I Quit My Day Job, Retired Early & Started a New Venture Using Real Estate: Here’s How

54

It’s hard to imagine now how hard it was to save up that initial $5,000 to buy my first rental property back in 1989. I bought a duplex, which was owner occupied in the traditional way.

Just like many of those starting out in real estate investing, my goals were very modest at the time. In fact, I just wanted the tenant who happened to live above me (which by the way isn’t the greatest idea) to pay half of my mortgage. Shortly thereafter, my goal grew to saving up enough money from my second job to buy just one rental property a year. It wasn’t until I got to 10 or so units that I started to broaden my goal to replacing my income.

Today, I look back to how funny my strategies and goals really were back then. I would never even think about saving up money today to use to invest in real estate. I would just go find a good deal and use OPM (other people’s money).

But to be quite honest, it doesn’t matter how my real estate portfolio started. What really matters is that I did it, that I continue to grow it, and that I became better and better in real estate investing as time went on. I continued to cultivate my portfolio over the years, and there were some significant benefits from doing so, and by that I’m not necessarily talking about the normal stuff people think of like: depreciation, mortgage interest deductions, and various repair and maintenance expenses, or the fact that your tenants are buying your properties for you.

I’m talking about some of the other not-so-obvious benefits of passive real estate investing.

How to Purchase Real Estate With No (or Low) Money!

One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.

Click Here to Download

You Can Leave Your Day Job

If it wasn’t for the fact that I got up to 20 rental units, which made my net cash flow equal to my take-home pay at my day job, it may have been much harder to quit my “Corporate America” job, especially since I had a wife and two kids to support at the time. But this one’s a biggie, and for me, I was 32 years old when I told my boss,“I’m outta here!”

Related: How to Quit Your Job & Invest in Real Estate Full Time: Steps 1, 2, & 3!

Now, maybe you love your job, but for me, that last day there was one of the happiest.

You Can Retire Early

When I was 42 years old, I had owned a painting company with up to 12 men working for me, and I had a pretty successful business with many valuable commercial accounts, and then suddenly I got hurt. It was my back, and the doctors told me I shouldn’t lift anything over 20 pounds. Needless to say, I was done. I couldn’t really work in construction anymore, especially since my business wasn’t set up properly and revolved around me too much.

But there was a saving grace: I had 40 rentals by then, and my passive income from my rentals, along with money from flips, private mortgages I held for other rehabbers, was enough for me to be able to retire.

You Can Start a New Venture

At 42, I first went into real estate sales and investing full-time. The cool part is that I had very little pressure on me since I had so much equity and passive cash flow by this time. Even when the real estate market crashed, it didn’t really matter much, and I was able to weather the storm rather easily.

Even later when things got really bad in real estate sales, my real estate portfolio enabled me to go off and start a new venture, a little note company called PPR. I’ll never forget the first two years, when my one partner and I worked with virtually no salary as we did what we could to get the business off the ground. Trust me, this would have been quite impossible without my real estate portfolio.

Today, I’m fortunate enough to have a pretty successful note company, most of which was built with OPM (other people’s money) and lots of hard work. Yet, I still have to say that none of the wealth I’ve built would have been possible without those crazy little rental properties that my family and friends couldn’t believe I would even invest in.

Related: 8 Crucial Points to Consider BEFORE Quitting Your Job to Invest Full Time

Once your portfolio income passes your earned income, it’s a game changer.

It can give you not only financial freedom but also freedom to decide what to do with your time, whether that’s spending more time with your family, retiring, or moving to Puerto Rico.

So, let me ask my fellow BP tribe members: what does or will your real estate portfolio enable you to do?

Leave me a comment below, and let’s discuss!

About Author

Dave Van Horn

Dave Van Horn is President at PPR The Note Co. - an operating entity that manages several funds that buy/sell/hold residential mortgages, both performing and delinquent. Dave has been in the Real Estate business for 25 years, starting out as a Realtor and contractor and moving onto everything from fix and flips to Raising Private Money.

54 Comments

  1. Matt Aspen

    Dave, you’re my hero!

    I’m in the same boat, but am a bit older. I have a ’10 year (working & saving) plan’ in place to do, basically, what you did (down to 9 years, 9 months xxx days … believe me, I’m counting).

    I have a few questions:
    1. how did you acquire the knowledge (my 2015 resolution) to be educated enough to know what you’re doing in REI (including flips)?
    2. how did you gain the ‘notes’ knowledge to be able to start your own company?

