Building Passive Income: Cadarrius McGlown’s Journey in Real Estate Investment

According to Cadarrius McGlown, when you get into real estate, you have two choices: “Do you want to be an investor or do you want that to be your career?” McGlown, a software developer and self-made millionaire, wanted to invest in real estate to earn passive income. This way he could focus his energies on passionate projects and his business instead of having to worry about income.

McGlown places great value on the word “passive”. When he bought his first investment property in 2019, he knew his only concern was growing his wealth and that he didn’t want to make this his new job.

“My true passion is technology,” said McGlown. “I only use real estate as a wealth-building strategy.” Currently, McGlown only spends about three hours a month working on his rental property, but he makes thousands of dollars a year doing it. To do this, he follows these three steps:

1. He changed his lifestyle to save for real estate

When McGlown began saving for the property, he wasn’t sure whether to finance it or buy it in cash. In any case, he knew he would have to put a significant amount of savings aside. So he started saving aggressively. “I tend to pick the thing that’s going to be the hardest because that’s where I get the most discipline,” he said.

Saving up for the investment wasn’t easy, but it wasn’t new to him either. Having spent the first two years of his professional life paying off $200,000 worth of student loans, he already knew how to live frugally. So he used the same strategies he did back then to save for his real estate.

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2. He learned about funding opportunities through free and low-cost resources

“I started a resource called Bigger Pockets,” McGlown explained, “I started learning the basic stuff about how to actually make money from real estate.” Through that education, the topic of leverage kept coming up in conversations.

However, the thought of going into debt again scared him. After he finally freed himself from student loans, he didn’t want to take out any more loans. It’s one of the reasons he even considered paying for the property in full — something most homebuyers don’t do.

His parents had taught him the “cash is king” tenet, and part of him still clung to the idea that the taking out a mortgage is risky for a house. However, he realized he was wrong after looking through the numbers: If he just invested in the down payment, the monthly rent checks would be more than enough to cover the mortgage. The property would pay for itself over time.

“I realized that if you rent it long enough, it’s like you never bought it,” he said. “You just got it for free.” Funding the investment also meant he could start earlier and didn’t have to save extra money. By then he had saved $75,000, which he used for the down payment.

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3. He paid more in advance to save time and energy

Ultimately, McGlown’s entire goal was to have as passive a revenue stream as possible. He knew it would be expensive. He first experienced this while researching mortgage lenders.

“I started looking at different interest rates to see what I could get,” he said, but nothing seemed like the right choice. Eventually he decided to try a mortgage broker who helped him find a much better interest rate in less time.

“They came back with a lot better opportunities than I’ve ever found,” he said. “A mortgage agent is definitely worth the money.” When he set out to find the actual property to buy, he was also willing to pay a little more for a turnkey property in a popular location that he would surely rent out. That way he didn’t have to worry as much about the risk involved in funding. “Even if you get a bad deal, the location makes up for it because the value of the property goes up.”

He also hired a property manager to take care of all his tenants’ issues to keep the investment passive. He pays the property manager a percentage of the rent.

Along with mortgage payments, property manager fees, and insurance, he owes about $1,600 each month. However, he rents out the house for about $2,600 a month, so this investment earns him an additional $12,000 annually. In addition, his equity in the property grows over time.

For McGlown, this setup is exactly what he wanted: recurring monthly income with little active energy on his part. “If you want, you can skimp a little and get as much value as possible,” he said. “But then you created a job.”

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This article has been translated from English. You can find the original here.