I want to share my story because if I don’t why else would you continue reading anything? I want to share with the world my experience, struggles, triumphs and everything I have learned so that it may be of benefit to someone else who is struggling with debt and feels there is no way out. Trust me, you can do it and it may not be as hard as you may think. And you may discover some additional sources of income to help you do it. Sorry this post is really long, but full of good info that will hopefully help you relate.

A little about my background

I am in my early 40’s at the time of this posting. My parents were always lower middle-class earners. My Father passed away 16 years ago when he was 55 years old and didn’t leave a large insurance policy. My Mother is still living but has Multiple Sclerosis (MS) and other health issues. She has not been able to work since the late 1990’s. I served a two-year mission for my Church in Argentina where I learned Spanish fluently. I thought this would benefit my job options in the future but never really did. Other than a brief experience running a translation service where I made a little money on the side. When I came back I went back to school studying business management and working a full-time job. I got married and because of a promotion I thought I needed to support my new wife and myself, I no longer had time to finish school. After a few years I lost that job and got hired at a start-up company that offered to pay my tuition and books so I went back to school with a focus on Finance since it was a finance job it made sense. Right at that same time we had our second child. A couple years later another child. I was still taking classes part-time at night. During all this time my wife did not work outside the home, she was busy taking care of our children, a decision we both made because that is what we wanted for our family. This whole time I was earning between $30-40k/year. Other people I talked with didn’t understand how we could support our family on just one low income. We of course tried to live as frugally as possible.

As time went on I finished school with a degree in Finance, Banking, and Investment Science & Portfolio Management. Things were looking up, my employer was going to create a new hybrid position for me to get started with the portfolio management aspect of my education. At the time I had been making about $40k/yr. Well guess what happened? The market collapse and recession of 2008 came about. People were getting laid off and my employer no longer saw the possibility to create a job they didn’t need while others are being laid off. I was disappointed. So I stayed with the job I had because at least I had a job. I didn’t want to risk going to a new job someplace and be the new person who gets laid off first. As I searched the job markets there was nothing to be found with my new Finance/Investing education. Places like Lehman Brothers and many investment banks were closing down. What I did find were lots of accounting jobs. So I made the wise decision to go back to school again to get an Accounting degree so I could then plan to earn the CPA designation. I had previously planned to get a Masters in Finance and get the CFA designation. But I no longer saw the point of getting a Masters in Finance if there are no Finance jobs. Part of my plan was to also have one of those titles to be able to get a higher paying job in any market. We wanted to move our family closer to my Mother to help care for her as her MS progressed. I finished the Accounting degree but could never get time to study for the CPA exams. I really didn’t like accounting but did what I needed to do.

Time went on and since our kids were growing and starting school my wife wanted to do something to keep busy but be flexible to be available if the kids were sick. We were doing fairly well considering. We had purchased a modest home in 2003 when banks were handing out jumbo loans to people with no income, but we were wise and didn’t take a loan larger than we could easily afford. We had managed to stay out of debt and had even saved up about $10,000. However, we hit a major snag. My wife had tried to start a company of her own and had purchased a lot of supplies. At this time we also took our family to South America to visit my wife’s family, not a cheap trip to make. When we came back I discovered that the business expenses had ballooned and had incurred late fees and other high interest charges from the credit cards she had used. To try to get us back on track we depleted our savings to pay back as much as we could and then took on new debt for the difference. She had about $18k to pay back, plus the $5k or so we spent to go to South America. So we went from a positive savings of $10k to basically the exact opposite of that on the negative almost overnight. This was the starting point of our downfall.

After some time my wife decided to go into Real Estate. Around the same time we had our fourth child. And since we now had a large amount of debt we were struggling some. There were months when money in the bank was short so we had to use credit cards to buy groceries. We sold off everything we didn’t need, cut cable and other expenses to reduce our costs to focus on paying the debts. But it was hard and we never really got out.

