How a single mom’s real-estate investing propelled her from unemployed to a six-figure salary
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It was late 2012 when Amanda Young decided to try making money from real estate.
Young, a newly single mom working as a clinical analyst for a software development company, had just gone through a divorce that had drained most of her savings.
“I didn’t have two pennies to push together, basically, when I first started,” Young, now 40, told Business Insider.
Eight years later, she is a successful full-time real-estate investor in Spring Hill, Florida, an enclave about an hour north of Tampa on Florida’s Gulf Coast. Young struggled through two layoffs during the journey, but she now makes about $125,000 annually — and is her own boss.
Currently the owner of seven income-generating rental properties, Young started small: she bought her first home by scraping together just $8,000 for the down payment (while making around $60,000 per year in a software analyst job) and then renting it out to cover her mortgage payments and other costs.
She hopes her rags-to-riches tale serves as inspiration and a road map for women and other aspiring investors with modest means to take the plunge.
Advice from a book and a podcast led to her first home purchase
After her divorce, Young said, she dreamed of buying an RV for hiking and traveling. But because she couldn’t afford a big-ticket purchase, she started researching ways to generate passive income.
Taking books out of the library is free, so Young scoured the shelves for books on business and personal finance. On one trip, she stumbled upon the self-help book “Rich Dad Poor Dad.” In the popular tome, Robert T. Kiyosaki encourages readers to educate themselves, take smart risks, and build wealth.
“It changed my mindset about money and gave me the idea that real estate could be my vehicle to get that passive income I want,” Young said. “So I just started throwing myself into research.”
She started networking at local Real Estate Investment Association (REIA) meetings, and became an avid listener of the real-estate investing podcast BiggerPockets. Indeed, Young appeared on BiggerPockets as an expert guest earlier in December, taking her journey full circle.
At the time, to save as much money as she could for a down payment, she rebudgeted her expenses.
“I had to cut cable — any kind of extras around here got cut,” she explained.
Two years later, by August 2014, she had saved almost $8,000 to buy her first rental property, purchased through the Fannie Mae Homepath Loan Program. (Though the program Young used has been discontinued, the government-backed mortgage giant operates a HomePath Ready Buyer Program that offers first-time home buyers of certain properties up to 3% of its purchase price back in closing-cost assistance.)
Thanks to the Fannie Mae scheme, Young was able to put down just under $8,000 for the roughly $78,000 property, located just a few minutes from her own home. In fact, Young told Business Insider, all of the homes she bought during that time were within a 20-minute drive of her permanent residence in Spring Hill so that she could minimize time spent away from her son Wyatt, then 13.
It took just a few weeks and a quick paint job to prepare the home for renters, Young said, and she quickly found a tenant to pay roughly $1,150 a month. The mortgage at the time was around $500. Today, the property is still profitable, with a tenant who pays $1,350 each month.
Her first success left Young hungry for more.
“Along the way, real estate became not just a vehicle but an absolute passion of mine,” she said. “I fell in love with it. It was something I was good at.”
Her son got sick, and she was laid off
As Young prepared to buy another property to grow her passive income stream, tragedy struck.
One weekend in October 2014, Wyatt was playing in a soccer tournament when he felt pain in his teeth. The doctors at a walk-in clinic and, later, the emergency room couldn’t find anything wrong and assumed it was a cavity.
That night, Wyatt’s mouth swelled so much he couldn’t speak and struggled to breathe. Finally, doctors figured out he had a growing tumor that was eating away at his jaw. It took three days to convince a surgeon to undertake the risky operation he needed. After two weeks in the hospital, he was sent home to recover, one side of his face temporarily paralyzed.
Young — who had to oversee his rehabilitation, coordinate homeschooling, and coach him through reconstructive surgeries — saw her side hustle as an a form of therapy during those tough times.
“I never lost focus on real estate,” added Young, who listened to podcasts, read books, and attended industry meetings when she could. “I had to have an outlet mentally, and that was my outlet.”
The following month, when Young got laid off from her day job as an analyst, her foray into real estate became even more important.
The road to recovery — and her second rental property
In 2015, Young landed a full-time job as an IT security analyst.
At the same time, she scored a list of probate leads at a REIA meeting. Homes enter the probate process when their owners die, in which they are either distributed in accordance to a will or through state laws. It’s often a prime time to buy because whoever is inheriting the property may be looking for a quick sale.
After reaching out to the leads, Young purchased her second rental through a “subject to” or “subject 2” deal, which essentially means taking over a mortgage that is in someone else’s name. She paid the inheritor $6,500 upfront for the house and started making monthly $400 payments towards the roughly $42,000 left on the mortgage.
