How to Retire with Rentals in Just 10 Years (It’s Still Possible!)

Summary

BiggerPockets Real Estate Podcast: How to Retire with Rentals in Just 10 Years (It’s Still Possible!)

Host: Dave Meyer
Guest: Paul Novak, Sheboygan, Wisconsin
Release Date: May 19, 2025

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Introduction

In this compelling episode of the BiggerPockets Real Estate Podcast, host Dave Meyer welcomes Paul Novak from Sheboygan, Wisconsin. Paul shares his inspiring journey from dividend stock investing to building a robust real estate portfolio aimed at achieving early retirement within a decade. This detailed conversation offers valuable insights into strategic investing, creative funding methods, and disciplined financial planning.

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Paul’s Investment Journey: From Stocks to Real Estate

Paul Novak began his investment career in the stock market, specifically focusing on dividend-paying stocks. However, he soon realized that achieving financial independence through dividends alone would require an impractical principal sum.

Paul Novak [02:21]: "If I want 100,000, I did like eight and a half million dollars in the market. Seems crazy."

Confronted with this daunting figure, Paul sought alternative investment strategies and discovered real estate. Inspired by the tax benefits and the potential for more manageable cash flow, he transitioned to real estate investing in 2021.

Paul Novak [02:58]: "When I looked at how much I needed to have total in that portfolio to live off dividends, it seemed like an unattainable number."

Using equity built from refinancing his primary residence, Paul secured $112,000 to kickstart his real estate journey, locking in a favorable mortgage rate of 2.38%.

Paul Novak [03:34]: "My wife had a similar career and similar journey. We've really just gotten disciplined at whittling down our expenses. And I think our savings right now is somewhere around 55%."

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Acquiring the First Rental Property

Paul’s first foray into real estate involved purchasing an off-market multifamily townhouse. This property acquisition was facilitated through family connections, allowing him to negotiate directly with the landlord and secure a deal below market price.

Paul Novak [05:05]: "We ended up finding our first deal was a multifamily, a side-by-side townhouse. It was actually an off-market deal that I learned about kind of through family."

The initial cash flow from this property was a significant motivator, as it surpassed the returns he could have expected from dividends.

Paul Novak [06:37]: "So I start doing the math and I thought, wait a minute, if I had 50,000 in VO, what I'd be getting in dividends? Like it's nowhere near 570, 750 bucks a year."

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Managing Properties: A Natural Fit

Paul enjoys managing his rental properties, attributing his success to skills honed in his 20-year corporate career in manufacturing. His ability to handle metrics, manage people, and navigate difficult conversations has made property management a rewarding experience rather than a burdensome task.

Paul Novak [09:22]: "I really enjoy dealing with people... I've managed people forever. It's just so much based on people."

This hands-on approach has allowed Paul to maintain control over his properties and ensure their profitability.

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Scaling the Portfolio: Challenges and Strategies

After successfully acquiring his second property in early 2023, Paul faced a common challenge: limited capital to continue scaling his portfolio. Despite the potential to grow, his savings were depleted, necessitating a reevaluation of his funding strategies.

Paul Novak [24:10]: "We had to find ways to get capital... I never ever would have considered [a 401k loan] before."

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Creative Funding: Utilizing 401(k) Loans

To overcome the capital constraints, Paul turned to a creative solution: taking a loan from his 401(k). This unconventional approach allowed him to secure $50,000 with minimal fees and the interest paid went directly back into his retirement account.

Paul Novak [25:04]: "I decided to take a loan out against my 401k and almost use that as like the bank. So I pulled out the full $50,000 and I only have to pay in fees, $10 a quarter while that money is borrowed."

This strategy enabled him to finance his third property without waiting to save the required funds, accelerating his investment timeline.

Paul Novak [25:25]: "We use that for our third property."

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Current Portfolio and Future Plans

Paul's disciplined approach has led him to acquire a total of five rental properties within approximately four years. He leverages both HELOCs and 401(k) loans to fund additional acquisitions, maintaining a balanced and manageable portfolio.

Paul Novak [26:58]: "We sit down quarterly and we actually go through your real estate strategy. We go through each element of it and kind of talk about, okay, what are our plans over the next quarter, the next six months?"

Paul and his wife are focused on paying off existing loans to solidify their financial foundation, ensuring they can retire comfortably within the next six to ten years.

