Ideas in the Wild: David Vernich On Helping the Middle-Class Become Millionaires

Many middle-class Americans constantly worry about their current expenses or the next recession. They can’t fathom securing their financial future decades before retirement, much less creating enough passive income to surpass their earned active income. The dream of being a millionaire seems lightyears away. But it doesn’t have to be that way.

In Middle Class to Millionaire, David Vernich demonstrates how investing in real estate can be a simple, profitable solution for sustainable financial security, long-term growth, and complete peace of mind. He provides the insight he’s learned as a banker who realized that his 401(k) wouldn’t provide the lifestyle he truly wanted. By forming a small team of investors and securing a loan with good credit, David became a real estate investor and changed the course of his life within a few short years.

David shows readers that when they invest in real estate, they invest in a worry-free financial future without sacrificing the life they live today. I recently caught up with David Vernich to learn more about why he wrote the book and the ideas he shares with readers.

Why did you write this book?

Two massive issues that will never be fully resolved in our lifetimes face the majority of the American population:

The retirement income crisis — People are retiring into virtual poverty with insufficient income to maintain the standard of living they had when they worked full time due to a lack of proper financial education.

The affordable housing crisis — The number of starter homes is declining each year due to obsolescence, gentrification, natural disasters such as fire and floods, and the fact that builders cannot build new starter homes that are both profitable for them and affordable for a buyer. Ultimately, there is no such thing as affordable housing if you simply don’t make enough income to pay the average mortgage payment.

Both these problems could be solved — individually and collectively — if every American could learn how to become a millionaire. That might seem crazy, but every individual who has or can attain the status of being solidly in the middle class can absolutely achieve millionaire status.

The key is putting together the people with money to invest in real estate with the people who do the actual work.

What’s an idea you share that really excites you?

The country’s in the middle of a housing crisis. There’s a shortage of available real estate, which means there’s a growing demand for rental property and a constant supply of tenants. It’s also possible to buy properties that are a couple of decades old and renovate them relatively cheaply. If you choose the right properties, you can keep any risk of a devastating loss from the investment very low.

To make money from real estate, you just have to think about debt differently. You have an untapped resource, a secret weapon: your credit and your ability to borrow. You can use that resource to purchase assets that can then generate that ever-important cash flow.

Banks are generally quite happy to lend money for real estate because the property acts as its own collateral, and the rent paid by the tenant will more than cover the loan payment. The key is making sure you know your numbers. Do the math and know what your holding costs on a property are going to be based on the repairs needed and the rental market.

“Holding costs” are what it costs from when you take ownership of the property until the time when you start making money on it, which might include payments on a loan or line of credit, utility expenses, contractor payments, and so on. If you set up a credit line based on the equity in your own home, or down the line on your other rental properties, then the money for those holding costs is covered by that loan, rather than coming out of your own personal bank account. As an added bonus, all those expenses — interest, repairs, and whatever — are tax deductible.

How will following your advice improve your readers’ lives?

Since I implemented the plan I describe in this book, I was able to make the leap from middle class to millionaire. Not only that. I found the process to be fairly painless — and it certainly didn’t require superhuman skills to achieve.

Instead of following the sole path we have always had drilled into our heads (which generally only works for very high-income earners), people can add just one missing ingredient to make a huge, life-changing difference in their standard of living.

Spoiler alert: investing in income-producing assets (rental real estate properties) through a partnership of like-minded people who each bring their unique skillsets to the venture will massively increase the probability of becoming a millionaire rather than sticking with a traditional course of action that is guaranteed not to work for the vast majority of people who follow it.

The nice thing about this plan is you can increase your standard of living NOW. You won’t have to wait until you are 65 years old to pull money out of your retirement account. You won’t have to worry about getting fired from your job (you will have enough income from this strategy to replace your full-time income after a few years) or becoming sick or disabled so you can no longer work, and you will not have to retire (eventually) to a life of tight budgets and a one-way trip to an ever-decreasing standard of living.