Afford Anything - Ask Paula: Should You Buy Real Estate in Today’s Economy?

Episode Date: July 6, 2023

#449: Jackie is a 42-year-old paralegal with two rental properties. She wants to buy three more. She asks for Paula’s thoughts about today’s economy. Should she buy under these economic conditions? Jen’s husband will retire with a pension that pays twice their living expenses. Does she still need her own retirement account? Rachael just bought a duplex, which she wants to househack. But she’s having second thoughts. Did she bite off more than she can chew? “Minouche” is a return caller with new information: she believes that borrowing from Dad is her only path to home ownership. Does this change Paula and Joe’s advice to her? (And is it even true?) And Molly, a concerned mom, shares some thoughts about this situation. Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode. Enjoy! P.S. Got a question? Leave it here. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Joe, our faces are on YouTube. Oh, no. Yeah, it's true. And I wore my best t-shirt, too, for the moment. What does it say? What's on that shirt? It says M-22, which is this, it's this Michigan highway that goes around the Lelandau Peninsula, which is wine country of Michigan.

It's beautiful. You see views of Lake Michigan and Grand Travers Bay the entire way. So I put this shirt on while I'm sitting here in Texas, and I dream about being someplace where it's actually cooler. And there's a breeze. It's not 120% humidity. And my blood pressure goes down. Be in the present, Joe.

I am. Find the beauty of where you are. I am currently with you getting ready to record and afford anything show. And dreaming about Northern Michigan while I do it. Nothing wrong with that. Is there anything wrong with that? Not at all. Not at all.

Welcome to the Afford Anything podcast, the show that understands you can afford anything, like a trip to Michigan wine country. but not everything like... Like buying the t-shirt while you're there. Right, like buying the t-shirt. And that's true for your time, your focus, your energy, any limited resource. The number of places you can travel, you can travel to any state. You could actually travel to every state.

You could travel to every country. There's roughly around 200. We both have a mutual friend, Chris Gillibault. He went to every country. The very last country that he went to, he threw a big party and he called it, his end of the world tour. My name's Paula Pantampton, the host of Afford Anything. I'm Joe Sal C-high, frequent guest, and I don't know what else did.

And you're a former financial planner. Former financial planner, 16 years in the financial planning trenches. Right. In fact, you were the WXYZ Money Man on Detroit's TV station. Channel 7. Fun nine years doing that. And now you get to be on YouTube with me, and we are going to answer some questions. Questions here. Huge upgrade. Our first question today comes from Jackie. Hi, Paula and Joe. I saw you both in

Chicago during Joe's book tour. I didn't have the courage to ask you guys any questions then, so hopefully this reaches you now. I'm 42 years old in a long-term relationship with three children, one adult, which is mine, and two smaller children with my fiancé. I've been a paralegal now for 16 years with the same firm. I'm looking to pursue my own. own business in real estate and investing, eventually, and leave my full-time job. I've been working part-time as an agent now for three years. I've been looking to acquire five cash-flowing properties in the next five to seven years. We are currently looking for properties three through five and doing so with the intention of cash-flowing each one. I'd at least like to purchase a three-to-four unit before I

leave my full-time employer. The hitch is that we have a limited amount of money set aside for the next purchase without touching our emergency funds for our rental properties. Home pricing keeps ramping up, and now our budget of 400K is able to buy us less and in much less desirable neighborhoods. I have a large 401k with my employer. My question revolves around whether I should quit my job, roll over my 401k into an IRA, and dive fully into my business before acquiring the next property. Or should I ramp up my search and try to make my job?

make something work within our budget and then make a decision about my employment. For general context, we make a combined income from our W-2s of at least $160k and sometimes more. I have a small mortgage on my first home, which is a rental and cash flows about $250 a month. My partner has a property that cash flows about $600 a month. We have a one-year-old mortgage in our primary home, which we currently house at and it pays for a third of our mortgage, which is about 3,300 a month. We both have sizable amounts in our employer 401 case, as well as smaller Roth IRAs and after-tax brokerage accounts. We currently do not have any other outside debts other than daycare, which is about $2,000 a month, and our living expenses.

I'm curious to hear both your thoughts. Paula, your thoughts on acquiring more investment properties in our current economy, and Joe, your thoughts about my employment business venture questions and future financial planning goals. Much appreciated and thanks for doing what you do. Jackie, congratulations on starting your path in real estate. Congratulations on converting that first home into a rental, on house hacking your primary home, and on being on the search for properties number three, four, and five. I love the fact that you have a great emergency fund, the fact that you have your full-time job as a paralegal. You've got that part-time work as an agent. You're building a rental property portfolio. You're on the right track in so many ways. So huge congratulations

to you. My thoughts, you asked for my thoughts on acquiring more investment properties in our current economy. The short answer is, I think it's a fantastic idea. Long answer, let me be a little bit more nuanced about the landscape that we are facing currently. What we have seen in the past decade, I mean, particularly in 2020 and 2021, we have seen home prices rise at significantly above historic norms. So historically, if you look over a 30, I mean 30 is skewed by the last 10. So if you look over like a 50, 60 year period, a multi-decade period, historically real estate has appreciated around 5%. That's 3% for inflation plus 2% above inflation. Over a very, very long-term historic average, that's what real estate in the United, residential real estate in the United States has typically done.

