Mindy: Welcome to the BiggerPockets Money podcast, Finance Friday edition, where we interview Amanda and talk about lean fire, portfolio optimization, and life transitions. Hello, hello, hello. My name is Mindy Jensen and joining me today is the man, the myth, the legend, Kyle Mast.
Guest 1: Thank you. I don’t know that I can live up to any of that, but it’s good to be here.
Mindy: Kyle and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you’re starting.
Guest 1: Whether you want to retire early, travel the world, go on to make big time investments like real estate, start your own business, transition out of a job you don’t like, we’ll help you on your financial journey to get money out of the way so you can launch yourself towards your dreams.
Mindy: I am very excited to talk to you today. I’m very excited to talk to Amanda today because she has a real estate portfolio and we’re at Bigger Pockets and we like to talk about real estate. But one of her properties in particular, I don’t really love and she doesn’t really love. and I don’t think you really love it either, do you?
Guest 1: Oh, probably not. Yeah, it’ll be a cool conversation because they’re kind of in a life transition point with, you know, their jobs are, their work life is really intense right now. There’s not a lot of family time. They’ve got some young kids and they’ve, they’ve done well with some investments and they’re just trying to figure out what the next step is. So, yeah, it should be really good.
Mindy: Yeah. I think that a lot of times people will buy a property and then feel married to it so they don’t ever go back and reconsider it. So one of the things that we give Amanda today is some homework to go and run the numbers for keeping the property and run the numbers for selling it outright. I am excited to see what happens with her property. Uh, but before we talk to Amanda, I have to tell you that the content of this podcast are informational in nature and are not legal or tax advice, and neither Kyle nor I, nor Bigger Pockets is engaged in the provision of legal, tax or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal, tax and financial implications of any financial decision you contemplate. And while Kyle is a CFP, he’s not your CFP.
Guest 1: That is correct. I am a CFP. I have done this professionally in the past, but I am not your CFP, and just trying to help and give some ideas here today.
Mindy: Yes, he does not have enough information about your specific situation or about the specific situation of Amanda to give actual CFP level advice. This is more of, hmm, this is what I would do if I had these same set of circumstances and goals. So, without further ado, let’s move on to our money moment, Kyle. We have a new segment on the show called The Money Moment where we share a money hack, tip or trick to help you on your financial journey. Today’s money moment is, are you having trouble with impulse spending? Call your credit card and debit card companies and have them set a personal daily and monthly limit. Many credit card and debit card companies allow clients to evaluate their own finances and decide on a personal spending limit. Some companies that allow users to set these limits are Discover and Capital One.
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Mindy: Today’s guest is Amanda. She and her family have reached leanFI through several rental properties. Yay! But they’re too lean to quit all forms of W-2 jobs. Amanda and her husband are both burnt out in their current positions working at a coal mine and are looking for guidance on their next financial moves. Amanda, welcome to the Bigger Pockets Money Podcast. I’m so excited to talk to you today.
Guest 2: Yeah, thank you, Mindy.
Mindy: We are going to jump right into it because we have a lot to discuss. Let’s look at your money snapshot. I see a take-home salary of approximately $6,200 a month after paying into 401k and index funds after insurance and taxes. So that breaks down to W2 income, VA disability income, and approximately $39,000 annually from rental income.
Guest 2: The rental income looks like it’s about $4,200 a month.
Mindy: We actually don’t use any of that except for back into the rental business so far. So far we’ve just been snowballing it into like um, paying off, you know, the burr and um, different expenses and then acquiring new properties.
Mindy: an hour. Okay. I’m seeing a total of monthly expenses at around $8,800 a month. Home improvement, 331, groceries and restaurants totaling almost 1700. How many kids do you have?
Guest 2: I have four kids.
Mindy: Four kids. Okay. And are any of those kids boy kids?
Guest 2: Uh, three of them are boys.
