BiggerPockets Podcast 183: Achieving Financial Independence Through Rental Properties with Sarah Pritchett

by |

What does it take to achieve financial independence? Thousands of deals and a 100+ hour work-week hustle? Not according to today’s guest! Today we bring you an incredible interview with Sarah Pritchett who just one year ago began her journey toward financial independence using rental properties — part-time! You’ll learn how Sarah is building a rental portfolio despite living in one of the most crowded, competitive markets in the world, as well as her best tips on overcoming obstacles, creative finance, and more. This show will not only give you miles of practical advice, it will leave you saying, “I can totally do that!”

Click here to listen on iTunes.

Listen to the Podcast Here

Watch the Podcast Here

Help Us Out!

Help us reach new listeners on iTunes by leaving us a rating and review! It takes just 30 seconds and instructions can be found here. Thanks! We really appreciate it!

This Show Sponsored By

simplisafeCheck out SimpliSafe Security’s DIY home security systems; an affordable, wireless, cellular, and customizable system that doesn’t require a contract!

Try it today with a discount:

Fire Round Sponsor

freshlogoA huge thanks as well to our Fire Round sponsor FreshBooks.
FreshBooks customers spend less time on paperwork, freeing up 2 days per month to focus on the work they love. What would you do with that extra time?

Learn more by visiting FreshBooks.

In This Episode We Cover:

  • How she got a ride in an F-16
  • How she discovered financial literacy through Mr. Money Mustache
  • Her experience going from the air force to real estate investing
  • How analyzing deals made her feel comfortable buying her first deal
  • How to invest if you’re in an expensive market
  • The details on her first deal
  • How she chose her market
  • Sarah’s thoughts on HOAs
  • How she’s managing her properties
  • How old her properties are
  • How a Home Equity Line of Credit helped her land her first properties
  • What her long-term goal as an investor is
  • How Sarah finds her deals
  • Some obstacles she’s encountered in her investing career
  • What the 2 year rule is
  • How many hours a week she works on her real estate
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “My rental income does not count as income.” (Tweet This!)
  • “If they can’t help you, ask who else they know that can help you.” (Tweet This!)
  • “You need to know what to ask because you don’t know what you don’t know.” (Tweet This!)

Connect with Sarah

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners -- without the non-stop pitch prevalent around the industry. With over 180,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!


  1. Michael Trizzino

    Great show, thanks for sharing your story, Sarah. It’s so inspiring to see other MMM and FIRE enthusiasts making their dreams a reality, and you’ve given me more hope that my own journey can be similar.

  2. Leon Greene

    Thanks for sharing your story Sarah. My wife and I would love to know how you structured the first few properties to be able to cash-out refinance? Did you purchase them in your name and refinance them, then transfer the deed to an LLC? We’re in the process of buying our first rental in Indiana (we live in NYC). We’re paying cash for the property and repairs, but want to refinance and pull cash out to get more units, but there seems to be so many restrictions on bank financing when the property is owned in an LLC. We’d love to be able to leverage our W-2 jobs and good credit on the first few deals before we venture into portfolio loan territory.
    Thanks Sarah!

    • Sarah P.

      Hi, Leon,

      I apologize for such a huge delay. Can you believe I didn’t know there were comments here until today?! 🙂

      So to answer your questions- since I used my HELOC for my first one, I was able to talk to a bank and do so since I owned that property outright. As for the LLC- it depends on the state, but in a lot of cases you can do a Quit Claim Deed (if your mortgager cares/allows it) to your LLC for most of the time a small fee. In Colorado it’s $10 but in Florida it’s quite a bit more.

      I hope you got that first rental!

