Five People, One Income, and Self-Made Success

bootstrapping real estate investor
Myth: If you’re supporting 5 people on 1 income (and it’s not a high income), you’re screwed. You’ll never become a business owner or an investor. You’ll be lucky just to pay the bills.

Fact: Ladies and gentlemen, meet success story: Rental Randy.

In my last blog post, I re-emphasized that the best way for two-income couples to turbocharge their savings and investments is to live on one persons’ income, and save 100 percent of the others’. Live like you’re a one-income couple.

This led to a great follow-up question: What if you’re already a one-income family? Specifically, what if you’re a family of 4 or 5, living on one income? What then? (And what if you’re single — a “family of 1” living on one income?)

Here to answer that question is an Afford Anything reader named Randy, who supports his family of 5 on a single income … and still bootstrapped his way to becoming a successful real estate investor.

Here’s his story, in his own words, completely unchanged / unedited:

Five People, One Income, and Two Years of Savings

I have three children and did not buy my first income property until after my youngest was born. My wife does not share my drive to prepare for our future, which means she does not contribute financially to this cause. I pay the majority of the family bills and I do not have a high paying job. Still, I managed to save enough to get my first property. It took two years of saving every dime (literally) I could.

I have an unconventional life and job and work odd hours so I could be a stay-at-home Dad and primary caregiver for our children. It means I have to live off 4-6 hours of sleep a night and be a walking zombie some days, but that’s okay. I did it primarily so our kids would have a parent looking after them and not a day care employee, but I can’t lie and say the money saved wasn’t a small part of that choice.

You have to start. Just start.

One year, I decided to open a Rental House savings account at my bank. I started with about $25. Every chance I got, I deposited money in that account. Tax return? (having a mortgage and three kids helps there) Straight into the Rental House account. Xmas Gift money? Sorry kids and wife, but no big ticket gifts this year or the next. That money’s going straight into the Rental Home account. Friends want to meet at the local bar/restaurant and have fun? Sorry guys, I can’t go out until I buy an investment property. That’s $30 into the Rental House account.

I didn’t choose to buy a home that was outside my budget — say, the type of home/neighborhood you or I might choose to raise our children. That would be setting myself up for failure. Besides, it offers a sort of built-in excuse for not accomplishing my goal. I chose a price point that worked for me, went to the real estate websites, and searched for properties I could afford.

Then, after I’d saved a few thousand dollars, I went to my bank and asked how much money they would loan me. Remember, I don’t make a ton of money. I was disappointed when the bank offered $10,000 less than I wanted. No problem. I lowered my Rental House budget and kept searching. I found a property that needed a little bit of repair. Between the money I’d saved and the bank loan, I bought the property, fixed it up, and had it rented in two months.

I don’t view the rental income as “income”. It all goes to paying down the debt. The sooner I pay it down, the sooner I can buy more properties. Both my homes are owned free and clear, though I have a few thousand to pay back on a line of credit I used to help fix the second property. Also, I have a bank lined up to provide a HELOC on one of my rental houses. I will use that money (and some of my own savings) to buy my next property.

It can be done. You just have to start. Now. You don’t need a detailed plan initially. Just start saving. Now.

Savings Happens in Small Increments

Boom! Drop the mic!

That was awesome. Thank you, Randy, for sharing your story with the Afford Anything tribe. You rock.

Here are some key takeaways from Randy’s story:

#1: Savings Happens in Small Increments.

It’s tempting to get shell-shocked by a large number. “I need to save $12,000? How on earth can I come up with that?”

But savings unfolds in tiny increments. You save $10 or $20, again and again, until you reach your Mega-Number-Goal.

(It’s like burning calories — you burn an extra 50 calories here, an extra 70 calories there. And pretty soon, these tiny increments have added up to 3,000 calories, and you’ve lost 1 pound.)

(Or, conversely, you nibble on an extra 40 calories here, an extra 80 calories there, and soon you’ve gained 1 pound.)

When people say that they can’t trim their budget any further, my response is:

  • Do you buy red meat, like beef or pork? Swap it with beans/lentils or possibly chicken, and you’ve lowered your grocery bill by $20 – $60+ per month.
  • Do you pay someone to cut your hair? Start trimming your own, and you’ll save $10 – $50 per haircut, depending on the “caliber” of salon you’ve been frequenting.
  • Do you buy orange juice, cheese, and other packaged foods? I love juice, and I used to buy a ton of it. But when I was saving for my round-the-world trip, I knew I needed to cut back. Each time I shopped, before I hit the checkout aisle, I’d put back any juices in my cart and devote that money to my Travel Fund. (I literally kept an envelope with me, marked “Travel.”) That meant I saved an extra $6 each time I hit the store — about $24 per month, or $288 per year. (And these days I make my own fresh juices / smoothies at home.)

There are always ways that you can save more. Remember: there’s a difference between “I can’t” vs. “I choose not to.”

#2: Your Goal is Investing (Earning), Not Saving

Frugality is the first step — not the last.

Nobody penny-pinches their way to wealth. If that were possible, the most miserly, cheapest SOB’s would be billionaires. But they’re not.

Instead, the (self-made) millionaires in our society are the people who build valuable businesses and invest in cash-flow machines. That’s where you focus needs to stay.

Frugality is a means to an end; it’s the method by which you raise your initial investment money — your “seed” money. But you can’t stop there; you need to move to the next step.

Notice that Randy didn’t penny-pinch … and then let his money fester in a savings account. Instead, he bought an asset which will give him monthly cash flow for the rest of his life.