    I am purchasing books (the one I’m reading now is “How to Get Started in R.E.I.” by John T. Reed. I have a few more on order also. Furthermore, I’m taking a few online classes to learn about ‘strategy’, analysis, finance & law.
    I thought of working towards a RE sales license would give me a good foundation.
    I’ve also looked (per Reed’s hint) at formal classes which are offered as part of an MBA program; I don’t want to get an MBA (time/money … since I work full-time AND have kids) … there are also some classes at a local college that, basically, train you for the RE sales license exam. There are also classes via CCIM but are $1200+

    Embarrassingly, when I realized that I HAVE to quit my tech ‘career’ in early 2014, I started w/ the ‘gurus’ (spent 3 days w/ Fortune Builders and almost parted w/ $25k for their ‘training’).

    In short, what path(s) did you take to gain expertise? I’m thirsty for it and feel overwhelmed by the possibilities.

    Your guidance if greatly appreciated!

    Best, –MA

    • Ryan Arth

      Matt,

      A short answer is simply, acquire long term experience and knowledge rapidly. The more books you read and information that you read on BiggerPockets the more experience you can “leverage” from others within a given time frame. You can save yourself years of setbacks over a career. And the most perilous part of any venture is the beginning stages. Education is essential and you can compress the time required through increased input (hours).

      To Dave, that post was timely and excellent. Great article and inspiring story. I hope to parallel it.

    • Dave Van Horn

      Hi Matt,
      Thanks for the positive feedback!
      Regarding your question about how I acquired the knowledge in REI, I was a realtor at the time, and then I took action and learned from experience. Also, I joined a national REIA group and was able to learn from and network with others.
      Regarding your second question, I started to learn about notes through networking, and then a national note seller taught me the collections side of the business.
      I do read a lot. For books on real estate, I suggest “Buying Real Estate without Cash or Credit” by Peter Conti & David Finkel. They give you verbiage / information on what to say in negotiations.
      I hope this helps!
      Best,
      Dave

  2. Larry S.

    Great blog and congratulations on quitting your job and retiring early. I have done the same thing . Please however don’t get trapped into doing what I have seen other successful investors do. That is to keep working so hard at making money you don’t start enjoying the fruits of your labor. Habits are hard to change and next thing you know your hit with poor health and maybe some mental problems. I now spend every other month on an adventure. Skiing in Vail all of February. The beach with all my kids and grandkids in August. The entire month of June finds me wilderness fishing in Canada. A month is in our Florida vacation home and a nice two to three week cruse fills out the year. None of this would have been possible without the number of rental units that I have acquired over the years. I still love investing in rental housing but now as a hobby.

  3. Jonna Weber

    Dave- you inspire me! Thank you for expanding on your story in this article, and I am grateful that you continue to share your knowledge. My goal was originally just 10 rentals also- but the goals have grown exponentially after getting to know people like you through BP.

    • Dave Van Horn

      Hi Jonna,
      Thanks for the positive feedback!
      In the beginning, I was mostly doing things on my own and my goals were smaller. Once I expanded my network and was exposed to more information and experiences, my goals grew as well.
      I’m glad to hear yours are too.
      Best,
      Dave

  4. Dondi C Johnson on

    I really want to know how to get started doing real estate. I am now a school bus driver and have no money saved to get started. How do I get in the game with using other people money when I have no money? I really want to learn.

    • Dave Van Horn

      Hi Dondi,
      Thanks for reaching out!
      I suggest joining a local REIA group to network with other people doing the business. This kind of group is a great resource for learning creative strategies.
      Also, start with finding the deal. Then, you can shop the deal to fellow investors, and the money will find you.
      Best of luck,
      Dave

    • I am 56 this year. I want to start investing in real estate, as I only have about 100k in my IRA. Am I too late? I’d like to have passive in one of 100k by the time I’m 65, would you have some ideas? I make approx 95k now and am looking at the real estate for wealth building/equity as much as future income. Thanks!!!

