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Kevin O鈥橪eary Reacts: Living On $1.6 Million A Year In Los Angeles | Millennial Money - YouTube
Channel: CNBC Make It
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Hi there, Mr. Wonderful here, a.k.a.
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Kevin O'Leary. And today I'm gonna have a
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look at a video I've never watched, called
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Millennial Money: Living on $1.6 million a
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year in Los Angeles.
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Before you start, smash the like button like
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I'm doing here. That helps the algorithm.
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Alright, now I'm going to watch this thing.
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We'll see if I like it or not.
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You know, I like to tell it like it is.
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I always believed that I would be a
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millionaire. And I think originally my goal
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was to try to hit that by 30.
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I ended up surpassing that by a decent
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amount. This is the moment.
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My name is Graham Stephan. I'm 29 years old.
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I make $1.6 million per year and I live in
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Los Angeles, California.
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And welcome to, wait for it, Millennial
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Money. So I'm a
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full-time real estate agent, real estate
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investor and YouTuber.
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You know, when I first started watching I
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thought, this guy's gonna be a dick.
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But now, as I'm just seeing the first few
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frames, it sounds like he's for real.
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My mortgage is just over $2,800 a month.
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The market value of the other unit next to
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me is about $2,500 a month.
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Then between the equity I get and the tax
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write-offs using the garage as my office, it
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basically works out to be a free place for
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me to live. Okay, that's pretty shrewd.
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This guy knows what he's doing.
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He's basically bought two properties and
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he's using the tax code fairly and legally
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to try and live in his place for free
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because he's profiting off the amount he's
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getting on rent after he services the
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mortgage. Good idea.
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So I spend about $200 a month in groceries,
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and I do price shop between grocery stores.
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I'll kind of make the rounds and just stock
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up on whichever item is the cheapest at
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which store. Every morning I have my same
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two eggs with ham and cheese and a half a
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bagel with store-bought, generic-brand cream
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cheese is my favorite to do that.
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I refuse to spend money on two things:
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number one, I think everyone knows is coffee.
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I think it's absolutely ridiculous, the
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markup of coffee at Starbucks and Coffee
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Bean and a lot of those places out there.
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So I just make it home for 20 cents.
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I love this guy.
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This is exactly what I'm talking about.
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He's not an idiot.
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He knows exactly what he's spending his
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money on. He's got it graphed out.
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He's very, very conscious of not wasting a
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single cent. Nothing wrong with that.
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That's very smart. Coffee is a big money
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waster. You get really hosed when you buy
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it. Also, designer clothing.
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I don't see the point in going and spending
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$700 on like Gucci shoes.
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So I end up saving about 99% of my income
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just because my income is so high and I keep
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my expenses so low.
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And most of the properties just kind of like
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pay for my living expenses.
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So anything else I make is really just seen
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as a bonus and I save and invest it.
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Now the one thing I would disagree with him
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on is, you know, buying really cheap
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clothes. I'd rather say, look, that's okay
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for jeans and a T-shirt, maybe, but every
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once in a while buy a spectacular piece
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that's going to last you a lifetime.
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I like to buy great suits.
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I want to look good. But I don't waste
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money. All of my suits are the same.
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I just have 25 of them.
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They last forever.
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Alright, you got it? Oh, can you keep -- Can
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you watch the whole thing? Oh, there's more?
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Graham is a realtor?
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That's the same thing?
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Got it.
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So I got into real estate basically as soon
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as I turned 18 years old because I had no
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other options. I didn't get into college.
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I had really bad grades in high school and I
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saw getting my real estate license, honesty,
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as a way where I could just get one year of
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work experience and then reapply to
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colleges. But it turned out to be a career I
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really loved so I ended up living with my
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dad for the first few years.
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I moved out in my early twenties and that
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was when I bought another property.
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This guy's living proof you don't need
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secondary education to make it.
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I mean, you know, everybody says you gotta
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go to college. Look, I'm not against going
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to college, but it is no way a prerequisite
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for being successful. He's living proof.
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The first property I bought was when I was 21
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years old. It was a short sale for $59,500
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in San Bernardino.
