The Lazy Millionaire

by Marc Fisher

The other day, my wife suggested that we should rent it out, because we never use it.

  She told me: “If we were to rent it out for $500 per month, that would represent a differential of $700.”

  She was right again.

  Because the tenant would pay for the heating and electricity. Instead of a $200 monthly expense, I would have a $500 monthly revenue.

  People often forget the concept of differential.

  Lazy millionaires never forget it.

  And if they do forget, their wives don’t!

  Especially if they are anything like my wife!

  That’s why, every time he gets the chance, as soon as possible and as often as possible, the lazy millionaire tries to use his money (or the bank’s money!) to acquire assets instead of creating liabilities!

  For those who are not yet familiar with this jargon, let’s just say that if you buy a car, and out of necessity you do not pay cash but commit to making payments for 3 or 4 or 5 years, you have created a liability.

  I know that a bank will include your car in your list of assets on your balance sheet, especially if it is paid for in whole, but your car loses 20% of its value during the first year, and is a source of expenses (monthly payments, often at very high interest rates, insurance, repairs, gas, etc.). I know you need a car: it’s very difficult to travel the streets at the wheel of a… duplex!

  But who says you need a new car every two or three years? What is wrong with your five or seven year-old car? Except the fact that your neighbor changes his every three years? Put aside vanity and start using your money the lazy millionaire way! When you are starting out, keep your old car, which is what I did.

  What’s more, by putting off the need to buy a new car, you do not reduce your borrowing capacity, which is based on all of your monthly obligations. Your “ratio” will improve immediately. The bank will like it. And so will you.

  Instead of buying a car, if you buy a (good!) property that you rent out (good!), it constitutes an asset because, in principle, it gains in value every year and generates passive revenue every month, in the sense that you don’t need to be there and work in order to accumulate it.

  This is the basic definition of passive revenue, with the extreme example obviously being interest revenue generated by a bank deposit…

  But passive income is not always as “passive” as we wished in the first place.

  I soon found out at my expense.

  Indeed, one month after I purchased the little white house, it became clear to me why the seller had let it go for peanuts: his daughter probably never paid the rent.

  At any rate, she only paid for the first month.

  At the beginning, my optimism as a young investor was challenged.

  But I immediately told myself: “That’s a sign life is sending you to help you make more money. Instead of keeping the house, sell it!”

  When the tenant was two months late, I offered to cancel her debt and give her another $500 to move out immediately. I did this on the advice of my real estate mentor.

  He knew I got the amazing deal only because I accepted to keep the owner’s daughter as a long-term tenant…

  But now she was not paying the rent so I did not have to keep my promise.

  Anyway, the tenant accepted my proposal and left the next week. Once I paid the commission, I was left with a profit of around $30,000.

  Since I paid $82,000 for the house, it was $42,000 more than I paid.

  Once I paid the commission, I was left with $50,000, or a profit of around $30,000.

  With my initial $30,000, I now had the $60,000,and thanks to a few (free!) financing tips from my mentor I bought three other houses, which I refinanced instead of reselling.

  Six years later, I owned a nice real estate portfolio that was evaluated by the bank (which means a conservative estimate) at $3,000,000…

  Yes, $3 million…

  I had taken the $30,000 that I planned to spend on a car and transformed it into assets of $3 million,

  Yes, I bought a frightful little house instead of a car: I bought an ASSET instead of a LIABILITY.

  An asset that, during the first year, and still assuming a 5% annual increase, (the average over the past 50 years) would make me $150,000 richer…

  I’m not saying this to blow my own trumpet…

  Because for people who are truly “wealthy,” an asset (whether in real estate or otherwise) that is worth $3 million is “peanuts”.

  I just wanted to show you how someone who knew absolutely nothing about the real estate market (although I had a wonderful mentor), and who was also a… writer, was able to transform $30,000 into $3 million in only 6 years…

  On top of that, these properties would generate $50,000 of passive income per year for me, in exchange for 5 or 6 hours of work per week, on average!

  I say on average, because sometimes I do nothing for 3 weeks, and I don’t even hear from my tenants, which gives me the impression that I am being… paid to do nothing!

  That’s the real beauty of passive revenue, and it is precisely for this reason that it is something that lazy millionaires really like!

  I know that $50,000 isn’t the be all and end all…

  But many people have to make do with far less in retirement…

  So when he time comes for me to retire (whatever that might mean for a novelist), I will gradually sell off these houses, which will be completely paid off, and which will probably be worth twice or three times as much, so maybe $10 million!

  Yes, I know, some of the money will go to taxes, but I will still have some left over, won’t I?

  At any rate, more than the old age pension that the government will pay out… if it is still paying it at all!

  When I tell people about this adventure, they often ask me the following questions:

  Has it prevented me from writing?

  No. I wrote my yearly book.

  Do I have more worries, now, with all these properties?

  Yes, I’ll admit to that. But as they say, you get out of things what you put into them.

  Did I have to work harder?

  Yes, I have sacrificed several weekends on renovations that I’ve had carried out but have had to supervise, and I have played golf less often than I would have liked…

  Do we go without?

