How To Become A Millionaire In 5 Years

this is like putting something in a toaster. Only in the dictionary does the word success come before the word work. Because it's alphabetical, so nothing good comes easy. And whenever you make emotional decision, it's going to be a bad one, and we're going to get into that with this trending topic around money. But I am I'm making this promise to you in this hour, Within this hour, I am going to break down for you and I want you

to go get my book. Financial Literacy for All, is number one in business finance in the country on Amazon. Financial Literacy for All as part of the Operation Hope and Financial Literacy for All movement, and it's been out for three months and it appears a lot of people of color. I'm very proud everybody's buying it, but a lot of people of color in particular are buying it because it demystifies money. And I want you to see it marked up. I want you to see underline. I

want you to send me notes with dog ears. I want you to talk about this at the dinner table. Okay, But I'm going to deal with something I don't specific explicitly deal with directly in the books. I'm trying to give you the foundation and the guidepost for just managing your life. Right. So I'm going to break down if you want. If your goal is to become a millionaire, I'm going to break down in this hour. Get all

your friends together, share this with others. I'm going to make this simple of how you become a millionaire and is little as five years. You can also do it in forty five years and take very little risk on your way to do it. But before we do that, I'm gonna share a disturbing trending topic and it is his brother. This I'm gonna call it brother because I don't claim this dude. This is young black man who gets entitled about his girlfriend's not even his wife, his

girlfriend's money. And I'm always advocating buying a home. I say this is the way, a way to build generational wealth. This is the wrong way to do it. I'm gonna let you listen to this because I want you to hear the emotions and how frustrated this young lady is, and she has to rewrite my opinion to be frustrated. You want me to understand a lot of what you're hearing.

I'm gonna try to translate it for you, but I think you'll get the message from the emotionalism here, and then I will further break it down after it finishes. We bought the house tripping. So he is walking her in this house, and he says that she's tripping. She's upset. Why would you do this with our money? She says, getting it's fine, man, So the boyfriend asked the guy to explain it to her. When he's been explained it, he tells the dude he's not in part of this conversation.

Seventy percent her money. By the way, we had a relationship. I told you get out to change just my Josney right, just we bought the house. This is alarming, is distressing, it's hurtful. Cover the furnace up with a curtain. So she says, I need my money back to the realtor. The realtor begins to explain that you're under contract, and this is I guess the way it's structured. They can't

get the money back. The deal is about to close, and I don't know how they did that, because either he forged her signature of the boyfriend or he'd put it in his own name, which is worse because seventy five percent of the money is her money. But right when she says I need to get my money back, the boyfriend tells the girl girlfriend, not all the dudes

not in this conversation, leave him out of this. But then when he wants to calm the girlfriend down, as if she's some toy, again, it's seventy five percent of her money here be clear, twenty five percent of his money. Maximum. When he wants to calm her down from her emotionalism over a decision that he made about the single most important decision on investments that you can make as a family, which is where you're going to live your own home, he then invites the same guy he just seldom said

to be quiet. He's not part of this. He doesn't invites that guy to shut his girlfriend down. It's toying with her. She's clearly about to go left. And while I don't encourage emotionalism and I don't encourage anger, I do understand what she's going through. She trusts at him. She says, we're not even married yet. Yes, I trusted you to make this decision, but you should have checked with me before you made a final decision. That didn't mean to just go out and buy whatever you like.

I don't even like this how, she says. Clearly, she's you know, a man may make the house a woman turns into a home. Anybody common sense knows that. So it's arrogant, it's narcissistic, it's it's it's presumption, it's entitlement. It's it's disgusting what this dude did. And hopefully they're able to resell this, this house and get the money out. This relationship, I can tell you right now, is not

gonna last my opinion. Now, unless they just love drama and this is just part of what they go through and for some reason they're just hooked on pain, then I don't know. Maybe it will last, but in anything that I call common sense, don't hunt. This is not going to sustain itself. And I feel sorry for her, and brother man needs to learn some lessons about human decency, respect, decision making in life. What do you think? What's your opinion?

Did he have a right to do this? It was twenty five percent of his money seventy five percent of her money. Did he have a right to do this when she said, you're basically sure, baby, go find us a house or should he have checked with her before he made a decision for her? Okay, this is John O'Brien and this is money and wealth talking today about becoming a millionaire. Now you've heard me say over and over again, real estate is the biggest business in the world.

It's the biggest business in the entire world, biggest industry. Be very specific, in the entire world. Anybody who's a millionaire was a man dollar net worth or more. The likelihood is ninety percent plus that if they're a sustainable millionaire, meaning somebody who's not just as a contract earning of million dollars an income. By the way, income is different from net worth. If they have a net worth of a million dollars or more, and it is sustainable, meaning

it's not here today, gone tomorrow. There's a ninety percent chance there's some real estate in that portfolio. Every millionaire just knows that this is, you know, a basic part of your building block. So the easiest way you build wealth in America is home ownership. But forty one to forty four percent of African Americans, as an example, own a home compared to seventy five percent of our mainstream

counterparts who own a home. The tax system in America, And no, this is not jeez, this is John's strategy. How do I become a millionaire? No, I'm just giving. I'm laying the foundation here. I'm I actually walk you through how you can do this. I think with minimal risk and maximum upside, both a short term strategy and a long term strategy. But I want to lay the frown foundation in the building blocks because we all start in our knowledge of financial literacy, which I believe is

the civil rights issue of this generation. And why I book wrote the book Financial Literacy for All, and why I found it the largest financial coaching organization financial literacy coaching organization in America, Operation Hope, And why I helped to create federal note that helped it we created federal policy. Sorry,

we didn't create it. The president, President George W. Bush and President Barack Obama executed federal policy at the federal levels for the first time in this country on financial literacy as a direct result of our recommendation when I was a presidential advisor. So I know lot about this topic of financial literacy, and I know that some of us is what we don't know, that we don't know what we think we know. So I try to lay out the basics. Why do I say home ownership is

the easiest way to build wealth in America? Well, Number one, the entire tax system is designed to encourage home ownership and even a mortgage. So if you look at the tax policy, if you rent an apartment, and as I've said before, you could rent in places that you can't afford, around people who don't want you with money, you don't have to impress people you don't know and to have conversations in the hall that don't matter. And you don't own a thing, or you can buy something that you own.

