3 Kids, Full-Time Job, $2M Portfolio: This Single Mom Did It in 6 Years!

0:00Brandon Turner:A single mom with three kids builds a multi-million dollar rental portfolio while working a full-time job. You have to hear this one. Six years ago, Rachel Duck was freshly divorced, a single parent of three kids. She needed a safe, low-money-down strategy to start building wealth. The answer? A method that 99 % of people will never try, but they should. Rachel used 5 % down, owner-occupied loans to build a portfolio of 10 properties. She fixed them up, she rented them out, and made huge equity along the way. Did we mention that she worked a nine-to-five while doing this? Now, she's grown her net worth to over$2 million, making her financially free.

0:41Brandon Turner:Rachel is breaking down her buy box, including the exact property she targets, the loans she uses to fund them, and the uncomfortable truth that made her a self-made millionaire. She had three kids and a full-time job, so why can't you do this too?

1:00Brandon Turner:What's going on, everybody? I'm Henry Washington, co-host of the BiggerPockets podcast. And today I'm bringing you the story of investor Rachel Duck from Austin, Texas. Let's jump into the conversation. Rachel Duck, welcome to the BiggerPockets podcast. Thank you so much. Thanks for having me. Awesome. We are glad to have you. Excited to get started. So as we do that, why don't you tell us a little bit about your background and how you first got into real estate? Well, so I've been in real estate as an investor, as a sales agent, as a consultant since 2006, really. I started buying some raw land in college and then bought my first duplex, which ended up being a house hack without knowing what a house hack was, and then just kind of kept going from there.

1:42Now I have a portfolio of mostly long-term rentals. I've got a short-term rental, which I'm in right now, but that's been how I've grown over the years.

1:50Brandon Turner:That's cool. And what part of the country are you in? I'm in Central Texas, so the doomed Austin market. Awesome. So you said in college you bought a duplex? Well, so in college I bought some raw land. And then right after grad school, I graduated from A &M. There's a Master of Real Estate Finance. I wanted to be a developer, but I graduated in 2009. And there wasn't a lot being developed for someone wanting to be a developer. So my program director is like, maybe you think of some other options. But I got into property tax work because that was something that was going on in the Austin market in 2009.

2:28And I also bought my first duplex. So in 2009, things were pretty cheap. I was just out of college and I bought a massive fixer upper outside of Austin that I just did myself, jumped into it, learned a lot, learned a lot of lessons, mistakes, but it ended up being great.

2:46Brandon Turner:So your first deal deal was a live-in flip house hack all rolled into one? All into one. Okay. And this was before I knew all those terms. I started listening to BiggerPockets, I think like 2017, 2018, and started hearing people talk about that. I'm like, oh, I did that. Yeah. But I had no idea what I was doing at the time, but it worked out okay. Mainly, I had good timing. I got lucky with the market and then just learned how to do all the flip renovations and how to get tenants. This was when I was 23. So that was my first big one. Okay. And it seems like that live-in flip strategy kind of struck a chord with you because it seems like you've done it multiple times in your investing career.

3:33Yeah. So I had the live-in flip, the first one, took a little bit of a break from a lot of real estate investing. I got married, had three kids. My husband at the time wasn't crazy about it because we were doing a lot of the work ourselves and we had little babies and it was a lot. So I took a break. In 2018, we moved into another home. And then in 2020, I got divorced and decided, you know what, just going to go all in on this that I know how to do. So from 2020 to now, we've moved, I was counting last night, nine times. Oh, you and three kids. There's been a lot of moving. Currently, actually, we're moving.

4:09So I'm in that. season, but it's helped me grow my portfolio in those six years to 10 pretty good properties. So that's been my strategy.

4:18Brandon Turner:Why this particular strategy? Why this one property at a time, living it for a year, and then either disposition it or rent it out? Why did you decide to go this route to build a portfolio? At the time, and when I was starting over again in 2020, I didn't have massive amounts of money to just go buy. And it felt safer than getting a lot of partners or getting a lot of other people's money. That felt scarier to me at the time. So I knew I could just go in with 5%, 10 % down, do a lot of work myself. And then we lived there a year, move out, rented out, the numbers worked. So it felt familiar. It wasn't easy.

4:57But the numbers in my head, it didn't feel as risky as some of the other strategies. And as a single mom of three, I didn't want a lot of risk, but I wanted to start growing my portfolio.

5:09Brandon Turner:Here's why I like this strategy for the people who are interested. First and foremost is you get 30 year fixed rate debt on your properties, right? So I'm assuming you used probably a combination of FHAs and conventional loans. Have you used more than one FHA or are you just doing conventionals? They're all conventional for me. Okay. So 5 % down typically if you're going to live in it on a conventional. So that's good. The low down payment is also a draw because 5 % is a whole lot easier to scrounge up than 20 to 25 % if it's just a pure investment property. But you get 30-year fixed rate debt.