      • Dave Van Horn

        Chris,
        You’re never too late; my dad bought his first three houses at age 72, and my mom started earlier than him (she was in her mid-sixties). She bought her rentals right before she retired.
        Rehabs and flips are probably the best strategy to make that much money that quickly. Then you could use the profits to purchase more passive investments.
        If you do the flips in your IRA, you’ll get the most income, tax-free, quickest.
        Best,
        Dave

  5. I’ve been flipping houses with some rentals for about eight years. I always seem to have to flip to fund any additional projects. Every course, every seminar talks about using OPM but how do you get that to happen? I’d love to use OPM but my bank wants MY money to finance my ventures and while they are a small bank and easy for me to work with, I’m house rich and cash poor. I don’t want to sell my current houses but a recent divorce wiped me out financially and I’m broke. What and how do you get to use OPM?

  6. Luis Montanez

    Move to Puerto Rico!!! jajaja, funny you say this… I lived a passive life in Puerto Rico during my childhood till the early years of my Adult life, then I decided to move to the States to take advantages of better earning opportunity with the goal of moving back to the same passive life… funny how entrepreneurs think

  7. Jeff S.

    Retire. Just like you, when my back starting hurting I said “I am retiring.”

    It is great to know that when you are working you can retire if you choose to. Rental properties along with a well earned pension means working is by choice, not necessity.

  8. thomas williamson

    Good inspiration.

    Our real estate investing allowed my wife to retire first only 2.5 years after we started buying rentals in Atlanta in 2010. She was free from a job, and a one way 40 mile commute each day. She’s now been “retired” at the age of 43 for two years. We can now claim real estate professional on our tax returns, and she has obtained her R.E. license to help us further our business. Our goal now is to steadily work to get more units so that I can leave my job and focus on R.E. full time. We started in investing in January of 2010. We currently have one quad, and six S/F homes. We sold four others in the process of trading up.

  9. Evelyn Jordan

    Dave, thanks for sharing your very inspiring story. Anyone can work for money but not everyone can make money work for them. I love it how real estate provides a variety of avenues to choose from to build streams of passive income and have the life that we really want for us and our loved ones.

    Question for you Dave: from your personal experience, what would you say was the most difficult and the easiest part of REI?

    Thanks,
    Evelyn

  10. Nayeem Amin

    Dave,

    Thanks for the excellent and motivating post!

    The hardest part I’ve come across as most others have expressed is navigating the helpful REI information from the flooded and vast quantities of ‘guru’ information out there! Do any of them even help?

    As a young / newer investor, the biggest challenge is using OPM to fund deals or holds (Rentals). Do you have any detailed advice as to where to begin that process? All I know of thus far is about Hard Money and Traditional funding.

    Nayeem From Michigan

  11. Kevin Yoo

    Dave,

    Very nice post. I am always amazed at how many people that go into real estate fail to see the message of your post. Our goal should be to create wealth through passive income to become financially free. Real estate is only one vehicle and within real estate owning rentals is just one way. But it surprises me to see so many real estate investors work so hard at deals that create one time income such as wholesale and fix and flip. Even if you are extremely good at this, you are just another rat in the race unless you have set passive real estate income to allow you to walk away anytime. You have to make generation of passive income a top priority if not the only priority of your real estate investments.

    As to how to proceed with real estate investments including using OPM, you need only two things. One, 10,000 hours of hard work of actually doing real estate deals. You can read all the books and attend all the seminars you want, but if you do not put in countless hours of actually doing the deals, you will never become good enough to succeed. And it is a guarantee that you will have failures but if you quit at hour 9,999 of your real estate investment career, you just do not have it in you to succeed in real estate. Do not give up!

    Two, you need a team of other real estate people that have the knowledge or skills that you do not have to mentor you and help you successfully do real estate deals. Stop going to over-priced seminars. There are successful real estate investors in your own backyard that will give you that education for free. They know as much as the gurus you go to see. You should spend more time and more money looking for these people to put on your team than going to seminars. You cannot do this well on your own. Just as you use OPM, you want to use OPExpertise.

    Currently, I am extremely focused on passive income and buying one house a week. I spend every minute I can doing actual deals ticking my way towards 10,000 hours. I have more OPM than deals. I also give away my expertise to anyone that will hear me. It is disheartening how so many newbies initially show great interest and then simply fade away.

  12. Dina Fantegrossi

    Very inspiring stuff! I love your use of the term “OPM” (Other People’s Money). My husband and I are both Realtors and hands-on flippers. We have an investor who pays hourly for us to do a lot of the work and manage the contractors for the work we cannot do ourselves. We get the buyer agent commission at purchase and seller agent commission when the property is sold. So far so good, but I’d love to establish some relationships with other investors. How do you feel about “investor Websites”? Any advice on appearing trustworthy to investors? Thanks for the great post!

