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Can you become a multi-millionaire on a McDonalds worker’s wage?

Property

October 28, 2024

David Parker’s book Income and Wealth poses an interesting challenge: Is it possible to become financially independent on a McDonalds worker’s wage?

The topic was covered here and here.

David Parker’s life story is living evidence that it can be done. He became a multi-millionaire property owner on a teacher’s salary, living in San Francisco, one of the most expensive cities in the world.

Parker pulls no punches about what it requires: you should aim to save half of what you gross each month, even if that means living with your parents until you are able to earn sufficient income from your investments. You’ll need to drive around in a cheap car, live simply and skimp on a lot of luxuries.

This deferment of pleasure is what builds wealth.

You might roll your eyes are saving half of what you earn, but once you start to strip out the middle class expectations from your life – such as a nice house and nice car – you’ll see where the savings can be made.

For many, saving 20-30% of their monthly salary might be more realistic. Either way, the trick is to make a start, and then see if that percentage can be bumped up.

A McDonalds employee in the US earning a minimum wage of $10 (R17.50) an hour would come away with a gross wage of $2 400 (R42 000) at the end of the month. That’s a pretty decent salary by South African standards, and perhaps unrealistic, but if half of that is saved each month, that amounts to R252 000 a year.

If you’re a married couple, both employed, that can be doubled to savi8ngs around R500,000 a year.

In less than a year you would have enough to put a down payment on a property that can be rented out.

You would have to purchase a property with good rental potential, and there’s plenty of material online explaining how to do this without making too many mistakes.

The advantage of property is that the bank is financing most of the asset acquisition, so anyone with savings of R100 000 can theoretically borrow R800 000 or even R1 million, depending on their ability to service the loan.

That property could be rented for R20,000-R15,000 a month, which would be sufficient to cover the mortgage bond repayments, with a small surplus which would then be saved for a down-payment on a second property.

After 5-6 years, you would be able to ditch the job at McDonalds and live off the rental earnings from the properties.

Once you develop a good relationship with the bank, you will be able to borrow 100% of the property value (rather than the more typical 80% or 90%).

Your tenants are paying off the bonds and building your wealth profile. There are thousands of property millionaires in South Africa that have followed this exact model.

You should sign up with 80Eight.io and join the “Become a millionaire club”.

by Ciaran Ryan

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