Real estate investor and YouTube star Graham Stephan has made a series of smart money moves throughout his career. As a result, his net worth crossed $1 million when he was 26, and today, the 29-year-old earns up to $220,000 a month from his various revenue streams.
Even the millionaire isn’t immune to money mistakes, though: “If I could go back and do anything over again, I would get a credit card the day I turned 18,” Stephan tells CNBC Make It, because it would have allowed him to start building credit sooner.
When he wanted to buy his first property in his early 20s, “even though I had the savings and I had the income, no bank wanted to give me a loan because I had zero credit history.” The first thing most mortgage lenders look at is your credit score, since it’s a good indicator of your ability to pay off debt. It’s not impossible to get a mortgage without a score, but it’s more difficult. Additionally, borrowers with good credit tend to get the best interest rates.
Stephan’s lack of credit didn’t prevent him from purchasing real estate — he had enough in savings to buy his first three properties in cash and avoid borrowing any money — but it held him back from investing in multiple properties.
“I bought what I could outright,” he says, including his first property, which cost $59,500. But, ideally, “I would have put 35-50% down per home and bought two to three times the real estate.” If he’d been able to finance six homes, for example, instead of buying three outright, “I would definitely be way further ahead,” he says.
Stephan got his first credit card, a $300 secured card from a local credit union, when he was 21.
Today, he has 12 credit cards and owns six properties, which bring in $15,105 a month in rental income. After factoring in expenses, which include three mortgages, property taxes and insurance, he earns about $5,000 a month in profit.[ Graham Stephan Youtube Channel ]
He’s not the only self-made millionaire encouraging young people to open credit cards as a means of establishing credit. Bestselling author of “The Automatic Millionaire” David Bach recommends opening one in college. But use it responsibly, he emphasizes: “You don’t have to use a credit card a lot to build your credit score — you just have to pay your credit card bills on time and pay those cards off in full every month.”
As Bach notes, if you stick to a few basic guidelines, you can use a credit card without going into debt.