To prevent the bank from calling the loan due, she explained on the BiggerPockets podcast, Young put the home in a land trust. Then she opened up a checking account under the name “Property Management Company’ and issued the mortgage payments from there.
“I wrote all the checks out of that account. So when the bank received those checks, they wouldn’t be flagged like, ‘Oh, this is coming from a different person other than who owns the house,'” she said on the BiggerPockets podcast.
Within weeks, she was able to rent the second property out for $900 a month, $500 more than the mortgage payment.
In an unexpected turn of events, a few months later, the tenant offered to buy it from her for around $85,000. She was tempted, but waited to sell. She held onto the house while the tenant continued to rent so that she could take advantage of the 1031 exchange — a federal tax rule that allows investors to sell one property and put the proceeds towards another without being hit by capital gain taxes. But in order for Young to qualify, she had to own the property for just over a year, then sold it to the tenant.
Young ultimately netted around $40,000 from the 2016 sale. Using the 1031 exchange, used it to buy two more homes in the area that now generate around $1,100 for her a month, collectively.
‘Driving for dollars’ to find another rental property
Young was able to score her next property through more creative financing.
“So [by] ‘driving for dollars,’ driving around different neighborhoods, I found a for-sale-by-owner sign written in pencil and I’m like, ‘Oh, that’s opportunity all over,’ ” she said on the podcast.
Young was able to convince the owners to sell her the property through owner financing, which is when the buyer finances the purchase of a home directly via the seller. It cuts out a middleman: the bank. Young and the seller agreed to $5,000 down payment in cash and then a $62,000 mortgage at 6% over 20 years.
This year, Young refinanced the home so that it has a traditional bank mortgage instead of the original owner-financed one. She profits around $500 a month off of it.
As part of the refinancing, she pulled out $20,000 and bought another rental. That one brings in around $400 a month.
Flipping ‘sinkhole homes’ for additional profit
In 2016, Young decided to start flipping homes — after hearing a guest on the BiggerPockets podcast advise going after properties no one else wants.
“In my area,” she said, “that was ‘sinkhole homes.'”
Sinkholes, which are common in damp, humid Florida, occur when the ground beneath the surface opens up and caves in. They can pose major threats to a home’s foundation and structural integrity.
They’re undesirable because many prospective buyers don’t want to go through the hassle of fixing them.
But Young took on the challenge in 2016, during her first flip — even though she had to resort to a hard money loan, which typically comes from a person or a company rather than a bank. In hard money deals, the loan is backed by the loanee’s real property.
The sinkhole home cost $85,000; she put down 20% and the loaner supplied the rest. She then paid for the sinkhole repair, a cost of about $20,000, out of pocket. The home was otherwise in good condition, Young added.
“I didn’t paint, I didn’t clean, I didn’t fix anything,” she said. “All I did was fix the sinkhole and we stuck a sign in the yard.”
In less than a month, the home was under contract — she sold it for $155,000, about $50,000 than the cost of the house and the sinkhole repair bill.
Finally getting the RV— and achieving financial freedom
In August 2018, Young left her job as an IT security analyst for a position selling software. She was let go just four months later.
Young recalled: “My boss said to me, ‘Amanda, the problem is you’re not passionate about software sales. You’re passionate about real estate. You need to go and follow your passion. That’s where you’re going to make it big.'”
After getting that, Young decided to pursue real estate full time — managing her growing rental portfolio and flipping homes.
The same boss who laid her off said Young would be on TV one day. The premonition came true: In 2019, the Discovery Channel did a documentary on sinkholes and interviewed Young.
Today, Young owns a seven-rental portfolio that brings in around $3,500 a month, and has flipped about 20 homes since partnering with Lori Slatter Moise, a Keller Williams realtor. In 2019, those flips brought in around $100,000 after costs and expenses were deducted.
She was finally able to purchase the RV she’d been pining for ince 2012. She, Wyatt, and her new husband Wade (they tied the knot in 2020) use the 17BH Coachman Clipper to go camping.
In 2012, Young made around $60,000 as an analyst. In 2019, her first full year as a real-estate investor, she brought in roughly $125,000.
And despite the pandemic, Young still expects 2020 to be a good year, business-wise. Right now, she told Business Insider, she has two duplexes in contract, a flip in contract, and two flips in progress.
Heading into 2021, her goal is to double her number of flips and pick up more rentals.
“It is work, but it doesn’t feel like work. It’s very comforting to know that I’m not capped on my income,” Young said. “I’m having the absolute time of my life doing it.”
This content was originally published here.