A lot of people will go with something in the 8% to 10% return range for index fund investing over the long term. Enjoyed the podcast. The math is telling us that the biggest parts of your spending are in housing and transportation. Are they easier to manage initially? Find out more about how we use your information in our privacy policy and cookie policy. Scott Trench: So, after the other expenses that went into maintaining the property and fixing some things up myself, I was probably breaking even or maybe paying a little bit out of pocket to live on a monthly basis. So thats not scalable. And both Mindy and I are a little bit morehow do I describe it? This is a loan at the best rates available. But we dont talk about his real estate investing, we talk about his personal financial journey where he started as a waiter and found ways to make way more money than all the other waiters at the restaurant, how he saved all that money, how he was able to house hack, how he was able to parlay into his career as a police officer, how he was able to save and accumulate tremendous amounts of wealth while most of the people, most of his peersand this is in San Francisco. Here I am today after a string of I think good decisions and good fortune accompanying them, but I look back, and Im like, Im not sure which one of those was a bad decision where I got lucky. I think they were good decisions and I got lucky if that makes any sense. So, if thats something youre interested in, head to MadFientist.com/advice. You can download a free copy there. Scott Trench: Yes. The amount of savings I had, less my car loan payment, plus the value of my car. Cheers! First, theres the traditional. So, the goal of this show is to say, Hey, real estate is one part of a strong portfolio. And I believe it makes sense for many people. And I think I can read my opponents as well as I can to feel comfortable with those odds and set myself up. Scott Trench: Its been going pretty well. So the only criteria that I have that I think that you should really kind of strictly enforce is: Will this property make sense right now?, the day you buy it as an investment property if you dont live there. And thats a Corolla. You can change your choices at any time by visiting your privacy controls. Thats great. Id recommend people start from the source. Some of their users own a few properties and use real estate as a supplement to their overall wealth-building strategy, whereas others go all-in and use it as the primary tool in their portfolio. Mad Fientist: And you could do it while youre on the clock. He married his lovely wife, with whom he now lives in Denver, Colorado. Mad Fientist: Wow! And theres nothing wrong with this plan of index fund investing. While there, Scott served as a captain of Vanderbilt University Rugby Football Club. And one of my, and I think Mindys, big petpeeves with the real estate community is that a lot of people will go in and try to buy real estate and hope that buying that real estate will solve their financial problems. I love helping spread the message of financial independence to as many places as I can. Its good to make those mistakes early. And so, I believe that two things are likely to help people increase their odds of success going rapidly from $25,000 net worth to $100,000. I actually enjoyed the audio version of it in the gym. Scott Trench is married to his lovely unnamed wife. This doesnt work so well when I have a family. Scott Trenchs net worth is estimated to be $1.5 million. For example, we had Erin Chase on there. Earning an $8000 raise after a year is great. Trench is the author of the 2017 book Set for Life. Mad Fientist: Very cool! And theyre just like, I dont know what Im going to do after I retire. The money is not the fear anymore. Have you made any mistakes, or is there anything you would do differently if youre starting from scratch now? Ive been doing the same in Denver (and CA & MI) for the last 20 years and it has allowed me to retire at 46 with sufficient income from the rentals. Scott Trench: But well get her to rap on one of the future ones coming up. I just finished up @Scott Trench book Set For Life. Scott is the CEO of BiggerPockets.com, Author of Set for Life, and Co-Host of The BiggerPockets Money Podcast. You made the right choice. I am a massive fan of multiple streams of income, so have been pursuing side hustles for a while now. The more money these institutions raise, the more soaring property values they can scoop up, and the more carried interest the deal sponsors make. So, it sounds like you havent made any sort of mistakes or youve been on such a very amazing path seemingly as soon as you got your career? She now has a net worth of $5 million, and her annual salary is estimated at $1 million. So, alongside kind of dollar cost