Paul Novak [28:28]: "I think the day could come that we'd at least have all the properties that we need. Me, knowing me, I'm never going to stop, but at least to know like, hey, I could get this."

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Paul’s Retirement Goal: Financial Freedom in a Decade

Paul’s ultimate objective is to retire within ten years by owning between seven to ten fully paid-off rental units. This strategy aims to generate over $10,000 in monthly cash flow, providing sufficient passive income to replace his current W2 income.

Paul Novak [31:19]: "We really have a clear path to more than $10,000 in monthly cash flow in less than 10 years."

His methodical and conservative investment approach ensures sustainability and minimizes risk, aligning perfectly with his long-term financial goals.

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Conclusion: A Blueprint for Early Retirement

Paul Novak’s story is a testament to the power of strategic planning, disciplined saving, and creative funding in real estate investing. By leveraging his corporate experience, making informed investment decisions, and utilizing unconventional funding sources like 401(k) loans, Paul is well on his way to achieving early retirement through rental properties.

Paul Novak [33:00]: "Awesome. Thank you."

His journey provides a valuable blueprint for aspiring investors aiming for financial independence through real estate, demonstrating that with the right approach, retiring with rentals in just ten years is indeed possible.

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Key Takeaways:

• Diversify Investments: Transitioning from dividend stocks to real estate can offer more sustainable and manageable returns.
• Leverage Existing Assets: Utilizing home equity and retirement accounts creatively can fund property acquisitions without significant delays.
• Conservative Financial Planning: Adopting a conservative approach to budgeting and financing ensures stability and minimizes risks.
• Strategic Portfolio Scaling: Focus on quality over quantity, managing a smaller, well-maintained portfolio can lead to substantial passive income.
• Clear Financial Goals: Having a well-defined retirement goal provides direction and motivation, allowing for disciplined investment strategies.

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Paul Novak's journey underscores the importance of adaptability, strategic planning, and disciplined execution in real estate investing. His approach serves as an inspiring example for those seeking to achieve financial freedom through thoughtful and methodical property investment.

Transcript

[Dave Meyer]

This investor needed only five rental properties to put himself on the path to early retirement.

[Paul Novak]

Even after accumulating huge debts in his 20s, he was able to start buying real estate using a repeatable, kind of.

[Dave Meyer]

Boring strategy that almost anyone else can follow. Now he's cash flowing thousands per month.

[Paul Novak]

And will have the option to leave his job in his mid-40s if he.

[Dave Meyer]

Wants, instead of working another 20 years. Keep listening to find out how he did it. Hey, everyone, I'm Dave Meyer.

[Paul Novak]

I'm the head of real estate investing.

[Dave Meyer]

At Biggerpockets, and I've been buying rental properties for 15 years now.

[Paul Novak]

Today's show is an investor story with Paul Novak from Sheboygan, Wisconsin, and this one's going to be a lot of fun. Paul started investing in dividend stocks in his mid-30s, but soon realized he'd need millions of dollars in principle to ever actually replace his W2 income.

[Dave Meyer]

So that led him to discover real.

[Paul Novak]

Estate, and he wound up buying his first rental property in 2021.

[Dave Meyer]

Now fast forward a couple years.

[Paul Novak]

He has seven rental units and a.

[Dave Meyer]

Clear path to more than $10,000 in monthly cash flow in less than 10.

[Paul Novak]

Years after he first started investing.

[Dave Meyer]

In this episode, we're going to hear from Paul how he found a creative.

[Paul Novak]

Way to fund his deals and pay the interest to himself instead of a bank, why he doesn't aspire to accumulate hundreds or even really dozens of rental units, and why he found that his.

[Dave Meyer]

Corporate career prepared him for for all.

[Paul Novak]

The ups and downs of property management. This is a great conversation. It's a lot of fun. Let's get into it. Here's me and Paul Novak. Paul, welcome to the BiggerPockets podcast.

[Dave Meyer]

Thanks for being here.

[C]

Yeah, super pumped about it. I literally watch every episode when it comes out now to actually be on telling my stories. Really cool.

[Paul Novak]

I'm glad we got you on the show. So maybe just tell us a little bit about yourself and how you found yourself in the world of real estate.

[C]

Investing For a very long time. I've been into personal finance, how to do more with my money. If I think about my start was kind of in the stock market. That's where I started investing once we paid off all the debt and things like that. Originally it was let's live off dividends. The dividend payments were not that big, and when I looked at how much I needed to have total in that portfolio to live off dividends.

