Sacrifice: A Real Estate Investor’s Magic Bullet

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A few weeks ago, THIS article made its way across my desk via facebook.  For those of you who haven’t had a chance to read the article, the long story short is that an investor by the name of Bill McMachen purchased 627 foreclosed homes at the Macomb’s county tax sale.

The headline is what immediately caught my attention.  After all, 627 units is a lot of property, especially for ONE transaction! I found myself a little envious of McMachen.  To snatch up hundreds of properties for roughly $7,500 a piece is an amazing deal.

However, I’m not writing this post merely to toot Bill McMachen’s business sense.  I’m writing because I wanted to shed light on the most interesting aspect of the article – the comments.  You don’t have to look too far down the comment portion of the page before you read things like:

“…The only way I can condone this is if this man uses this large housing stock to return the houses to those who need them – not to benefit him, but to benefit them.”

“I was hoping the article would read that he bought these homes to help the poor, instead of helping himself to their misery.  I am also disappointed, to say the least.”

“… it is disgusting that you people out there who try to take advantage of people who did not initially have things handed to them!!…”

“Just another case of GREED.  He already has big bucks but wants more and more.”

“So the vultures who were planning to buy the homes of down-and-out folks, were beaten to the punch by an even bigger vulture?  Hope they all go to Satan’s fiery pit on an express train.”

“Why aren’t both of these men in jail?”

What frustrated me about these various commentators is that they don’t consider the other unspoken sacrifices that may have been made to acquire the $4.72 million to purchase these properties.  The article states that Mr. McMachen was a business owner of a yacht dealership and while I don’t know his story personally, I do know that many entrepreneurs endure years of long work days, personal checks written to pay staff and high periods of prolonged stress.  Unfortunately, none of these commentators took these into account.

As I look at my time working in the rental business, I realized that I’ve also had naysayers and “haters” come across my path.  The tricky thing is that these folks don’t typically make statements as blunt as the commentators did in the above mentioned article.

For example, I remember a recent interaction in which a relative was discussing their struggles with paying their monthly bills.  I harmlessly asked if they had considered creating a budget.  The response to my question was, “We’re not like you; we don’t have money just lying around.”

I think the perception is that people who are successful in real estate are plain “lucky.”   While that may be true for a few, my experience has been that investors who have any type of successful track record in this business has been by design, not chance.

In a given week, I typical received 5-10 emails from new investors looking for advice or mentorship.  Of these various individuals, there is always a portion of these folks who seem to be looking for a “magic bullet” or a “secret recipe” for success.  The cold truth I share with them is that this business requires effort, determination and most importantly sacrifice.

Three years ago when my wife and I decided to dive into the rental property business, we agreed to do whatever necessary (within reason) in order to become financially free.  To realize this goal, we sold our primary house, used the equity to purchase several lower-priced rentals, downsized into a small apartment, and cut our living expenses in order to save 50% of our income which would then be used to acquire more rentals.

An investor at my local REIA moves every two years to acquire owner-occupant financing and keep the previous home as a rental.  In order to do this, he and his wife had to move to a part of town that was sixty minutes away from family and friends in an undesirable neighborhood.

Another investor in my market rents out two of the bedrooms in his and his wife’s home so they can expedite their monthly savings and roll the saved money into a down payment for a rental.  I could continue with these examples, but the point in sharing this is to highlight the fact that the road to success is paved with sacrifice.

Recently, I heard an advertisement on the radio for a free investing seminar.  According to the ad, the conference was going to discuss how to make “quick cash in real estate, using little to no money, in your spare time.”  While this statement may be plausible, it’s also misleading.  Most of the investors I know who generate “quick cash” or use “little to none of their money” have an extensive track record and have already paid their dues in this business.

Unfortunately, the idea of sacrificing for a larger aspiration isn’t a message that typically fills seats in a conference center or sells books – but it is what most successful real estate investors have done to secure their final freedom.

In today’s post, I shared a few of the sacrifices my wife and I are making to become financial free.  Readers, what are a few of the sacrifices you’ve made/are making to realize your goal?


About Author

Arthur Garcia (Google+) Arthur is a buy and hold investor in Southern California who is buying up dozens of homes while working a full time job. Arthur acquires properties using a combination of hard money, HELOCs, partnerships and private investors.


