I’ve been going to the same barber for a few years and we usually get to talking about the economy, investments and such. He doesn’t openly brag about being a multi-millionaire, but it’s plainly evident based on our discussions that he is one. He’s somewhat a case study in The Millionaire Next Door: Surprising Secrets of America’s Wealthy
Here’s my assessment of how he amassed his fortune:
- Real Estate Mogul – He owns multiple rental properties. Not just single family homes, but entire plots of land that major businesses lease from him, apartment complexes and he’s developing a cul-de-sac into single family homes. He started off small and kept rolling his profits into more and larger properties. Sure, he’s come across the tenant from hell now and then, but those were few and far between.
- Business Savvy… and Patient – He knows the real estate market very well and he waits for deals to come around. He doesn’t go out seeking deals as soon as he has a wad of cash; he sometimes sits on the sidelines for years and then the perfect opportunity comes around. He’s an older guy, and he’s had a lot of time to hone his skills. He’s patient. Being impatient is what gets people in trouble. I knew young kids trying to flip condos in Miami beach a few years ago because they saw everyone else making a ton of money doing it. The one I know indirectly still got killed in the downturn; he couldn’t flip his and he’s out over six figures.
- Frugal – Just through some casual observations, it’s evident he’s a frugal guy. He dresses modestly, he doesn’t take extravagant vacations, and he doesn’t drive a fancy car. Due to the demands of the job, he basically eats an apple during a bathroom break around lunchtime each day, but that saves a few bucks a day instead of eating out or ordering fast food like many other people do for lunch each day. He’s also very careful with how he spends his money, like being well-insured for the properties and always using travel insurance for vacations. The combination of multiple streams of income and frugality make for a huge net worth in your later years.
- Small Business Owner – Like all smart business owners, he gets other people to work for him and generate income and offset his costs. Rather than just running a one man barbershop, he has a couple other barbers working there. I’m sure they get to keep their tips and a fair share of the price of a cut, but surely, they must pay him some sort of monthly rent. This probably helps pay the mortgage and utility costs of the shop so everything he makes himself goes right to the bank. He started off as a young entrepreneur and it’s rewarded him for life.
People normally think of “the rich” as being a corporate executive, a “Wall Street Fatcat” or a tech insider on the West Coast, but there are lots of ordinary Americans walking around out there that you’d never think are millionaires.
Do You Know Any Unassuming Millionaires?
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I guess the real question is why does he still cut hair? Must be a labor of love–it would have to be!
He definitely enjoys chatting with the customers! I guess it’s a relatively low-stress job if you like talking to people.
… and he can set his own hours. I doubt he’ll quit anytime soon. A little money, social interaction, and keeping busy can be a great combination if it’s on your own terms.
A number of my friends are millionaires! The only similarity is they all did it through real estate. They all live somewhat modestly, but there are a few indicators such as a nice car (paid off) or some nice jewelry.
Yup, real estate is the missing cog in my future. I’m working on something now, should know within weeks (partner involved). I’ll be psyched if this one actually pans out.
Maybe he gets his best ideas doing what he started doing – cutting hair! I know atleast one other person who lives very frugally but makes more money that one would imagine! Buffett drives his old car lives in the house he first bought and enjoys a burger every now and then.
Unfortunately, Buffett doesn’t know me! 🙂
True, he knows all the ins and outs about what’s going on in town, who’s thinking of selling, etc.
I forgot to add something:
He deals in cash!
Now, I’m not accusing him of tax evasion… but seriously – why do you think servers like their tips in cash instead of on the credit card? And every haircut gets a tip. So, a $4 tip is like $6 taxable equivalent. And who knows how much of the routine charge gets reported?
So, not to say the path to riches is tax evasion, nor do I have any insight into what my barber’s doing… but one thing a lot of the subtle wealthy have in common… cash businesses… restaurants, trade/skills, barbers, etc.
I know a few folks that you’d never, ever think are millionaires but actually are. I think the common thread has been spending WAY below income – I mean living like on the low end of the middle class range, but actually making in the top 5% of income most likely. That, plus having no income disruptions over the years or bad luck, has allowed them to succeed. Oh, and multiple streams of income too.
You can be a millionare if you choose not to own a car and just invest the difference. The western lifestyle leaves us broke. I have this argument with people all the time in regards to needs expanding to meet income
I could never do it; but many do!
At least in restaurants the IRS actually assumes a minimum tip percentage based on revenues. Any employee reporting income below that amount will have an assesment made against them for the difference and so will the employer for the payroll taxes.
I hadn’t considered that! They actually “assume” what you should make in tips? What if you’re a crappy server?
I’d have to say that I only know 1 millionaire – and I’ve learned a lot from the family – watching the things my friend does like shop at thrift stores in ritzy areas for nice suits, buying used cars and the like, and starting to amass a portfolio of properties, I can definitely use them as an example to follow!
Common themes … frugality… real estate
I’m working on becoming a millionaire partly through real estate and it is hard being patient. I have found a great property but it is over priced. It needs to come down about another 10% before I would even offer anything. I am sitting here, with my cash watching like a hawk. Hopefully he will drop it within the next 1.5years.
It’s tough; I’ve been mulling over deals for a while and I’m finally close to something that’s cash flow positive in a big way. I hope it works out!
My wife and I are Canadians that became multis in our 30s. Stocks and real estate. Nobody has any clue. We drive Honda Civics and live in a small mortgage free home. No flash because we recognize that it doesn’t make us happy (at least not for very long). We pay for experiences (vacations, time with friends, reunions with family). We own thousands of shares of stock and rental property (Toronto, Canada and Phoenix, AZ). My website documents some of our investing habits.
I’m totally into life experiences over material acquisition. Our kids are only young for a short time. A fancy car is a depreciating asset. I’ll take the vacation over the BMW.
I have a friend and former colleague who recently retired a millionaire on fairly modest real income. He achieved millionaire status by working two jobs for many years, buying assets (including collectible cars, motor homes, real estate, precious metals, land and farm equipment) on the cheap and selling them at good market prices, starting and selling a number of small side businesses (including a Dairy Queen and a self-storage), having multiple rental properties (and later disposing of them) and living well below his means.
Interesting, a Wealthy Barber, someone should write a book about him.
I suspect some of my friends are millionaires, but I don’t know for sure. They live in CA and their primary residence alone probably add 500k to their net worth.
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