And if you rent, by the way, you're opening up that window and you're throwing money out that window, and you have no claim to it. I have said before on Roland Martin Show, and I believe I said it on Charlemagne's program that I created from twenty seventeen to twenty twenty one the largest minority owner of single family rental homes in America. I sold the company Christmas Eve, twenty twenty one. I'm still a passive shareholder, but I

don't have any material involving any decision making anymore. But we built a portfolio of seven hundred homes, and we gave them a lot of incentives for going from rent to own and paying rent on time, and using minority vendors and all that stuff, raising their credit score, all these programs. But I encourage people not to rent for me for life, like you know rent and whenever you can move up to home ownership, there are no incentives for renting. If you have a mortgage, you can write

twenty about any paying mortgage once a year. I would encourage you, by the way, to pay a mortgage every two weeks. Doesn't cost you anymore. I'll get in that minute in a minute. But if you pay your mortgage once a month, like most people do in this country, two Thursday, mortgage is going to be mortgage interests, So twenty years approximately, that thirty year mortgage, depending on how your mortgage is structured, is probably mortgage. Interesting. Now here's

a good news. You can write that off your taxes most of the time. So you now get the benefit of the money you're paying on the mortgage you have in the house, get that back in a tax refund, whole or part. At the end of the year. You get a benefit of the depreciation of the house. Okay, you get a benefit of the appreciation of the house the value increase, and you get to write off the mortgages most payments against the house against your income. It's

a great deal. The tax system is designed to support home ownership, and once you're in that house, there are things that you can also write off that you spend on the house. But that's a whole nother conversation. So the tax policy isn't designed to encourage people to own a home. Brothers going to say to me at a session of your I was I think it was Roland Martin again. My brother responded, you know online, Oh you know, why should I Why should I buy a home? John

Brian talk I want to buying a home. I don't own the home. The government owns a home. No, he said, sorry, the bank owns a home. I don't own the home. The Morris Company owns a home. My reaction if you don't pay, if you don't pay that mortgage, yes, the bank's going to own the home. Let me tell you something. If I loan you some money to buy a house and you don't pay, I'm going to own your home. Real talk. You stop being my cousin Pookie. Then you start being my uncle jojo U. Stop being my buddy

and my friend, and you start being my borrower. My business contract. Uh, I want to say client, my business contract recipient. H and soon the foreclosure notice recipient, because I'm going to forkloths on you. Business is not personal. That's another podcast I would do at another day. Business is business, and we need to see it that way. Now, if you pay that mortgage payment, you do own the home, and you own all the interests tied to that you own.

As I said, you get the benefit of the appreciation the value of the house after you bought it. You get the benefit of depreciation, which is a tax strategy, a tax reality really, and you get the benefit of writing off mortgage payments which are tax deductible against your income. Now, see a tax policy, see a taxman or tax woman on this. Don't take my specific example. I'm just giving you broad descriptions here, by the way, just to get

into depreciation specifically. It's really gives you some value on the wear and tear and the aging of your of your house over time. It's typically tied to rental on investment properties, by the way, which I'm going to get into on how you build a net worth, but I wanted to at least cover all these different definitions so that you're really clear on it. There's a depreciation calculation again, talk to your tax pro on this. There's a depreciation

depreciation formula. Talk to your tax pro on this. So when you're buying a house for yourself, you just really you want to obsess on the appreciation, obsess on the mortgage write offs. Okay, so now let's get into the meat of the matter. Now that we've made a case for your own individual homeownership for wealth creation, now let's get into what I promised you building a million dollar portfolio being being having a net worth of one million

dollars or more. Now, let me be very clear, making a million dollars income is different than a million dollar net worth. You can actually a million dollar income and have a zero net worth. You make money during the day. Thank you Tony Wrestler, my billionaire brother for giving me in my business partner, and my friend for giving me this very specific distinction during the time I was building a company with him. Help me to focus on the right thing. You make money during the day. You build

wealth in your sleep. That's what I call making money during the day, making a living. Most people are obsessed with making a living, but they're not making necessarily a life. You build wealth in your sleep, stocks, bonds, investments, homeownership, small business ownership. I believe education qualifies for that. You build wealth in your sleep. It's compounding mechanism. Now, let's now deal with how if you want to build wealth a million dollar net worth minimum in five years. You're

in a rush, you're in a hurry to do this. Well, No, let me deal with the easiest one first. Let me deal with if you don't mind waiting, and you are focused, you're on mission in your life, and you don't mind starting this adventure this process. Your generation is going to live longer because there's the health care and wellness mostly wellness strategies. Now you're eating better, hopefully you're eating eating fruits and vegetables and a balanced diet, and you're taking

nutrients and you're exercising. You're going to live a longer life. You're going to live hopefully close to one hundred years old years of age, at least to ninety, at least to eighty. Right, So, if you're living in a seven undredredit score neighborhood, by the way, you lived at least eighty one years old. You lived in a five eighty credit score neighborhood, five fifty credit cocre neighborhood. If you look at the Hope credit score index, you live to

sixty one years old. I'll do a separate podcast just on that. Yes, fifteen minutes apart you live, it's a twenty year delta on life. You live twenty years longer in a higher credit score neighborhood. It's mindset mentality surviving versus a thriving and winning mentality is where you know.

