Welcome to Asset Accelerator, the weekly letter for people who make good money and want their money to finally make some too. Real numbers, no hype, one idea a week.
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A few weeks back I told you about Ray Dalio’s big idea. Own a handful of things that don’t all have their bad day on the same day, and you cut your risk way down without giving up much return.
So over the next stretch of letters, I’m walking through the streams a regular person can actually own. Not private equity with a million-dollar minimum. The real ones, the kind you can start with a brokerage account, a government website, or a down payment.
We start with the one I know best. Rental real estate.
I’ve spent 25 years in the mortgage business, so I’ve had a front-row seat to this one. And let me tell you about the week that taught me why it belongs first on the list.
March 2020. The world shut down. For a few days there, my team literally couldn’t price a mortgage. The market moved so fast, and fear was so strong, that the normal machinery just froze. It was the strangest week of my career.
And here’s what happened next. While the stock market was having a heart attack, people still needed somewhere to live. It wasn’t a smooth ride for owners; the eviction moratorium had a lot of us worried. But the rent mostly kept coming, and over the next two years rents ran up hard. The thing that felt scariest to own in the moment turned out to be one of the steadiest.
That’s the whole case for a rental.
Your tenant’s rent check does not care what the S&P did this morning. It does not check the headlines. It shows up because somebody needs a roof, and that need doesn’t go away in a recession. That is what makes real estate so stable. It zigs when paper assets zag.
But I have to be straight with you about something, because everyone else seems to dodge it.
A rental is not passive income.
I know that’s not what the gurus say. They put “passive income” on a thumbnail next to a beach. A rental is a small business. It’s almost a hospitality business. When the water heater goes out on a Sunday night, that’s your water heater. When a tenant moves out, that’s your vacancy and your turnover cost. It pays you well over time, but you are earning that return.
That’s not a reason to avoid it. It’s a reason to go in with your eyes open. It’s why I tell people to self-manage their first two or three properties before they ever hand it to a management company. You need to learn the business before you pay someone else to run it.
Here’s what makes it worth it. A rental doesn’t pay you one way. It pays you four ways at once. The cash flow every month. The loan your tenant pays down for you. The value the property builds over time. And the tax benefits that come with owning it. I’ve shown you the real numbers on that before, and they’re the reason I’d still rather own one boring house than almost anything else.
So how does a regular person actually start this?
You don’t need to be rich. You need a down payment and a property where the numbers work. That means the rent covers the mortgage, the taxes, the insurance, and the upkeep, with a little left over. Not a property you’re betting will go up. A property that pays for itself from day one and lets the 4 engines work over several years.
Run the numbers before you fall in love with any house. I built a free calculator for exactly this, so you can see all four ways a property pays before you ever make an offer. It’s linked above.
That’s Stream #1. The one I’ve spent my whole career around, and the one I’d still build first.
Next week, Stream #2: private lending and notes. Or as I think of it, being the bank instead of borrowing from one.
You made the money. Now make it count.
Your Front Row Seat Investor,
Jim
P.S. I don’t want to make 2020 sound easy for landlords, because it wasn’t. The government put a moratorium on evictions, and for a while it looked like tenants might legally stop paying with nothing an owner could do about it. Plenty of us were scared to death. But here’s the thing. Most tenants kept paying, people worked it out, and the rental market came out the other side stronger than almost anything. It wasn’t painless. It was just resilient. That’s the difference, and it’s the whole point. :)
About Asset Accelerator
I'm Jim Duffy. For 25 years I've sat across the closing table from families who looked successful on paper but just weren't building anything that would last. I started Asset Accelerator to change that, one reader at a time. My wife Lisa and I are walking this same road ourselves, from earning to owning, and every week I share what actually works. No hype, no gurus, just real numbers and the belief that it's never too late to start. Let's build something that pays you for life.
