I’ve written quite a bit about my previous life as a real estate developer – including how one of my first clients was Advance Auto Parts (AAP).
At the time, it was a small, privately-owned company looking to scale operations in the Carolinas and Georgia. And it hired me to secure new sites in rural parts of that latter state. That’s how I came to trek up and down towns like Sandersville, Vidalia, Macon, Cartersville, Gainesville, LaFayette, and Jesup.
But the trip that stood out to me the most – and still does today – is when I went to Calhoun.
Calhoun is in northern Georgia, around 50 miles south of Chattanooga, Tennessee, and 68 miles north of Atlanta. It already had a number of auto repair shops, but I canvassed the place anyway… finally settling on a vacant lot to investigate further.
There was no “for sale” sign there, only a mobile home at the very back. But there was an older man sitting outside of it in a rocking chair. So I deemed that an invitation to go introduce myself.
He shook my hand cordially enough. And when I asked him if he knew the land’s owner, he nodded.
“That would be me.”
Pleased with how easily my mission was going so far, I told him my intent. But when I finished talking, he explained where he was coming from: how he and his wife had lived there for quite a while until she passed away a few years prior.
Tragically, she had died due to medical malpractice.
Recognizing that the property had sentimental value to him, I thanked him, gave him my business card… and went on to look for alternative sites. There was no way he was going to sell, I figured.
Turns out, I was wrong – about a lot, in fact.
The Millionaire Next Door
It was only a few days later that I received a call from that old man. He wanted to know my offer price.
I told him I could pay around $175,000 and that I could subdivide the land in the back. That way, he could remain in the mobile home.
I thought I was being nice with the offer, and I’m sure he appreciated the intent. But that seemingly unassuming old man was a lot shrewder than I’d realized.
He agreed to the $175,000, but he had one more condition. He wanted me to buy the mobile home, too, then lease it back to him for $100 per year. You see, the Taxpayer Relief Act of 1997 was already in place by that point. That law included a provision that excluded capital gains from the sale of a “principal residence” (his mobile home).
By including the mobile home in the deal, it meant he wouldn’t have to pay any capital gains tax by selling the primary residence and the larger plot of land it sat on.
Impressed, I agreed. We signed a contract, and I closed the sale a few weeks later.
About a month down the road, I returned to meet with my contractor, only to see the man in the back there on his rocking chair again. We got to chatting, and he casually mentioned the settlement he’d received after his wife’s death.
Turns out, not only was this man business, law, and real estate savvy…
He was also a multimillionaire.
I was shocked. He could afford to buy any house he wanted – yet he opted to live in a mobile home behind my new Advance Auto Parts store.
That kind of practice, I’ve since learned, isn’t all that uncommon. According to one of my now favorite books, The Millionaire Next Door, there’s an entire class of citizens who have money, but live like they don’t.
By that, authors Thomas J. Stanley and William D. Danko don’t mean they’re misers or hoarders. They’re describing men and women who understand that “being frugal is the cornerstone of wealth-building.”
It’s not about showing off your wealth. It’s about knowing what’s worth it and what isn’t.
“The foundation stone of wealth accumulation,” Stanley and Danko write, “is defense. And this defense should be anchored by budgeting and planning.”
Buy What Matters
Think about the foolish things you’ve purchased in the past…
Perhaps a pair of parachute pants from the ’80s. Maybe “rare” Beanie Babies in the ’90s. Or how about timeshares, gym memberships you never use, or brand-new cars just because yours isn’t the newest model anymore?
We’ve all made our fair share of consumer mistakes. But the millionaires next door that Stanley and Danko describe – real people, mind you, some of whom probably live in your neighborhood – commit to making fewer of these errors.
They understand that by spending less, they can save more.
By saving more, they can invest more.
And by investing more, they can accumulate more wealth.
Maybe that doesn’t mean you live in a mobile home in rural Georgia. But perhaps it can be a reminder to take stock of what is – and is not – worthy of shelling out your hard-earned capital for.
By doing that, perhaps you too will wind up the millionaire next door.
Regards,
Brad Thomas
Editor, Wide Moat Daily
P.S. Make sure to watch my YouTube show later this week. We’re releasing an episode titled “Investing Like the Millionaire Next Door.”
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