averaging with index funds, I try to dollar cost averageand by that, I mean consistently invest, so Im not buying at the top or the bottom of the marketin real estate. The couple posts a lot of their pictures together on their social media account. And this is the real power of it in a non-financial sense. So, you had mentioned when you hit that $25,000 stability level, you would mention you could get a job that pays less salary but has a bigger bonus potential, or you could go and work at a startup or things like that. Im going to bet on that and go with that. And thats the correct decision to make in that game. These offers do not represent all deposit accounts available. real estate investing strategy that makes financial freedom And I have a couple of other expenses there as well. She said hes a 20-something whos doing incredible things with real estate and investing and finances in general, so I needed to talk to him. You have to live there until things appreciate or rents go up, or the property goes up and you either have to be able to sell it or live there happily. Hes doing some amazing stuff, which Im really excited to talk to you about. What do most people not know about real estate investing that you wish they knew? Thats another good thing. Scott Trenchis the epitome of the "grind until you shine" real estate investor. Congratulations! Scott Trench: Yeah, I think thats huge. What about equity in rental properties or home equity lines of credit (extremely cheap money that can be used as a down payment for more properties). Im not sure how long youve known Mindy Jensen, but I think ever since she got introduced to you, shes been like, Brandon, you have to get him on the show. Joshua Dorkin, founder and CEO of BiggerPockets.com, joins me on the Financial Independence Podcast to talk real estate and entrepreneurship! . Im very excited to be here. Throw all your additional cash into index funds, model it out using whatever percentage return youre comfortable with. This is a business that requires, literally, hundreds of hours of self-education from the investor prior to getting started. I could continue living in that property happily forever, I could sell it at a gain alongside all the other homeowners in the area, or I could rent it out. Scott Trench: Yeah. I believe I currently was able to getI remodeled and got one of the units up to $925. I was just working towards that financial freedom. Im now working very long hours and trying to figure out how to grow the company and all that kind of stuff. Scott started acquiring more properties as he worked with Josh and later became such a crucial part of the BiggerPockets family, he was promoted to president. But I didnt realize that passing those first two stages, my first $25,000 and my first $100,000 gave me so many more options and so much more power to make that journey quicker and more enjoyable. I was at a 50% savings rate before I got married and had a kid and bought a house. BiggerPockets.com is the worlds largest online real estate investor network. And no one can go in and audit them and figure that out. Theres plenty of exceptions to that, and Im not discounting that. http://traffic.libsyn.com/madfientist/scott-trench-interview.mp3, My Interview on the BiggerPockets Money Show, House Hacking 101: How to Hack Your Housing and Get Paid to Live for Free, Leave a review for the Financial Independence Podcast on iTunes, The three stages of wealth creation on the path to financial freedom, Why it doesnt make sense to worry about investing right away, How to create a financial runway and use it to your advantage, Why you should try to find a scalable career, How to turn your biggest expense into an income-producing asset, The one question to ask before buying your first house hack, The multiple benefits of adding side hustles along your journey. Scott Trench: Yeah, that was my first property. Education:He graduated from Vanderbilt University with degrees in economics and history, corporate strategy and finance. But if your house hacking correctly, you have three options. So, the goal is to go from a year of financial runwaywhich is a very modest goal that you can grind out over maybe a year to eighteen months depending on where youre starting from, what your income is, and where your expenses are, to a goal that has a lot less certainty. Mad Fientist: Cool! And thats when I found your show, some time in that timeframe. Although his salary was less than $50,000, Trench took on an aggressive saving strategy and had enough to put a down payment on a $240,000 duplex in just a year's time. And yeah, the main focus in that first $25,000 is frugality, which as you talked about in the book, a dollar saved is better than a dollar earned because obviously youve already paid tax on that dollar that