#3: Reinvest Your Profits

Here’s where the magic really happens:

Randy will reinvest the equity from Rental House #1 (plus his “day job” income) to buy Rental House #2. And I’m betting that he’ll use the equity/cash flow from Rental Houses #1 and #2 to purchase #3.

Do you see where this is going?

This is classic “the rich get richer.” Instead of spinning around on the time-for-money-exchange (known as a J-O-B), you create profits — and use those to create more profits.

After a few cycles of this, Randy won’t need to use his “day job” income to buy houses anymore, and he won’t need to appeal to banks. Instead, his houses will start buying more houses.

And at that point, you’ve really won the game.


  1. Karen Kinnane says

    Dear Paula, I do so look forward to your newsletters! This one with Randy’s inspiring post about saving in small increments is useful because many people don’t understand “small increments”! We’ve achieved financial success like this, and I STILL pick up aluminum cans when I walk the dog, stop for curb side treasures on trash days, and pick up recyclable metal. I’m one of the few women who is greeted happily by first name by the crew at the scrap dealers. Incidentally, I’ve posted some photos there of metal items I need, and when they get one in, they call me and I buy what I want for the price of scrap, around 8 cents per pound, talk about a bargain!
    I LOVE reading upbeat posts about how to achieve one’s financial goals. I like success stories, especially those by people of modest means.
    Karen Kinnane

  2. says


    My wife and I have 3 kids and we live on one income. And of course we are working on our side business.

    Thanks for sharing this. I am sending it to my wife now.

    So we can talk about this and just stay focus !!!!!!

    Here’s to financial awesomeness!!

    • says

      Hi Darrian,

      Staying focused is very important when providing for a family with a limited income.

      It is so easy to derail your plans with a single mishap. At the very least, a mistake can add a year or more to your preparation timeline.

      Two big mistakes, in my eyes, are expensive vacations and furniture purchases. To me, an expensive vacation is any trip that cost more than a couple hundred dollars. Seriously, $200.

      If we could travel somewhere and stay with friends for a couple of days, that was a sensible vacation. If we traveled to some non-destination area, rented a cheap hotel room (<$50/night) for a couple of nights, and avoided tourist traps (amusement parks, gift shops, etc,) that was a sensible vacation.

      Even following those rules, my family went about three years without taking a single vacation. Not even one that fit the above criteria. The only traveling we did was when my wife took the kids to her hometown 250 miles away and stayed with her family.

      Buying new furniture is another money trap. Families on limited budgets who are trying to save money to invest and improve their lot in life have absolutely no business buying new furniture.

      Avoiding those two money drains is a good way to stay on track. A "minor" slip-up that leads to a $1500 week long vacation can be brutal on your investment budget.

      My philosophy is, once I've successfully invested my money, I'll be able to take multiple nice vacations yearly, and buy new furniture if I want. Right now, I have to maintain my focus.

      • says

        The problem with your scenario is kids are young only once. Spending time/money on them and vacations is a must, IMO. I do not want to get to the point where they’re leaving the nest and we’ve spent little time travelling or having fun with them because we were so obsessed with money. A good example for us was this past summer. We spent a small fortune to go to Cedar Point, a large coaster park in Ohio. The kids absolutely loved it, we created memories that will last forever for them and us. We don’t do this every year as it’s too expensive but we’re making memories with our kids. They’ll be gone too soon and we will regret not having spent time with them.

        • says

          I’m glad you’re doing what makes you happy. That’s the most important thing, I guess.

          I will disagree with one thing. It’s not necessary to spend “a small fortune” to create memories with children. I could spend $1000 for a weekend at a destination beach, or I could drive to a nearby big lake and spend $150 for the weekend. To my kids, there is enough fun and memories to be had at either. The most important ingredient is time spent with the children, not money spent on them.

          But again, I’m happy you’re happy doing what you’re doing. Not every path is for every traveler.

  3. says

    Hi Paula,
    Thanks for this post.

    I immediately opened up a “Next Property” account.. only takes minutes with my online bank, funded it with a hundred bucks. And this is a goal of mine.
    I’m already paying down a 45k HELOC from my current house.. and applying everything I can to that. But I’m going to put a little bit here and there and watch it grow.
    I only read the first couple paragraphs and can’t wait to finish it late (busy at work!)

  4. says

    I LOVE this, Paula. After I published that article last saturday on BP about a “Slow, Boring, Awesome Strategy” for real estate investing, I had a ton of people tell me that saving for a down payment was impossible, especially if you have kids. Now, I don’t have kids so in theory I can argue but in reality I can’t, which is why the timing on this post couldn’t be better! This is pure hustle, and I love it. Thanks for sharing Randy’s story and giving me something to point people to next time they whine and tell me that they can’t save any money because of X,Y, and Z.

  5. says

    I’m confused. Does the wife work but then just spend the money on herself and just a few family bills? If she does work then how is this a one income family? Kudos for him for saving up enough money to buy an income property.

    • says

      @Kay — Great question; I’ll invite Randy to answer that. I call it a one-income family because, as Randy says, he himself pays for the vast majority of the family bills + the family savings.

    • says

      Hi Kay,

      My wife works, but she is a wasteful spender. I hate to say it that way, but I’ll call it like I see it. She eats out often. She buys a lot of nonessential clothing. Relatively inexpensive, but nonessential nonetheless. She has a weakness for name brand pocketbooks. There are other ways she wastes money, but that’s the gist of it.

      I pay approximately 80% of the household bills. I pay 100% of the children’s extracurricular activities, such as music lessons, dance lessons, sports teams, and such. No, we’re not a one-income family by definition, but we’re close to one by practice. After our second child was born, my wife took off work nearly three years to stay home. When our third child was nearly a year old, my wife went back to work. During that time, we were truly a one-income family.