Mindy: Okay, so I’m guessing they eat like linebackers. Although so do girl kids, so it’s not like you’re saving a lot of money if you had all girls, uh, because I have two girls and they eat like crazy too. But 1,700, I’m wondering if there’s anything we can do to bring that grocery budget and restaurant budget down. We’ll talk about that a little bit later. Uh, very low alcohol budget. We have a husband work budget, and this is more like gas to get to the grocery to get to work, uh, work clothes, snacks, things like that, $160 a month. Healthcare including the gym, the daycare, vitamins and supplements, Dr. Copay, medical or medications, things like that, $771. I don’t really know that there’s much you can do to reduce that simply because there’s six of you and we live in the United States and it’s expensive here. Um, automotive, $984. We are definitely going to talk about that. Utilities, $584. That seems a little bit high and I’m wondering if that is just for your personal residence or if that is for all of the rental properties that you have combined. Uh, kids, childcare and small activities, $1,300 a month. Eventually that will go away, but that looks like something that’s going to be around for a while. Clothing, $200 a month, shopping $45 a month, travel, $832 a month on average. Gifts, $50, miscellaneous 200, mortgage 1,600. That’s a real win, the $1,600 mortgage. Um, so total 8800, total income 10,400. There is a bit of a delta, but 1,700 for food, 800 for travel, almost $1,000 for auto. These three expenses make up $3,500, which is almost half of your total spending. That is, I mean, we can’t really cut out food, but we can maybe reduce that. The travel could be cut out completely and that money could go towards building a reserve fund or, you know, investing in a different way. Um, $1000 for auto, I know we have to have a conversation about that, so we’ll do that in a little bit. But let’s look at your investments. You have approximately 93,000 in an index brokerage and 146,000 in pre-tax retirement accounts, 239,000. That’s great. But we also have a whole lot of rental properties. I counted it up, it looks like there’s eight units that are soon to be nine units, a duplex, two single family homes and a fourplex that’s being turned into a fiveplex.
Guest 2: Yeah. Did we count? I’m the duplex, I mean I live in one half, so it only counts as one right now.
Mindy: an hour. Okay, so that is that we’ve got seven, eight total units but seven right now that are being rented out. And so your debt is a little bit skewed. You have zero personal debt, that’s great, but you have $563,000 in debt that is, well, all mortgages.
Guest 2: Mhm.
Mindy: Okay, so I think that’s fair to say that you have all that debt because there’s mortgages attached to them. You have a five-year goal of doubling your rental income and a 10-year goal of a million dollars in a stock portfolio. So let’s look at your money story. Where did you start from and how’d you get here?
Guest 2: Well, I came from a home that was probably lower middle class income and um, I remember, you know, my mom doing cash envelopes and we always drove very used cars. So I grew up pretty frugal. We didn’t do any extracurricular activities, um, things like that. So I guess I’ve always been kind of very aware of how much I’m spending and saving. I, you know, did community college the first year to keep my student debt very low. And um, I don’t know, that’s kind of my background, so I kind of, I did the Dave Ramsey there right out of college and, um, transition out of that after, I don’t know, two or three years when I wanted to do a little bit more than that.
Mindy: and let’s talk about your rental properties. You have a duplex that is a house hack. You’re living in one side and renting out the other side. My notes say that you have zero reserves. The property is valued at $266,000 and you have a loan balance of $264,000. an hour. How did you get a $2,000 mortgage on a house like this?
Guest 2: Okay, so that was a huge burr project. Um, we kind of ran into it off market and bought it from the seller and it took 18 months to rehab and we moved into one side, finished the other side, and then cashed out with a 100% VA loan. Um, when we say the reserves are zero, it’s just because it’s my personal residence and we would use our own emergency fund if we ever needed anything out of that.
Guest 1: What’s your plan for this property? This duplex that you’re living in? Is it a long-term or yeah, are you looking to live there like five years? Are you planning to move out of it, do another burr? Um, you don’t have to have the exact plan, but in general, what are you guys thinking on where you’re living right now?
Guest 2: Uh, currently we, we went ahead and furnished it, uh, since we had some experience with short-term rentals, but we’ve been doing medium-term and having, you know, longer guests. This summer, I broke it up a little bit to have a few more guests with the busier season, but we’ll probably stick with one or two guests over the winter. And then probably mid-term rentall the side we move out of when we decide to move. We are kind of at a inflection point with life, so maybe we want to move soon, maybe we don’t. We’re not really sure what we want to do with when when we want to move out.
Guest 1: And are all these properties in Wyoming, like close to you, or no?
Guest 2: Uh, no, that’s part of our struggle. We have two in Missouri. um, the one we live in locally, and then we have one in South Dakota, the multi-family. So they are very spread out.
Guest 1: How did you end up with the properties in the different states? Did you go visit or do you know somebody? How did that work?
