Engineer Sees the Light
Dale had been working as an engineer for years when he attended a symposium organized by my 5 Day Weekend collaborator Garrett Gunderson, in April of 2005. During the event, Dale’s mindset shifted. He realized he was just working for a paycheck and had no independent cash flow. He was maxing out his 401(k) contributions, but when he did the math and figured out how long it would take him to replace his income with retirement funds, he decided to start investing in real estate.
Not having ever done it, he immersed himself in real estate books and courses. In September of that same year, he purchased his first property, a triplex, for $180,000, which cash flowed about $250 a month. He continued buying multi-unit properties, primarily in his local area. He didn’t do any fix-and-flips, since his goal was to invest for cash flow.
Within 362 days of starting to work on real estate, Dale owned six properties with a total of 14 doors. He was generating enough positive cash flow to cover his expenses and replace his job salary. He then used his real estate to leverage himself into many other ventures. Currently, his income is seven times higher than he was earning as an engineer.
Dabbling Investor Decides to Focus
Pete is an entrepreneur and speaker who has tried a lot of different types of investments. To use his word, he was “tinkering” with the stock market, oil investments, real estate, and a few other investments. Pete wasn’t focusing on any of them. After looking at all his investments and realizing that real estate was giving him the most independent cash flow, he and his wife decided to zero in on that.
They had gotten their start in real estate when they bought a personal residence in Colorado Springs, Colorado. A few years later, they moved out, kept the house, and rented it out. They did the same thing on their next house: lived in it for a few years, then moved out and rented it. On this move, they moved into their dream home.
Over the next few years, they saved money from their business and purchased four more rental properties, giving them a total of six. In 2015, they started considering vacation rentals via websites like Airbnb and VRBO. They started renting out their own home for a week at a time. During the weeks it was rented out, they would travel as a family. They were able to get $6,500 per week from their home as a vacation rental. At that rate, it took only eight weeks out of the year to completely cover their mortgage.
Seeing how successful this was, they purchased another nice home in Colorado Springs, and furnished it as if it were their primary residence. Now, they rent out both of those homes as vacation rentals, and bounce back and forth between them depending on which one is rented out.
With their two vacation rentals and six traditional rentals, they are currently about 70% of the way toward financial independence.
Reluctant Husband Listens to His Wife
Bob grew up being taught the standard advice: get a good job, save money, invest it in the stock market, and eventually you’ll be able to retire. His parents mostly rented and they didn’t invest in real estate, so he had no frame of reference around real estate investing.
He worked for 13 years in the printing industry. On the side, he and his wife, Holly, started building a network marketing business. He quit his job when their business income was triple that of his job income. They were putting all their excess cash into the stock market, just handing it over to their broker without knowing what was happening to it. They weren’t making any money in the market.
Holly had grown up watching her parents invest in real estate with great success. She urged Bob to follow their example. But he was reluctant. So she started doing some research on her own and found a for-sale-by-owner duplex that she wanted to buy. She told Bob, “If you won’t back me and I don’t do this, I’m afraid I’m going to regret it for the rest of my life. And you wouldn’t want that, would you?”
Being the smart guy that he is, Bob agreed. They bought that duplex in 1996. They had a great experience with it, but his real epiphany came one year later when they sat down with their accountant. He said, “Our accountant explained to us the depreciation schedule for the duplex and the tax deductions qualified for. I started doing the math and thought, ‘Holy smokes, this is fantastic!’ Not to mention that our experience dispelled all the myths surrounding being a landlord. We’ve had great tenants, and we hire professionals to manage any problems we’ve had.”
Bob and Holly no longer put money into the stock market. They’ve built dozens of business that have generated hundreds of millions in revenues. But they view real estate as their retirement and security. They now own 11 properties, a combination of single-family homes and duplexes, which are worth a total of $4.783 million and generate $18,500 per month in positive cash flow. Bob doesn’t regret listening to his wife.
In my next post, I’ll offer some advice and insights I learned from over 25 years of investing in real estate.
In the meantime, I’d love to hear your thoughts on these real-life examples of people who put into practice some of the things I write about in 5 Day Weekend, as it applies to real estate investing. Thank you for sharing!
Secure your copy of the “5 Day Weekend” book. 5 Day Weekend: Freedom to Make Your Life and Work Rich with Purpose [Nik Halik & Garrett Gunderson]
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