      Some would say I should press the issue with her regarding her spending habits. Let’s just say that’s a nonstarter. Tried that, got middling results, and that’s pretty much it. At that point, I could press it and create a tense situation. Or, I could try to figure out a solution that allows her to be her, and me to be me.

      My life hasn’t been built around making other people do all things the way I want them done, or manipulating situations/jobs until they fit my style. My style is to figure out solutions that don’t make either party miserable.

      If I keep on my path, it won’t matter what she does with her earnings. Actually, it never has in the sixteen years we’ve been together. If she were on board with my plan, we’d be so much further ahead right now.

      On the other hand, I don’t live in the land of make believe. I look at the facts, and I work with what I have. The way I look at it is I am relatively close to being financially independent, so I’m in a good position so far. Four to six more years should add four to eight more properties. At that point, I can either focus on real estate full time or continue my “day” job and build super fast at that time.

      Sorry for the long answer. I have to find a way to be more concise.

      • says

        “Some would say I should press the issue with her regarding her spending habits. Let’s just say that’s a nonstarter. Tried that, got middling results, and that’s pretty much it. At that point, I could press it and create a tense situation. Or, I could try to figure out a solution that allows her to be her, and me to be me. My life hasn’t been built around making other people do all things the way I want them done, or manipulating situations/jobs until they fit my style. My style is to figure out solutions that don’t make either party miserable.”

        THIS is golden, Randy. I have a spouse who is similar. He is conscious of his money but he certainly can pull the reins in on his spending. Buying lunch at work every day, haircut appointment every 3 weeks, etc. It’s easy to feel like we’re alone on the journey to financial freedom. That’s why I love articles like yours and blogs like this.

        • says

          “He is conscious of his money but he certainly can pull the reins in on his spending”

          Hi Jen,
          That’s what makes the situation a little frustrating for me sometimes. My wife isn’t a financial idiot. She isn’t in (much) debt. She maintains a very good credit rating. She has some money going into her retirement account at work. It’s just that she doesn’t save anything.

          Pick any day out of the year, and my wife probably doesn’t have $100 in cash savings. Each time a pay day cycle is nearing its end, she’s probably broke and desperately anticipating that next paycheck. The last few days prior to getting paid are the only three or four days my wife takes lunch to work. It’s not to save money, but because she doesn’t have any money left to spend eating out for lunch.

          She does a lot of things right, financially. I just wish she would have the light bulb switch on over her head and get on board with the next stage of being financially prudent. If it happens, great. If it doesn’t, for you or I, neither of us can afford to wait for our spouse to join the party. You and I can do all the work to set up the party, and one day, our partners can enjoy the rewards with us. That’s good enough for me — that there’s a party at all, not who helped arrange it.

  6. says

    This is something that I need to start doing. I used to be really hesitant and mainly just scared of becoming a landlord, but I think I need to just get out there and start! Having a savings fund to start the process is a great idea!

    • says

      @Michelle — You don’t need to become a landlord — I emphasize it because it’s a (relatively) fast way to create cash flow, but if you’re not into the idea of owning rentals, you could also invest in index funds, which is the most passive way to create profits. The most important thing is to start investing.

    • says

      A few years back, we bought a rental property. Actually had two going at once, a three unit and a single family home. Let me tell you, I am GLAD we do not own them any longer!! They were such a headache it was unreal! In this day and age, people just don’t care about your property. I screened the tenants very carefully, made them pay first/last months rent and a deposit and held it. Didn’t matter. The people in the single family threw darts at the wall, screwed up the toilet, ruined the carpets, on and on. The three unit we had a hard time even keeping all three units full. We’d no sooner get em all filled and one would leave. We’d have to work on that unit. Get it going, filled up and then ANOTHER would empty. Fix it up, get it filled, etc etc. It was a PITA! They’d be late on their rent, not pay, trash the place. Being a landlord is not easy. You can screen em and still have problems. We sold them all and have peace now.

      • says

        @Joe — I’m sad to hear you had that experience! Your results don’t speak for everyone, though — I have 7 units, I’ve been in the business since 2010, and I’ve never had any problems. There are thousands of real estate investors who have incredible success, luxurious passive income, and great stories about their tenants. The website features a ton of rental property success stories; the books From 0 to 130 Properties in 3.5 Years and the back-section of The Millionaire Real Estate Investor by Gary Keller also features many of these successes.

        My biggest keys to success have been: 1) Buying properties in stable, desirable neighborhoods — the type of neighborhoods that feature high-quality tenants, strong demand, and low turnover. 2) Careful screening. 3) Choosing the BEST property managers — not the cheapest.

        I hope you don’t write off rentals entirely, because they’re an incredible opportunity to create a stream of passive income. It worked for me, and I know it can work for you, too. Best of luck!

  7. says

    I was wondering what type of work Randy does in addition to the real estate. My husband is the stay at home dad and would love to have additional income. However, due to the needs of the family, finding work has been a challenge. Please let me know. Thanks

    • says

      Here’s my work history. Many years ago, I worked for a magazine. Four years in, I was Circulation Manager and starting to hate a job I absolutely loved when I started. I took a couple of years away from the working world to write a novel. I finished the novel, it remained unpublished, and I went back to work. A year later, I was doing marketing for a tech start-up. I later went to another tech start-up where I was a Marketing Analyst /slash/ Marketing Programs Manager. I then took off some time to write another (also ultimately unpublished) book.

