- Ryan Chaw is a full-time pharmacist who makes $70,000 a year on his side hustle — real estate.
- He worked overtime and saved aggressively to buy his first property, then rented out each room.
- He’s since leveraged that home to buy more properties, growing his passive income.
- Read more stories from Personal Finance Insider.
Growing up, Ryan Chaw’s grandfather showed him that real estate was one of the best ways to build passive income, generational wealth, and financial independence. In the 1950s, Chaw’s grandpa bought a few properties around the San Francisco Bay Area, and over time, both the property value and rental income went up. Through this, he was able to retire early, reach financial independence, and help pay for Chaw’s and his brother’s education.
“Because of this, I realized that real estate is one of the best ways to create generational wealth,” Chaw said. “So, I wanted to get started pretty much as soon as possible.”
Chaw is a pharmacist, but in the past six years he has also built up an impressive passive income stream on the side completely through real estate. According to documents reviewed by Insider, this side hustle brings in over $70,000 annually. Below, he breaks down the strategies that helped him get here.
He took on extra work to afford the down payment of his first property
When Chaw graduated with his pharmacy degree in 2015, he immediately started saving for an investment property he hoped to purchase in the near future. Not only did he start working right after finishing school, but he worked extra hours and shifts from the very beginning. “I worked double shifts from 7:30 am to 11 pm,” he said. “And I would do that quite a few times.”
His goal was to save enough money for the down payment quickly so he could start investing in real estate as soon as possible. “I wanted to put myself in the best position possible,” he explained.
About a year after he started working, Chaw bought his first property for $262,000 in 2016. He financed it with a traditional mortgage and put an initial 20% down.
He bought his first property near a college town to rent to students
Chaw specifically chose to buy a house in Stockton, California, a college town, to offer to students as an alternative to on-campus housing. “I saw my buddy doing this when he was in college,” Chaw said. “Basically, he rented out all the other rooms, and that paid for his mortgage. So I figured, why can’t I do the same?”
The first property he bought was a three-bedroom home, which he later converted to a four-bedroom. Instead of renting out the entire property, he leased each room individually — in this first home, each went for about $600. “It was a little bit over $1,800 between the three, but then I rented out that fourth bedroom and that added an extra $550,” he said. “So that whole place rents out for about $2,500 right now.”
This strategy works well for him for a few reasons: It allows him to earn more money from the rent than he would likely be able to if he rented the property as a whole, and he finds there’s almost always a demand for the rooms. Plus, his prices are lower than student housing on campus, and with students always moving to the town, there’s never a lack of potential tenants.
He continues to reinvest his rental income and looks for specific qualities when purchasing new properties
Chaw wanted to continue his college town strategy and used the money he earned through his first property to purchase more homes in neighborhoods close to universities. He planned to buy one property per year; using the profits from his first investment, he bought two additional homes.
Later, he took out a home equity line of credit, or a HELOC, for $100,000 from the first home and used that money to purchase two more homes. Currently, Chaw owns six properties across Stockton and Sacramento with a total of 29 tenants. He bought the sixth with money he’d invested into a mutual fund in 2020.
Each room rents for around $600, allowing Chaw to bring in about $18,000 per month in rental income. After paying mortgages and other expenses, his cash flow is around $6,000 per month.
When he’s looking for a property, he aims for a home as close to a school as possible with three bedrooms, two baths, and extra square footage so he can add in another bedroom. “I also want it to be in pretty good condition,” he explained “Because I don’t want to do like a six-month rehab, because that really eats into my profit.”
He learned along the way
Chaw doesn’t deny that when he first got started in real estate investing, he made some mistakes. However, he didn’t let that deter him and instead focused on using the experiences to learn. “One of the biggest mistakes I made was getting a super old house that didn’t have updated systems: HVAC, roof, all of that stuff,” he said of the first property he bought.
One night he got a call from a tenant telling him there was sewage leaking through the kitchen sink, seeping onto the floors, and clogging the shower. The sewer line ended up being completely broken and cost about $9,000 to replace. He also quickly learned the AC would need repairs, adding another $15,000 onto his expenses.
Most of his money was tied up in the house at that point, but he was able to come to an agreement with his dad who agreed to front the $24,000 for the repairs in exchange for the rental income of one of the rooms for the rest of his life. “It just made sense for both of us,” Chaw said. His dad was ultimately paid back in about three years and still earns income from the room to this day. “That’s one way I learned to get creative,” Chaw explained.
Now, he knows to buy more modern homes and does very thorough inspections before closing. He also says his HELOC from the first property gives him more security, and he plans to use that if any unexpected repairs or bills come up.
“It’s a little scary for a lot of people to get started because there is so much to know,” he said. With time, it got much easier and any mistakes he made just pushed him to be a better, more knowledgeable investor. “I didn’t have any mentors or anyone like that,” he said. “You’ve just got to take the plunge.”