Why the Massive Real Estate Empire You Think You Want Won’t Give You the Life You Imagine

by | BiggerPockets.com

Think big! Accumulate hundreds or even thousands of units. Use economies of scale. Syndicate. Benefit from maximum leverage. In other words: go big or go home.

Aren’t these the messages we hear so often here on BiggerPockets? Aren’t the biggest and the best the ones with the most cash flow, the most flips, and the most rental units?

Well, I’m here to tell you that bigger is not always better. In fact, I plan to show you that smaller and simpler is actually better for many of you.

I’m trying to start a new movement. I hope some of you will join me. The motto is “go small or go home.”

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Big Isn’t Bad

Life is too complex to say big is bad and small is good. We all have different motivations, don’t we? You aren’t wrong if you have big, large-scale real estate aspirations.

I would say it’s only wrong if you think big is the only way to live a rich, amazing life.  There are other simpler investing options that don’t get enough publicity because, well, they’re too simple.

You don’t have to get big to accomplish incredible financial and life goals. Small-scale real estate investing with even a few properties can do that, too. These mini real estate models can give you plenty of money, plenty of free time, and plenty of flexibility. And they can help you avoid a lot of hassle and risk that comes with growing a big business.

Isn’t that what most of us wanted in the first place?

Unfortunately, smaller real estate investing does have its downsides. You may not get famous with a best-selling book. And I’m sorry to tell you that you probably won’t get an HGTV show contract. But as a consolation prize, you CAN get a life of financial security, simplicity, and freedom that most people only dream of.

To begin exploring my point, let’s look at an interesting story of three BiggerPockets investors**.

A Story of 3 Real Estate Investors

One summer, three real estate investing couples travel together to Europe. These investors originally met as beginner investors on the BiggerPockets Forums. They liked each other and helped each other grow. Along the way, they became friends. Fifteen years later, they each have experienced success with their real estate, and they want to enjoy the fruits of their efforts.

They spend 14 days visiting the Mediterranean coast. First, they explore ancient sites in Italy while enjoying amazing food and wine. Then, they continue with a high quality, Mediterranean cruise to explore stops in Croatia, Greece, and even BiggerPockets author Erion Shehaj’s beautiful native country of Albania.

Could these investors afford a nice trip like this? Let’s see.

The Financial Scoreboard

Couple #1, Liz and Tom, are in their 50s. They live, invest, and self-manage their properties in Missouri. Over the last 15 years, they’ve bought 10 single family houses, one-by-one, in good neighborhoods.

Liz and Tom searched hard to buy these houses as fixer-uppers below value, and they used the BRRRR technique to recoup most of their cash on each deal. Then they used the debt snowball technique to pay off their mortgages early. Their houses now produce $7,000 per month, or $84,000 per year, in positive cash flow.

Couple #2, Tiffany and Darius, are in their early 40s. They live in New York, and they invest in North Carolina using a property manager. Fifteen years after starting, they now own one 50-unit apartment building.

Tiffany and Darius began with smaller properties and then used 1031 tax-free exchanges to trade up to bigger units until they had enough equity for a down payment on the 50-unit building. They have a solid, fixed-interest, 25-year mortgage on the building, and the property produces $10,000 per month, or $120,000 per year, in positive cash flow.

Couple #3, Mike and Lauren, are in their late 40s. They live in Nevada and own properties all over the country. Fifteen years after starting, they now own 500 units!

Mike and Lauren began with their own rentals, but because of their ability to put together great deals, they also began syndicating deals by pooling money from others. Their portion of the rental income equals over $30,000 per month, or over $360,000 per year! Their portfolio produces the most money out of the three couples.

It’s clear to see that all three couples can easily afford to pay for this nice European vacation. This is exactly why all of them began investing in the first place.

But the story gets a little more interesting as they approach the end of the trip.

Let’s Extend the Trip!

By the end of this trip, all three couples have had a fabulous time. It’s been so great, in fact, that couple #1 (Liz and Tom) propose that they all stay a few weeks longer to explore more.

Liz and Tom’s rentals are all full of self-reliant tenants who automatically deposit their rent each month. The tenants can email or leave a voicemail with any maintenance emergencies, but this rarely happens. And with no debt or immediate plans to buy more properties, their business schedule is amazingly flexible.

Couple #2 (Tiffany and  Darius) check their calendars. They have a few community and church functions, but those could be put off. Their property manager is competent and in control of day-to-day issues at the 50-unit building. And because no major financing or remodel projects are looming, they happily agree to stay on as well.

But couple #3 (Mike and Lauren) has challenges. They want to stay and can easily afford the expense of extending the trip. But there are projects looming back at home.

Remodeling contractors are waiting for their guidance on recent value-add apartment purchases. A new property manager needs to be found to replace an under-performing one. Their corporate bookkeeper and administrator need help. And some of their equity investors want to meet with them to discuss some past and future projects.

As a result, Mike and Lauren regretfully decline the vacation extension.

The Myth of the Passive Big Business

Mike and Lauren do not have a bad business. In fact, it is financially the most successful business of the three investors. But here are the questions I always ask the Mikes and Laurens of the world:

  • Did your investment business meet your true goals?
  • Are you spending your time doing what’s most important to you?
  • Would alternative approaches have met your goals just as well with less hassle and risk along the way?

It’s possible that Mike and Lauren are happy with their current situation. If so, then I’m happy for them. But my experience has shown that many people in their situation are less than happy. Their extra money has come at a cost.

And I’m sure I’ll get examples in the comments about Shark Tank hosts, famous entrepreneurs, and BP Podcast guests who’ve built big businesses that also check all the goals off the list. It’s fine to provide successful examples. But the bottom line is, what are your goals? And what’s the best way to achieve them? Are you a Shark Tank host, or are you a regular person trying to free yourself from the 9-5 grind so that you can live an extraordinary life?

I know a lot of entrepreneurs and real estate investors. The ones with the most money have big businesses. If that’s your #1 metric, then go for it. But the ones I know with the most free time, the most flexibility, and the least stress have smaller, simpler businesses and portfolios. And interestingly, I don’t see these smaller investors worrying that they have a smaller net worth than the big investors. It seems they’re too busy enjoying life!

Can You Control Frankenstein?

So far, it might seem that I’ve beat up on the big real estate investing model. But I’ll readily admit that it’s not impossible for you as the owner of a bigger business to have it all. You can create systems and teams of people that both produce a lot of money AND allow you to be relatively passive and flexible. It does happen.

But very importantly, it’s a lot harder and more time intensive to manage a bigger, more complicated business. There are more people involved, more moving parts, and more things to pay attention to.

I think of it like Frankenstein’s monster. Without extreme focus, a business can become a scary, out-of-control creature that takes on a life of its own. And yes, it can even get hungry and eat your money, your free time, and your life!

The Frankenstein business monster becomes most scary during the business’s growth spurts. Look at this graph of a business life cycle, for example:

The Danger Zones are where business “Frankenstein monsters” attack.