      I started a third then realized it was the perfect time to start a family. I wasn’t working, I had some money saved so I didn’t have to get a regular job, which meant I could be a stay-at-home dad. Ensuring my children had parental care and not paid-for care, was/is very important to me. I accept that it’s not every parent’s choice, and some parents (especially single parents) may feel it’s not even a realistic option. But it was an option for me, and I wanted it to happen. I could have gone back to what I had done last, but my travel time would have been an issue and I didn’t want to be away from my family that much. Strictly a personal issue.

      I soon realized my savings were not quite as, ahem, robust as I originally thought. A friend suggested I look into delivering newspapers. He was in IT/Networking but had delivered newspapers off and on since he first started taking Networking classes. I scoffed, but long story short, I’ve been delivering newspapers for over a decade now.

      It works for me because I work while the children sleep. It works for me because I’ve parlayed what should be a low-paying side gig into a decent paying gig that only takes up side gig time. I earn approximately four times what most other carriers in the area earn.

      Delivering newspapers while holding a full time job is brutal. However, I know several stay-at-home parents who do it. It’s not so bad once you get over the shock of realizing you deliver newspapers for a living. But, I realize not everyone wants to take such a job.

      Again, I’m into solutions. It solved a problem for me. I thought I’d do it for a few months, and it’s been many many years. Seriously, outside of being a full-time author, I don’t think I’d change a thing. Any other job would require me to give less time to my children, and that would make me absolutely miserable.

      Gee, another long answer. I MUST do something about that.

      • says

        Great stuff Randy! I too am a stay at home dad to a 2 year old boy…I’ll call him Satan, and a 4 year old daughter…J Lo. 😉 kidding, they’re amazing. Thanks for sharing your story, it’s giving me a much needed kick in the ass! My wife and I were a single couple making a very good living up until I lost my “real” job in 2007. I was fortunate to have been able to save substantial cash up until that point due to our reasonably high paying jobs and then my job went away, I was 45 at the time. I was able to create work starting small side businesses through multiple connections none of which had any longevity and eventually 4 years later we now had a daughter, one job, and one income. The market had crashed, and so did our savings, etc…I’m sure you’ve heard the story a zillion times over. Today we live in Eastern Canada with one income and are in the process of starting a side business. Now I’m looking at rental real estate for the future of my family. I would love to read more about your foray into real estate and the bootstrapping, Can I do that here at or do you also have your own blog? thanks again for sharing! Just realized my comment is obnoxiously long! Sorry about that! many thanks,

        • says

          Hi Steve,

          I do not have a blog. It’s something I’ve long considered, and once, I had a URL and started one. Unfortunately, at the time I couldn’t maintain a regular posting schedule and I let it go. So, there’s nowhere to read my story.

          I’d love to start a multi-focused blog. If I do, I’ll let you know where it is. After all, MY story deserves to be told and read. 😉

          If you have any specific questions for me, ask. If I have an answer, I’ll offer it.

  8. says

    One point that Randy subtly made that Paula has also made is that the house you invest in isn’t necessarily the one you’d live in. You can’t let emotions and your own biases color decisions on buying an investment property.

    • says

      Exactly, Jason! Right on!

      Some of my readers will say: “You can’t buy anything in L.A. for less than $600,000,” and that’s … B.S.

      Think about the hardworking people who work respectable, lower-income jobs. Where do they live? Where do post office employees live? Full-time restaurant servers? Hotel workers? Cashiers? Baristas? The people who lay asphalt on the side of the highway in a construction zone? The guy who works the night shift at 7-Eleven?

      Don’t tell me they live in a $600k house … because they don’t. So where do they live? Find those neighborhoods. There are lots of good, hardworking people who need a good-condition property with an attentive landlord. Serve that need.

  9. says

    I think that’s a great point from Randy and Paula that those little wins do add up whether you are saving for a home or paying off debt. Big Wins are great, but lots of Little Wins add up to a Big Win!

  10. says

    Great story Paula. I have similar questions as @Kay does. I too have been a very successful saver and investor and have a very nice nest egg. However, like Randy I have done so without the help and support of my spouse. I continue to save but it creates significant challenges when you and your spouse are not on the same page. I wonder how much more successful Randy (and me!) would be if the couple was in sync?

    A few things I have found helpful to ease the financial tension in my house are:

    1. Share a little of the success. When I make a little extra money from an investment I will give my wife a small ‘bonus’ to go blow on something.
    2. Ignorance is Bliss. I dont intentionally hide investments, but rather than say “I have $50,000 invested in X” I might say, “Investment X is bringing in $500 per month” Things seem to be smoother when I dont throw out large numbers!
    3. I get reinforcements. Many women will say the man they trust most in their life is their father, not their husband. I talk to her father about what I am investing in and he tells here, “honey, Dale is doing the right thing with your finances.” That goes a long way. Daddy will always be Daddy!

    That is what works for me. I would love to hear how Randy does it. I can always use some more tips!

    • says

      ” I wonder how much more successful Randy (and me!) would be if the couple was in sync? ”

      If I could convince my wife to fully commit to the plan, we’d probably have eight to ten houses by now. At least. We’d probably be free from doing any job we didn’t want to do. We proba … but that way lies madness.

      Thinking of what might have been is not for me. Well, I think about it, but I don’t dwell on it. What if I hadn’t quit little league football after two year? I might have had an NFL career and earned millions of dollars.

      My wife, your wife, they have other positive attributes that make us want to be with them. No one is perfect. I don’t like the way my wife manages money. She could probably rattle off five things she doesn’t like about me. Meh, let’s focus on the positive. I don’t want to hear about my bad qualities, so I don’t dwell on what I don’t like about her money choices.