  3. Earl minnis

    Observations on this podcast.
    Why are people who jumped into this business 1yr. ago being interviewed? They know next to nothing and others are listening to this stuff. Would you go to a doctor, dentist or attorney who just got into the business and expect good results?
    People constantly talk about cash flowing . Everything cash flows either positive or negative. Many deals have a negative flow. You need to be specific.
    Allowing others to rent your properties or manage them is allowing others to manage your financial future. Not a good idea.
    Anybody can buy properties for retail value as it appears Sarah has done. The trick is to buy wholesale or with terms that make a great deal such as maybe an owner carry back at no interest.
    Using a home line of credit to buy other properties at market value is a great way to loose your new rental along with your primary residence. Review what happened 2007-2009.
    Sarah is totally leveraged.a blip in the market and the house of cards will collapse. She has bought these properties after a huge price recovery has happened, not at or close to a bottom of a marker swing.
    Financial independence- 6 properties, really? How do you make enough to live on if you pay retail, almost 100percent financing and property managers. I’m confident there is cash flow here but it is negative. This is not reality. If it was everybody would be doing it.
    Sarah says now she is connected to wholesalers. Let me tell you about wholesalers today. They are giving away nothing. You may get an occasional small deal but nothing to write home about. Especially somebody new to the business.
    People who know next to nothing and talking about investing out of the area. An old saying comes to mind “a fool and his money will soon be parted”. This stuff is difficult enough to do in your own backyard let alone somewhere else. Only for a true experienced professional with a lot of deals and years of experience under his belt.
    Sarah says if she is working to buy a deal maybe works 5 hours a week. And if not spends 1 hour a week with 6 properties. Again not reality.
    Skipped your “Fire” round. To frustrated listening to a fairy tale.
    Scott at Big Pockets- hope you catch this review. Earl Minnis

    • matthew simmons

      Hi Earl – I have no doubt you have far more knowledge about RE than Sara, and certainly me, but I went back and looked at your posts and mannnn, your a miserable cus lol. I hope if I’m lucky enough to achieve the sort of things you have in this business, I am able to share some positivity and encouragement.

    • Brandon Turner

      Hey Earl,

      We definitely appreciate opposing views and welcome yours. However, I thought I’d address a few of your concerns.

      First, who wants to listen to someone in the game only for a year? A LOT of people! The doctor/dentist analogy doesn’t work because basic real estate investing is case-specific and far less complicated than being a doctor. I learn from people who have been in the REI game for 6 weeks just like I might from someone who has been in for 60 years. Because it’s the lessons they are going through that matter. For example, in Sarah’s show, I was reminded of the simplicity real estate can provide for getting someone out of a job. How Sarah did it is exactly how I did it. Just pick up a few properties that provide positive cash flow (and yes, she says she’s getting positive cash flow) and you can fairly quickly get enough to pay your bills.

      Furthermore, I find newer investors are better at explaining topics to brand-new investors because they remember all the tough little details that experienced investors take for granted. In fact – there is a reason we don’t interview a lot of investors who are older than 50… because almost every one of them is TERRIBLE at explaining topics or talking about the stuff that matters to newbies.

      Anyway, keep listening Earl! Even you might pick up a little tidbit someday that could help your business!

    • Rhondalette W.

      Earl, each year there are new doctors, dentists and attorneys practicing and guess what… people go to them. Actually, some new doctors may be more knowledgeable than those who trained 20 years ago due to advances in technology and how readily accessible information is now. I believe Sarah can cash flow in her first year if she has found a good area to buy in. I live in Dallas which is an excellent area to buy and I cash flowed my first year and purchased property directly from the MLS. My first property was in great condition needed NO repairs and met the 2% rule. This business is only as difficult as you make it.

      • Earl minnis

        Rhondolette, again people on this site talk about cash flowing. Let’s be specific, either positive or negative. Let’s see your numbers. How much did you pay, down payment, int. rate on loan, loan amount, payment, yearly tax amount, insurance premium, a little set aside for vacancy and repairs ? What is the house? Number of beds and bathes, square footage ? And what does it rent for? I know the numbers somewhat in the Dallas area and don’t believe you can net any where close to 2 percent of a purchase price (net) per month. Let’s have a real discussion here and just not people saying things with no facts to back them up. Earl Minnis
        If you have figured out something new to do consistently that nobody else knows how to do without risking their life on inter city properties than you and I should get together, I can make you a very rich person.

    • Zach Lemaster

      Personally enjoy hearing peoples success stories from new to the seasoned! I find the newer investors finding success motivates me to keep in the game. Remember, the audience is more than just real estate professionals with 20+ years experience! Enjoyed the interview Sarah, Josh & Brandon! Always learning something new from every podcast!

    • Sarah P.

