The Small, Simple Business Model That Supports Profits AND Free Time


“Simplicity, simplicity, simplicity! I say, let your affairs be as two or three, and not a hundred or a thousand; instead of a million, count half a dozen, and keep your accounts on your thumb nail.”

Henry David Thoreau, Walden

My approach to buy and hold real estate investing is very focused on how the business and properties contribute (or hinder) the personal lifestyle of me and my family. The nuts and bolts of real estate investing are interesting, fun, and meaningful to me, but unless my business can produce tangible results measured in money, free time, and flexibility, it doesn’t do its job for me.

I have found that a business model I refer to as “the small and simple real estate lifestyle business” produces the well-rounded results I want better than any other.

How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties

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Recap: Big, Fast-Growing Businesses Aren’t For Everyone

I wrote an article called “Why Big, Fast-Growing Businesses Are Not the Ticket to True Financial Freedom.” My main point was that big, fast-growing real estate businesses with hundreds of properties and syndicated partnerships are exciting to talk about, but they don’t usually satisfy the primary goals of small entrepreneurs here on

Related: Start Small: How Purchasing 1 Investment Property A Year For 10 Years is Really All You Need

Most small investors want more personal freedom, which in addition to money means having time and flexibility to do whatever they want. Freedom ultimately includes things like traveling, spending more time with family, contributing to the community, or leaving a well-paying job for a fun, rewarding, but lower paying job elsewhere.

My own experience and observations tell me that big, fast-growing businesses fall short of the criteria for more free time, more flexibility, and less stress for the owner. Even if the big business machine has wonderful systems and capable team members, bigger operations inevitably and often have “fires” to put out. These big-business fires are usually more stressful and risky than small-business fires, and they require the head decision maker (YOU!) to be on location to put them out.

A smaller, simpler real estate business can accomplish all of your personal goals, while also avoiding many of the stresses and hassles that come with running a business with many moving parts, high levels of debt, and overhead.

In the rest of this article, I’ll give you an example of a small and simple real estate business that can work very well. There are of course many different ways to accomplish the same end, so I welcome comments and discussion in the comments section.

The Finances of a Small and Simple Business

Let’s start with the money — because it always comes down to that. There are two main questions to answer here:

  1. What’s your number (i.e. how much cash flow do you need to cover personal overhead)?
  2. How many properties do you need in order to meet your personal cash flow number?

The answer to #1 is very personal. I can’t help you much there.

The answer to #2 for the small and simple business is this: “The least number of properties that will also meet my financial goals.”

A smaller number of properties is ideal for a lifestyle business because it means fewer tenants to manage, fewer HVAC systems to break, and fewer properties to keep an eye on.

You might ask, but how can a smaller number of properties still meet my financial goals? Let’s look at an example.

Let’s say your number is $60,000 per year, or $5,000 per month. To meet your goal, you could own 10 units free and clear (no debt) that each rent for $1,000 per month and have 50% expense ratios.

10 x $1,000/month = $10,000 x 50% = $5,000/month in Net Operating Income

Because you have no debt on these 10 units, you keep 100% of this $5,000.

Of course, you don’t just arrive at this point in your business overnight. You’ll need a big chunk of equity capital to make this work. Assuming that your basis of cost in each unit is $100,000, you would need to have 10 x $100,000 = $1,000,000 equity to achieve this goal.

While this number is not small, it is very achievable within a reasonable amount of time for those of you willing to work at it. It can also be done part-time while working a full-time job or while doing other parts of the real estate business.

The temptation is always to get bigger than is necessary. Like me, you may buy more units than you initially need using leverage. If you want to grow a little faster and are willing to take on a little more risk, this may work out. But, at some point my suggestion is to move towards a state of smaller and simpler.

This article is not about how to grow from $0 to this $1 million figure, but that is also an important topic. You can find plenty of information on how to reach this type of free and clear goal relatively quickly (10-15 years) from me and other well-qualified contributors here on

As an aside, a strong argument can be made to keep fixed interest, long-term debt on some of the rental properties as a hedge against inflation. I would not disagree with this argument, but I think we should weigh this need against an equally important need for simplicity and enjoyment of your life.

To balance the two goals, you could simply refinance 3 of the 10 properties and pull out $300,000 or so. The other 7 would remain free and clear. Note that it’s far safer as the borrower to owe money on a few properties at a higher loan to value than to owe money on all the properties at a low loan to value.