It's a belief system. It's your emotional spiritual health basically that is materializing in access, opportunity, belief, confidence, so on, and so forth, the execution of your aspirations makes you happier and less stressed out, and you're making better decisions and you live longer. I'll get into that also in a separate podcast. So, now you don't mind starting at twenty or twenty two years of age, you're working somewhere, you don't mind starting your journey. Now you've gone through college.

You know you've got some job or you're in college, you've got some job that pays you, I don't know, thirty thousand dollars a more year, okay, And you're going to live on a budget, and you're going to in this example, you're willing to put aside three thousand dollars a year. Okay, this is the easy way over forty seven years, forty five, forty seven years to make it be worth a million dollars. You're going to take three thousand dollars and you're going to put it in a

wroth ira. Now it doesn't have to be a roth ira. It can be certain I'm trying to be careful not to make certain stock recommendations here. It can be in a certain type of investment account for publicly traded stocks. It can be in an index fund. It can be in a blue chip like a high quality stock portfolio. You can deal with if you want to. If you want to be culturally and enrich, you can deal with a company like Aerial Capital Management, which is a black

owned mutual fund. My friend John Rodgers and Melody Hobson found it in and run it. But do business with whoever you like, whoever ye're comfortable with. But you can, you know, let's just let's just make this simple and say, through your four oh one K program at your employer, you pick a basket or an index fund or whatever. Again, I'm trying not to be specific here or in this case again a wroth. I are a account and you're going to set aside three thousand dollars a year. Now.

The key here is that it going to throw off on average, give or take. Some years will be higher, some years will be lower, but on average you'll probably throw off about seven percent return. Okay, you're not going to touch it. It's very important here. Put it in, set it aside, and forget about it. Now. It's your money. It's not going anywhere. It's not running off to China or Russia around the world without your permission. Nobody's going

to steal it from you. If you ever get into a desperate situation, I encourage you not to think about it in this way, because you will go grab it at some point. Something you will find to rationalizes is to tell rational lies. You oil frill, find some reason to go to go punch a hole in this account and grab it. But I'm suggesting that you've invested and forget it, set it aside, and forget it. You didn't make thirty thousand dollars, you made twenty seven thousand dollars. Right,

You didn't make thirty five thousand dollars. You made thirty two thousand dollars before Texas. You didn't make fifty thousand dollars. You made forty seven thousand dollars. Okay, Now and budget around it. Put that three thousand dollars size is going to get you an average return. Again, some years will

be hired, some years will be lower of about seven percent. Now, if you do that and do nothing else, you can still live your life, go on vacations, enjoy yourself, and as you over years, you're gonna make more and more money. So this will become less and less painful. Because in your earlier years you're probably making less money, particularly when you start this when you're in college. Right, it'll be a point you go get to a point where you

go forget about it. But if you do three thousand dollars a year for forty seven years and follow the calculations forty five to forty seven years, you'll be worth about one million dollars. Do nothing else. Okay, you do that for sixty years, you'll be worth about two point five million dollars. And if you really want to be a baller, and you start earlier, or maybe as a couple, will you double down and don't get married and don't

get divorced? Okay, because you can break this. You can cut this in this number in half and just do it fifty to fifty. You do it for sixty five years at three thousand dollars a year, you'd be worth three and a half million dollars. But let's go back to the million dollar number, because that's something most people can see line of sight to. You know, it's forty five to forty seven years, again depending on how the

markets do. But you know, let's say in five years the markets don't do that great they do good and they do bad. But over the long arc of time, if you keep it in there, keep it the money in the market for twenty years. There's never been a twenty year period of time in the US where the markets didn't on balance go up. I'm talking about the stock market in this example. I'm not even gone in real estate yet, right, so buy, So invest it and

forget about it. There's three things that have not gone down in the history of the United States of America stock market value, real estate values, and the GDP gross domestic product the income of the nation. That doesn't that They're not going to be dips. You go up, it dips, right, but it always corrects above the line. It has always corrected above the line. So invest it and forget it. And that's the easiest way, and that is the least volatile way, is the least risky way. Now you say,

I don't have forty five years. I'm not that patient. I don't want to get married and rely on on splitting this responsibility with my mate. I don't want to wait, you know, forty five to sixty years, right, I want it now. Okay, here you go, here's something. Now I write all this down. I want you to get, when you're twenty years old, a term life insurance policy. I want you to get a policy for one hundred thousand dollars.

It'll cost you if you're in great health, you know, it may cost you as little as ten bucks a month. And the older you get, by the way, the more expensive the policy. But if you're twenty three, thirty years of age, thirty five years of age, and you're good, good health, this should not be expensive at all. If you can't get a million dollar policy, can't It will cost you less than one hundred dollars a month if you're in good health, fifty bucks a month. I've seen it,

all right. That's not the key to the policy, the strategy either. But if God forbid, you dropped dead before you and you've had children before you enter the heart of the plan. I'm telling you about the minute you get this policy and you pay your premiums and you're having children, you're starting a family, you drop dead. I don't know how long you only live, but I dang sure not. We all will die, all right. It's not a mystery. You drop dead. And now there's two things

going to happen. One you don't have to your family is have to do a embarrassing go fund me campaign to bury you. Right, that's just crazy to me. All these celebrities doing go fund me campaigns to have themselves buried. Its nuts. You know, you're making all this money and two your descendants, your children, your wife or your husband will be a millionaire in the example of a million

dollar policy or at least one hundred thousand there. But they'll have money to buy a house, start a business, go to college, reset their life, etc. Don't you want that for them. That's not the strategy either of how to become a millionaire. This is bonus stuff. I want you to go. I want you to fill out one page will so that you can direct your affairs. You know, you may have a PlayStation, but you want to make sure that PlayStation's going to whomever you wanted to go to.