Guest 2: The two Missouri ones, we lived in St. Louis for seven years before moving back to our like hometown where we both were born. And our former primary was our first long-term rentall, and then back in 2018, it kind of was real slow. I think it was vacant for four months under a property manager. And that’s when we decided we got to do something else, and we went ahead and furnished it, put it on Airbnb, and that’s at the same time that we bought the second one in that in a similar area in St. Louis, because we were real familiar with the neighborhoods, and we did both of those as short-term rentals right off the bat for our investing journey.
Guest 1: Okay. And what what’s been your experience with those? Has it been a good experience with the short-term rentals and do you plan on keeping them in the long run?
Guest 2: Yeah, we really like them. Uh, I prefer managing the short-term rentals and doing that, that’s kind of my job outside of parenting. And I prefer it a lot compared to long-term rental, uh, management. So I have outsourced the long-term rental uh, the multi-family and I love doing the short-term rental management and my medium-term rental.
Mindy: How is their performance? It looks like short-term rental number one, you’re making $1,000 a month. Is that net?
Guest 2: Yeah, that is net, but it that’s the one that doesn’t have a mortgage on it.
Mindy: And the short-term rentall number two is $841 a month.
Guest 2: Mhm.
Mindy: How frequently are they booked?
Guest 2: Um, they’re high occupancy, over 85% for sure.
Mindy: Oh, nice. Okay.
Guest 2: Yeah, I mean I’m definitely nervous about regulations. They’re happening everywhere. Uh I’m sure St. Louis is going to get some in the next year or two. So with that landscape change, they may have to change we may have to pivot and do something else.
Guest 1: What do your loans look like on the different properties as far as, uh, the ones that you do have loans on, what are the interest rates that you have on them or approximately? Are we talking like low interest rate era or high interest rate era rates?
Guest 2: Uh, we so the one our former primary has no um, regular mortgage. We do have a Heloc that we have tapped into to gain other properties. Um, that balance or that interest rate’s low. Well, it’s about to change. I don’t know what the renewal will be, but it was at 4.5%. Uh, the mortgage we have on the second St. Louis property is around 4. 4 or 4.5. So also pretty low. Um, and a low it’s a $100,000 or $99,000 balance, so kind of a they’re both smaller homes. So that one we when we, uh, cached out this bur house hack, got the primary, you know, occupancy rate back last fall, we took all that money and just went ahead and paid off the multi-family, which was adjustable and would even I think we had a year or two left, but it was going to readjust, so we went ahead and just paid that off and now we’re going to refinance and cash out on that at a higher rate. It’s going to be like seven, but that way we get all that equity that’s grown over the last two years, plus we added the fifth unit. So it should appraise pretty high compared to the purchase price. So another bur hopefully. One
Mindy: comment I have about this. and Kyle, correct me if I’m wrong, but if you’re going from a four unit to a five unit, that goes from a residential mortgage to a commercial mortgage. A residentialall mortgage is a fixed rate for however long you’ve locked it in, unless you have an adjustable rate mortgage. A commercial mortgage is an adjustable rate mortgage. It’s, it’s um, fixed for a set amount of time like three years or five years, and then it adjusts again.
Guest 2: Mhm. Uh, have you run the numbers to make sure that this is what you want to do as opposed to maybe opening up a Heloc? Can you open up a heloc on a commercial property? You might not be able to. Yeah, you can. I think the rates were worse, uh, in this case, with I’ve talked to two lenders. um, our previous loan was also not um, a normal residential loan because of the way the units, it’s like a large multi-family and then an accessory dwelling unit in the back. So it didn’t qualify for like a traditional four family. um, anyway, so it’s I’m basically going from one loan to a similar loan. Uh, the rate did increase, but we’re going to get a lot of cash as the trade-off.
Guest 1: So, I I’m jumping back to your short-term Reynolds here. I mean those seem, you said you’ve been you’ve enjoyed those ones. I mean for the the value of the houses and what you’re getting, you know, on a $120,000 valued short-term rental, you’re making $1,000 a month on it, um, at net, you know, after all expenses, no appreciation, no deprecia, you know, just your cash flow. I mean, that seems, it seems decent. and then your other one too, the value of 130,000, um, you know, the return the return here doesn’t seem too bad. You’ve got some pretty that well, let’s see, um, you got that helock on that first one. So is that net the short-term rental, the first one that net of $1000 a month, that’s after paying the Helock interest, right?
