EP261: The Richest People in the World All Did This One Thing

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There is a truth that only the ultra-wealthy, the richest of the rich know.  The richest in China knows this.  The richest in France knows this.  And of course, the richest in the US knows this as well.  

But no one bothered to tell the rest of us.   So we spend every single waking hour doing the exact opposite of what these people do and yet somehow we expect we’ll have similar results as them.  How does that make sense?

We get it, unbeknownst to you, you’ve spent your entire life as a cog in someone else’s wheel, but once you understand the same truth as the ultra-wealthy, you will become the pilot of your life, as opposed to a pawn that helps builds someone else’s life.

And the secret is, that it’s much simpler and faster to amass a huge fortune if you buy profits instead of growing it.

In today’s episode, we will not only explain what this means but also give you real-life concrete steps so that you too can make this magic happen for your own life.

How do we know this? We, the Kitti Sisters, have had the fortune of seeing behind the Wizard of Oz’s curtain, so to speak. In less than 6 years, we’ve dove deep into the world of multifamily apartment investments, amassing over $300 million in our portfolio. Multifamily apartments are the same investments the ultra-wealthy are involved in. We’ve seen the secret sauce behind the scenes, and not only have we seen it, but we’ve tested and used it for ourselves.

Starting in 2019, we began acquiring income-producing properties, beginning with a relatively small $6.9 million purchase compared to what we’re buying now.

Our latest multifamily apartment acquisition is a $77 million, 295-unit property built in 2021. We’ve grown not just linearly, but exponentially, thanks to the steps we’ll dive into together.

To explain what we mean by buying profits instead of growing them, let me share a quick story. A few years ago, I decided to grow my own Holy Basil.  Authentic Holy Basil is tough to find in U.S.-based Thai restaurants, so I thought, “Why not grow my own?”

I ordered a small plant online, and when it arrived, I was pumped. I took care of it, and when the leaves started sprouting, I used them to cook my favorite dish, Krapow Kai. But guess what? My little plant only produced a handful of leaves—nowhere near enough for even one dish.

That’s when it hit me: growing enough Holy Basil at home was a losing game. I’d never get the results I wanted by doing it myself. It was way easier to buy a bunch from someone who already mastered growing it.

That’s a great story and a great point.  The same goes for businesses.  If you were like us a few years ago, wanting to get into real estate, or if you’re currently in a business or thinking about starting one, you need to consider: is it worth starting from scratch, or would it be much more lucrative and easier to buy an existing profitable business?

The richest know this truth well.

Warren Buffett, worth $129.7 billion, transformed Berkshire Hathaway from a textile company into a massive conglomerate with diverse holdings. His investment strategy involves acquiring well-managed companies with strong fundamentals and holding onto them for the long term.  Buffett’s approach to acquiring and managing companies has earned him the nickname “The Oracle of Omaha.”

Bernard Arnault, the third richest man in the world is the chairman and CEO of LVMH, the world’s largest luxury goods company.

Arnault entered the luxury market by strategically acquiring Boussac Saint-Frères in 1984, which included the icon glam brand, Christian Dior. Through a series of strategic acquisitions and investments, he rapidly expanded, acquiring other prestigious brands and accumulating a net worth of $194 billion. 

Don’t we always hear that acquiring businesses is risky? Yet, these billionaires are making tons of money. What’s going on?  The secret is that these strategies are actually copy-and-paste. You can learn them too, and start acquiring profitable businesses yourself.

So how do you buy profits?

NO. 1 Buy income-producing businesses, not a job

One of the biggest traps early-stage entrepreneurs fall into is creating a business that isn’t profitable from day one. To grow and expand exponentially, you need to step into the role of CEO and Visionary.

If your business isn’t generating income, you won’t afford to hire help, buy tools, or implement technology to improve efficiency. You’ll struggle to form meaningful partnerships or joint ventures, and you won’t have the profits to remove yourself from day-to-day operations. Essentially, you end up stuck in a perpetual small business loop, effectively buying yourself a new job.

Instead of working for someone else with guaranteed pay, benefits, vacation time, and regular ACH deposits, you end up with a low-paying, high-stress job. For those considering leaving their corporate job for multifamily apartment investing, think hard about how to avoid turning it into a second job.