  13. Michael Shawn King

    Dave,

    you said ‘I would never even think about saving up money today to use to invest in real estate. I would just go find a good deal and use OPM (other people’s money).’

    Can you elaborate a bit on how that deal would have been structured now using OPM?

  14. Dave:

    Do you have any books you can recommend about raising money, joint ventures and OPM?

    Do you have any real estate investing books you’d recommend in general?

    Thank you,
    Ryan in DC

    • Dave Van Horn

      Hi Ryan,
      Thanks for your comment. A good book that I can recommend on raising capital is “Pitch Anything” by Oren Klaff.
      What kind of real estate investing are you interested in or want book suggestions for (commercial, residential, wholesaling, property management, renovations, selling, etc.)?
      Best,
      Dave

  15. Tommy DeSalvo

    This story is very inspiring. I plan on acquiring my first owner occupied 4plex and then snowball my way into more units. I’m sure this path will let me achieve financial freedom and it’s great to see other people succeed at it.

  16. Elle Swanson

    Dave,

    Thank you so so much for this article! I’m 30 and have been in corporate tech sales on and off for 7 years. Making a high income (taxed to death) and all that jazz but finally fed up and newly laser focused on leaving the rat race with real estate as my vehicle to freedom. Currently looking for mentors and reading everything I can. This article came at a perfect time 🙂
    Congrats on your success! I look forward to following in your footsteps. Thanks again- Elle

    • Dave Van Horn

      Hi Elle,
      Thank you for the positive feedback. I’m glad to hear you’re breaking into real estate investing, as it’s probably one of the best investments for utilizing tax saving strategies. It sounds like you’re on the right track.
      Best of luck to you,
      Dave

  17. Minh Le

    Dave,

    Thank you for sharing your story. I had the pleasure of meeting you at the San Francisco Summit in November 2014. I have a couple of questions. Was your partner a good friend, or someone you met through networking? Was your partner independently wealthy that he didn’t have to take a salary for the first year?

    By the way, you need a new profile picture since you’re much younger in person. Well, at least you were to me.

    Cheers.

    • Dave Van Horn

      Hi Minh,
      Thank you for your comment! One of my partners and I both had cash-flowing real estate portfolios that enabled us to take little to no salary for the first year, which definitely helped us to get the business off of the ground. We actually met through mutual interest in investing in multiple mobile park years prior.
      Hope to see you at the next summit.
      Dave

  18. Stuart Fox

    Thanks for sharing. One of the biggest regrets I have from the past 20 years of investing is not buying rentals. I was a first generation investor, didn’t know any investors and thought rentals were boring so I focused on hard money lending and flips. I was so wrong to put off buying income properties. Last year I finally “woke up” and am now buying SFR properties for rent. Definitely not as exciting as flips, but a much better retirement solution for me.

  19. Mindy Zimmerman

    Yet another amazing post, Dave. I’m at the stage where I’m saving up my own money for deals. The idea of bringing in others and using OPM to acquire properties is too intimidating to me at this point. My end goal is to generate enough passive income to “retire” early but it’s a little slow-going on my own.

    I plan to attend the local REIA next month. I missed the Jan meeting because I was out looking at a duplex! But my hope is that I’ll start networking with those who could be potential partners or investors. Then my growth rate might explode.

    I’m also considering a second job of some sort to boost my personal savings so I can purchase buy and holds more often. Whoever said passive income doesn’t require any effort was way off! But I’d much rather hustle hard in the beginning to enjoy the freedom sooner. I can’t wait until I can flip the switch and start living like Larry! I love the idea of spending every other month on an adventure.

  20. Dmitriy Fomichenko

    Nice post. The key is that you decided to invest and continued to do so over the decades. It is all about buying those first few rentals and gaining experience out of it. However, I would suggest reading books and a lot of them to avoid major mistakes. Here is a Zen Proverb that fits very well here:
    “It takes a wise man to learn from his mistakes, but an even wiser man to learn from others.”

  21. I read these blogs they sound so good some times to good. I just attend a seminar for three day again sounds to good to be. I must say I was highly motivated and I wanted it but the hammed came down the price. I could see that the first or second real estate deal you make would possibly cover the investment or maybe a few more deal would. It was just that up front investment. I do believe in a divine present that has put this path in front of me I will follow it. Thank for the book title I will read them.

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here

css.php