And thats kind of where we start getting into part two there which is $25,000 to $100,000. 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. So the best place to find me is actually on Bigger Pockets. Congratulations! More luck is involved in rapidly going from $25,000 to $100,000 than there is from going from zero to $25,000. They help ordinary Americans build wealth and achieve financial freedom through real estate investing. But you can next week go to the grocery store, plan out your meals, and save a few hundred bucks on your eating billand eat healthier and bring that advantage into your life. 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 Trench: And I do it while Im on the clock. Scott is a lifelong learner of personal finance, real estate investing, sales, business, and personal management in the United States. Your first guest was the same first guest that I had way back in 2012, Mr. Money Mustache (which was a great episode). A family that reached financial independence while raising children. Yeah, no, absolutely. I think that the two things that come into play there are going to be entrepreneurship, asset creation, and then investing. Ive listened to probably half of the episodes so far. I love helping spread the message of financial independence to as many places as I can. Andrew Ross Sorkin - $10 million He serves as the CEO of BiggerPockets.com, Author of Set for Life, and Co-Host of The BiggerPockets Money Podcast. Scott Trenchis the epitome of the "grind until you shine" real estate investor. . . And theyre fine with that. The next phase is getting that first $100,000. Youre now president of Bigger Pockets which is huge. 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. Mad Fientist do you agree, that in UK its harder to make this work? So, for example, a house hack the way I look at it through my lens was I bought a duplex for $240,000 here in Denver in about late 2014. So you have no financial runway. 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. DO NOT Sell My Personal Information. It just didnt work out. 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. This is it!. 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). Search by Name, Phone, Address, or Email So, you really have to start somewhere. So, I think thats really important. Poker players, at least the ones that are really good, have this really good outlook on things where theyre like, Hey, heres the hand Ive been dealt. And both Mindy and I are a little bit morehow do I describe it? Some of it is obviously also luck. And I believe that by the end of next yearso thats the end of 2019that Ill be able to get approximately $925 to $1000 per unit, plus I can pass on the utility fees to the tenants. It wasnt in the nicest area. Trench is the author of the 2017 book Set for Life. Scott Trench is married to his lovely unnamed wife. I have my eye on maybe branching out into some other types of investments. Mad Fientist: Right! Starting with little-to-no savings, he was able to work his way up to his first rental, his second, and now his thirteenth. 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. All the index fund investors were seeing strong returns. I think a 50% percent savings rate kind ofget to a median income, and then get to a 50% savings rate. Mad Fientist: Yeah, this is a long time coming. Im going to put that book in the show notes, a link to the book in the show notes. You made the right choice. Scott Trench: Yeah, sure. So yeah, the Bigger Pockets Money Podcast, how has it been going? 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. 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. And shes a poker player. His parents brought him up in the United States. The first $25,000 was focused on frugality and cutting expenses. Accumulating a lifetime of wealth in a short period of time involves working harder and smarter than the average person, and Scott Trench--investor, entrepreneur, and CEO of. 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 theres a ton of great stuff there. Scott is the CEO of BiggerPockets.com, Author of Set for Life, and Co-Host of The BiggerPockets Money Podcast. Have you enjoyed it? Scott Trench: Oh, wow! Rising interest rates are likely to impact cap rates on properties, which will compress values and limit exit and/or refinance options. We both have kind of a similar approach to money in general. But you wrote a great book called Set for Life. He is 31 years old. She and her husband interviewed me in #26. At the time that were recording this, Im finding it very difficult to find properties. Scott Trench: Yeah, I got promoted to president of Bigger Pockets maybe last Tuesday I think. Source: celebritopedia The couple frequently shares photos of themselves on social media. Any investing information provided on this page is for educational purposes only. Currently, real wages are still at relative highs, and asset prices are finally moving back towards what seem to be more sustainable valuations. So that would be cool to read that. Required fields are marked *. SNAP gives eligible low-income households extra food-purchasing assistance to supplement food budgets. And I knew that my salary at financial analyst 2 would be about $56,000 to $58,000 (again depending on performance). Turns out our guest today, Scott Trench, found a lower paying dream job at a startup. But having that thing that youre working on as youre trying to reach financial independence, then hopefully, by the time you reach it, youll have something there that youre really passionate about and that you can spend a lot of time