BiggerPockets Real Estate Podcast - Retire Early with Less Than 10 Rentals? She Did It, Starting in 2022

Starting point is 00:00:00 You do not need a big, expensive, stressful rental portfolio to retire early. Today's guest retired in her late 30s, all with a small, manageable rental portfolio that she built after 2022. That's right, high rates, high home prices, she dealt with it all and was still able to retire completely on her own terms just a few years later. She used an often overlooked source for her down payment that many Americans have access to and quickly bought her first three rentals in just three months as a complete beginner. But she never wanted to scale to a dozen doors.

Starting point is 00:00:36 In fact, it took her only half that many to retire from her W-2. She's sharing exactly how she bought the rentals, how much they make in monthly cash flow, her yearly income with real estate, and why knowing your enough can get you to early retirement decades faster. What's going on, everybody? I'm Henry Washington. Welcome to the Bigger Pockets podcast. Today we are bringing you an inspiring investor story featuring Lucy Hines from Cincinnati, Ohio. Let's bring her on. Lucy Hines, welcome to the Bigger Pockets podcast. Thanks for having me, Henry. So glad to have you. And as always, as we get started, I want to know what your background was like before you got into real estate investing, especially since you have a little bit of a history with personal finance. Yes, thank you so much. So I'm actually a veteran of the United States. States Army. Thank you for your service. Thank you. A fun fact about me is I used to jump out of perfectly good airplanes and helicopters, so that's always my good icebreaker question. Yeah, I have a hard and fast rule about that. To not do it. Yeah, if the plane's going to land, then I'm going to

Starting point is 00:01:46 not jump out of it. That's my pretty hard and fast rule, but that's awesome. I do live by that now. Paratrooper. Is that what they call that? Paratrooper, yes. I was a big Dave Ramsey girl, So I read the total money makeover and drank the Kool-Aid big time about staying out of debt and eliminating debt. So I lived that life for years and years, I'd say, until I happened upon Robert Kiyosaki's rich dad, poor dad. And that really changed my mindset about debt. Yeah. It absolutely does open your mind to how money works. I think people, I mean, everyone can accredit their start in real estate.

Starting point is 00:02:26 to reading that book, but it's not a real estate book. It really just teaches you about how money works and how to think about money differently. That's what I remember most about me reading that book. Yeah. All right. So what made you become interested in real estate? Because that's a big shift. So I think just kind of analyzing my portfolio giving me an idea that I wanted to build some passive income and how could I do that. So I realized that after the COVID spike in real estate, that I had quite a bit of equity in my home. And after reading Rich Dad, Poor Dad, I thought to myself, well, how can I leverage this as debt potentially to make myself more money?

Starting point is 00:03:07 And, you know, I went down different rabbit holes of buying a business or starting vending machines. And then real estate was one of the options as well. And then I dove deep into that rabbit hole. And that was it for me. I'm like, okay, we're doing real estate. I had a home equity line of credit for up to a lot. $176,000 that I could use to get started. And you know what I did with that $176,000? I'm guessing you used it to buy some property. I bought three in 90 days. So, wait, wait, hold,

Starting point is 00:03:41 hold, hold, hold, hold. Yeah. Okay, okay. So hardcore Dave Ramsey, read Rich Dad, Poor Dad, start to change your mindset. And then you take out a home equity line of credit. So for those you don't know, you can tap into the equity in a property. It doesn't have to be a personal residence, but that's what's most commonly used. And typically, when you do that, they'll give you access to about 75% of the equity. So it sounds like you had a good bit of equity in your property. You applied for a home equity line of credit. And then you didn't just go by one house. You bought three in 90 days? Yes. So they were back to back. So I was busy working on getting any updates that I needed, getting tenants in immediately, and filling

Starting point is 00:04:30 those houses. And I had all three houses with tenants and sign leases all before I even had a single mortgage payment. And that was a win for me. Well, that's impressive, first and foremost. But let's back up a second because it's hard enough to find one deal that you feel like it's worth buying, but you found three consecutively. So how did you locate these properties? Yes. So I found everything on the MLS, no wholesaling or insider deals. I found my first baby. I called my house as my babies because they're, you know, nothing wrong with that. They're near and dear to my heart. And nobody messes with my babies. You know what I mean? I bought my first house or baby in a, in a nearby neighborhood. I'm in the Cincinnati, Ohio area. So actually, all of my properties are within a