The growth spurts of this graph are the steep inclines. These are the danger zones. This is when you, the business owner are most susceptible to cash crunches, dramatic market changes (i.e. 2008-2010 Great Recession), personnel problems, and even personal burn-out.

These danger zones are where the Frankenstein Monster rears his ugly head. You can win against the monster. But just be prepared for a battle.

Finding Your Business and Investing Sweet Spot

You as an entrepreneur have to decide where on the business lifecycle graph you want to end up. You have a virtually endless choice of plateaus that you could aim for. The sky is the limit in our economic system. But again, your choice will depend on your personal financial goals.

And your choice will also depend on your willingness to take on the risk and hassle of the perilous climbs up to higher economic ground. The reward at the top better be worth the sacrifice of the climb (and the fights with the Frankenstein monster)! Unfortunately, plenty of people have arrived at the top of the financial mountain to realize they lost everything they really wanted along the way.

The key is to find your personal business sweet spot. As you’ll see in the graph below, I’ve marked two different sweet spots.  One is smaller (fewer assets, fewer employees/team members, less money), and the other is bigger (more assets, more employees/team members, more money).

Smaller or bigger business sweet spot? It’s your choice.

Both sweet spots are beautiful, level plateaus where you’ve increased income while also gaining efficiency that frees up your personal time and reduces hassle. The bigger sweet spot has more money earned. But nothing comes without a cost. You must make the choice if bigger is worth it for you.

And that choice may come down to the concept of enough.

The Fulfillment Curve & a Place Called “Enough”

One of my favorite personal finance books is Your Money or Your Life by Vicki Robin and Joe Dominguez. In the book, they share a graph called the Fulfillment Curve. Here’s my drawing of what that looks like:

While the authors shared this as a personal finance concept, it also applies to the real estate investing business. As you move up the curve, you pass milestones like survival, comfort, and even small luxuries that make life sweeter. But you finally arrive at a place called “enough,” the peak of the fulfillment curve.  In terms of happiness, it doesn’t get much better than this.

But as you continue moving past the peak of the curve, each subsequent amount of money you earn and spend has diminishing returns on your personal happiness. This occurs because the extra you earn, spend, and accumulate carries with it clutter, complexity, stress, and hassle.

The place called “enough” is different for each one of us. But it’s vitally important as a real estate investor to learn what it is for you. The main point of this article is that smaller, simpler businesses can take many of us to this place called “enough.” And going past the peak of the fulfillment curve by getting bigger and more complex just clutters our lives.

“But I Enjoy Growing and Staying Busy!”

By this point in the article, I’m sure some of you are with me, and others of you are completely turned off. That’s what I expected. But some of you may still be on the fence. Perhaps you know you’ve got enough financially, but you’re thinking something like this:

But I like working. I enjoy being busy. If I weren’t continually buying more deals and building a bigger business, I don’t know what I’d do with myself. I’d rather stick with a pattern that satisfies me than risk an unknown void in my life. What if I get bored?

I feel your pain. I’m a model member of the club for the recovering Type-A, job-identifying, workaholics anonymous.

The truth is that of course work is fulfilling. It really can provide a wonderful sense of purpose, growth, and challenge. I personally enjoy it, too. And there’s no reason to give up that outlet in your life if you like it.

But would your “work” projects be different if you knew you had enough financially? Would that allow you to negotiate a different approach to work, your investing, and your schedule? You could even keep doing the same basic activities, but you’d do it completely on your terms.

Sometimes this leap requires a little bit of imagination.

What Do You Want to Be When You Grow Up?

You’ve been hard at work for years. Even if you just graduated from college, you’ve still been through years of schooling, which conditions you to constantly perform and check off endless to-do lists.

I’ve found for myself that this hard-working, 9-to-5 grind for many years causes me to lose something. That something is the creativity and imagination of a child. It’s that inner force that caused you to stare off into space as a kid and say, “I want to do [insert your passion]when I grow up!” Adulthood has a way of squashing dreams with the hammer of practicality (under the disguise of money).

In 2009, my wife and I took a sabbatical trip for four months to Spain and South America. During the trip, I finally got a glimpse into my own forgotten imagination. Six weeks in, my uptight, ambitious self finally let go a little bit. It happened after spending several magical hours just sitting with my wife and watching the bay of a Mediterranean fishing village in Cadaques, Spain.

We first watched a sunset, then the arrival of a beautiful star-filled sky, and finally the biggest shooting star we’d ever seen streaking in green across half the sky! During the entire experience, I could physically feel myself relax like a big knot untied itself in my chest.

There weren’t any specific epiphanies at that moment. But I was stunned as I realized how one-tracked and focused my life was. Without that trip, that space, and that slowing down, I may have talked myself into thinking I needed to continue growing and pushing for another couple of decades. It was like I had woken up to brand new, child-like possibilities.

Go Small And Do What Matters in Your Life

The story I just shared was my specific experience. But I’m convinced that we all can regain our own unique imaginations if we just give ourselves the space. And to create that kind of space, it helps to have a particular kind of real estate investment business. It’s big enough to give you enough financially. But it’s also small enough to give you free time and space to think, to explore, and to do what matters in your life.

What matters. That’s an interesting concept.

On my personal website, I wrote something called the “Money-Life Manifesto” that talks about what really matters to me. Everyone’s life priorities are different, but perhaps this excerpt from my manifesto will resonate with you:

Sleep more. Relax in the morning. Sit in a rocking chair.
Learn something new. Be impractical. Explore.
Visit amazing places. Go on adventures. Hike trails. Ride a bike again.
Unplug from the matrix. Do work you love. Buck the system. Say “shove it” to the man.
Raise your own kids. Play silly games. Help with homework. Spoil your grandchildren.
Plant a garden. Grow your own food. Eat healthy. Exercise.
Slow down.
BREATHE.
Pursue your passions. Volunteer. Listen to people. Make an impact.
Advance your cause. Create your art. Write your story.
Get OFF the 9-5 treadmill.
STOP selling out!
DO what matters!

Henry David Thoreau once wrote to “live deliberately.” Our businesses should work the same way—because real estate investing isn’t just about real estate, is it? It’s about what matters to you.

I wish you best of luck in your real estate journey to discover what’s enough financially, to find your investing sweet spot, and to start doing more of what matters, whatever that means for you.

I’d love to hear your thoughts in the comments section below.

**I heard a variation of the “three real estate investor” story at a seminar at least 10 years ago. I think it was the late Jack Miller who told it. If someone knows differently, please help me give the correct credit.

About Author

Chad Carson

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

151 Comments

  1. This is so great, I am out of the rat race at a fairly young age. Having done so, many people are wondering what is next. Originally, I thought about building a big “B” as in Big Business Quadrant, but decided that I am best suited as someone in the “I” quadrant. It is very important to understand who you are and what you want in life and your passions and it’s ok, to stop and smell the roses. Bigger is NOT always Better. The beauty is that being Financially Free is more important than more and more money which may require you to have less and less of your own time which is exactly why you got out of the rat race.

