Financial Independence with Rentals in 3 Years: How Becky Did It

Three years ago, Becky Nova had no interest in even owning a home, much less becoming a real estate investor.

Today she owns ten units and teaches women how to invest in real estate and build passive income from rental properties.

“I’m a traveler, the free spirit type – I never saw myself settling down. Plus I grew up poor and never thought I would be in the position to own a home.” But after her first property, she caught the real estate bug and never looked back.

If you’ve ever dreamed about building passive income and reaching financial independence with real estate, or mistakenly assumed women can’t build real estate empires, you’re going to want to hear Becky’s story.

Becky’s First Property: A Duplex House Hack

“I’ve lived in three countries and owned businesses in all of them, so I never planned on owning a home. But my husband is an immigrant to the United States and it was his dream to be a homeowner. Since it was his goal, I agreed to go through with it, but I wanted to find a way to make money off of it. So I always say I came up with the great idea of buying a duplex to rent out one half – I never knew that it was called house hacking until months after we closed!

“Once we bought that one, I was hooked.”

It’s a classic model, house hacking a duplex: you score free housing by renting out the other unit(s) in a multifamily, so the rents cover your mortgage payment. It lets you supercharge your savings rate while taking advantage of cheap, low-down-payment financing.

The Property Details

“We paid $465,000 and financed the duplex with a conventional loan, putting down 5%. It’s in a Class C neighborhood (which is my sweet spot) in Yonkers, New York. It’s just outside of New York City, and the fourth largest city in the state.

“We got in our bid just in time. Apparently, the seller’s real estate agent had told the other buyers that there were no other offers so they went in low and thought they had the place in the bag. We came in and created a best and final offer, which we won.”

Sound simple? A fairy tale first-time homebuyer’s story?

It wasn’t.

Sabotage & Vandalism

“We went for the home inspection only to find it had been vandalized with racial epithets in bright orange spray paint.

“The fire department came to try to power wash it off, the police questioned us, all the neighbors came out and apologized to us. The story was on the local news and everything!

“Everyone was freaking out but my hubby and I decided to go through with the purchase anyway. It actually ended up being great because we got to meet all the neighbors before we even moved there!”

So who ended up being the culprit?

“It turns out a couple who had also made an offer and lost their bid to us were trying to scare us away. They graffitied the place hoping to scare us away so the sellers would have to go back to them.”

But Becky and her husband’s troubles were just beginning.

Shoddy Repairs, Settlement Snafus

The aftermath of the broken sewer pipe

The duplex had just been renovated by a flipper, so Becky and her husband thought it was turnkey.

“At the final property walkthrough before settlement we noticed some leaks and told our attorney. She  talked to the sellers, who agreed to do the work after the closing. No mention of escrowing the funds, and we didn’t know any better at the time.

“The day after closing, the sellers sent a handyman, who reported that the leaks required a licensed plumber. The seller refused to pay for a plumber, and the handyman refused to do the repairs – it turned out the seller already owed him thousands of dollars.

“So we hired a plumber ourselves, as it’s a rental property in addition to being our home, and we needed to get moving. He had to open up pipes and covered our entire basement with poop as well as another leak coming from roof, which the seller also refused to fix.

“We ended up spending about $7,000 that we were not expecting. Also because of the leak, there was a $7,000 water bill that the title company missed that became a lien on our property a few days before closing (which they also missed). The title company agreed to foot the bill that they missed.”

Word to the wise: buy title insurance when you buy real estate.

As for the incompetent attorney who failed to recommend that the seller escrow the repair costs, Becky and her husband ended up suing her to recover those costs. Unfortunately it wasn’t the last time they had to take people to court over their real estate investments – but we’re getting ahead of ourselves.

The story comes with a happy ending though: “The rent from the other unit covered the mortgage, so we were living for free at this point.” House hack successful!