Starting point is 00:05:21 30-minute radius. So all the greater Cincinnati area. Found my first one on the MLS. I purchased it for $215,000. It's a three-bedroom, two-bath. It's lab house, no basement. We like that for, you know, less things to go wrong. It's around probably 1400 square feet, just a great little starter home. We did a little bit of work to it. My husband and I, so my husband does help with some of this too. We did a little bit of work to it to get it ready on the market maybe a week or so. We just did some little painting and upgrades, nothing crazy. So super cosmetic.

Starting point is 00:05:59 Yeah, just small things. And got that on the market. Like I said, got a tenant in right away before we even had a mortgage payment. The jumping off point was once I had the lease signed, I was like, hey, I can do it. I did it. Let's look for the next one. And the next one is actually in that same neighborhood. It's let you could literally throw a stone to the second house that I bought. So I'm like, I'm playing Monopoly here. I'm buying up all the trees. Right. So I was like, okay, I'm playing monopoly here. This is I'm having a good time. And the second one was completely turnkey,

Starting point is 00:06:35 absolutely gorgeous. This house was a little bit higher on purchase price. It was $240,000. But similar layout, just nicer appliances and finishings and things like that. So that was $240,000. So you got access to this line of credit. You started buying properties like crazy. What were you doing for work at that time? I had left the Army active duty in 2017. And I didn't start buying properties until 2022.

Starting point is 00:07:03 So I was working a regular W2 job in a few years in between kind of where we left off. My career, I'll say was an HR. We can talk about this more later, but I'm retired now. I retired early from my rental income. I worked in human resources for my whole civilian career, if you will. I was doing well for myself, like a mid-tier manager making six figures. Nothing crazy, though. So that would go toward the down payments or it would go toward the helot,

Starting point is 00:07:37 toward paying off the helock. So let's chat about that for a second. So the first property said you paid $2.15, assuming you use conventional mortgage, so 20% down. And I'm guessing that's what you leverage the HELOC for. Am I right? I actually always had to put 25% down. Just that was the agreement that I had with my current lender. So it was around $54,000 of the cash down that I had to put down on that 215 at that 25%. And I started with some cash that I had and some of the HELOC funds. Okay. So you rented it out fairly quickly.

Starting point is 00:08:15 And so tell us what your rent is and then what your mortgage is, if you don't mind. Sure. So the purchase price was $215,000. The rent is $2,150. I know in the real estate world, we love to talk about the 1% rule. So that's usually what I'm going for on these. The mortgage is $1,227. Oh, wow.

Starting point is 00:08:37 1,227, bringing in 2150. That's awesome. That's a great cash flow and deal. Cash flow 923. Yeah, that's a pretty awesome deal. And then you were like, all right, proof of concept. I did the thing. I rented it out. They're paying the rent. I didn't have to do much work to it. Let's go do another one. And then you found another one in the same neighborhood on the MLS again. And so this one purchase price was a little higher. It was $240,000. $240, but it was a little bigger, a little nicer finishes, totally turnkey. So you did nothing. You put 25% down off the HELOC. So what was your mortgage payment on that one?

Starting point is 00:09:17 The mortgage payment on that is $1,480. And it rents for $2,225. So you're just knocking them out of the park now. You're just like base hits, single, doubles, no big deal. It's good. It's not exactly the 1% rule, but it was good enough. You know, so cash flows about $750,000. I'm good with it.