    • Chad Carson

      Kiyosaki’s 4 Cashflow Quadrants idea is definitely relevant. Thanks for bringing that up. You don’t have to be in every quadrant. You just have to figure out the best place for your life. And “I” is certainly a nice place to aspire to.

  2. David Todd

    Your article was a good investment of my time. I enjoyed reading the article because it brings me back down to earth. I have yet to start investing. I am trying to learn as much as I can until I start. I find myself going off on all kinds of tangents that seem interesting and sound as if they would help me with my long term goals. Your article lets me know it is OK to grow slow and steady and have enough. My goals are not to have tons and tons of money, but just enough so that I can spend more quality time with my family. Thank you Chad!

    Take care,
    David Todd

    • Chad Carson

      Hey David! Thanks for commenting. Glad you took the time to read. At the beginning is a perfect time to read this message. Just find your pace, move forward, and keep YOUR goals in mind.

      I love how you said it “My goals are not to have tons and tons of money, but just enough so that I can spend more quality time with my family.”

  3. George Krischke

    Great words of double wisdom: “Live deliberately, and work towards the peak of your fulfillment curve”. The goal is to fine tune the journey towards the peak of the fulfillment curve by delegating and outsourcing tasks that can be handled by others. In other words, focus on the most important task, that if done correctly will eliminate the need to do everything else. That way you can eat your cake and eat it too. 😉

  4. tim boehm

    I’m with you Chad! We only have six units now all SFR’s we at one time had ten. I’m a rehaber and do it all from plumbing wiring roofing and even the granite on the counters.. tools tools and more tools, now I have to finish this one probably my last but at 5k feet it’s no piece of cake.

  5. John C.

    Thanks, Chad. That was a great article. Sometimes, I wake up and want to keep pursuing the real estate game. Other times, I think we have enough to live on, that any more would become a full time job.

    Your article has certainly given me more food for thought into the latter. That’s where I’m leaning more toward now, I think. The whole point of investing was to become financially free, not to have so many units that it would take up all my free time.

    • Chad Carson

      Thanks, John. Glad you’re doing some deep thinking on the subject. It’s never an easy decision. But just plowing ahead without thinking at all is an ever worse alternative.

      Best of luck finding that sweet spot!

  6. Jeb Brilliant

    Great post Chad. It sounds “cool” when you’re talking to your friends that you own 500 units but if you’re married to them it’s just a job, granted one you control a LOT more then a regular one. I’d rather own 50 units that allow me go to the beach all summer, take some nice trips and be there to do homework with my kids. 43 to go but I got to go to Hawaii in October because of residual income from my houses.

    • Chad Carson

      You’re exactly right, Jeb. There certainly is a “cool” factor to doing more and more. I think that social pressure – self-imposed or otherwise – often comes into play. I’m with you – let your lifestyle quietly do that talking. And love the comment about doing homework with your kids and visiting Hawaii!

  7. Sandeep S.

    Great article, Chad! It is such a great reminder for us investors that the whole point of getting to being financially free is to also stay “free” (and pursue your other passions). I have reached financial freedom after few years of investing and I am also out of 9-5. Right now, I’m steadily moving forward on the curve. It is so difficult to figure out what would be the peak of my fulfillment curve.

    Lot of food for thought…

    Thanks a lot for writing it.

    • Chad Carson

      Thanks for your comment, Sandeep. Congratulations on reaching financial freedom yourself! I agree it’s not easy to identify exactly where we are on the fulfillment curve. The clarity comes and goes over time. Perhaps that’s ok. But it sure beats working like a maniac and never thinking about what really makes you happy!

      • Jas Russ

        In the North Texas area (hot market), free cash flow on a typical 3/2/2 in the $150,000 ARV range is going to be around $400/mo. These homes usually cost $15-20k out of pocket after rehab and refinance. The popular investing shows in the area promote the same message and it’s what I experience with my own portfolio. $700/mo free cash flow is great if you can get it on a SFH. If anyone is seeing this in North Texas, Id love to see some examples.

        • Chad Carson

          Erion Shehaj with http://investingarchitect.com/ is not in North Texas, but he’s down in Houston and other parts of Texas. I know he’s getting reasonable rent returns on his properties. I didn’t mean to imply just any property would get the desired return. There will be some hunting involved. But in reasonably priced markets (many in Texas, midwest, south, etc) this isn’t an unreasonable goal. If it is unreasonable, you might have to look elsewhere or move to different types of properties (duplexes, triplexes, etc).

  8. bryan l.

    You’re right on target with this. I’ve actually cut back on my efforts to find houses to fix and flip. People are paying too much for them on the front end, and it’s hard work to rehab a house. And really not worth it in many cases in my area with the current market. My j.o.b. is actually easier than flipping at this point. And I intentionally set up that j.o.b. to have flexible hours, low stress, and it’s less than full time – and without risking my money. Wow, did I just say all of that? I now have a j.o.b. that is easier and meets my needs (financial, flexibility, low stress, etc) better than REI? Yep. But I still do a bit of REI to supplement and to keep my mind fully engaged.

  9. JL Hut

    Many times in life the grass looks greener on the other side of the fence until you get there and find it is artificial green grass and has its own set of problems. But, most wont believe that until they discover it for themselves.

    The more pieces of the puzzle you add to life the more difficult it is to put together and keep together.

    The greatest challenge in life is looking in the mirror and understanding who that is and what drives them to do the things they do each day, all without justification or self deception. Then you will have a chance of finding your “own” success.

  10. Gretchen Ott

    Nice article. As a single working woman, I’m not looking to leave my well paying job, but rather supplement my income and diversify, as well as create some stability if something happens to that good job. I don’t need to be a real estate mogul to reach those goals, so my small portfolio suits me fine. If I was younger and had more time, maybe that would be my path instead!

    • Chad Carson

      Thanks for commenting Gretchen. It’s great to hear you’ve given it some thought and know what success means for you in the real estate world (and life). And I think you’re right that age might have a lot to do with it in many cases.

  11. Ray Morris Jr.

    This was a great read. I felt the same way after taking my family to Europe for two weeks over the summer. I’m now working on ways to decrease my lifestyle and building a rental portfolio to replace our household income with as few units as possible.

    • Chad Carson

      That’s great to hear about your trip to Europe with your family, Ray. Sometimes getting outside your comfort zone and normal routine of life helps bring back some clarity.

      Best of luck with your next steps finding your own real estate sweet spot!

  12. Jacob Murphy

    Chad – I wish folks talked about this more! It is easy to get caught up in going the furthest you can making the most you can. My hope is that I would be able to give a lot of money away to charities that really need the money. The thing is, I need to decide if that kind of lifestyle is really where my time is best spent. Maybe spending more time with family is the best way I can give back. All things to ponder.

    This definitely reminds me of the minimalism culture. Living life and not buying so many things. Learning to enjoy more experiences rather than buying things we don’t need to make our job seem “worth it”. Appreciate you bringing me back to earth with the dreams of owning an empire.

