Rich on Money

What My Grandmother Taught Me About Real Estate

I have a deep love for real estate that I can’t fully put into words.

I’ve done several podcasts and interviews and been asked on many occasions why I got into real estate.

It took me a while to figure out the real answer.

It’s a deep respect for what real estate meant in my Grandmother’s life.

She’s the first househacker I ever met, although when I heard about her real estate story as a child, I didn’t know that was called househacking.

I just knew it was smart.

As you’ll see, however, her story is so much more than just househacking.

My Grandma grew up poor.  Really poor.

She was raised in Los Angeles in a neighborhood known as Watts.

In case you haven’t heard of Watts, it has a reputation for being a low-income, high crime area.

It’s well-known for gang problems and the Watts riots of 1965.  Since the 50’s, it’s been a rough neighborhood.  It’s still rough today, although improving.

My grandma eventually moved to Glendale, California and married when she was very young.

She had three children with my blood grandfather and adopted a child as well.  I’ve never met my Grandfather.  Apparently, he wasn’t much of a family man.  He wasn’t cut out for family life, and left when my mother was about 8.

So my Grandma was left to raise four children on her own without any help from the father.

Grandma was frugal.  She had to be.

She worked at an insurance company in L.A. making about $500 a month.  She owned a house that was worth $36,000 and eventually paid it off. (Smart move Grandma!)

Her car was paid off as well.

She ran into a dilemma at work where they wanted to move the insurance offices from Glendale to Costa Mesa, a more expensive area near the beach.  (This is all in the vicinity of L.A.)

She got some great advice from her mother-in-law, ironically enough, that she should buy a four-plex close to the new office, live in it, and rent out the other three units.

At the time, on top of taking care of her four kids, she was also taking care of her elderly father.  He was an old-fashioned man with strong opinions.  When it came to the roles of women, he was set in his ways.

He was totally against the idea of his daughter owning a property like that.  A woman has no business owning a property that large!  That was a man’s world.  He often belittled her efforts to get ahead.

Luckily, she never listened.

Back at that time, there was a surprisingly large amount of opposition to a single mom attempting to buy a four-plex.  Nobody seemed to think it was a good idea.  Many thought she didn’t know what she was doing and would lose everything for sure.

Luckily, she never listened.

She sold her house in Glendale for $36,000 cash.  She then took $25,000 as a downpayment on a $75,000 4-plex in Costa Mesa.  That’s 33% down!

Read my post on the 5 Best Places to Save Your Downpayment

That was a lot of money back then. Hell, it’s a lot of money now.  Luckily, through frugal living and being smart, she had a nest egg saved up and was able to do this.

It’s not easy to make rental property work in Southern California.  I asked my Grandma if she was cash flowing when she first bought the property.  She lived in one of the units and rented out the other three.

I asked her if she considered the rent from the other three units, was she breaking even or getting any extra money each month.  She said she didn’t for a while.  She had to kick in $200 a month for about two years.  It wasn’t easy, but she made it work.

She managed the properties herself and tended to be a lenient landlord (this doesn’t always work).  She rented to people at church, so she had a personal relationship with many of these people.  Overall, she didn’t have serious problems with this arrangement.

After a few years, with inflation and rents rising, she started to see some cash flow each month.  Over the years, that cash flow became significant.  After some more time, the equity in the house also became quite significant.

Several years later, she got remarried to a wonderful man that she is still married to today, and they paid off the property a few years later.

In my estimation, the decision for my Grandma to purchase this property was one of the most important decisions she made in her life.  Financially, it was able to provide generational wealth to her and her heirs.

It provided steady cash flow throughout her entire life, providing enough money to cover her living expenses and allow her to be helpful to her children, friends, and members of her church. I know in this case of my parents, she’s helped them financially continually throughout my entire life.

The 4-plex is in a trust and, upon her passing, it will be split up between her four children.   This will provide a significant amount of money to her heirs.  This is something that I imagine brings her comfort.

All this came from a brave decision to purchase a property when she was a young single mother more than fifty years ago.  She did so against the wishes of her father and with many telling her she was making a mistake.

I’m so proud of what she did with real estate, how she raised those children on her own, and all she’s accomplished in life.

I remember how scared I was when I bought my first rental property.  Several things went wrong and I had many sleepless nights.  I thought for sure that house would bankrupt me!

But when I compare that to the courage my Grandma had to purchase that 4-plex some 50 years ago,  I realize my problems were small by comparison.  I’m glad I didn’t give up at the time and continued investing.

So that’s my story of the first househacker I ever met.  It was my Grandma.  I’ve known her my whole life.

She is my role model and mentor.

Who is yours?

Tell me about them in comments.

Rich on Money

I now own 20 properties that are paid off providing significant passive income.  How do I do it?  Read The Complete Guide to Real Estate Investing

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8 Comments

  1. Laurie

    What a great and touching story! If I ever get cold feet to make a decision to invest in a real estate property just because people tell me I’m just a single girl in my 30s who know nothing about real estate, I’ll think of your grandma and how she overcome sexist prejudice!

    • Thank you for commenting on this post. She’s an amazing woman who proves anyone can do anything they want.

  2. Nina

    Love this…it’s so inspiring to hear stories of brave women forging the way for us. We probably couldn’t be doing what we are doing if she and others like her had not done what she did. I’m going to bookmark this post and re-read when I get anxious about my own journey in this real estate endeavor. Thanks for sharing.

  3. mike

    My grandmother is the reason for all of the abundance in my life. She escaped the holcaust, came here with nothing, was a single mother and ended up building a motel on the beach in NJ. Thanks for this post and for reminding me for doing what and why I do what I do.

  4. Megan

    I love this story. My mentor was my dad. He bought his first rental when he was 58, and by the time he died at age 83 he owned $4M in real estate. He’s my hero!

    • That’s great. I’m hoping I can be a mentor to my children for real estate, and life. Just like my Grandma.

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