The Turning Point

My wife started representing a client that was buying houses to use as rental property while the markets were still low in 2013-2014. Her broker told her to read The Millionaire Real Estate Agent to help her become a better agent. While I was searching to buy that book I discovered The Millionaire Real Estate Investor. It sounded interesting to me so I bought that one for me and the other for her. As I would go with her to show houses I would wait in the car and read that book. I was fascinated at how easy it sounded, but also not easy. Every example said you had to put at least 20% down. I knew I didn’t have money for that. But it got the gears moving considering real estate investing. About this same time we also made the decision to move across the country to be closer to my Mother to help care for her as her MS was progressing and she was going to need more help.

About a year after we moved I saw a commercial for a “guru” type real estate investing seminar. You know, one of those come for free for info, but then they upsell you to another one, and at that one they upsell you to their super-expensive training. I liked what I heard at the free one so I paid to go to the next two-day seminar. There they then tried to get me to buy their $50k training. I wasn’t going to do that, I didn’t have the money for it and I wasn’t dumb enough to put it all on a credit card. In fact, our total debts (not including mortgage) was about $40k. So I wasn’t about to double that amount. But at that seminar I met a guy to introduced me to another Real Estate investor website. It wasn’t at all what I first thought it was based on what he told me and the name of the website.

After going home I visited the site and signed up for a free account. Then watched a couple webinars and podcasts and then tested out their calculators. I loved it so much that I signed up for a Pro membership right away. This site has seen substantial growth since then. If you are at all interested in Real Estate investing, I implore you to check out BiggerPockets.com. I was learning a ton of information and it was all free, well, basically minus the membership cost. But comparing a few hundred dollars to $20-50k for the same information, or probably better information than the guru, I thought it was a great deal.

At this time I was working from home for that same finance company I was with. So while I worked during the day I started listening to all the podcasts. Went back to #1 and got through all of them within a couple months. At the end of all of the podcasts they always ask their guests to share their favorite books. I began to write them down and began reading the ones that were most often suggested. I’ve never really been a reader, not my idea of fun, but I began to devour these books. I couldn’t get enough. I wanted to know everything. I participated in the forums, asking questions, even answering questions. Making connections with people and before long I was the “expert” people would come to for advice. People in my area sought me out to meet up. It was great. Also in those early months I participated in a 90 day challenge to buy my first rental property. I think that was in Jan 2017. By March 2017 I had one under contract.

The Start of Something Great

With everything I learned about how to properly analyze a rental property for cash flow I was searching for properties and running the numbers on them every day. I probably had analyzed over 100 properties before I got my first one. I did place offers on a few others but they did not get accepted. In my learning process I discovered that multi-family (more than one unit or house) would probably provide higher returns and possibly less risk. I’ll get into why that is in a later post as well. I had found a four-plex (4 apartment building) that was fairly new and well maintained. I found it on Craigslist listed by the seller. It was not listed with an agent which helped keep the price low and less buyers looking at it. I ran my analysis and the numbers looked pretty good. I knew that I could probably raise the rents and I could manage it myself to save on property management fees. Once I got the rents raised the numbers looked even better. The bigger question was how could I come up with the down payment? I still had virtually no savings. I had learned about something called “creative financing”. I also discovered an amazing local lender that would let me use a 10% down payment rather than 25% like others would require and no PMI charges either and fairly low interest. What I was able to do was borrow from my 401k.

Yes, that’s right! I did not withdraw funds, I borrowed from myself with a payback term of 5 years at a 4.5% interest which gets paid back to myself as well. I borrowed $20k. Borrowing is not the same as withdrawing, so there are no penalties or fees. It was the best decision I ever made. Yes, I was forgoing the earnings I would have received from the market gains in that time. However, that same $20k will have earned me back FAR more than it would have in my 401k account. This is due to the many ways rental property pays you. Cash Flow, appreciation, depreciation, mortgage paydown, and some other tax benefits. But more importantly, I now had a cash flowing rental property. I was now an official real estate investor. This meant a lot believe it or not. Many private lenders and even normal bank lenders won’t even give you the time of day without the “experience” of being an investor. This one property opened many other doors for me. But it also did cash flow great. I raised rents as planned and have been able to manage it with little headaches.