      Hi, Earl,

      You make a lot of good points and I apologize for the delay as I just realized there were comments on this page. So let’s get to it:

      1. I actually say this in my podcast- I was humbled to be invited on the show as I was still very new. A whole year later and I’ve learned a LOT, but still had positive cash flow enough to support my annual expenses, which is exciting to report! I also just finished summarizing for a future blog post about the lessons learned so far as well in hopes that others can take my adventure into account for their own.

      2. I hear you on the property management point of view. I have a hard time trusting others who don’t quite have your same financial interests in mind. I prefer to manage my own properties if possible, but I am also lucky to have found a few people I trust with those.

      3. A few I’ve been able to purchase at wholesale price, one was turnkey, and a few at market price. I purchased and remodeled a foreclosure recently and it was not quite my cup of tea. I find purchasing properties, giving them a minor facelift, and renting them out is much more my style. I do know people make wonderful livings off of wholesale/flipping, etc. though. Good for them and you if that’s the route you take!

      4. Can you elaborate on what you mean for losing properties if the real estate market tanks if I used my HELOC? I assume you mean renters wouldn’t be looking for places and that the idea is I wouldn’t be able to cover my mortgages? I’d be happy to learn what you mean by this. As for the HELOC itself and the comment on being fully leveraged, I’m not 100% sure why you think that. Two years later, my HELOC is fully paid off due to the (positive) cash flow from my rentals and I’m able to get more properties if I want, but I’m content on my current situation.

      5. Yep! Six properties, although now I have eight as I’ve acquired two since that podcast. Have you read Mr. Money Mustache or anything from the Minimalists? I’m a fairly simple person with few needs other than a preferably lofty travel budget. Life is pretty good and a year after this podcast, I’m still very pleased with how my business has grown/provided for my basic needs.

      6. I agree that wholesalers, or anyone in general, may have a hard time finding slammin’ deals nowadays, but they’re out there. I’ve stopped searching for them as much now, but I keep an eye on the markets in case I find something I want to move on.

      You seem to be very experienced. What advice as a more experienced investor would you have for me based on the comments you wrote above? I’m sorry this wasn’t your cup of tea. I have really enjoyed learning about and participating in the world of real estate and wish you the best of luck!

  4. Earl minnis

    Really Mathew? That’s what you took from my comments. I’m anything but miserable. Quite to the contrary.
    Don’t like seeing people tell how easy this business is . Anybody that is REALLY in the business will tell you the same things I’m saying. Don’t like seeing people led down a rosey path that does not exist and told how they can become financially independent in a few short years. As I said before these these things are just not reality. Good luck to ya, Earl Minnis- don’t be an ostrich.
    P.s. Telling fairy tales is not positivity or encouraging anybody,quite to the contrary.

  5. Alison Koenig

    Thanks for sharing your story. Your journey has just started and you certainly don’t know where it is going to go. It sounds like you have been smart, savvy and run your numbers. Not everyone has to buy dilapidated homes to cash flow. Full disclosure I have not invested, yet, but I have been running a lot of numbers in preparation and I’ve found that I can cash flow buying undervalued property that are still nicer. Stick to your goals and your numbers. Use any naysayers to make you extra diligent. Its good to have a mix of negative and positive, learn from it all! Keep it up girl!

  6. Earl minnis

    Hey Brandon
    I guess we’ll have to agree to disagree on my doctor-dentist analogy.
    The cash flow from 6 retail house purchases would have to be proven to me with numbers to show adequate income to be financially independent. Unless you bought them for cash I would highly doubt you had any positive cash flow to speak of. Just because somebody says something does not make it so. If it was that easy to buy a few properties and be self sufficient I doubt we would have many people employed in this country. Then as so many of your people talk about you could just put them with a property manager and have the manager send you the money wherever in the world you are this month. As I keep saying and I’m about done saying – this is not how the world works and is not reality. I had a great conversation with your associate Scott the other day.
    I guess I will challenge you to really prove how easy this stuff is done. I think your in Wash. I’ll pay for your flight to Santa Barbara , put you up at the Biltmore at the beach and we’ll meet . You can explain in detail with numbers how easy this is. Maybe I can talk one of the writers at the LA Times to come along or an agreed upon moderator. This could be very interesting and maybe very beneficial to your business. In addition you could get with Sarah and get the particulars on her deals. We could also compare financial statements. What do you think? Earl Minnis