    • Thanks for sharing your thoughts, Jacob. There are always tradeoffs. But my own decisions lean towards freeing up my personal time for contribution now. There will still be plenty of opportunities to donate money and contribute in that way. But I have found the world has short supply of people with entrepreneurial skills (like so many on BP) who also have free time and mental energy to contribute. Those are even more valuable contributions than money in my book.

      Good luck with your own deliberations!

  13. David Roberts

    Thank you for writing this. My goals are freedom, and my nature is to stress. So, it sounds cool to have 30-40 rentals but i thin that seems to just be glamorous. You never hear the bad side. Like, hold for 30 years. Thats a long time for a lot to go wrong, times 30 rentals lol.

    That being said, for me, I feel like 10 paif off real nicely rehabbed homes with good tenants, and then managing a few flips a year, adding that money back until paying cash for another rental, leaving the money in even though the return is lower and I take all the risk, makes sense to me. Awesome to go for it and grow huge, but over 20 years if you can add a couple a year or even add 1 a year plus do 2 or 3 flips, you are likely going to have more money than you know what to do with in retirement.

    I have flip flopped ao many times on what the end goal is for me, but never have I changed the “why”.

    I think you also have to consider market cycles. At the peak isnt time to buy rentals. But if a great deal comes then move on it. Many people will be losing their homes again in the next down cycle and thats the time to expand. Just be ready.

  14. Cameron Small

    Great article Chad, all to often we get caught in the capitalist part of investing and business that we forget our original why. Financial freedom can be a harsh reality because we have to deal with the fact that we’re responsible for our own happiness.

    • Chad Carson

      Great point about the connection between freedom, responsibility, and happiness. I heard someone say once that creativity and anxiety go hand in hand. Sometimes I think freedom is the same way. It can be easier to keep plugging away and setting goals higher and higher than face the reality that anything is possible now!

  15. Simonne Stewart

    I love the message you are sharing. My investing business is small and still has some growing to do before I hit my sweet spot. But I was distracted from the message a bit because my biggest thought as I read the story about the three investors and extending their holiday is…….where are the kids!! The 40ish couple likely has kids in elementary or middle school. The couple in their 50s, teenagers and/or university age kids. If the kids are with them, how long can they travel and be away from school? If the kids are older and not with them, will the house still be standing when they get back lol!

    • Deanna Opgenort

      Pretty sure no actual kids were harmed in the making of this example, though my thought is if you can’t trust university age kids to leave the house standing, and don’t have the social connections to arrange for someone you trust to take care of older teens maybe it’s even MORE important to throttle back on career in order to have time to focus on raising the kids (also, if the parents in this example had kids by 20 the 40-ish parents’s kids are in their early 20’s).

    • Chad Carson

      Ha, ha! Great point, Simonne! You poked a hole in my story! And i should know because I am traveling with kids right now for a year in Ecuador. Mine are 4 and 6 years old.

      But I tried to keep the story simple because it was already a long article!

      If I had to expand on the story now, I would say it is May or June, and the kids are with them. And they want to continue the trip too. But I have learned that traveling with young kids is much different. You have to go much slower (which can be good) and playgrounds and parks take the priority over historic sites and museums. Thanks for reading and commenting.

  16. Mike Dymski

    Wrong about one item…the premise of this blog and your story would make a best-selling book.

    Many of the BP authors and podcast guests contribute to BP partly to give back and largely for marketing themselves and their business. I would venture to guess that most BP members have more modest goals (although exceptional to achieve) than constant growth.

    I plan to join you on that trip some day. Brilliant article.

  17. Mona Lisa Harrison

    Knowing you, and knowing that you could choose to go big or small and seeing you make your choices and telling us why is most enlightening. You are living your message. Not all “experts” do that. Thank you for the time to you give to write, share, and create those cute concise graphs.

  18. Alek Liskov

    First comment on BP Blog and it’s this article that pushed me to do it.

    First and foremost – great article, Chad. Thank you!

    I’m just getting started myself (1 duplex) but as I listen to the BP Podcast and read articles and books, my mind can’t help but wander into “go big or go home” territory. I then take a step back and see how many weekends I have to sacrifice (I bought cash so not much left for GCs. I do all the work myself) and be away from my wife and 9 month old daughter. And while I am sure once the cashflow starts, it will be very helpful, that money will never bring back this time that I could have spent with them.

    On the other hand, I used to be exactly the work 9-9, study full-time, get-it-done type of a person who just accumulated money, degrees, you name it. And then I met my wife. And thank god I did. Prior to meeting her I had only been to 1 “exotic” vacation and that number has skyrocketed in just a few years. I have spent a significant amount of money on them but I am so glad I did. We had the best experiences together on these trips. And a few of them generated exactly the “big knot untied itself in my chest” moments. And they have become so important to me, because they give me clarity as to what I want to achieve.

    My personal goal is to aim to have *Enough*.

    Thanks again and best of luck!

    • Chad Carson

      Hey Alex! I love hearing your story. Sounds like you have had some similar experiences. My wife has had a similar impact of enriching my experiences and pushing me in directions I might not have gone or that I wanted to go in but might not have done that soon.

      I hope I conveyed tha “enough” is no simple place to find. Like you, I am always torn between competing desires (slow down or grow faster). But I find the end result of that tension to be healthy and worth while. Hope you do too.

      Best of luck!

  19. Adam Ulery

    I love your philosophy, Chad, and I love your manifesto! I am going to create a similar manifesto for myself this week! Your mindset resonates with me. This is a great article to keep me grounded and remind me why I’m doing this real estate thing! The book Lifeonaire by Shaun McCloskey and Steven Cook is a good book that had similar ideas. Thanks for writing this article and periodically revisiting this topic, Chad. You have inspired me to Go Small!

  20. Josh Sterling

    I’ll take the other side of the coin on this one. I noticed as we grew past 10, 20, 30 units it started to get less stressful. Maybe it was just my personality, but when we only had a couple units, anytime we had a minor issue (furnace repair, late rent, etc) it would feel like a huge worry. As the number of units grew, it was naturally less significant in relationship to the whole portfolio.
    As we crossed the 50 unit mark and started hiring help things become easier. Somewhere in the 150-200 unit range after we had several employees and solid systems in place it became much easier and allowed me to take my hands off the wheel for more extended periods of time. It was a real life example of the E-myth. There are definitely bumps in the road (and I couldn’t agree more with your graph showing the business life cycle) but the more units we add now the more streamlined the cash flow and the operation seems to get.

    • Ray Morris Jr.

      I also like your example. I’m at 30 units with the goal of 50. I don’t think that I will go past that number without a good system and team in place. I would also like to transition into seller financing some of the units that I acquire. I’m also a fan of the e-myth and I need to star incorporating more of Mr. Gerber’s ideas into my business.