I decided to let the cash flows accumulate. I did not want to use any of it for myself yet. Once I got everything stabilized and rents raised, it was cash flowing about $1k/mo. Or about $250 per door. That is really good since most people consider $100/door the minimum. As it was growing I began looking for more properties. I had a few offers on others but I either backed out because it just didn’t feel right or there was some other major problem with the property. After about a year and a half I came across a larger apartment complex. I say “came across” but it was actually sent to me. Like I said, I made a lot of connections and I now had people sending me properties. Long story short, I didn’t get it, but through that got in contact with an agent in that area who had a pocket listing for 2 four-plexes. They looked really nice and the numbers worked as-is and again I knew rents could be raised and I could even do some updates to make it worth more. And the price of both of them together wasn’t much more than I paid for the one I had. This by the way was in another state. I never visited the property, I just relied on a great agent. And again I was able to find another lender in that area who would let me do a lower down payment. And since these were not listed for sale, I got them at a lower price. They appraised for $10k more than I paid. I was able to recycle the cash flows I had kept from that first property and use them toward this one along with a little more cash that we accumulated. And I was able to find a bank to give me a home equity line of credit on that first four-plex.

Now I had three cash flowing properties in two different states. Now people would take me even more seriously. There was a lot more that went on during that year and a half but I don’t want to bore you with my life story. However, during this time since I now had the property management process down pretty well with much of it automated, I started managing properties for other people. I would only accept them if they are nice properties in good areas. I didn’t want to deal with potentially bad tenants or too many maintenance issues. So I now had great cash flows, a nice side-hustle business, and a more professional investor profile.

Future Plans

Now that I have some good extra cash flows coming in consistently each month, the plan is to now focus more on paying down debts. Our debts had grown to around $50k, including 3 kids with braces. I knew my situation when I started was that I needed more income. We could not cut anything else from our expenses so the only solution was to increase our income. I was helping my wife get more business as well. As I was now an active real estate investor, I would talk with other investors and if they wanted to look at properties in our area I would refer them to my wife. That way they get the extra benefit of me as well to provide my insight on certain aspects. Then when they do buy something, they will often ask me to manage it for them as well. So when I started this journey, it just clicked with me. Real Estate investing was our solution. The great passive cash flows and property management fees from just those few properties would just about cover my actual take-home pay. So I would now use at least half of the cash flows from our rentals and all of the property management fees to put toward paying down our debts much faster. I still want to accumulate some of the cash flows just in case another great opportunity emerges or in case we have some emergency. But I want to put a good part of it toward paying down debts. My plan is to be able to pay it all in about a year or less using the snowball method. This is where you pay off a smaller debt and use the amount you were paying on that one to add to the next one until it is paid down and then taking the sum of those two payments and adding them to the next and continue in this manner until they are all paid off. So using my new monthly cash increase and the expected commissions my wife will receive, I think it can happen. Even if I come short but we crop it down by a large amount I still consider that a win.

The long-term plan is to continue investing in real estate. I plan to purchase larger complexes and possibly even partner with other investors in some very large deals or new construction opportunities. I’ve also started looking into assisted living facilities as a new possibility, especially since this is something my Mother will probably need one day. I need to at minimum double my current monthly work take-home pay so that I can “retire” to enjoy life with my family and focus more on my new real estate business to continue to grow it. The great thing about investing is that with each successive purchase you are giving yourself a lifetime raise and purchasing the “money making machine” with less money out of pocket than those who get there with the stock market. Once I get to a level that is comfortable and sustainable to maintain our family needs, I plan to start donating a large part of the extra income. I have already always been donating over 10% of my income. But if I were to get to the point where I am making $10k/month, I don’t see any reason why I couldn’t give away half of that each month. And just keep going up from there.

What you can expect

As part of the purpose of this blog I will be maintaining a record of my total debts, and other incomes to help track where I began and where I end up so show other people that it is possible. And can be done with not much money and your life can change forever. The biggest factor holding most of us back is FEAR. If you can get over the fear you can move forward.

I welcome your comments and questions. I didn’t plan on writing this much when I began but it all needed to come out so you know who I am and why you should read what I write. I hope it resonated with you and maybe gives you some hope. Feel free to ask me anything and if you are someone looking to partner on a real estate deal, let me know how I can help.

In future posts on this blog I will discuss all aspects of real estate investing, index fund investing, other investing methods as well as how to travel potentially for free or at least at a greatly reduced cost using travel rewards. Plus just other great life hacks you can take advantage of to save you money and increase your income.