The last decade has been a bit of a special case, and that is for a few reasons. Number one, prior to the Great Recession, we had a massive, housing inventory shortfall. In fact, before the Great Recession, and we're talking the 2008 recession, before that began, Freddie Mac was putting out warnings about lack of available inventory. And we're going to talk a little bit in a moment about why there is such a lack of available inventory. Prior to the recession, that was a problem, even though home builders were speculating and building in the lead up to the recession. So in the lead up to the recession, we had more housing than previously.

You know, we had a lot of builder speculation. And yet even at the frothiest peak of builder speculation, we still were staring down the barrel of an inventory shortage. And a big piece of that, and I'll talk more about this in a moment, a big piece of that is the fact that we have huge demand from particularly millennials. So prior to the Great Recession, at the height of froth, at the height of builder speculation, we still had an inventory shortfall. It only got worse. That problem exacerbated when the Great Recession happened and Builders stopped building. They stopped building for,

you know, a number of years. And not just, not only did Builders stop building new construction, but also renovators, remodels, stopped fixing homes. There was a huge decline in 2008, 2009, 2010, it began to pick back up around 2010. And from 2010 through 2020, you saw pick up in the space, but lending criteria was still quite tight. I mean, think about it this way. It was only in the very later stages of that decade that you saw private equity take a strong hand in the deal. You saw BlackRock and Invitation Homes become very aggressive right around 2016, And it's easy to think only about mom and pop investors. You and me, mom and pop investors, are actually an incredibly small subset of people who buy and sell homes. The biggest,

in the residential real estate market, the biggest chunk of rental properties is held by institutional investors, namely private equity. And they were very gun-shy shy. And they were very gun-shy. until 2016, 2017. That's when you started seeing a lot more activity there. And so we didn't get much of an uptick in building, which only exacerbated the inventory problem. And that leads us to 2020 when everything shut down for the pandemic, because of the pandemic, which meant that, again, new construction halted.

There were major disruptions in the supply chain. Remember, the cost of lumber skyrocketed. and as a result of all of that, you now have a problem of a massive housing inventory shortage that has only consistently grown worse and worse and worse. Couple that with the fact that in times of high inflation, people tend to park their money in tangible assets, including commodities, gold, art, and houses. So you had, starting in 2020, simultaneously very low housing inventory, a problem that had been brewing for a decade. You have high housing demand, as a lot of people were buying and selling homes

and more millennials were, and first-time home buyers were getting into the market. And you had, as inflation started to kick up, people who wanted to park their money in tangible assets because those tend to be more inflation-proof. And so, again, that only exactly. masturbated the problem. And you can see that by looking at what home values did from 2020 through 2021 and 2022 even, it is a historic aberration. You should never expect returns like that. Don't expect history to repeat itself. What happened from 2020 to 2022 is in terms of the home price run up, the culmination of all of the factors that I have just outlined. What we are seeing now, you know, many people had wrongly assumed that if interest rates rise, home values would crash.

How many, like, chicken littles did you hear doom and gloomers? Did you hear saying that? And they were wrong, of course. That's because the data does not back that conclusion. It is a simple supply and demand situation, right? Demand for homes is strong. Again, there are 72. We'll go through some facts right here, right? Millennials who were born between the years 1981 to

1996, right? Millennials are now between the ages of like 26 and 41, 42. Millennials are the largest generation group in the United States. There are 72 million millennials. By contrast, there are only 65 million members of Gen X and 68 million members. of Gen Z. So millennials, as a demographic, are larger than any other generation in the United States, including even baby boomers. And millennials, at the age of 26 through 41, 42, that is typically the age in which people become first-time homebuyers. So you have this huge wave of millennials becoming first-time homebuyers, all of this new household formation that's happening from that generation, from my generation, that's driving a lot of demand for homes.

On top of that, you have housing inventory disruption, which even though it is expected to rise in 2023, it will still remain below pre-pandemic levels. So you have an already tight inventory that is only getting tighter. And on top of that, now with higher interest rates, you have people who have locked in fixed-rate mortgages who don't want to give up their 3%, 4% fixed-rate mortgage, and so they don't want to sell their home. So you have already tight inventory getting even tighter. There's no new supply, and the people who hold the existing supply don't want to sell it. So you have that coupled with very strong demand from new household formation,

and you have this perfect recipe for home prices that will only continue to increase. Now, what we see from the rise of remote work is some shifts in where that demand is happening. So the outer rings of major urban areas are seeing more demand than ever. You might not necessarily want to be in Manhattan, but you might want to be in Westchester County, New York, so that you're commuting distance to Manhattan if you have a hybrid job that requires you to go to the office two to three days a week. We had a recent guest on the podcast named Nick Blue. Stanford professor who has studied remote work since pre-9-11. He studied it back when it was still called telecommuting back in the 90s, who has

described in great detail how shifts in remote work, how the rise of remote work has shifted where people are buying homes. But largely, broadly speaking, the outer rings of urban areas, as well as mid-sized cities, suburban areas, rural areas, by and large, those are seeing a lot of up to in demand for residential real estate. And all of the supply and demand factors point to that trend continuing. And I think that to me also says there's also danger in talking about just the real estate market as one market in the United States.