  1. Good points Arthur. I was equally distressed when I read the comments connected to that article. It seems many no longer, or never did, understand free enterprise and capitalism. Those who say “it” can’t be done anymore do not understand the work ethic and sacrifice required.

    • Steve,

      It is a sad thing, but I see the work ethic in this country deteriorating. It seems everyone wants to make 100K a year, but no one wants to work or deal with the stress associated with those businesses/jobs. I wish this wasn’t the case, but I feel like our country is migrating to more of an entitlement mindset. I doubt the WWII generation would have a lot in common with the current generation.

      Anyway, thanks for sharing your thoughts!


  2. Hedonic Adaptation folks. Be happy with less. I had this thought while commuting in to work on my bike the other day. I was passing by the gym I used to belong to and I couldn’t help but notice people circling the parking lot in their SUV’s waiting looking for a spot close to the entrance. Think about how much this says about us. We drive somewhere to exercise and then sit in a vehicle, burning gas, waiting for a parking spot 10 feet closer to the door, so what, we don’t have to walk? Quit the gym, fire the landscaper, ride a bike, get a room mate (ours cash flows better than any of our rentals and he is a fun guy to hang with) cancel cable and satellite radio, net flix, etc. Basically we are focusing on not only increasing our income but reducing our expenses. Been reading a lot of the Mr Money Mustache blog and it has really opened my eyes to the other side of the financial independence coin.

  3. Brandon Turner

    Agreed, I got irritated reading those comments as well. I too find in my life people who make those little “we don’t have money just lying around like you” comments, followed by a discussion of their new 60″ TV that they’ll spend four hours per night watching. I just want to shake them! Our time is -by far- our most valuable resource and we all have the same 24 hours a day. Talk about sacrifice!

    Ok, I could rant for the next three hours but I’ll stop here. Thanks for the good post Arthur!

    • Brandon,

      Comments like the ones I posted make my blood boil!! I get too worked up. I have a hard time listening to talk radio for the same reason. The reality is, if someone can’t manage their personal balance sheet – they won’t see much success in this business. Between mortgage payments, property management, house repairs, taxes and everything in between, things will fall apart on them.

      I think you should “rant”. I love reading things I agree with lol!



  4. Jason Grote

    Arthur, spoken like someone who has paid the price! Thank you for dispelling the get rich quick schemes that bombard the new & experienced investor alike with just one word – SACRIFICE!

    Most do not want to sacrifice. Just want to receive something without giving…. sounds like welfare!

    • Jason,

      Thanks for the note.

      The whole “guru” seminar stuff really ticks me off. I even have friends and family members who go to these things and act like they know what it takes to make money in this business. I highlighted this in my article, but the investors who don’t use their own money typically have been investing for years, they have developed a reputation and made some very powerful relationships. I don’t care what anyone says, no one is going to give you money just because you took a course.

      Track record is even more important if one doesn’t have money or credit to make a deal work. What is even more crazy is that almost every REIA club I go to has about 10-15 people who’ve paid 10-15K for coaching, seminars, etc. I’m not saying these are bad programs, but the irony is that many of these “investors” never end up doing a deal.

      I think you and I are in the wrong business – lol!!



  5. My wife and I purchased 6 homes in 2011 and one in 2012. Are actively looking for 4 more. Our sacrifice has been for 32 years, the same amount of time we have been married. We have saved our entire married lives, no fancy clothes, no nice new cars, no vacations (including cheap ones). We have saved, saved, and saved!! Now, we are financially able to many homes. Had our money invested in the stock market. Once we recovered our money, after the crash, we sold out and invested it into real estate. We have a monthly gross income of 7k and a net income of $3,500.00. With our huge down payments, rents are more than double the mortgages and one home we paid cash. Once we have our ten homes, we are going to rest for a long time, and take in a couple of reasonable vacations yearly. After 32 years of having nothing, we have earned the right to enjoy what we have now. Nothing is for free, and if you work for it, you have an appreciation of it, like no one else.

    • Randy,

      It sounds like you and I were cut from the same cloth! My wife and I downsized from a HUGE 3/3 house to a small little shoe box of an apartment, just to build our rental business. Everyone thinks we are crazy, but in a few years they will be asking me what the “secret” to my success was – lol!!

