Since we focus on the realistic side of life rather than the instant gratification game that many put so much emphasis on, I usually tend to stay away from topics like these, but it only makes sense for me to share how I made my first million and some interesting lessons he learned along the way.
It’s so easy for every one to claim they made a million dollars, and even easier for everyone to generalize their earnings in one word like “real estate” or “trading”.
Instead, I’m going to walk you through a step-by-step guide of how to become a millionaire, and how I made my first million and the background that allowed me to do so.
How to Become a Millionaire – The Process Explained
Making your first million isn’t that difficult, but it does take time to get there, but more importantly, it takes a series of good choices, followed by some amazing actions to get there, it also takes remaining very focused on the goal at hand.
For this particular story, I am going to share with you a step-by-step look at how I did it, and thankfully for you, I am not going to tell you how I bought a 100 homes at once or made 2000% return on an investment, but rather a combination of the above with a blend of entrepreneurship, business, finance and even a 9-5 job in the mix.
Making your first million starts with your understanding of money and your emotional disconnect with regards to it.
You must learn to let go of greed and the fear of losing money, but you must also understand how money works in general.
You must understand three fundamentals around money itself:
1) The power of supply and demand and how one impacts the other.
2) How the credit markets work and their importance on the economy.
3) The concept that residual income and 2-in-1 business model must be followed in order to make money past your capacity of working.
It is very important to understand all these things because without that simple understanding, everything you read and hear online seems like a “one-off” miracle.
The truth is that it really isn’t a miracle and it isn’t magic.
The Context of Achieving a Millionaire Status
Most people that hear of others making money often will think you need large amounts of money to start, or will often say that they simply can’t risk anything, therefore fairy tales of stock market fortunes won’t apply to them.
This excuse is no different than saying you won’t start a business because you are afraid that it may not make it or you simply won’t buy a home because values may continue to drop.
All of these are excuses people use because they have no tolerance to risk.
I describe all about why people are the way they are and why others have a different take on risk in my book Third Circle Theory. You might want to make yourself familiar with which circle you fall into and why if you are one of these individuals.
For me, my business life started very young at the age of 14, and yes, it is important for you to understand the full context of how I made my first million rather than just understand the generalized version.
I was in my high school cafeteria when I saw a sign for “customer service reps” paying $12/hr plus commissions.
As a confused 14 year old with a working single mom and no green card to actually use to obtain normal employment at the mall or other retail institutions, I had no choice but to inquire.
This organization was small and required me to make cold calls to local residences to sell roofing, siding, and kitchen remodeling. It was ultimately a telemarketing job, and since the company was small, a school work permit was enough to get me in the door.
As a 14 year old, it only made sense for me to do a good job as I saw the value of employment since it was so difficult for me to obtain work elsewhere.
I worked hard and actually made all the calls I was supposed to rather than waste a lot of time in between calls.
As a result of my 3 hours-a-day work schedule and my tenacity making calls, what started as $12 per hour ended up being $1,500 a month in commissions and eventually lead to $1,000 a week.
Making about $45,000 annually at the age of 15 is quite an accomplishment and one that can either get to your head or one that can help build a strong foundation.
I decided to save most of my money and continued to grow in the same organization to eventually reach a director level position by the age of 18 earning right under $75,000 per year.
I managed to save roughly $60,000 by the age of 18, and even though I could have saved more, I had always wanted a nice car. I had gone through a new Pontiac Trans Am, Ford Mustang, and Chevy Camaro SS by that age, and it left me with only $60,000 in my savings.
I used most of that money to invest as a down payment in a house located in Virginia, which I bought for right under $200,000. My payments were low, my income was high, and my equity leverage was good with 25% down.
I bought this house only for the sake of providing a home for my family, rather than as an investment.
At the age of 18 I also started working for a bank and took a 30% salary cut to be able to go to college. My 80+ hour work schedule at my old job wasn’t ideal for college and made me realize that I needed a normal 5-6 day a week schedule.
I was also curious as to how banks worked and always felt that if you want to understand money, you should be around money.
So a bank made perfect sense.
I worked in management at the age of 18 and spent most of my free times studying loans, stocks, and just about anything else I could find on how money flows.
I quickly understood how banks make money off of loans and also why they like giving bad loans out and what happened when people default on loans. The main learning was how they determined who got a loan and who didn’t.
I also started understanding a bit more about the way people file taxes and the loopholes around the system. I was determined to reach a level of wealth above what my family had ever accomplished and so understanding the system made me realize I needed to start a few companies to get the maximum tax benefits I could.
Now most people think of how to make more money, but my focus was to be realistic with money and instead of seeking more, I wanted to close the gap between my gross and net income and only measured my income through my net take home, rather than my gross earnings.
Just because you learn to make more money doesn’t mean you actually live better.
Anyhow, after I created my companies, one of which was a detailing company that specialized in high-end cars, I started learning how to write-off cars and my lifestyle assets to lower its cost on my overall life.
I increased not only my net take home from my corporate income, but also gave myself the greatest gift in the world, access to unlimited creation of my own pay stubs.