      Gotta go now. One of my daughters is tugging on me. I’ll try to answer this one later … ” I would love to hear how Randy does it.”

      • says

        “let’s focus on the positive” — Randy, I just have to say: I love your attitude. I applaud your ambition and optimism, and I’m proud to share it with the Afford Anything tribe. (And on top of it all, you’re a great writer.)

        Thanks again for sharing your story. I truly appreciate it, and based on the comments, I can tell that many others feel the same.

        • says

          You’re very welcome, Paula.

          Initially, I was simply responding to another reader’s question. I couldn’t be sure, but reading between the lines (dangerous, I know) made me think she didn’t think there was a way out of her particular situation. I wanted to briefly share my story with her to let her know there is a [i]proven[/i] way out. Well, as proven as I can make it so far. We’ll see how everything turns out for me in the long run.

          I think attitude is very important. People shouldn’t be afraid to be hopeful, to be optimistic, to be ambitious, to dream. People shouldn’t be afraid to try to do something just a little bit different than what the people in their lives around them are doing and saying.

          There is always a way to accomplish a goal. It may not happen as quickly as one hopes. It may not happen as grandly as one hopes. It may not happen in quite the fashion one expects. But there is always at least one way to make a goal a reality — usually, there are multiple paths.

          But let’s be brutally honest. The first step is attitude. You have to believe you can do it. Even if deep down you don’t think you can accomplish your goal, at the very least, you have to want to do it.

          And continuing the brutal honesty, when it comes to real estate investing the second step is money. Cash. No one can invest money until one has the money to invest. I wanted to impress upon her the importance of starting saving right this very moment. It won’t help her cause one bit to delay saving.

          Dream. Save. Endless possibilities spring to life.

          Thanks you, Paula for the opportunity to ramble. Keep up the great work!

          • says

            RentalRandy, your analysis of what the original commenter was saying was about what I thought as well. Sometimes, it’s a little hard to interpret tone or intent from written words, but that one seemed pretty clear to me as I read it as well.

            My first reaction to her comment was to think “There aren’t a lot of good options with an attitude like that!” Of course, I don’t always write what first comes to mind!

            I’m really glad you responded how you did. It was positive, inspiring, and has created sort of a magical moment on this blog where readers are inspiring readers. That’s really cool.

  11. says

    It’s so nice to read about larger family units striving for financial independence. It helps those not in the dual income category see that everyone can do it and that it does not have to happen at lightning speed like it can for those with two incomes or households without the financial responsibility of children.

    We are a 5 (soon to be 6) person household with one income earner and one rental (so far) in the portfolio. I often get frustrated with the pace of progress, wanting so badly to retire as early as possible, and I compare myself to others with very different circumstances. I have to take a step back to remind myself of the choice we made to have a larger family and that we must balance financial independence with investing in our children (both time and money). But we’re still going to make it there by sticking to a solid financial plan of saving/investing and smart spending.

    • says

      “I often get frustrated with the pace of progress, wanting so badly to retire as early as possible, and I compare myself to others with very different circumstances. I have to take a step back to remind myself of the choice we made to have a larger family and that we must balance financial independence with investing in our children (both time and money)”

      Danny, I sooooooo completely understand you!!!

      The pace I’m on is sometimes excruciating. I constantly browse real estate websites for potential investment properties in my price range. And I consistently find properties that would be perfect for me. The problem is, I don’t have the means to acquire them. I could, if I was childless. But I’m not childless.

      You and I made the decision to have families. And you’re right that it takes money AND time to do right by our children. One example — Last year, I closed on my second rental property a week before the school year ended for summer. I had to get to work on it immediately, because I can’t afford to sit on a property. I have to get it generating cash as soon as possible. But, I’m the primary caregiver for my three children (then 11, 6, 4) which means there are with me all day every day during the summer. They spent riding with me to the second rent house, to Lowe’s and Home Depot, sitting in the house while I check on contractors’ work or did small things myself. Let’s just say the first half of their summer wasn’t how they might have planned it.

      Flash forward to a few weeks ago. A great, no make that GREAT opportunity popped up. [Details deleted for brevity] In the end, I decided to pass. I didn’t want to muck up a second straight summer for the kids by buying and fixing up another home. They don’t deserve that. I decided to wait until school starts to try to acquire a third property. Of course, it helped that other buyers got involved and drove the price up, but I’ll credit myself with passing on this one. 😉

      The point is, you’re right. Choosing to have children is something that will slow us down. It can be frustrating sometimes, but the benefits of having children outweigh the negative effects they have on my ability to save and invest. Most of the time. I think.

      Good luck with your efforts, Danny,

  12. says

    Another inspirational story – way to go, Randy!

    Paula, I love how optimistic and motivating your features are. They keep me on track with my saving/investing and working towards my financial goals.

  13. says

    Love the article. I was about to reply to Paula’s last response and say, you can’t find a place for less than $600K in LA but then I searched for it on trulia and yes, there are over 5000 listings for less than $600K homes in LA,CA/#/for_sale/Los_Angeles,CA/0-600000_price
    However with that said, I think it’s important to stress that any real estate investor needs to run the numbers before buying anything even if it’s less than $600K. Just because it’s cheaper doesn’t mean the cashflow is there to make it a good investment.

    Where I do disagree is that there are many hardworking low-income people that Paula cited that do live in expensive homes. Albeit, they rent it with multiple families living in it or if they are single, they may rent a room with multiple roommates. And yes, there are many that live in less prestigious (and sometimes unsafe) neighborhoods as well. My opinion, for large metropolitan areas, there are investment opportunities, but they are fewer and more difficult to find and often will require someone with skills or access to doing a lot of renovation work cheaply.