I mean, we truly have, I was looking at some data recently on Airbnb's and some of the stuff happening in Airbnb world and totally something different happening in high tourist areas versus places like Detroit, as an example. You know, Airbnb price is doing very well there, but in some high tourist areas, you've got such a flood of these big, huge companies that had purchased so many units and turn them into Airbnbs

that you've got something completely different going on there. So I think there's danger in looking at just one, talking about the real estate market, not the case at all. Exactly, exactly. Yeah, and I completely agree with that. I'll often tell the students in my course in your first rental property, There is no such thing as the real estate market.

There are only many, many, many local markets. So what's happening in Key West Florida is not the same as what's happening in Des Moines, Iowa. So when I talk about suburban areas or the outer rings of urban areas or rural areas, I mean that as a broad generalization. Of course, your mileage may vary. Like what's happening in Fort Wayne, Indiana is not going to be necessarily the same as what's happening in Kennesaw, Georgia. So what does she do?

Keep buying. To quote another podcast guest who's been on both of our shows, Joe, Nick. McGooley. Nick Majuli. Nick Majuli. The name of his book is Just Keep Buying. He means that in reference to stocks, I mean it in reference to residential rental property. Just Keep buying.

The one thing that I would encourage you not to buy is Class B commercial real estate. I would stay away from that. But if we're talking residential real estate, keep buying. Well, and I also wonder if she's buying locally, if based on what you're talking about, if she then adopts more of a national scale where she looks at properties that might not be in her neighborhood. Yeah, I think that's a fantastic idea. Invest anywhere, right? Like there's no reason to stay in your own backyard.

You go where the returns are. Yeah. And if she's just looking in her Chicago area, maybe that's not the area. that she should be looking in. But to your point, I think there certainly are deals in other places. Yeah, absolutely. I think generally Paula, when she, you know, from my half of this question, when she asked about what do you think about this from a financial planning perspective, I would ask Jackie to reframe her question because her question is, which should I do? And that game, I think you almost always lose because you end up playing, what if I does,

the opposite. So I would ask her to reframe it is, which one do you want to do? And then let's see if it can work. Do you want to stay in your job a little longer or do you want to leave now? I get the feeling what she's really asking is, can I leave now? The reason I like that question better is, if we ask the question, can I leave now? Then I start running what if scenarios based on that question. So can we do it on a single income with a second income that's variable. How much money do I have to make from that secondary income? If I keep my goals around long-term goals of financial independence, maybe education for kids, like, I don't know what the long-term goals are, but can I reach those on this single income or how much money do I have to

make from that second income stream to make that a reality? Once I know which scenario we're doing, just putting the financial planner head on, then it's much easier than to go, okay, we can't do it today, but we can do it if we do X, Y, Z. If we meet these conditions, then we can do it. Or if there are hurdles, she has to make X amount of money. Then we know how much money that is that she needs to make. So she's got this monthly number she knows that she has to bring in. So now she has a much more concrete set of goals to work with versus this thing versus this thing.

The thing I want to caution her about is when she talks about having significant money or 401k and properties are getting more and more expensive. What was the first thing you thought? I don't see a link. Oh, you don't see a link? I don't see a link between 401K versus, uh, no. I think there shouldn't be a link, but I'm wondering if Jackie's wondering if she's thinking about rolling that 401k to an IRA so she can do a self-directed IRA to invest

in real estate. That's such a bad idea. That is such a bad idea. Not do that. Not do that. Please. If that's what you're asking, Jackie, please don't do that. Do not, do not take your 401k and turn into an IRA and invest it in pieces of property.

There are so many pitfalls there. There's so many risks. It's a minefield. Just wait until it's RMD time. Oh. Woo! You're right. And I know that seems, when you're 42, that seems like it's very far away.

but let's talk about what Paul is talking about with RMD. So later on, she's going to have to take these things called Require Minimum Distributions. And imagine it is in a non-liquid position like a piece of real estate. And all of a sudden the government's saying that you've got to take a piece of this IRA and you have to liquidate it. Make it a non-Ira. You can't peel off your bathroom and just say this piece of the house I'm going to take out. Like you can't do that. Right.

which means you're forced to sell at a time. And let's say that we're in a 2007 situation. You don't want to sell then. You want to hold in that real estate environment. And you can't because you're forced out. So just so many nightmares. And let's say you want to visit the property. You want to have it?

Maybe I'll just stay a couple. No, no, no, no. You just turned your whole IRA into a non-IRA overnight. You want a write a check to the cleaners who are cleaners. who are cleaning the property for you or to the construction people, that's got to be inside the IRA. If you write a check for any of that, you just turned all your IRA into a non-IRA. And for people not watching in some video, I just slap my hand. And it hurts a lot more than a hand slap. Right. Yeah, exactly. With a self-directed IRA, every eye has to be dotted,

every T has to be crossed. It is massively, massively, massively burdensome, administratively burdensome. And in addition to that, I think the most compelling reason is the RMD situation. Like the required minimum distributions, you don't want to have to take distributions from an illiquid asset. Yeah. And I know Jackie didn't say that. Right. Yeah. She said properties are expensive and I have massive amounts of money in my 401k. And I put, I put those two things together. in my head and when if you're thinking that. Yeah. Yeah. No, I don't see a link. I hope there's not. What I hear is I have a big 401k. Yeah. Properties are expensive. Cool. Let's figure out how to acquire now before they, you know, so that you can even more expensive. Yeah, exactly. Yeah. But I do

think, Jackie, that if you take that question and work from what do I want to do and then begin framing out your financial plan from that. Either you'll find out, yes, I can do it because the hurdles are so low that I can make it work. I can make my budget work. I can make my goals work. I can do that. Or you'll find out what the time frame is that you can make that a reality. I think that's a better question. Yeah. Yeah, Joe, because what you're talking about is a fancy word is the counterfactual, right? You don't ever want to be caught up in wondering about the counterfactual, wondering what if. But we do that to ourselves all the time, don't we?