    • Chad Carson

      Thanks for sharing your experience, Josh. Definitely no set formula on the right sized business, that is for sure. I do think it is a personality thing. Some people will thrive in big, some in small. I definitely enjoy and practice emyth lessons, too.

    • Marlowe Quart

      Great article but I really appreciated the comment here by Josh Sterling. I have read a lot of the minimalist/enoughness blogs (a la mr money mustache) and it seems they are all coming from a place of thumbing their nose at the man. I know that wasnt the intention of this article but it seems like a lot of ppl who have built up to that larger business level have done so because of passion or a desire to help others which seems like it would be more satisfying than taking a forever vacation. In my mind I would actually need to have the option to turn down a $100m lifestyle before I could say that its truly not for me. Either way these are good things to think about while building to these levels.

      • Chad Carson

        Hey Marlowe, you bring up a good distinction to think about. Is life a “forever vacation” after you reach enough? And do you lose an opportunity to make an impact on a larger level?

        I personally think the opposite is true. When you no longer work for money, you can make decisions almost exclusively on impact. I have given travel and family examples. But that need not be the way everyone chooses to spend their time or make an impact after enough. The new project after enough could be a new business that changes the world. And your lack of need for money gives you incredible leverage and credibility as a leader. I personally find this to be an incredibly inspiring next step.

        The minimalist movement has its own box which limits the application of its more helpful principles. The principle I think is widely applicable is a deliberate, purposeful approach. Whether the end result is big or small business is irrelevant. It is the purpose and personal decisions behind those results that matter.

        • Marlowe Quart

          I agree with you here. I wish there were more blogs of ppl who have decided to have that larger impact after reaching fi because I find blogs helpful to download the mindset, but perhaps those ppl going for impact are too busy changing the world to write about it!

  21. Michael Tempel

    Great article. As we approach a few large, rewarding, but time consuming projects I can see the validity of this blog first hand. We love what we do, but I constantly joke about how long it has been since we took a real vacation over 4 days. My long term goal is to find employees to fill in the accounting, day to day management and executive level decisions, but in reality this is extremely hard to do and very expensive to do it right. We are in the growth danger zone without question, but at the same time I love it over the no business growth zone, I had that for a few years as well. Didn’t sleep or feel like I was reaching my potential.

    I will say getting close to 1000 units this year has been exhausting, but I am starting to see the light at the end of the tunnel where I can leave for a month at a time once everyone is dialed in. A large part of my long term goal is active philanthropy so that also plays into our growth equation as well. The people you meet down the path of high growth are amazing as well, we work with owners that live all over the world from a net worth of 100K to over a billion in assets. It has made me realize that everyone truly puts their pants on one leg at a time and has something unique to contribute. It has been a challenging, but uplifting as well.

  22. kris patel

    I was on right side of enough, happy with great cash flow. But lasted only 2 yrs, had foreclosure on office building and chapter 11 BK on student housing in TIC investment in 2007. Now after losing 2 buildings, very happy, it is over, have write off for office bldg and manager for the other had breach of fiduciary duty, got 15% of dn payment back in lawsuit. So back to left at enough!! very happy, no stress, so less is more happiness.

  23. John Thedford

    Great article and spot on! There are many that don’t realize that RE investments are more than money, they are freedom. I can go bigger if I desire, but I CAN stay exactly where I am, devoting less than five hours per month average, and never having to “work” a day in my life. No other “job” can provide what real estate can. Now it’s time to enjoy doing what I want to do, not having someone tell me when and where to punch a clock.

  24. Elizabeth Dabczynski-Bean

    Love this article. I’m in the “getting serious about getting educated” phase of real-estate investing and this article really resonates with me. It’s easy to feel overwhelmed by the options and the looming notion of an “EMPIRE” when all I want is the more-or-less-passive cash flow income that will help me be the best person I can to those who are most important in my life. Thank you for sharing your thoughts!

    • Chad Carson

      Thanks for reading, Elizabeth!Yeah, so many times the goals you are given in so much of re estate education is like an “empire.” What is wrong with a peaceful, simple principality, with a small white castle on the hill:) And you as the ruler have plenty of time to do what you want and contribute I’m a way that resonates.

      Best of luck with your next steps!

      • Jeff Krauss

        I recently downsized from a 4,100 sf McMansion to a 2,300 sf property I originally intended to flip. Best decision ever. $2k/mo mortgage off my back and my current house was mostly paid for by the equity in the big house. Big sense of freedom!

  25. Christy Greene

    This is a great article!! I read a similar article that talks about a point in which happiness starts to diminish. Whenever I start to think of increasing my cash flows , I have to go back to my WHY and WHAT I have to exchange for the increase in cash.

    My WHY is so that I can have more freedom to do use my energy, resources, and money to focus on the things I want to focus on. Whether it be for business, charities, family or friends.

    If I find that my time , resources, and energy is being used to bring me only more money which will then be only be used to pay more taxes, increase expenditures, and rob me of my freedom, then it defeats the purpose.

    • Chad Carson

      Awesome you have that clarity, Christy. You are exactly right that every choice for more cashflow must be evaluated with an awareness of the investment and risk of your money and your time. If the ROI is good, go for it. If not, pass.

      And the more cash you have, the higher that hurdle gets, at least for me. And i add fun into the equation. If it is not fun, what is the point!

  26. Tim Czarkowski

    Love the article in the point. I have actually done this. I was flipping a number of homes a year and putting the profits into rentals along with selling, rehabbing, and managing rentals to my investors. I used to basically do everything except maintenance/rehabs myself (I hate that type of work). I now have an assistant who basically does the property managment work along with my maintenance man/contractor who’s been with me for years. This allows me to manage 25 units(half are mine) with only a few hours a month put in. The past two years I’ve traveled all over the world and taught myself Spanish. I have plans to continue traveling regularly along with learning French and the harmonica followed by the guitar. I also have hopes/plans to homeschool my children and raise them multilingualy. I still grow my business(both my rentals and managment deals). I like the idea of the plateu as I feel like I could double my units owned/managed without much change but after that I think more significant systems would need to be in place for me to be as hands off as I am now.

    I personally like this way of managing too versus turning properties over to a managment company. First off it’s much cheaper, I still have full control of my business and am more involved in it, and I can manage others properties as well for an additional stream of income. I basically get all the upside of a managment company and then some but none of the downside. The key of course is the people working for/with you, as it is with any business.

    I also always have and still do live very frugally. The less you need to live on, the easier it is to reach that ultimate freedom to do what you want.

    • Chad Carson

      Awesome story, Tim. Thanks for sharing. I think your specifics are very helpful to give people real world application of these ideas. And I personally love some of your specific passions (language learning, travel, music, and family education).

  27. Michael Swan

    Great Blog Topic!!

    Right now I have 87 front doors and counting!! I just started investing in 2011. I started with 10 single family purchased in 2011-2012. I have 1031 exchanged 9 of these single family into 6 apartment complexes and purchased another 8 low priced single family in another area of the country and mange my property manager, have my first investors in a 21 unit in thet area too. Also, I still work my day Job as a Catholic School teacher and two nights a week at a local community college.

