Too good to be true, skill or luck? 25-year old "millionaire"

[George Mortimer]

I came across this article on CNBC: https://www.cnbc.com/2020/02/28/budget-of-millennial-millionaire-who-saves-80percent-of-his-income.html

This guy bought his first house at 23 by using his $19k in savings and a 3.5% FHA mortgage loan ($506k purchase price for the home). He then bought another house 9 months later and continued buying more since then. He claims at 25 years old his net worth reached $1 million.

The article claims he saves 80% of his income. Based on his $150k annual salary from insurance, that would probably be around $80k after tax. Assuming he invested that every year, that's $240k invested in real estate between the time he was 23 and 25. That's if we are being generous, because he claims to have gotten a salary bump (perhaps in those two years).

That implies he made around $750k in rent and capital appreciation in two years (or a shorter time period if you consider they didn't buy a house until 9 months had passed after the first purchase).

Now I know that Seattle home prices have been on a tear for the past few years, but that's a lot of appreciation, right? Let's say he made $100k in capital appreciation on his first home. Sold it and bought a couple more and each appreciation another $100k. Even with these overly generous assumptions, you can't really get to his $1m net worth claim at 25. Also principal pay down over 2 years doesn't really help bridge the gap either.

So are Seattle rental yields just crazy high or what? Or is the story bogus (would have thought CNBC would fact check or something)?

[Michael Haas]

This isn't the first time this article has made its way onto Bigger Pockets, and this isn't the first forum post questioning his numbers haha. This piece has been reprinted by a couple different news outlets over the years. @George Mortimer you're overlooking the fact that his wife also makes six figures, and I would assume he's calculating his million dollar family net worth since they're buying these properties together and are married. 

His spending numbers are probably a little sensationalized for newsworthiness / bragging rights (EVERYONE thinks they spend less than they actually do. EVERYONE), but his rental income and net worth numbers don't seem that far off. My wife and I have 6 rental properties in the Seattle area and our numbers are very similar. The snowball effect is real - when you have a 4 million dollar portfolio it only takes one 10% appreciation year (which Seattle has plenty of) to add $400,000 to your "net worth". We can talk about whether net worth is really the metric we should be tracking, but that's a whole discussion to itself.