The Millionaire Next Door

Option 3 for Stop Acting Rich-Part II

The cost of housing is often a major barrier to becoming financially independent.  That’s why Ms K.S. might consider becoming her own landlord, as did Brian.  But “just follow the rules.”  And as I wrote in The Millionaire Next Door:

To build wealth, minimize your realized (taxable) income and maximize your unrealized income (wealth/capital appreciation without a cash flow).

Brian has a net worth of just under 2 million.  But his taxable annual income last year was only $70,000.  It is not all that unusual for someone in the real estate investment business to realize only the equivalent of 3.5 percent of his wealth annually (see The Millionaire Next Door).  Interestingly Brian told me that he could live on just $50,000 income per year.  Here is what else he had to say about his financial lifestyle.

Letter II

Dear Dr. Stanley:

Today at age forty-one, I still live in the same two bedroom four-plex I started with, and my estate is over $5 million…. [I have a] net worth near $2 million…. In about two weeks when I close on three more 4-plexes… I will own 12 4-plexes.  I started with one then I bought both 4-plexes on both sides of mine…and so on….  My detailing business (down) last year… more time working on my 4-plexes and searching for more apartment buildings.

Today I could easily buy back all the toys [Porsches and Harleys] and the custom home…. One day maybe ….But money, if used right, really represents freedom…the freedom to do whatever turns you on.

I do play hard on the weekends…but I never had cable TV until a year ago…. My only auto is a 13 year old Toyota truck purchased used with 75,000 miles on it.  Today it has 170,000 miles on it….But it’s real nice.  My TV is over ten years old…so is my couch. 

On the other hand, I’m not cheap with the people I love…not with my sister and brother and their kids and not with Mom and Dad.  Plus I’m a great landlord…have a good relationship with all my tenants.  I would have to say yes I’m the most cheap with me…myself.  But not the people I care about.

People often ask me how did you get to own all those apartments?  You know what I tell them?  Just get one…just one…then focus on getting the next one.

I feel very lucky to be me.  For most of my life, I felt that I was less of a person than other people…I didn’t feel like I fit in.  As I get older and more successful, I don’t care as much what people think of me.  If you saw me on the street in my Toyota pickup and didn’t know me, you would guess I was a regular guy making $20,000 to $30,000 a year.  Life is funny.  I live in my two-bedroom apartment and I gotta tell you I have never been happier.


Brian can be a role model for those, like Ms. K.S., who wish to become financially independent.  He was very smart to ask the most successful patrons of his automobile detailing business (very wealthy owners of apartment buildings) to be his mentors.  Not one turned him down.  “They answered all of my dumb questions.” Brian very cleverly leveraged the high-quality, dependable service he provided his automobile detailing clients. 

1 thought on “Option 3 for Stop Acting Rich-Part II”

  1. Great stories. Most folks get restricted by their own pre-conceived limitations. It is written, “Ask and ye shall receive”. As a Realtor, I encourage all of my clients, especially first time home buyers to start planning on investing after they get accustomed to home ownership. I encourage them to read good investment books, including “Stop Acting Rich”, to learn more about the truth behind being Rich. Your other books are highly recommended too. Most of us have a false notion about the Rich and Wealthy and feel that we are hopelessly destined to have the average paycheck-to-paycheck struggle of life.

    Thank you for educating us so well in this area.

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