Surprise! 4 Famous People Who Made Their Fortune in Real Estate
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Discover 4 people who are well known for things other than real estate but because of investments in real estate, they became famous and/or reached their full potential in the pursuits they are best recognized for. You’ll learn that without real estate, Arnold Schwarzenegger may never have become the most famous bodybuilder, blockbuster movie star or politician. Without real estate, Cyrus McCormick may not have been able to distribute the enormous number of wheat reapers to small farmers around the world which reduced world hunger by leaps and bounds. Without real estate, McDonalds would have folded and wouldn’t be around today. And even the hip hop star Vanilla Ice would have been just another has-been, broke, one hit wonder had it not been for real estate. These 4 individuals provide a wonderful lesson on the power of what can be accomplished in one lifetime if you diligently put your financial house in order with real estate investing. This training is for anyone who has a dream to do something extraordinary with their life. Maybe it’s a ministry, a non profit, a world changing idea or a life committed to giving back to those in need. Learn how others have used real estate to reach their full potential in life.
Four Famous People Who Make Their Fortune in Real Estate
It will surprise you when you hear their names because it’s not what they’re know for, but it was real estate that provided the financial foundation for them to accomplish what they did, or what they’re still accomplishing.
For millions real estate is a means to an end. That end could be a ministry, a non-profit, a movement, an organization, an invention, an idea. There is one key ingredient that most people would agree is missing from being able to achieve all that they have set out in their minds to achieve, and it’s money. That is what slows people down. They don’t have the money to do what they need to do in order to launch that ministry, launch that movement.
There are plenty of people out there that made a bunch of money and then went and invested it in real estate. In some degree, a few of these I’m going to mention did that as well. The difference here is real estate was the foundation for allowing them to do what they’ve been able to do.
These four people found that real estate was their foundation, and I hope that will encourage you here as you listen to their stories.
The first person on this list is the godfather of modern-day body-building. Hollywood superstar, The Terminator, former governor of California. I’m talking about Arnold Schwarzenegger. That’s right; his fortune was made in real estate. In fact, when he first moved to the United States, what he did was scrape by every penny he could get from body building shows and anything he could do on the side to buy income producing multifamily real estate. It was because of that real estate that he had the income to be able to do the things that he needed to do to get his name out there. Whether it be to go to these special shows that weren’t going to pay him much. It would be all pay for the flights and the travel and all of the different foods and nutrients that he had to ingest in order to get that big, but it was because of real estate. He was a millionaire from real estate investing before he ever got to Hollywood, and before he ever did anything in politics. That was his foundation. Fascinating isn’t it? You can hear the entire interview in his own words.
Our second famous person has had a tremendous impact on human history. Now, you may not think he’s famous, but his invention, the wheat reaper, is responsible for feeding millions and millions and millions of people. It didn’t completely end world hunger, but it put a huge dent in it because the wheat reaper allowed farmers to be able to harvest more wheat much more efficiently than ever before. Although that might sound boring, I’ve done plenty of research on the grain industry. That impact that that wheat reaper made was absolutely enormous. It crossed all kinds of barriers, not just feeding people, but politics and all kinds of different aspects of life.
This individual’s name, Cyrus McCormick. Although he is very well known for this extraordinary invention, and not only inventing it, but then also creating a way to manufacture it in a mass quantity, and get this out to farmers all around the world, but where he made his money was actually not on the wheat reaper. Because this is really interesting, he wanted the wheat reaper to get to the masses, to small farmers all around, not just the United States, but the entire world, and farmers didn’t make much money so they couldn’t afford it. He often times he financed his own equipment. If they didn’t pay him, because the thing was so big, it was hard to repossess it. He didn’t make a lot of money although he distributed a ton of wheat reapers.
How He Did It
Where he made his money was he bought up a bunch of land in this small mid western town of Chicago. Then, he built plants, and he built things for his employees. He owned all the land. He owned all the real estate. Then, of course, Chicago built up around him, and that’s where he made all his money. If he was short on money, and some farmers were not paying him for the wheat reapers, because again, he still had to pay for the manufacturing of them, then he’d sell some land off to have some money to keep the wheat reapers distributed around the world. That’s a really big deal. That means that millions and millions of people did not starve to death ultimately because of real estate, because he owned real estate, was able to sell that real estate and take that money and use it to plow back into distributing more wheat reapers.
Our third famous person, you may better recognize the company he launched, which is McDonald’s. His name is Ray Kroc. Now, Ray Kroc got a licensing agreement from the McDonald brothers. They have one little restaurant in San Bernardino, California, and he is the one that franchised McDonald’s around the globe. What is so fascinating about the McDonald’s story is how the business ended up making money. Listen carefully. Ray Kroc cut a deal with the McDonald brothers whereby he was going to get a small percentage of the gross sales, and he could sell an upfront fee for the franchise. Once he cut the deal, he went out there and tried to put together some franchisee relationship. He did sell some franchises.