  7. Craig Horton

    As a Vietnam Vet from the Navy I really appreciate the opportunity to have an active duty military person on the podcast. There is a great book I love by Robert Kiyosaki that I would refer her to that I liked a lot. The title of the book is “8 Lessons in Military Leadership for Entrepeneurs”. In the book Robert Kiyosaki talks about how his military service helped him be strong as an entrepeneur. I thought the book was excellent. On a future show, Sarah might also discuss the advantages of using a Federal VA Loan to buy a house, move in, and later move out keeping the loan on the property. That topic was not covered on the show. Thanks for a very good interview that was also a tribute to our active duty military from a Veteran !!

  8. Vandana Rao

    Hello Sarah, very inspired by your story. I live in a high priced market too and am looking for good out of state towns to invest in. Just wondering what part of Florida were your first investments? The Audio wasn’t clear on the podcast for me. Thanks, Vandana

  9. Dolores Waldron

    Hi Sarah,
    Loved your podcast !! You mentioned you are taking steps now to research a new territory – would you be able to share the steps you take to research a new territory and how you make the decision that it’s an area you would like to invest in?
    Thanks so much for sharing, Dolores

    • Sarah P.

      Absolutely! I do a lot of hopping around on Zillow/Trulia to see what properties are in what areas (safety-wise), what are listed for rent and how much they were purchased for/renting out for, and plugging in with a property management place nearby who is willing to answer some questions. They also have the inside scoop often times on properties they’re managing coming up for sale. Most agreements say that if a property goes for sale, they’d be the selling agents and I’ve had a few deals come by that way. I went out of state to Florida because it was less competitive, and then to Michigan where I’m from because I could get similar cash flow for properties at 60K vs. 90-150K out here. I could use less of my own capital and get the same returns, so that’s why I broke into a new market.

  10. Joshua Keene

    Thank you for sharing your story and experiences Sarah! One of the points that stood out to me in this podcast refers to hiring contractors that may work on your units. Sarah mentioned a website called Thumbtack which posts your work order to members of the site where contractors can place competing bids for work. It’s always a good idea to vet not only the contractor that will work with you, but potential employees that the contractor may have work with them. A smart tip that was mentioned in the podcast is to disclose that you are a Real Estate Investor and that the contractor chosen to complete a job who does excellent work will more than likely be called back as investors tend to use contractors often. This tip is helpful in luring contractors in to work with you because you almost certainly will have jobs lined up for them in the future with your properties. This also makes it easier for the investor so they have a reliable contractor to hire for work, rather than scouting for someone new with every job. Brandon mentioned that it is also a great idea to have your property manager follow through by contacting the tenant (if one is living in the unit where work is being done) to get their feedback on service provided by the contractor. This is a great way to verify quality of work and show good faith to your tenants that you are providing the best service possible to their living needs. (Beware of the “paranoid ones out here in Podunk”) Thanks for that Brandon! Another great podcast!

  11. Julie Marquez

    Hi Sarah, I appreciate you sharing your story and how far you’ve gotten in real estate in just a year. You make real estate sound so simple and achievable. I’d like to do real estate in a manner that it doesn’t take over my life, just is a side gig, and enhances my life, so I like your story. All the best to you!

    • Sarah P.

      Hi, Julie!

      Thanks for the comment. I suppose it’s achievable, but only seems simple in hindsight. 🙂 There was a lot of preparation into each deal but if you set up your business properly, I believe that per your words- it doesn’t have to take over your life.

  12. Julie, good luck with how you think this business works. Not reality. Yeh, just a side gig, pretty funny. You as the rest of the people that read this stuff will find out when you dip your toe in the water. Earl minnis

    • Sarah P.

      Hi Monica!

      Thank you for reaching out. It has been a ride for sure! In fact, since I have considerable gains on a property I own, I’ve chosen to sell it and possibly 1031 exchange those gains into two properties for some extra cash flow. I’m not sure what I’ll do just yet but it’s a thought to have more cash flow without anymore of your own original capital going into the deal! 🙂

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here