Guest 2: Yeah, it’s interest only, so it’s I mean it’s only a couple hundred dollars a month.
Guest 1: Okay, so that’s what’s keeping it cash flowing well there. but then the other one is still cash flowing $841 a month and you have a $99,000 loan on a $130,000 property, is that right?
Guest 2: Right.
Guest 1: Okay, so that’s decent cash flow on a property that size with a loan on it. Do you do
Mindy: anything when it gets closer to a time that the property is vacant? Do you do anything with the pricing to try and entice somebody to come in and rent it out? I’ve heard two schools of thought on this. Sometimes people are looking to get as many days of occupancy as possible, and sometimes people are like, look, I don’t want somebody who’s making a last minute plan because those are people that are having parties.
Guest 2: I tend to agree with the first camp. we have had pretty rough luck with a few guests. So I do not like I have a threshold and I don’t I just will be vacant rather than have um, you know, you still pay utilities and you know, toilet paper supplies and stuff like that. So your expenses are not zero even if there’s somebody there at a low rate, if that makes sense. So it I guess I’m saying there I feel like there’s a threshold where I’m I’m not willing to go below a certain nightly rate. So I don’t really do a whole lot to try to get um, I do allow one night bookings, which a lot of short-term rentals do not. um, and we’ve been okay with that as long as they have a good review prior to staying with us.
Guest 1: 85% sounds great. um, but you might want to check on the area because if they’re too high, if you’re higher than what the occupancy is on average for the area, you might want to look at your pricing a little bit and you might be able to price higher, make just as much or more and not have people in your property quite as much, or if it’s low, which I doubt the occupancy is low, um, with 85%. But, you know, you could be pricing a little bit too high to begin with, but there’s, yeah, you know, there’s AirDNA, a couple other sites that you can check to to see the pricing in the and the comparable on that. Um, you know, some we’ve been asking kind of detailed questions on what’s going on with the rentals and it just kind of helps us give gives us a better idea of where how you feel about the rentals and how you feel about the situation that they’re in.
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Guest 1: Maybe we’ll transition for just a little bit to see, you know, like what what your goal, you know, we kind of covered the goals that you have. Um, maybe talk a little bit about you guys are at what you called lean fi, you you are not enjoying your jobs right now. Is that the or you’re ready to be done with them? Kind of tell us what what decisions you’re looking at at this point in life and what we can help you talk through to maybe have some options going forward.
Guest 2: Yeah, so we’re we’ve been working kind of grinding pretty intensely these last four years to um, my my husband’s the one with the W2. um, and his job is pretty um, not quality of life friendly. And so my job as the full-time caregiver has also been a little bit, I’m I’m burnt out on that because he’s not his job doesn’t allow him to help as much as say a typical job. Um, so we’re both burn out after four years of that schedule as well as adding all these rentals to to our life. Um, so I managed those with my time plus taking care of the kids and then he works this shift work that is pretty brutal as far as family life goes.
Guest 1: Yeah, definitely.
Mindy: Have you guys given any thought to what you would do after you leave your current jobs? Like for income, would you consider switching employment?
Guest 2: Yeah, I think so. I think that’s kind of where we’re at. I I mean I would love to maybe transition as the full-time work, you know, be employed full-time, and Trevor would love to be a stay- at- home dad for a while. Um, we’re just kind of in that weird spot where do we leave his high paying job now, do we try to stick it out a little longer? um, his background is not as friendly. I mean his work experience, he’s military, um, private contracting, nonprofit and now at a coal mine. So it’s kind of like a weird hodgepodge of experience. Uh, mine is in graphic design, so it may be could be more marketable. However, I’ve been out of the workforce for um, a decade. So that’s also very intimidating.
Mindy: Have you given any thought to doing anything freelance?
Guest 2: So I do have like a very small amount of freelance work, but yeah, that I suppose would be very flexible. So that would probably be a good place to start. Um, getting clients is also quite a bit of work. So I think that’s where I I haven’t had I’ve been putting all my ex extra time into the rental business and growing that and so I don’t really focus on any of my own paid employment.
