- Ashley Hamilton was living paycheck-to-paycheck when she went to a local real estate conference.
- She learned two important principles that have helped her go from broke to financially independent.
- 1. Delay gratification and think long term. 2. Be greedy when others are fearful.
Ashley Hamilton knew that if she wanted to build wealth, she’d have to get creative.
“There were limited things that I could even do even if I wanted to,” the 36-year-old Detroit native told Insider. She dropped out of high school to wait tables so she could support her first child, who she raised on her own. “I couldn’t get a CEO job or a corporate job because I wasn’t educated. I love real estate because the barrier to entry is so low. Anybody can do it.”
Hamilton first learned about real estate in 2009, when she attended a free seminar in Detroit. She was 22 at the time and knew next to nothing about the process of buying a home, she admitted: “I didn’t understand anything at the conference.”
Still, two concepts resonated with her that she says helped her go from living paycheck-to-paycheck to building a 35-unit real estate portfolio that has helped her achieve financial independence.
Insider verified her home ownership by looking at the City of Detroit’s online records, as well her closing documents.
1. Delay gratification and think long term
The first principle that stuck with Hamilton was, “be willing to spend a couple of years living how most people won’t so you can spend the rest of your life living how most people don’t,” she said. “What that meant to me was delayed gratification.”
While Hamilton didn’t have much money left over for discretionary spending at this time, she did anticipate a fairly big tax refund in 2009.
“When you’re low-income, the only time of year when you have extra money is tax time. That was always the best time of the year for me because I got an actual refund,” she explained. That year, “I was scheduled to get about $7,000.”
Rather than take that small windfall and spend it on a vacation or shopping spree, she used it to buy a $6,300 foreclosure in cash. She renovated it that year — it took her three months of working overtime to save up specifically for renovation costs — and moved in with her two kids, meaning she didn’t owe rent anymore and, for once, had leftover money each month.
Following the rule of delayed gratification, she didn’t spend it all — instead, she set it aside to save for her next property, she said: “I had to put blinders on. I was 22 and my friends were like, ‘Let’s go to the bar. Let’s go to New York.’ And had to say no. It does take sacrifice.”
Over the next nine years, she bought one property a year in cash. She funded the purchases using her tax returns and her own savings, which started to snowball as she earned rental income from more and more properties.
It’s harder to exercise delayed gratification today, she noted, since most things simply can be purchased with the swipe of a credit card or tap of an iPhone: “The new iPhone comes out for $1,500. You don’t have the money and that’s ok. You can finance it. Back in the day, if you wanted anything new you had to work and save for it. But now, you can break anything down into payments.”
It takes more willpower to say, “just because I can get the new iPhone, I’m not going to get the new iPhone,” she added. That’s when you want to remind yourself of your long-term goals. Before making a big purchase or financing something you can’t really afford, think about how much that will set you back from buying your first home, for example.
Another trick that helped Hamilton think long-term was to always have a specific timeline for her goals.
“If I have a time frame, I can do anything,” she said. “If you tell me, I just need you to do this for two years and here’s the reward at the end, I can do it.”
2. Be greedy when others are fearful
The second concept Hamilton picked up on was a Warren Buffett investing philosophy: “Be greedy when others are fearful and be fearful when others are greedy.”
The idea is that, when people are greedy, prices typically soar, meaning you could overpay for an asset and get subpar returns. When people are fearful, however, that’s when it could be the perfect opportunity for a good value investment.
Hamilton first heard this Buffett principle in 2009, when “we were in the biggest real-estate financial crisis that the world has ever seen with over a couple million people going into foreclosure, so everybody was scared of real estate,” she said. On top of that, “Detroit was facing bankruptcy so everybody was scared of Detroit,” she added. “I saw the opportunity.”
What Hamilton learned from buying cheap foreclosures was that, just because something doesn’t cost a lot doesn’t mean it’s worthless: “A lot of people perceive low-cost as not valuable. It was national news that you could purchase properties in Detroit for $5,000 but nobody thought to do the research because they thought that a house that cheap must be in shambles or in a war zone.”
It doesn’t hurt to “peel back the curtain and do a little research,” she added.
It just might lead to a gold mine like her first property, which cost her $6,300 in 2009 and recently appraised for $125,000, she said. What’s more, after living there for five years with her kids, she moved, filled it with tenants, and started bringing in about $9,000 a year in rental income: “I had already made well over my investment in rental income, but then I was also able to get almost $120,000 in appreciation.”