, but I was getting way more compliments on my physique. People were saying, you got so strong. Look at how big your muscles are. And I was like, what?

They're like half of what they used to be. But the thing is, when my diet improved, you could see them. If you're looking at it, I guess when I say fitness, I should probably clarify, like, aesthetic fitness, right? Your diet is so much more important than everything else. It's the hinge. You've got to build your whole fitness routine around supporting a healthy diet. Everything else just supports that.

When it comes to your wealth building, buying assets with the extra income that you can save is the most important thing that you can possibly do. And you got to build your whole game plan around achieving success in this one area. That's good, man. And for those who don't understand real estate exactly, you might be like, I don't get the real estate thing. Maybe this is the first time listening to the Bigger Pockets podcast. Understand that Bigger Pockets is a website all about real estate investing.

And millions of people come here to learn how to do it. David and I both invests heavily in real estate. We buy real estate because it just makes so much sense. And primarily because of the four wealth generators of real estate. That's what we call them, four wealth generators. Number one, the cash flow, the extra money every month. And we love the cash flow. It comes in, it's just profit, right?

If all of your bills, all of them, expenses, everything combined, equal $1,000 a month, and you're renting a property out for $1,500, that extra 500, that helps you quit your job at some point. It helps you save more money. It helps you, in case things go wrong, and helps you a ton of ways. But that is not all of real estate. You also get the fact that over time, your property value is going up. Yes, there are recessions. Yes, there are dips.

But on average, in America and in the world, real estate is climbing. And especially now that the government's printing so much money, I think almost everybody agrees, we're going to see massive inflation in our country and around the world, which is going to drive values even higher. At the same time, the mortgage that we use to buy a property, we're buying, usually buying a property with a loan. And I'm a big fan of that as long as the property makes money, so you don't have to worry about the risk of losing it.

As long as you're making profit, I don't care about a loan. So you get the loan, and the loan's getting paid off. It's a fixed payment every month, the same payment every month, but over time, that loan balance drops. And then there's tax benefits. That's the fourth wealth generator. We don't need to talk about that. But it's actually really cool, but it's boring for most people.

So we won't talk about it. But basically what we're saying here is remember earlier I said, what if every three months you bought a rental house? And after a year, you own four of them. After two years, you own eight of them. And again, hopefully you get into a multifamily at some point. But let's just say, that's all you did. And you own eight properties at the end of two years.

If you did nothing else, at all over the next few years, those properties are climbing. Let's say 3, 5, 8% per year in value. At the same time, those mortgages are getting paid off, you're going to end up being a millionaire by accident. And this is how I believe, David, I mean, I don't want to put words in mouth. This is how you became a millionaire, right? You just bought a bunch of houses and they went up in value. 100%. I just didn't track the equity. I didn't know. But that I became a millionaire by accident. That's the best way to put it. Yeah, I did the same thing in that, like, I was sitting at the Starbucks filling out a personal financial statement for a bank. And all of a sudden my hand starts shaking because I just wrote down a number that I didn't like, I didn't realize that I crossed.

I was 30 years old. And it was like $1.03 million. Because I didn't, my, it's like having a bunch of little boats in a bathtub, right? And then you start filling the bathtub up. And they all start climbing together. Now, yes, the boats drop a little bit over session. But then it goes even higher. And then the boats drop and a little bit higher. And so all your little boats are just like, and at the same time, the rent's going up over time because they're not, I mean, they're just not build enough housing in America. So like just supply and demand, making rents go higher. So now your monthly income is going up every year. Your assets are going up. And that's why we're so big on this idea of buy assets. If you take all your extra money and go buy cars and go buy shoes and go by whatever it else that you want to show off to your friends on how rich you are, those things just lose, lose, lose, lose, lose value.

