How I saved enough money to invest in real estate

What's up you guys? It's Graham here! So I just realized this is the first YouTube video ever that I've recorded while wearing a tie. And what are we celebrating today? 60,000 subscribers! Thank you guys so much for all of your support, for watching anything I put out there, for subscribing, for commenting, for absolutely anything. Thank you guys so much for all of your continued support! It really means so much to me.

So one of the questions I get asked a lot is, how do they get the money to begin investing in real estate? How do they do it? So I'm going to be sharing exactly what happened, how I got the money to begin investing in real estate, and a little bit about my thought processes when it comes to making money, and like saving it and investing it.

And by the way, just a little bit of background on me: I did not grow up in a wealthy family whatsoever. My parents were not the parents to be like, “Hey, you turned 16 today, let's get you a Porsche!” or like “Hey, you're 18, we got to get you investing in real estate; here's a down payment for you.” I just have parents like that. And in fact, I think what shaped me the most growing up was that both of my parents ended up filing for bankruptcy around the time I was like 15 or 16 years old, both at the same time.

And I remember going through that and how difficult that was. I remember the value of $20 and just how far you can stretch $20. And you can stretch it a very long way, by the way. But there was a time at that age for me where I distinctly remember how far $20 needed to go and how much money that really was and how much you can get with that. That's always stuck with me too because they still act as though, you know, $20 is, you know, a thousand in terms of what you can buy in purchasing power behind that.

So I think that ended up having a huge impact on me, not growing up from a wealthy family and really appreciating the money that you make, and all that goes into making money, and investing and saving. So I really believe for me having that background really provided such a good foundation for really realizing the true value of the dollar and just what goes into making money.

Because for me, at least, at the end of the day, I'm really such a believer that it doesn't matter how much money you make; it's really how much you can save that really matters the most.

So to start, I began working at Heist part-time. I worked like two to four days a week after school for a few hours, and I was photoshopping pictures for a Marine Aquarium wholesaler that would import and export like exotic fish and coral and like all that cool stuff. And I got paid a dollar for every picture I photographed, photoshopped, and helped put on the website.

So I worked there after school, and from there I was able to save up really just a few thousand dollars from working part time after school over the period of like a few years. So I think by the time I graduated high school, I think I had between like four and five thousand dollars saved up in a savings account. C'mon, that was like over a few years’ worth of part-time work after school.

And because I didn't get into any colleges, I ended up going for my real estate license, and thankfully that savings that I had—$2,000—was enough to pay for all my licensing courses, for insurance, business cards, marketing materials, everything that's needed to become a realtor.

That pretty much was my savings, and that lasted me to pay off all those things. So I began working as a realtor, and at the time, money was really tight. I didn't have the luxuries to go out and like get a brand new car or get expensive clothes or do anything like that.

So I really did this very minimalistic, and I went with pretty much what I had. The first car I had, it was a 1996 Ford Explorer, and that was the car I would use to drive around. I was so embarrassed about that car, by the way, that what I would do is pull up to a showing and park like down the street. I'd park it early so nobody would see me, and then I'd walk down to the house so people wouldn't see the car I pulled up in.

And it was like a kind of beat-up car, so I was really, honestly, I was really embarrassed to pull up in that. But I ended up working as a realtor, and thankfully, one of the things I got very lucky with was growing up in Los Angeles, where I was around a lot of very, very, very expensive real estate.

To the point where if you drive like five minutes this way, houses go between three and six million dollars on the lower end, and go all the way up to like twenty or thirty million dollars. So in terms of making money and working as a realtor, that was something I definitely had going for me because the commissions I would make from selling a three million dollar house could be like $50,000 or more.

So in that sense, I did get very fortunate to already live and be already established in an area that just commanded really high housing prices that ended up just being huge commissions. So when I first started, I was not making a ton of money as a realtor. I started working with leases, where I would represent tenants when they found a place, and I would get paid a commission by the landlord for bringing a tenant.

That commission would range anywhere from 2.5% to 5% of the total lease that would be signed for. So those commissions usually went between 500 bucks and sometimes as high as like $2,500. I just hustled and worked my ass off to do as many leases as I could and just get some sort of extra money coming in.

So it really wasn't until about 10 months in that I really started to see any sort of significant income. And that's actually when I sold my first house. It was after 10 months of grinding and working like pretty much every day, 10 to 12 hours a day. Finally sold my first house, that was 3.6 million dollars in Beverly Hills, and that was the first point ever that I had seen any real significant amount of money.

I mean, like 500 bucks, thousand bucks here, that's like great, that's amazing money. But at the same time when you get like 40 grand or more in one check, that is eye-opening. And then you realize like, “Wait a second, I can actually make a lot of money by doing this! This is amazing!”