      Congrats on the acquisitions, it sounds like you and your wife have been busy. My wife and I have a similar goal, except instead of taking a long rest, we are going to start a family once we hit our target cash flow goal.

      My wife and I also love to travel, we’ve found that places in Latin America have the biggest bang for your buck. We just came back from Cancun and before that we spend some time in Costa Rica. The great thing is that the dollar than here in the states and the beaches are just a nice.

      Anyway, congrats on your success. I wish the media outlets highlighted more stories like yours. I think people would have a better appreciate of what you have done to earn your financial freedom.

      Take care and thanks for taking the time to comment!


      • Hello Arthur,

        Sorry for the delay in responding to your reply. But, I wanted to choose my words wisely 🙂 First, I really admire your family’s ability to downsize, just to start the rebuilding process. Because we were so poor growing up, neither of our families gave us any money to help buy or rent, our first home. So, we were as poor as. . . well really poor. So, we moved up, only because of profiting from the past sale, and savings for a long time. We are by no one’s definition wealthy today. We own just over a million dollars in property, with about $750k in mortgages. And, as previously mentioned we have about $3500.00 “NET” monthly cash flow from 6 properties. Hopefully, by the end of this year, we will have 10 properties and our NET monthly cash flow will grow to $5,500.00 thru $7,000.00. We plan to keep these properties as very long term investments to enjoy their cash flow, which will only increase through rent appreciation and paying the properties off. My wife and I can say to you now, it is and was, worth every sacrifice we made and are so looking forward to start living next year entirely on our monthly Income Properties’ income, yeah. . . and travel to your recommended destinations :)) Again, lets stay in touch. Would love to know more about where you are in your goals and your success!! Wish I had known someone like me a few years ago to let me know I was doing the right thing. And, I do believe, it will all be worth while!!

  6. Arthur,
    Your post is a great reminder of a successful implementation of sacrifice in real estate. Most people do not understand the longterm positive effects that structured budgeting can have on them. Mr. McMachen is definitely one man who understands the process, those comments in the post seem to come from those who don’t understand that structure. If we were more intelligent with our savings and budgets, we could be just as successful, thanks Arthur!

    • Larry,

      I couldn’t agree with you more – budgeting is key.

      I was talking to a new investor the other day and during our conversation the topic of credit cards came up. To make a long story short, this newbie had over 17K in credit card debt. I told him that if he couldn’t master his personal balance sheet, there is no way he would be successful at this business. More money doesn’t make someone a better manager of money – just look at the government, lol!

      Thanks for the comment Larry!


  7. Arthur

    Love the article. Nice Job again.

    As I have shared with you before my wife and I have taken Zero dollars out of our real estate business over the last 10 years!!! We rolled everything into more profitable deals and when deals were not profitable we just kept building our pile of cash because we knew this time was coming.

    Keep up the great work


    • Mike,

      10 years is a long time! It is a good thing both you and your wife like your jobs. I can see the value in “letting it ride”, I am just really attracted to the idea of working for myself. Hopefully, in a few years, I can step into this business full time.

      I know this is kind of a broad question, but how you still manage to balance everything? I own about 10% of the houses you do and some days the phone calls/emails I receive are all real estate-related. I can’t imagine juggling your portfolio, your day job and family time.

      Regarding the current market, it looks like we still have a few more years before this “time” is going to be over. Now the problem is the inventory, it is getting harder to find deals. Down in my market we have a couple of hedge funds who are paying above market price for everything that looks decent. Oh well. I guess that is just part of the business.

      Thanks for the words!


  8. Arthur –

    Great article. The hard work and sacrifice part is always the part that is left out. Those that have big successes have almost always paid a big price to get there. There is no magic button in real estate. However, some people will always chalk success up to “luck”.

    • Hello Sharon,

      I agree people on the outside looking in only see the success. I once read that it takes about 20 years to be an overnight success – lol! I think that really highlights the point of my article.

      How long did you have to work in the private sector before you transitioned over to RE full time? Do you wish you would have stayed longer? just curious.


  9. I really appreciate this article, as I often get those ignorant comments like the one you got after you suggested a budget. In fact, I think I got the same exact response from my sister. I try not to let people know exactly what I do, because they automatically assume I’m rich. Or a slumlord. Or a rich slumlord.