By being able to write my own income in a “stated” income loan environment meant that I now could buy just about any home I wanted, even those I couldn’t afford.
By studying the real estate market, I started to understand how history repeats itself, and that real estate always remains a strong long-term investment.
I chose Virginia because of the upside potential and the fact that government was right around the corner in DC; it made business sense that there would be major growth there in the next 5-10 years.
Having only an income of $60,000 and depleted savings made it difficult to own and hold multiple homes, so I used a different strategy to get myself some capital.
I found pre-construction homes in further places that were not due for build for another year, so all I needed to secure a lot was $5,000 to $10,000 with an approval letter from the bank.
I forecasted that those properties’ demand would exceed supply by 2004 and positioned myself ahead of the market by securing as many lot as I could, all while working hard in a bank and getting loans from other banks with pay stubs from a detailing business that barely made $3,000/mo, all of which went to buying more homes.
Enter Real Estate Investing
I also started looking into commercial real estate, which was undervalued especially knowing how quickly the residential market was growing. I looked but couldn’t afford to buy, so I kept up with the market trends from a spectator level only.
In 2003, people started lining up early to buy some of the lots from those places I held lots with deposits, and as expected, my 17 lots were highly valued and demand far exceeded supplies, so a “premium” would be added to all homes sold and sometimes in excess of $40,000.
I was almost broke, as all my money was tied into these lots I had secured way ahead with small amounts, but I often held some of the best and first lots since I locked them in over a year before they were built.
I would go wait in line with those buying at 1-2 am as lines formed for the 8am opening only to wait for the builders to ask for their $20-40K premiums.
When I saw that people were willing to pay $40,000 more just to have a home in six months to a year, I offered them one of my premium lots at $50,000 which would be ready next month.
They paid $10k extra, but saved six months and made me $50k cash.
By being in line, I got to know people and who was a cash buyer, versus those that were seeking financing. It helped me differentiate who to approach.
By 2004, I had sold most of my lots and accumulated over $250,000 in my savings which I would used to get into the already built real estate and commercial real estate markets.
I invested $200,000 of that money into a series of commercial properties in Virginia and also looked into condos in Miami.
Again, using bank’s very greedy and generous approach to lending money, I secured over $1.3 million in debt that I couldn’t afford with moderate down payments.
I secured six condos in South Beach Miami, each selling for $300k-$350k with 5/1 interest only ARM loans giving me $1,000 payments with 5% down.
This was very risky due to the fact that I was in debt significantly more than I could afford and I only had $40,000 left in my savings.
The main factor here that made these very attractive was the equity they would build in the next 2 years and also the fact that everyone was spending all their home equity money on leisure and luxury lifestyle.
It made sense to rent these condos for $2,500 a month or more giving me great cash flow once again. I continued to work full time and moved up in corporate America while living well into my means.
I also bought 2 warehouses for less than $100k each that already had businesses functioning out of them, and simply re-rented to the businesses at the same rate they were paying.
Leveraging interest only options and lines of credit on the house I lived in allowed me to net over $3,000 in rent from each of those units a month. I now not only had good cash flow of over $12,000 a month net at the point, but was sitting on well over $500,000 in equity by 2004, not including my own house which was maxed out in loans to accommodate these investments.
I was also now working as a Vice President of a bank making well over six figures a year, and had fully given up on school years ago.
I was in a position where I had no immediate supervisor and my results were based upon how well my staff worked and executed on my direction. I ensured my time was free to focus on all others to push harder than before.
I did eventually hire a financial assistant to manage all the properties and book keeping.
The Exit Strategy
At the end of 2005, I saw the potential for a storm coming and decided to look into a very strong and quick exit strategy.
How did I anticipate the storm?
To make a long story short I simply paid attention to mainstream as my indicator of Wall Street’s future.
I knew how I was cheating the system to secure lots and loans and it only made sense that normal people would catch on too and start. That was my signal to get out.
Long ago I heard the saying, “Be afraid when others invest and invest when others are afraid.” I had a conversation with my neighbor who was a cab driver who informed me that he just bought his second $800,000 property on a $70,000 salary.
Knowing what I knew about supply and demand and the way banks wrote off losses and gains, I started re-thinking my views on how long this ride would last.
I also started to see that foreign money was pouring into the country as investments and therefore the whole system had become a giant game.
I liquidated over $2 million in properties in South Florida and $350,000 in commercial properties in Virginia in less than 90 days while the market was still hot.
Those condos were now selling as high as $700,000 and therefore sold quick when I listed them in the $600’s. I did keep three very nice town homes I bought really cheap that were in great locations in order to one live in one for free and rent the other two so I didn’t lose my cash flow entirely.
I helped the business owners buy their own buildings through the same tricks I knew that was a mystery to them.
That unfortunately was not enough to reach my first million believe it or not. I was still working because I not only loved my job, but I also liked having this secured income while I had all that debt at the time.
It was now 2006, and I was sitting at $780,000 net, none of which was invested. This was after I had paid all my gains and taxes which was good, but since I live in a net game, I still wasn’t a millionaire per my own standards.