[Paul Novak]

Yeah, it just.

[C]

It seemed like an unattainable number.

[Paul Novak]

Do you remember what the cash on cash return is essentially On a dividend when you start doing this.

[C]

Sure. So I was putting money in V, the dividend Yield was like 1.51%. So I started working the math and I thought, well, if I want 100,000, I did like eight and a half million dollars in the market, Right?

[Paul Novak]

Exactly.

[C]

Seems crazy.

[Paul Novak]

Yeah. It's just like, that's not very motivating to think about, you know. Oh, just somehow managed to get $8.5 million and you could live off it. That's just doesn't feel like something worth spending any time on.

[C]

Yeah. And you know, I think about myself too. Right. I know how crazy that number sounds. And if it actually got that big, I know I could draw from the principal. Right. Because it'd be growing faster than I'd need it. But my goal was kind of build up this nest egg that I didn't need to do that. And in essence, I could live off the cash flow. And that's when, you know, at that same time, I also read the book Rich Dad, Poor dad, which a lot of people talk about on here. And the one thing the dividends didn't have was all the tax benefits that you could get from going into real estate. So I thought, you know what, like, let's give it a shot. And we got lucky. We bought our house. Timing just worked out that way in 2009. So what we paid for this house versus what it was worth. When we started in real estate in 2021, we had a ton of equity built up. I was able to refinance my loan, go from a 15 year to a 30 year, pull out 112,000 in equity, and my mortgage remained the same and locked back in at 2.38%. So that kind of gave me the cash that I needed to get started on the real estate journey.

[Paul Novak]

What were you doing full time?

[C]

Yeah, so I've worked for my employer in. Well, next month it'll be 20 years.

[Paul Novak]

Wow, so you don't hear that a lot anymore.

[C]

Yeah. So work in manufacturing. Phenomenal company. Great people. They really helped me build my career. They helped put me through school and paid for my schooling. Like so a lot of stability there. And then that W2 income is what we've invested. My wife's had kind of a similar career and similar journey. She worked where I did for 13 years and then switched to another company and has been there for eight. So we've really just gotten disciplined at whittling down our expenses. And I think our savings right now is somewhere around 55%.

[Paul Novak]

Okay.

[C]

So when we're saving like that, we can invest a lot of that money.

[Dave Meyer]

So let's talk about real estate.

[Paul Novak]

Tell us about your first deal. Was that on the heels of refinancing your, your primary residence, you made your first rental investment? I assume it was, yeah.

[C]

So it was. Oh man. Still every day going to that closing table and signing, it's like all the field. Right. It's exciting, nerve wracking. It's, you know, it is really exciting because I don't know, as an adult, it's hard to get that rush anymore.

[Paul Novak]

Yeah.

[C]

But like I always get it when I close. So we ended up finding our first deal was a multifamily, a side by side townhouse. And it was actually an off market deal that I learned about kind of through family. So it was nice because once we got to the point of that house, we got it for ask. We, we knew who the landlord was or the owner and we just, we agreed on what the price was. And that's kind of where we got started on our first house.

[Paul Novak]

Was there something about the 2021 market that appealed to you or is it just like, oh, I have this cash now, like now's the time to do it? Because I think in retrospect it makes a lot of sense. But I remember 2021 and everyone was.

[Dave Meyer]

Like, it's going too crazy.

[Paul Novak]

You can't find a deal, it's too competitive. So what gave you the confidence to jump in? That.

[C]

The thing is, if I get an idea, I don't really care what all the noise is. I got to experience it for myself. And for me, the big thing that tipped the scale again, if you remember, we were talking dividend investing on that property. We put 49,000 down or $50,000 down. Right. The property was199.9, so pretty much 200,000. Our cash flow on that was almost $1,000 out of the gates.

[Paul Novak]

What? Really?

[C]

So you start doing the math. And now to be fair, Dave, right, this is like straight line cash flow, not the real cash flow, capex and all the other things, like all the time. Right. Just straight line. But I started running the numbers and I thought, wait a minute, if I had 50,000 in VO, what I'd be getting in dividends?

[Paul Novak]

Like it's nowhere near 570, 750 bucks a year, basically based on the yield you said.

[C]

Yeah, right. So all of a sudden it was like, well, this is a no brainer. So I don't care if it's tough to find a deal or Any of those things when you look at like the juice is worth the squeeze in this. And I'm also going to get appreciation, I'm going to get the tax benefits, the tenants are paying down the mortgage. Like, to me it was a no brainer and I didn't know any better. That's what I knew. That was the first deal.