And with that commission, I spent it all on a Lotus Elise. It was the first time in my life where I had wanted something really badly. I had looked at Lotus Elises for a long time, it was my dream car, and I finally had the money. I was like, “Oh, and finally I want the car.”

That, besides that one purchase, any time I would make any sort of money, I would stash it away religiously. I basically would hoard all the money that I would make. I would hate to spend it. I wouldn't want to go out, I wouldn't want to spend any money; I would want to save it all. I actually got more enjoyment from saving money than I did by spending it.

And part of that goes back to the fact where I remember where I had to make $20 last. I remember that I got the most value in to $20 from spending it on gas. I wanted like the cheap gas stations and buying a Subway five-dollar footlong. And I could split the footlong up, and that was like two separate meals for $5.

I found that to be the best value. So always my turn, even like $1,000, $5,000, it doesn't matter. I kept thinking just how far you could make $20 go and how $20, for me growing up, was a big deal. That was a lot of money, so that never really changed for me.

So I just kept saving up money. In the beginning, I didn't really have any plan for this money. I wasn't like I was thinking for the future; I was just like I didn't want to spend it. I didn't want to spend it. I didn't want to save; I just saved and saved and saved.

And it got to the point where, like, I really didn't have any sort of social life. I didn't go out, I didn't spend money. The car was basically like my social life—me taking my Lotus Elise down PCH to maybe go to a car meet, hang out in Malibu for the day, if I get a coffee.

Like getting a Starbucks coffee, by the way, it was my idea of like splurging, and that would be it. And then I go back to work, and that was it. I just like would save money religiously.

So the other little mental trick I did when I was in this phase of like not spending any money and trying to save as much as I could, is viewing all the money I didn't spend as like additional income. So as an example, let's say my friends all go out, and I spend like $40 on that night on drinks.

Well, instead, I would just drink at home and then show up there and not spend the $40, and I would think in my mind like, “Hey, so I just made an additional $40 because I didn’t go out and spend it.” Or like if my friends go out for dinner and they spent like $50 on the dinner, I might get an appetizer for 15, and I'd be like, “Hey, so that $35 I just saved is like I had just made an extra $35.”

And I viewed almost every single expense like that. So I didn't spend money, and everything I didn't spend, like if I wanted to spend $5 on the coffee, I didn't; that's an extra $5 I just made. And I viewed almost every single expense like that.

And then in 2011-12 is when I finally started to invest in real estate. Keep in mind this is three and a half to four years of saving money religiously, like $5 Subway footlong sandwiches and like little iced coffees—like splurges and all that sort of like that was it. I would avoid spending money at all costs.

And it took me almost four years to save up enough money to begin investing in real estate. The first house I bought, it was $60,000. I spent $12,000 renovating it, and I bought another one, and then another one. And that really changed my entire perspective when you begin earning money passively.

That to me, a light bulb went off in my head that I was like, “Wait a second, that is the way to really be making money is passively.” Because you can only work for so long; you only have a certain amount of hours in the day that you can go out and that you can really hustle.

But at a certain point, it really gets capped to what you can do on your own. At a certain point, you can just need to leverage yourself in terms of investments or in terms of running a business or delegating something to really leverage the amount of money that you can make. Because as a single person, you can only do so much with your time.

At a certain point, you have to start delegating it out and investing to begin increasing your income. And then that changed a huge perspective with the way I saw money.

So for instance, if I made a hundred thousand dollars a year, I would not view that as, “Hey, that’s a hundred thousand dollars that I have! That’s good! Now I can do this.” Instead, I averaged, you know, about 10% return on real estate. So for me, a hundred thousand dollars did not mean $100,000.

$100,000 to me meant that forever, in perpetuity, I can make $10,000 a year return on my investment. And that was true for any amount of money that I made. If I made a thousand dollars, it was—“I can make a hundred dollars a year from this.” If I made ten thousand dollars, “I can make one thousand dollars every single year from doing this.”

So a hundred thousand dollars—that's eight hundred and thirty-three dollars a month every single month for the rest of my life that you can make from that money. And that's how I began seeing money after that point.

Every commission that I did, if I calculated the commissions, like fifty thousand, I calculated—there we go, that’s like four hundred and something dollars I can make every single month.

And my lifestyle has pretty much revolved just around how much money I have coming in passively every single month. So it's not so much that you make $100,000 and you live like you make $100,000. I made $100,000, I lived like I was making $10,000 a year because that's what the investment was bringing me in.

And then I got to a point after about five years where that investment money that I had coming in from rental income began pretty much covering all my day-to-day expenses, allowing me to pretty much save even more money working as a Realtor, allowing me to put more of that money back as an investment, and then allowing me to make even more money every single month passively from rental income that just upped my lifestyle.