  No. We have maintained the same quality of life.

  Am I happy to have made these sacrifices?

  YES.

  VERY

  Because in all honesty, I’ve enjoyed it, and it has taken my mind off my work as a writer.

  Every time we bought a new house, my wife said something like:

  “The rent from this one will pay our electricity bills.”

  Or: “The rent from this one will pay our taxes!”

  Or even: “The rent from this one will pay for our daughter’s daycare!”

  Then I realize something:

  At the moment when your passive revenue exceeds your expenses… YOU ARE FREE!

  Yes, FREE!

  Think about it for a while.

  What it means is: you do not have to have millions in your bank account to be financially independent.

  You just have to have a passive income that exceed you expenses.

  Isn’t that great?

  Okay, I hear you saying: it’s fine to buy houses and have passive revenue and assets that increase in value over time, but I don’t have the $30,000 I need to get started, so what can I do?

  Well, then, you begin searching immediately for the person I’ll be talking about in the next chapter!

  CHAPTER 4

  THE LAZY MILLIONAIRE GETS RICHER QUICKER

  THANKS TO HIS MENTOR

  Newton said: “If I have seen further, it is by standing on the shoulders of giants…”

  He was obviously talking about past giants, referring to the philosophers and wise men who came before him, and whose works he had studied.

  The lazy millionaire does the same thing.

  He
stands on the shoulders of giants.

  He lets the great men “carry” him…

  Instead of saying, like everyone else, “We always need someone smaller than us,” he wisely says “We always need someone bigger than us!”

  It’s less work, and it enables us to take… giant steps!

  That’s exactly what the Lazy Millionaire wants. In fact, IT IS his specialty!

  He draws inspiration from the example set by those who came before him and who accomplished great things.

  Plato had Socrates as a professor.

  Alexander the Great had Aristotle.

  A little closer to our time, Steven Spielberg had Hollywood icon Lou Wasserman as a mentor.

  Donald Trump had his father as a mentor. He was a real estate developer in the Bronx, and young Donald followed him to work sites.

  Warren Buffett, whose fortune is evaluated at $40 billion, had Benjamin Graham as a mentor. At the end of his high school studies, he accidentally came across his book, The Intelligent Investor, which has remained a classic.

  Fascinated by this work, the young Buffett decided to register for a course that Graham was giving at Columbia University.

  After earning his Master’s degree in Economics, and after being told no for three years, (even if he was offering his services for free!) Buffett landed a job at the company run by Graham. He worked for two years under his supervision then decided to start out on his own. He did for himself what he was doing for his mentor. Five years later, at the age of thirty, Buffett was a millionaire. The rest is history.

  This is the amazing power of a mentor.

  Why take years and lose thousand of dollars learning the hard way when you can learn from the best if you are smart (and lazy!) enough to find the right mentor?

  In his book called Ogilvy on Advertising, advertising icon David Ogilvy relates an enlightening anecdote. He was talking with Stanley Resor, who headed the famous J. Walter Thompson advertising agency for 45 years: “Every year,” Resor told him in confidence, “we spend hundreds of millions of dollars of our clients’ money. And what do we learn from it? Nothing. Two years ago, I asked four of our employees to attempt to identify the factors that usually work. They identified 12!”

  David Ogilvy commented:

  “I was too polite to tell him that I knew 96!”

  Just imagine the immense benefit that the young cub in advertising could have drawn from having David Ogilvy as a mentor!

  How many years did it take him to learn how to use these 96 factors to his advantage?

  How much money had he spent —his clients’ money of course, but his own as well —to acquire this priceless experience?

  I have a friend who is a real estate investor. He isn’t the biggest, but he isn’t the smallest either, with 300 doors, worth several million dollars, because he was intelligent enough to invest when he was very young. In fact, he was so intelligent that he got his hand on buildings for $150,000 that today are worth $700,000 or $800,000…

  One day at lunchtime, I asked him how he had come to the decision to buy a certain building. “It’s easy. I have 37 criteria!”

  What a gold mine these 37 criteria could end up being for the young man who succeeds in making my friend his mentor!

  In fact, a mentor is of inestimable value.

  The lazy millionaire knows it.

  He will try, from the very start of his career, to find one.

  He will not hesitate to dedicate his time to this task. A great deal of time.

  Because the mentor who is worthy of this name knows how to:

  1. accelerate his learning process in an extraordinary manner, by sharing the fruits of his experience.

  2. save him from a lot costly mistakes, although not all of them, because the young protégé will not “understand” all of the secrets that his mentor tells him, even though the mentor may have explained them fully. There are some things one can only understand by experiencing them for ourselves. And while the mentor knows a lot, he might not know everything. Especially the way the modern world is changing at an incredibly fast pace. If, at the end of his life, Henry Ford had repeated to a young protégé that the only cars that sold were black cars, he would have been giving him bad advice!

  3. open doors for him and put him into contact with influential people, and giving him his first chance by hiring him or asking a friend or business contact to hire him.

