From Broke to $4,600/Mo in Passive Income By Age 28

By Brandon Turner

I knew it would be the worst day of my life.

Throughout my childhood and teen years, I saw it coming. And it scared me to death.

I鈥檓 talking about 鈥渢he day after my honeymoon.鈥

You see, I knew I had college to look forward to. After college, I had the dating world, travel, and the honeymoon to look forward to. Everyone 鈥渒nows鈥 the early twenties are the best years of a person鈥檚 life.

In my mind, those glory days ended with the honeymoon 鈥 a symbolic sign that life would cease to move forward.

Sure, there would be kids, vacations, raises, etc. 鈥 but I knew that the first day of adulthood had officially arrived. There would be no more levels. I had checked the box for high school, college, sex 鈥 and then what?

That鈥檚 why I dreaded this day. The day when I woke up and realized that from this point on, until I hit my 60鈥檚, I would be stuck.

The thought depressed me 鈥 until I found a way out.

Can you relate?

For millions upon millions of adults, this is life. Your progress until finally you 鈥 just stop.

You stagnate.

But I found a way around it. Phew!

I used real estate to create financial freedom and live a life that I wanted. By age 28, I built a rental portfolio which produced around $4,600 per month in (mostly) passive income. This post is going to share how I did it, and offer tips for how you can do the same.

Why I Chose Real Estate as my Path to Freedom

I have to admit, I was first sucked into real estate investing from the television.

During the mid 2000鈥檚, there were several 鈥渇lipping鈥 shows that featured an investor tackling a large remodel job and making big money fixing ugly houses and selling them for huge gains. It sounded so easy and exciting 鈥 I just had to do it.

I bought a home, fixed it up, and sold it without really knowing what I was doing. (This was before the real estate crash鈥 when anyone could flip a house!) Although I cleared around $20,000 over the year, I realized three important things about real estate:

#1: Real Estate Has No Limits. My fear about reaching some final 鈥渟tep鈥 was quickly washed away when I realized I could control my own future because there was no limit on what level I could take it to. I didn鈥檛 realize this at the time, but the reason I had such fear of growing old and stale is because I was an entrepreneur stuck in a day-job world. As soon as I realized there was hope 鈥 the 鈥渄ay after the honeymoon鈥 never came!

#2: Flipping Houses Is Not Passive Income. Yes, I made money (and spent it on my wedding.) However, it was a LOT of work, stress, and risk. I realized flipping houses was just a business. It appealed to the entrepreneur side of me 鈥 but it was still trading time for dollars, which I was beginning to see was my enemy.

#3: Real Estate Can Produce Outsize Gains. For example, I bought that first home with just a couple thousand dollars down and used credit to remodel the home (not the world鈥檚 best choice, but it worked for me this time!) Had I tried to invest in stocks with that could thousand dollars -I would have possibly made a hundred bucks a year. Hardly life changing. You see 鈥real estate is the one asset class that allows you to use creativity and sweat in the place of cash.

My First Rental Property (And My First Addiction)

After that first successful house flip, I was back at square one, with no home and no income. I began looking for a new home to buy 鈥 which is when I stumbled upon the concept of buying a small multifamily property.

The home was a duplex located in a nice, blue-collar neighborhood. It was a bank foreclosure, so it needed a little bit of paint, carpet, and cleaning. I bought it, lived in one half, and within a couple weeks I had the other side rented out.

The best part? The other unit paid the entire mortgage. More than 100% of it.

Which meant I was living for free. This was my first taste of (mostly) passive income and I quickly grew addicted.

I say 鈥渕ostly passive鈥 because there is work involved with managing rental property 鈥 depending on how you set up your business. In the beginning, I accepted phone calls from my tenants and did my own maintenance and repairs (though I鈥檝e sinceoutsourced both of those tasks.)

My Step-by-Step Path to Growing Passive Income

As the title of this post suggests, I went from having nothing to around $4,600 per month in cash flow by the time I was 28. There is a good chance you are wondering how the heck I did this, so I鈥檒l break it down for you here.

However, keep in mind that this is just the path I took 鈥 not necessarily the path you should take.

Age 22: I bought that first duplex that I lived in part and rented the other part out. I stayed for a year or so, and then moved on. The mortgage was right around $600 and I rented the other home out for $625, giving me the opportunity to live for free. As soon as I moved out, however, I rented the home I lived in for $500, providing me around $500 in extra money. However, after paying the utilities and budgeting for repairs, I ended up clearing around $300 per month.