Guest 1: So ideally, I’m just trying to get a feel for what you guys would really want to be doing, you know, ideally would you, I’m trying to think the best way to word this, would you would you want to be like flexibly employed, maybe managing several short-term rental properties since that you kind of mentioned that that’s something that you enjoy, and then have your husband to work maybe be able to come home more often, have a less stressful job with more regular hours, would that be like a solution that would kind of work for you guys or to be able to move you in the right direction because it sounds like we we need to find kind of a medium ground because there’s no like we need to quit right now, go do the real estate or quit and just go do graphic design, but it take, you know, there’s some lead time for that. So like what’s a transition possibility or how do you see like the graphic design is a good option, but when you were talking earlier, I just the fact that you mentioned that you enjoyed the short-term rental piece and that those are cash flowing and you’ll probably get better at managing those over time that maybe that’s something that you know, you’ve basically already built client tell or maybe you’ve got some experience and it’s you’re not 10 years out of that workforce, you’re fresh and you’re you’re in it right now and you know how to how to do it. Um, is there a possibility that you could focus more on that and even uh, you know, I don’t know this multi-family property how how attached you guys are to it, you know, you’re going to refinance and pull the cash out of it. Is there any option that you would want to unload that one and to do short-term rental properties and I’m not trying to push you short from Reynolds. I’m just trying to get you to think through like what would your ideal situation be that’s not like we’re retired but like from a working continue to make some income situation, what would that look like?
Guest 2: Yeah, I think you’re close for sure. I mean, if I had a small part-time job and my husband had a small part-time job and we kind of flip-flopped and then also worked on a, you know, a new property or acquiring a property. We did a lot of the work ourselves, DIY, we totally enjoy that and love it. um, but I think just a little more balanced where I’m not parenting to where I’m exhausted and he’s not working to where he’s exhausted. I think the scariest part is the cost of properties right now has skyrocketed as well as the rates. So it feels I mean, I’ve been watching, um, a a market in Florida for months and months and months and I just none of the numbers work. So I and that maybe just the MLS listing as my strategy, that’s not going to work, but yeah, I would love to have like I said in my goal, double the short-term renal income for sure.
Mindy: Do you see any way to double it without doubling your your income, your rental property counts?
Guest 2: Hmm.
Mindy: Let’s look at the short-term rentals that you do have. Are they close to any of the attractions that are in St. Louis? Could you make them into a destination? There are some really great short-term rentals out there that have like they cater to bridesmaids or uh, what is it? the bachelorette parties. Or they cater to hunting, or they cater to football games, or they cater to, you know, all these different things. Can your unit cater to something or several some things that would make people want to go there and even better take pictures while they’re there so other people can see them too and want to go too.
Guest 2: I don’t know that the two houses, uh that we have in St. Louis could grouse much more. Uh, they’re, you know, they’re pretty small so they’re limited with the number of guests we can have. like we couldn’t, we would not advertise for parties at the house or big groups. And but I I mean we, my husband and I love that idea. Like we would love to have these really unique Airbnb rentals uh, to basically entice people, but I think more rural is going to be where that’s at, like getting away out of the city where there’s not going to be all these like regulations and neighbors to kind of make those unique stays. And we would love to invest in that. We just I think feel maxed out on our time to explore how to like get acquire a property that could do that.
Guest 1: How much equity? this this fiveplex, this fourplex fiveplex, um, I’m just like zeroing in on this, not that I want to like eliminate it, but I but I want to make sure, um, so I had I talk to Mindy and before we got on here that I had had a few bad experiences with some fourplex properties. um, and where they were, they were bad investments. I’ll just completely say that and where there’s a lot of cash that went into them. So when you have less control of a property, which it sounds like, you know, you have a property manager doing these this property, um, it allows for some of the expenses to creep up a little bit more and maybe you can’t force as much equity. Although you are, you’re adding the fifth unit on this one, right? You’re bringing it from a four to a fifth or you already have?
Guest 2: Yeah, it’s nearing completion, so it should be filled in the next couple months with a tenant.
Guest 1: So, when you’re pulling the, how much cash are you expected to pull out of this when you refinance it?
Guest 2: Well, I have not had always the best luck with appraisal, but I am certainly hoping for around 300,000 um, out of the out of the property. So a value of around 375, we bought it for 205, so I basically I want all my cash, my original cash out plus what we put into make that fifth unit.