youre saving, and its worth more to you than a dollar earned because you would pay a bunch of tax on it and have to do work to get it. Id say for young people who start today, house hack is one of the best ways to get to FI, especially since young people can take in roommates (itd be impossible for families w/ kids). Scott Trench is CEO of BiggerPockets, co-host of the BiggerPockets Money Podcast, a real estate investor, and a real estate broker.He is also the best-selling author of Set for Life and First-Time Home Buyer, which have sold more than 140,000 copies combined.Through a solid understanding of wealth management, calculated risks, and a lot of hard work, he created financial freedom for himself as . Its been a whirlwind since then. Click here to listen on iTunes. Bigger Pockets Money podcast did a show about this recently. A lot of these investors have enjoyed well over a decade of rising prices. Mad Fientist: So yeah, that could take a nice chunk of change. So was that your first property then, the duplex in Denver? And Im looking forward to checking out the rest. Its hard to see how unemployment can increase right now in a meaningful sense when the minimum wage is this low. Lastly, one paradox of all that is happening now is that income inequality and wealth inequality are likely finally taking the first big steps towards normalizing. Calculate your FI date and graph your progress to FIRE for free in the Mad Fientist's FI Laboratory! It will also teach you how to live a happy, healthy, and fulfilling life . And if you continue along that line of thinking and apply it to your life, I think thats how you have just really good odds of hitting success. I mean, if you think about that, how on earth is their market cap less than that? And hopefully, Ill make it out to Denver one of these days and say hello. Also, you have nothing to invest, so you cant get a higher return on your invested dollars if you have nothing to invest. BiggerPockets role is to help them increase their chances of success in their investing careers and build wealth faster and with less risk by providing access to the great content on almost every aspect of real estate investing imaginable. And theres nothing wrong with that plan. Yeah, this could be your biggest expenseespecially if youre renting or if you go out and buy your dream home right out of college like some people. Its not to save the economy to support the Biden Administration. Mad Fientist: Nice! Congratulations to you! And I wanted it as soon as possible. Fun, entertainment, healthcare, insurance, all of that falls into that last third. When Josh decided to step away to be with his family, Scott became CEO. So, the goal of the show is to showcase these different perspectives on finance and enable people to think outside the box of Oh, real estate is the only way to go about this or even Index funds is the only way to go about investing or frugality is the only path to financial freedom.. This is why I studied finance in general, in college and with the start of my career. So, those are two approaches for investing. So, for example, on a basic level, Mr. Money Mustache has an incredible intro because I believeand Mindy agreesthat the basis of personal finance, the foundation, is always in that frugality and having the mindset of the end goal of happiness and using money as a tool to live out that ideal lifestyle I guess. And yeah, hopefully, Ill speak to you soon. And if people want to find you, wheres best to find you online, just go to Bigger Pockets? So lets dive in! Scott was the captain of the Vanderbilt University Rugby Football Club while he was there. Theres so many different ways to make money that dont cost anything but your time, and maybe a few hundred to a few thousand dollars to try out. Scott Trench: Yeah, Im 27. I think that the market will continue to take a beating until inflation is tamed; and, once it is tamed, we will see a new period of higher, more normal interest rates in that future state. Scott Storch is a record producer, songwriter, and former musician who began his career in 1991. Scott Trench: And I do it while Im on the clock. This doesnt influence our evaluations or reviews. The identity of Scotts wife is not known to the public. And I also have a quadplex now that I bought as a regular investment property. Scott Trench: Well, thank you for having me, Brandon. Thanks for taking the time to read this post and thanks Scott for writing such a good book. I know its a really hot real estate market these days. Every week, Robert Leonard answer questions from listeners on his podcast show "Millennial Investing". Mad Fientist: Very cool! But you model it out, and you just throw all of your excess cash into a big pile. Scott is married to his beautiful unidentified wife. But thats a huge