  14. says

    As you said earlier its not good to read between the lines(I hope I am not here), but don’t let not having enough down payment money be an excuse to not buy property. There are other solutions.

    We purchased several of our properties with hard money and then refinanced into 20 year or 30 year fixed mortgages. Our out of pocket is less than 5k per property and we still cash flow over $100 per property.

    I love your attitude about making things happen. You are a solution oriented person. Have you looked into other ways to acquire property with less money down?

    Thanks for sharing your story.


    • says

      Hi Jason,

      I’m certain I wouldn’t qualify for that kind of deal. Income level is very important when getting loans for more expensive properties. I hope to do that sort of deal later, after I add more properties to my portfolio which will increase both my net worth and my income level.

      • says


        After further consideration, I think I might just ask around about a hard money loan. Even if I don’t utilize it, assuming I am offered it, it would be useful to know if I might be able to qualify for one.

        Even if I don’t use every weapon in my arsenal, it’s important to know which weapons are available to me.


        • says


          Your point on income is important, but as you add properties your rental history counts. When I bought my first 3 rentals, I made about 50k per year. I used private money and then refinanced into traditional 30 year fixed mortgages. My loans were for 75% of the after repair value, but required only around 5k each out of my pocket when all was said and done. 2 were from turnkey wholesalers and 1 was a fix and rent. My mortgages totaled around 300k. This was in 2008 when lending was virtually non existent. I just had to find the right mortgage company.

          My biggest issue was actually credit, I had none since I did not have any loans or credit cards. I had to get a credit card for 3 months just to have a credit score. I think I was started at 650.


          • says

            “My biggest issue was actually credit, I had none since I did not have any loans or credit cards.”

            That reminds me of me. When my wife and I bought our personal home, the bank initially had a problem with my credit report. The problem was I didn’t “exist” on two of the three credit reporting agencies they used. Fortunately, the third agency had just enough information on me to rank me high enough (somewhere in the mid 600s) to qualify for the mortgage.

            Prior to that, I hadn’t utilized credit practically ever. I’ve always been debt averse. When I was younger, I didn’t realize I needed to “play” with credit to get in the game.

            Now, I’m recognized by all the credit agencies and my rating is high enough to qualify for good rates. I use credit much more than I ever thought I would, and I plan/hope to use it even more. Just another tool for me to use to accomplish my goals.

  15. says

    This is a great story and it should motivate anyone who is ready to accept that investing is the best way to build wealth. Those how are scared of investing are just not ready to change or don’t care for real freedom. Which is not the plan I have for my family. Thanks for the story.

  16. says

    I’ve always said getting into rental real estate is the best way for someone to make a decent amount of money from a limited pot of money.

    I love the tips on savings. I managed to save up a seven figure portfolio and retire at 33, and a lot of the savings happened $10 or $20 at a time (well, a lot of $10’s and $20’s obviously).

    When I hear people that make way more than we did say “it’s impossible to save anything” as they blindly skip over those $10 or $20 saving opportunities, a tiny chunk of my soul dies because I know what kind of freedom those people could have with a tiny bit of effort and minimal real sacrifice.

  17. says

    I’m all for building a property empire, and that is what I’m doing (bit by bit). However, re-renting is sometimes painful (and this time it is). My property has been on the market for 4 weeks (I realise this is not long but it always shifted quickly in the past). Some are interested, but nobody has bitten, yet. Tenants are just about to leave and called last night to say they cracked the bathroom sink. They are going to replace it. I guess it never rains but it pours.

    Think I might be asking too much money p.c.m. Might drop the price.

    • says

      @Cat — Yes, definitely! I keep a cash reserve of 6 months of rental property expenses, though that number is always changing, as various things get upgraded or repaired. (For example: A few months ago, one of my units needed a new water heater. No problem: I just paid from my cash reserves, and then used next month’s rental income to replenish those reserves.)

      I hold these funds in Everbank, which has a 1 percent interest rate on savings. (I write about savings accounts here).

  18. says

    When you are buying real estate investment properties, have someone who is handy at fixing things to help you out. Otherwise, your extra cash will be depleted by high repair expenses. A reliable handyman is great for tenant issues that may arise during the day or night.

  19. says

    The biggest take away here is taking the money earned from the investment and creating a new investment – reinvesting that money. I don’t know if rental property is for me (maybe someday), but I definitely know that reinvesting profit is how the rich get richer!

  20. says

    That’s fantastic–very inspiring! I totally agree with your assertion on saving in small increments. I think it’s easy for people to think they’ll never be able to save enough money, but it’s almost always possible! And thumbs up on reducing the grocery budget–food is definitely a hidden budget destroyer. Thank you for sharing your story, Randy!

  21. says

    This is a great guest post. Thanks Randy for sharing your story and being so positive and upfront about your situation. Very inspiring!

  22. says

    I’m 17 and stumbled upon this blog. Honestly… I’ve been reading through these post for the past 3 days just trying to absorb all the information I can.
    I want to know if there’s a more in depth resource for me developing passive income. I have a lifetime goal I suppose you could say of one day owning a small farm. I simply want to generate enough income to support myself by the time I am 40.

    • says

      @Alex — You’ll definitely be able to do that if you start now! Age 40 is 23 years away, which means you have plenty of time to create that type of income.

      First and foremost, avoid all consumer debt: credit cards, car loans, etc. Since you’re 17, you’re presumably finishing high school soon. If you choose to go to college (though you don’t have to), try as hard as possible to avoid taking out student loans, even if that means attending an in-state school or living with 8 roommates.