Age 22 (and a half!): I bought another house to 鈥渇lip鈥 鈥 that ended up not selling. The market started crashing all around me, and I couldn鈥檛 sell. However, I discovered a tactic (out of necessity) that I鈥檝e used numerous times that helped me turn this flip into a cash flowing rental that brings me around $300 per month 鈥 with no money out of pocket. I鈥檒l talk about that strategy a bit more later in this post.

Age 23: I bought 鈥渢he hell house鈥 鈥 a home that just breaks even every month. Not cool.

Age 24: This was a big year. I bought a 24-unit apartment complex, using seller financing (which means the sellers act as the bank, and I pay them the monthly mortgage payment each month.) The property was half empty when I bought it, and in rough shape. I spent more than a year turning the thing around, raising rent, fixing problems, and managing the rehab (and doing a lot of the labor myself.) In the end, this property cash flows around $2,000 per month.

Age 25: Nothing. What a lame age.

Age 26: I bought a triplex with some friends this year, which provides a total of around $600 per month in cash flow. I get half, so approximately $300 per month.

Age 27: I bought a four-plex at the start of my 27th year of life, using a hard money loan. There is a 5th unit that I will be renting out after my refinance goes through, and I should be cash flowing around $800 per month within a few months of now.

Age 28: I decided to flip a duplex a few blocks from my house, but decided to just keep it for a rental instead for a few years, maybe indefinitely. I鈥檓 working on getting a refinance on it right now, but it will be cash flowing around $500 per month when the refinance happens later this month.

Age 28: I鈥檓 closing on a triplex later this week that provides around$400 per month in cash flow.

So add it all up and you get $4,600 per month in fairly passive income.

Of course, there鈥檚 volatility. Some months, Murphy鈥檚 Law kicks in. I deal with an eviction, a trashed unit, extra vacancies, and other problems. Other months, however, I have strong occupancy and everything runs smoothly.

I plan for most problems by collecting security deposits from the tenants (sometimes as high as two months鈥 rent), I have my manager make frequent inspections on the units, and take quick decisive action when things go wrong.

The Power of Real Estate Partners

At this point, you are probably thinking, 鈥淢an! Does this guy work for the Mob?! How did he get so much money to buy all this stuff?鈥

Here鈥檚 a secret: I鈥檝e put almost no money into anything I鈥檝e ever bought. Really, probably less than $5,000 total over the past seven years.

How did I do this?

While I used a variety of techniques (probably every method a person could) my favorite technique was to invest with partners. Essentially, my strategy looks like this:

  • I learn everything under the sun about one specific real estate niche and strategy. I become an 鈥渆xpert鈥 in that very narrow niche.
  • I find a great deal.
  • I negotiate a killer price.
  • I find a partner, who wants to earn a good return but doesn鈥檛 want to be actively involved.
  • The partner supplies the down payment and gets the loan on their credit.
  • We both own the house jointly.
  • I manage the property entirely and manage (outsource) every aspect of the deal.
  • We split all profits 50/50.

A lot of people ask 鈥渂ut why would this partner want to do this? They are paying all the money, yet giving you half the profit.鈥

True 鈥 absolutely. However, as I often say 鈥50% of a great deal is better than 100% of no deal.鈥

The simple truth is that most people will not invest in real estate. They won鈥檛 take the time to learn how to evaluate or negotiate a good deal. They won鈥檛 call the agents, arrange the financing, or crawl under the houses. (Though I鈥檝e finally outsourced the crawling-under-houses aspect!)

The fact is: most people won鈥檛 invest. When I pitch a partnership, I give them an easy way to enter the field.

Cool, I Got Cash. Now What?

My point is not to show off, or to make it sound easy. Sure, in a 1,800-word blog post, it can seem pretty simple.

But the fact is, I鈥檝e struggled a LOT to get where I am. I鈥檝e made more mistakes than good decisions. I鈥檝e bought property that I later regret buying. I鈥檝e wasted a lot of time chasing deals that made me no money at all. I鈥檝e even lost money a few times.

Reaching $4,600 in passive income took a massive amount of work.

But I love it.

Life did not end the day after the honeymoon. Now that I have financial freedom, I can live on my own terms.

There are many ways to create freedom in your own life. Your path doesn鈥檛 have to be real estate investing. 鈥 that鈥檚 just the path I chose.