    My response to those who assume I got here via Easy Street . . . I have had zero luck in my life. What I did have is a husband who is great with money and budgets and taught me what he knows. We saved our butts off for years, forgoing expensive vacations and fancy cars and such, so we could buy our first rental. We toiled endlessly, renovating our first few homes ourselves. Yes, we make good money on our investments, but that money goes right back into the next investment so my husband can retire soon. Besides, you think it’s hard to come up with your $1000 mortgage payment each month? I dare you to take on my monthly bills, or the $15,000 in property taxes I pay at the end of each year. No so easy anymore, is it?

    I am tired of the victim mentally surrounding the current real estate market–people calling me a vulture for scooping up good deals, griping about the price of rent, wanting to keep a house they had no business buying in the first place, etc. If I didn’t make my mortgage payment, the bank would take my house. Period. No one is going to bail me out or give me a better deal or rescue my house or anything like that.

    I run a business, not a charity.

    • Terri,

      I’m glad to hear I am not the only one who gets comments like “Slumlord”. There is no way to win with these types of people, either your too rich, or your automatically taking advantage of people. I think much of this steams from what I call the “robinhood syndrome”. There is this belief within our society that we need to take from the rich. I’m not saying wealthy people shouldn’t pay carry their load in society, I just want people to realize that nothing just “happens”, most all success is by design, not chance.

      It sounds like you and your husband have done a great job with your investment. I feel like I can completely relate to you. My wife and I have foregone new cars, fancy toys – heck, we even sold our house to pull the equity out. I know my friends would love to have our cash flow, but I doubt they would be willing to put the extra time in to look at junkie houses on the weekend, manage property managers, pay bills and monitor contractors.

      I hear you about the current real estate market. The funny thing is that even if a homeowner is “upside down” the bank is really the one that has the bad end of the deal. Most folks have little to zero equity in my market which means the banks have more skin in the game. People are far too attached to their house. It is a place to live and rest, nothing more. Most people never own their home, the banks does. Even if the asset is free and clear, the government can always take away your home if you don’t pay your property taxes – lol!!

      Thanks for taking the time to comment!


  10. Excellent post, Arthur. You make your own luck. It’s too easy to blame others for one’s lack of success, especially when it comes to money. I think we all know people who fall into that category (and have probably been guilty of it ourselves at some point in our lives). Being a successful entrepreneur is not easy — and that’s why few attain that level of success. I wouldn’t have it any other way.

    I can’t think of any successful business owner I know who didn’t make sacrifice after sacrifice to get to where they are. If anything, posts like this keep me motivated, so again, thanks for posting!

    • Michael,

      Yes, I completely agree with you – you make your own luck. I think the best thing about Real Estate is that you can control your luck. If you know what you are doing, with a little research and knowledge, you can predict most all the factors needed to make a sound investment.

      That being said, there is still quite a bit of work required. I don’t think any of my friends are interested at looking at junkie old houses on the weekend or downsizing their lifestyle to grow a passive income.

      I think sacrifice is life’s way of measuring one’s personal fortitude. If they are not steadfast in whatever they are trying to peruse – real estate, a job promotion, the stress and work will eventually weed them out.

      Best of luck to you as you continue on your journey. Keep on keeping on!

      Thanks for the comment!


  11. You mean I have to give up my weekends to work real estate? I’m out!!

    Good post Arthur,
    Glad you brought this victim way of thinking to light. It can subtly sneak into our subconsciousness if not consciously pointed out to be absurd.


    • John,

      Unfortunately, you’ll have to do some work, not just watch episodes of Archer – lol!!

      The victim mentality really ticks me off! When I read the comments at the bottom of the mentioned article, I got pretty frustrated. No one saw the other end of the equation which was the risk this investor was taking by putting his money in real estate. I’m not sure I would want 600+ vacant houses at one time. It sounds there will be a lot of break-ins, repairs and squatters. He’s going to turn a nice profit, but there is still an element of risk in the deal. Too bad the commentators couldn’t see that.

      Question for you, where do you think you get your work ethic/ entrepreneurial spirit from, John? Was someone in your family a business owner or have you just always had a drive to blaze your own trail? Just curious.

      Thanks for the comment bud!