Starting point is 00:09:38 And at the time, too, I mean, the interest rates on these are high fives and into the sevens. That's awesome. So I wasn't even buying during the two, three, four period. So to make that kind of money, even with that type of interest rate, I'll go with it, you know. So here's what I like so far is that you are buying these and you're essentially putting a, a decent size down payment down. What that's doing is it's reducing your principle and interest. That's allowing you the room to cash flow. So yeah, second deal, not quite 1%, but it doesn't really matter because you put a good chunk down, which allows you to still cash flow, even though it doesn't

Starting point is 00:10:22 quite hit the 1% rule. The 1% rule, guys, is just a rule of thumb. It's not the law, right? And every deal is a little different. The more money you put down, the lower you can be. You don't have to quite be at 1% and still cash flow. And what I like about your strategy is that you are buying good quality assets. You're not buying the cheapest house that you can find and having to spend hundreds of thousands of dollars fixing it up. You're buying good quality assets and good quality areas. And the reason I want to highlight that is because you leveraged your personal home on a home equity line of credit. Where I think people get in trouble with this strategy is they have equity in their personal home. They tap into it, which is great. But then they do

Starting point is 00:11:03 don't do enough research to buy a good enough asset at a low enough price point for that deal to be a good deal. And you never want to leverage your personal home and then go buy a bad deal because now you put your personal home at risk. Because if your deal is bad, you end up having to pay to feed that deal and you still got to pay back that line of credit. And so you can get yourself into financial trouble pretty quickly by doing this strategy and not purchasing a good deal or not putting enough down when you purchase a good deal. So I like the fundamentals that you use and I want to make sure that we call that out for people. I don't think home equity lines of credit are bad. I don't think they're good. I think they are a tool in the toolbox. And the way tools work on any job is you have to

Starting point is 00:11:53 use the right tool in the right situation and you have to use it in the right way for that tool to be And it sounds like that's exactly what you did. So amazing. But you've only told me about two of these and you said you bought three in 90 days. So I want to hear all about this third deal. And we'll do that right after the break. If you've ever run rentals, you know this feeling. Your maintenance guy quits to turnovers hit at once.

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Starting point is 00:15:42 Learn more at biggerpockets.com slash bam. Only for accredited investors, past performance is not indicative of future results. All right, we are back on the Bigger Pockets podcast. I am speaking with investor Lucy Hines. who has leveraged her personal home to get a home equity line of credit and use that to start building a rental portfolio that has eventually sounds like led to your financial freedom. But you only told me about two of the first deals that you did. And you said you bought three in 90 days when you first got started.

Starting point is 00:16:17 So what that third deal looked like? First two were single family homes, a stone's throw from each other. Was the third one the same? The third one is in a different neighborhood, but still within that third. 30 mile radius of the Cincinnati area. This one is actually a town home. So it's a little bit different the first time dealing with HOA. So that's a little bit different.

Starting point is 00:16:37 This one is a three bedroom one and a half bath. So when I was kind of looking, I really wanted a three bedroom two bath, but came across this great deal for these townhouse, three bedroom, one and a half bath. But the price was so good. I just couldn't have it up. The purchase price was $157,000. Dang. Yep.

Starting point is 00:17:02 And it's a three bedroom, two and a half bath. The mortgage in HOA together is $1,288 and the rent is $2,050. Boom. Did you have to do any work to this one? That sounds like a really good deal. Yes. We did put in a little bit of work. So we updated one of the bathrooms upstairs and we did a little bit of demo.

Starting point is 00:17:24 There was some funky extra. shelving going on in the kitchen, but not much. It was about $10,000 that we put into it. That's pretty good. So MLS deal bought it, put a little cash in it. I'm assuming you used the same type of loan. So that cash you put into it had to come out of your pocket, yes? Yes. And like I said, I always lived below my means. It would, you know, it would just regularly be there. Awesome. So another decent deal, are these deals that you've left all your money in, or have you refinanced these deals to pull any cash out? I have not refinanced.

Starting point is 00:18:00 And all of the money that I've ever made on this business has gone back into the business until I retired. Say that again for the people in the back. All of the money that I ever made from all of the deals that I had went back into the business so that I could continue to grow it so that I could continue to buy so that I could continue to pay down the HELOC while I had it. While I was working a W-2 job, it's not until I decided that I hit financial freedom and was no, you know, and I wanted to retire that I would then begin using the money from the business to live off of. There you go. That is how you get to financial freedom because the whole point people want to get into it is they want to generate cash flow from their rents. But if you do that on your first couple of properties and you're taking your cash flow and you're putting it in your pocket, what people tend to find out. is you got to pull it back out of your pocket sometimes to fix things, to solve problems, to

