What if I told you that your income is the reason you aren’t wealthy and probably never will be? Whether you're a high-income earner or low-income, one of the worst things you can be in the United States while actively trying to build wealth is a W-2 employee. The concept of the 9-to-5 was never designed for growth outside of the system it was built around; it was made for compliance, control, and for employers to live the life you only dream of. The American Dream isn’t something you have to be asleep to achieve, all you need is a 1099.
Most high-net-worth individuals don’t have income; they have assets, trusts, and use what are known as owner’s draws through their LLCs. Oh, and let’s not forget those non-profits that almost every celebrity seems to have. As far as assets are concerned, let’s take a look at real estate. Many people say the Kardashians are not talented, but those people lack the business acumen needed to build a billion-dollar empire off beauty standards and a California drawl. But make no mistake, families like the Kardashians aren’t just bleeding money into mansions the way it might look from the outside. What many wealthy people do is treat real estate less like “homes” and more like a mix of assets, branding tools, and financial instruments. The money is made in ways that aren’t always visible to the public.
Related articles: How High-Income Earners Restructure Their Finances After a Major Life Change
Luxury real estate in places like Los Angeles and Calabasas tends to rise in value over time. Let’s say they land a brand deal worth $5 million. That money can be used as leverage to secure a bank loan of around $2 million. With that loan, they can purchase a home for $10 million and sell it years later for $18 million or even $25 million. That gain is often taxed more favorably than income. There’s a strategy called buying and flipping, but for the wealthy, this isn’t HGTV. It’s the act of finding and buying undervalued or off-market properties, renovating them with high-end designers, and then selling them at a premium.
This creates a perceived value boost, also known as luxury repositioning. Additionally, celebrities will live in these homes for some time, which can further increase their value. During this period, they can enjoy mortgage interest deductions, property tax deductions, depreciation, and 1031 exchanges. A 1031 exchange is when a celebrity sells one property and rolls the profits into another, deferring taxes in the process. They can repeat this strategy until they eventually buy or build their dream home. Kylie Jenner is a great example of this.
So sometimes, all it takes is one large check to create a domino effect for building wealth, but only if you’re privy to this information beforehand. A celebrity starter home is not just that; it’s a money machine through content creation, brand affiliation, and, as mentioned previously, renovations. Shows like Keeping Up With the Kardashians, as they progressed, stopped going out to restaurants to shoot content and instead stayed home.
The personal trainers came to their homes. The photographers came to their homes. The chefs came to their homes. Their employees for their brands came to their homes. It was no longer just a house to live in, but an office—a workspace that generates income indirectly while still being a comfortable place to rest at night. All of that income from businesses, brands, and their reality show is meticulously funneled through a well-organized system that will most likely never fail, as long as tax laws remain in their favor.
Related articles: Is Beyoncé a Billionaire: How to Make Money Without an IPO
Here’s the difference: the middle class buys comfort first, while the wealthy buy assets first and comfort later.
Will Smith was also known for famously doing this, renting homes while working on various film projects. These were homes where he would eventually deduct the payments through his production company, which is where his checks were mailed. Celebrities having their own production companies, but never producing any actual films, is a clear sign of tax structuring among the wealthy. Contractor pay goes to his company, his company pays the rent, and this now lowers his profits, thereby reducing his tax liability and, in some cases, resulting in a tax refund.
The truth is, trickle-down economics was never going to work, not with the way the tax codes are currently set up for the wealthy. Real estate is one of the easiest ways to transfer wealth from one generation to the next. This can be done through LLCs, trusts, and even “rights of survivorship” deeds. Placing a home in a trust protects a celebrity’s privacy by keeping ownership details less public, and when it’s passed down, the children never have to sell it and subject themselves to taxes. They can either continue to live there or rent it out, which becomes another vehicle for revenue.
But make no mistake, the way wealthy people use real estate to build their brand and net worth can be scaled down. Most people are not aware of this, but instead of buying a purely expense-driven home, like a single-family home, start with something that can pay you back immediately. A duplex, small multi-unit, or three-family home where you live in one unit and rent out the others. The rent then covers your mortgage and reduces your living expenses to near zero.
Related articles: What Is an Original Book Score? Inside 'The Naida Saga' and the Music Behind It
Next, you want to do some light renovations. You don’t need to fly in a private interior decorator from France to remodel your home. What you need are small improvements that help increase the value of the property, which will slowly increase your monthly income. Then, turn your real estate into a business asset. Make it a space where you create content once a month and post about it, or do something similar to Candace Owens, who appears to have a studio in her home where she shoots her YouTube content. If she’s financially literate—and there’s a good chance she is—that likely means she’s deducting a portion of her home expenses as business use while still working from home and taking back control of her time.
Expenses can be written off: mortgage interest, depreciation, and more. During this time, you want to begin building toward your next property. Refinance or save, buy another, then repeat the process. This is how portfolios are built. The American Dream is not achieved through a dream home and income. It’s achieved by buying a starter home first and leveraging it until your dream home becomes one that is essentially paying for itself or has already paid for itself. Here’s the difference: the middle class buys comfort first, while the wealthy buy assets first and comfort later.
Image Credit: Phillip Faraone
Image Credit: Kim Kardashian for MasterClass
Ashley Morton writes on real estate, focusing on high-value markets, investment strategy, and the evolving definition of luxury living. Her work examines how property, design, and location intersect to shape both personal lifestyle and long-term asset growth.