      Look for jobs that will pay you more than the pittance that most student jobs pay. Many college students make minimum wage, and it’s hard to support yourself on that. If you develop a skill, like hanging drywall or fixing cars or landscaping, you can start at double or triple the minimum wage, which is good by student standards. And if you start your own side biz, like programming or graphic design or freelance writing or selling things on eBay, you can earn anywhere from $20 to $100+ per hour. None of these require a college degree; they only require skills/knowledge, which you can learn for free online through blogs and videos.

      If you absolutely MUST take out student loans, take out the smallest amount possible — just enough for tuition and fees. Don’t live lavishly on loans. Cover your day-to-day living expenses from working.

      Next: Once you’re finished with college (if you choose to go) and working full-time, live on 50% of your income and invest the other 50%. The easiest way to do this is to focus on turbo-charging your income. If you work 9-to-5, for example, grab a second job during your “time off” — like waiting tables or freelancing or consulting or bartending or programming or doing tech support. Let’s say you work an 8-hour shift every Saturday, and two 4-hour evening shifts on Tues/Wed. You have Sunday totally free, and you have Monday/Thurs/Fri evenings free. If you make $25/hr during those extra 16 hours, you’re pulling in another $400/week, or almost $21,000/year, in “extra” money. Save every dime (after taxes) and throw it into investments.

      Buy index funds and rental properties. Don’t get too risky or sophisticated or crazy with your investments — stick to the tried-and-true, time-tested investments, like the type in the detailed plan I wrote on this blog post. Reinvest all your gains. Live like a college student for as long as possible, and continue to avoid consumer debt (always). Live with roommates for as long as you can, live in a part of the country with a low cost of living, drive used cars, don’t eat at restaurants too often, and don’t buy into the myth that your personal home is an “investment,” or that you should spend money purely for the sake of the tax-write-off.

      Follow those rules, and you’ll be golden!

      Continue avoiding all non-mortgage debt.

  23. says

    Hats off to you Randy! I can say that groceries are just one of my biggest expenses every week and I’m trying to shift on to more chicken and lesser the pork meat. You’re such a very, very responsible father and a husband.

  24. says

    Owning rental properties has been a dream of mine since my early 20’s, but life has gotten in the way. So, I need some advise…I’m a single mom with an ex that refused to pay for anything, I make less than $400 per week before taxes, attend college part time and have to rely on food stamp assistance. I just recently started reviving court order child support of $350 per month, which I strictly keep depr tats and only for the kids. I’m in $10,000 in debt most because of paying for kid expenses without child support for 5 years. ‘ve also started having some stress related health issues…go figure. Not the life I wanted for me or my kids! I seriously have $0 to save every penny goes to a bill somewhere, how do I buy a rental property?

    • says

      @Single Mom — First and foremost, you need to make more money. $400 per week is hardly enough for one person; it’s definitely not enough for a family.

      Give Yourself a 62.5% Pay Raise — Based on your payrate of $400/week, you must be earning $10/hr if you’re working full-time, 40 hrs/week. Find additional jobs to increase your income. Working 65 hours/week at $10/hr would get you $650/week before taxes, which is a 62.5% raise.

      Re-Consider Your Strategy — You mentioned you’re also a part-time college student; I hope you’re pursuing a degree in a field that’s likely to land you a higher-paying job (i.e. I hope that you’re majoring in engineering or accounting, rather than, say, history or sociology.) If not, then I’d like you to ask yourself what you hope to get out of this degree, and consider if perhaps your time/energy could be better spent elsewhere. Remember, also, that many high-paying careers such as being a real estate agent, electrician, general contractor, etc., don’t require a college degree.

      Get the Family On Board — If your children are old enough, encourage them to start working, as well, so that they can cover some of their own expenses (clothes, shoes, etc.) Working is actually quite good for kids, as it teaches them the value of money — I started working at McDonalds at age 15, and I have friends who began working even before that (babysitting, lawnmowing, etc., starting around age 11 or 12).

      Pay Off Your Debt — Let’s return to that 62.5% pay raise we talked about earlier, which comes from working 65 hrs/week at $10/hr. (Remember, many professionals — such as doctors and executives — work 65 hrs/week, so this is a totally reasonable workload.)

      If you live on your current budget, but increase your working hours to 65 hrs/week, you’ll earn an extra $250/week above what you’re earning now, which comes to $13,000 per year. Your debt load is only $10,000. After taxes, that extra $250/week is still enough money for you to be debt-free within one year. Repeat the same during Year Two, and you’ll have enough money for a downpayment on your first rental property. :-)

      • says

        Well that sounds good on paper, except I would have to spend most of that extra $250 on child care, lawn care, food (because I would loose the food stamps) house cleaning and laundry service. Not to mention if I made and extra $250 I would then have to pay $300 per month for health insurance for my kids. But nice thought.

        • says

          @Single Mom — Lawn care?! Laundry service?! House cleaning?!

          You have got to be kidding me.

          Lawn care, laundry service and house cleaning are LUXURIES, and they’re luxuries that you cannot purchase right now. MILLIONS of hardworking professionals wash their own laundry and clean their own houses; why can’t you? Mow your lawn during your time off, just like everyone else.

          Let’s look at a model workday:

          6 am-7 am: Wake up, get dressed, eat breakfast, go to work.
          7 am-6 pm: 11 hour workday, 6 days per week.
          6 pm-6:30 pm: Commute home from work. Pick up kids.
          6:30 pm-8 pm: Laundry, housecleaning, yard care, cooking, etc.
          8 pm-10 pm: Relax.
          10 pm-6 am: Full 8 hours of sleep.
          Every Sunday: Full day off.