Starting point is 00:19:01 be able to purchase more. And so when you're growing and scaling, the best way to do that is to take the cash flow and reinvest it into your business so that you can get to your retirement number faster. But it sounds like you've got a history of fiscal responsibility, having gone through Dave Ramsey and just having being a saver, it sounds like. So that definitely seems like it's helped you. So as someone who, you know, you were a Dave Ramsey acolyte. You followed the Dave Ramsey plan. Drink the Kool-Aid. Was it difficult for you to make the mental transition to taking on debt? Because I've seen, I've seen people really struggle with it who are hardcore Dave Ramsey folks. 100% terrifying.

Starting point is 00:19:53 You think jumping out of planes is scary? You're taking on some debt after you've been obsessed with Dave Ramsey and his teaching principles for years. Jumping out of a plane is less scary than that. Okay. But what I want people to see is you can leverage responsibly. And Lucy is a great example of how she's leveraged the assets that she has, but she's done it in a very responsible way. She has found very good quality assets that she can afford. She has made sure that the rent is going to more than cover what she is spending.

Starting point is 00:20:30 She's putting a little more money down so that that ensures that cash flow and gives her a way out if she needs out. Leverage is good if it is used properly. Leverage is very bad if it is used improperly. And I want to make sure that we're like harping on that for people. So what you told me previously was that you now don't work anymore. So because you've leveraged this responsibly, how long did it take you kind of from start to the day you decided you were going to be full time? How long did that take you to get there? So I bought my first property in July of 2022.

Starting point is 00:21:12 And I officially retired in September of 2020. So just about eight months ago. Awesome. Congrats. Thank you very much. And I actually, you know, I hit the number. I'd say earlier than that. That's just how the timing worked out.

Starting point is 00:21:31 I figured I would stay till the end of the year. And then just things happened to work. And I was like, you know, it's time to go. Yeah. It's funny how when you start having some cash flow coming in, things that weren't as annoying to you at work, all of a sudden just are a little more annoying than you used to be able to deal with. But three years is pretty cool.

Starting point is 00:21:48 quick to reach financial freedom. But I think, again, I think your journey to financial freedom was accelerated because you weren't spending that cash flow when you got started. You were reinvesting. You were putting money down. And you were in a strong financial position prior to investing. So I know a lot of people may not be in that strong of a financial position. And that's okay. There are ways to invest without that. But again, this is just highlighting that you can accelerate your journey. A, if you're putting your money back in, B, if you're investing responsibly. So great, great work. So when did you buy your fourth deal? Was it immediately? Because you just rapid-fired three in 90 days. Did you do your next one shortly after or did it take you some time?

Starting point is 00:22:32 So I bought the next one almost a year later. So it took a break. So you sat down for a minute. I'm tired. Get hard for 90 days, okay? And then I was like, woo, I'm tired. Let's take a break. Also, this HELOC is looking a little big.

Starting point is 00:22:51 Let's take some time to pay it down so we can kind of reset, relaunch, right? And just let the dust settle for a little bit. Because it was quite a feat. I don't think, you know, for most people to buy three houses in 90 days. No, that's a huge feat.

Starting point is 00:23:05 Yes. Let's let that settle for a bit. So I had bought the third house. So it went July, August, September of 22. Those are the three. And then I didn't buy my next one until the end of July of 2020. So almost a year later. That house we purchased for $235,000.

Starting point is 00:23:26 And this house, the mortgage payment is $1,492. And the rent is $2205. And you'll notice as my purchases go over time, my interest rates certainly climb. Like I said, we started at about 5.75 where we were buying, and we ended around 7.5%. So the market changed quite a bit. So the cash flow gets smaller as time goes. But it didn't keep me from buying.