We're like, oh, I should, and we second guess ourselves, and that just destroys our confidence. And it's all about confidence. So I just wouldn't play it. It wouldn't play that game. A final thing that I'll say is don't be afraid to look at markets where the price to rent ratios are beautiful. You don't have to invest in your own backyard, especially if you're not house hacking. as long as you're not house hacking, you can invest anywhere. Invest where the deals are good.

You've got a team that's going to be working on this anyway. So find a market and start buying. I own properties in three states, Georgia, Nevada, and Indiana. And I live in New York City. I love how big her goals are. I like that. Yeah. So thank you, Jackie, for asking that question.

Congratulations on everything you're building, and best of luck with what lays ahead. We'll come back to this episode after this word from our sponsors. Fifth Third Bank's commercial payments are fast and efficient, but they're not just fast and efficient. They're also powered by the latest in payments technology built to evolve with your business. Fifth Third Bank has the big bank muscle to handle payments for businesses of any size. But they also have the FinTech hustle that got them named, one of America's most innovative companies by Fortune Magazine. That's what being a fifth-third better is all about.

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I just, well, yeah, it's a bit, anyway, yeah. Long night last night. Oh, that's right. That's right. That's right. I'm sorry. I should not ask you questions when you're hung over. But seven is also the number of bottles of wine I drank.

What it feels like inside my head. If we could lower the volume on this podcast, that'd be great. I see. Lower it down to a seven. Well, speaking of seven, actually, this question has absolutely nothing to do with the number seven at all. Wait, let me read through. Let me read through. Nope, there is no number seven in this question.

But there are other numbers. There's the number 150,000, the number 80,000, the number 2,000, the number 20,000, the number 250,000. Those are all numbers. They are all in this question. From? And the question. The question that we are about to answer, our next question comes from Jen. Hi, Pauline Joe. This is Jen from Ohio. I really appreciated all of the great financial literacy on your podcast.

I just have a question about our extra cash flow each month. We are at a point where we aren't really sure what to do. We have about $2,000 cash flow a month after savings and expenses. I have a traditional IRA that we're going to convert to a Roth of about $20,000. My husband has a full pension plan through STRS. He's a teacher. So he'll retire with probably over $150,000 yearly income. And we live comfortably at $80,000. So I'm not really sure if I should contribute to my Roth IRA because it doesn't really seem like we'll need it in retirement. We also could invest in paying off our house.

We have about $250,000 left to pay off our house so we could invest the extra 2K every month to do that. We also have three kids so we could put more into their 529 plans, although we don't want to put too much in there just because, yeah, we wanted them to be able to use all of it and we don't know if they're going to go to college or not. So I'm not really sure if I should contribute more to my Roth IRA because we will be well compensated with a pension plan from my husband. When he retires from his job, he can choose to take a lesser percentage of his income to allow me an income if something happens to him. So we could easily do that as well. so I wouldn't necessarily need a ton of money into my Roth IRA even then. We also are maxing out our HSA every year, so we should be pretty covered as far as health expenses. So we're doing everything we can on that front as well.

Any advice? Jen, thank you for the question. So a couple of things strike me right away. Number one, with the 529 plan that you mentioned, you've got three children, you're not sure if they're necessarily going to go to college or university, that's okay. With a 529 plan, you can pay for any qualified educational expense. So if they decide to go to school to become an HVAC technician or an electrician or a coder or a makeup artist, any type of vocational training, as long as it is a qualified educational expense, it does not necessarily have to be a four-year college or a four-year university.

There's a wide array of training and education in the broad sense of the word, not just college, that you could spend $529 money on. In addition to that, I don't know if you have nieces, nephews, potentially future grandchildren, but you can always change the beneficiary on a $529 plan. So if you've got three kids and their names are Alvin, Simon, and Theodore, and let's say Alvin and Simon use their 529 plan, but Theodore uses only 10% of his, right? The other 90% of Theodore's plan can be reallocated. You just rename the beneficiary. And that can go to Theodore Jr. It can also go back to you. You can use it for continuing education, the two of you, change it to your name. But you're right. It can essentially become an education. It's not. actually a trust, but it feels like an education trust that you've set up. Right. Another thing strikes me, and this is kind of an uncomfortable topic to bring up, but I'm just going to have to say it.

And I don't want you to take this personally. I'm sure your marriage is great. But what would happen if your husband were to leave you? Let's just walk through that scenario. And I hope that doesn't trigger any anger for me even bringing it up, but as a financial planning exercise, imagine if at the age of 62 he were to, let's say it's through no fault of his own. Let's say he gets hit on the head with a piece of debris and suffers a brain injury and his entire personality changes, then he leaves you as a result. So it's not even him. It's the head injury that's doing it.

