Business Management

At Age 26, I’m on the Brink of Financial Freedom: Here’s How I Did It

Expertise: Personal Finance, Personal Development
32 Articles Written

A year and a half ago, I told the following story. I had so many people contact me and thank me for writing it over the past year or so that I wanted to go back through, update it and republish it to share, help, and inspire more people.

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In this post, I will tell you how the long struggle of choosing to stay broke has left me with a foundation strong enough to now begin the pursuit towards wealth.

For some reason, real estate has been labeled a get-rich-quick joy ride for entrepreneurs. This is funny because in my experience, it has been more like a be-broke-for-a-long-time uphill climb. Can you get rich quickly and easily from real estate? Definitely — and you can also do that with the lottery. Unfortunately, both of those results are unlikely to repeat, and neither are anything close to sustainable. Getting rich quickly requires the use of self discipline in order to utilize the power of exponential growth AFTER you put in the long grind of foundation building. Whether that foundation is in knowledge, money, or connections, it must be built!

Exponential Growth is a Powerful Thing

I was never a good student in school. I would daydream, not care, and halfway pay attention to lessons. However, I do distinctly remember being taught about exponential growth. I have no clue what grade that was, but I remember typing 2^2 = 4 in my calculator, and then tapping the “=” button over and over to watch the numbers climb higher and higher.

The math behind exponential growth forever stuck with me. I always related it back to money. As a middle schooler, I would run scenarios, such as what if had one dollar and it doubled every day for a month? BUT WAIT — what if I started with 100 dollars and it doubled every day for a month? Boom. An investor was born.

Related: How Much Money Do You Need to be “Rich” and Is It Worth It?

My brother (my 50/50 business partner) and I share views on finance and wealth building. We have worked together since I was 18 years old. We began by opening a handyman business back in 2008 while living in a “house hack” with six guys. Through word of mouth, trial and error, and a ton of effort, we grew that company into a successful home renovation business, rehabbing kitchens, bathrooms, and additions for homeowners. It was pretty cool being 19 and making good money off these projects.

However, unlike the majority of our peers, we didn’t blow it at bars or on clothes. We saved it because we were never going to be the smartest by a long shot or have the most connections. What we did know was that we could out-work others, and if we had the capital to work with, we could build the foundation necessary to do so.


Take the Classic Investing Approach and Flip It on Its Head

The classic real estate investor newbie says, “I want to wholesale so I can make enough money to put a down payment on a house to flip." After they profit from several flips, they can have enough money saved up to put a nice down payment on a buy and hold property so that one day they can pay it off and have a nice passive, cash flowing rental. Great. But where is the foundation to exponentially grow on? My partner and I are working the inverse of that equation (with some variation). I'll explain how later in this post.

Related: Financial Freedom: 14 Steps to Stop Relying on Your 9-5 Job’s Income

Have you ever heard “live below your means”? We took it one step further and lived at our lowest means — and did so for a long time. While running the home renovation company, we paid ourselves very little — some months nothing, some months $500. Remember, we were in college living in a house hack with six people, renting each room out. It’s funny; everyone is poor during college living off practically nothing, but as soon as they get some income, it’s impossible for them to continue living at such low means.

We got paid well, lived at the bottom of our means, and saved in order to prepare to enter into real estate investing. By 2012, we began buying highly distressed SFRs, rehabbing them all cash. We then rented these newly renovated properties out and took NO money for ourselves. We looked at it as if it wasn’t ours to have. We would have 3, 4, then 5 debt-free houses renting for $800-$1000 a month, but my partner and I would be doing quick rehab jobs for others and picking up scrap metal on trash night to pay for our personal needs (groceries, cell phone).

Sacrificing to Build a Foundation of Wealth

Sounds like it sucks, right? It did, but the foundation was being built. We were living like most wouldn’t so that one day we could live like most can’t. We knew the faster the foundation was built well, the more we could utilize exponential growth. After we had 7 houses under our belt, we finally leveraged some of them to continue the growth into another 4 SFRs, 3 more duplexes, and a 5-unit apartment building. Not until two and half years after we bought our first rental did we decide to pay ourselves a whopping 6% of gross rents. I will admit some where in this mix, we were lucky enough to find great wives to help support us through this financially draining journey.

As I mentioned before, we are running the inverse of the classic path of entering REI. We started by owning buy and hold properties free and clear. We then used debt from those properties to acquire more buy and hold properties.

We then pulled the remaining chunk of equity out of the rental portfolio (to a safe 70-80% LTV) and ventured into flipping houses. Because of our track record and newly liquid capital, banks and private investors were now willing to lend to our company on multiple flips at once. Even with the option to borrow money, we found most of the time we had enough to do the whole flip with our own funds. This only further accelerated profits and growth.

In 2015, we did 17 flips for just under $3 million in gross sales. Because of our background in contracting, a hot market, and our hustle, each flip produced very good profits. However, flipping is risky and didn’t meet our long-term goals, so by the end of 2015, we wrapped up most of the flipping. We had made a chunk of change and were ready to move onto the next step in our journey.