Those are not a ship that's going up together. They all just a sinking ship. So buy assets with that extra income and you will just automatically become wealthy. That is so funny. I love this analogy of the boats in the bathtub because, what everyone does in my experience is they run around worrying about, well, if I put this boat in the bathtub, what happens if the mast gets a splinter? What happens if the sale? I don't want to go by boats because the sail could split or, all right, I'm going to go buy boats, but I'm going to spend all my time

focusing on how I get the next boat and I put it in the bathtub and I don't even pay attention to what's happening. Well, really, the main piece of this whole puzzle that makes it excel is the water going into the bathtub, which is inflation. That's it. Yeah. That's it. Yeah. And we don't even, we forget that that's even going on because we're so worried about the little intricacies of the boat and asking these questions like, well, what do I do if the fence in the backyard isn't lined up perfectly? And the neighbor says that that foot is his. And we get so worried about that that we don't pay attention at the freaking insane water that's pouring into this bathtub, where if we did have our eyes on the thing that mattered most, it would be, look, I'm going to get the boats in the bathtub. And I'm going to figure it out once they're in there. The important thing is to get boats in the bathtub.

And that's sort of what Brandon and I, we did that without realizing how valuable it was. Like, we're not taking credit for being super smart guys. We bought a bunch of houses and then it turned into this great thing. And now we're telling people about what we learned. But that's what I want to share with everybody else. You're probably overthinking the wrong stuff. The way that the government is printing money, the way that they're not building housing, the way that most Americans will not manage their budget, the way we're telling you guys to,

will put you in a position where most people will always have to be tenants. They're not going to have to play defense. with their money. They are going to engage in lifestyle creep. That gives you a competitive advantage. Okay. If we're using a jiu-jitsu advantage, the majority of people that are in there are out of shape and not training. If you're just training a little bit, you're going to beat everybody because they've set the bar so low. That's what it's like in this game of building wealth. If you're focusing on the stuff we're talking about, you're improving your game. Very few other people are trying to do the same thing. They're going to be your tenant base that you're going to build and that inflation is going to take your

portfolio into the millionaire realm. Yeah. That's really good, man. The boats in the bathtub, the new book from Bigger Pockets coming in 2023 by David Green and Brennan Turner. Wasn't there like a Burton Ernie thing where they were playing with a rubber dekey in the bathtub? They need to put like our faces onto that. You and I are Burton Ernie. We're playing in the bathtub with a bunch of boats.

I'm wearing my swimsuit people. Quit being perverted. All right. Moving on to number, let's go to number five. In fact, yeah, you know, I was thinking about adding a fifth one in here, but I'm not going to another one in here. But let me just add this one in here. And really it relates to what we talk about.

lifestyle creep early on and again i know i'm jumping backwards and then we're to jump back forwards again i just want to make sure we don't miss this point early on in my investing career or my career of just life my wife and i realized at one point when i sat down and wrote out my like my expenses i took my my bank statement every single dollar i spent for the last three months and every dollar i had made in the last three months this is when i was working at the bank and i realized i was spending a thousand dollars more every month than i was making well no wonder i was 20 grand in credit card debt at the time or whatever I was. Like I was spending way more than what I was making. So I read Dave Ramsey's total money makeover. I got on a budget. Literally, we went on a cash budget. Everything was cash.

We got little envelopes. And we rearranged our life to make it so that we weren't spending more money. And I didn't even have to adjust that much. Just knowing how much money was coming in and out was a psychological shift enough that stopped me from this like crazy lifestyle creep. And it wasn't even lifestyle creep, it was just lifestyle like gluttony. Right? Like I just bought. whatever I wanted because I wasn't tracking my money. So I just wanted to add that point in there about when you're buying, when you're fighting lifestyle creep, one of the easiest ways to do that is to track your income and expenses every month. And there's a million apps out there that will do that for you. One of them is called You Need a Budget. Why Nab is a very popular one, but there's

other ones out there. Track the money like mint.com. Track what comes in, track what goes out, set goals for how much you want to spend if you're in a similar state. In other words, be fiscally responsible. If you're not fiscally responsible, if you can't learn how to live on a budget now, you're never going to be wealthy later because you'll blow it on like crap. You won't buy assets with it because it's that mentality that you have to shift the asset thing. So before you even buy assets, get your financial house in order, know where your money's going and get some financial stability there. And then you can buy assets and you'll have the extra money to do it. Let me tie all four of the ones we've given into what you just said, right? If you want to buy

