About three years ago, I sat down and wrote my vision of where I wanted my life and companies to be at 40 years old. Every night before I’d go to sleep, I’d picture myself retired from corporate America with 50 rental units and $1M in equity in real estate. Two years after I started, I had just that.
But I didn’t stop there. I constantly focused on my future self to subconsciously guide my behavior. This is my current portfolio:
- $4M+ in RE assets
- 56 rental units and counting
- 15-20k in gross rents per month
- 6 figure net marketing/wholesaling company
All while having the time and financial freedom to travel the world, skydive, snowboard, and go on adventures with my friends. So how did I do it? How did real estate allow me to retire from the corporate grind and live freely at 40 years old? Let’s jump right in.
My Story
I worked as a software engineer for 20+ years before working solely on my own business ventures. I always loved being in tech but knew I didn’t want to do it forever. Now, don’t get me wrong; it was a great career path for me. But at the end of the day, I was simply trading time for money, which wasn’t scalable and wouldn’t create the freedom I desired. I wanted to be in control of my income; not dependent on the viability of someone else’s business.
I also knew I wanted perpetual income that would allow me to explore the world, enjoy the people in my life, and pursue my passions. Plus, I needed something that was easy to outsource so I wouldn’t be tied to one geographic region.
So, I simply focused on the type of lifestyle I wanted and worked backward. I started grinding on side hustles and new businesses, enduring a couple of failures here and there. I don’t call them failures though; rather, I simply found something that didn’t work and kept moving forward.
Trial and error opened my eyes to the art and science of passive investing. Slowly but surely I learned how to identify opportunities to grow passive income and my overall net worth. It wasn’t long until I realized REAL ESTATE was my golden ticket to REAL WEALTH.
I began learning as much as I could about real estate, consuming 40-50 books and hours of YouTube videos, podcasts, and blogs before underwriting my first deal. During this time more than ever, I lived by one of my favorite quotes by businessman and author Robert Kiyosaki: “work to learn and you’ll always earn.” And that’s exactly what I did.
I networked with people who were where I wanted to be and had a great deal of experience. To be respectful of their time, I’d learn as much as possible on my own so I could ask the right questions. My goal was to provide value, in some form or another, to those who gave their time to help me. Whether it was through referral fees, finding deals, or offloading tasks for them, I always found a way to demonstrate my gratitude and provide real value.
During this time, I continued studying mindset and the power of visualization and positive thinking. One of the books that really spoke to me on this was “Think and Grow Rich” by Napolean Hill. If you’ve known me long enough, I’ve probably gifted you this book.
Why I Chose Real Estate
Rental Real Estate can be highly passive and tax advantageous. Plus, it pays you in 4 different ways:
- Cash flow: rental income above debt and expenditures per month.
- Depreciation: rental properties can be depreciated over 27.5 years, which can be a direct reduction in your taxable income.
- Appreciation: property values, mostly, go up over time.
- Debt payoff: while holding an appreciating asset, other people pay down your debt.
Real estate is also a highly leverageable asset class. In fact, it’s one of the most stable asset classes in the world, making it very easy to acquire debt. Debt, in turn, allows you to scale.
My Strategy
I knew from the beginning I wanted to build a large portfolio to replace my W2 income. Real estate is without a doubt expensive, so I knew that I couldn’t leave capital tied up in any one property if I wanted to scale.
To accomplish this, I realized I needed to acquire properties that had a value-add opportunity. Essentially, I focused on finding properties that needed a lot of love. I went to local Real Estate Investor Associations (REIA) meetings and networked online with as many wholesalers in my area as possible.
Wholesalers find off-market properties that are, usually, distressed in some form. You can get a traditional loan for 75-80% loan-to-value (LTV). I targeted properties that needed work and once rehabbed, would have 25% of equity built-in. This allowed me to buy the property in cash, refinance it, and get all of my money back out.
That was the goal, while underwriting each deal, anyway.
Example
Purchase Price: $50k
Rehab: $25k
ARV (after repair value): $100k
Equity: $25k
Loan amount (75%LTV): $75k
This strategy allowed me to get all capital invested out of the deal after refinancing, a house that cash-flowed, a few hundred dollars a month in passive income, and $25k added to my net worth. So that became my process and I’d get a free house out of each deal. Read more about How to Get All of Your Money Back Out of Each Deal.
Wash, rinse, repeat!
I used this strategy to buy single-family rentals. After I refinanced the first house I bought, every penny I invested was returned and I had a cash flowing asset. I was hooked! As I got more comfortable evaluating and doing deals, I moved on to larger multi-unit deals and multi-family apartment complexes. Plus, the knowledge I gained in real estate allowed me to start ancillary businesses such as:
- flipping houses for profit.
- lending to other investors at a desirable interest rate.
- direct marketing to homeowners to control the supply chain, build my rental portfolio, and/or sell to other investors.
- new construction
Here’s an example of how I directly market to homeowners: https://jwsacquisitions.com/
Eventually people began taking notice and started asking me to invest their money for them, allowing me to do even more deals.
The passive income and knowledge I gained from my real estate businesses allowed me to retire at 40 years old and focus on what truly matters most to me. I’ve even begun expanding my investing to other areas, as well. For example, I’m currently focusing on acquiring a number of income-generating web-based and eCommerce businesses.
Ready to Level Up Your Portfolio?
Get a jump start on generating your own passive income. Partner with me today to learn the ins and outs of my passive investing strategy and to discuss how I can help you increase your income and net worth.
