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- Bryce Stewart made his fortune through real-estate investments in Bethlehem, Pennsylvania.
- Stewart went from owning one condo that was depleting in value to owning 37 rental units.
- In 2015, he retired from his $50,000-a-year teaching job. He now earns about $20,000 a month.
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Bryce Stewart was 35 years old when he retired from his 9-to-5 job as a middle-school teacher — and he now works one to two hours a day as a real-estate investor.
In an interview with Insider, he broke down how he went from bringing in about $5o,ooo annually to pocketing $17,000 to $20,000 a month from his rental units.
They’re in Bethlehem, a small city in the Lehigh Valley region of Pennsylvania about an hour and a half away from both New York City and Philadelphia that’s home to just over 75,000 people.
Stewart, now 41, published “House Hacker’s Guide to the Galaxy: Use Your Home to Make Millions and Retire Early” in December, which highlights the strategies he used to achieve financial freedom.
He didn’t have a big pile of savings he was able to dip into when it came time to make his first real-estate purchase. Instead, through the help of his trusting in-laws, he used other avenues to gain capital and has since built a 37-unit portfolio.
Buying the first properties
In 2008, Stewart and his wife, Kelly, were living in a one-bedroom condo in Bethlehem that was depreciating in value. Kelly was pregnant, so they moved into a bigger space that cost them $850 a month in rent.
Unable to off-load their condo, they rented it out but incurred monthly losses.
“We went from two salaries, with two mouths to feed, to one and a half salaries and three mouths to feed — and we were losing $300 a month,” Stewart said.
When his wife got pregnant again, Stewart decided to give real estate a try.
In 2009, he invested in a duplex in Bethlehem for $177,800. He used an FHA loan, a mortgage that is backed by the Federal Housing Administration and lent to low- to middle-income borrowers who will be owner-occupants. Stewart was able to put just over $6,000 down by drawing from his savings and borrowing from in-laws.
Stewart and his family moved into a three-bedroom, two-bathroom unit, and he rented out an additional one-bedroom unit on the property.
In 2011, Stewart bought the triplex next door for $195,000. He couldn’t afford to take a loan out on his existing investment property because the down payment would have been about $60,000, so he got creative.
He bought the property as an owner-occupant, meaning his family moved into one of the units in the triplex (they were still able to keep the low rate on the duplex). That arrangement allowed him to get a loan with a 10% down payment of $19,500, which he borrowed from his parents.
By the end of 2012, he was renting out five units — the additional two units in the triplex, the two units in the duplex, and the condo. And while he was still taking a loss on the condo, he was clearing about $1,500 in profits a month from the rentals, he said.
The power of a home-equity line of credit
Stewart was fortunate to have his in-laws trust him enough to lend him money to build his portfolio. He said they were able to lend such large sums because they took out home-equity line of credits (HELOCs). Those are like second mortgages that allow a homeowner to take out a line of credit (giving them access to cash) from the bank to use for large expenses, with the equity in their home used as collateral.
The first time a HELOC came into play was when Stewart and Kelly needed to renovate the triplex. They borrowed about $65,000 over the course of nine months from Stewart’s in-laws.
While he was living in the triplex, Stewart went to the bank and had it reappraised with the renovations. The value jumped from $195,ooo to $300,000. Stewart, as an owner-occupant, was able to get a loan for 90% of the new value at a 3% interest rate. From that $270,000, he paid back his in-laws and paid off the original loan on the triplex.
The borrowed money was constantly recycled, Stewart said. His in-laws would loan him the money, he would pay them back, they would put it back into their house, and then take it out again when he needed it.
In 2013, Stewart and his family moved out of the triplex and into a three-bedroom home. The rent from the units they owned at that point, plus Stewart’s salary, finally put the family on solid financial footing.
Over the next eight years, Stewart continued to source out deals in Bethlehem and finally sold the (initially money-losing) condo in 2019 for $119,000.
Enough real-estate investments to retire
In 2015, Stewart had accumulated 16 units that were bringing in $8,300 to $8,500 a month in profits (after the monthly cost of his single-family home) and was able to retire from his 9-to-5 job.
Banks like to see a W-2 job when giving out loans for investment properties, Stewart said, so after retiring, he signed up as a substitute teacher.
He said his advice to aspiring investors was: “Hold your horses. Don’t tell your boss you’re quitting to be a real-estate investor. It has to start as a side hustle.”
Today, Stewart owns 37 rental units in Bethlehem that bring in a monthly profit of $17,000 to $20,000.
“My strategy worked because there’s solid demand in this market, and there’s been solid demand throughout the duration of my investment career,” he said.