Okay, so not casting any character aspersions on him. But let's say that at the age of 62, he were to walk off, how much of the pension that he will be receiving would you be eligible for? I think that is a very important thing to know. And I don't know if you have a pre-up. And I don't know if you live in what's referred to as an equitable distribution state. versus if you live in a community property state. But if you are planning for your retirement to be largely based on his pension, and a pension is future earnings, then you need to think very carefully about what would happen in the event

that he is not there. I say this as somebody who is divorced myself and who never expected to be. Yeah, right. I've got a more basic question about the pension. I would love it if Jen confirms those numbers because if her husband is a teacher and I just don't see pensions that are $150,000 a year. You know, I was thinking that. So my dad has an STRS pension also. He was a teacher in the state of Ohio and he has an STRS pension and his pension is $60,000 a year.

Yeah, I just don't see $150,000 pensions. But then my thought was my dad didn't start working until he was in his early 40s. So he had, you know, only half the length of a career of someone who has lived in America since their 20s or, you know, since childhood. But still generally speaking, pensions are based on a percentage of your income and you get a higher and higher and higher percentage of your income for life over time. And so $150,000 pension would assume, and maybe it's the case that he's making around $200,000 a year. But if they're, if they are living comfortably now on $80,000 a year and they have an extra $2,000

a cash flow, I'm just not feeling the $200,000 number. So Jen, if your husband isn't making $200,000 a year, I might go ask some more questions about that pension because you might be reading it wrong. You might be expecting a lot more money from that pension than it's actually providing. Yeah. And by the way, Jen, you wouldn't be the first. person to do that. When I was a financial planner, I would see that many times a year where people would walk into my office assuming they're getting X from a pension and I would have to tell them that, no, that's not $150,000, you're getting $40,000 a year. That $150,000 might represent the total amount that has been put into the pension by the company that they're then going to an annuitize

and turn into an income stream. And if it's only $150,000, it's going to last over his lifetime. that number is not even close to $150,000. It's going to be closer to $10,000 a year or some number that's way, way, way, way, way, less than that. Yeah, yeah. Joe, I'm glad you said that because it sounded high to me when I heard it, especially because my dad has an STRS pension as well. Yeah. But then my rationale was, well, the whole immigration and curtailing the length of the career. I thought maybe that would have something to do with it.

It could be correct. Yeah. It could be correct. I just would want to verify that number. And then, you know, Paula, when she talks about what to do with the money, I love the fact that she knows what the goals are.

What I would do is look at based on those goals. How funded are they? Now, if the pension is $150,000 and they live comfortably on 80, well, then she's right. Then retirement is funded. And now it's just flexibility in retirement.

And then certainly, for me, paying the house down then becomes a great goal because it's super conservative to pay the house down. It's the most conservative thing you can do. There's people screaming at their device now listening to me say this or watching a say it on YouTube. They're like, no, no, no, she can beat that. The math is truly you can beat that. But the happiest retirees are people that don't have any debt. And if you can afford to be that conservative, why not be that conservative and have this free cash flow? So it is the most conservative thing that you could do to pay off that house.

Investing it will probably make you more money, but investing it also adds to the stress level that you may experience during market downturns. Yeah. I'm uncomfortable with, unless they have a pre-up in place that really outlines this, I would want her to know what the, laws are in the state that has jurisdiction over their marriage. Because I'm very uncomfortable. You know, oftentimes family court will split the current assets as of the date of filing, but claims on future income, and that's all future income, future royalties that you receive from sales of software, sales of books, as well as, future social security, future of retirement, you know, there's, there are a lot of different ways

that family courts do it. And the future that you have will some will depend largely on the jurisdiction that you're in and on the mood of the judge that day. And you don't want to bet your entire future on that. So that brings up something interesting. So what you're saying is theoretically, she may be, depending on the laws of the state, entitled to a portion, let's say half the pension, but only during the time that they're married. And if he's several years away from retirement, that pension calculation is going to become bigger and bigger and bigger as he gets closer to retirement, which means that the pension number for her now may not be that significant of a number where it will

continue to multiply for him. Right. Yeah. Well, I'm trying to avoid giving legal advice because we can't give a legal formula. And again, every state is different. And there's two terms that you should definitely familiarize yourself with is community property versus equitable distribution. Familiarize yourself with those terms, know what state you live in. But Joe, broadly speaking, without waiting into the territory of giving the perception of legal advice, Correct. The calculation will differ. Well, just the pension calculation in either one of those scenarios is the way pensions are calculated, depending on how far away he is from. So if that, which also brings up something else, Paula, if that $150,000 number is a future value number based on a projection and he's a long way away from retirement, I'd also find that number suspect for a couple of different reasons.

