Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.
If you’d like to be considered for an interview, drop me a note and we can chat about specifics.
My questions are in bold italics and his responses follow in black.
Let’s get started…
How old are you (and spouse if applicable, plus how long you’ve been married)?
I am 49 years old and my wife is 43 years old. We have been married for 18 years.
Do you have kids/family (if so, how old are they)?
We have three children ages 14, 11 and 6.
What area of the country do you live in (and urban or rural)?
Suburbs of a large, Northeast city.
What is your current net worth?
$1,955,000 ($2,260,000 if primary residence included)
What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?
- Retirement Assets in Vanguard (70%) and TIAA (30%) = $805,000
- Cash = $250,000.
- Vacation Beach Home = $500,000 (no mortgage)
- 3 Duplex Rental Properties = $1,100,000 ($700,000 mortgage)
- Primary Residence = $525,000 ($220,000 mortgage) I do not factor my primary residence into net worth calculation.
What is your job (type of work and level)?
Healthcare Administration
What is your annual income?
$350,000
How did you grow your income so high?
I was initially a clinician and worked a 40 hour per week job. I worked two evenings per week to earn extra money to accelerate savings for investment properties. When I was 36 years old I finished my MBA and transitioned into management. My income has been strong for the past 10 years.
What is your main source of income?
My job. However I also earn additional free cash flow from my investment properties, approximately $24,000 per year.
What is your annual spending and what are the main expenses you have?
- Real Estate Taxes and Insurance – $16,000
- Private catholic School for three kids – $18,000
- Utilities, food, spending and vacation ~ $100,000
I decided 10 years ago to only replace my cars if I have cash. I drive my vehicles in excess of 200,000 miles before trading them in for new or certified pre-owned and I always pay cash.
I am entering the point of life where the cost of raising children will increase significantly with driving and college on the horizon.
Yearly savings:
- Retirement – $52,000
- General – $50,000
How did you accumulate your net worth?
I started investing in the company 403 b program when I was in mid 20’s.
The past 10 years my salary has been at a sustained high level. The last 7 years I maxed out my 403 b and 457 plan contributions $18,000 per year per plan.
Additionally I have been investing in real estate for 25 years. My first house was a duplex. When most of my friends were buying houses with a mortgage of $1,000 per month, I chose to live in a 1st floor apartment in a building I owned and rent the 2nd floor unit. My part of the mortgage was only $250 per month.
I continue to own investment properties which yield strong positive cash flows and year over year market appreciation. My wife and I have a marginal propensity to save vs spend.
What money mistakes have you made along the way that others can learn from (or something you’d do differently)?
When I first started investing I was choosing Stocks and placing my children’s savings in “I” bonds. I have learned to place my investments in index accounts. I like Vanguard’s VFINX/VFIAX.
What have you learned in the process of becoming wealthy that others can learn from (what can others apply to become wealthy themselves)?
Invest in Real Estate but look for opportunities which yield 20% – 40% monthly returns.
Multi-units are best because you when someone moves out the other tenant is still paying rent….single family and condo rentals are single income cash flow.
What are you currently doing to maintain/grow your net worth?
Aggressive bullish approach to the Stock Market while maintaining current savings amounts.
Do you have a target net worth you are trying to attain?
$3.5 million and will not include real estate.
What are your plans for the future regarding lifestyle (for instance, will your net worth allow you to retire early, downsize jobs, etc.)?
I plan to retire in 11 years on my 61st birthday.
In retirement we plan to withdrawal 4.5% of my net worth or $157,500 per year.
My investment accounts will remain aggressive as I will need them to last beyond 30 years.
Rental income per month when I retire should provide an additional $30,000 per year. I also plan to defer Social Security until I am 67 years old.
Is there any advice you have for ESI Money readers regarding wealth accumulation?
Read about how people plan their wealth accumulation via ESI website, this is the most practical information I have found and hearing about others is inspiring.
Save more than you spend.
Grow your income and max out your retirement contributions at a young age.
He may not have enough to retire. .. Great work though. He has done a swell job making cash work for him and his family. After his kids get out of catholic school, they should be able to get into a good college. Save that money you would spend for their education for better investments. It may be too risky investing in your childrens education. Just in case you don’t get a return. College is expensive these days. In a way I’m glad my parents didn’t write me a check to go to school. I had to get in through the boot-strap method. Took a few years and finding out what I wanted to do with my life but in hindsight I appreciate working and saving and raising the funds myself.
Invest in yourself to grow your salary. Max out retirement accounts. Drive your cars until they reach 200,000 miles. Invest in low cost index funds. House hack. Diversify investments with real estate. Sounds like the perfect wealth formula. Congrats MI 32. Well done.
Agreed with Jason – first, congratulations and thanks for also mentioning house hacking.
A number of the items mentioned here are basic – yet so effective.
I highlight Jason’s call-out of the house hacking – living in a unit / room while you rent out the other(s) – because it can help reduce the barrier to direct real estate rental investment. About 25% of our net worth is in real estate exposure but via REITs. We’d like to transition some of that exposure to direct ownership, and house hacking seems like a good entry point to consider further.
Congrats again and thanks for sharing.
Thanks and I appreciate the advice I receive from this website and it’s followers.
That is a healthy income!! I’m jealous you have the 457 and 403b as options… that is a dangerous combination. I know the fees can be higher than a normal 401k, but with a high income, it’s nice to reduce your taxable income by $36k!
Cheers and Happy Holidays
Wow, that’s a massive income. Impressive indeed. Seems like you could retire much earlier if you could get your “Utilities, food, spending and vacation” category of spending down. But it also sounds like you have no interest in retiring early, which if so, kudos to you! If you like your job and want to continue with it that’s a refreshing take in the FIRE community 🙂
Really solid work, kudos! It looks like you have struck a nice balance of growing your career/income and yet saving aggressively. Nice work!
Yes, college is expensive even for public universities. I calculate that our 3 sons college will cost us about $400K total by the time that we are done. Ouch!
Great work!!!
Thank You…
Great advice! It’s always good to hear from people that successfully invest in real estate, since this can be such an intimidating area. Choosing good properties, good tenants, etc.; it’s nice to know that people who don’t do it for a living (who have another source of income that is primary) can successfully pull it off.
Congrats to Millionaire 32!
We did a very similar real estate scenario, but with single units in an overseas context …Michael CPO, from the far side of the planet
Fabulous job MI 32. All of this talk about real estate has got me seriously thinking about buying some. And an opportunity might have just come my way. Love these interviews.
MI32,
Congrats on your success! Do you or anyone else have any good recommendations on books to learn about real estate investing?
Hi Ryan, I have not read any rea estate books. I learn from talking to other investors, especially the landlords who have been in the business for awhile. A few rules… keep them close to your primary residence….to minimize the drive back and forth when you are showing a property to potential tenants and when you have to check on things…
use craigs list to research what properties are renting for….then purchase at a 20% discount from the market…..this takes time. I never purchase a hot market unless I think the market will increase 20% over 3-4 years. The numbers have to make sense…when you add up all of your expenses you want to clear 20-40% per property…
Regarding rental property: When owning rental real estate you have to wear many hats, if you want to make any money, in my opinion. Maid to clean up the vacancies for the people who don’t clean up after themselves, bill collector for the people who seem to think it’s not important to pay the rent on time, handy person for all those little calls you don’t have to make for help. There are more. Make sure this is worth it to you before buying rental property.
Great interview. It shows the role real estate can play in wealth building.
Hi ESI,
Wondering what happened to your blog page. No post since new year.
Hope everything is well with you.
I tried to send you an email, but didn’t hear anything. Can you email me?