  12. Wonderful article. My business really started moving forward when I realized there is no magic letter, no magic day to send a letter, no magic anything. Now i agree there is an art to writing letters etc., but this business takes hard work, persistence and a desire to always be learning. Again great article.

    • Gary,

      Great insight! I had (still have) the same issue. For the longest time, I bought books, I downloaded podcasts, I went to seminars and what I found is one I had about 80% of the information on a particular topic, I had enough information to take action. Education is tricky because it makes you feel like you are moving forward, but in reality nothing new is being accomplished.

      One day looked in the mirror and realized that “I” was the magic bullet – not a guru or a set of tapes. Keep plugging away Gary!!


  13. Jeff Brown

    You’ve made my week with this post, Arthur. I’ll be 61 soon, and though financial times for me are far better than they were at 18, when I began, the only part luck has played in my ultimate results has been when it was bad. 🙂 Not only have I not been lucky, much of the results I’ve produced, just like your results, were achieved after overcoming ‘bad luck’. (And for the record, I’ll retire on the day the Padres win their fifth consecutive World Series championship. 🙂 I’m an addict. But I digress.)

    But none of it was luck, good or bad. It’s called real life. Boomers like me have seen, count ’em, five recessions, starting with the late 1960s. Prime rates over 20%. Inflation over 14%. Personal income tax rates as high as 90.5%. Real estate interest rates? Between 1969 and roughly 2001ish, we didn’t see an owner-occupied rate starting with a number below 7. Oh, don’t forget the infamous S & L Crisis. What a party those years were. We were lucky — yeah, that’s the ticket.

    Won’t bore ya with my sad story, cuz we all have our own versions. But when the smoke cleared, we decided at a pivotal point, that we were producers, not takers. Winners not losers.

    Losers MUST believe successful folks like you, Arthur, have been lucky. They know in their heart of hearts the alternative is that they’re losers, instead of merely unlucky. When I was a high school senior studying for the state test to be a real estate agent, Dad took me aside. He said to be vigilant about who I hung around with, who I’d call a ‘friend’. He said, “Losers believe in luck. Winners believe where they are at any given time in their lives is a direct result of the decisions they’ve made.

    An absolutely stellar post, Arthur. Thanks so much.

    • AG, Jeff, and BP nation,
      This post has hit a cord with me! I have been working my tail off for the last 3/4 years. I teach full time, watch my kids after school while my wife works. Then every spare moment that I get I’m rehabbing, searching, planning, coordinating, whatever needs to be done to try to help our situation in the future. I/we have not taken a dime to go on a vacation or buy a new car in hopes to pay down a mortgage so we can get another house. What makes me upset is that some of the workers that I have hired, who happen to drive better cars, can’t work because they are on vacation, complain because they don’t make enough money or they have to work night or weekends. Oh and the always “it must be nice to be rich” comment just gets under my skin to no end. Sorry that I am venting, but I have no one that I can relate to, so it going to be you all! Thanks for all of the great post.

  14. Jamie Randall on

    There’s a quote those people need to read that if applied can change your life forever. I don’t think I’ve ever come across a quote before that’s “smacked me in the face” like this one.

    “For things to change for you, you have to change.” Jim Rohn. ‘Nuf said.

  15. Sabrina Laplante on

    Love this, thank you so much for posting such a great article. It is a shame, the mentality of others that are starting to out number us these days. I have had a tough time these past couple weeks thinking, for over a year now I have given so much up, and feel like I have not accomplished 1 deal yet. However, after reading this, I know it takes a long time, and I will stick with it. Being 24 years old and having no life besides work work work, and trying to learn/invest on the side is tough, but will be more than worth it eventually! One of these days, my friends that have been begging me to go out, chill, relax, and just “have a life for once” will be asking how I got lucky….
    Thanks so much for reminding me about the sacrifices we have to make!!! Keep up the good work, and best of luck to everyone out there that is working hard to achieve their goals!!!

  16. McKellar Newsom on

    Hi Arthur,

    Great post! I remember the days of not buying a new phone even when the number 4 button didn’t work well. Early on, my husband and I invested or saved all our windfalls instead of spending them.

    Back when I was in my 20s, I remember thinking how well a few friends must have been doing because of their nice cars and house. A couple of years back we received a call from those friends asking if we would purchase some of their assets because they weren’t able to pay the bills… Thanks for the post. mck

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