You know, I mean Prince is upset in death. I'm sure that he built this whole thing and like the money had no control over his affairs because these thoughts was gonna live forever or whatever, didn't get around to it, didn't have a will, So he built a great estate, great net worth, and then it went to people he barely as I could tell, barely knew who happened to be related to him, who are now paid, and I'm

sure doing things that he would not want done. Your will is your direction post life on this earth, of how you want your affairs to be out. I want you to get a one page will. I want you to execute it. I want you to finish it right. I want you to file it right. I want you to have a insurance policy. I mean a life insurant policy. A term life policy is easiest and cheapest. Whole life is better. But that's again, I'm not giving you investment advice.

I'm telling you how the minimum you should have. Right. I want you to buy a home. Now, we're getting into it, right. I want you to buy the worst house and the best block. Okay, no mini mansions right, no balling, no profiling, all right. I want you to buy the worst house on the best block, in a working class, a workforce neighborhood, near jobs, transportation, economic activity, and commerce. Now, most inner cities in America are centrally

located real estate. They used to be the center of whatever area that was until minorities moved in and other folks moved out and try to create suburbs, and now traffic so bad that the folks who moved in the suburbs trying to come back and reclaim the inner cities. You know, in the inner city in France is called Paris. An inner city in the UK is called London. An inner city in Turkey is Istanbul. Like inner city is are prime real estate. Inner city in Greater New York

is called Manhattan. Right, So only in America that we run out of our own communities because of you know, reasons. I'm not going to get into and left poor people there. But that real estate now is centrally located invaluable, and I want you to own some of it now. And a great example of this is Anacostia. If anybody knows Washington, d c. Area, you know that for years and years and years Anacostia was basically abandoned, and Frederick Douglas used

to live there. It used to be a very prosperous area, but in the Industrial Revolution it was thought to the worst place to live was on a hill next to the water because during the Industrial Revolution the factories polluted the air and polluted the water through dumping so you didn't want to be anywhere near the water or a hell with your home. But we now live in a clean economy, don't we. Hello, we've gone from the industrial

age to the technology age, to the information age. We're about to go into the AI age, all right, artificial intelligence, and I'll do a whole podcast on that. Don't worry. I'm working with my friend Sam Autman on the AI Ethics Council that's coming up. But in that clean economy, where's now the best land next to the water on the hill? Go check out Anacostia. See what's happened. Poor people were giving them a little voucher or you know,

encouragement here a couple thousand dollars or whatever. Move them out, and now anacosiaus that real estate is invaluable. Same thing happened in Harlem. You could give that property away thirty years ago, give it away thirty forty years ago, tear down you know today is seven figures in Harlem. You can't you know? And I mean top seven figures, maybe

eight figures. And as soon as Bill Clinton moved into Harlem, President Bill Clinton, you should have known and signaled that things were changing on Harlem, is Upper Manhattan, even Detroit with they're giving away homes for a dollar a decade ago. Those homes now many neighborhoods and the hopes many neighborhoods in Detroit are now valuable, right, and you can still buy homes in certain neighborhoods. And you know Baltimore has an oversupply. I'm not telling you to go buy in Baltimore,

so don't be blaming me for your decisions. I'm just saying that these are you should do your own research. But you want to buy in a neighborhood you're comfortable, that you understand, but you need to buy modestly in areas that fit the criteria that I outlined for you,

where there's robust engagement and economic energy vibrancy. And if you see hospitals and universities and retail and restaurants and transportation and ports and office buildings or whatever it is your definition of economic activity and vitality, that might be a signal. If you can find a house that is modest on a decent block, then think about buying it rehabbing it. Can get a rehabilitation loan from a lender

if you need to a construction loan. You can use minority vendors from the neighborhood to help you do that work. Make sure they're certified. By the way, don't go hire cousin Jojo who has no skills. They will go. They will take all the money with good intentions and then say they're sorry. As you got to pay that bill, you have to say, yeah, you are sorry, you are sorry, right, but they were not gonna give you none of that

money back because they broke. If you want to, you heard me say, if you hang around nine broke people, you'll be the tenth. So get certified vendors to do that work and hold them accountable every week. You want to progress, report, don't let don't let time go by anyway, buy it, rehabit, live in it. I want you to buy something modest now, no mansions. I'm not talking about millions of dollars a half million dollars. I'm talking and you may have to You may not be able to

do this in the city you're living in. You may have to go where the puck is going, meaning you want to go where the market is going, where withere, someplace is still growing. If you see on the front page of your newspaper in your town, the real estate values are at an all time high and people are getting becoming millionaires and billionaires. Well, that deal is probably done. That that money has been made Manhattan. The money has

been made. You can get a nice lifestyle, but you're not getting rich or building wealth overnight in Manhattan on real estate. That's not going to happen traditionally. And if you want to go restructure some office buildings, which is a whole other conversation, that's a different thing that takes deep pockets and a lot of courage. I'm talking about, you know, I'm talking about a second tier city. You know, you know, Atlanta used to be considered a second tier city.