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It was a foreclosure that was being sold by
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the bank. And at the time, I had been saving
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up as a real estate agent, basically using
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all my commissions, just putting it in a
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savings account. I bought that property in
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cash. It actually appraised and was
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refinanced for like $260,000.
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So he took advantage of a dislocated market,
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2007, 2008, some part of 2009.
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Housing had been crushed.
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He took advantage of that. He bought it out
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of foreclosure from the bank.
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Obviously, it was a great trade.
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You can't do it all the time.
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But he was able to do it because he'd saved
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his money.
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My investing strategy really hasn't changed
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since I was 21. And all of it has really
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just been about real estate.
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If anything, I'm just looking to buy more
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expensive real estate now that makes a
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little bit more money. But otherwise, I've
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just kept doing the same thing over and over
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again. Nothing wrong with doing what you're
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great at. That's clearly what he's doing
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here. Graham is focused on real estate,
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bringing in about $15,000 a month.
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But here's what you should be doing while
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this is happening, because real estate is
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just one sector of the economy and goes
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through cycles, too.
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If you're investing, diversify out of real
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estate. Now, obviously, it's hard for him to
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do that because he wants to keep buying more
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houses. But it's very prudent sometimes to
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put something aside and just buy the overall
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market, an index or something so you get
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diversification of your net worth.
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Because when real estate slows down, you
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have other investments that can continue to
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perform.
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I had no idea that anyone would actually
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watch me and I had no idea that I could
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actually make any money doing this, so I
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started it really just with the intention of
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having fun. I'd always wanted to do it, but
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I also felt like, "Who would want to watch
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me?" And I felt like I didn't have the
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personality for it.
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I just felt like, you know, I should
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probably postpone it. But I just made a
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video one day, spur of the moment.
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It was a slow open house.
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And I just filmed with my iPhone on the
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selfie side, just talked about how I got
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started in real estate. And that was such a
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fun experience and I remember that video
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getting like nine or 10 views and just being
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like, "Oh my God, like nine people have seen
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this video." So I started making more videos
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and once I started doing about two videos a
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week, the growth really just exploded, it
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seemed like. So he's really figured out how
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the algorithms work and how to produce
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content that people want to just generally
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check in on every week.
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And when you have a million subs, you
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basically have a business.
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You're a broadcaster.
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That's what you're doing. So he really has
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figured that model out. Kid's a hustler.
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So right now, probably like 85% of my income
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is affiliated with YouTube in some way or
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another, and then the remaining 15% is
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through real estate sales or real estate
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investments. So
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since I've always been self-employed, I've
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never had a formal, like, 401(k).
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But I do have a SEP 401(k).
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I throw some money in there at the end of
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the year just if it's left over, just as a
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hedge. But then as far as savings are
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concerned, I always like to keep about
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$20,000-$30,000 in one of my checking
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accounts just to cover anything that could
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come up in the short term or to draw from if
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I have any expenses that come up.
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But other than that, all of my other money
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is spread out through several high-interest
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savings accounts. His monthly income is
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$150,000. You know from before that he told
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you $15,000 of that came from his rental
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income. This kid is a YouTuber.
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He's making the majority of his income
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running a broadcasting facility.
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That's the way you should look at it.
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That's a big number for YouTube.
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You can only do that if you have a
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million-plus subs. And he does.
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That's extraordinary. So coin
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collecting was actually something I really
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got into as a kid. For some reason, I found
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it really cool to collect like old American
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coins and paper money.
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And what I would do is go across the street
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from where I would work to a bank.
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And the bank teller knew me and she knew me
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because I would go in and always ask for
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like any old money that she would have.
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Some lady came in the bank and exchanged
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$200 of all just like perfect condition $10
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bills from 1934.
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So some of these are worth up to $200
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depending on the condition. Others are worth
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more like $40 to $50.
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So I wouldn't really consider these an
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investment. Like I think it's probably way
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better for me to put my money in the stock
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market than it is for me to get like, you
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know, old money and just keep it for a long
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time. But this is just a fun hobby.
