California man turned a $1 down payment into 2 properties: Joseph Worthey awoke in his Southern California residence in January 2021 and decided he had had enough. Worthey gave his two-week notice after working for a Fortune Global 500 company for more than two decades.
He was not independently affluent, having worked his way up from receptionist to human resources manager without a college degree. Then 46 years old, he had not squirrelled away the $1 million-plus balances that adherents to the FIRE (financially independent, retire early) movement typically amass before departing the workforce. But Worthey was done with the corporate world, he wanted to find a new way of life, and he had “two wise investments” in real estate.
In 2008, he purchased a property in Northern California through a programme for first-time buyers that, at the time, did not require a down payment; his was $1. In 2017, he initiated a cash-out refinance on this residence, which provided him with the funds required for a 5% down payment on a new property in Southern California. The properties were valued at $300,000 and $335,000, but the down payment he made was significantly less than 20% of each.
By July 2021, he had sold them for $640,000 and $545,000, respectively, and his plan for an early retirement was in motion. Worthey tells Fortune, “I had this dumbfounded expression on my face for months” after the sale. This high school dropout who worked his way up could sell two properties for a profit of $500,000? I never, ever imagined that I would be able to retire at age 46.”
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How a California man turned a $1 down payment into 2 properties
Here’s how Worthey started a completely new existence for himself, far from California, before he turned 50, without taking on another job (or desk job).
Destination: The Midwest
After speaking with a friend who wanted to depart California for less expensive pastures, Worthey began researching the costs of purchasing rental properties in various cities across the United States. Given the rising cost of living in California, he knew he could no longer remain there, especially without a full-time job.
Worthey, now 48 years old, is not the type to spend all day reading financial websites or glued to markets TV; he is only interested in investing to the extent that he contributes to his 401(k). However, he realised he had discovered gold in the golden state and decided that real estate was his forte.
After earning a profit from his two real estate transactions, Worthey decided to investigate markets with relatively affordable home prices and healthy rents. He considered a few communities in New York and Pennsylvania, but ultimately chose Peoria, Illinois, a riverside city with a population of approximately 110,000 that is affordable.
Using the equity in his Bay Area home, he purchased a modest home for himself for $105,000 and three rental properties for cash (the most expensive of which was a four-bedroom, two-bath rental for $46,000).
Worthey has collaborated with the Peoria Housing Authority to make one of these new rental properties available to low-income renters. He had sufficient funds to purchase a car outright and add to his savings. Worthey is handy, so he manages the properties on his own and lives off the rental revenue.
“I never believed in the’system’: graduate from high school, attend college, work until age 65, retire, and perish. “It made and makes no sense to me, given the value of our lives,” he says. “For the first time in my life, I feel in charge of my own destiny. “Isn’t that the way it ought to be?”
Goodbye to California
Worthey had spent his entire existence in California and had never even visited Peoria before purchasing four homes there. During the first few months following his relocation, he doubted his decision. He waited for the other shoe to drop financially. Surely he was overlooking something, he continued to consider. This could not be so simple.
“Coming from California and seeing those home prices, I thought, ‘What is wrong with it?'” he says of Peoria’s unexpectedly affordable housing. “It must be something significant. But they were all safe locations.”
A year-and-a-half into managing the homes, and Worthey says everything has gone efficiently. He estimates that he spends one day per month troubleshooting or improving something. The remaining time, he attempts to “enjoy life.”
There are other obstacles, obviously. It took time for Worthey, who is homosexual, to locate a community. However, he eventually met another queer resident at the local dog park, and they introduced him to other members of the LGBTQ+ community in Peoria. He spends his days hiking, kayaking, trap and skeet shooting, and travelling with his Cocker Spaniel, Bullet. He is still determining what his “retirement” will look like.
Without having to pay for lodging or transportation, he estimates that his monthly expenses range between $800 and $1,000, which he easily recoups through rent (his largest expense is health insurance, which he purchases through the state marketplace). Additionally, he sets aside money each month for property taxes and insurance. His annual revenue has decreased from $120,000 to approximately $34,000.
Worthey on His Earnings
“When I was earning six figures, I definitely shopped. “I have everything I could possibly need,” he says. “But I don’t need the objects anymore. It was more crucial that I find a way to leave the workforce and truly take charge of my existence.”
Worthey has always been frugal—he rarely eats out or buys new clothing, for example—and while he acknowledges his lifestyle isn’t for everyone—”I can’t go to Manhattan and get away with that,” he jokes—it suits him. He is often conscious until 4 or 5 a.m. and sleeps until noon because he is a night owl.
Worthey is no longer bound by the corporate 9-to-5 schedule, and he is enjoying his independence.
“I frequently do not know what day it is. “I constantly ask Alexa, ‘What day is it?'” he says with a chuckle. “I do not know. Daily is a Saturday. I’m alone with my pup.”
Worthey has some money stashed in a 401(k) he says gives him some peace of mind, and would be able to step back into a desk job if he absolutely needed to.
“I am not concerned about the possibility of needing to return to the workforce,” he says. Who knows what could occur in this day and age? The homes could fall apart and lose all value. Who can say? I strive not to dwell on the past and concentrate on the present.”
