When Jamie McCauley was a junior at Cornerstone University, his parents bought and helped him renovate a foreclosed house near the campus in Grand Rapids, Michigan.
He lived there and managed the property while in college, renting rooms to seven other Cornerstone students to help pay his tuition. He also met his wife, Sarah McCauley, at this house.
His time as a young landlord foreshadowed the couple’s now lucrative real estate ventures: 12 years later, they’re bringing in up to $11,000 a month renting 11 remodeled units at five West Michigan properties, documents show. reviewed by CNBC Make It.
Jamie, 33, and Sarah, 32, are also flipping houses to live in. So far they have bought three distressed properties, renovated them, stayed there for a few years and sold them for a profit before starting the whole process. again.
Their most recent remodeled home sold for $436,000 in February, earning them $149,260 in profit, Jamie says.
These real estate businesses are not their only sources of income. The McCauleys also restore and resell furniture and home decor, bringing in around $3,500 a month. And they document their home flipping and renovating adventures on YouTube, where their channel and other social media accounts have generated $102,000 in revenue over the past year.
Through 2021, they’ve also balanced a fourth: their now-closed wedding photography business brought in $150,000 a year at its peak, Jamie says.
But the real estate business is particularly close to their hearts, both financially and symbolically, they say.
“Investing in real estate was so powerful and important,” Sarah says. “It just created this life of freedom for us.”
When the McCauleys talk about freedom, they’re referring as much to flexible schedules as they are to financial power.
Neither works 9 to 5: Jamie works about 30 hours a week and Sarah works 10 more, allowing them to spend more time with their two daughters.
Of their multiple sources of income, real estate investments give them the most bang for their buck. With all 11 renovations fully completed — a process that took around six years, Jamie says — they’re now spending just two hours a month maintaining the properties and earning an average monthly profit of $6,124.
Becoming owners was not their initial intention. After graduating in 2011, her parents sold the house near the university. And when the couple married in 2012, they needed a place to live and run their then fledgling photography business, fueled by Sarah’s visual communications degree and Jamie’s technical skills.
They found a house in desperate need of repairs and paid $48,000 for it. Their plan was to renovate it and live there for at least two years to avoid capital gains taxes. The property is now worth $286,800, according to Zillow.
“It’s called the live-in flip strategy,” says Jamie. “The main reason [we started flipping houses] it’s because we couldn’t afford anything else.”
Since then, they’ve also bought and knocked down two houses they didn’t live in. The most successful cost around $210,000 including renovations – but the couple were able to sell it in 2020 for $292,000, says Jamie.
High Costs, High Rewards
After realizing they had a knack for changing homes, the couple began venturing into real estate during the winters when Michigan weddings were rare.
In 2016, they bought a duplex in Grand Rapids for around $37,000 — “almost nothing,” says Jamie. But the house needed a new roof, furnace and drywall due to severe water damage.
They did almost all the work themselves for six months. Jamie estimates he spent between 40 and 60 hours a week running the duplex. The renovations cost about $43,000, more than the purchase price of the duplex, according to Jamie.
“We treat renovations like a job,” says Sarah. “It was a big chunk of our time.”
Today the property is worth around $200,000 and the couple earn $2,200 a month from their tenants, Jamie estimates.
The success of the photography business allowed the McCauleys to do some trial and error.
They spent money renovating 10 rentals in Muskegon, Michigan, about 40 miles north of Grand Rapids – but the area proved to be a tough market, and Jamie says it was difficult to manage the properties from afar.
They quickly sold the properties, managing to make a short-term profit of $30,000, less than they had hoped to make from the rentals over time.
In 2015, the couple hired a property management company to handle the day-to-day maintenance of their units for 10% of rental income. Jamie and Sarah spend an additional 40% of that income on services such as garbage collection, grounds maintenance and pest control.
It helps them spend virtually no time checking out the rentals themselves, says Jamie: “Now this property is paid for, and it’s just passive income.”
Juggling three companies
In 2019, the McCauleys added an element to their business: they began filming their rental projects and posting the videos on YouTube weekly.
After about a year, they hit 1,000 subscribers and 4,000 hours of watch time, making them eligible for Google AdSense, the Google feature that allows creators to monetize their YouTube videos with ads.
After a video titled “We Paid Our Mortgage by Flipping Furniture” went viral, brands like Skillshare, Beyond Paint and HelloFresh started offering partnership opportunities.
“Our marriage [photography] propelled our rental business, and our rental revenue propelled our business on YouTube,” says Sarah.
The McCauleys say the YouTube business has been their toughest venture yet: They treated it like a full-time job for a year without earning a penny, adding 40 hours a week to their collective workload.
But it was worth it, they say: The third source of income allowed them to close their photography business and spend more time with their families.
“We weren’t really sure where the house design, the flipping, the photography or YouTube would take us,” says Sarah. “But we knew if we put ourselves out there it would open up more opportunities.”
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