[Paul Novak]

Yeah, you need to. The funny part about real estate is you just need to like find the sweet spot between education and just complete naivete. Like you just don't know. Like you don't know what you don't know, but you know enough that it kind of makes sense. Like that's sort of how I got started is like I didn't know all the formulas or anything, but I was like, I could rent it for way more than my mortgage rate, so I'm going for it and it worked out. Now you need a little bit more nuance. But I really like what you're saying here, Paul, because I think as investors the key to really being successful is like always just thinking about resource allocation and where you can put your money and where makes the most sense to put your money at any given time. And I've been trying to encourage a lot of folks in today's day and age in the housing market to not really think about, oh, I should have bought in 2021 or 2022 or 2015 or whatever. But think about like, is real estate a better option than then what else I could do with my money? And it sounds like for you, I think that's probably still true even in today's day and age. Real estate buys better cash flow. It's better upsides than dividend investing or putting your money in a savings account or buying bonds, you know, those types of things. And I really just recommend to people to sort of think about your own money, your own risk tolerance in the same context that Paul is where it's like, what else are you going to do with your money? Because that that's ultimately what matters, not whether the deal today is as good as it was during like this perfect magical time that we used to have, but whether it's going to move you closer to your goals in the most efficient way possible. And for me at least, real estate's still that number. This was 2021. You bought this single family, right?

[C]

Multifamily.

[Paul Novak]

It was multifamily, yep. And were you managing it yourself?

[C]

Yeah.

[Paul Novak]

Okay, and how was that?

[C]

I don't know. I love it.

[Paul Novak]

Really? Okay. I like it.

[C]

I really like dealing with people which a lot of people are going to say they don't like. But again, if I go back to my career, like my job has set me up for all of this stuff, like I've managed people forever. I've done KPIs and managed metrics at work and difficult conversations and like, I don't know, this is just so much based on people I feel like more than anything else. So for me, I still honestly really enjoy it. And we self manage all our properties.

[Paul Novak]

Wow, that's great. I love hearing that because so many people complain about it and honestly I never found it that bad. I house hacked and managed it and I never found it that bad. Teach their, you know, people. Different people have different personalities. You definitely need to have comfort with difficult conversations. You know, you need to be organized, you need to be a good project manager. But I think people sort of like dramatize how hard it is because I don't know if you experience that. But like it's not crazy, it's not rocket science. It's just like responding to some phone calls. It's really not that big a deal. So I'm glad Paul, to hear that you liked being a landlord. You know, you had this inclination to go for it and you enjoyed it. I want to hear about what comes next, but we do need to take a quick break. We'll be right back.

[Dave Meyer]

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[Paul Novak]

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[Dave Meyer]

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[Paul Novak]

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[Dave Meyer]

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[Paul Novak]

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[Dave Meyer]

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[Paul Novak]

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[Dave Meyer]

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[Paul Novak]

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[Dave Meyer]

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[D]

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[Dave Meyer]

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[Paul Novak]

Welcome back to the podcast here with investor Paul Novak, who's telling us about his story of starting to invest in 2021 in Sheboygan, Wisconsin. Paul, after your first duplex deal, how did you decide to proceed and scale your portfolio from there?

[C]

Yeah. So then 2022, we kind of took the year off. It was just okay learning. And while I was all gung ho, right. I've got a partner in this. So making sure my wife was on board was another part of that. And we got to the end of 2022 and we had an interesting conversation here at actually at my house at Christmas, we had a family member, their rental was going to go on the market, so they reached out and asked if we wanted to get the property. It was another property that was off market. Again, I thought it was undervalued. We ended up walking in and buying that property off market. And that was the second property that we had. So that was another duplex, upper and lower. And that was, I think we closed on it like February of 2023. So really right away to start 2023, that was our second property.

[Paul Novak]

That sounds like a great deal, but I need to ask, you mentioned your wife was sort of hesitant or at least wanted to pump the brakes and think about it. What was she experiencing? What was she thinking about?