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Coin collecting, old note collecting, you can
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make money doing that. I find it boring.
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I have some coins I've collected, including
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some gold coins. I bought them for the gold.
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But I'd much rather collect watches.
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You know what I like about watches?
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You can wear them.
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Very much like gives you a little jolt there.
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So I bought my Tesla in April of 2019.
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You get so many rebates back for it.
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The financing is so cheap, everything that
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went on with the car, I calculated that it
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was going to cost me $70 a month out of
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pocket net in the first year.
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Not counting the opportunity cost of then
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having all the money left over that it could
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then go and reinvest. So I figured, like,
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depreciation is going to be minimal.
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And I got some really great tax write-offs
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from it. So it's going to almost be a free
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car. I figured, like, oh, you know, that's
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the video I'm gonna make. Then that video
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ended up getting now almost six million
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views. I think the total cost of the car
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with everything all at the door with taxes
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and like all of the options, everything was
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like $44,000.
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So I ended up making money from getting a
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car. I actually don't think a car is that
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necessary anymore.
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Bottom line. But if you're gonna own a car,
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own a Tesla, it's very efficient.
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He's figured out a way to take advantage of
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tax incentives to make it under $100 a month
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worth of cost. But so many ways to transport
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yourself these days. Cars also have
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insurance costs to them.
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You have to store them.
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I'm not a big fan of owning anything anymore
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when it comes to transportation.
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But he's done it well.
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Nothing wrong with that. And he enjoys
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driving it.
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So I have an amazing girlfriend and her and I
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share a lot of the same values in terms of
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saving and spending money.
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And I find it fun that she is just as frugal
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as I am. So we can have a great time trying
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to figure out like where is the best happy
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hour spot and like how we could save a
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little bit more money doing this.
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And she's the one too that's also very
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encouraging of like, "We don't have to go
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out tonight to happy hour sushi." She
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doesn't sound like that, by the way. But she
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encourages me to like, you know, we could go
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cook food at home or instead of going out to
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see a movie, we could just pop something on
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Netflix. Always great to have a partner that
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shares your economic values.
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You really don't want somebody that spends
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their brains out. That's why he's so happy.
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She's a wonderful gal, it looks like.
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But she also is in sync with the way he
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spends money. Very smart.
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Okay, I know it sounds weird, too, but I do
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end up rewarding myself every now and then
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at McDonald's from the dollar menu.
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Not a chance in hell I'd eat that.
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Look, the guy's in shape.
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So maybe indulging once in a while.
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But I'm really uptight about what I put in
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my body. It's not something that happens too
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often, but it does become this thing where
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it's like, that's my treat.
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Look, I'm not going to eat fast food, but I
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am going to buy a great bottle of wine.
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So in terms of net worth goals, I really
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don't have any and I have no desire of
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becoming a billionaire. I don't even know
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what I would possibly do with that amount of
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money. I would like to hit $10 million.
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I feel like that would be just a decent
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number. $10 million is a good number.
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You know, they say it's almost impossible to
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make the first million. He's already done
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that. $5 million is next to impossible.
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$10 million gets easier, actually.
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Once you have $5 million, you're investing
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in other things and it helps you grow your
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net worth. You don't need to be as extreme
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as I am. You don't need to skimp on every
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purchase at all. You don't need to work 12
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hours a day, but you do need to think
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outside the box. Yes, you do.
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You have to do all of that stuff.
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Don't listen to him. Listen to me.
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Yeah, you've got to skimp.
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Yeah, you've got to work 15 hours a day.
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That's what it takes. It's very competitive
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out there. No one is more frugal than I am.
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Well, let me rate Graham on a scale of one to
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10, one being a horrible saver and 10 being
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just brilliant. I'm gonna give him an 8.234.
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He's got a little bit more to go in terms of
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diversification. He wasn't a 10 because he
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didn't diversify enough, but he's really
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good at staying focused on saving and making
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money. Thanks for watching.
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And don't forget to subscribe to CNBC Make
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It. And while you're at it, why not
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subscribe to Ask Mr. Wonderful on YouTube?
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You'll find some interesting data on there
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too.
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