    Right now I have $120,000 tax deferred cash flow with my partners (me, wife, mom, and dad), and in the next few months should be cash flowing nicely with other partners on this newly acquired 21 unit 70/30 value to yield play. In the next 4 years, I expect to be financially free. So, 10 years after buying my first little single family, we should be on our next phase of 1031 exchange and having a complex 100-200 units and being financially free. With my original 10 single family, I don’t believe I could have been financially free, living in San Diego and living the life. At 55-56 years old, I wil take my family, partners, etc… along for the ride too.

    Right now my W2 family take home is $55.000-$60,000 a year and my tax deferred cash flow is the same after 6 years. If I lost my jobs and my wife lost hers too, how long would we be able to live, without selling our personal residences. The answer is forever!! By getting bigger and managing my PM and having a strong team, I will work a lot less than I am working now.

    My biggest problem is knowing when to make the jump and not work for money. Working for money, I work 50-60 hours a week as a dedicated teacher. When I get to $200,000 or more tax deferred cash flow, split between my family, I believe I will have a lot more time, than I have now.

    Just imagine taking away 60 hours during the week of teaching, grading papers, and planning to teach. Along with hours of professional development required as a teacher online etc…

    Getting bigger in RE will allow me to reduce my 60 hours of teaching jobs hours and replacing with maybe 10 hours in RE. Most importantly, I will be financially free. Allowing me more time for the lifestyle, donating time and money to charitable causes, church, and helping out family, friends, Biggerpockets members to become financially free!!

    Swanny

    • Christopher Smith

      Micheal

      My background is a little like yours, started in 2011 time frame with a number of SFRs. Got them at fantastic prices and they are all up >100%, plus kicking off solid cash flow of about 100k annually. I have been looking to cross over to Multi’s (maybe even commercial), but I have a couple of issues.

      There would be a huge tax bite if I sold and while 1031 is available, its kind of awkward. Even more important prices here are very high and we have lots of foreign money in my California market chasing Multi’s so the elevated prices make these deals very difficult to justify. I also have properties in a Midwest market, but it might be dicey to run a complex operation from such a long distance. Individual SFRs have been very manageable at a distance, but a larger Multi operation I’m not so sure about,

      How did you make the crossover from SFR to Multi?

  28. Raj Mathur

    Great article, Chad and my thoughts exactly. Most people start to invest to make some extra cash, but then start comparing themselves to the big gurus or try to do everything they hear, and shoot in all directions. You have to see what gives you the biggest pleasure and try to achieve that through real estate. You don’t want another ‘job’ with all its stress and hassles, just the boss changes.
    In three years I have already replaced my high paying professional income through two multi unit properties (27 units), totally passive. My sweet spot will be doubling that level and make my job optional. So working towards that over next 2 years. Thanks for corroborating that strategy. No complex schemes/ syndications fir me.

  29. Chris Field

    Good article, I think a lot of articles focus just on growth for the sake of growth. But they miss the why, what are the goals for the business?

    A lot of people also miss the most import metric in this business, and it’s not number of doors. It’s profit per door. The couple with 500 doors missed this. More doors more deals is simply more bs. You want to be efficient and make more doing less deals.

    Than on the flip side what lifestyle do you want? How much stuff will make you happy? Does a $300k car provide that much more happiness than a $50k truck? I’d say a $50k truck provides a lot of utility over a $5k or $500 one but after a point the return diminishes. Is the bs required to earn at the next level worth it or is freedom more important?

    Everyone has to decide for themselves. Personally I’m setting up my business to generate about $200k-$300k without much debt, risk etc. I’d rather live than kill myself chasing another few hundred k a year for stuff that won’t really improve my life.

    • Chad Carson

      Great point about profit per door, Chris. Efficiency economically leads to meeting your goals (and freeing your time) much faster in any scenario.

      And you said a most important part of all this – everyone has to decide for themselves. Enough is a very personal decision.

  30. Alex Ell

    Chad, excellent article. Your ideas reminded me of a quote I heard from Tony Robbins: “Wealth is a product of the mind.” Recently I reached a passive income milestone in my business and I couldn’t believe my feelings of happiness…for about 1 day! I immediately started thinking how to achieve the next milestone instead of truly appreciating what I had accomplished. My take away from your article was a reminder to work hard, but continue to live your life without the unnecessary moving parts that take away from your freedom. PS – my fiancee and I did celebrate by visiting Spain and Portugal for 3 weeks. Great travel pics!

    • Chad Carson

      I like that Tony Robbins, quote Alex. And you are not alone with that desire to move on to the next goal right after acheiving one (congrats by the way). That is why I added the section on imagination. Especially for those of us good at achieving goals, it is easy to just move to the next one without really thinking about options. That is why the sabbatical/mini retirement trip was so helpful for me.

      Cool to hear about your own Spain/Portugal trip!

  31. Christopher Smith

    When I got into this game (about 6 years ago) I went the minimalist route from the very get go. I invest only in B/B+ properties in B+/A- neighborhood, homes that are less than 5 years old, very close to walk in ready and I use two managers to do all of the heavy lifting (my property groupings are about 2,000 miles apart). I did it this way because I work a full time professional job that requires a fair amount of effort outside normal working hours so performing extensive property management activities was not really practical even if I had the desire to do it which I don’t.

    Like you I would constantly read on this site that the only real way to do this RE thing is to buy a 1,000 C or D properties in equivalent neighborhoods, borrow to the sky and just stand back and let the magic happen. Maybe – for a few sharks that will pay off and perhaps pay off potentially big, but its my guess unless you have an incredibly deep skill base in assessing the inherently risky elements of that strategy, you are going to get your lunch eaten. I simply don’t see it as a viable game for the uninitiated.

    I myself only own 6 properties in two locations, but because of some very propitious timing (bought in big at the very depth of the housing crises) I have made close to 2m in underlying property appreciation, and clear close to 100k annually in rent. I’ve only bought 1 property in the last 3 years because I am very very selective and will only commit to a clear winner. However, that’s OK I can’t complain with my results overall (either the profit or the time it took to earn it).

    I have also tinkered with the idea of selling what I own (or perhaps 1031’ing) and moving up to bigger game (Multi’s & Commercial), but I always keep that old adage in the back of my mind “if it ain’t broke, don’t fix it”. I do that just to keep my feet on the ground and as a warning not to move on to “bigger and better” things unless I know with some certainty that they will indeed really be bigger and better, and not a looming disaster just waiting to happen to someone who’s eyes are too big for his head.

  32. Vincent Galvante

    Just wanted to say the article so long but I get it. Anyways love the subject of fulfillment, its all about balance in life. But no matter how much I have, how big is my Net worth, or how much freedom I have, nothing can fulfill the love of christ who provided all this wealth and it’s just a privilege that I am blessed. Thank you

  33. Mabel Ileogben

    Thank you very much for your insight about real estate investing as it relate to chosen purpose in life. I am new to real estate investment and I am have decided to go to the limit of having life, comfort and happiness in doing it. That means, make a enough money to take care of myself, enjoy my family and my friends. So, thank you for given us the choice to go small, medium and bigger depending on ones purpose in life.

