Secrets to Becoming a Millionaire

Are you struggling to make the kind of money you want as a real estate agent? Or maybe you're putting in the hours, making good money, but you don't have a whole lot to show for it. Or maybe it's just the constant grind and you really aren't getting anywhere whatsoever. You're working evenings, you're working weekends, and you're just at wit's end on how to make something financially of this career as a real estate agent. In today's episode, I'm going to tell you how I went from a modest multiple six figure net worth to a liquid net worth multiple seven figures today. Meaning I can write a check in less than three days for multiple seven figures. And I don't say any of this to brag or boast or anything like that. I've learned a lot along the way and it didn't happen overnight. It took me more than a decade to figure out some of the things I'm going to share with you today. My name is Lars Hedenborg. I'm the founder of Real Estate B School and I help real estate agents and team leaders grow and scale their businesses so so they can systematically increase their net worth and time away from the office. Before I get into it, I want to make sure you grab a copy of my free report called the Real Estate Business Growth Navigator. In this report, I detail the six stages of growth to go from new to real estate to business owner with complete time and money freedom. Go to realestatebusinessgrowth.com that's realestatebusinessgrowth.com to grab a free copy today. So you might be asking yourself, Lars, why this topic? Why talk about how to become a millionaire, right? It's not all about the money. It's about serving our clients. It's about helping. All that is true. But we trade so much time, we put so much effort into our businesses, we endure so much stress and the question is, do we have anything to show for it financially? This topic is not taught by most real estate coaches. Who even knows if most real estate coaches are even financially free? So it's not that I really want to boast and brag about how I figured some things out. I've made more mistakes than anyone I know. If I would have avoided those mistakes, which is what I'm trying to help you do, I would have been way farther ahead financially than I actually am. And that's why I want to dig into this topic, tell you a couple things to look out for and also to give you the roadmap to true financial freedom. All right, so let's dig in. I first want to start off with a quick quote by Mike Michalowicz in his book Profit First. And I'm going to read the quote. Mike says, putting your nose to the grindstone is a really easy way to cover up an unhealthy business. We think that if we can just work harder, longer, better, if we can just hold out, something good will happen one day. And that is so true, and it's so good. But there isn't a pot of gold at the end of our real estate business growth journey, right? Unless you're doing the right things along the way, you're not going to be financially free at the end of your real estate career. That's where the industry's failed us, and that's what I want to dig into today. So I think it was in 2010, I went to a Tony Robbins event in Fiji called Health and Wealth Mastery. At the event, Tony taught us the definition of becoming wealthy or how to become wealthy. He said, spend less than you make and invest the difference. And I'm thinking like, Tony, you got to know that we all. It's about 50 of us in a room, a very intimate setting. And I'm thinking to myself, like, there has to be more to this than that equation. Spend less than you make and invest the difference. But he went on to say, until you get to the point where you have a critical mass of investment capital where you can live off of the interest. So think about that for a second. Spend less than you make. Invest the difference. Accumulate a pot of gold, enough liquid net worth where you could live off the interest, conservative interest, not risky investments. So let's say a 5% return, right? So using simple math, if I had $2.4 million in the bank earning 5%, that would throw off $120,000 cash. That would be 10,000amonth. So that's simple math. For every 2.4 million of liquid net worth, you could roughly equate it to about $10,000 a month of residual income. And that changed everything for me. I looked at everything differently. It also made me realize that I wasn't as far along as I thought I was. You know, I was doing good in real estate. I was selling a lot of homes, but I. I was overspending. I was wasting a ton of money. I really wasn't, you know, tending to the bills, right? I was just all front stage. I was all sales and marketing and let's sell a lot of homes, you know, 27. Then 44 is better than 27. You know, 58 is better than 44, and then 118 and 178 and more overhead and less fiscal responsibility. And I finally figured it out that I need to be aware of my bottom line, and I needed to follow an economic model. That's the first thing we've got to figure out about our businesses. Are you following an economic model that allows you to systematically make money, like, 11 out of 12 months? I know we always have that one or two months where there's not enough income to perhaps support the expenses that we have, but are you making enough money to sort of get to this critical, massive investment capital? Are you saving enough money every month? And that's the conundrum that most agents have, right? We have money coming in, but it's going out as quickly as it's coming in. So that's a problem we're going to solve today. I'm going to go into two pitfalls and then two things to look out for. Number one, don't try to buy your way to wealth, meaning you can't pay for all the lead sources, all the technology. You. You can't just throw your credit card at things and expect it to return dollars in a way where you're going to spend less than you make and have money left over to invest. The difference. I was talking to a client of ours recently. He was telling me the problem is he has 50,000 coming in and he has 50,000 going out. You have, like, one agent, one admin, and, like, what? I don't even know what's going on here. Like, how could you possibly be spending everything you make? It's just what we do. We see our bank account with the. With the money in it, and I think we're just, like, excited, and we're like, let me sign up for this thing and that thing. We're not really a good steward of the money that's coming in. So that's the first realization that I had. And I did it for probably my first two or three years in the business. I bought everything. I thought it was more leads in, easier leads. I outsourced inside sales. I, you know, paid for anything that I thought could get me closer to scaling my business. But I didn't realize that I wasn't actually