Before I tell this story, let me say up front – I used the student loan in this story to pay tuition. That said, let me tell you how that led to a multi-million dollar company.
Most people know me as the Founder of BNI. However, I actually started a property management company three years before I started BNI.
My $5,000 Student Loan
I was recently going through my old files and ran across the paperwork for an old student loan that I took out during graduate school. It was 1982, and I had applied to USC for a doctoral degree. I really wanted to do my Ph.D. there, but I also had to figure out how I would pay for it if I was accepted. Several years earlier, I had been accepted to Occidental College for my bachelor’s degree. I was offered a 50% scholarship to go there. However, I couldn’t afford the other 50% (nor could my family).
Therefore, I went to a community college and then a state college, because that’s what I could afford (by the way, they were great schools). Although I didn’t know how I could pay for the doctoral program at USC, I didn’t care. That was my big goal. Therefore, I applied and I was accepted. I received a couple of small scholarships. However, I still had to pay the lion’s share of my tuition myself.
At the time, I had a full-time job in Los Angeles. However, I wasn’t making enough money to cover living expenses and the doctoral program. So, I took another job. Working as many hours as I could so I could save up enough money to pay for that semester’s tuition. I discovered that one semester at USC cost me more than my entire bachelor’s degree! But that was my vision, and that’s what I worked towards.
I worked the two jobs AND I applied for a student loan of $5,000 to help pay for a semester at the university of my dreams. Having no idea if I’d get the loan, I applied. I worked to make the money in case I didn’t get the loan, however.
Well, a few months later (right before I was to start at USC), I was approved for the loan! The thing is, I had also saved $5,000 from my extra work to pay much of the tuition in case I was not approved. So, I had $5,000 in cash and $5,000 available as a student loan. What should I do? Should I use my $5,000 cash to pay for school, or should I take the low-interest loan for school???
Well, I knew I couldn’t keep working long hours for the next several years. Therefore, I decided to take the low-interest loan and use the $5,000 in cash that I had earned and applied it as a down payment on a condominium. And that’s where my journey began in the investment property business. You see, I flipped that condo a few years later for a larger house. I then flipped that house a few years later for another larger house, which I then flipped for another two homes. Eventually, I flipped those two homes to pay about 50% of a commercial property that I was building in Texas!
The original loan allowed me to take my $5,000 in cash and turn into a $1.8 million dollar commercial property. Of course, my wife and I made other cash investments over the years. We turned this little company I started into a multi-million dollar business with nine commercial properties and dozens of tenants. All of this happened because I got a $5,000 student loan. I worked really, really hard to earn money and invest it – not blow it on things that wouldn’t matter decades later.
This is a story about the use of leverage and the commitment to discipline.
Leveraging your money and using discipline can lead to incredible success. I used leverage and discipline later to help build the BNI business.
By the way, I paid off all my student loans including interest years ago. It was a proud day for me. However, four weeks later, I got a letter from another university that read: “Congratulations Dr. Misner, your daughter has been accepted to our school. You can go to this portal to make the tuition payments on her behalf.”
This time around, I didn’t need student loans.