How I Made Enough Rental Income in Denver’s Real Estate Market To Quit My Job

It’s easy to assume folks in real estate come from money. But I, emphatically, was not one of them. My parents married and had me at a young age. Years later, they divorced, and my mom eventually decided to relocate to New Mexico with my stepfather. I was given the option to stay in Colorado with my Aunt, or live with my mom and her husband in New Mexico. I chose the former, and consequently developed a desire to be financially self-sufficient. 

After graduating from University of Colorado (go Buffs!), I fell into software sales primarily to pay off student loans. My career enabled us to buy our second home and even dabble in real estate investing. It wasn’t long after my 18-month-old son was hospitalized for a respiratory infection – that my stepfather unexpectedly passed away from a work-related, stress induced aneurysm. In those moments, I realized I never wanted to let any job compromise my health, mental wellbeing and the limited time we have on this earth. Simply put, time with family became my no. 1 motivator to become financially independent.  

I became aggressive about real estate investing in, and today, own more than $6.2 million in property and over $31,000 in rental income a month. Here’s how we did it, and you can, too: 

Buy modest homes you can move into now, rent later.

This is probably the quickest path to generating wealth. Here’s why: when you’re buying a primary residence, banks may not require as much of a down payment (as a first time buyer you can put as little 3 percent down on a conventional mortgage  or 3.5% through an FHA loan). What’s more, they will generally give you better interest rates, compared to investor rates. This, in turn, can help minimize your monthly payments, enable you to retain more funds and position you for better cash flow later on. Plus, buying homes that are “modest” or in need of repairs, may make it easier to score a deal and help sidestep bidding wars. 

For instance, we ended up buying a fixer-upper in Denver, which we not only renovated over time, but found the ‘once-run-down’ area we bought in was becoming more popular. We could rent our house for double our mortgage. This was the launchpad into our next property and real estate journey. 

Move as often as you can stomach.

I’m not going to pretend this is easy, however, if you have the endurance to move and to move often, consider buying a primary residence every year, converting it into a rental and moving on to the next. The reason this strategy works is because you can build equity to leverage towards your next property, and you get the best rates to aid higher cash flow. In other words, if you were to simply buy an investment or rental property outright, without living in it, you’d be required to put 20-25% down and would pay a higher rate (usually around 1% more). That has a sizable impact on your bottom line. 

We did this on four separate occasions (FOUR…it’s crazy, I know), and while it was a pain, it helped us scale quickly, and gave me the confidence to quit my six figure job. 

Look for properties with private entrances.

There are only so many multifamily (e.g. duplex or triplex) homes for sale, especially in hot markets. That doesn't mean a single family home can't function like one. Commonly known as “house hacking”, homes with walk-out basements or other private entryways can easily be converted into a separate apartment, helping mitigate risk by increasing your income streams. We’ve done this multiple times with our homes/rentals and are able to not only “up” the value, but also increase the amount of cash coming in. 

Rent unused spaces.

Another form of “house hacking” and a way to start generating passive income quickly, without moving, is to consider renting rooms or unused living areas to either cover your mortgage or save for your next property. You could do this with longer term roommates or even rent rooms through sites like Airbnb. We were lucky enough to find properties that had either an Accessory Dwelling Unit (e.g. carriage house/above garage apartment) or were zoned for them, which we could convert into short term rentals. 

Mix it up.

Like any investment, you wouldn’t put all your eggs in one basket. Same goes for real estate. This is one of the many reasons our real estate properties include a mix of multifamily, single families as well as long term, mid-term and short term rentals. We also invest in high demand markets, less desirable areas (I call them up-and-coming) and regional travel destinations. The reason we do this? It minimizes risk and covers us should the unexpected happen. For instance, if the long term rental market “nosedived” and our houses sat vacant, we could rely on the higher income streams from our short term rentals or sell properties with larger value increases to offset any loss. 

Just do it.

Nike says it best. In all honesty, it doesn't matter what strategy you choose for investing, just pick one. Life is too short and the market is appreciating too quickly to over analyze. If it doesn’t fit, you can always change your approach. The beauty of owning property is it provides a myriad of income-making opportunities that didn’t exist before (e.g. appreciation, long term rentals, corporate rentals, short term, renting out rooms, etc.). It just takes some resourcefulness.

*Results may vary, and are dependent on market conditions, resources and several other external and personal factors.