doing. This is why I studied finance in general, in college and with the start of my career. I think it starts with a basis in frugality, but then theres an aggressive investing component. If you dont have that option, then you are stuck. Mad Fientist: Very cool. I think that this asset class and I broadly bucket large multifamily, NNN and other such real estate into this category is much more exposed to rising interest rates than people think, and there could well be some pain here. Share book. Mad Fientist: Absolutely! Mad Fientist: Perfect! What Is A 529 Plan and Where to Open One in Your State, How Much Should You Have In A 529 Plan By Age, How To Use A 529 Plan For Private Elementary And High School. Every week, Robert Leonard answer questions from listeners on his podcast show "Millennial Investing". For example, if I were single, I could rent out my spare bedroom in my house. Yes. Yeah, thats a great way to look at it. When (if ever) do you think the real estate bubble we are in will burst? I was listening to your podcast (which well obviously talk about here soon as well). Mad Fientist: And thats why I love these three distinct phases so much. So it gets harder to save, and you need way more the more your average monthly spending increases. I bought a house in Edinburgh and Ill definitely be able to do house hack in the short feature with the prices in this city. even while working full-time, earning a median income, and making up for a negative net worth. And now that Im there, I guess I technically lean FI, but I have more work to do if I want to get to the point where I can support maybe an upper middle class lifestyle in a good school district and a family one day. He earns his wealth from his career, therefore, he has amassed a fortune over the years. Two or three years ago, I actually [00:01:46] Bigger Pockets. We go into just incredible personal stories. So, its kind of the opposite of FI at this point. 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. Nice episode! But if it can cashflow as a piece of investment real estate, then you can always decide to continue living there or keep it as a cashflowing rental. And once you have that financial runway, moving into step two here, were trying to get to about $100,000 in investable liquidity. He uses the example of a quadplex I believe in that post. Together, they reside in Denver, Colorado. And it currently rents for $1400. more attainable than ever. Now, of course, you cant make any bets in the first place if you have no wealth and spend all that you earn. I was interested in that line of work, but I didnt want to be tied to it for 40 years. So, my question was, Has she rapped yet? because she is actually a really good rapper. As a fellow beer lover, I highly recommend you get to Colorado for a visit! 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. Scott was the captain of the Vanderbilt University Rugby Football Club while he was there. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). No, all of these things work. So were wishing him the best with those. And you mentioned in the book something called scalable careers, which thats a great phrase that I dont think Ive really heard before. I couldnt agree more. 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. I definitely still have some work to do to get to there. His net worth is estimated to be $1.5 million. Subscribe to our YouTube Channel and get one extra LIVE episode from us per week. In this book, author and investor I invest in index funds. Thats true for the average and the median American, but not popular to point out. 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 . Now to strategize on which to sell and when to acquire my forever home. 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. But on the other hand, if I wasnt saving, if I had no financial runway, it would be too risky to leave. So thats not scalable. I started my investing adventure as a pimple-faced 22 year old when I bought my first house/investment with $22k and that has laid the foundation of my FIRE journey in my 40s. One, go find a new job. And thats when I found your show, some time in that timeframe. And yeah, youre 27 and youve done a ton of crazy, amazing stuff so far. My odds of success of winning this hand based on what I know are 70%. Survey: Even With Higher Expenses, Most Student Loan Borrowers Are Ready To Resume Payments, Learn the three phases of financial freedom, Discover the secrets to creating an efficient lifestyle, Create your strategy to replace your wages with passive income streams. Also, you have nothing to invest, so you cant get a higher return on your invested dollars if you have nothing to invest. The math is telling us that the biggest parts of your spending are in housing and transportation. Start tracking your own financial progress with these money management apps. 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. But you get to this $25,000 or this one year of runway, and now you have a lot more options. So, yeah, Bigger Pockets Money Podcast. 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.. This has been a big party for many years. But do have any other questions about the. Building wealth is always possible, even while working full-time, earning a median income, and making up for a negative net worth. David Greene shares the exact systems he used to scale his I really appreciate it. And theyre just like, I dont know what Im going to do after I retire. The money is not the fear anymore. Scott Trench: Yeah, you know, I had the good privilegeand this is not like an intelligence thing. real estate business from buying two houses per year to So, I mentioned your podcast briefly, but I definitely want you to talk about it because your co-host is one of the people that has been on my show probably more than anyone else. Melissa hence worked as a reporter for the Great Neck Record and later on began her television career working for CNN Financial News and Bloomberg. And so, I put down 5% with an FHA loan. 