Starting point is 00:23:59 I was very hopeful that, you know, it was still cash flowing and hopeful that maybe we could refinance over time. Yeah, interest rates are what they are, right? It's not necessarily the interest. rate that makes a deal good or bad, it's the total numbers on the deal. If a deal can cash flow at 9% interest rate, it just depends on what you're buying it for. And a deal can cash, a deal cannot cash flow at 3% interest rate if you're overpaying for it, right? So it sounds like to you, even though it was a higher interest rate in the seven and a half range, you were still able to make that work. Again,

Starting point is 00:24:30 I'm assuming everything was the same. You put 25% down. Did this one need work or was it more of a turnkey? No, this one was turnkey. Completely turnkey. And it was, and it was, again, you know, the more nicer fixtures. And that's where the purchase price comes into play with that being at that $2.35. That's awesome. So you did that for property number four. The numbers sound good. Sounds like great turnkey property. It's bringing in about $5.5.50 and cash flow a month, even though the interest rates a little higher. All right. That's really cool. It seems like you have this formula of buying good quality assets and good quality neighborhoods where the rents are well and you're putting a substantial amount of cash down

Starting point is 00:25:09 so that these deals all make a lot of sense. I want to pivot and talk to you a little bit about where you are now in your investing journey and what you're continuing to grow and invest in. But I want to do that right after the break. If you would like to connect with investors like Lucy, a great place to do it at is BPCon. This is BiggerPockets annual conference.

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Starting point is 00:30:03 All right, we are back on the Bigger Pockets podcast. I am chatting with investor Lucy Hines, who has shifted her mindset from a Dave Ramsey saver to a real estate investor borrowing on her personal home, using leverage to build and grow her portfolio, but has done it in a very fiscally responsible way, which makes a lot of sense giving your fiscally responsible background. Where are you now? because now we're in 2026. Are you still buying using the same formula? Things are more expensive now. What's been your goal or have you hit that goal considering you've hit the financial freedom. So what are you doing now?

Starting point is 00:30:43 Yeah. So I did have a goal at one point to buy 10 rental homes. But after hitting about that 5 to 6 mark, I realized that would be enough for me to claim that financial freedom. so then if I wanted to live off of the profits of the business, then I could. So that really changed my mindset of, you know what, I don't need to grow more. I don't need to take on more liabilities at this point. I'm in a comfortable spot. Part of living below your means is being okay and comfortable with what you have, with not wanting more. And I really just kind of had to have a check with myself at some point of, you know what,

Starting point is 00:31:24 that's enough. I don't need to be greedy. I don't need to take it to the next level. I have what I need and that's enough and that's okay. So at the end of 2025, we always do kind of an ROI assessment of like how did the properties go this year in terms of how much money we put into it, how much rent. Is it a good ROI or not? And one of our properties, we actually paid it off completely.

Starting point is 00:31:48 We took a look at that six rental property and said, hmm, do we want to keep it or not? if we do sell it, it's almost the exact amount of money that would pay off our primary mortgage. And for us, a personal decision or a level of comfort that we wanted to have was we'd rather sell that property and pay off our primary mortgage, which is really just a nice stepping stone going into retirement to cut down on personal expenses and say, you know, all I owe now is taxes and insurance on my primary home. That's wonderful. Yeah.

Starting point is 00:32:25 So we paid off our primary home and now we still have those five rental properties. And I don't plan on buying anymore at this time. Look, you learned a lesson that a lot of seasoned investors don't learn for several years. And that is when to realize enough is enough. So here's some wise lessons that I heard in what you said. First, you had a goal of getting 10 properties. And instead of getting all the way to 10, you evaluate your portfolio each year and you see how the properties are performing and then you make decisions based on that.

Starting point is 00:33:05 That is a seasoned investor thing. Not a lot of investors do that. And Dave and I talk about this all the time. You should be looking at your portfolio at least on a quarterly or biannual basis and see if they're performing like you want them to perform. Great. Super smart thing to do. Second, a lot of people get caught up in the growth phase and they're growing for growing sake and not necessarily because it's truly what they need or want. Ask me how I know, right? This is me waving my hand saying I have been that person, right? I am actively shrinking my portfolio right now. I bought a lot. I got up to 150 rental units at one point. Wow, that's amazing. We're now down to under 100.

Starting point is 00:33:51 And my goal is to get to about 60 of my favorite properties, the ones that are in the best locations that perform the best. And then I'm focusing on paying off those properties, right? It's okay not to chase what everybody else is chasing. The beauty of real estate investing is that you can have a business or a portfolio that supports the lifestyle that you want. You don't have to just go chasing doors. you can buy enough.

