When Mr. Tran first moved into Germantown (80s), it has nothing. Quality of life is not much to be proud of. Germantown back then was solidly despised as blue colar town. Those folks in Bethesda definitely won’t say anything good about this place. Even today, there are many blue colar neighborhoods in Germantown, mostly townhouses. By mid 90s, Germantown has transformed itself into more suburban and less rural, more white-colar people moved in. Price has started to rocket. Even at that time, a bigger luxious new SFH already cost nearly 400K. Mr. Tran could not afford the upgrade to 400K, so he moved to Frederick (back then a small town, but not a suburb of DC). To him, the quality of life is not perceived reduced because GM was not much better anyway. Well, I don’t exactly know why he moved to Frederick. The bottom line is, by sequentially moving to new houses and renting out old houses, he has been able to accumulate a good holding of houses. By not selling these houses, he created a chance for these houses to work over time.

No, sequential investing is not normal living. Most people won’t do that because most people are lazy and can’t put up with the pressure of being a landlord for multiple houses. There is definitely a price to pay. However, it’s a proven strategy that worked for many selected people. Sequential investing is in fact a classical investment scheme taught by many real estate experts. Using this strategy is easier than other strategies because it incorporates primary residence with investment, sequentially retiring current primary residence to rental properties over the long term. At the same time, this strategy is less risky than the others because investors can choose when to move. When the market is not doing well or the rental rate is not desirable, he may choose to stay in the current home longer. It’s more flexible. He only moves after he has seen some equity created in the current house… According to statistics, average Americans move every 7 years. I don’t think sequential investors move more often than that frequency. The key difference is: sequential investors don’t sell houses until there is a definite need for cash-out. While regular people always sell their old house and then move to a bigger house. This is sequential move up, not sequential investing.

By the way, I forgot to mention that sequential investing can be done without moving out of the general school district or neighborhood. All it requires is you moving to a next house, could be next door.

Another investor I knew is now living in Rockville. He started investing like this since about the same time early 80s. He is a restuarant owner without even an elementary school education! He told me about his story of accumulating houses one by one, also moving from one house to the next within the same area (Rockville). He never went to any real estate seminar or studied any books. But he has been doing exactly what the books are teaching. These people do have different IQs that many people who went to years of graduate schools don’t, business instinct. He told me that he doesn’t know much about stock market, afraid of opening an account in a brokerage. He never heard of sequential investing and he is careless about terminologies. He has no confidence in those slick stock salesman or fund salesman. All he knows is to use house as his bank. He buy one house, and turn it to rental immediately. He doesn’t worry about about landlording either because he loves to pay more than 10% to hire the best property managers to maintain day to day rental. He accumulated more than 8 houses. His restuarant business was not doing that well. He said he was lucky because all of his houses doubled or tripled in value over the course of years.

I have the third investor story, but I will share them with you later. Amazingly, many successful investors I learned from are older folks, the youngest is 58. The oldest (restuarant owner is 67). It concides perfectly with Washington Post’s statistics (in a separate post). One outstanding characteristics of this group is they are often without formal education. All of them are serving as my role models.