5:43Brandon Turner:And so that is obviously a benefit, lowers your risk, keeps your payment lower because you're spreading it out over 30 years. One of the things to consider when you're doing this strategy is you said that some of these properties needed work, but these loans don't come with renovation money. So I'm assuming you were funding the renovations out of your pocket. Correct. Yes. So I had to put less down, but then that renovation money was something that I had to fund. And it's kind of a trade-off, especially in the Austin market. All of mine now are single family rentals. So your cashflow is pretty low, but my goal was equity growth more than cashflow just to kind of grow the portfolio over time.

6:21So that has been positive, but you're not getting a ton of money off each property each month.

6:27Brandon Turner:So I'm assuming you're still working your job. Kind of explain what you're doing in because it's in the real estate space and you help people with taxes. Yes. So in Texas in particular, well, across the country, but in Texas, property taxes are a very large part of your expense. And I know that as an investor and as a consultant. So it's a great business as a consultant because, you know, we help fight property taxes for property owners. We primarily work in the commercial sphere, but obviously already also do residential. But we go to county appraisal districts throughout the state and just say, hey, you say the value's here, we say it's here, and try to get a value that works for our clients.

7:11So I do it for my own. Obviously, I think every person who's an investor should fight. Everyone should do this.

7:17Brandon Turner:People don't even know you can do this sometimes, but you can contest your taxes, your property taxes. And I'd say the good majority of the time, they'll lower them. You'll get something usually. I mean, not always, but especially if you're doing it yourself, it's not that challenging and it's a huge expense. So it's worth it. Absolutely. And the reason I brought that up is because I'm sure there are people that are interested in this as a strategy, but the caveats here are you've got to fund the renovations yourself if you're going to buy value add. Also, your strategy wasn't one for lots of cash flow up front.

7:53Brandon Turner:And so typically what I tell people is define your goals first. If your goals are a function typically of how much money are you needing to make and in what time frame are you needing to make it, sounds like your goals were more long-term focused, right? And that allows you to have an investment strategy that will produce the income you're looking to make in a longer time horizon. Whereas some people need more cash now, that might lead you to a different strategy. And I think where people stumble is they pick an exit strategy first before they have their goals defined. And then you end up doing things that aren't really helping you get to where you want to go.

8:27That was part of the, you know, keep your job if this is your strategy. One, because it's a lot harder to get conventional financing if you don't have a job and you need the money to keep it going. And that strategy might switch for me at some point if I've got equity built up, should I put that into something else that has a higher return? And I'm kind of looking at that now, but it's worked so far.

8:52Brandon Turner:And how were you locating the properties that you bought for your portfolio? So all of mine are in the greater Austin area, but that's within kind of a two hour radius from north to south. So I looked for good school districts. My target box, which I went outside of and regretted it on a couple, was three or four bedrooms, two bath within a 1500 to 2500 rental range, because I felt like I could get really good tenants pretty easily in that group. And then are you just looking on the MLS for these deals? Or are you sourcing them some other way? All of mine have been on MLS. I'm an agent as well.

9:28It's worked out okay. But yeah, I know there's some other strategies out there.

9:32Brandon Turner:All right. This is really cool. I don't think I've talked to somebody in a while that has built a portfolio by using strictly owner occupied loans. And I know you've got a few that you didn't live in, but for the most part, the majority of your portfolio has been a live in flip of some kind or a live in move out rental of some kind, which is pretty cool. But you did mention that you ventured outside of your comfort zone slash buy box to do a couple of deals and it didn't go like you would have hoped. And I want to talk about that right after the break. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress?

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13:03Brandon Turner:All right, we are back on the BiggerPockets podcast with Rachel Duck, and she has built a rental portfolio by using the live in flip strategy, low down payment, 30 year fixed rate loans, move in, live there for a year and then move out and keep it as rental or you can move out and sell it. This is a strategy that I don't think enough people consider as a true growth strategy. I think a lot of people see this strategy and do it for maybe one or two deals, but people, they kind of get the jitterbug once they do a real estate deal and they want to scale. They want to scale quickly. And this doesn't necessarily lend itself to scaling quickly, but that doesn't mean it doesn't lend itself to scaling at all because you are proof that you can scale this.

13:48Brandon Turner:Before the break, you had mentioned that you went outside of your buy box in a couple of deals and you ended up regretting it. I wanted to talk about that because it just seems like every time I bend my own rules, I regret it. So misery loves company. Tell me about Tell me about those deals that were outside of your comfort zone. Yeah. I mean, it's great looking back and I regret it too. So I got pretty overly confident during a bad time to get overly confident in the Austin market. So it was, you know, 2020, great time to buy, 21, 22, 23, getting a little risky there. So at the end of 22, I had bought a decent amount of properties in that time and great interest rates and the interest rates started going up.