assets with the extra income, you're going to need a scalable income source to bring in more money. you're going to have to fight lifestyle creep in order to spend less money, and you're going to have to have a target for both of those. You need a target for how much money you want to make and where your money is going, what you're spending it on, which was number one, if you want to succeed at two and three, which will allow you to do number four,

which will open the door for everything else. You know, they all tie in. This is weird to say, but I'm just going to say it. What we're describing, the way that wealth is built, at least in our experience, Brandon, is not that much different than the games that people love

and get addicted to like World of Warcraft or other role-playing games where there's this system of progress. Like, I don't play World of Warcraft. Just disclaimer. I don't know exactly how it works. But I get the gist of it that you are trying to succeed in all these little areas that ultimately life succeed in a bigger one that you can scale your character up. And it's really fun. We're just doing that in real life. And we're showing you the techniques that we used to do it. Yeah. That's awesome, man. You're 100%. 100% right. Well, we got to get out of here pretty soon. Episode one is almost over. We are going to do a follow up part two. First, we've got our fifth tip for today on how to build, how to become a millionaire and the

kind of the habits that made us that way. And we call this one, I call it stair stepping, stair stepping. Here's what the analogy comes from. And I actually, I talk about this in the new book I just wrote called the multifamily millionaire. It's in volume one where I talk about stair step wealth building. And that is most people, when they're saving money or investing in the stock market or whatever they're doing to build wealth, most people build very gradually. Like every month I'm going to stick $100 in bank account.

At the end of the year, I've got $1,200. The next year I've got $2,700 because then, you know, my interest is kicking in. Then the next year I've got $3,500. In other words, over time, and if you were looking on YouTube right now and watching me, my hand's going very slowly up and scaling wealthy. And there's nothing wrong with that. It's a great way to build wealth over time. And when you're 65, you'll be the richest person in your nursing home.

However, the way to build wealth faster is what we call stair-step wealth building because it looks like this. Again, you can't see me if you're listening, but like you're like think of a graph and then a stair instead, like a big jump up and then a little climb and then a big jump up, a little climb, big jump up, little climb. So stair stepping is a big piece of how David and I became millionaires by way we kind of said accidentally. Like we just, we didn't even realize we had done it because let's say you buy a piece of real estate

that you owe $100,000 on it and it's worth $100,000. Next year, that piece of real estate is worth, let's say, $105,000. Good job. You just made $5,000 in a year. The year after, it's worth $110 or maybe $111. The year after, it's worth maybe $113,000, right? Nothing wrong with that. That's the gradual slow wealth building. But what if you bought that same house for $70,000? And immediately it was worth $100,000. What if all you had into that property was $70,000 and it's worth $100? You immediately, overnight, the minute you bought it, boom, added $30,000 to your net worth. How long? How long? would it take to go from a $100,000 property to $130? How long would it take you to build $30,000

of equity in that property? Probably five, six, seven, eight years. But if you'd buy it right, you can, boom, hit that overnight. And then it goes up over time. And then boom, you hit another one. And it goes over time. And so you can buy these properties. And that's one thing we love about real estate that you can't do with a lot of other asset classes. Real estate allows you to get really good at finding great deals that allow you to stare step your wealth and add massive chunks of net worth every so often whenever you invest in a new asset. David, how do I do an explain in that one? It's not a hard concept to explain. It's so good. And let me add some icing onto your cake here for anybody who's still may be skeptical. This rhythm that

Brandon is describing here, it's a rhythm of how to build wealth. Okay. It's not necessarily like this is your niche or this is your strategy. Whatever you pick, this is the way that you walk that path. I say all the time, if you're confused as to if you should go to A or B and you're hearing different pieces of advice. The way I always decide which to listen to is I say, would this strategy work at anything else in life? Okay. If some guru is saying, hey, give me $50,000, you'll be a millionaire tomorrow. And you don't know if you can believe it. Your question should be, is there anything else that I can just contribute one chunk of money and be done and just have all the success I wanted? Well, no. So I probably shouldn't do this either. When you are getting a promotion at work,

that would be like a step up. You make more salary. Boom. Okay. But, Now you're in a position where you don't know how to do that job very well. You can't just take another promotion right off the bat. You have to work that job until you get good at it. And then when you get good at that job, your next promotion is your next step up. We're all familiar with that rhythm. What about when you're in the weight room and your bench pressing a 45 pound plate on each side? And you get to where you can do 10 in a row.

