My first-ever property was that seminal, blue Anchorage, AK fourplex.

I scraped together $11K for a 3.5% down payment FHA loan on the $295,000 purchase.

At the time, I didn’t even realize that I was positioned to be the beneficiary of financial leverage.

Sheesh, I didn’t even know what “leverage” meant back then! Later, I could see that was about 28x leverage (1 ÷ .035).

That meant with a 8% appreciation rate on the fourplex, the return on my “skin in the game” was about 224% in the first year (28 x 8%)!

Additionally, I had profit centers of: cash flow, return on amortization, tax benefits, and inflation-profiting on the loan. I didn’t know that yet either.

About all that I knew at the time was that wealth is built through real estate, not stocks.

Plus, since I lived in one unit, I knew that I was living nearly “free” because the other three rents mostly offset the mortgage and property expenses.

Dealing with tenants in my own building wasn’t always so great.

In a way, it was still more genuine than the “fake me” at work – pointing at dumb charts, fake-laughing at Dave’s jokes, and listening to Jane go on about KPIs.

But back at that time, I still thought, “Gosh, it would be a great feeling to have this fourplex paid off someday.”

Later, I connected the dots: property equity is unsafe, illiquid, and its rate of return is always zero. I would never want to pay it off.

To some, that last sentence is financial heresy.

But understanding and adhering to this truth has been a guiding wealth-building principle.

I did not come from a wealthy family. I received no inheritance. I have never had an uber high-paying job; the most I ever made was $108K from my day job around 2015.

Here is Why Your Return From Home Equity Is Always ZeroWatch here or click below:

If you would rather read a timeless article about this, that’s here.

That original blue fourplex appreciated from $295K to $425K over three years.

I held onto it and did a cash-out refinance. Those proceeds were used to put a down payment on a second fourplex building.

It was green and cost $530K.

Some people would not have done that. They would not expand their portfolio because they would take on more debt – two fourplexes’ debt rather than one.

By then, I figured out that I had really just outsourced debt to more tenants – eight rather than four. It also increased my cash flow.

(Later, I’d learn to diversity out-of-market. I bought single-family rental homes in various states.)

Constant equity harvesting and pruning via cash-out refinances and 1031 Tax-Deferred Exchanges kept my velocity of money, leverage ratio, and returns all high.

Later, I exchanged those first two fourplexes for both an 11-plex and an 8-plex. It was a $1.6M total purchase price, with the addition of very little of my own money.

I was mostly still leveraging that original $11K down payment from the first fourplex into $1.6M worth of property!

So then … how do you get wealthy?

Grow your asset portfolio’s value, borrow against it, realize that you pay zero tax when you extract debt this way, and live off the cash flow.

Go from thousandaire to millionaire. If you want to start wearing a top hat and monocle, that’s purely optional.

Provide a trail of clean, safe, functional housing to others; ethical all the way.

As long as you bought for cash flow, you can nearly always ride out an unexpected market downturn. That’s what I did from 2007 – 2010.

Albert Einstein is credited with saying: “Compound interest is the eighth wonder of the world.”

If Einstein had only been a real estate investor, he would have replaced “compound interest” with “financial leverage”.

You can choose to focus on either working for money … or you can have leverage work for you.

You can’t make any money from the property that you don’t own. Just copy me and buy where I buy. Get pre-qualified for a mortgage loan and find property through

Thought getting your money to work for you creates wealth? It doesn’t! That’s a myth. My one-hour investing video course is now 100% free: Real Estate Pays 5 Ways. For a limited time, you can learn how wealth is really created, here.

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