Re: Question for full-timers - Posted by John Sheridan
Posted by John Sheridan on August 28, 2005 at 20:34:37:
So, in answer to my question about becoming a millionaire quickly (I define “quickly” as less than 20 years) we have 2 people who say they have done it, and one person who quotes a RE guru who supposedly said “everybody does it”.
Now this will be a long post, because I’m going to get everything I am thinking on this subject off my mind. I’ve been around for a while, and I’ve been from here to there in the investment world. I’ve seen lots of “get rich quick” schemes out there, and I’ve seen lots of people hurt by them. They get hurt when they are persuaded to take too many risks. Like for example, giving up their day job to open their own business, when they have not proven yet that they can run a viable business.
That venerable book “The Millionaire Next Door” - a book that most people on this site pay lip service to, but I feel that only a few have really read it carefully - sums up the facts. It is true that a large proportion of millionaires are business owners, but the authors are quick to point out that running your own business does not at all guarantee that you will become wealthy. They say that “only a very small percentage of business owners earn a six figure income” and “most start up business fail”.
As for the John Shaub quote - well, maybe real estate is a better business than any other. But every time I have heard that about any business or investment, I have always discovered that it was not so. So please pardon me if I am suspicious. I would ask, what did he base this statement on? Does he have hard data, or is it just his memory? The problem with memory is that it is basically anecdotal evidence. You tend to remember what you want, and forget what you don’t like. Another name for this is “gambler’s delusion”. Also, what about the people who failed? Does he have an accurate mental count of them? I’ll bet he doesn’t.
As for the people did get rich quickly - well, I never said that was impossible. It certainly is possible. But now I’m going to mention a little word, a four letter word that successful people don’t like. Can you spell “L-u-c-k”?
When you ask highly successful people about the key to their success, you hear things like “discipline”, “hard work”, etc. but the “L-word” is almost never mentioned. You do hear the L-word from the people who fail though. With them, it’s almost every other word in the sentence.
Now as I see it, the real truth is somewhere between those two extremes. If you work hard and are disciplined etc. then the odds become stacked in your favor. But luck is always an issue. With above average luck, you get rich quickly. With below average luck, it takes you longer. For the people who really make it (think Bill Gates and Warren Buffet here) luck is a big factor. Do you really think that in each case there is only one person in the entire nation who has the talent to do what these people have done? Of course not, there are many people who could have done it. But to be in the right place at the right time, and to have things work out in the right way - that’s what you need to hit it big.
So, what does all this have to do with the issue at hand? Well, I caution the original poster to take care when listening to the “success stories” that abound on this forum and elsewhere. We are hearing only one side of the issue. There is no way to know how many people have tried the same exact things, but failed. No one has a site for “failure stories” - and if they did, who would post there anyway?
And I have not even mentioned the problem of cash flow. A business owner must make sure that they generate enough cash to live on, and this must be done while dealing with all the other problems involved with growing the business and making it profitable.
So I would advise, someone who has a day job should not give it up based upon what they hear about other people’s success stories. You need a success story of your own. Run your real estate business on the side. When your business gives you an income that is roughly equal to your day job, and does it for at least 3 years but preferably 5 years, then you can give up your day job. I know that sounds slow and conservative compared to what a lot of so-called “gurus” tell you. Well, you can take more chances and try to go faster if you want to. Then you might get there quickly, or you might not get there at all. If you are more conservative then it might take you longer, but you are much more likely to get there. In other words, “slow and steady wins the race”.