I was recently asked why I am focused on looking for rental properties to own when I am currently renting. I had to think about the WHY. A lot of times you can make a decision and be so far in executing the decision that you forget what spurred the action in the first place.
This person wondered why, since “all homes are homes”, I didn’t settle into a solid home right now and focus my efforts there and then look at rental homes. OR they meant that I shouldn’t be looking at rental homes in the first place. I don’t know what they meant but after giving it some thought I know why I do what I do. The key is that assets pay for liabilities aka luxuries. You don’t pay for luxuries out of your working income. Rental homes are assets, those rental homes fund my lifestyle. The home you live in and financed with your working income is not an asset. It is a liability because it takes money out of your pocket. Thus all homes are not homes. The difference is how you use it. Just like any other tool.
The number one book that I live by is a book called Rich Dad Poor Dad. And that is the book that I pulled that principal from. I thought this was cheesy and cliche but it seems like every single successful real estate investor interviewed on bigger pockets also swears by this book. This book is a total mind shift.
One of the most powerful statements Kiyosaki makes is that your home is not an asset. It is a liability. Another thing that is not an asset is your car and your job…. Yet these are the things most heavily marketed to the middle class. To make it into the 1% you have to be willing to do what 99% of the world won’t do. This means that you can’t follow middle class logic and make it into the 1%.
The 1% will get richer, the poor get poorer and the middle class will struggle in debt. But it’s interesting that you have to look at why it is that the middle class remains there and struggles in debt. I think it is because they are sold things that keep them stuck. I didn’t realize this until I learned that the wealthy earned their wealth by providing the products that keep the middle class in the middle. Not only that, a lot of the things that the middle class perceive as accomplishments are really just traps.
For example, if you work hard at your job and buy a luxury car, everyone on your IG timeline will tell you congrats. You won. Or if you buy a house with at thirty year mortgage everyone will tell you that you did a good job. This is because it takes work to make it into the middle class. It takes work and planning and sacrifice to do all of those things and the reward is debt.
It also takes work and effort to do the things that get you into the 1%. 1%ers are producers, they sell the homes and the cars and the products that you consume. It takes sacrifice and planning to do this as well. The difference is not the work or time or sacrifice. The difference is the mentality.
That is why the book Rich Dad Poor Dad is so enlightening. It opens your eyes to the right actions you need to be taking. You will look silly and foolish when you start running down the Rich Dad or the Millionaire Fastlane road because you won’t be doing what everyone on IG is doing. But the end results are a foregone conclusion.
We know what it looks like to do both actions. The difference is what is popular. The middle class road is popular. Its easy and predictable. That is why most people just take that middle class road. It is what they have been sold their entire life. Go to school, get a job, buy a house. Well now you know that there is another way. If you continue to work hard and sacrifice to tie yourself to debt, you know where that will lead you. If you want to be a part of the 1% though, you will have to be willing to be mocked and laughed at while you accumulate cash flowing and appreciating assets. One is liberating and the other is just another form of slavery. Choose wealth. Choose assets not glamorized liabilities. In the end you win.