But there's there's suburbs outside of Atlanta. This is you know, you know, there's seven counties that surround it Greater Atlanta. Go to one of those counties. Go to some place that's twenty thirty minutes outside of Atlanta, proper, Go go drive the neighborhoods and find a home with it in a nice neighborhood with a tree in the roof, right, right, but buy something, or go to Columbus, Georgia, or go go to, you know, go someplace out right outside of Nashville,

or go someplace, you know, Memphis, wherever it. I'm not telling you where to go. I'm telling you what. I'm telling you what you need to look for, right, And it's not just in the Southeast. These are just examples I can give you because I'm taking I live in Atlanta, Georgia, so it's just something around the top of my mind. I grew up in Los Angeles, and you know, you can go to you know, places outside of La Lynnwood and you know whatever, you know, Long Beach, whatever floats

your boat. Long Beach probably actually not a second considered a second tier city anymore. It was when I was growing up. But you got the message right, and my mother bought in Rialto, Rialto. That property went up too. That's an hour outside of Los Angeles. So I want you to buy it, rehabit and live in it. Okay, after a couple of years, I want you to get that home reappraised, right and hopefully it's gone up a

little bit in value. I want you to pull out and gets you Your credit score has to be you know, decent, Hopefully it's seven hundred operation hope can help you get there if you're not there already. Right, And because once you get a seven hundred plus credit score, you're no longer black or white or Latino or whatever you want

to color. You know you think it is an issue black or Latino or brown or whatever or a woman, right, you're just green in the computer at midnight just says yes when you putting that application in if you have a very high credit score, because it's just analyzing, you know, your risk factors is not looking at what color you are,

whether you're male or female. Okay, So you're gonna take a home equity loan, home equity line of credit out right, which by the way, in most cases you can also get a tax deduction on if you check with your tax pro You're gonna use part of the loan, the home equity loan. And I don't want you to sell that first house. You just want to extract a little bit of equity. Don't over leverage yourself, all right, a little bit equity. You're gonna buy another home, hopefully more

modest than the home you're in. Hood adjacent okay, a working class neighborhood, workforce housing preferably. Right, You're gonna buy that house. You're gonna rehabit with hopefully again minority and women owned vendors in that neighborhood, plumbing, heating, lighting, landscaping, and roofing that like I did with Promise Homes Company when I built it, when I built up the company, when I owned it, And then you're gonna rent that house.

Now you may say, well, John, I don't have you know whatever, I don't have the total down the down payment for the new house, or I can't apply enough money out of my home on a home equity line of credit. Okay, you've got somebody in your family that makes less than sixty thousand dollars a year. Okay, you're going to form a limited liability corporation in LC. I did a whole podcast on different types of corporate structures. Go back and listen to that podcast on which structure

to choose from. And this example, it's an ALC. You've got somebody in your family who makes less than sixty five thousand dollars a year. I forget the exact cutoff or earned income task credit, but I know sixty thousand dollars is an easy number. And they live maybe in the neighborhood or the area that you're going to buy this house. Maybe you live in La they live in pick the state, Alabama, wherever it is right and wherever you're looking at doing this, and you trust them, you

have a good relationship. They're a hardworking person, right, no emotions here, and they have three children. They make Ashley as a teacher in that community. They make forty thousand dollars thirty eight thousand dollars a year. There aren't. They have a right to the Earned Income Task Credit. It's a bonus for working. They're gonna get, in this example, six thousand dollars cash. You can do this any time of year. Amend your taxes, okay, operation can help you

with that as well. If you've never filed for eiitc hold on now, it's retroactive for three years. That's right. You get three years worth of the Earned income tax credit. That could be as much as close to twenty thousand dollars. Now, if you're buying one hundred thousand dollars house as a rehab project, by the way, you can buy it for sixty thousand dollars because it's got a tree in the roof. Right,

it's not livable. You get a construction loan for you know, a total, a construction purchase and construction loan for a total of let's say eighty five thousand dollars or ninety thousand dollars. And so that's the lender saying, I'm gonna, you know, we believe the house is worth one hundred and twenty five thousand dollars or one hundred and thirty hundred and fifty thousan dollars whatever, We're gonna give you a construction loan for up to seventy seventy five percent

of that number. Okay, a purchase number, A purchase and can we can and construction loan. They're going to purchase the house and give you a construction loan so that you can rehab that house. Now, if you're confused about confused about any of this, just simply go to my

Hope Financial Coaches. Sign up, by the way to the one million Black Business Program or partnership with Shopify and truest Banks and Bank of America, Wells farg and all these other partners that donate expertise and provide access to capital to business owners in that program, including black banks. By the way. So if you get confused, go get an appointment with Operation Hope. But I'm walking you through this. So you're gonna get the earning task credit. You're buying

this house for a modest amount of money. You're getting a construction and rehab loan, a construction loan or construction or a purchase in construction slash rehab loan orright so rehab loan. It's a purchase loan and you can rehabit with your own money. The money from the earn income Task credit and your line of credit that I gets told you to take out on you homelexicuity, a line of credit or yes, a purchase a construction and rehab loan. Okay, that allows you to do all that. You may not

need any additional capital. Maybe you need to put a modest down payment, okay, but I've just given you two ways to do a down payment, either through the home equity line of credit. Do not over leverage yourself. I would not suggest you go over seventy percent loan the value of your primary residence. You don't want to stress yourself out, and make sure you can afford the payment for the first trustee and the home equity line of credit. You don't by the way, you don't have to move

money out of the line of credit. When you get it, they approve you for it. You can let it sit there and do nothing, okay, and then you get the earned tax credit. In partnership with a member of your family. In this example, they contribute the money, you contribute the good credit, et cetera, et cetera, the purchase ability, and you guys share in the upside of this property. Now that's up to you how you negotiate who owns what in that LLC. I want you to wait another So

in this example, you've waited. The first deal was you bought the house your primary resid you had two years. Now you're waiting. Now you've you've finished through construction of the rehabit this purchase home. You've rented it out, Okay, and maybe you've got a Section eight certificate from the city, or maybe you know you've gotten some other tax benefit from the city because they were so happy you rehab