Guest 1: So 300 in cash, so let’s just let’s say 250. Let’s round it way down to 250, which is not ideal, but it’d be great if you got the 300. But so now, what are your plans for that 250? Do you have any plans for that?
Guest 2: I mean, we’re hope I wanted to go ahead and pay off the Heloc for now and just use that as a backup. I mean, no reason to pay interest on that when I’m paying high interest on the property and then, yeah, we we basically want to do another short-term rental. We were hoping for a warm climate. So that’s why I’ve been watching Florida, because we have very long winters, they’re about 10 months long where I live. feels like it. And um, I also just want to rent where it’s like going to be safe, uh, not going to be shut down when the neighbors decide they don’t like them anymore. So we wanted a vacation destination. So that’s where I’ve been watching. And then I then just having some leftover as like Flex to possibly like look for opportunities to buy another property.
Guest 1: I think the thing that I’m seeing maybe and is just like maybe if we look at your your situation currently of not enjoying the jobs, you know, like that as far as like where life is sitting right now, the burnout and parenting and the burnout and work and the days and nights that the husband is working. um, I would probably focus more or, you know, try to think more about like what can that $250,000 do to change that situation. Like does that allow for a better job to be taken to make it through a few I mean your kids, your kids are, you told me earlier two, four, seven and nine, like some awesome ages for kids, young, precious ages. And maybe these funds are funds that you use to kind of bridge a gap of taking some employment that maybe pays less but allows some sanity and some family life back in. And if we come all the way back to your your house hacking currently, correct, in a duplex where you’re living in one side and ran out another one. You know, maybe you make it something as simple as you you move out of that one, you turn that into a mid-term rental like you were talking about and maybe you do another house hack but because you do these little stacks and you have this big chunk of cash, you can take uh, get a better employment situation, better family life. and at the same time, slowly build a couple doors, not necessarily taking that 250 and throwing it just towards another short-term rental somewhere in Florida, which would be a good long-term investment, but you’ve got like some more family uh, lifestyle needs right now, which are important. I mean, that’s and you guys have done a good job. You’ve got some real estate here, you’ve done a good job of building some stuff up. You really have. And maybe it’s time to take care of your young family for just a little bit and not focus so much on like fire, let’s get financially independent. Maybe you need to just become like I don’t know what you would call it, time independent a little bit or like give yourselves some more breathing room so you can feel like a family and make good plans and maybe move a little slower, but but you’re sane and and happier along the way.
Mindy: I really love that perspective, Kyle, and it is it has taken me a really long time to embrace this setting back mentality and I hope that Amanda at an, uh, younger age can can figure that out way earlier than I did. Um, I’m looking at these numbers for the fourplex and it looks like they were it was bringing in 1400 and $20 a month when it was a fourplex, but because you’re pulling money out, because you’re refinacing into a higher interest rate, adding that fifth unit is going to reduce your income to $400 a month. If you sold this property outright, mhm. you would owe taxes and, uh, income, uh, depreciation recapture. Have you done the math to see if it’s worth keeping versus letting go?
Guest 2: Um, I don’t I don’t think I have really because in my mind it’s a burr, so if it exists and it pays for itself, it felt like keeping um, because we’d be getting out, I guess maybe maybe 50,000 more to sell it outright, but no, I haven’t, I don’t think I’ve tossed that around too much because I was like, well, if I don’t have to deal with it and it didn’t cost me any money, why not just keep it and then someday I could refinance and cash flow a little better or or rent the the property manager is raising the rent a lot compared to what I did and so that that will help. They’ll they’ll continue to go up. But yeah, I’ll I we should think about it because I I definitely don’t love it.
Mindy: I would just look at the numbers. It can be uh, it can be an emotional decision. Oh, I bought this. I’m going to continue down this road. but numbers are facts. There’s no emotion involved in numbers. So just look at and maybe the numbers say no, you should keep it. Or maybe the numbers say now is a great time to get out, go down to Florida, buy a duplex down there, and house hack down there, and mid-term rentall the other side of your duplex, maybe you’re making more money that way. Or then you’re getting out of the 10-month winter. I used to live in Wisconsin. I totally understand not wanting to be in that winter. Um, you get the sun, you get time back with your husband because now he’s not working those crazy swing shifts, which are horrible and whoever invented them, I hope they had to work them too. Um, he could look for a job because you’ve got this cash from the sale of the multi-plex that you are taking down there. It’s not an immediate need to go get a new job. Um, on the other hand, the numbers might say it would cost you money to sell this property, so don’t do that. So just taking a look at those numbers, running them, having a conversation with your husband, what do you think of these two options could give you more clarity on what your decision should be. But you don’t love the property and it’s got a lot of money sitting in it. So something to something to consider.