Setting the Framework to Scale

By the start of 2016, we had, for the most part, exited the flipping strategy. We added on our CPA asset manager as a partner to our rental company and formed a management company to consolidate operations between holding companies. At this time, we were ready to scale. We had all the systems in place and the right people. We were ready to jump in with the big boys buying apartment buildings.

After struggling to find a deal that met our needs, we eventually closed a multi-million dollar apartment complex without raising any money from outside investors. All of this was possible and will continue to be possible because of the foundation that was laid years ago when we were handymen cleaning out dirty houses, not taking money out of the company to accelerate growth.

After all these hard years, I am proud to say at the young age of 26, I am very close to my personal financial freedom number. That doesn't mean we will stop there. As I said before, I work for the good money can do, and I believe that good can be endless. This is why moving forward, our journey will continue by venturing into larger apartment deals through syndication in Ohio and Georgia. I know this will continue our exponential growth and will only allow us to do great things in the many years to come.

“But That is Way Too Hard!”

My partners and I are willing to make the sacrifices now in order to reap the benefits later. This sounds great, but when it comes down to actually putting this to action, it is beyond hard. By no means is this lifestyle choice for most. People claiming that sacrificing your spending money in order to build wealth is nothing new. The reality you don’t hear about is all the other things that also get sacrificed. We realized that working 12-15 hour days rehabbing houses 6-7 days a week left very little room for other things. We willingly let go of much of our social lives in order to build this foundation.

Related: The Unspoken Problem With Financial Freedom Few People Acknowledge (& How to Avoid It!)

Along with social life is the toll this can have on your health. The sacrifices go far beyond money. I know these years of buying my t-shirts out of the nine-cent box at the thrift store (yes, this does exist) will one day have a positive ripple effect on everyone important to me. We do not work for money, but rather the good money can do. We paid ourselves nothing and worked 80-hour weeks of hard labor in order to know that when the day comes when we have children, we can give them and our wives all they need and more while only working as much as we want to.

Some may say we could have leveraged sooner — even at the beginning. They will say in the formula of exponential growth, the exponent is more powerful than the base number. They are right, but the real world isn’t a formula, and having money makes it so much easier to make money. That’s the foundation I talked about. If you try to grow too fast without enough money, experience or connections, your foundation will crack, and you wont have any money to repair it. The next thing you know, you will be looking around saying, what the hell happened? You must take the time to build the foundation of knowledge, money, and connections.



Advice to the Beginner

Plain and simple, there are thousands of ways easier than the approach my partner and I took to build a foundation for growth. It worked really well, but there are better ways. You may be asking, “Then why didn’t you use the better ways?” The truth is, it’s because we didn’t know how — or even know they existed. We entered our investing career full blast, we hit the ground running. We didn’t take the time to educate ourselves well. We didn’t network with anyone for the longest time.

I did whatever I knew how in order to build my foundation stronger. We just were go go go, and when a roadblock came along, we just pounded away until it broke. Little did we know, with knowledge and the right connections, you can avoid half of the roadblocks we ran into. Along with our all-out approach, we were fortunate to enter REI in one of best markets to buy into. Because of this, our mistakes didn’t hurt us as badly. Had it been 2006, our growth would have been much different.

My advice is simple to beginners: You don’t have to be a pro, you don’t need a team of 10 people. Just understand what REI is, and get a grasp on the basics of it. Find a couple people who you can call when you get stumped. Then hit the ground running with this amazing website (BiggerPockets), and you can accomplish all that relatively quickly. The rest you can sort out along the way, as long as you continue to learn from your mistakes and educate yourself as you progress. You don’t need a degree or anything special.

When you make things happen, things happen! Just don’t ever plan for it to be easy or that you will get rich quickly. Once you get rolling, continue the sacrifices to build your foundation. Once your foundation is strong, let ‘er rip and watch the hard work pay off. If you aren’t able to have the self-discipline to sacrifice either time, money, or both, then entrepreneurship isn’t for you.

The only sustainable way to get rich quickly in real estate is to use self-discipline and sacrifice up front, building the foundation. So one day with the power of exponential growth, you will be able to get rich quickly!

[Editor’s Note: We are republishing this article to help out our newer members.]

Where are YOU on your journey to financial freedom?

Share your story below!