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Property #2: A Fourplex Across the Street

In the wake of all these battles, Becky discovered a role reversal had taken place. “My husband got very depressed when our first property had so many issues. But I was energized: I think I would have gotten rid of him before I got rid of the property!”

And it turned out they didn’t have long to wait before opportunity for a second property came knocking. Quite literally: “While our real estate agent was inspecting the property, a little old lady from across the street went over to see who he was. It’s a typical neighborhood where everyone knows each other, and our realtor stood out as a stranger. She mentioned to him that she might want to sell, so they stayed in touch for a few months.”

The old woman and her husband had owned the property, a fourplex, for 30 years. They decided they were ready to sell, so they called up Becky’s real estate agent. “When he got the listing, he called me.”

But as so often happens, this elderly couple had let the property fall into disrepair. “They never did any work and were legitimate hoarders. Every inch of the property inside and out was covered with what we called garbage but they called valuables. We have no idea how the renters walked down the hallways to get to their apartments.”

They put the property under contract for $650,000 without it ever hitting the MLS. But the hassles were just beginning.

Renovation & Cleanout Battles

Becky & Emilio’s second multifamily house hack

This time, the contract of sale included an escrow clause, requiring the sellers to put money into escrow for the cleanout. But yet again, the seller failed to deliver. “They cleaned it up for the most part before closing but didn’t finish. We took them to court to deduct our cleanout costs from the escrowed funds and won, but they appealed. We are still in court for the money in escrow.”

In fact, the sellers proved difficult to work with across the board. “The owners were so confused when we bought the building. They failed to bring keys to the closing, and afterward when I painted the front door firetruck red to distract from the garbage and cleanout work that still wasn’t finished, the little old lady called our realtor (as he was dual agent) and complained I painted her door!

“We renovated one entire apartment right after we closed. My hubby and I were actually on our honeymoon on the other side of the world talking to our contractor at 2am do get this done, which was new to us as we had done all the other work ourselves. Since then we have had to do major upgrades but the units were functional so we just do one renovation at a time. It will probably take us another ten years to restore it to its former beauty.”

As for the rental cash flow?

“Gross rent for the four units comes to $6,200 per month, plus we rent out the parking separately for another $1,200 for $7,400 in gross rental income.” It always pays to get creative to find ways to earn more from your rental properties!

Changing Tactics & Strategic Buying

“I learned to always keep my ears open for opportunities, but to have a goal and to stick to it.”

In other words, have a clear destination in mind – but stay flexible in how to get there.

After picking up a third property (an apartment in the Bronx), Becky and Emilio set their sights on buying a vacation rental. “I was going to buy a short-term rental in the Dominican Republic before COVID hit. It was tough because a beach rental is my life goal and I was so close. But it didn’t make financial sense, so I pulled out.”

Instead, Becky looked at the rapidly shifting housing trends in the US and noticed the de-urbanization trend taking place in New York City. So she turned her sights to easily-accessible areas outside New York City, and bought a duplex an hour out of the city.

“I think people need to watch for trends and think with numbers over their emotions.” Which novice real estate investors all too often do, getting excited about one property or area in particular and then bending logic to support it, rather than using the numbers to find the right areas and properties to invest in.

Investing Overseas

Becky and Emilio may have changed course on buying a beach vacation rental in the Dominican Republic, but that didn’t mean they abandoned the notion of investing there entirely.

Being quite familiar with the Dominican Republic – Emilio was born there – they found a long-term rental property to buy there instead. “Emilio picked the property, a long-term rental in the capital rather than the typical beach rental I’d been exploring. It cost $70,000, we put down 50% and financed the rest (which we could do because Emilio is from there).

“We bought it as brand-new construction, so it didn’t require much work. But there are things considered standard there that the construction company doesn’t do, such as installing bars on the windows and doors, so my husband did that himself.”

As for how they manage it long distance, Becky put it like this: “The DR is like anywhere else, where one guy knows a guy who knows a guy. So it’s the same process to build a team as anywhere else!”

