Scott Trench: Yeah. And no one can go in and audit them and figure that out. Scott serves as the Co-Host of The BiggerPockets Money Podcast in Denver, Colorado alongside Mindy Jensen. Rising interest rates are likely to impact cap rates on properties, which will compress values and limit exit and/or refinance options. I put down $12,000. We were fortunate enough to get the good advice from someone who actually did this since 70s and retired a multi-millionaire in 90s (in bay area, which is quite a feat), and perfect timing too (he told us to buy in 2010, when no one would touch real-estate since the 2008 crisis). Mad Fientist: Right! Your email address will not be published. Its about a little over 10% of your savingsthat means you spend around $4000 a month. But two, youre decreasing the amount of money that you need to produce financial runway. even while working full-time, earning a median income, and making up for a negative net worth. So, yeah, Bigger Pockets Money Podcast. This is like the most opportune time for low cost entry into any sort of business world you can imagine which is super exciting. 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. Its unlikely. We both have kind of a similar approach to money in general. The thing I liked most about the book was that he broke the journey to financial independence down into three distinct stages, each with their own focus. Its not to save the economy to support the Biden Administration. I was able to reduce my monthly payments. Mad Fientist: Thats cool! The next $75,000, youre looking at housing and income generation. So that would be cool to read that. So thats how I managed to lose money investing in stocks I guess. Scott Trench: Yeah, and I think a dollar saved is better than a dollar earned because of that tax advantage. 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. So theyre not even recognizable by name, the companies? 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. Scott Trench is married to his lovely unnamed wife. He has some family things that are going on. This has been a big party for many years. So the best place to find me is actually on Bigger Pockets. 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. . Scott Trenchreal estate investor, co-host of the BiggerPockets Money Podcast, and CEO of BiggerPocketsdemonstrates how to accumulate a lifetime of wealth over a short period of time. One of my favorites which will be coming out soon is with David Greene whos a real estate investor. 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). For the most part, these folks will have just one income stream their job and they will have massive leverage, perhaps five times or more their annual income, against a single large asset that comprises most of their net worth: their home. He is 31 years old. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). Scott Trench: Well, I think we both share a lot of interest in personal finance. The author, Scott Trench, has some very wise . So thats what I did! Enjoyed the Podcast, great to find the BiggerPockets Money Podcast too and enjoyed Scotts book (audible) and the three levels FI! Its not like I bought an [00:29:20]. Scott Trench: Yeah, sure. But also, a dollar saved, at least a dollar of lifestyleyou know, if you can reduce your average monthly spending by a thousand dollars, thats better than increasing your average monthly income by a thousand dollars for a couple reasons. And Ill see you next time. marion dupont scott net worthNitro Acoustic. Once your account is created, you'll be logged-in to this account. Mad Fientist: Very cool! Of course, that logic works both ways; and, if interest rates come back down quickly, these types of investments might perform even better. Set For Life: Dominate Life, Money, and The American Dream. So one of the problems that a lot of people have I think when it comes to finance is theyre unable to take any risk whatsoever. Cheers! And that is my question. These offers do not represent all available deposit, investment, loan or credit products. Now to strategize on which to sell and when to acquire my forever home. Mad Fientist: And I really think you make your own luck too to an extent as well. I cant answer that question. Top Money Advice for Periods of Inflation, 7 Classic Finance Tips That Will Change the Way You Think About Money. Also, you have nothing to invest, so you cant get a higher return on your invested dollars if you have nothing to invest. But really, what were after here is a strong personal financial position with a good savings rate, a strong income, strong investment returns, and then the opportunity, if desired, to go take advantage of entrepreneurial pursuits. And so what Im trying to do with Set for Life and with some of the other things Im doing is try to help people put themselves into a position where theyre saving enough, where leaving a career track like that where they have very limited upside becomes the bigger risk than taking a chance on something that they believe to be a good opportunity. Im now working very long hours and trying to figure out how to grow the company and all that kind of stuff. So, I always end all my interviews with one piece of advice youd give to somebody whos starting on the path of FI. Its hard to see how unemployment can increase right now in a meaningful sense when the minimum wage is this low. Source: celebritopedia The couple frequently shares photos of themselves on social media. But when youre putting yourself into a position to take advantage of opportunities, and you do have options, and you do have that buffer (like that first $25,000 that we talked about), and youre able to take advantage of things that other people cant, and then yeah it may look lucky after the fact. Fun, entertainment, healthcare, insurance, all of that falls into that last third. Scott has dedicated his career to helping ordinary Americans build wealth in part through real estate investing. I believe that in a market decline, this cohort is likely to experience some pain in the form of falling prices and/or rents, but that their long-term focus, fixed interest rate debt and multiple income streams (most small landlords work a full-time job in addition to owning a few rental properties) will put them in a relatively strong position to weather a market downturn. DO NOT Sell My Personal Information. This is a bad position to be in, and a recession that results in high unemployment will impact these folks first and hardest. So you have to have some baseline of stability, and then work as hard as you can to acquire excess so that you can then go on to take these chances in life that you believe, to the best of your ability, are great, and then obviously do whatever work you can to increase the odds as much as you can to your favor. But its funny because I hear these people, theyre like, Oh, Im very well into FI. Like many people who are successful in the music industry, Storch became a wealthy man. And yeah, hopefully, Ill speak to you soon. But for those who may not have heard that episode, could you just describe what house hacking is? 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 written for a median income earner that is starting with little to no assets but wants financial freedom. And I definitely recommend everyone to check it out. Scott Trench: Well, thank you, Brandon. Scott Trench: But well get her to rap on one of the future ones coming up. So, the Bigger Pockets Money Show started as kind of a spin-off, an alternative to the Bigger Pockets I guess real estate podcast. And thats why I really like how you laid out the book, is because its like, Okay, you may not have that much money to invest and you may feel like its a long way out. Scott Trench: I live in another duplex doing the same thing. What Are Qualified Expenses For A 529 Plan (And What Doesnt Count)? 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. And its about putting together a plan that makes the most sense to you based on the perspectives of smart people who have been there and that resonate with you. Scott Trench: One of the great things about house hacking is its a huge spectrum. Scott Trenchis the epitome of the "grind until you shine" real estate investor. I just think its lower odds of success than maybe focusing on savings first. 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. . Scott Trench: Yeah, absolutely. 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. I know a lot of people that would be happy with a raise of that level. And once you have that financial runway, moving into step two here, were trying to get to about $100,000 in investable liquidity. I think that different types of real estate will be affected differently. Invest in real estate and never run out of money! He earns his wealth from his career, therefore, he has amassed a fortune over the years. Scott is a lifelong learner of personal finance, real estate investing, sales, business, and personal management in the United States. Hes doing some amazing stuff, which Im really excited to talk to you about. BiggerPockets is a complete resource for anyone looking to succeed in the world of real estate investing. Start tracking your net worth with Personal Capital using our link. Probably worth a listen. But on the other hand, if I wasnt saving, if I had no financial runway, it would be too risky to leave. So, if you spend $40,000 per year, if thats your target goal, and you have $1 million in index funds or wealth in general in your portfolio, youre likely to sustain that in perpetuity. The amount of Money world you can imagine which is super exciting part through real estate and never run of..., Hey, real estate will be affected differently how unemployment can increase now. 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