14:34And I thought, you know, I want to do a bigger deal. And so I found a property that was in pretty bad condition, but it was in an excellent neighborhood. I grew up in the area and that was kind of like the neighborhood that, man, if I could live there one day, this is, it's great, right? It's gated golf community. And this property was an estate property that the owners had passed away and the heirs wanted to get rid of it. So I thought I got it at a great deal. It was an inflated market. So looking back, not that great of a deal for the purchase price. That was problem number one. But it seemed, you know, it seemed good at the time.

15:09The second problem was the massive amount of renovation. So it had a pool. It had a, do you know, I had never dealt with a pool before in a renovation. I had never touched that. It had a roof that needed repair, but you could only do ceramic tile or metal roofs which are extremely expensive it was 3 400 square feet um and just so many things wrong more than i anticipated the amount of the repair budget just went sky high went to sell it that wasn't happening price kept dropping when i look back i should have just dropped the price more and just eaten the cost at that point but i thought the market would turn so i rented it at a massive loss for two years, just a lot of money each month.

15:56And it wasn't just the mortgage. The mortgage was at a bad interest rate. It was also that community had a lot of fees, a lot of club dues and all these different fees that went in, the pool, all that stuff. So I recently, a couple months ago, ended up selling it to the tenants barely more than I bought it. I mean, it was bad. But it was all outside of, if I had just stuck with the 3-2 and the rental rates that I knew. And I think, you know, I could have avoided it, but I got, I got ambitious. And I now I now I know.

16:30Brandon Turner:Well, first and foremost, thank you for the transparency and the honesty. And so what would you say is like, the one big lesson you took away from that deal? I think I maybe overestimated my expertise in a renovation sphere that I didn't know. And so that really messed me up. I think maybe having someone come in alongside me that knew more about that at the start would have been helpful because I was estimating things that I was really unaware of. So if I had an expert say, you know, what you're saying is 100 grand is really, let's call it three or four times that, I would have not bought it, right?

17:09So that I think, I don't want to tell people or myself never to go outside your little box because I want to grow and do new things as well. But yeah, just have somebody who knows what they're doing help you.

17:22Brandon Turner:That's a phenomenal point. We have to try different things to learn and evolve as investors. Right. And yes, you should have a buy box and you should have a comfort zone and your superpower should live somewhere in that comfort zone. Right. But sometimes we are going to go outside of that. So, yes, do things that are new. But when you do, make sure that if it is something new that you are doing it with an experts. So either you have a mentor or somebody that's an expert that's going to guide you, or you're partnering with somebody that's an expert in this new strategy so that you've got someone who's seen some of the things that you couldn't see with your newbie eyes in that particular strategy.

18:05Brandon Turner:Or the deal has to be so ridiculously good that it's dumb not to do it. So I bought my mobile home park. I don't own mobile homes, but I bought this mobile home park because I got it for$100 ,000 owner financed at 3%. If one person pays lot rent, I'm covered. And so I took that as my opportunity to learn how to invest in mobile home parks because I had pretty much a can't lose deal. So don't be afraid to try new things, just try new things with caution. Make sure you have someone on your side, either on your team or partnering with that can guide you through. And you're right, even going from a basic flip to a higher end flip is still something new.

18:54Things are different at higher price points. So awesome.

18:58Brandon Turner:Thank you for sharing that. And thank you for being transparent. Yes, thank you. All right. I wanted to pivot and talk about the couple of deals that you did that you didn't force your children to move and live in. Those are their favorite. Okay. So what went into the thought process behind those? You had done the live-in flips. It was working for you, but you did buy a few that you didn't live in. So were these different types of properties? What made you choose a different strategy for those particular properties? So the ones that were not live-in flips were in slightly less expensive markets.

19:32So that was part of it too. So the first one, well, actually the first one I bought, I did buy with a friend. So we did 50-50. And that's one of my best properties to the state. Maybe it was luck on timing. It was in 2020. We bought it at a good price and a good interest rate. It's in a market just south of Austin, a three-bedroom, two-bath, the right price point, right under$2 ,000 a month for that market. So that one's been great. The couple others that I bought were about the same. One did have a tenant in place when I purchased it, which I know people have different opinions on that, but it has been fantastic.

20:07He stayed the whole time. He's a plumber. He fixes things. It's just been great. So I think I got a little lucky there. That could go the other way. But about the same price point pricing. So the ones I moved into were slightly higher pricing. And that helped with the financing too. These other ones were typically around$200 ,000 to$300 ,000. And then the rental rates were$1 ,500 to just over$2 ,000 for most of them.