Find a few good people, and you’ll find more. It’s that simple.

And Becky hasn’t abandoned plans to buy an Airbnb rental in a beach town in the Dominican Republic. She’ll become an Airbnb landlord yet: “Our next purchase will be in the DR again for a beach property in Spring 2021.”

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Savings Rate, FIRE & Buying in Cash

“I’m the risk taker for sure, and my husband is the realist so he keeps my plans and goals in check.”

Even so, Becky and Emilio tend to pay in cash rather than leaning on real estate leverage.

“My husband and I work hard, save a lot and spend very little. I work days as a cancer researcher and have two businesses besides my day job, while Emilio works nights as a bartender. Many people make a lot more than we do but we live off of less than $1,000 a month now that we’re not paying rent. We sacrifice now so we can retire early to enjoy life and have a family.

“So, I save a lot and when I hit a number in my bank account, I buy a property!”

They did buy their house hacked duplex with conventional financing, and the $650,000 fourplex. Initially, they also took out a 50% rental property loan for the property in the Dominican Republic. But they ended up paying that loan off in the same year – they originally took out the loan to stay more liquid during the coronavirus pandemic, but since decided it wasn’t worth keeping.

With thousands of dollars in passive income already accrued, and a frugal lifestyle keeping their expenses low, Becky and Emilio have already reached financial independence with real estate. Becky plans to retire by 40, a few years from now.

But for the moment, she’s just having too much fun with real estate investing to give up her regular paycheck as a source of investing capital.

Legal Battles

Becky has not shied away from taking people who cross her to court.

“We’ve been to small claims four times in the two years or so we’ve been investing in real estate. And we’ve won every time, even against our first lawyer that we had to sue.” You remember that story – the seller repair escrow fiasco.

The second lawsuit involved a neighbor who shares a roof with their duplex house hack. The neighbor’s roof leaked into their building, causing damage. When he refused to repair the roof and leak damage, Becky took him to court as well.

Then came the older couple who sold them the fourplex without cleaning out the hoarder furniture. The couple sued them to get back the escrowed cleanout funds, and Becky countersued to keep them. Once again, Becky won.

Finally, a tenant broke their lease agreement early and failed to pay the early lease termination fee.

While many real estate investors go years or even decades without legal battles, Becky’s story illustrates a simple point: with assets worth hundreds of thousands of dollars, disputes happen. Be prepared to fight for what you agreed to with other parties and defend your boundaries if you want to build passive income from real estate!

Lady Landlords: A Pandemic-Spawned Side Business

Becky doesn’t just research cancer treatments and invest in real estate on the side. She also teaches women real estate investing and property management, a field she fell into almost by accident.

“I am much more involved in our real estate investments than my husband is, so back at the start of the coronavirus pandemic when we were stuck at home he was tired of me talking about it all the time. So, I started a real estate Facebook group for female investors to ask my own questions and I clearly hit something!

“We grew to over 4,000 women in under six months. I started creating courses for beginners and those looking to grow their portfolios, and worksheets for strategic planning. I vetted select partners to refer, and host local events for women in real estate to learn and connect.”

Check out her website Lady Landlords to learn more about her events, courses, and networking opportunities for women in real estate.

Becky’s Final Words of Advice

“Do it! Now! Stop procrastinating!

“Most people never become real estate investors because of fear. For someone wanting to grow, I would say it’s really not as hard as people think.

“Figure out what is scaring you and move forward with what you want. There are thousands of ways to be involved in REI, so pick a path and move forward.

“Life is too short.”

Amen.♦

What’s holding you back from investing in real estate? What are your own plans for reaching financial independence with real estate?

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About the Author

G. Brian Davis is a landlord, real estate investor, and co-founder of SparkRental. His mission: to help 5,000 people reach financial independence by replacing their 9-5 jobs with rental income. If you want to be one of them, join Brian, Deni, and guest Scott Hoefler for a free masterclass on how Scott ditched his day job in under five years.

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