If she's comfortable living on $80,000 today and there's still 15 years away from retirement, if we use the rule of 72, prices double every 18 years, that 80,000 she's comfortable living on right now is $160,000, a future value against a pension projection that's actually not as big as she thinks it is. Because 150,000 future versus 160 is a lot different than 150,000 versus the 80 she's living on today. So maybe if she's a long way away from retirement and it's a projection, maybe the 150,000 is right. But I'd also find that suspect in another way, which is look at all the pension reform, all the pension changes that have happened over the past 15 years. There could be a lot more coming, which from a financial planning standpoint, basing a pension projection that's a ways away, betting my future on that number, regardless of marital. status still also. Right. I would still caution against that. But to your point, back to marital

status, if the pension is a ways away, the way that pensions are calculated, in either one of those scenarios, whichever state she lives in, she would still, in a most equitable situation, get half of a pension number that is projected into the future, her number is not going to be half of the end number of the pension. I mean, unless, to your point, if it happened at 62, if it happened at 62, then depending on the laws of the state, she may get half of it in the most equitable arrangement. You don't mean equitable in terms of legalese. I mean, in terms of the most favorable. How about that? the most favorable toward her arrangement could be half.

Using the term equitable, not in the legal sense of the word, but rather in the, as a synonym for favorable to her. Yes. But what happens in court is often not necessarily always favorable to a given party. And the calculation will take into account how long you've been married. But both of us are saying, Paula, either way, either way, there, either way, there may be more retirement planning to do than she thinks there is. Yeah, absolutely. I think it behooves her to put some assets into her own name, you know, which an IRA would do, especially for something as crucial as

retirement, because you don't get a second chance at that. The last thing that I would say, we've spent quite a while discussing marital status. There's also the issue of if he were to pass away at a young age, if you were to pass away unexpectedly, that would also have an impact on this pension, right? That would have a drastic impact on this pension. Yeah. So I think there's a life insurance component here as well, a term life insurance component. Yeah. Great point. Thank you for asking that question, Jen. I hope we've given you some things to think about and some lines of inquiry to pursue. We'll come back to the the show in just a second. But first,

Hey, Joe, how's the plumbing in your house? You talking to me about my plumbing? I'm talking to you about your plumbing. I don't, whoa, whoa, whoa, whoa, easy. Blowing through the pipes. Easy. Easy. It's flowing just fine.

Thank you very much. How's your plumbing is the new is your refrigerator running? I may be 55 years old, but things are still working okay. All right? Still okay. The reason I ask, I ask, because we have a collar named Rachel and she has plumbing issues. Oh.

Oh. Yes. Much less personal than I thought that was going to be. Yes. Well, when I say she has plumbing issues, I mean literally the toilets in her home. I don't mean she has plumbing. Yes. Yes.

Rachel doesn't have plumbing issues. Her house does. Her house does. Ambiguity. So let's find out all about Rachel and her plumbing, her home's plumbing issues. Hi, Paula. My name is Rachel. I recently bought a duplex, my first home. I actually planned to live in one unit and rent out the other. My mortgage is such that I could save about $1,000 per month with the rent that I collect from the other unit compared to what I was paying in rent prior to buying the house. Before I bought it, I knew I was going to have to sink a little bit of money into it. It's an older home and really needed some attention in the bathroom in my unit. However, I'm finding out that the property really needs. some real money put into it, including two new furnaces, the plumbing is out of date, and there's absolutely no way to get a dishwasher put into my unit without basically redoing the entire kitchen.

The plan was for me to live in the unit for a couple years and eventually buy another house and rent out both units. I know with the rent, I would have a positive cash flow of at least $1,100 per month at minimum. For context, I currently have about $50,000.000. dollars in personal savings. I'm also a single mother with two children, a full-time job, and a side business. So I always have a full plate. I'm trying to decide if I should pull out the equity in the home and remodel the space such as the kitchen and the bathroom and sell it for a decent profit or continue to live in it and fix up things over time with the positive cash flow and keep it long term. Or maybe there are other options I haven't even considered. I'm trying to decide what to do

with this property since it's shaping up to be a lot more work than I imagined. Rachel, thank you for the question. First of all, congratulations on everything you're doing. Like, you're raising kids. You've got a full-time job. You've got a part-time job. You've got a demanding remodel. You are a juggler.

She's a juggler. Yeah, and you're doing an amazing job. You're making smart decisions, thoughtful decisions. You're building your net worth. You're setting yourself up really well. So huge, huge congratulations to you for everything that you are creating. Yeah, massive, massive congrats. All right, to your question, normally I like to talk through the pros and cons of all possibilities,

and I will do that for this. But I'm actually just going to jump the gun here and go straight to what I would do if I were in your shoes. And I often don't do that when I answer questions. I typically like to be like, let's assess. But honestly, if I were in your shoes, I would hold the property and very, very slowly renovate it over time with a positive cash flow. The reason that I say, and again, that's what I would do. That's not necessarily what you should do. I want to be fair to all options.

So I will talk about the advantages to some alternate plans as well. But the reason that I say that is a fewfold. One is the fact that the home positively cash flows, to me, that's a sign of an asset that you want to keep, right? It's a sign of, it's the gift that keeps on giving. So it's not something that I would readily give up. Yes, the home needs a lot of repairs, but none of them are urgent as in today. You know, these are repairs that can happen in the span of the next six months, 12 months, 18 months, 24 months, 36 months. And every time that you make a repair, fundamentally, you are converting cash into equity in that home.