You could use that $300,000 cash to invest in income producing assets like discounted notes or 3 more rental properties at $100,000 per unit. As long as the 3 financed units pay for themselves, you have provided yourself a moderate amount of leverage while still keeping things relatively simple.

The Small and Simple Business Model

Keeping things small and simple does not mean doing everything yourself. A lean set of systems and key outsourced personnel can give you the freedom you desire.

My business partner and I choose to manage our 58 units ourselves with the help of a bookkeeper and leasing specialist. But this lean model can work just as well or better outsourcing all or pieces of the property management to a third party management company.

Like any management company, we have a list of reliable specialty contractors whom we can call during or after business hours to quickly handle problems. These contractors include a carpenter/handyman, an electrician, a plumber, multiple HVAC companies, painters, roofers, a carpet cleaner, a lawn maintenance person, a pest control company, and a house cleaner.

I often tell people that I realized this small and simple business was for real when I was on a trip to the Patagonia region in the country of Chile. We were in the southernmost town of the country, virtually at the tip of the South American continent on the Magellen Strait. I spent 5 minutes talking on Skype to South Carolina, directing a plumber to fix a hot water heater at a unit. He never knew where I was, and the problem got fixed. I went on to visit a penguin colony for the rest of the day!

Our tenants pay rent online (preferred), in person at Woodforest/Walmart Bank, or by mail to our P.O. box. Maintenance requests are submitted by phone, text, or on our website. We recently switched to Buildium as our property management software, and in addition to accounting functions, it handles our website, rental applications, tenant screening, and maintenance work orders.

Here is a rough breakdown of our monthly non-personnel overhead costs:

  • $30 = RingCentral Fax/Phone Line
  • $60 = Buildium Property Management
  • $100 = Office and Misc Expenses (paper, folders, signs, etc)
  • $300 = Office Rent
  • $60 = DSL Internet
  • $30 = My Cell Phone (unlimited 3G data/text/calls plan with Republic Wireless)
  • $10 = Additional Cell Phone (wifi-only plan with Republic Wireless)
  • $20 = Rental advertising

$610 =  Total Overhead Expenses

If you self-manage fewer units, like the 10-13 I discussed in the section on finances, you can get by on a lot less than this.

Related: Why Being “Small” in Your Real Estate Business Might Be an Awesome Thing

Out of all of the functions in a small and simple business, very few must still be done by someone in person. The two that stand out are showing units to tenant prospects and turning over vacant units between tenants.

In my case with a college town, the process is very seasonal. Most of the showings happen in February and March, and the turnovers between tenants happen for 5-10 days in August. So we just don’t plan any trips during those times. But for other situations, talk to local property managers and to your contractors to find someone hungry and willing to handle turnovers for you. Some managers will require a full management agreement, while others may be willing to be compensated piecemeal for finding tenants and for doing the turnover process.

Is a Small and Simple Real Estate Business Right For You?

As I said in the beginning of the article, the purpose of your real estate investing business is to serve your life. You are the one who must decide what your real estate business will do for you.

Think long and hard about the type of business you create. The business model you choose will determine not only your financial success, but also the amount of time and flexibility you will have to enjoy the fruits of your labors.

Fighting against the tide of “bigger is better” is not easy. A lot of outside hype and a lot of pressure in your own mind (especially for those of us who tend towards Type A personalities) will work against your desire to keep things small and simple. But I hope you can see the merits and the possibilities of following that path so that you see it through.

Questions? Comments?

Leave your thoughts below!

About Author

Chad Carson

Chad Carson invests in Clemson, South Carolina. He also writes at about using real estate investing to retire early & do what matters. For practical advice each week — join his free newsletter at


  1. Cydni Anderson

    This article really nails it for me.

    I’m all about simplicity. I’ve read most of the books in the Rich Dad series, and while they make sense and are inspiring, I tend to find myself thinking about how I really don’t want to scale so high…

    Thanks for taking the time to write this!

    • Chad Carson

      Thanks Cyndi! I agree about not feeling a need to scale. It seems like complexity it touted too often in our finances, when a simple structure will do just fine. If simplicity works in other areas of your life, why not your real estate?

  2. Ryan Mendonca

    It seems to me, that if your goal is simplicity and you have $1-2M in equity in 1-4 unit buildings, you may want to consider selling some (or all) of them and moving into just one or two apartment buildings so that all of the units you manage are under one or two roofs. Obviously, this depends on you being able to find the right deal, but if you own all your buildings free and clear, you could take your time searching for that deal, and in terms of simplicity and overhead, there are some definite advantages.

