Real estate can change your life.
I have a friend who works hard. In fact, he grinds for 70 hours per week or so, and has done it for about twenty years. In fact, that’s become his “thing” and he routinely misses out on fun times, friends, relationships, and enjoying the fruits of his labor because he’s overwhelmed with the hustle of trying to make a living – and get ahead.
Over the years, I’ve seen him go through wild highs and lows based on the state of his current entrepreneurial ventures, becoming anxious and depressed, losing hair, losing sleep, and losing that spark in his eye. Sure, he had some moderate successes, and we all still respect him, but his life was out of balance – just to chase a buck.
But something strange happened the other day. He gave me a call and wanted to go get coffee, in the middle of a sunny Wednesday morning. When we met, he was all smiles, taking his time to chat and not worrying about checking his phone or getting back to work.
What brought about this big change, I wondered? Did he hit the lottery? I asked him and was surprised by his answer.
My friend told me that about 12 years ago, he bought a couple of beat-up short sales, fixed them a little, and rented them out. It was a toil to deal with repairs, tenants, and paying the mortgage for those 12 years, but he finally sold them – at a huge profit.
He now had a windfall of about half a million dollars in cash, which he invested wisely. He still worked, but he did so because he wanted to now, with balance in his life, as just the dividends from his investments paid for his basic living expenses.
He was happy, relieved, focused, and in the moment. He talked about a couple of future trips he had coming up, giving back to the community more by mentoring disadvantaged teens in business, and had picked up cycling. He even had a social life again.
It was truly an incredible transformation. He was no longer chasing life at a panicked pace; he’d finally caught it. He’d won.
Why do I tell you this?
Most of us will never get rich from our day jobs. We can toil and stress and put in countless hours, but we’ll barely keep our heads above water.
Sure, our bank accounts may go up a little. We may “succeed” just enough to acquire tokens of materialism, like a bigger house, a nice car, and some bling. But with nice things come loans and insurance and more time we have to invest into maintaining and preserving them. And then, we’re deathly afraid of losing them, or slipping backwards at all.
So, we hustle even harder, putting in even more hours and accelerating our internal panic meter even more, telling ourselves that we’ll be happy once we make a certain amount of money or
But is that really what we want? Aren’t those things just more chains and anchors that actually prevent us from being truly free?
But my friend had found the magic formula that allowed him to “win” life, whatever that looked like for him or looks like for you.
The formula was this:
His daily job kept him afloat. It was necessary and took up the majority of his waking hours here on earth, but it would never make him wealthy or allow him financial freedom.
So, he needed an investment that, once acquired, would work and grow and earn money on a parallel track, regardless of his effort and activity. He needed something that, eventually, once those seeds were planted, watered and allowed to grow, made money even while he slept.
Of course, for my friend, that meant buying real estate and rental properties.
And for many of us, for the common person, that’s the single best way to get ahead financially in life.
I don’t mean just keep up enough to acquire a bunch of stuff to make us feel better (along with more debt), but actually get ahead.
In fact, he bought two properties about twelve years ago, in the midst of the Great Recession and housing market crash.
He purchased short sales, which took him a lot of effort, frustration, and patience. They were not on the “right side of town,” and needed some repairs. The loans were difficult to get at the time.
Once he acquired the properties, it wasn’t even glamorous, as the rent just covered the mortgage, insurance, HOA, and maintenance every month. (It’s hard to buy a property that cash flows from the get-go in California, unless you put a huge chunk of change down!)
The twelve years was also a struggle. Sometimes, things would go well, and the rent checks would roll in month after month without a peep from his tenants. Other times, there were busted water heaters (expensive), a storm-damaged roof (expensive), HVAC problems (expensive) and a tenant that had to be evicted (really expensive).
Through it all, these two properties felt more like burdens than assets, another list of things he had to handle added to his already too-long To Do list.
But, as my friend professed sitting there as we had coffee on this sunny morning, “The twelve years would go by whether or not I had rental properties.”
And then one day (or over a couple of years to be accurate), he looked up and his properties had appreciated wildly; so much so that they were worth double and nearly triple what he paid for them!
The rents had also gone up incrementally over that decade-plus, and he was now easily covering his mortgage and expenses, with the promise of paying one of them off completely in another eight years or so.
In the end, after consulting with me, he decided to sell one property and keep the other. We got him top dollar by listing it in the right market and after a few easy fixes. The other unit, he’ll hang onto for a couple more years and sell then when the tax situation is more favorable, or maybe do a 1031 exchange at that point.
But, either way, he’s flush with cash, still has an asset with hundreds of thousands in equity, and he’s cash flowing with passive income every month.
All of the soul-crushing hustle and hard work week in and week out, and it’s these two “buy it and forget it” properties that ended up being his windfall, and that will propel him to millionaire status if they haven’t already.
And while that was in California, my friend is now extremely interested in buying a few rental properties in the Las Vegas, Nevada market, leveraging low prices and a hot rental market into repeating the same formula, but this time on a larger scale and a lot of experience.
In the end, he’ll be rich and comfortable in retirement not because of his J-O-B, but because of the opportunities real estate afforded him.
I’m just pleased I could help him – and ecstatic that I have my old friend back, happy, healthy, and enjoying life once again.