And that was one of the things I really tried very hard to avoid—lifestyle inflation, which is where you tend to make more money, spend more money, but you're always in the same place. You just end up with more things.

And that's something very true that you see so many of these people that make amazing money—$70,000, $80,000, $90,000 a year, and they're constantly broke. And then maybe they get a bonus—about $120,000, and all of a sudden, they're still broke after $120,000.

And it sees little tiny lifestyle creep moments where you don't really realize it. Where you upgrade the car, and then you start getting nicer clothes, and you start going on nicer vacations, and you find a way to spend the money that you've made. And it happens so quickly, and you don't even notice it.

And it's happened to me multiple times where things start to get nicer and nicer and nicer, and creep up on you, and you're starting to spend more and more and more money not even realizing it. And that's been one of the things that I've tried my best to curb.

And part of the way I do that is just by throwing it all in real estate and just counting the income that I make from rental properties. That for me was one of the best ways I was able to stay on budget without overspending. I just consider my rental income—anything I make as a realtor—that's purely just investment money that I can put away and then increase my positive cash flow from rentals.

So that has always been one of the things for me. So in short, the way I was able to invest in real estate is by decreasing my expenses a lot and working my best to increase my income. And that is another one of the things that I think is very important: decreasing expenses.

Because you have to consider this: let's say you spend $20.00 at Starbucks. To spend that $20 on Starbucks, you have to make about thirty dollars before taxes to be left with $20 to be able to spend it. One of the easiest things you can do right now immediately is decrease your expenses.

It's one of the things you have 100% control over. You don't necessarily have 100% control over what you make in terms of income. Some of that is completely out of your control, and you can't just control yourself to make 150 grand or 100 grand a year.

But your spending, you are in direct control of that. You can cut your costs down significantly, which would end up saving you a lot of money. And you have total control over how much money you spend.

That is one of my best pieces of advice—is always to decrease your spending. And then once you decrease spending, you can begin working on increasing your income, from either working a day job, having a side hustle, doing something—whatever makes you money. At that point, you could begin focusing your time and effort on increasing your income after you've decreased your expenses.

And then once you start decreasing your expenses, you notice that you just end up feeling a little bit better; you're less stressed. You don't have all the higher overhead. You could really focus on other things that tend to bring you the most enjoyment that don't end up costing you a lot of money.

And then the other thing I've noticed is that once you begin getting some income and some savings, it's just a snowball effect. Because the more money you make, the more money you invest, which means the more money you make, which means the more money you can invest—and it just keeps getting larger and larger and larger.

And I think the largest increase in my net worth really just came in the last two years. Now it took me a little while to get to a hundred thousand dollars net worth, but then to go to two hundred thousand dollars net worth took even less. To go to five hundred thousand dollars net worth took even less.

So the million dollars net worth took even less, and it just continues to grow at an exponential rate. And that's one of the best advantages of saving as much money as you can, investing it, and seeing it grow.

So here are a few of the points to take away from this story, and it's not so much about how much I make as a realtor, because I mean, I totally get it; that's certainly a big component of it. But I think the principles behind it are what could really apply to anybody else.

The first thing is to decrease your expenses as much as you can—cut out anything you don't really need, that's just kind of in the way, that's white noise in terms of your spending. You don't really notice that you just kind of do without, even thinking about it—decrease those expenses.

The thing after that is to begin increasing your income by either looking for other work, maybe doing something on the side, maybe getting involved in something else—do anything you can to begin increasing your income once you've already decreased your expenses.

The next thing to do is stop viewing $1,000, for instance, as $1,000. $1,000 could make you $100 a year, pretty much pro-rata when you invest it. So start thinking $1,000 is $100 a year for life. And also consider how much money you really need to make to begin spending.

Because to spend that $5.00 on a Starbucks coffee—that's $8 you need to make before paying taxes on it to be able to spend $5. So it definitely puts things in a different perspective when it comes to spending money and instead investing it.

So anyway, I really hope this helps. And keep in mind, when you see some of these videos I make, this is almost nine years now that I've been working as a realtor, saving religiously, and investing as much as I can. It's not something I did overnight; it's not something I did in a few years.

This is really almost a decade into doing this every single day, and that's what you're seeing at this point. You're seeing results—look, ten years later from where I started, which was with a few thousand dollars in my bank account.

So keep in mind that it is a slow process, and you're not going to start to see a lot of the results until you start doing this for a few years. And then you could start to see all the work you put in really start to pay off.

So as always, you guys, thank you so much for watching! It really means so much to me. And thank you again, by the way, for helping me hit 60,000 subscribers! That is a crazy number, so I thank each and every one of you who’ve watched any of my videos, who comment, or subscribe, or like, or dislike, or anything like that. Thank you guys so much!

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Thank you again for watching, and until next time! [Music]