  34. Raj Singh

    Nice Article Chad,
    The perspective you presented applies to most of the people/community.

    However, sorry to rock the boat, there is other side of coin:

    IMHO, ‘Change it the Constant in current/future world’.
    Taxes can rise, Policies relating to Tenants/Landlords can change (e.g. Rent Controls/Stringent Laws), Technology can pose challenges, Inflation can rise dramatically and lots of other unseen factors

    Living off from a set monthly/annual income gives a rosy and promising picture and it can be achieved, however it leaves us in Reactive state instead of remaining Pro-active state (that is required to tackle any future challenges heads on).

    Richard Branson is the prime example of building multiple large businesses and then handling them to capable persons so they almost run on auto-pilot and he gets on with his life and new ventures.
    Being said that, it is not easy to replicate his model/success for most of us.

    • Chad Carson

      Raj,
      Thanks for reading and providing a different perspective. That is always welcome in my mind and keeps things interesting!

      However, I don’t see a decision to go small as limiting yourself with an uncertain and changing future. The assumption I heard you state was that this small portfolio would be fixed income and too rigid. That is not necessarily the case.

      For example, even the person with 10 free and clear houses owns assets with appreciation potential. They are also available to be releveraged if needed. And if that flexibility and proactivity were not enough, this person maintains the greatest asset to hedge against future change – an open, uncluttered mind with freedom to pivot as many times as necessary. I would actually argue this little small business is even more antifragile, like a small boat that can steer around storms, unlike a big ocean liner business that must plow through the storms and hope its hull is thick enough.

      And regarding Richard Brandon, I found his business biography “Losing My Virginity” fascinating. But I would not want to replicate his path. He took big risks (which paid off) but it was no cake walk or sure thing to get to where he could eventually hand things off. But to each his/her own!

  35. Ashley Wilson

    Great article! I agree with you that there needs to be a balance, and that balance is set by you and you alone. Everyone has different goals in life, and one’s day-to-day should be designed to achieve those goals. It is very easy to be caught up in the glamour that comes with being on HGTV, and other spotlight like moments, but at the end of the day, if that has nothing to do with your personal goals, then it is only derailing you from what you are ultimately hoping to achieve. I have often thought about the content of your article, and I am glad to see you put it to words!

  36. Mario Mormile

    Chad-

    This article couldn’t have come at a better time! As much as I would like to get into flipping, my goal doesn’t entail doing that. Buying and holding for the long run is what I am focused on. Living comfortably and having time to be a dad with my wife, 7 year old, and baby- that’s my big why. Thank you for sharing!

  37. This was written by someone who has no idea how you can own 1200 units or more and still have a life. Please don\’t believe this nonsense.

    Their are 3 levels of apartment investing: under 50, 50-100, and 100+. As you get bigger there are economies of scale. It only takes one person to run 100 apartments or less, and you only need 3 others to run it (a maintenance guy with an AC license), an assistant, and a porter who is min wage. Anything over 100 units and you should be using a professional management team.

    So if you are rehabbing, that means you are in the first 12-18 months of buying the complex. So you might not want to be on a 3-week vacation, but your general contractors should have their sh*t together at this level. This article makes it seem like you can just buy a 100 unit apartment to rehab and leave. No. You can buy ANYTHING that way. Get real!

    Unless of course you buy in a group of investors and someone else runs the project.

    ….THEN you can extend your vacation, even with 1200+ units. Trust me.

    \”Mike & Lauren\” are still clearly building their business and probably shouldn\’t be on a 2-week vacation anyway of their in the middle of a major rehab project.

    • Chad Carson

      Hmmmm, I don’t have any idea. That’s interesting.

      Andy, you don’t know me. I certainly don’t know you. And I trust the readers can judge for themselves what is nonsense and what isn’t.

      Nothing in this article made it seem that there were not economies of scale when getting bigger. You need only look at the simple diagrams I drew where time/hassle goes down after reaching certain levels of growth.

      But it would take quite a lot of trusting you and a suspension of logic to believe that owning hundreds or thousands of units is less hassle and work than owning 10 or 50. You discount heavily the skill and effort of managing (and replacing when needed) these people you entrust to care for your units.

      And you mention nothing of the reality of capital raising, restructuring, and relationship management for equity and debt required to support this large portfolio. Is that outsourced too? No pressure or stress there, right? Or do we magically assume people begin with millions of their own capital?

      A different perspective and alternative examples to my own are welcome. But let’s not insult the intelligence of the readers with a superior tone and one-sided arguments.

  38. Christopher Miller

    Chad – Great article it resonates with me so much! Thank you so much for investing the time into writing it and having the life to back it up. For me the idea of diversity can hold me back from truly embracing simple. Diversity is a good thing, to a point, but endless diversification and covering all bets seems to be keeping me trapped and struggling. Thanks again!

  39. Andrew Ziebro

    For most of my adult life I worked just enough to pay bills and save enough to go off and have numerous adventures (2 years living and studying art history in Italy, a year in Poland teaching English, and 2 years in South America volunteering and backpacking around). In between a lot of road trips, time with friends, dinner parties, etc etc. I got married 4 years ago and now have 2 little girls, a house, a real estate business (6 mos. old), 2 cars and a LOT more responsibility and stress. I work like I never had before. I want to get to the place I was before where I can take my family to the places I’ve been and new places too, where they can enjoy what I had the fortune to experience in my life. I didn’t need a lot of money to do all those things but I will need more now to do them with my family and not have to work so hard in the restaurant business (25 year veteran). I’m glad to have found real estate investing as a vehicle to be able to see a way back to a more simple, fulfilled life. Great article. I don’t intend on building an empire.

  40. Cindi Anderson

    Great article. After a lifetime of saving (too much probably) we retired before 50. We have 2 residential rental homes and 5 NNN commercial buildings. Once you have some money to invest, commercial are truly the mailbox money. But you are exactly right about deciding how much is enough and not pushing it. Sometimes I get tempted to take more of my equity and cash to buy more buildings. But that would result in more work and more risk, and we already make a lot more than we spend. Plus having a lot of cash, or ability to get cash quickly from equity, really pays off sometimes when a deal comes along that is too good to pass up.

    I’d like to address the people who say “all you have to do” is hire competent people, then you can go off on vacation any time you want. That is an easy thing to say, but a much harder thing to actually pull off. Nobody you could ever hire is going to be as diligent as you are, and I have had more problems like people quitting while I was on vacation than you might believe. You might get lucky once in a while, but as a strategy it is risky.