          Sounds like a luxurious schedule to me. I’ve worked a LOT harder to get where I am, maintaining a much more demanding schedule than that, and I’m not special — millions of people work much, much harder than this. None of us insist that lawn care, housecleaning and laundry service are necessities or entitlements.

          You make valid points about the food stamps and the health insurance; your government benefits will change based on your income levels. However, additional child care is tax deductible and will counteract your gross income, upon which your benefits are based. That additional deduction may still keep you eligible to collect benefits since your taxable income will remain at a similar level.

          Let me ask you this: Have you talked to a benefits counselor? Have you spoken with someone at the food stamp agency to see how you can increase your workload will still maintaining your benefits? Or did you simply conclude, “It’ll never work! I’m stuck where I am forever!”

          Pro-active people say: “HOW can this work? HOW can this happen?” and find solutions. If losing your food stamps or your subsidized health insurance is legitimately the ONLY thing that’s keeping you from working harder, talk to a benefits counselor who can help. Talk to a financial planner at a nonprofit agency. Be proactive. Find solutions.

          But I suspect that your attitude — rather than the food stamp program — is the thing that’s really holding you back.

    • says

      Single Mom,
      You are in a difficult situation. Difficult, but not impossible.

      I’ll start with something our hostess has already mentioned, your college classes. Take an honest look at your degree program. If you are not going to make significantly more money, you should not incur more debt for college. If you don’t think it’s realistic for you to graduate in that program (for instance, your grades are failing because of time/study/health issues,) then you might want to set aside college (and its debt,) until you are in a situation that will allow you to excel in college. If you think times are hard now, just wait until you have to start repaying $20K in college debt in four years.

      You must start cutting expenses somewhere. If you have cable, drop it. If you have an iPhone or any smart phone, drop it and get a basic cell phone. There is always something to cut.

      You mentioned that for five years, you did not get child support and you managed to scrape by. Now that you are receiving $350/month, try to set aside $50/month.

      If you’re going to invest in real estate, you need cash. Especially in your situation. With a lower income, relatively high debt, and possible credit problems, you will have a very difficult time convincing a bank to loan you money to purchase an income property. You will need cash, both to pay down your debt and to save for your future investment.

      Once you have eliminated your debt AND saved a nest egg to invest, I suggest you try to purchase a very inexpensive duplex. You and your children could live on one side, while you rent the other side for income. If you pay the mortgage from your work paycheck and also pay your rental income toward the mortgage, you’ll be able to create solid equity in a few years.

      But the first step is saving money. You simply must start saving. No excuses, just find a way to set aside some money each and every month.

      Good luck, Single Mom. You can do this!


  25. says


    Just wanted to post an update. Yesterday, I bought my third rental property. This one is a small 3br/1ba, brick exterior that needs minimal repairs. The kicker? It cost only $9K. With my estimated repair budget of $6K, I’ll be all in at $15K. Even better, all this was accomplished without any loan, so I have nothing to pay back. It’s all mine.

    I think the rent will be $750-$825, so I’ll earn back almost half my total investment in the first year. It will pay for itself in about two years, and every year after that will generate a gross of about $9000/yr.

    I’m eager to get going on the rehab. I figure it will take about two weeks to get it ready to rent, and I should have a tenant in place for May 1. After that, I’ll be on the prowl for property #4.

    This is the property that I think will turn the corner for me. This is the tipping point. After I get this one rented, saving for future income property purchases should be a lot easier, and take less time between acquisitions.

    Just wanted to share.


    • says

      @RentalRandy — CONGRATULATIONS!!!!! Wow, that’s incredible!!

      $15k total acquisition cost for a rent of $750+ ?? Those are amazing numbers! You’re totally right — once this one is rented, saving for future income properties will get much easier. That’s the beauty of rental cash flow: it builds on itself, and success breeds more success.

      Congratulations again!!

      • says

        I, too, think they’re amazing. It was a tax foreclosure auction house. The owner was a decades-long resident. When he died the house was passed down to his son who lives out of state in Philly. After unsuccessfully long-distance renting it for a couple of years, the son basically gave up on the property. It’s been empty for about two years, according to the neighbor.

        The house looks just like any rental where the tenant moved out. There are no stains or major damage to the interior. Honestly, I could probably steam clean the carpet and keep it, but I plan on replacing it or seeing how much trouble it would be to bring the hardwood (YAY!) back to life. Seriously, I’m pleasantly surprised by the interior.

        I think other bidder passed on this because it was boarded up and the houses/yards on either side look very bad. Gentrification is sweeping the area and moving this house three blocks would result in a huge uptick in value. I figure another year or two and this block will be gentrified as well. Glad I got this now, because in two years it would probably be outside of my investment budget.

        • says

          @RentalRandy — I love being an early investor in changing neighborhoods. House #5 is located in a similar area: the neighboring house, and five other houses on the same block, are boarded-up and vacant. Many investors are passing on this street, because it can’t be Section 8 approved (due to all the boarded-up houses).

          But if this house were only a few blocks away, it would be worth double. The neighborhood has changed rapidly in the past 5 years, with new businesses moving in, creating more jobs in the area, and with the city opening a new walking/biking path nearby. I predict that in another few years, this house will be worth substantially more.

          Of course, the rental cash flow is good enough that if appreciation never happens, that’s okay too. Cash flow is the name of the game, and rising values are icing on the cake. :-)

          • says

            Cash flow really is KING for me.

            The only real benefit if the valuation rises is that I could refinance and take money out to buy other properties. I know I should never say never, but I simply can’t envision even selling any of my current or future rental properties. I buy them all for cash flow, and that’s all I’m really interested in.

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