So this is not money that disappears off of your net worth statement or off of your personal balance sheet. You are simply taking the cash that you have and you're converting it into home equity. And by virtue of doing so, by virtue of updating the furnace or updating the plumbing, you now have a home that may or may or may not, not rent for more. Let's just say it doesn't. Let's say that rent stays exactly the same. You at a minimum, have a home that would sell for a higher price because it would do better at inspection. And also, you are taking care of an expense that you then will not have to take care of for the next 20 years. When you put a roof on a house, you're paying a huge amount of money upfront for the knowledge that you're not going to have to re-roof that house for another 20 to

25 years, right? When you put new windows in a house, again, you pay a huge amount of money up front with the knowledge that you're not going to have to put in a new set of windows for another good 30 years. So you're front-loading a lot of your future costs, which means that down the road, more of your future dollars can then be kept as cash. It just gets better and better. Exactly.

It feels almost like, Paul, like an amortization table, right? Where you're paying a lot up front, a lot of it's going to the bank. But then later on in the back end of that deal, you're just paying down that mortgage very quickly. Same thing here, really. You're getting more of the profits, the windfall, the, I don't know, more of the money stays with you. Yeah, exactly. I actually get excited about it. I just had to put a new air conditioning unit in one of my rental properties yesterday, yesterday or two days ago.

It was within the last 48 hours. You've a super exciting life. I know, right? Guess what I did. And I remember when my contractor called me, he was a little bit sheepish to tell me because he was like, I'm so sorry. I know it's a big expense. You know, like you could tell that he felt the pain of it. And he was having like sympathy pain on my behalf.

And I actually had the opposite attitude. I have a big spreadsheet where, you know, I can see with every major component, when was it last replaced. When did I last install carpet? When did I last paint it? When did I install the windows? When, you know, and I looked at it. And this is a multi-unit property.

And I was like, oh, you know, the neighboring unit had a new AC that was put in in 2014. But this particular unit has not had an AC put in in the entire time that I've, been acquainted with it, which started in 2011. And based on the look of it, according to the contractor, that AC was probably around 20 years old. And so my attitude about it was, hey, great. I pay the cost now. And I'm likely not going to have to think about this AC until the year 2043. So I've just given a gift to my future self.

Bam. So yeah, I get excited about CAFX. So that's why I would keep it. Plus the transaction costs, right? You know, the transaction costs of unloading a property are not insignificant. Yeah. And Joe, I think you said it very well when you talked about when you buy a mutual fund with a front end load or a back end load. I mean, people analyze the poop out of it, not to use a plumbing pun, but like people analyze the S-H.

Right. You know what. Yes. you know, out of a mutual fund that has a front end load and a back end load. That's just a fancy way of saying a big fee up front or a big fee at the end. But every house that you buy has that front end and back end load. So it's not something that you would want to be transacting very often. But it is funny. You never hear about that. Right. When you talk to these real estate wizards, but talk to any investing wizard in other areas there, I was like,

watch out for the fees. Watch out for the fees. You know what? The people who are are really cognizant of it, I find, are flippers. Sure. Because flippers operate on such a tight margin, typically, and they don't have time on their side. Time is very forgiving. If you make a mistake when you are upgrading the plumbing, and that mistake costs you $5,000, but you hold this property for another 30 years, that $5,000 mistake averaged out across the next 30 years is nothing. Yeah. If you're flipping a house and you make a $5,000 mistake

and you're only going to hold this house for like three months, that might be your entire profit margin right there. That's why when you see a flipper, you almost always see they have a real estate license just to lower that cost. Yeah, exactly. So yeah, so that's my point is flippers have to be extremely cost conscious. And so they, I think more so than any other type of investor in the real estate space are extremely cognizant about transaction costs and understand what a big chunk that consumes. You've forgotten more about real estate than I know about real estate, Paula, but that was my initial gut feeling as well, was to hold the property and just realize it's going to be

a slower burn than what she originally anticipated, which happens a lot in real estate. You know, you uncover things that you didn't know about, which was a question that I had for you, Paula, which is, what a best. Better inspection or more attention to the inspection maybe have brought up these problems ahead of time? I don't think it would be a better inspection. I think the solution would be have an inspection, but also, in addition to that, have a general contractor do a walkthrough of it and pay that general contractor for their time at an hourly rate. because what an inspector is going to give you is a very specific type of report that's going to detail, you know, the amount of insulation in the attic, and it's going to detail the structural stability of the beams and the crawl space. And yes, the mechanicals will be looked at as well, the HVAC, the plumbing. but an inspector is trained and their job is different than that of a general contractor

who is looking at it through the lens of what needs to be done to make this place livable right now. You know, what needs to be done so that the people who are living in it will be able to live in it and will be able to use it. and such that stuff is going to be unlikely to break in the next year or two. And that's just it. It's a different vantage point. Sure, but I do like to do that type of postmortem, because especially if she's going to buy more real estate in the future, I just think, okay, what can I improve about my process? I love the Stephen Covey quote that the systems that you have are perfectly designed to get you the results you're getting. What I love about that is if you're not getting great results, then work on your system.

Right. Exactly. Don't work on the specific issue at hand. Yeah. Work on the overall system. I mean, do tend to the specific issue at hand. Sure. Right?

Don't ignore it. But in a way that's replicatable. Yeah. So I guess I'm not going to talk about the advantages of the other options. Joe, you and I are in agreement that she should keep this house. Keep the property. Keep it. Yeah.

Yeah. Joe and I rarely agree on anything, and we're both saying keep it. It's annoying when we agree. Speaking of, were you segwaying there? Oh, that I was not, but that is a great segue. I thought you were. Okay, well, yeah, let's make that the segue. So thank you, Rachel, for your question.