[C]

Yeah. So we haven't walked into a property yet that she isn't hesitant on and wants to pump the brakes. It's just right. Every property you add, it adds a little bit more complexity to the portfolio and just to life in general, especially when we self manage and it's a lot of money. Right. When we're constantly sticking these into these properties. So I think one thing that I've shared with her to kind of help get her over the hurdle a little bit is that the money's never gone right. It's just kind of locked away in a more secure savings account. So at the end of the day, if things didn't work out or it wasn't something we wanted to do, you're never boxed into a corner. Right. You could always sell the property, get the cash back out and we could do something else. Now it's worked out really well. So we haven't done that and we don't plan on it. But letting her know that we had flexibility was something that was important to her.

[Paul Novak]

I mean, that makes sense. Like a lot of times in the real estate investing ecosystem, people glaze over these things and don't talk about like that these are legitimate concerns. Like there is less liquidity in real estate than there is in other asset classes. And it's something to think about. And I personally believe it's important to have a little bit of healthy fear and skepticism for every deal you do. If you just go in and you're like, this is going to work out, everything's going to be great, you might run into some trouble. I think it's really nice, you know, whether it's you, your partner, just your agent, your lender, whatever it is, to have someone who's just like, are you really sure about this? For each one. And sometimes you're right and you keep going and it's a great deal. And sometimes you think, yeah, you know, maybe. Maybe we wait and go on to the next one. But it sounds like this deal that you found was just so compelling that your wife was comfortable making the second purchase.

[C]

Yeah. And I think, you know, another thing that's helpful, and I've always been this way. I'm super conservative when I run my numbers. So I go into a deal, I'm assuming, right, that the interest rate's going to be higher than generally what it ends up being. And I always take the property taxes and round them up, and I go high on insurance costs and all these things. And then a lot of times, right. It's kind of nice because when I get to closing, I'm pleasantly surprised. Like, oh, our cash flow that I thought was going to be X is now a hundred dollars more a month. But I know never, ever put myself into a situation where I'm coming up on a deal where it's time to sign the papers and I end up coming out where, shoot, the numbers go backwards.

[Paul Novak]

Yeah, right.

[C]

Like, I. I don't. I'm not so conservative that I think it takes me out of deals. Right. But I always got that little buffer that, like, helps us. So I think whenever I go into, like, I feel good about the numbers that we ran and we're not going to do the deal if it's really teetering. Right. We'll make sure that we're comfortable with it.

[Paul Novak]

Is that something you learned in real estate or is that you do in your job or just kind of your personality?

[C]

Yeah, I'd say personality. And, like, honestly, I've learned it from budgeting prior to real estate, right? So, like, let's say we're going to go on vacation. I don't want to run that budget that I plan for vacation so tight that all of a sudden we're there and we have to scale back because we don't have enough. Yeah, right. So like just, I always want to be heavy and, and then all of a sudden, once we get to the point that that's done. Okay, so I budgeted X for vacation. I have this much left over. Throw that into the next vacation to get started already or for Christmas gifts or any of those things.

[Paul Novak]

Yeah, right.

[C]

I just always like to err on the side of caution.

[Paul Novak]

That's so smart. The vacation example is so true. I. It's just like had a, a real guttural reaction because, like, you've been there when you plan a vacation and you're like having fun. You get to the place that you wanted to go and you're like, oh, I can't even afford to eat here. And then it's kind of disappointing. Whereas, like, if you plan it backwards, then, you know, you make sure that you're allowed to do, you can do everything that you want. The same thing goes with the property. I love that example. So you did two deals in two ish years, Two and a half years. And so were you then at that point, just ready to scale.

[C]

I'm hooked.

[Paul Novak]

I can see it in your face. You're excited.

[C]

Right? So like the first one went well. It was nice getting the cash flow, but. Right. It was limited as to how much that was growing. So I'm not going to lie. Right. We, after we did the first one, did the second one. Now that refinance money we pulled out, like that's pretty much depleted. So I got two problems. I'm ready to go, but my bank account is not.

[Paul Novak]

This is a familiar problem.

[Dave Meyer]

Yes.

[Paul Novak]

All right, Paul. Well, I want to hear how this problem that is very familiar to many of us sort of evolved your strategy. But we got to take another break, so we'll be right back.

[Dave Meyer]

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[D]

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[E]

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[D]

But you're never going to catch me.