this property. Looking at every city, state, and federal program available when you're doing stuff like this, the third thing you're gonna do is you're gonna take now equity from this second home all right, or the or the lone of credit from your first home okay, or savings you for that aside, and you're going to buy a third rental property the same platform, same area, so that you can do maintenance on all those homes. Right. I'm ideally you want to buy all these three homes in the

same city. But you can do this where the two rental homes or another city loan as there's somebody you trust taking care of it, or you can get there on a regular basis. I would suggest someplace you can drive to if it's just you doing this. You don't want to have something out of state you got to fly to. You will always over calculate how often you're going to go there, Like buying a time share, I will go together all the time. You ain't been there

in years, and you upset and it ain't. That's the one thing that's a one kind of real estate investment I do not like is a time share. The only time I lost any money was when I bought a time share and I broke my own rule. I made an emotional decision, but I was trying to impress a gentleman who I won't mention. But he was the president of a prominent nonprofit when I was coming up in

south central LA. I loved this man, and he knew I loved him and admired him, and so he used my emotions to get a bonus for himself and got me to buy this time share that he owned as well, and he had a referral fee for me doing it. And I've owned that thing for thirty years and it has lost money. I mean, it is horrible. I got his horror. I gotta pay maintenance fees. And you can tell him emotionally distraught about this. I'm I'm still I'm talking about it. Not even that's not even the subject

of this program. I I did a whole segment, by the way, just on on time share, so you can go and check that out. So that's the only kind of real estate I don't love. I don't. I don't think that's a that's a good deal, do you that? For lifestyle and not for investment. It's like, you know, certain kind of bioin not bitcoin, but some kind of cryptocurrency.

Bitcoin actually it seems to have stabilized, but some of these cryptocurrencies, it's just speculation, and that's what timesharees are it's just speculation, so and it's cool if you can afford to do it, but just don't do you, just don't use your rent money. So in this example, I told you get a will, I told you get an insurance, a life insurance policy. I've told you to get your earn income tax credit if you qualify for it, or find out somebody in your family who qualifies for it,

who may become your investment partner. I've encouraged you to use an LLC structure for the investment properties. I've encourage you to buy a home for yourself. I've encouraged you after a couple of years, be patient, get a line of credit against that home. Do not take that line of credit and go on vacation. Do not go buy it. Do not go shopping at the department store, do not go Craig Cray because you have a line of credit. And don't sell that house. Because you sell the house,

you're going to get a capital gains tax hit. And there's another thing you can do when you sell a piece of property, which I'll get to in a minute, to avoid a capital gains tax hit. But if you take a loan against the house. It's not taxable. In fact, it may be tax deductible. There's a lot of covering in this podcast, so you may have to listen to it over and over again. So I want you to buy the house, a modest home that you can afford, right in a neighborhood that is a good street, decent,

and near where you can go to work. But may not be all the floss in that you want to do. That's fine, floss later, all right, buy it, live in it. The worst house on the best block because of the other homes of that block. Are gonna pull your values up. And the neighbor's gonna be happy you bought this house and you rehabbed it. It was an eyesore. They were so happy you bought this out. They may bring you a pie. You're gonna own that home for a couple

of years. Then you canna use equity and or the other strategies I mentioned you, and you're gonna buy a second home, and then you're gonna buy a third home. No many mansions, nothing fancy, right, workforce housing. You do that three times. You do the other things I mentioned to you. You have a million dollar net worth in five years now, that's the way you do it in five years. That's one strategy. Another strategy is to start

a business. Now you can take some money you've been investing, and I'm not gonna tell you where to get this money from. I want you to put By the way, four oh one K programs are easy free money. If your employer has a four oh wing K program, you need to be in it yesterday. That's free money. They're putting a dollar in for every dollar you put in, it's your money for life. Do not pass go without putting money into a four to one K plan. But you're gonna find and there are ways you can use.

You can use that money to help you with a down payment. It's another topic for another day. I'm gonna deal with that with a fan question. By the way, so you can start a business. You can start a franchise business with money you set aside right or an investment group you put together through an ALLC however you want to do it. And in this example, I would not encourage you to do something that's never been done before. I want you to do something that has been done before.

It's an existing business plan. So an entrepreneur is different than a business person. An entrepreneur is doing something that has never been done before. It's from a whole cloth, creating value out of nothing. That's me, I'm crazy. An entrepreneur works eighteen hours day to key from getting a job. We're nuts. But that's the highest risk in the highest reward. A business person woman or a businessman is using an

existing business plan, a franchise. You know that they need a local restaurant or a drive through restaurant, or a little food store, or a gas station, or a beauty salon or a nail salon. Nel salons tend to be lower cost, consistent businesses that are needed in a neighborhood. Every neighborhood needs twenty different businesses. Figure out what those twenty businesses are. See if there's a franchise model for it that has a brand name attached to an existing,

proven business plan. And typically if you you know, do it right, You work hard, you don't pull money out. You know as you're starting the business, don't go still getting don't go listen lease in Mercedes. You know with money you don't have trying to floss again. Flossing is the death nail of building wealth right, keep that money in the business and within five years, if that business succeeds right, and if it's a franchise, there's a high

probability it will approven. Franchise for a basic need in the neighborhood. Once again, you'll be worth a million dollars in five years. About five years, I'm going to give you an example of businesses to start if you keep listening to this podcast and tell all your friends and subscribe.