improvement from paying hundreds or thousands of dollars in rent per month. - What else would be considered an asset in his model? Shop Pay is an innovative payment solution developed by Shopify. So, the first time that I can figure out anybody actually using the term house hacking was by a guy that works here named Brandon Turner. And this brings up a really cool thing that I liked in your book, which I havent even mentioned yet. But theres also this whole realm of entrepreneurship. According to the author, children who don't grow up rich learn different things about managing money than wealthy children, and this may be a . We try to be a little bit more creative and adventurous with our investment and money management than maybe just passively investing in index funds. Mad Fientist: Yeah, thats absolutely crazy! In 2021, he also released his book First-Time Home Buyer: The Complete Playbook to Avoiding Rookie Mistakes. Total Audience Reach (Twitter, Instagram, YouTube and TikTok). So, the final step I think is it goes on forever basically. Mad Fientist: Wow! DO NOT Sell My Personal Information. At the moment, no information about his parents or siblings is available. There needs to be more FI conversation for those with children. July 8, 2022, 4:00 AM Scott Trench Scott Trench is the author of "Set for Life," CEO of BiggerPockets and co-host of the "BiggerPockets Money" podcast. Lease Purchase, Lease Options, Tax Liens, Notes, Paper, and Cash Flow Discussions, Private Lending & Conventional Mortgage Advice, Real Estate Guru, Book & Course Reviews & Discussions. They have nothing to fall back on. And I knew that my salary at financial analyst 2 would be about $56,000 to $58,000 (again depending on performance). And shes a poker player. Scott Trench: Sure! Anyway, thanks a lot for listening. One, youre accumulating that all in savings which is 100% gain because its after tax savings that youre accumulating. This is like the most opportune time for low cost entry into any sort of business world you can imagine which is super exciting. Scott Trench is the CEO and President of BiggerPockets. But youll need about $48,000 to finance your $4000 a month lifestyle. Thats fantastic. But its very exciting, and its like the perfect world for me because I just love Bigger Pockets. So, some people are starting from a position where they already have a good $25,000 saved up through whatever fortune, whatever theyve done previous to this point. And my rents were $1150 from the other side and $550 for my side. Andrew Ross Sorkin - $10 million By layering philosophy with practical knowledge, Set for Life gives young professionals the fiscal confidence they need to conquer financial goals early in life. If you lose your job, youre screwed! And I wanted to do a little bit more than maybe invest in index funds again which is kind of a standard 8% to 10% long-term average return. Mad Fientist: Yeah, this is a long time coming. Mad Fientist: Yeah, exactly. Youre welcome any time. . Yes. Questions About BiggerPockets & Official Site Announcements, Home Owner Association (HOA) Issues & Problems, Real Estate Technology, Social Media, and Blogging, BRRRR - Buy, Rehab, Rent, Refinance, Repeat, Real Estate Development & New Home Construction, Real Estate Wholesaling Questions & Answers, Rent to Own a.k.a. Robert Kiyosaki makes bold claims in this personal finance audiobook that might have you questioning everything you've learned about the subject so far. 3. Particularly liked the part about a scalable career and adding side hustles along the way. Scott Trench Mar 21, 2017Mar 16, 20218 min read In this article I just talked to a lender that prequalified me for over $1 million in financing. However, like Scott said, it is absolutely critical to keep positive cash-flows (rents must cover mortgage payments + HOA + property tax, with backup plans, like moving in to the property yourself), weve seen people end up having to sell in down market when losing the job or can no longer subsidize the negative cash flow, therefore cannot reap the long term appreciation or refinance to lower rate, etc.. It cost me $1700. His net worth is estimated to be $1.5 million. They both live in Denver, Colorado. buying two houses per month using BRRRR. And then, two, house hack. Body Measurements So can you talk a little bit about that? Mad Fientist: How is that going in Denver? He's the VP of Operations at BiggerPockets and loving life. I published that episode way back in May of 2012. And I couldnt agree more that also should be a very important focus for you because if you just work so hard to financial independence, and then have nothing to work on after, nothing that gets you out of bed or gets you excited about starting your day once you reach that point, youre going to probably be pretty miserable