[E]

You know why? Because I have the SimpliSafe home security system and I've got multiple locations I can go to with it installed there too. Just try and get past my high tech sensors that detect break ins, fires and floods or indoor and outdoor cameras to keep watch day and night. There's no way you're getting past my 24, 7 professional monitoring that I only pay like a dollar a day for. And they even said if I don't like my system that I could get a full refund with SimpliSafe 60 day money guarantee. But that'd be crazy because I love it so much and they love us so much that they're doing 20% off any new SimpliSafe system with fast protect [e-mail] pockets. That's SimpliSafe.com pockets. There's no safe like SimpliSafe. Another safe ad in the books.

[Paul Novak]

Welcome back to the podcast here with investor Paul Novak talking about how he said scaled his portfolio over the last couple of years. Paul, where we left off, you were describing what I think happens to all of us ready to go out of cash. How did you, how did you move beyond that and get your third deal?

[C]

Yeah, so we had to find ways to get capital and you know, and watching a lot of videos, kind of learning different things. 401k loan was something that I never ever would have considered before. My 401k was my golden goose for retirement. But now that real estate has become kind of a helper in that and I think what will end up being our primary driving force for retirement. I decided to take a loan out against my 401k and almost use that as like the bank. So I researched into it and at least through my 401k right, I could take out half the principal or $50,000, whatever was less. So I pulled out the full $50,000 and I only have to pay in fees, $10 a quarter while that money is borrowed. So $40 a year to have it out. So. And all the interest that I Pay, which is 8.25% goes back to, into the account to me and it comes out of my paycheck every two weeks. So.

[Paul Novak]

Are you serious?

[C]

Yeah. So I found like a really good deal and I thought, well, okay, at the end of the day if I'm saving this money, I'm Saving it for a rental anyways. I could just buy the rental using this 401k loan and just pay myself back the money instead of waiting to save it up and then deploy the capital. So we use that for our third property.

[Paul Novak]

And what kind of deal was it? Similar to the small multi families that you had done previously?

[C]

Yeah, this was a single family home. The list price was 150. We bought it for 170.

[Paul Novak]

Okay.

[C]

And then this one, we stuck probably another 20,000 into fixing it up. It was a similar situation.

[Dave Meyer]

Okay.

[C]

Really good house in our neighborhood. Good bones. But the person that lived there had lived there for like, I don't know, I think like 50 years and didn't do much updates on the inside. So, like it was dated, needed work. We gutted the kitchen, we replaced all the flooring, but other than that, it was like a lot of cosmetic.

[Paul Novak]

And are you able to use the 401k to finance the renovations as well, or is it kind of like a line of credit kind of thing? You can spend it on what you want.

[C]

Sure. Yep.

[Paul Novak]

Oh, amazing. Catch us up to today. Like, what have you been doing ever since? Like, how, where are you at? I guess 4,4ish years after you began?

[C]

Yeah. So since then, we've acquired two more single family homes.

[Paul Novak]

Nice.

[C]

We've got a HELOC now. We leverage that for the last one. We also have a 401k loan out on my wife's 401k right now. So the max we can pull is 100,000.

[Paul Novak]

That's pretty good. Especially buying $200,000 properties is pretty great.

[C]

We sit down quarterly and we actually go through your real estate strategy. We go through each element of it and kind of talk about, okay, what are our plans over the next quarter, the next six months? And for this year, kind of the battle cry has been, let's just pay everything back off. Right. Let's pay the HELOC off, let's pay the 401k loans back because you can also pay them back early. So it was like, let's just get back to zero and kind of arm ourselves so we can go into 20, 26 and buy our next property. Well, today we walked through a property and might put in an offer. So I, I get answered. I see a good deal.

[Paul Novak]

Help yourself.

[C]

Yeah, like want it. I said game plan is not to do get a property until maybe late this year, early next year. But if a good deal comes by.

[Paul Novak]

I'm not going to just sometimes you got to do it. Yeah, absolutely. So what's what's the deal that got you so excited?

[C]

Well, the property's like, I don't know, three blocks from our house. It's right by the park in the river. It's within our buy box as far as price goes. And you know, I'm kind of the Coach Carson approach, right. Small and mighty. I don't plan on getting 50 doors. I really believe that if we bought one more property and then paid all of these off, we'd have enough to retire and we could probably get there in the next six years.

[Paul Novak]

That's amazing.

[C]

I don't know that we would get necessarily the highest rents at this property, but just because of where it's located, I think the appreciation long term would be huge as a single family home. So I don't know, I get excited to think that the day could come that we'd at least have all the properties that we need. Me, knowing me, I'm never going to stop, but at least to know like, hey, I could get this. We could kind of pivot from okay, we got to find the next deal to, nope, let's stick all the capital into paying all of these off and then get to a spot where our portfolio is steady enough that we don't have to work. Now we could still go and acquire other properties or do things from an investment perspective, but that risk is just not there.

