2025-03-05T18:46:27Z Read in app Seth Jones, seen here with his wife, is a former mortgage broker in Florida who sold his investment properties. Courtesy of Seth Jones This story is available exclusively to Business Insider subscribers. Become an Insider and start reading now.Have an account? Seth Jones had a real-estate-investing rule: only rent out homes for 1% or less of their value.He sold his 10 properties and put the money into an exchange-traded fund portfolio, or ETFs.Jones says life is easier without the headaches that come with property management.This is an as-told-to essay based on a conversation with software engineer Seth Jones, 36, who lives in Port Orange, Florida, about 20 minutes south of Daytona Beach. Jones started buying investment properties in 2015, then began selling them off in 2020 to put his money elsewhere. The conversation has been edited for length and clarity.When I was younger, I read books like "Rich Dad, Poor Dad," and "The Millionaire Real Estate Investor." That's all I wanted to do. When I left the military at 22, the first thing I did was get a job as a real-estate agent because I thought it would help me become an investor.My wife and I moved to Port Orange, Florida, in 2013 to be closer to her parents. I quickly realized Florida was saturated with agents. Even back then, there were only a small number of really good mortgage brokers. So I pivoted.It took some time because I had to develop the right credentials. I became a personal banker with a regional bank and worked there for about a year and a half. Eventually, I became the branch manager. The entire time, I was working on my licensing to become a mortgage broker.For years, my wife and I were hyper-focused on saving money. My wife is a teacher and we lived only off her salary. All of my income went into saving to buy properties. We hardly ever ate out and never went to bars. My faith is really important to me, so I spent a lot of time around people in the church, which made it easier. A lot of the people in the church live pretty simply, so we didn't do a lot of things socially or travel-wise, either.The goal was to get to 100 doors. That was my entire focus. I just wanted to build a real-estate business that would eventually support me and my family, and I wanted to do it as fast as possible.I didn't purchase my first property until 2014. They were actually two, each with three bedrooms under $60,000. I was able to pay 15% down.I created a rule to guide my real-estate investing strategyI'm very conservative by nature. Fundamentals have always mattered to me.It's been frustrating to me that in the aftermath of 2008, a lot of people developed a mindset that real estate just doesn't go down in value.I developed a rule as a mortgage broker that I often call the 1% rule. It's very simple, back-of-the-napkin math. When I look at a property, the first thing I look for is whether the monthly rent I can charge for it is greater than 1% of the home's value. So on a $100,000 property, am I able to rent it out for $1,000 per month? On a $200,000 property, am I able to rent it out for $2,000 per month?It's not ironclad and doesn't always make or break a purchase. But I use it as a guidepost and for quick analysis of a deal.After the first two properties, I was able to grow rather quickly. In 2018, I opened my first mortgage brokerage, which increased my income and gave us more resources to invest with. By 2019, I was able to target higher-quality properties in top school districts.My tenth and last purchase was a property in Lexington, South Carolina that I bought for $138,000 in February 2020. By that point, I had realized I had been concentrating all my risk in Florida. I started to get worried about the impacts of a big hurricane and wanted to diversify my portfolio out of state.Doing my research, western South Carolina seemed fairly insulated from national disasters and I found a good school district in Lexington.I ended up with a 10-property portfolio.The COVID real-estate boom worried me and I got outIn the real-estate investing world, everyone used to talk about cash flow.Sometime around 2019, I noticed a shift in focus. I listen to a lot of financial podcasts and I heard everyone's focus change from cash flow-oriented to appreciation-oriented. That's just never how I've looked at underwriting deals.At the beginning of COVID, I anticipated property values were going to be stressed and would potentially go down. Obviously, the opposite happened.I watched things take off. I wasn't sure what was going to happen moving forward, but the fundamentals started to change. I used Reventure, a data aggregator for real estate, pretty extensively. It pulls in data from a lot of different sources, and I would track price-to-rent ratios for the local market.For property values, I've used every website, but I prefer Redfin. I find it to be the most accurate, and I like the feature where you can see comparable sales.I sold two properties in 2019, three in 2020, three in 2021, one in 2022, and one in 2023. The biggest appreciation was a home I purchased for $190,000 that I was able to sell for $500,000.I put all our resources into liquid assets a diversified, multi-asset ETF portfolio of fundamentally sound stocks (SCHD), gold (IAU), long-term treasuries (SCHQ), and short-term treasuries (SCHO).I have no regrets, and I think that I'll be vindicated once we have some type of correction.I have people who tell me I'm an idiot for selling off my properties. They think they could've made 10 times what I did in real estate.I do think real estate is a great tool to build wealth, but it's also true that fundamentals matter. There's a significant difference in my headspace coming from not owning real estate. From a liability perspective, I have no external worries. No one's going to get hurt. I'm not dealing with late-night phone calls.There is still stress in trading stocks and equities. You don't see a ticker on a house going up and down all the time, but life is way simpler.