Couple Who Retired Early Share Their 3 Biggest Mistakes in Real Estate

  • Michael and Olivia Zuber retired in their 40s, thanks to smart real-estate investing.
  • Over the past 20 years, the Bay Area couple has acquired over 100 units in Fresno, California.
  • One of the first mistakes they made was assuming they had to live close to their investments.

Over the past two decades, Michael and Olivia Zuber have built a real-estate empire in Fresno, California. 

They bought their first rental property, a $107,000 single-family home, in 2002 and have been adding to their portfolio since. Today, they own over 100 units and earn over $100,000 a month in rental income. Insider reviewed their real-estate-portfolio summaries that showed these details.

The Zubers, who both retired in their 40s, emphasized that their success didn’t happen overnight — nor did it come without hurdles.

Here are three of the biggest mistakes they made throughout their real-estate-investing journey. 

Assuming they had to buy in their neighborhood

The Zubers live in the Bay Area, one of the most expensive housing markets in the US. In 2001, when they were starting to look at rental properties, they spent a year looking within 30 minutes of their home because they assumed you had to live close to your investments.

Further complicating the search process was that they were following the “1% rule” of real estate at the time.

“This rule claimed that if you buy a house for $100,000 or less and then rent it out for $1,000 or more a month, you were golden,” Michael Zuber said in his book “One Rental at a Time.” 

After a year of searching for a property in their backyard, they realized that if they wanted to meet the 1% rule, they were going to have to look outside the Bay Area. They wish they’d known that out-of-town investing was feasible earlier. That way, they could’ve bought their first property sooner, rather than spend so much time and energy looking in a market that wasn’t a good fit for them.

Out-of-town investing may require buyers to spend more time on due diligence, since it’s likely that they don’t know the area as well as their hometown. The Zubers, who decided to invest in Fresno, spent hours driving through the various neighborhoods, going to open houses, and looking at rental listings before buying their first rental property.

You also need a property manager on the ground who you trust, Zuber told Insider.

“Our market was 2 1/2 hours away,” he said. “We didn’t know anyone there. We would have failed miserably without a property manager.” 

Now that they know their market in Fresno well and employ property managers, they’re almost completely hands-off when it comes to their real-estate portfolio.

“Most people would be shocked at how little time we spend on our portfolio,” Zuber said. “We’re probably spending five to eight hours a month — and most of that is done on the phone or through email.”

Not anticipating major challenges such as rent nonpayment

Real-estate investing comes with a handful of challenges, Zuber said, including dealing with tenants who don’t pay rent. 

Their first tenants in the first rental property they bought didn’t pay after the first month, and the Zubers had no choice but to evict them. It took time and money. They lost three months’ worth of rent and had to pay attorney fees for the eviction, Zuber said.

A couple wearing sunglasses takes a selfie in front of the Golden Gate Bridge

The Zubers retired in their 40s, thanks to smart real-estate investing.

Courtesy of Michael and Olivia Zuber

“When you’re a landlord for 20 years, you see it all,” he said, adding that he learned to develop a no-tolerance policy on late rent. And expect to deal with scenarios you’ve never experienced before, he said.

“Everything the first time is scary: The first time you have to evict, the first time you replace a water heater, the first time a roof leaks. But you just have to learn from it and move on,” he said.

Real estate is always going to test you, he added. With patience and time, it can lead to financial freedom, but prepare for the stressful situations as much as you can by setting up a cash reserve to handle things like maintenance, renovations, and missed rent. 

Focusing on one end goal, rather than setting smaller goals and celebrating along the way 

It’s important to have an end goal and be clear on why you’re investing in real estate in the first place, Zuber said. Initially, real-estate investing was a way for him and Olivia to get back on track financially after losing most of their nest egg in the dot-com bubble of the late ’90s. Over time, it evolved into a path to financial freedom.

Once they set the goal of achieving financial independence and retiring early through their real-estate portfolio, that’s all they thought about. “We were always looking ahead,” Zuber said. “We should have taken time to enjoy the process a little.”

If they could go back, they would set smaller goals and celebrate whenever they hit one.

“No one should set a goal that will take decades to reach and climb without stopping,” he wrote. “Set small goals that take you to the end goal.”

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