[Paul Novak]

I think that's so important, right. Knowing what you want, like you said, you don't want to go out and buy 50 doors. It's going to change your approach for some people want to scale. You're not going to pay off your mortgages. Like that's not going to become a priority to you. But you have spoken with your wife, your family, you figured out what you want and you're just going about it in a really methodic way. And that doesn't mean you're going to miss an obvious layup. You know, like you're going to take a good deal when you consider see it. But it sounds like this deal, even though it wasn't your plan at the beginning of the year, is still aligned with your long term strategy. This is still getting you. You're not going outside your lane.

[C]

You're.

[Paul Novak]

You're staying inside the plan that you have and just maybe trying to find a way to accelerate. Perhaps what your similar goal remains to.

[C]

Be really the approach that we've taken and it just works for us is I look for a property that like I'm going to be proud to own, proud to put tenants in And I would live there myself. I love, I'm not looking at how much cash flow it's going to gener rate. And then once it's a property that I'm proud to add to my portfolio, then I work the numbers backwards. So I say what do I think I could get for rents? You know, what is the purchase price that we're going to do and all these things. And then I actually start playing with the down payment. So I, even though I need to put for traditional financing 20% down, if the numbers don't work at 20, let's go to 25. Let's go to 30, let's go to 35. And I'll just keep upping that number until that number becomes what I'm deeming is ridiculous or like way too high. I don't want to put that much in. Right, okay, well, then I'll walk away from the deal. But know that when I spout off some of these cash flow numbers, that's not because I got in at 5% down. Some of these, I put, of course, 35% down on these properties. And now we're in a really good place. And I also look at it as if I'm going to pay off this whole portfolio in the next five to six years anyways. Who cares if I put more money down short term? I'm just speeding up where I'm going to go to anyways.

[Paul Novak]

Yeah, you're going to pay less interest over the lifetime of that loan if you start with a higher line of principal.

[C]

100% smart.

[Paul Novak]

Yeah, I know. Yeah. And that's why it really goes back to your goals. Right. Like Paul has a clear goal. What's the number, like 10, 15 units or something like that?

[C]

You need, I think in all honesty, if we got anywhere between 7 to 10 fully paid off units, at least here in this market, amazing. Like, yeah, we'd be good. And you're talking, you're talking probably $11,000 a month cash flow. And we still have our 401ks and everything else that we've funded over the years.

[Paul Novak]

That's the coolest thing. You think you could do it by 10, 12 years?

[C]

Yeah.

[Paul Novak]

That's unbelievable. It's so great. I mean, that's the thing is like people talk about scaling quickly and optimizing, but like you're saying you're taking a pretty conservative approach. Not like crazy, you're doing deals, you're doing stuff, but you're not leveraged to the max. You're not pursuing cash flow at every cost. You know, like you're just doing a pretty normal approach. Like what I think is like a great, solid, smart strategy to real estate.

[Dave Meyer]

And you're going to replace all of.

[Paul Novak]

Your income in 10 years. Like, that is so incredible.

[C]

Yeah.

[Paul Novak]

Good for you, Paul. It's a really cool story and I just love hearing it. I love your philosophy and your approach. To each their own. But I just think you found a really cool way to make it work for you and your lifestyle. Like, you have a career, you leverage the benefit of the career. You've been smart and built a 401k. You leverage the benefit of your 401k. You're just finding ways to make it work. And the result is coming. You're going to be able to retire or, you know, have the option to retire at least 10 years into real estate. That's unbelievable. So thank you so much for coming on and sharing your story and congrats on all your success so far.

[C]

Awesome. Thank you.

[Paul Novak]

And thank you all so much for listening to this episode of the Bigger Pockets Podcast. If you think anyone you're friends with or you know who's doubting getting into real estate could benefit from hearing Paul's story, please share this episode with them. I'm sure a lot of people can learn a lot from Paul's approach to real estate. Thank you all so much for listening. We'll see you next time on the Bigger Pockets Podcast Podcast.

[Dave Meyer]

Thank you all for listening to the BiggerPockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico, content and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com.

[F]

The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose, and remember, past performance is not indicative of future results. BiggerPockets, LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.