Guest 1: You said you purchased that property with, uh, kind of during COVID because the short term or because of COVID, because short-term rentals made you more nervous. You know, so, so you just have maybe also keep in mind your decision-making like there’s some emotion involved in that decision. I don’t think that’s a bad emotion. I actually think that’s pretty smart because that’s, uh, diversifying, but you could also, if you ended up selling that property, you could diversify and house hack more and have more long-term rentals, but as a or long and mid-term rentals, but in a slower process. Um, and your logic is right as far as like if you’re burng it and you can pull the property out and it makes sense numbers wise to just leave it there. It’s almost like a free property, but not technically because if you can get more cash out and do something better with that cash out by selling it, but there are also expenses to selling it. So, you know, take all that into account. Um, this is a, this is a question that I should know the answer to. Is there a limit on the number of VA loans that you can have?
Guest 2: Yeah, and I have tried to understand that a little bit, but I don’t know that we could do another one, maybe. There’s there’s like a threshold and it depends on where you live about how many you’ve taken out and each time you take it out, it applies to that threshold. Um, it’s called eligibility. And we also, you can’t keep houses that you have used the VA loan on. So I think if we try to do another one, we would probably have to sell all of the houses, but there it may be depend on the lender, it may be depends on the VA person that they’re connected to. It’s like the most complex, complicated I, I don’t know, I don’t know that I could use it again unless we got rid of our first house, the first short-term rentall and the duplex.
Guest 1: Okay, yeah, that’s just a question. it’s a product that is very unique and only some people can use it. So if you can use it more, I would definitely that would be a whole another house hacking thing to check into, but I don’t really don’t know the rules behind it.
Guest 2: Yeah, I mean the if you were to live and flip and snowball that of two or three times, that would be the smartest way I think to build a real estate empire is to keep rolling your equity into a new a new property and then a bigger property, but because we did buy and hold, I think it was not the best strategy and you just don’t know that when you’re you know, 25 and getting your first house.
Guest 1: I think you have a great opportunity in this asset that you have of this fiveplex that you’re either caching out or selling. you know, say there’s 250 to 300,000 that you can do something with to change your life situation. Most people would not have that option right now. You know, they might be in a situation similar to yours and like burnout. um, you know, it sounds like that I’m 38. So, I’m like right in the same age bracket. and this is the age when the kids are little, the jobs are busy, and it just is intense. So, if you have a way to mitigate that, you know, be careful with this little nest egg that you have and really think through what decision with that will make your life better and improve your long-term goals. You can buy another good property somewhere that cash flows and you reinvest in that property and it builds for the long term. That’s great, but that doesn’t do anything for your current situation. Like try to think through how you can use this money to improve your current situation, whether that means that you you live off of 10,000 of it for three years. you know, like you put 10,000 towards your budget each year from this 250. This is not a crime, you know, it’s totally fine to do that and you invest the rest of it in something. Say you live off of you take 50,000 of it and use that to live three years plus some part-time jobs. There’s you can do a lot of different things. don’t think that you have to use all that money to reinvest it to build your wealth and then otherwise it’s not going to be okay. You know, your your kids are what some people say you’ve got 18 summers with them, you know, and and you don’t get those back. So if you can invest some of that that you guys you guys have been a good job of investing these properties and you’ve built some things up and the fact that you’ve burned something in your be able to pull out this amount is really good. When you’re at age, you know, 39 and 40, that’s awesome. So, uh, take that opportunity to make some decisions that could change, you know, maybe the course of your life for the next 10 to 20 years for both you, your husband and your kids.
Guest 2: So we don’t need to obsessively look for a high ROI property at this moment is what you’re saying.