Starting point is 00:34:18 And I commend you for stopping prior to your, because you had a goal. And it would have been, if you would have said, hey, I'm going to power towards my goal. I'm going to get to my 10 doors. Everybody would have applauded you. It would have been awesome. But I think people need to applaud you more for saying, hey, I don't need to get to 10. I have enough. I want to focus on what I have and making sure that I'm maximizing what I have.

Starting point is 00:34:39 So great, great points. I think that that's going to help a lot of people who are looking to build and grow a real estate business. Thank you so much. I appreciate you saying that. And it means a lot to me and how I live my life in general. And it is just being comfortable with enough. It's not about keeping up with anybody else. And it's not about not doing what I said I was going to do. Things change and that's okay. I'm responsible for myself and I'm not worried about what other people think or want to do. I'm building this for myself. Now, Lucy, I've been talking to you for a little bit now, and something tells me that you're not buying real estate, but somebody with your finance background and savings background isn't just not investing money. You've got to be putting money somewhere. Am I right or am I right? Of course I am. I'm not trying to stay around. I couldn't possibly do that. Yeah. No, that's so funny. Yes, of course I am. Now, I have a lot. an interesting story and some people won't believe me or say what the heck or another expletive, but I'm living off of $40,000 a year by choice right now because that is all that I need personally to live a fulfilling life. And yes, I still get my hair done and my nails done and I travel and I do

Starting point is 00:36:02 all the things that I want to do on my little $40,000 a year. But guess what? With the money that I make on top of that, I can invest that. And I still feel good about the fact that I have enough money to do the things that I want to do in life. And I am still investing for my future goals, which for us is to buy a future primary residence in Florida. So it will serve as a vacation home for us. We're probably going to be buying in the next five to eight years. So for a few years, it'll serve as a vacation home. And then once my kids are grown, we plan to move into that what is a vacation home to make it a future primary residence for us in the Florida area. Awesome. This has been amazing. What a fantastic story. What a way to build and grow a real estate

Starting point is 00:36:53 business and do it in a responsible way. A couple of last things before we get out of here, just some more housekeeping style questions. It sounds like you manage all your properties yourself. Are you still doing that to this day? I do. Yes. Not to say that we don't ever have a handyman or a plumber come in as needed, but I'm a great painter. My husband's a great of small things. So we do what we can when we're willing and able. And then, yes, we do hire out things that are a little bit more skilled. But I completely manage the property. So I'm taking the rents every month. I'm making sure all those get paid. I'm calling and texting with the tenants to make sure everything's taking care of leases are signed, et cetera. I do all that. Okay. Wonderful. And last question before we get out of here,

Starting point is 00:37:40 you left your W-2. Is your husband a W-2 still, or are you both retired from the real estate? He is. He is still a W-2. He has a date set of 2929 for his retirement. So we've got less than three years. He'll tell you down to the day. I don't know it. He knows it. But you've got less than three years for his plan to retire as well. All right. And last. And And last but not least, can you give everybody just a quick update? What's your portfolio look like now? What are you doing in terms of cash flow? Overall, we have five units that are cash flowing for an annualized amount of $45,352. Ooh, yeah. Congratulations. That's amazing. Those are great numbers. And you're living below your

Starting point is 00:38:24 means on $40,000 a year. That's impressive. Listen, if I were to have my wife call you, could you talk to her about the $40,000? Sure. Yeah. Anybody. We can do it. A little bit, yeah, just, you know, between you and I, between, between us, friends. Got it. Are you willing to do that for a friend? Yes. Thank you so much.

Starting point is 00:38:45 Congratulations on all your success. Thank you for coming on the podcast, being so transparent, and sharing all of this information as well as these numbers. I hope this was helpful to all of you listening, and we're very excited to share more with you on the next episode of the Bigger Pockets podcast. Thank you all for listening to the Bigger Pockets podcast. Pockets 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.

Starting point is 00:39:14 I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calicoke 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. 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.

Starting point is 00:39:41 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.

BiggerPockets Real Estate Podcast - Retire Early with Less Than 10 Rentals? She Did It, Starting in 2022

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