  4. offer him financial assistance for a project by lending him money (e.g.: $30,000 to buy his first home!), (or) introducing him to his bank manager, or co-signing a loan. (for him)

  5. more generally speaking and equally important, influence him positively through his own experience, philosophy on life, and style… But how can you find a mentor?

  Here are a few rules and tips:

  1. Mentors, even retired ones, are generally busy people, whose time is valuable. Never abuse their time, and understand that it is possible they will not be able to arrange a meeting with you for a few weeks, or even months, especially if they are still active and they travel a lot. Be patient. And confident. If they can’t meet (with) you immediately, this doesn’t mean that they don’t want to meet with you —it usually means that they simply aren’t available.

  2. Be daring and creative in the way you approach them, and introduce yourself. Remember the film The Six Degrees of Separation, which claims that ONLY six people separate us all from any person in the world. I don’t know if this principle means that I will meet Bill Gates, Steven Spielberg, or the Pope one day, but there is some truth to this principle. You undoubtedly know someone who knows someone who knows … the mentor that you would like to meet!

  3. Although they are very busy, mentors are often more available than we think. And more importantly, in your quest for a mentor, don’t believe that it is an impossible mission, because then it risks… becoming one!

  4. Before meeting with your mentor, read Dale Carnegie’s book How to Make Friends and Influence people. This book will teach you (or remind you) of the basic principle of human psychology: in order to arouse someone’s interest or get something from him, what you must do is show him how he will benefit if… he gives you what you want! Of course, given the obvious disproportion that exists between you and your mentor, this principle doesn’t always apply perfectly, because your mentor will not necessarily think that you have anything to offer him. But keep this principle in mind anyway when you meet him, and when you meet anyone you want something from, like a job, a service, a loan… For example, offer your services, even free of charge, like the young Warren Buffet did. He didn’t fare too badly, did he? Make sure your future mentor knows how important it is for you to work with him, or simply to become his protégé

  5. Do your homework before you meet with your mentor. Try to learn as much as possible about him: about his start, about his career, his achievements, his dreams, his charitable and social endeavours, his hobbies and his passions. Speak to him about these things during your meeting, and remind him of his most illustrious ventures. Ask him for details or simply ask him to tell you again. I have never met anyone who didn’t love to recount the story of their brilliant and modest beginnings, even when they have already told the story 100 times! Flatter him. But do it intelligently. I don’t know very many people who do not react to compliments. Even God is touched, I believe, when we praise Him. There must be a reason, right?

  6. Be brief and polite in all contacts with your mentor. Listen attentively —and religiously! Let him tell you everything he has to say, without interrupting him. Thank him for giving you a few minutes of his precious time.

  And make sure his advice and the example he gives you are not in vain: put them into practice that same day!

  Not in a month or a week: immediately!

  “If you don’t do it right away, you’ll never do it!”

  That’s what all lazy millionaires do, and that’s why they take giant steps when the people around them, who are often more educated, more intelligent
, and harder working, find themselves running around in circles for their entire lives!

  Lazy millionaires also do something that a lot of people do not do.

  They use a really simple secret —an extraordinary lever that literally makes their revenue explode, and makes it possible for them to earn 2, 5, 10, or even 100 times more money without having to work harder…

  Do you like what I am saying?

  Read on!

  CHAPTER 5

  THE LAZY MILLIONAIRE

  LETS HIS OBJECTIVE WORK FOR HIM

  One day, legendary golf champion Ben Hogan played a round of golf at the Los Angeles Country Club.

  Hole No. 5 (on the North Course) is a 476-yard par-5 with a green that is not visible from the tee because of the waviness of the fairway.

  There is a row of four large palm trees behind the green. When Ben Hogan stood at the tee, he immediately asked his caddy to give him a target, because the green was not visible, and Hogan was playing there for the first time.

  His caddy recommended that he aim for the palm trees.

  “Which one?” replied Ben Hogan, to his caddy’s amazement.

  And probably to your amazement too, even if you are a golfer…

  I found this anecdote in the wonderful book Golf is Not a Game of Perfect, written by sports psychologist Bob Rotella who, over the course of his prestigious career, has been personal advisor to such talented golfers as Tom Kite, Nick Price, Curtis Strange, Brad Faxon, and Davis Love…

  Here is how he explained the somewhat strange question asked by Ben Hogan: “This story is cited sometimes as an example of Hogan’s perfectionism. But what it really suggests is Hogan’s knowledge of one of the fundamental psychological principles in golf:

  « BEFORE TAKING ANY SHOT, A GOLFER MUST PICK OUT THE SMALLEST POSSIBLE TARGET.»

  Rotella continues:

  « This may seem obvious to some people. But the number of golfers who don’t do it continually amazes me. When I’m at a clinic or pro-am tournament with someone who’s just sprayed his ball into the next country, I sometimes ask what he was aiming at when he hit the errant shot. Usually, the reply is something like, “I was aiming down the left side.” Or “down the middle”. Or people might say, “I don’t know what I was aiming at. I just knew I didn’t want to miss left. That’s not good enough. Aiming down the middle is the equivalent of trying to go to Los Angeles by flying to an airport somewhere in California! »