Guest 1: I’m a CFP, but I’m not your CFP, so I can’t give you specific advice, but that’s what I would do. I would if I was in your situation, Okay. I would be looking for a way to relieve the stress on the family because the other stuff, you already know how to do the other stuff. You’ve been doing it. You’re not perfect at it, but nobody is. And that stuff will come, but you know, try to think through how can I knock these both of these goals forward at the same time, but you know, that 10 or 20 years from now, you’re not going to be like, I’m glad I just burned out for another 10 years and invested in this Florida property. That was great. You’re not going to say that. You’ll be, you’ll be glad I spent more times with my four kids and we got ourselves in a better situation mentally and physically. Uh, that’s where you’re gonna wish you had done that if you don’t do it. It would be that’s my personal opinion. If you can’t tell I feel a little strong about it.
Guest 2: Okay, no, I love it. I think that’s helpful. Thank you.
Mindy: Awesome. Well, Amanda, I really appreciate your time today. I appreciate you sharing your numbers with us and sharing your your rentals and your situation. I think you have some homework to do and I think you have a couple of conversations with your husband to have. Uh, pop a movie into the TV so that the kids have something to do when they’re not asking you for things all the time, but having a an uninterrupted conversation with your husband or a series of conversations with your husband about your options is really key. The most important thing is that you’re both on the same page. This is what we want, maybe even have a goals conversation first. It could be several conversations. uh, Scott and I have an episode 157 where we talk about, um, having a money date with your spouse. That could that episode gives some parameters for things to talk about. It’s more from the perspective of a conversation with a spouse who isn’t on board, but it gives you a lot of things to discuss during a money date. So maybe listen to that episode together, um, talk to each other about your big goals, your small goals, what he would really like out of life, what you would really like out of life and just work together to find a solution that makes you happy, that makes him happy and it allows you time with the kids that you have.
Guest 2: Yeah, definitely. I love it.
Mindy: Awesome. Amanda, thank you so much for spending time with us today and we will talk to you soon.
Guest 2: All right, thank you so much.
Guest 1: Thank you, Amanda.
Mindy: All right, Kyle, that was Amanda. I have to say I really loved your advice to consider pulling back, consider selling this house or taking the refi and living off of it for a little bit. So many people that we talk to are so rush, rush, rush to the end. I can’t wait to get there. I can’t wait to get to the end. And what I’ve discovered is that the journey is just as important as the end result and I’m really glad you brought that up.
Guest 1: Yeah, I mean, it’s only because I’ve been guilty of the same thing. You know, in the in the financial independence community, it’s really easy to get fired up about saving every last penny, optimizing everything you can, having both spouses work, you know, when there’s the the opportunity to make the money, save it, fast and get out of the grind as fast as you can. The problem is you get a few years down the road or even a few months potentially. um, and you realize the priorities might be a little skewed from what they should be. Um, but at the same time, the nice thing about being so aggressive in a financial independence journey like Amanda has been recently is that you are saving so much so that if you do get burn out or you do need to make a life change, you now have the option to or if you do need to slow it down because you’ve done well for the past few years, you weren’t not paying attention, you were trying really hard, you have more options than if you had not thought about it or planned at all. So, you know, that that’s kind of what gets you to where you need to be, but sometimes it’s time to take a pause and and just back up for a moment and see what’s really important and then decide which direction you need to go going forward.
Mindy: Like you said in an earlier episode that we recorded with Joe the personal trainer/cop, flexibility is key and when you have amassed a uh, plan, a pile of money, a, uh, uh, you know, investments and, you know, a a cushion, you have more flexibility and I’m hoping that they can look at their flexible situation, look at their flexible ness, their flexible options and decide on something that really gives them some some uh, peace and enjoyment out of their life.
Guest 1: Definitely me too. You know, I hope they’re able to use what they’ve built to to bring some, like you said, some peace to their young family, which it sounds like they could really use a rest right now really. um, so hopefully they get it.
Mindy: All right. Well, Kyle, thank you so much for joining me today in place of Scott who’s out gallivanting around doing who knows what. I appreciate you showing up today. Should we get out of here?
Guest 1: always fun being here. Yep, let’s get out of here.
Mindy: All right, that wraps up this episode of the Bigger Pockets Money podcast. He is Kyle Mast and I am Mindy Jensen saying out the door dinosaur.
Guest 1: If you enjoyed today’s episode, please give us a five star review on Spotify or Apple. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.
Mindy: Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Calen Bennett, editing by Exodus Media, copywriting by Nate Winetraub. Lastly, a big thankà¥à¤¯à¥ to the Bigger Pockets team for making the show possible.