Jered Sturm is the co-founder of SNS Capital Group LLC. Starting in the industry 15 years ago as a maintenance technician for residential rental properties, Jered built on that experience to start ...
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    Hien Phan Lender from Seattle, WA
    Replied over 3 years ago
    We’re the same age and I’m amazed at how far you have gone. This is my third time reading this article and I want to thank you for sharing your story! Very inspirational!
    Replied over 3 years ago
    You are an inspiring story
    Mathieu Boissy
    Replied over 3 years ago
    This is the type of article that gives me total faith and confidence in what I am doing right now! I am actually sacrificing a lot of time and money now to achieve my goals this year. Thank you Jered for sharing your story!
    Ambruce Carter from Boston, Massachusetts
    Replied over 3 years ago
    Between this article and the article you wrote on how you bought your first apartment complex, I have to say your story has me fired up! Your story is truly inspirational man. I am in the beginning stages of my REI career and its great to hear the truth about how hard it is to make it in this business as well as, the rewards that come from hard work. Thank you.
    Craig Herrman from Phoenix, Arizona
    Replied about 3 years ago
    With just graduating college, this hits home with me. Some incredible advice to get started and what it means to truly sacrifice to get started. Thanks Jered!
    Sean Krause Investor from Colorado Springs, CO
    Replied about 3 years ago
    I love everything about this post! I am stumped because currently I live in Germany and I am told all the time to go out and travel while I have the opportunity, but even living in the EU, traveling isn’t cheap! I have a pretty decent stockpile of cash but I feel like I am taking a slow route to FI. I will be moving to Colorado in November so hopefully, I won’t be as pressured.
    John Murray from Portland, Oregon
    Replied over 2 years ago
    J-Man you did it right! All your efforts were built on a solid foundation of building methods and materials. I became a multimillionaire on the same foundation, the more trades you cut out the more success you will have. Keep up the great work, see you on the beach in Maui.
    Michelle Felux Investor from San Antonio, TX
    Replied over 2 years ago
    This is such a great article! Seems like such a far ways off for us, but we have started. We started in REI November of 2016 and since then have acquired 3 single family rentals, one of which was a MASSIVE rehab! We both work full time and didn’t have a ton of great connections or even education under our belt, but we had a networking group to reach out to. Unfortunately, that group handed us awful contractors who ended up losing us a lot of money. However, we ended up making our way to a fantastic general contractor who pulled off the rest of the rehab and then led us to some much better, more reliable and overall just more qualified subs… truly a miracle of networking on that one. We lost so much up front, but interestingly enough, the market in that neighborhood began to appreciate tremendously and we feel that if we hold onto this rental for 3 years, we will break even and possibly even make money on it! Our first rental ended up having a massive sewage backup, which destroyed the entire inside and abruptly ended our current tenant’s lease there… but it led to our insurance company paying the rent and led us to a phenomenal general contracting company that will honor insurance pricing for us for our lifetime. Our third rental is slightly dicey, in a bad neighborhood, but we have found a decent tenant to hold down the fort until we are ready to sell and move into a little better neighborhood. Each of these properties generates $300-nearly $600 in positive cash flow each month, which is fantastic for this area. With a lot of personal sacrifices, I am looking to move into a career that allows me to focus more of my time and energy into building our real estate investment foundation to new heights. I know it will take a lot of sacrifice and hard work, but slowly I believe it really will result in our financial independence. The amount of time I will gain to be able to actually dedicate to learning and researching will be so worth losing the money I earn for things I don’t need.. or for travel that I can’t even take because I don’t have enough PTO… can’t wait and stories like this really help me keep the end goal in sight.
    Tim Rostro Rental Property Investor from Apache Junction, AZ
    Replied over 2 years ago
    I just wanted to comment that is was a great article! I just started out being a serious Real Estate Investor several years ago as I was getting close to retiring from the US Army after 20 years of service. I currently have only 3 properties right now. My first property was a single family home, a fixer-upper in central TX that I bought in 2005 at the height of the housing bubble but at a very affordable price. I didn’t know a dam thing concerning home renovations but I learned as I went painting the house, removing carpet (nasty!), and installing floating hardwood floors. There is a wonderful tenant there right now who has renewed her lease for the 4th straight year. Although rents have increased in the area, I have kept it the same as she always pays on time and has taken care of the property. I only have $25,000 left on this mortgage and, hopefully, it will be paid off by 2020/early 2021 with extra payments. I bought my second property, a duplex, in 2016 in the same area. After inheriting the tenants who promptly left 3 and 6 months after my purchase, I picked up 2 more tenants who moved in and both are still there. Last year, I bought another duplex but in Cleveland, OH. Both sides have tenants and it looks like they won’t be moving out anytime soon (knock on wood). I have extra income from all three properties which I put a portion towards extra mortgage payments and save towards a down payment on future properties. I’m currently retired from the Army and back at school at Arizona State University. I could just work right now with a full time job and continue towards acquiring more properties but its my bucket list to finish school. I have enough capital to buy another property at the end of this year and I’m eyeing a duplex in Buffalo, NY. My plan is to purchase another property prior to graduating ASU. My overall goal is to live off my rental income while still working on my farm in WA. Looking back during my Army career, I wish I had done it sooner. However, I am well ahead of a lot of folks who are still in the “rat race.” It’s a slow process but the journey to financial independence is an adventurous one. No one ever said it was going to be easy. To all fellow real estate investors and fans of BiggerPockets, keep it up!
    Andrew Lee Rental Property Investor from Cleveland, TN
    Replied over 2 years ago
    Thanks so much for this incredibly inspiring article! This is the first article on here that I’m actually printing, highlighting, and making my teenaged sons read word for word and then discuss it with me. This is the way to do it, thanks so much. (And it’s well-written as well, trust my opinion as a college English professor). 🙂