making more money. I was just making more transactions. And there's a big difference. The second thing I want to cover is don't be in such a rush. Tony Robbins also says that most people overestimate what they can do in a year. And they underestimate what they can do in a decade. So in my first business plan, this is the plan I wrote in late 2009, about September 2009, before I started a team, before I had this grand vision of, you know, selling 453 homes in a year, you know, working one day a week. When I was in town, I detailed out in that plan my three year, my five year and my 10 year vision for my business and, and every area of life that mattered to me. And so it was the hours that I wanted to be working, it was the money that I wanted to be making, the jobs I was doing in the business, like really detailed out exactly what my life looked in the future in three, five and 10 years. And if you're not doing it that way, if you're not slowing down to think about what you want the future of your business and your life to look like, chances are you're not going to get there. Specifically, when it comes to your net worth and your ability to accumulate seven figures of liquid net worth, right, you've got to slow down and get an idea of where you're going and stop this incessant, you know, it's got to happen this year. It's got to happen this year. Just stack wins day after day, week after week, month after month, year after year. And before you know it, you're going to get your three year, your five year, your ten year vision completely achieved because you just slowed your roll. You realize that anything is possible when you look out 10 years. So here's something you can do right now. And I actually just went through this exercise a couple months ago. I printed out credit card statements. So I have an Amex for two businesses. So two Amex accounts and one personal account that we run our personal expenses through. And I printed out six months, line by line, every expense in our personal and in both my businesses. And, and I got away for a few days. I did some other things on this retreat. One of the things I did, it took about six hours, but I went through line by line and identified expenses that some I didn't even know what they were. Some I was like, I thought we canceled that nine months ago. And some I knew had to go, go away right away. And others I was like, okay, that's definitely money that we need to spend. And this happened in my personal life and in both, both businesses. So if you haven't done that exercise, that is a must do, especially with the shifting market. You know, the example I gave of the, the agent bringing in 50 and, and losing 50 every month or spending 50, you know, the, the, the thing needs to be shifted. You can make 50, but you can spend 20 on that 50. Right. And then you've got $30,000 that you could do some good stuff with. You can save, you can give those sorts of things. So if you haven't been through this exercise, this is job number one. Spend at least four hours. It's going to take more time than you think to go through line by line where your money is going. And that will allow you to spend less than you make. The second thing you should do as per the equation, remember, spend less than you make and invest the difference. So in terms of investing in something, there's no secret pill here. There's no magical investment that's going to take, you know, $10,000 and turn it into a million. Right. It's putting money away systematically in whatever you believe in. It could be, you know, dollar cost averaging into the stock market, maybe a fund like vti. It could be dollar cost averaging into Bitcoin. If you're a believer in bitcoin. I'm a firm believer in Bitcoin. I'm not a financial advisor. So if you throw money at Bitcoin and it disappears, please do not come back to me. I'm also a believer in whole life insurance. Right. Most people aren't. Dave Ramsey thinks I'm an idiot. I believe in whole life insurance, whatever it is, be consistent in that thing and don't waver as we go through probably what is still more time of this economic winter. I don't think we've seen the worst of it yet. But you need to invest the difference. Spend less than you make. Invest the difference. Just pick something and be consistent. So chances are, if you don't have considerable net worth, chances are you're waiting for something good to happen one day, like the quote from Mike Michalowicz. But like he said, very rarely does it. It's not going to happen. We think our businesses are magically going to have this exit and they don't. So you need to take action today. Spend less than you make. Invest the difference. You know, this is oftentimes a really touchy subject. People just don't talk about their financial situations. People don't talk about where they're investing their money, if they're doing well financially or if they're struggling. Right. We know the statistics. Dave Ramsey tells US it's like 70% of folks are living paycheck to paycheck in the United States and that was pre inflation and all the chaos that we're going through now, I can only imagine what it looks like now. It's probably upwards of 80 plus percent of people that are struggling financially. And so why is it that we don't talk about these things? Why is it as an industry that we only promote like the number of homes we sell? Nobody's looking at our P and L, no one's looking at the number of hours we work. No one's looking on the inside of our bodies and our brains like how stressed we are and how much we're freaking out all the time. This chaos is incessant and it's just impacting us all the time. So you need to slow the roll and just take a deep breath. Screw the guilt. Forget the shame. The last thing you want to do is regret not preparing yourself for the future financially. And it starts today. That's it for today's episode. I hope I challenge you in some way just to slow down and be honest with yourself about where you are in your finances. And if you're not where you want to be, just take the time to run your net worth. You may be scared of what you'll find, but it will allow you to just be honest with yourself and figure out what what the next right thing is for you to do. Don't forget to grab a free copy of the Real Estate Business Growth Navigator. Just go to realestate business growth.com. it'll detail the six stages of business growth to go from new to real estate to $3 million in GCI or more and sitting in the owner's seat of your business. If you enjoyed this episode, please do me a favor. Hit the like button, subscribe to the channel and share it with someone that that you think might be struggling and might help them to hear the truth about what it takes to become a millionaire as a real estate agent. We'll see you next time.