Even with a great property management team or backend staff, their salaries might not match what you earn in your current field. So, why downgrade to more menial tasks when your corporate job might offer less stress and fewer hours?

That’s why we always say, if you’re going to do this, do it right: Buy income-producing businesses, not a job. Otherwise, it’s going to be a miserable experience.

NO. 2 We buy profits, not problems

In multifamily apartment investing, our top priority is ensuring the property is already income-producing. If it’s not generating income from day one, it’s not for us.

Some investors go for value-add properties—those in poor condition that they aim to renovate and flip like single-family homes. However, these properties are far more complex due to more tenants, large complexes, etc.. You can’t just flip a switch and start seeing profits.

That’s why we focus on properties that have cash flow from day one and are easily managed. We hire top-notch management teams to handle daily operations, allowing us to remain hands-off.

We’ve seen nightmare scenarios where friends took on extreme value-add C-Class or D-Class properties. They discovered issues much deeper than expected. One friend bought a property thinking it had a pitched roof, which is preferred in multifamily apartments for its durability.

Only after putting down a non-refundable earnest deposit in the 6-figure range, did they realize the pitch was a fake—someone had nailed boards to create the appearance of a pitched roof, but it was actually flat and prone to leaks.

This property had so many issues, they lost 65% of their investors’ initial investment. It’s a harsh lesson: tough properties are problems, not profits.

That’s why our investment strategy focuses on acquiring Class A properties or doing ground-up development to avoid such scenarios. We don’t buy problems; we buy profits. If a property has issues, it’s not going to become our problem.

NO. 3 We Buy Performing Properties, Not Potential

Pop quiz: What do Kwame Brown, Anthony Bennett, and Greg Oden have in common?

Besides being exceptional athletes and incredibly tall, they share the unfortunate distinction of being among the biggest busts in NBA draft history. All three were drafted first overall but, due to various circumstances, never realized their potential. NBA teams invested heavily in these players, focusing on their potential rather than current performance, and paid the price for it.

This same principle applies to buying businesses. You must evaluate a business based on its current performance, not just its potential. While potential is important for future profitability, sustainability during operations is crucial.

When we buy multifamily apartments, we conduct in-depth analyses and hire third-party due diligence teams to ensure the property is currently performing well, not just potentially performing well in a few years.

We look for properties that are cash flow positive from day one. If a property isn’t performing well, we don’t assume we have the magical power to turn it around.

For example, another friend bought a property believing that the occupancy was around 70%, but it turns out it was actually lower at 60%, believing they could quickly improve it they went forward with the purchase. 

Fast forward a few months, they needed help with rent collection due to the occupancy rates, and even keeping up with mortgage payments. They fell behind on their debt service because they bought based on potential, not current performance.

Potential is valuable, but unrealized potential can be the downfall of any business.

NO. 4 We Buy Back Time Today, Not Someday

This point might be fourth on our list, but it’s arguably the most crucial. Buying back time is the ultimate skill. At the core of everything we do, we teach our clients and help our passive investors reclaim their time.

Buying back time means having more meaningful connections with family, feeling accomplished and fulfilled, and living a life of purpose defined by your own standards—not someone else’s. 

When evaluating a business to buy, we always consider the five levels of leverage: team, tools, time, taxes, and debt. These levers allow us to maximize output with minimal input. It’s a mistake to think we need to control every aspect of a business ourselves—doing so is arrogant and inefficient.

Many of us have struggled with control issues—we even joked about having CIA – Control Issues Anonymous, thinking we had to handle everything ourselves. But real growth happens when we delegate and let others excel in their roles. When your team takes ownership of their work, your business experiences significant growth.

We prioritize buying businesses that won’t drain our time freedom. No matter how profitable a business might be, it’s not worth it if it consumes our precious time. 

So guys take away this, from the day we’re born, we’re on a ticking clock with an unknown end. Our moments and experiences will be our legacy.

Once you learn how to acquire businesses and use the strategy we teach in this next video, you could potentially be making millions or even billions too. Go check it out!