  41. Raul Contreras

    Having just stumbled across BiggerPockets A few months ago and reading the articles that fill up my email, this article stood out to me over the previous ones I have read. I am still well into my rookie stage but by reading this article, it actually put me at ease and gave me a much more approachable outlook on how I would like to structure my journey moving forward. Awesome article Chad!

  42. Khalila Adams on

    Awesome article Chad! Definitely hit the spot for me! I’m just starting out and I’ve read many blogs. This is probably the best I’ve read so far. I also love that you showed pictures. Anyone can tell a story, you just showed that dreams are attainable. Thank you!!

  43. Tim Puffer

    Adulthood has a way of squashing dreams with the hammer of practicality (under the disguise of money). Best point I have seen in awhile – spot on. This article is a must read. Any way that Josh Dorkin can create a “Must Read” section of articles?? 🙂

    • Chad Carson

      They could, and I’m sure it would help them. But it’s easier said than done. General managers are another complexity. If it works out for a while, then awesome. But when that person moves on, needs to be fired, has issues that need to be addressed, etc … those must be dealt with. So, there’s never a free lunch.

      And I think in Mike and Lauren’s case, they had been fresh off growth spurts. So, a general manager or other methods of handing off parts of their business would need to be next on their list. It’s that part of the growth curve I showed where it dips back down some in terms of time and hassle once they achieve that.

  44. Angela Fogg

    Chad-what a wonderfully powerful and freeing concept – finding the “Enough Sweet Spot”. Sounds like a great way to balance the realities of life, the demands of business, and the possibility of dreams. Thanks for reminding me to re-focus on my “why”.

    • Chad Carson

      I agree Angela – the “enough” and “sweet spot” ideas really are powerful and freeing. And they’re so personal and flexible. People could have two completely different sized businesses, big and small, and both be hitting the right spot. Good luck finding your own!

  45. Quinten Sepe

    Chad,
    I just wanted to take a minute to let you know how much I appreciated and identified with this read.
    In a consumer driven society, we often lack a certain level of clarity in the appreciation of “enough”
    Thank you for the focus and inspiration.
    v/r
    -Q

  46. Shimika S.

    This is one of the best articles I’ve read on BP… probably the best that I’ve read in a while on here. After reading this, I took sort of a sigh of relief. Sometimes when talking with other investors I feel like my dreams and business goals aren’t big enough. I feel a bit of inadequacy for not having the “1000 unit” plan. I’ve just realized it’s because the “1000 unit” plan isn’t my sweet spot. My ‘enough’ is probably more in the 20-50 unit range. Thanks Chad for your amazing insight!

    • Chad Carson

      I loved your comment about “sort of took a sigh of relief.” Thank you. That’s exactly what I was going for. And your plans of 20-50 are just perfect if they meet your goals. Go for it! And we’ll all celebrate together here on BP:) Good luck!

  47. Philippe Johnson

    Terrific article! You did a great job organizing and articulating notions/thoughts that have been percolating under the surface as I’ve recently retired from the military and begun my own real estate investment “career”. You’ve helped me to validate ideas/values that I’ve held but perhaps allowed the “mainstream” workforce values to subdue. Thanks for sharing this!!

    • Chad Carson

      Thanks for your kind words, Philippe. I’ve had many years (and many mistakes of my own) to flesh out these thoughts. So, it’s been a long time coming:) Good luck with building your own investment portfolio in a way that makes sense to you!

  48. Andres Branger

    Great piece, Chad, thanks. I bought a 3-fam building in Boston putting 50% down in 2016. Not knowing much then, perhaps that was more than I should have. Still, at that time, I thought it would give me a better cash flow and rate of return on money that was simply sitting in a bank account earning nothing. After some major rehab, the property has appreciated nicely. My cash-on-cash is 7%, not as high as others want but I thought an okay start considering how little I know. Now I have a lot of equity and can’t decide whether to put all the rent money towards principal and be debt free in 6 years (when I’ll be 62), or get cash out now and seek other properties. Free debt income will provide approximately $80k a year, a nice sum. But I wonder if tying that much cash in one property is a good idea. My day to day is managing restaurants, a very hectic profession. In investing in RE i was looking for financial independence and security. I do know that I do not want to add more stress in my life but wonder if my financial strategy, considering the resources I have in play, is sound. Any thoughts?

    • Chad Carson

      Hey Andres, thanks for reading and commenting. Some people pay all cash for buildings, so I don’t think having a lot of capital tied up in it is necessarily a bad thing. It all depends on your goals, your personal preferences, and your timeline.

      From reading your comment, it sounds to me like you’re leaning towards the route of just paying off the mortgage aggressively, but you want some validation to make sure that’s not a stupid move. Sure, some people will tell you that you’re not optimizing your return on investment, you’re not optimizing your portfolio in case of massive inflation, etc. But just think about it – owning ONE property that produces $80k per year and has very little downside risk – that’s a solid situation in anyone’s book, right? So, even if it’s not optimal, if it keeps your stress low and throws off an income stream that relieves some long-term financial pressure, I don’t see what’s wrong with that.

      Good luck!

    • Jeff Krauss

      ser my post further down the list. You should refinance to 75% loan to value baded on a new appraisal and lock that low rate in for 30 years. Reinvest that money in higher income producing stocks. Say you lock in a loan of 100k per house at 4.5% and reinvest in dividend paying stocks (like REITs) at a safe 7.5%. You are clearing an extra 3%, $3k on that money you borrowed. That extra $3,000 required no extra time finding, rehabbing, screening more tenants or dealing with headaches. Across 10 rental properties, that’s an extra $30k per year for no additional hassles. So, equity stripping and reinvesting in dividend paying stocks really supercharges the returns from each rental property.

  49. Tony Akhigbe

    Great article Chad! And personally, I couldn’t have read this at a better time. I’ve been investing for a few years and I’m currently putting plans in place to grow my portfolio, looking to add 100+ in the next 5-10 years to attain financial independence. This article made me go back to really think of the why I’m doing this, (which is the PASSIVE, in passive income) but also the how, to make sure this was really passive income and not another job/headache. Thank you.

    • Chad Carson

      They’re not the norm. You may have to have a lower loan to value or other risk-reducing incentives that make it worthwhile.

      Also seller financing is a possibility to get that. I recently got a 25 year fixed loan on a commercial property from a seller.

  50. Jeff Krauss

    I have 9 rentals purchased as distressed properties, rehabbed, appraised and equity stripped. Not only am I making $60k/year profit, but they all have 30-year loans fixed at 4.25%. The stripped equity was reinvested in various types of Real Estate Investment Trusts at an average of around 9%, giving me an extra 5% in my pocket without the headache of additional rehabs or tenants. My rentals and REIT dividends make me more than twice what I was making at my job 4 years ago when I started. I did it all because my day job was terribly stressful. I’ve found that now that I can walk away from my job whenever I want, and that my boss knows it, I’m much more care free at work and don’t find it stressful anymore. I’m there because I choose to be because frankly I haven’t yet found something better to do with my day. This article is correct…Acquiring more rentals and headaches won’t make me happier.

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