'Like winning the lottery without buying a ticket.' These people got rich in unexpected ways.

By Morey Stettner

How they did it: Hard work; prudent risk-taking - and some really good luck

When you tour a ritzy residential neighborhood, you may ask, "How did these people afford such huge homes?" Perhaps they attained wealth through conventional careers: doctors, lawyers, business owners, senior executives. Others probably inherited it.

But some of them may have blazed an unusual path to strike it rich. And that's when things get interesting.

Financial advisers often have clients who amass wealth through offbeat (but legal) means. Examples include one-hit wonders who reap royalties from writing a single song or go-getters who cobble together a hefty nest egg from part-time jobs.

Sometimes wealth just happens. It's like winning the lottery without buying a lottery ticket. Andrew Van Alstyne, an adviser in Waxhaw, N.C., cites a couple in their late 30s who were living "a normal, middle-class life" when they entered into a business deal as a side venture.

"It was a large contractual agreement that went south," Van Alstyne said. "The clients sought legal recourse and came into money from a lawsuit. The judge awarded handsomely for liquidated damages in their favor."

As a result, they went from having modest assets to becoming ultra-wealthy, Van Alstyne says. He acknowledges that "this isn't a path to wealth that most can plan for,," but he credits his clients for working hard, setting goals and playing by the rules.

"Had they not had the work ethic to commit to performing their job at such a high level, they may not have had the opportunities to work on what resulted in such a lucrative deal," he said.

Red Holzbach, a Boston-based certified financial planner, had a client stumble into wealth through residential real estate. "It was almost accidental," he said. "She's a school teacher in her late 40s who had no intent on becoming a landlord."

It started when she bought a condo in a Boston suburb for $250,000 about 20 years ago. In 2012, she bought another home as an upgrade. But rather than sell her condo, she rented it out. "She had a super-low 30-year fixed mortgage and the rent more than covered it," Holzbach said.

In early 2023, she moved into an even nicer home. She secured a jumbo loan at less than 4%, which allowed her to keep her first two homes and generate rental income from both.

"Now her wealth has doubled," Holzbach said. "She's not handy, but she lived in those two houses for many years so she knows them super well-and has a bunch of contractors on speed dial."

Over the years, her real estate holdings have appreciated on average about 8.1% a year. Her return-on-investment has soared given the low interest rates on her mortgages.

"The rents go up while her costs are mostly fixed," he said. "It's all about looking well into the future, and keeping your eyes open for opportunities that present themselves."

There's a common thread with both of these stories: Savvy individuals put themselves in a position to get lucky. They also took prudent risks to score big wins. Filing litigation is a hassle with lots of unknowns. And while owning real estate can be a decent investment, the steadily appreciating home values (and rising rents) in the greater Boston area over the past two decades certainly helped.

In a digital economy, there are other unconventional pathways to wealth. Most social media influencers don't make a fortune, but a few do. And employees at a tech startup that goes public - or who hold restricted stock units (RSUs) - can parlay a few years of work into lifelong riches.

Still, the lesson for wealth seekers is to live below your means and make smart investments along the way. Van Alstyne cites a retired couple in their 70s - he was a teacher and she was an administrative assistant. They lived in the same paid-off home where he was born.

"Although neither spouse had a high-paying job, they both had excellent benefits which included pensions," he said. "Between keeping their living expenses low and continuing to save for retirement in addition to the pensions, they were able to retire earlier than most do and live very comfortably in retirement."

More: Putting 6% of your income toward retirement could still leave you coming up short. Here's what to do instead.

Plus: Get inflation-protected income for life? Here's how you can set it up.

-Morey Stettner

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09-21-24 1224ET

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