By this time, I owned over seven companies and my accountant was my best friend, but I was too afraid to play in the market too because I saw its correlation into the real estate market and knew it would all end at once.
How I Became an Entrepreneur
I had my house, my Porsche 911 Turbo paid off, and still had my six figure job, but I really didn’t know what to do to continue to grow.
I decided to take the entrepreneur route while I worked a 9-5 job and expanded my detailing business into a luxury concierge business which catered to all these people spending their real estate earnings.
I knew people were on a spending spree and so I decided to take a piece of their money instead of getting back into real estate.
So I founded VIP Motoring and quickly grew it into $500k a year in revenue, but more importantly, a giant tax write off.
I would help people acquire luxury lifestyle at a cheaper rate than they would normally pay because once again, supply was scarce for luxury cars, watches, and homes, and whatever I would save them, I would keep 50%.
The beauty was that I acted more as a locator of goods and referral business than actually had to inventory products.
I was running my business from my office until it caught up with me, and I was betrayed by my own fatal mistake.
Through my business, I met a guy named Luigi, who bought a Ferrari 360 from me and told me about his business, which involved foreign currency trading, but not FOREX.
His business included taking cash bank to bank internationally and trading it. I never really understood what he did, but I decided to learn more about it, about him, and his business, which had been around for over 10 years.
I needed income as I had lost my job (more on that later) and the only cash flow I had was my rental properties and I knew my business income wouldn’t last once people started losing money on real estate.
I studied past financial crashes and understood that often when the US crashes, other countries and currencies prosper. It’s almost like a giant cycle and it’s important for people to understand that the cycle repeats itself, but the length of the cycle and time in between cycles changes because the dynamics of the economy are constantly changing.
Either way, back to my story.
After I met Luigi, I decided to let him manage $300,000 of my money and get me these “so called” promised 10-20% returns a month and so we embarked in a partnership that was quite scary, as you are ultimately trusting one guy to make you money without knowing how much money he makes off your money or what he is doing with it.
I was young, and believed in myself enough (perhaps too much) and still had a high tolerance for risk as I had never really lost much in the process.
In 2007-2008, all markets had crashed, fortunes were lost and my $300,000 was still with Luigi being invested in foreign currencies, primarily the Euro, per my request.
Markets crashed, banks collapsed, people lost everything and fear consumed the entire financial market as the US faced potentially a collapse greater than it could handle.
People saw CITI Bank stock as low as $0.33 and Bank of America trading at $2.50 a share. That might seem very scary to some especially as the government allowed Lehman Brothers to crash but to me, a golden opportunity appeared.
Two major investments for $50,000 each into the two most likely banks to crash in 2008: CITI Bank and Bank of America.
I invested because I still believed you invest when others are afraid, but also because I worked in banking and understood that it was impossible for the government to allow Bank of America and CITI to collapse.
It was almost like saying we would allow another country to invade us without ever putting up a fight.
I knew they could do something about the collapse and I also understood that this was the time the money I gave Luigi would start spiking, as foreign governments would invest in the US at very low prices both on a market level and bond market.
I got $470,000 back from Luigi and made roughly $120,000 net in 2 years after taxes and eventually sold my shares of Bank of America at 260% gains and CITI at well over 500% gains.
Not typical and I have yet to duplicate these types of gains, as it simply took major balls and an understanding of the finance sector.
I had officially made over $1 million in net cash by the age of 27, and now owned a Lamborghini Gallardo and Mercedes Benz CLS55 AMG out right, had no house payment, and still owned 2 rental properties, and 2 real LLC revenue producing companies.
All the numbers discussed above were rounded down, not up as I am strong believer in net gains rather than inflated gross numbers.
So what did I learn from all the hard work, constant headache and lack of sleep?
- Becoming a millionaire can happen overnight, but is unlikely. It took me 13 years of hard work, good decision making, and constantly acting on my goals. You might say that that is a long time, but if you had 10 years to your age now and assume this could be your retirement age, then you might consider that it’s not that bad. Bottom line, start now or you’ll always wonder “what if?“
- You can’t become and remain a millionaire doing only one thing. Most of us have our hands in more than 2-3 industries.
- Instant gratification is bullshit, don’t fall for it. Anyone who tells you they made a million selling someone else’s product or service and now is selling their own is on crack. The one that made the system is the millionaire because he learned how to make others work for him for free.
- The greater the risk, the greater the reward.
- The greater the greed, the less fulfilled you feel.
- Don’t be greedy, be emotionally disconnected from money.
- When you want something bad enough, you tend to not sleep as much, because your mind is always working. Balance your life but push your limits. No one created an extraordinary outcome for themselves through ordinary actions.
- If someone calls you crazy for taking a risk or doing something, it is only because they don’t see what you see or know what you know, so what is crazy to someone today becomes a trend others follow tomorrow. A trend you started that you benefit from, not them. It’s crazy ideas and risks that got us this far and the same crazy that’ll get us further.
These are just some of the things I learned on my way to the top, but remember that making my first million was only the beginning of my life and problems, I learned a lot more after I made my millions, as making money is not as fulfilling as you think and I did NOT consider myself successful yet.
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