I am often asked by my clients and students how I made a fortune in tax-defaulted real estate investments. The answer is obvious, having conducted more than 5,000 real estate transactions since 2002 and making money on virtually all of them.

But then I realize there is something else to bargaining. The proper mindset must also be present to consistently earn money and to build that fortune over time.

And this is when my students usually stare at me blankly. All many want to do is make a deal that gives them 20K or 10K or 50K and then use that money to buy the Doo-dads and toys they craved. While I have a lot of toys and doo-dass, this is not what I recommend any beginning investor to do.

Instead of taking the profits from your first deal and spending it on that new car, you should take that money and reinvest it in your business. By doing this, you effectively and massively SUPERCHARGE your pool of money to work and over time can seek more and more bigger and bigger deals and make more profit.

Did you know that $ 10,000 invested with a 30% return (something readily available in the world of tax-delinquent investing) in just 10 years leads to more than $ 137,000, whereas if you take only 20% of the profit each year, will it? Do you just end up with less than $ 2,600? That’s the power of compound interest. Use it and you will succeed, work against it and it WILL KILL you.

So if your goal is to buy that new car for $ 40,000, you shouldn’t use the first few profits right away to buy it, instead you should reinvest it in your business, continue to drive that old car you have until you’ve made enough money. that spending a little on that new car hardly hurts your wallet.

This is how the rich get rich and how they drive their cars. Most rich people don’t actually drive big cars, because they know what will affect their future earnings. Taking $ 50,000 out of your mutual fund today could translate into “lost earnings” of several million in the future.