    • Chad Carson

      Hey Ryan, that is a good thought. It certainly is tempting to own one or two buildings for the similicity of location and maintenance (i.e. one roof).

      There are always competing interests, and an argument against one building is that 10-15 properties give you a degree of diversification in case one deal or location goes bad. I also like the ease of financing 1-4 units vs apartments, and I like that I could sell off pieces of the portfolio much easier with more small pieces.

  3. Jen Shrock

    I appreciate an article spelling out the benefits of the KISS method of things. The frenzied pace of some does not sound enticing, but what you have laid out sounds spot on perfect for me. Thanks for sharing and showing how staying smaller and simpler can be a great and rewarding option.

    • Chad Carson

      Exactly:) That’s why our economic system is a beautiful thing. We can get paid doing it the way we want, and someone else can go on to make big profits (we hope) doing it the way they want.

      thanks for the comment, Giovanni.

  4. Marty U.

    Chad, good post. I had a chuckle when I read 58 units, but it’s impressive that you can make this many doors “simple”.

    Gives me a good aim point as I contemplate how to set up my RE business…

    • Chad Carson

      Thanks for pointing that out, Marty. 58 doors is a little misleading because it’s me and a business partner. I would consider 25-26 doors simple for one investor. And it also depends upon that sliding scale of desired income vs simplicity. We used to have almost 70 doors, and that stretched the seams of our capabilities a bit. That’s one reason we’ve cut back since then.

      I appreciate you reading and taking the time to comment. I assume you are working on a buy-hold business, too? How are things going so far?

  5. Edward Sitver

    While I’m not going about my investment exactly the same way as you are Chad, my basic approach is the same — keeping the portfolio manageable and set up to serve my needs. But you’ve definitely got me thinking about the pros/cons of paying off properties vs. using that cash as a downpayment on the next property. While it doesn’t make sense by the numbers, since I have six 30yr fixed all in the 5% range, I imagine there’s a certain sense of security having some properties free and clear. Yes?

  6. Jack Knochel

    Great article Chad! We love the way you think when it comes to REI. We have no desire to build an empire or create a job for ourselves. We started simplifying a few years ago and got Michelle out of the corp job and are working to get me out now. To us its all about simple and enjoying life. We were in Arizona two weeks ago and then just spent the past week in Florida, heading home tomorrow. My Corp job is in IT and I work from home, so wherever there is wifi, I can go and work. So we now take work/vacation trips a few times a year, I work half days and take vacation time in the afternoons. We can still handle any REI from wherever we are as well as keep my 9 to 5 bosses happy. Our goal this year was to get from 3 rentals to 10, just picked up our 4th last month, but am thinking unless we get some multi family, that’s going to be a challenge. 10 is still the goal but I do think we will be above that because we will find a small apartment building by the end of the year. Hope to see you at the REIA meeting Thursday! Later, Jack

  7. Scott P.

    One thing that has worked very well for me is using friends to do showings at the 2 properties that I own in another state. I’m surprised how few people seem to use this method. I work a full time job and manage 9 properties. I have never used a professional property manager and hope I don’t have to.

  8. Chad,

    Great article! This pretty much sums up what I am working toward. As I grow, I am be cautious not to push myself into deals or projects that will occupy mass amounts of my time, resources, and energy. Even if the deal is a slam-dunk! Always enjoy your articles.

    Lowcountry SC investor

  9. Kirk Thomas


    This matches what I try to do well. Although my Real Estate part of my portfolio is lagging. I have aimed at lifestyle that is supportable by stock investing and/or real estate. I really appreciate this article as it helps me focus on my goals and not the shiny objects. I stepped out of RE for a bit beyond holding some rental properties because of two beautiful young kids but now that I am starting to get a bit of extra time again I want to get back on path to financial freedom.


  10. JP Hill

    Good article Chad. I just signed up for your weekly newsletter email. I’m looking forward to researching niche markets. So far I’ve studied the student housing market in older homes converted to apartments and single family houses. I have a condo I bought to live in rented out in a military town as well. You laid out a solid plan similar to what I’d like to accomplish. I’d like to produce $5000 per month from rentals within the next ten years. I’m considering becoming realtor to get there faster. I look forward to reading more.

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