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. On the flip side, wealth inequality skyrocketed as asset prices inflated with low interest rates. And I also have a quadplex now that I bought as a regular investment property. And that is where I became interested in real estate and started listening to Bigger Pockets and becoming a fan of the company there. Shes good. Are there any links in particular youd recommend? If I ever make it out to Scotland, Ill have to come and check it out. Its a powerful way to build wealth over the long term and accessible to most Americans earning a median or higher income. - What else would be considered an asset in his model? You can change your choices at any time by visiting your privacy controls. Georgeta Orlovschi: Know about Sebastian Stans Mother? In addition to his career, Scott is the author of Set for Life which was published in 2017. Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. Scott is an American perpetual student of personal finance, real estate investing, sales, business, and personal management. And I think focusing on frugality at that stage absolutely is going to be the biggest impact you can have on your finances. And so, its all about increasing your odds of success I guess at this point. In this show, he talks with successful entrepreneurs, . If somebody is interested in getting started in house hacking, what would you recommend as far as getting duplexes? So, I think that from a big picture standpoint, I was able to think about it in a pretty rational way and have the odds in my favor for success. I would have been FI in my 30s. Thanks to both of you and him. And this is something that I really am looking forward to diving into today in the interview because I think its a really powerful way to make the journey to financial independence not as daunting. Im now working very long hours and trying to figure out how to grow the company and all that kind of stuff. Set For Life: Dominate Life, Money, and The American Dream. This is what I need to be doing and how I need to be moving forward with my life and with my finances. Calculate your FI date and graph your progress to FIRE for free in the Mad Fientist's FI Laboratory! At The College Investor, we want to help you navigate your finances. Scott is of white ethnicity and has American citizenship. Probably worth a listen. Its written for a median income earner that is starting with little to no assets but wants financial freedom. I have a very sizable chunk of my money in index funds for that exact reason. Scott was born in September 1990, in the United States. Dont get into real estate investing if you arent willing to invest the time up front to learn this business. One of my favorites which will be coming out soon is with David Greene whos a real estate investor. 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. So hopefully, it will happen. Mad Fientist: And I really think you make your own luck too to an extent as well. And Im going to hopefully get it out of the library as soon as I can because that sounds really good. There needs to be more FI conversation for those with children. It was definitely worth talking to youlots of great advice. If you lose your job, youre screwed! We also get your email address to automatically create an account for you in our website. Congratulations again on the promotion and the book. Scott Trench is the author of "Set for Life," CEO of BiggerPockets and co-host of the "BiggerPockets Money" podcast. Its been a whirlwind since then. Just search my name in the search bar, Scott Trench. Mad Fientist: Yeah, thats absolutely crazy! Thats great. Mad Fientist: Very cool! No, heres what I was thinking. And this brings up a really cool thing that I liked in your book, which I havent even mentioned yet. Scott Trench: So the quadplex that I purchased, I bought it for $355,000. You have no ability to even attempt to put yourself to put some money on that or take the shot on that new career or whatever. 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. The rents there are $800 per month on each of the units. So, thank you for that. So, if thats something youre interested in, head to MadFientist.com/advice. Im not so sure. Who Should Read Set For Life: Dominate Life, Money, and The American Dream? 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. Mad Fientist: Oh, nice. I think that, sadly, those at the highest risk are middle-class American homeowners. This is what I want to do with money. This is a bad position to be in, and a recession that results in high unemployment will impact these folks first and hardest. I know Ive had Chad Carson on the show, and weve talked about it in the 1500s. I think its going to take me a good bit of time here. Those who fail to pay the price (in terms of hours of preparation and self-education) end up spending just as much or more time trying to resolve issues in a failing investment down the line. 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. The start of my career to grow the company and all that of! Called scalable careers, which will be coming out soon is with david Greene shares the exact he... 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