Well, at a certain point, you're going to add 10 pounds to each side. And when you do that, that's your step up. But then you're not going to do 10 in a row. You're going to do two in a row or three in a row. And you have to build up by staying at that same weight. until you can do more and then you're going to add another weight, right? My last example would be, let's say you're a white belt in a martial art and you're sparring with other white belts and you get really good to where you're beating all the white belts.

Well, you don't jump up to black belt. You go up to the blue belts and then you're going to get your butt kicked because they're better and you're going to stay at the blue belt level until you can beat all of them and then you're going to go up to the purple belts. Everything in life works this way. We're just trying to explain how you can make that rhythm work for real estate so that you have a feeling of confidence where you're pushing yourself so you're not being lazy, but you're not breaking yourself by trying to take huge steps that you're not ready for.

Yeah, that's awesome, man. Can you explain how the Burr strategy applies to this? For those who have never heard of the Burr strategy, what is the Burr strategy? You wrote a book on it. Obviously, they can read it. But yeah, what can you tell us about that? Burr stands for buy rehab, Brent, refinance for Pete. It's a way of buying houses that's slightly different than just putting a big down payment. So you're going to buy a house, usually a fixer-repper with cash or with a short-term loan. You're going to fix it up to make it worth more. Then when it's worth more, you're going to take a loan out on it and you're going to pull your capital back out of the deal because the ARV is higher, so you're getting a higher percentage of the total value of the house back, and you take that capital

and reinvest it to the next deal. What it does is if you compare it to the traditional model where you're just throwing money at a house, this is what I used to do. I throw money at a house and I got to wait a long time before I can take that next step because I got to save up all that money. Okay? The Burr model allows me to get my capital back out of the deal and put it into the next deal. So what happens is I don't have to wait as long between steps. Okay. It just choppens them up so I can go up faster because I'm taking shorter steps more quickly recycling the same capital. And I like how you brought this up because what we did was we hijacked this principle and we made it work with the lending of real estate so that we could

get success faster. Yeah, that's really good. So the reason I wanted to bring that up is because people were thinking earlier, well, how the heck do you buy a house for 70,000 in today's market that's immediately worth 100? Well, the way you do it is you buy it for $4,000. Well, the way you do it is you buy it for 50 because it's a piece of junk and you put $20,000 of work into it. Now you have $70,000 into it. You go get a loan on that whole $70,000 to get all your money back. And now you've got $70,000 property that's now worth $100. That's exactly how you do it. That's how we do it on multimillion dollar apartments and on mobile home parks and on single family houses and on duplexes. I do it all the time. It's called value ad investing. And it's done in other areas too.

Like you could buy, technically, you could buy a stock that's like a piece of crap. Or a business. Or a business. Yeah, that needs a bunch of work. And you could stare at step your way into buying. I mean, imagine you're a tutor, right? You're a tutor, you own let's go back to that analogy. You were a teacher. You decided you were tutoring on the evenings, but then you're like, no, I'm going to own a tutoring business. And now you're making 10 grand a month in tutoring. But then you find this other company out there that's really, really bad at marketing. They don't know how to tutor very well. And you buy that company for $250,000, right? It's kind of like a three-x multiple of their profits. So you take their company, you add it to your

business and immediately you double their revenue and their sales because you're good at what you do and they're not. So all of a sudden, their profit before was, let's call it, let's see about it for 300,000 because it was a 3x, what they're worth, what their profit is every year. So they're making a hundred grand a year and profit. You're able to double that to 200 grand. Well, now that same three X multiple is now means your business is worth $600,000, not 300. You just added $300,000 of net worth to your net worth just by acquiring that other company. And again, that might be confusing the people who aren't into like buying businesses, but the point being, that is a stair step because you took a big action and you found a distressed asset. You added value and you