By the way, I'm going to break down different businesses in coming weeks that you can start, and I'm gonna break down how those businesses work, how they what are the risks, what's the profitability, how you structure them, which what businesses in your neighborhood are doing well that you're driving by every day. You know, when I was coming up and I got my financial literacy course when I was nine years old, I saw a muffler shop at the first time. I saw the nail salon as a

business for the first time. And in all these places I've been walking by all day. Now I understood they're businesses, you know, I mean real talk. The drug dealer neighborhood's a business person. It's not an ethical business or when it's sustainable, and it's not good capitalism because good capitalism where I benefit, you benefit more, and bad capitalism is where I benefit you pay a price for it. But everything around you is a business model. That's what I'm

trying to get you to understand. So I just gave you three strategies to become a millionaire. Right. We did this in less than an hour. I gave you a slow bake, easy methodical. Put it on remote control. You're not hurting anything because it's your money, is not going anywhere, You're not losing it. Way to build them at least a million dollar net well worth in cash. Better than cash, marketable securities is in stocks. And by the way, here's

something no one tells you. If ever you get in trouble and you've got a stock portfolio that you've built up, you can get a margin account alone from you to you. Did you know that for as much as seventy percent? Don't leverage this up. Please don't go saying John Bryan told me, actually, get a seventy percent loan against my own account. I don't want you get any loan against your account. I'm just saying I don't want you to be afraid of becoming an investor because you know your

money's not in your hands. You can't always locked up. I can't, no, no, if you have marketable securities, high quality assets that your own. By the way, when you buy one stock of anything, you have the right to all the financials of that company. You want to buy one share of Walmart. I think it is a great company. By the way, my friend Doug mc millan, CE of Walmart, is co chair of Financial Literacy for All with me and his coach and has done the force for my book,

Financial Literacy for All. And he's a great guy, great friend. But whether there's Tarja, Target or McDonald's, McDonald's, or whatever it is you love, you know, whatever business, Nike, whatever thing you love. Once you invest, you know, into one share of stock, you have a right of the same rights as Warren Buffett. You have the same rights. It's whatever investor you've heard about who is legendary. You get to look at all of their financials, all of their

financial reports, all their strategies. You get to go to those shareholder meeting. I think you should give your kid a stockport, a stock certificate framed. They don't do stock certificates so much these days because it's all digital, But you can still order one, and I'll maybe put a link in the video version of this podcast. I'll put a link where you can get a company that I

that I know here in Atlanta does stock certificates. You can frame and for your kid's birthday or graduation, whatever and put it on their wall so they can see it, and they can they have a right to now, it's just like any you know, like the biggest shareholders. They have a right to go to the shareholder meeting and vote and all that stuff. But you can now take a loan against your own asset if you get into trouble.

So I just tried to square out and zero out all of the risk, all of the downside, all of the naysayers. Right, And what are black people in brown people not doing. We're not investing in the stock market. Last time I checked, eighteen percent of us were invested in stock market. That number might have changed, but it was a low number. We're not investing in home ownership. Only forty one forty four percent of us own a home. I've just told you it's the easiest way to build wealth.

We're not owning businesses in a way that compound and build well. Ninety six percent of our businesses are sole proprietorships no, which basically makes it them a self employment project. It means you have a contract basically, and you're just doing work on your own schedule versus working for somebody else on their schedule. You think it's a business as a hobby horse, Okay, it's a hobby, and it isn't.

That contract is over the money, we'll run out. And that's why we're training you at Operation Hope in our Small Business and Entrepreneurship program, or really tuning you up through our one million Black Business program. We serve everybody, by the way, but we hyper focus on the group that we think have been left behind, like groups like black businesses and Latino owned businesses. But if you poor, white walk in the door, by the way, or middle

class or whatever will help you too. Right. So the point I was making is that most strategies we're not like we failed at them, We just never did them, right. I just gave you two examples, stock market and real estate. And I've already told you that over in the long arc of history, these things have never gone down they've only over time gone up. Now somebody, somebody's going to again say, John, what do you mean there was a

there was a crash market crash two thousand and nine. Yes, stocks will go up, they will crash, real estates will they will crashed. Be a recession, they will recess. Right, they will dip and they will correct above the line. Hello, Now, let me go back to something that I said I would explain to you, which is a tax exchange. So I bought a piece of property in Los Angeles for a couple hundred thousand dollars. It was a townhouse. When I bought it, I was very proud of it. I

lived in it. It went down in value while I lived in it. I was encouraged by my broke friends to sell it. Now they broke again. Watch what you pay attention to for advice. Right, my broke friends didn't even own a townhouse. They were written talking about you need to sell that. Just look, look, leave your bad advice in your bad in your well intentioned bad mouth, like in your head. Keep just say hello to me.

That's That's all I want to hear. Is you know he's an old Southern saying no matter how much I love you, my son or my daughter. If I don't have wisdom, I can only give you my own ignorance. So out of love, we passed down bad habits and bad advice from generation to generation. Is what we don't know. That we don't know. This killing is what we think we know. We never got the memo. That's my third or fourth book. The thing is my third book that

we never got the memos. Well, we don't know that we don't know, so stop listening people who have give you bad advice on no experience. Right, So that my friends quotation Marks told me to sell my house. Luckily didn't pay attention to on the condo. I moved out and rented it out to you know, a tenant, and they were slow paying, but they paid, and I had to pay the property taxes every year, but it was mostly covered by the renter. And I forgot about it.

I said it and released it, just like I told you to buy it, put money aside, set and release. I just forgot about it. And because I just figured, you know, can't be you know, over time it will at least be worth what I paid for it. So a few years past and I moved to Atlanta, and I'm trying to buy a piece of property that's, you know,

about seven hundred and fifty thousand dollars. And I call my friend, a broker in Los Angeles happened to be a person of color, Mister low is his name, And I said, can you check on this property from me? And he said sure. I said, well, what do you think I can get for it? He said, well, because I had a couple of properties I was selling this one, you can probably ge seven hundred fifty thousand dollars for I said, what did you say? What did you say?

