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I made $221K in passive income after quitting my corporate job to go into real estate. Here’s how I built up my portfolio to 38 properties.

Erika Brown in front of striped backgroundErika Brown bought her first property with $3,000.

Courtesy of MikeD.

  • Erika Brown is a real estate investor who made six figures in passive income in a year.
  • She left her 9-5 to pursue real estate and now she has more flexibility over her schedule. 
  • Brown took risks, stayed resourceful, and asked lots of questions to become successful.

This as-told-to essay is based on a conversation with Erika Brown, a real estate investor from the greater Atlanta, Georgia, area. It’s been edited for length and clarity.

I’m a self-made real estate investor who trains Black and Brown folks, especially women, to invest in real estate to build passive income and close the racial wealth gap. I work with about 15 to 25 students each month, offering group coaching and one-on-one sessions.

My life isn’t the norm — it’s super-unconventional. I live in a low-income neighborhood on purpose because I wanted to be part of uplifting that community and be able to provide jobs and houses to the people living in that neighborhood. I also homeschool my three boys.   

I didn’t aspire to be an entrepreneur

I had fully intended on staying in my corporate job until I retired, leading one of Atlanta’s top sales teams. But flexibility was scarce, and despite getting my tasks done early most days, I had to sit in the office until the day was done. I began wanting more of a challenge. 

I started dreaming of what I wanted my life to look like. I pictured a life where I didn’t dread Mondays — “Sunday scaries” wasn’t a thing for me. I wanted to decide where to work, live, and travel and to have new experiences with my kids.

Through my corporate job and speaking with executive clients, I learned that many higher-ups owned real estate. It seemed like a viable path to start building wealth, and I began working on it part-time on it for a bit.

Then I took the leap

I got my real estate license and bought my first property with a $3,000 loan from a family member.  

Now, I own nearly 40 multi-family properties in the greater Atlanta area. These include a couple of duplexes, one quad-plex, an apartment complex with 20 units, and over 10 single-family units. My properties are primarily located in Atlanta, Georgia, but I also own one in Dallas, Texas. I made $221,000 in passive income from real estate in 2021. 

Today, especially compared to my corporate job, I feel like I own my entire schedule. I’m more able to focus on my zone of genius and work on projects that truly bring me joy.

Here are some things I learned along the way to getting here.

Acquiring that first property was difficult

The first challenge for me was finding the money to get started. 

My husband and I had just a couple months of savings when I purchased my first investment property. Because I thought that the only way to finance a home was with a 20% down payment, I ended up needing to cash out my 401(k) from my former employer. Despite needing to pay the penalty fee and taxes, I was able to make that money back in a year.

During the first couple of investing years, I worked, saved up a bunch of money, and purchased just one property at a time. It was challenging. The market continuously climbed, outpacing my savings. 

It wasn’t until I had about five to six properties that I felt like we were making enough money to sustain growth. I’m now at 38 units. 

Real estate is not without risks. The two biggest: money and time

If you think you only have one way to come up with financing, I’d recommend talking to a financial advisor to see if there are options that you don’t know about yet. My own story is an example: If I were purchasing my first investment home now, I wouldn’t cash out my 401(k) because I now know there are other ways you can finance properties.

Time is a concern for many, especially because passive income is supposed to be passive. The reality is that many forms of passive income do take time and effort to establish on the front end. 

If you’re feeling like you don’t have enough time to give to real estate, really think through the next 5 to 10 years. Ask yourself what your life will look like in a decade if you don’t invest, and what it could look like if you do. 

Often it’s worth sacrificing a short amount of time so you can achieve your long-term goals and get your time back later.

Ask lots of questions and learn from mentors along the way

During my early investments, I called a former client who had a strong real estate portfolio. I asked him how he was able to buy properties so quickly when I was barely keeping up with my capital needs. He explained the “BRRRR strategy” — buy, rehab, rent, refinance, and repeat. 

That five-minute phone call was a game-changer. After that conversation, he connected me with a commercial lender who helped me get a commercial line of credit and made it more feasible for me to make new investments. In the next year, I was able to purchase seven properties. That client quickly became one of my most trusted advisors.

Managing a renovation is all about complex scheduling

The first time I decided to do a BRRRR deal, I ended up with a $9,000 loss

In the process of renovating the house, I acted as general contractor for the first time, and I didn’t ask the right questions. To be successful, you have to make sure jobs are completed in the correct order and that supplies arrive accordingly. 

Unfortunately, I made scheduling mistakes. The electricians ended up having to rewire the entire house after the new walls were up, poking holes in the drywall. I did not budget a contingency, which resulted in a loss.

Be resourceful

I’ve realized I may not always have the money to buy something, so I may need to improve what I already have. That requires looking around and seeing who’s doing what in my community. I’ve traded and bartered to be able to meet my needs, which has served me very well throughout my career, especially being self-taught and not having a lot of knowledge in the beginning.

Identify what you can delegate to others. For example, if you don’t have general contracting experience, it’d be best to hire someone who has the necessary skills and knowledge to get the job done correctly. In the end, you’ll end up saving money and time.

Being resourceful in real estate also often means finding people who can teach you valuable lessons. I’ve learned a lot from other people — people who are just starting their investment portfolios, and those who have decades of success — by just asking them questions. 

Read the original article on Business Insider