added a bunch of net worth to your life and more cash flow and everything else. So again, this doesn't apply only to real estate, but that's David and I's thing as real estate. So we use it. If you doubt whether value ad works, just ask Brandon's wife. She did value at dating and it worked out pretty good for her. I thought you were going to say ask Warren Buffett or Charlie Munger because that's like their whole thing is value at stock investing. But Heather is probably a good. example of that as well. Well, with that note, I think it's time to close up episode, part one of this episode. We've got five more tips for you in the next episode, which we will be airing, I believe on Sunday, will be the second half of the show. And trust me, you're

going to want to listen to it. We got some more cool stuff and some advanced stuff and stuff. Like, I just, I'm super excited to talk about that made a big impact on David and I. But before we get that, let's do a quick recap of the five that we talked about today. And then we'll get out of here. David, what do you got? Number one, aim for a target. You need to know where you're going if you're going to be able to measure your progress. There you go.

Number two. Number two, scalable income source. You need to find a niche. Find a way to make more money, increase your offense in an area that you're already passionate about. So that could mean picking up a commissioned job. That could be looking for opportunity

in a position you already have where you could make more money. But try to figure out a way to get out of the whole I trade time for money rat race. Yeah, there you go. Number three. Number three, five. fight lifestyle creep. Number two that I just described was your offense. Number three is your defense.

Prioritize keeping the money that you make. The best way that we recommend doing this is by tracking where you are spending your money every single month or even maybe every single week so that you set a goal. Number one, you aim your target or you have a target to aim for. And then when it comes to what you're spending your money on track to make sure that you are staying in line with that target. There you go. Number four. Number four, this is what it all comes down to, the big casserole. take this money that you've made more of and you've saved more of and you use it to buy income producing assets. You don't go buy expensive cars and luxurious vacations and status symbols. You put the money into something that's going to earn you money back with your income producing

assets. And then by the way, you take those income producing assets and either using to buy more income producing assets or using to buy yourself a Tesla, which is why I own two Teslas today. And people, they see that and they're like, oh, Brandon just like spends all like, no, I used my passive income. And actually, I flipped a house, which is how I paid off one of the Teslas. But I used that income to generate that lifestyle that I have today. So anyway, number five. Number five is stair stepping wealth building. It's the rhythm that you want to get into where you're always increasing your wealth building.

So if you're doing this right, you should be pushing yourself to new heights, staying at that height until you figure it out and you wrestle and you improve yourself until you're good at it. And then taking the next step. Very good, man. Well, really good stuff today. So again, these are the five tips or five things that habits that made David and I, a millionaire. So again, next episode, we're going to talk about the other five. Plus, we have a bonus tip on the end of the next episode where we're going to explain not just how to become a millionaire,

but how to turn that million into tens of millions of dollars of net worth. So it's kind of like how to supercharge every tip that we've given you. And it's made such a massive impact on David and I, changed both of our lives and made both of us very, very wealthy. And we're going to share that with you on the next episode. So stay tuned for that and more. David, last question before we get out of here. What do you need in your business right now. What do you need in your life? Oh, that's so good. Thank you for asking that. I need more team members. I need agents that want to come sell houses. I need loan officers that want to help people with loans. I want people who want a new career and they don't want it to be easy. They understand that just like getting in shape takes a lot of work. Building wealth takes a lot of work

and they're looking forward to doing that. And then I need more people that want to buy or sell houses in California. So if anybody is around here looking to do that, please let me know. Awesome, man. How about you, Brandon? What are you looking for? People are pre-order the multi-family millionaire. You really want to have a better selling book than me. That's what this is about.

Oh, by the way, I don't know if you knew this, David, but we have officially outsold in pre-orders. We've now sold more than you. That was the whole goal of this whole thing. But now I got to sell more copies than you when it comes out. What is that line from Big Lobowski that something cannot stand? What does he say? I never saw it. You don't know?

You don't know that line I'm talking about? It's something like this transgression cannot stand. That's how you felt when you saw that I had a book that sold more than yours. That's okay. This is why I love having people like you around me because now the next book that I write, guess what stair step I have to take. Yep. Yep, that's it. That's it, man. Well, anyway, thank you everybody for being a part of this community about being part of Bigger Pockets, and we'll see you on the next episode, episode 503. I think you're going to like it for BiggerPockets.com. My name is Brandon, and this is David, signing off.

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