Seven hundred and fifty thousand dollars. I bought it for two hundred thousand change. It had gone down one hundred thousand change. My so called friends told me to sell it. Hello, five years six years later, is worth seven hundred and fifty thousand dollars. It's worth even more now I sold it. You have a year to do a tax free exchange,

which means you pay no taxes. And I found the property that I wanted to buy, and I purchased the property that I wanted to buy with the proceeds of the property I just sold, and I paid no taxes. So there you go, and you want to check with your tax man and all this stuff. You know, don't listen to me and say John Bryant told me to

do this. I'm just giving you, you know, examples of what you can do, but you need to check with your tax pro and or my hope, financial coaches for exactly what you should do or how to do it. It's go by the way. It's called a ten thirty one tax free exchange in the Revenue the Internal Revenue Code. But again, tech, check with your tax pro and see how it relates to you. Okay, let's get to the fan question. I just made you a millionaire. Well you did,

because you're going to work hard at it. But you know now, there's no reason why you're not going to be better off after you do this when you than before. I mean, it's like somebody said, why should I try God? Well, because God cannot possibly screw up and mismanage your life worse than you have. So give them a try. Let's see how that works out. And given it, it says universe, in my opinion, you'll probably be Okay. I can't guarantee you that being positive is going to make you a success.

But I absolutely guarantee you the being negative will ultimately make you fail. I want you to be positive. I want you to employ common sense. Literally every group of people in this country, two hundred plus ethnic groups have succeeded using free enterprise capitalism and a market economy and the things that I've told you. The only three groups that have been left behind African Americans, not all Africans, African Americans. I'm gonna deal with Africans versus Africans or

blacks versus blacks. Is that a thing? And that's not a negative situation. I mean, blacks are blacks? Is that a thing? I'm gonna deal with that in a second part a separate podcast, because it is a thing. But African Americans, not African Africans or African Caribbeans. African Americans who had a special treatment negative in this country, and who's really there? Our self esteeming, our brains were messed with, Our minds and mindsets were messed with right and Native

American Indians okay, they didn't have a good run. And poor whites, yes, poor whites are those three groups that did not use free enterprise capitalism in a market economy to succeed. Two of those groups actually use a government, and in government will help you cover your downside. And we need good government. We need civil rights, but you also need civil rights. We need not just red rooms stopping bad things like this police discrimination and bias and

all the negative stuff. We need some green rooms. Access to capital, access to internships, extra apprenticeship, access to apprenticeships, access to credit, access to financing, access to you know, opportunity and aspiration. Can I get an amen? This is the church that what's happening now? And what have you done for me lately? All right? So fan question? Can I use my IRA? Let me see who this fan questions for, give her some credit or him some credit?

It's at This is on Instagram at Willy eight seven six at d A w I L l I eight seven six. That's on Instagram. So thanks for the question. Can I use my IRA to purchase my first home? The short answer is yes, you can use your IRA and they will again check with the tax person, but they will allow you. Irs will allow you to withdraw up to ten thousand dollars from a traditional roth ir without an early withdrawal penalty. If you want to buy

a home as a down payment. By the way, if you come from you need to use the funds within one hundred and twenty days to if you're going to use the funds to buy a home and limit I think it's ten thousand dollars begin check with your tax

pro and or check with Operation Hope. But by the way, you check with Operation Hope, and if you are from an underserved population, you could qualify for a ten thousand dollars In addition to everything I just mentioned, you might qualify for a ten thousand dollars grant you don't pay it back, a down payment assistance grant to buy your first home. It is so much stuff going on out here.

And what Operation Hope does is serves as a nonprofit investment banker to sort of concierge your financial empowerment experience. Whether you want to be a small business owner, you want to be an entrepreneur, you want to be a homeowner, you want to be an informed asumer, you want to get your credit score straight, you want to become an investor, you want to become a you know, a titan, a balla,

a balla adjacent. You want to become a billionaire or a thousandaire, right, I just want to buy some are you know we're going to help you get set yourself free. In order to do that, you need self determination. You need to self determine yourself and you're not going to do that in the current market economy unless you understand how the economy works. You're not dumb and you're not stupid. You are brilliant. Because you've been doing so much but so little for so long. You can almost do anything

with nothing. It's what you don't know that you don't know that is killing you. But you think you know. It's time to give you the enlightenment and the tools that you need to set yourself free. Go buy Financial Literacy for all the book. I want it dog eared, I want it underlined. I want you to have it on the bus stop, on the car pool and when you're driving. I want you to I want you to have a reas to the family meeting, have dinner once a week or what a concept dinner with your family,

talk about money. Don't come on by themselves talking. When you go to bed tonight, that's that's you know, that's a pillow you purchased right, whether you're renting it or where you're buying it, whether you own it, you know, it's always always kills me. People talking I don't like capitalism, as their commenting on the phone, they bought with capitalism from a capitalist. They bought it from Apple or Samsung

or whoever. They bought this phone from a capitalist institution with the money they made, the capital they made using their human capital exchange for their talents and skills. They got a paycheck. That's an exchange of human capital for compensation. I cover that in a podcast too, the six versions of capitalism from lowest risk to highest. Go back and read I'm sorry, listen or watch that. So yeah, look, we're you're in the system, whether you like it or not.

You might as well master it. That's what I'm talking about. Master it. This is John O'Briant. I'm out. Money and Wealth with John O'Brien is a production of the Black Effect Podcast Network. For more podcasts from the Black Effect Podcast Network, visit the iHeartRadio app, Apple Podcasts, or wherever you listen to your favorite shows.