How He Did It
Here’s what happened. They were very successful, but the actual breakdown of the math was that the franchisees, the ones that owned the individual stores, they made a ton of money, but Ray Kroc was making nothing. In fact, Ray Kroc did not make single penny out of McDonald’s for the first seven years of the business. Seven straight years, he never took out a penny, and he had another business going that whole time which kept things afloat, but here’s where things get really fascination. He hired a finance guy to help figure out the problem because the franchisees were making a killing, and he was making no money as the franchisor. It had to do with the deal he cut with the McDonald brothers.
It was a finance manager that said, “Well, here’s how we can make our money. We have to gamble a little bit, but what we’re going to do is we’ll buy the real estate underneath the restaurants. Then we will set up a lease whereby as the gross income of that restaurant goes up, our rental income will go up.” He said, “Well, okay, but if we’re going to do that we’re basically betting on the real estate because we’re not really making any money from the burgers and the fries and the drinks.” He said, “That’s exactly right, but if you believe in this business model, Ray, if you know that the restaurants are going to be around 30 years from now, then the real estate is going to be extremely valuable. That’s where we’ll make our money,” and that’s where McDonald’s corporation made all their money back in the day.
Valuable Real Estate
Now, I think these days they do own a couple of restaurants, like 30% of them are owned by the actually corporation, but back in the day he owns all the real estate underneath. They had to go out and get loans, and they had to borrow to the hilt. They bought this real estate all around, not only the United States, but the entire world. Now it’s considered to be the most valuable real estate portfolio that exists today. It’s because of real estate that McDonald’s didn’t go completely out of business. It’s because of that real estate that Ray Kroc was able to keep things afloat so that he could do what he needed to do to create the kind of culture and the kind of consistency that became what McDonald’s is today. Now, you may not like McDonald’s and you may hate the restaurant, so you may be upset with real estate at this point, but it was real estate that made McDonald’s what McDonald’s is.
Our fourth person is someone you probably know because his hit, Ice Ice Baby has sold over a hundred and fifty million records. I’m talking about the musician, rapper, Vanilla Ice, or since I’ve gotten to know him over the years, I just call him Rob.
Here’s his story. Rob was 16, he writes Ice Ice Baby. Age 17 he’s dancing in the club. The club owner recognizes that he has some talent. Next thing you know, a year later, the song Ice Ice Baby is hitting the radios and it becomes an international hit. He hits the road touring for several years. While he’s doing so, he’s making money, he knows he needs to invest. He’s got smart parents; he’s a pretty smart guy himself, even for a young age at age 18, 19, 20. He starts buying real estate with that money. He doesn’t want to buy stocks or bonds because he can’t touch it and feel it, and he doesn’t trust all the people in the entertainment industry, so he knows if he buys real estate he can touch and feel the investments he’s got.
How He Did It
Four years later, he’s got four mansions. He’s got a place in Park City, Utah. He’s got a place next to Michael J. Fox in Los Angles. He’s got a place in Miami. What he ends up doing is he sells all but one of his properties, and he reaps an enormous profit. He goes, “Wow, well that was easy,” so he goes on to buy more and more real estate. In fact, he paid $600,000 for a commercial property on South Beach in Miami, which is now worth about $20 million and is cash flowing like an absolutely freight train. What was his secret? He bought real estate.
Now, I know that you may not be an international super star making millions of dollars from royalties of music that you can pour into real estate, but where this lesson is so important is that there were other people, other counterparts, contemporaries that didn’t do what he did. A person like M C Hammer. In fact, M C Hammer, years later, was on a television commercial during the Super Bowl showing that he went bankrupt and went into foreclosure. See, Rob didn’t do that. Even though he was a one hit wonder, what he ended up doing was because he made so much in real estate, he was able to do other things. He went on to flipping houses. In fact, he’s got a television show on the DIY network called Vanilla Ice project where he renovates mansions, and he puts all the bling-bling he can into them, and he resells them.
The latest thing he’s a part of is this season’s Dancing With The Stars, which has become a really big show. It’s one of the highest rated shows on television. Rob was able to avoid the one hit wonder syndrome because of real estate.
That’s the lesson. I hope you’re inspired by these four people. I hope you’re inspired to find out that real estate doesn’t have to be the end, it can be a means to your end. What are your dreams? Because you can achieve them, but often times you need money. That’s just a fact of life. Real estate can not only give you the money from flipping houses, but also that long term steady income as well as the appreciation.
Rather than going and trying to raise money from everybody else, be your own fund raiser. Be the person that creates the wealth, creates the money so you can fund those other dreams in your life. That’s one of my big pet peeves when I see people that have great ideas, but they don’t want to do what it takes to make the money to fuel those ideas. I hope I didn’t step on any toes by saying that, but that’s the truth. People need to go out there and take responsibility because you may have an amazing ministry, and amazing non-profit or movement that could change the world, and if you just had some rental property, you just had some real estate to fuel that so you could keep your bill paid so you could go out and do what you had to do.