From 7 Rental Properties to 1 Index Fund: My Simplified Investing Strategy

At one point, I owned seven rental properties. Today, I'm down to just one (and I'm getting ready to sell it soon).

No more tenants, no more maintenance calls, and no more juggling spreadsheets and 5,000 receipts at tax time… I'm moving all my money into one low-cost index fund strategy that's easier to manage and way less stressful.

I'm not saying real estate isn't a good wealth-building tool. It's worked out well for me.

But I learned (the hard way) that passive income isn't always passive. Here's the backstory and my plans moving forward.

What drew me to real estate in the first place

Fresh out of high school, I was eager to build a real estate empire.

My original plan was to buy 10 solid rental properties, each cash flowing around $1,000 per month. That would give me a cool $10,000 per month in income -- enough to retire early and live life on my terms.

And honestly, as vague as that plan was, it made a lot of sense at the time.

I worked hard to save up down payments, slowly bought properties, and actually enjoyed the process (mostly).

Not every property I bought was a slam dunk. But I definitely found and experienced many of the benefits I was chasing. I built equity, earned decent cashflow, and took advantage of real estate tax perks.

But eventually, the cracks started to show.

The downside nobody warns you about

If you've ever owned rentals, you know: the spreadsheets don't tell the full ownership story.

They don't show leaks under the kitchen sink. Or the three-month turnover delay because your contractors ghosted you. Or the multiple tenants who stopped paying right after moving in.

Some properties ran fine for many years. Then in a single 12-month period all of the profits would get wiped out by a perfect storm of emergencies.

True story -- I had this one rental that was amazing for three years straight. I always got paid on time, and never heard a peep from the tenant… Then one day out of the blue I got a phone call from a lawyer. Turns out my tenant was a "lady of the night," using my apartment as a place of business for illegal services.

Property managers helped me manage everything. But they are costly. And at the end of the day, the responsibility always falls on the owner.

With each place I bought, my stress grew. Even when things were going well, there was always a low-grade sense of stress in the background.

My new strategy: Index funds

I made it up to seven rentals, then I decided maybe I was climbing a ladder I didn't want to be at the top of.

So I've been slowly exiting real estate ever since -- selling one place at a time. I began with the trouble-maker properties first, keeping the higher performers longer. And now I'm down to just one single property left.

In my early 30s, I stumbled into index investing. It was something I hadn't taken seriously before. I'd always known what index funds were (wide market exposure, low fees, blah blah blah). But I didn't realize how freeing they could feel until I actually tried it.

I've now moved most of my money into a total stock market index fund. And it's been one of the best financial decisions I've made.

I use Fidelity as my main broker. And I've been with them for over a decade now. Between my personal accounts, retirement funds, and custodial accounts for my kid and nephews, I've got 11 accounts with Fidelity… and I pay $0 in fees. Read my full gushing review of Fidelity here, all about why I'm a big fan.

Passive income that's actually passive

I now keep most of my investments in total market index funds like FZROX (Fidelity ZERO Total Market Index Fund) and VTI (Vanguard Total Stock Market ETF).

These funds own thousands of companies across nearly every sector. I don't pick individual stocks or worry about trying to outperform. Average returns are fine with me.

And the best part is, I don't have to manage anything. It's truly passive.

Here's why I'm a big believer in index funds:

• Built in diversification -- I'm invested across all industries, and own pieces of all the big and small publicly traded companies out there.
• Liquidity when I need it -- I can sell just a small slice of my index funds at any time, unlike real estate where I'd have to offload an entire property just to access cash.
• Low fees -- FZROX literally has a 0.00% expense ratio, so I love that fund. But most index funds have a tiny expense ratio compared to managed funds. Also most brokers have no trade fees when you buy or sell.
• Hands-off -- The only thing I have to do is not mess with it.
• Strong historical returns -- Large index funds like the S&P 500 have averaged ~10% annually over their long history.
• Mental clarity -- I don't get wrapped up in the headlines or have to think about my investments daily.

Even during the COVID-19 pandemic when my index funds were down 30%-40%, I was actually stressing about my rental properties more than I was about the stock market.

Thankfully, both rebounded after 2020. But that experience reinforced something big:

I'd rather hold an asset that can drop 40% without me having to lift a finger, than one that drops 10% and demands all my attention (or seven that demand attention).

Onwards and upwards

Seven rentals taught me a lot. But once I shifted my mindset away from "owning stuff" and toward growing wealth simply, index funds just made more sense.

I've reclaimed my time, simplified my financial life, and stopped managing my investments -- and finally started enjoying what they're doing for me.

It's not too late to switch strategies, simplify your approach, or start fresh. Index funds are a great place to begin.

Check out our favorite online brokers and trading platforms for index investing (and more) -- with low fees, no account minimums, and no stress.