and may want to go back to work. The mortgage is currently $1400 because I refinanced. I really appreciate it. I also observe that the federal minimum wage has not increased since 2010 we have the lowest real minimum wage in this country that weve had in nearly 50 years, since the 1940s and 1950s. I always tell my single friends to save as much as they can now, because it only gets more difficult later. Mad Fientist: He seems like a good boss anyway. The leap and I guess the freedom is almost kind of the scary thing. We go into just incredible personal stories. And then, I actually stumbled upon your podcast, the very first episode, and Mr. Money Mustache. Last, I wonder, with the Republicans predicted to pick up a lot of seats in November, whether the Fed is likely to attempt to stimulate a Biden Administration economy at this point. Im easily a 2% or 3% safe withdrawal rate, which is much more conservative than the 4% safe withdrawal rate, which means they have much more assets than they need to produce the level of income that they desire. Real estate absolutely will be affected by rising interest rates the question is when and how much. I was just curious if anyone has calculated there Real Net Worth as he describes it in the book. Instead, I think that we will simply see real wages fall relative to inflation. Once your account is created, you'll be logged-in to this account. Your first guest was the same first guest that I had way back in 2012, Mr. Money Mustache (which was a great episode). Is Scott Trench Married Yes. As a fellow beer lover, I highly recommend you get to Colorado for a visit! Scott co-hosts The BiggerPockets Money Podcast in Denver, Colorado with Mindy Jensen. By clicking the 'Subscribe Now' button, you agree to our Terms of Use and Privacy Policy. On todays show, Im excited to introduce Scott Trench from BiggerPockets.com. Author. But on the other hand, if I wasnt saving, if I had no financial runway, it would be too risky to leave. What Scott did was exactly what we did since 2010, except we did it differently (regular 2bd condos, not multi-dwelling places) and location (SF, bay area). Scott is a lifelong learner of personal finance, real estate investing, sales, business, and personal management in the United States. My odds of success of winning this hand based on what I know are 70%. So, I think that youre absolutely right to have a passion project, whether its personal finance-related stuff or a podcast or a blog or a project or a business in something else that you just want to work on with your free time. Denver, Boulder, Longmont (stop by and say hi to Pete), and Fort Collins are all full of excellent breweries. I think that once you have a 50% savings rate on a median income or greater, thats when all of this kind of really starts falling into place and the opportunities begin multiplying in so many different directions for you. Rich Dad Poor Dad: 20th Anniversary Edition. I think that, sadly, those at the highest risk are middle-class American homeowners. So hopefully, it will happen. Thats very cool. Mad Fientist: Perfect! The only caution wed give is currently you can no longer have positive cashflow in bay area as a real-estate investors, maybe in other part of the country, but not northern cal. Going back in time to the 1970s and 1980s, weve seen that the Fed is willing to push interest rates as high as they need to go to fight their first enemy inflation and that they are willing to conduct brutal monetary policy that affects jobs to do that. Scott Trench: Yeah, sure. Scott Trench: Yeah, you know, I had the good privilegeand this is not like an intelligence thing. And I think for that median income earner starting with zero, its with that savings position. Rising interest rates are likely to impact cap rates on properties, which will compress values and limit exit and/or refinance options. So, thank you for that. A family that reached financial independence while raising children. Scott Trench: But yeah, that interest in personal finance is kind of what spurred my ability to save and the accumulation of my first $20,000 to $25,000 for me. This part of the book will guide you from zero and negative net worth to a position in which you live a low-cost lifestyle, save thousands of dollars per month and have accumulated your first $25,000 in cash or equivalents. Im planning to invest in funds and a pension too, although most of the FI advice I found on Internet is US related so Ive been spending a while translating everything to ISAs, SIPPs, etc. If somebody is interested in getting started in house hacking, what would you recommend as far as getting duplexes? Get advice on achieving your financial goals and stay up to date on the day's top financial stories.

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