Book Review: Millionaire by Thirty

According to the Author’s Note in the beginning of the book, Millionaire by Thirty by Douglas, Emron and Aaron Andrew (father/sons):

“contains fresh, new and different approaches to managing debt and using safe, positive leverage to attain a million dollar net worth within 10 years”.

Does the book fulfill this promise?

Cutting to the Chase - What’s the “New Approach”?

Honestly, I hadn’t thought of Douglas’ approach to building net worth, and the book still leaves me wanting more hard data about the feasibility, applicability and safety of the methods prescribed. What are the methods? Well, in a nutshell:

1. Buy homes with the least amount of equity invested (i.e. interest-only loans, 100% financing, etc.)
2. Rent out the homes
3. Refinance when the home values increase and take the extra equity out (via home equity lines of credit, higher mortgage vs amount owed, etc.)
4. Invest that extra into relatively safe investments that make at least the same or better interest rate than what you’re paying on the mortgage

And what safe investment does he recommend?

Universal Life Insurance policies. Yeah, I didn’t expect that one either. But here’s his reasoning:

Your mortgage interest (remember, it’s an interest-only loan) is tax advantaged during repayment. When you sell the house, if you meet certain requirements, your profit in the home sale is tax advantaged (or tax free even). Under certain IRS tax codes, your premiums or earnings in universal life insurance is tax advantaged, as is the final payout at the time of death.

Even more, Douglas illustrates that after just a few years of paying premiums, as well as acquiring more universal life insurance in a ladder-like approach, you can begin earning more through the returns on the life insurance investments. You see, universal life insurance (ULI) is managed like a fund. Some managers take more risk than others, but ULI is one of the more conservative investments. ULI managers generally invest in index funds like the S&P 500, so over the long term, you’re supposed to see returns in the 8-10% range.

My Impression of the Book’s Quality

I’ve just given you the summary on what it took me 220 pages to get through. But honestly I can’t say I came out of reading the book with a clear understanding of the principles of this investment strategy.

Douglas begins the book discussing his two son’s (listed as coauthors) Emron and Aaron. He seemed to write as a proud father discussing how great his sons are, rather than a financial planner illustrating key foundational ideas. Eventually he eased up on the doting and began to actually get into the meat of his financial plan.

Overall, I think there was way too much fluff that tried to prepare the reader with grand visions of financial independence, and not enough detailed explanations of his method. Additionally, he kept repeating how renting is just throwing your money away without actually qualifying and quantifying his reasons.

The difficulties of being a landlord

One big deficiency I found was how the Andrews simply disregards the difficulty that comes along with managing properties. I can only recall once where Douglas mentions using a rental management company, and I would have liked to hear more about how those work. He made it sound like all you do is:

1. Buy a house
2. Refinance
3. Get a wad of cash in your hand
4. Invest that wad of cash

To the non-discerning reader, perhaps someone who easily gets caught up in “fast money schemes” and doesn’t do proper research, I would be worried that they would think it’s that simple and would go start buying properties. Before they knew it, they’d be swimming in debt without knowing how they would pay off those mortgages. There’s way more analysis in buying properties that needs to be done instead of just saying “buy houses”.

Would I recommend this book?

Although I think I gave away a good chunk of the book, I think I had to so at least someone searching for this book online could understand that this investment strategy is not as easy as the book makes it sound. Granted, buying houses and investing in universal life insurance does merit more serious research if you’re interested, dedicated, motivated and careful.

As with the commenters on Amazon for this book, I agree that the strategies of buying homes may not be appropriate for the intended audience. Really, how many high school graduates do you know that are responsible enough to not pick their nose during a job interview much less have a mortgage or multiple properties? YOUR kid is smart enough to do it, I’m sure, but would you trust their friends holding a loan if YOU were the banker?

But depending on the real estate market and specifics about universal life insurance (I need to do some research on it), I would recommend the concept of investing in real estate, with caution, to more mature, experienced and detail-oriented individuals. If your dad isn’t a seasoned financial planner like the author of this book, you probably don’t have the footing yet to understand what you’re really getting into.

So the final recommendation? No for the intended audience (18-25 year-olds) and maybe for more mature adults. The book does have some calculations and some more information than I wrote about here, but I highly recommend performing due diligence on anything as risky as stretching yourself across multiple, interest-only, fully-financed mortgages and betting that you’ll always cover the monthly payment with rent.

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