And let's segue directly into it is a follow-up to a question. that we answered on a previous episode. Should we play Molly's first before we hear the follow? Because Molly's is based on the first answer we gave. And then we're going to get some more context later. So maybe we should do Molly's response to your and my disagreement first. Okay. Do we want to give context to what Molly is about to say?

Yes. Thank you, Rachel. By the way, if I haven't thanked you yet, thank you for asking the question. So we got a call from Mnuch. Manouche was offered by her father, who is controlling some money to help her buy a house. To be clear, it is not her father is controlling some money. It is her father, comma, who is controlling.

A controlling individual. Comma. Right. Yeah. Yes. Like eats, shoots and leaves. Right. Let's eat grandma.

It's different than let's eat comma, grandma. Yeah. All right. Okay. So her father who is controlling. Yes. Who is control. comma. And so she can get what essentially is a free loan, much, much better than she could get from a bank. Paula, your advice was don't take the money. Don't do it. Because it gives dad even more control. My advice was dad's going to be controlling no matter what you do. It doesn't matter. So take the cheap money. But, but. But. But. But only if she knows she can get the loan from the bank. So if dad tries to play a game, she can end that game whenever she chooses. Well, Molly had an opinion on our disagreement. Hi, Paula. My name is Molly.

I am listening to your podcast from May 24th with Misha. Her dad is offering to basically buy her a house. I cannot agree with you more and Joe less with this. This sounds like a very controlling person. My daughter has gone through something similar with her dad where basically if he's buying something, he thinks he's the boss of it, whether it was a gift or alone.

It does not matter with certain types of people. And even though she may be getting a better financial deal with her dad having the mortgage, you hit the nail on the head. She is just setting herself up for a lot of power struggles and potential financial abuse. So sometimes you have to bite the bullet and just wait things out so that you can do the best for yourself and maintain some level of autonomy and independence. Do the ramen noodle thing for a while so you can have what you want later on. Thanks a lot. Molly, I love your comment.

Thank you. Thank you. What people listening to the podcast didn't see is Paula with her hands in the air, like she just doesn't care. Yes. Yes, on YouTube, you can watch me react to Molly in real time. Well, not in real time. Pre-recorded real time. In pre-recorded real time.

But Molly, thank you. Thank you for your comment. And I'm sorry that your daughter has had to deal with that. I can tell from the tone in your voice that you, from watching what you're your daughter has gone through, you know firsthand what that experience can be like. So thank you for calling. Thank you for sharing your voice on it. And we actually have a follow-up call that comes from Manouche herself.

She is caught. She called back with an update about her question and about her situation. Let's hear it. Hi, Paul and Joe. this is a follow-up from Manouche. I was surprised by the sound of my own voice on May 24th to hear my question being answered. Surprised in a good way. So thanks for answering it. I really appreciate y'all's feedback on my situation with accepting a loan for my dad. It sounds like a lot of the advice comes down to, okay, we'll just buy a cheaper home that you can't afford. And don't

worry about either taking a loan from dad or if you do take a loan from dad, you can always refinance or, you know, the mortgage somewhere else and you'll be fine. The issue is that what I can afford in Jacksonville does not exist. You can't get, you can't find anything in my price range of $190,000. That is not a very old, poorly taken care of condo with a HOA that is $500, dollars a month. And I know because I've looked, and it is very sad. So the reason I'm asking is because if my rent is going up, because we've had such an influx of people moving to Jackson all the past three years for the pandemic, my rent is going up by leaps and bounds. If I can't find somewhere to live that's decent and worth the cost I would pay, and I knew I could recoup

that if I ever sold it, it wouldn't be an issue. So it's not that this is the shorter, quicker path to homeownership, it's that this is the only path. So my dad's like, okay, well, I'll help you with a down payment, but also steering toward the $350,000 homes. So the issue is, if I take that, I then have a $350,000 home that I can't afford at all, like at all, even if I pay him back over more than 30 years at a really low interest rate. So I think I agree with you, Paula, because it sounded like you were saying, it doesn't matter the interest rate. Just don't tie yourself into a bad situation. But I don't know if that context changes the advice that you guys would give.

If, you know, the only route to homeownership is to take this deal and have my dad buy it for me and offer me a lower interest rate, if that is the only choice and plan B is to continue renting when I know rent is increasing 17% year over year. and I'm already paying 20% of my income toward rent with a roommate. There's not as many options. And I didn't make that clear. So does that change your advice you would give at all? Very curious to hear. Thank you guys so, so much for your thoughtfulness and for making sure that I am not tied down in a situation I don't want to be in.

Appreciate it. That changes mine, Paula. because my advice was, at the time, avoid the expensive properties that dad is pointing her toward. The $350,000 property? Yes. If you remember when I gave advice, I said, you have to disreit. You cannot take that advice. You can take his money, but you shouldn't take that advice because that puts you in a horrible situation.

So if dad's money comes with, and it sounds like now it does, it comes with you got to buy this property, then you don't. you don't take the money. Manush, I did a little bit of digging into some numbers. Average home price in Jacksonville is 303,000, according to Zillow. Median home price in Jacksonville is 314,000, according to Realtor.com. Let's take the higher of the two numbers, 314,000. There's two components to being able to get into a home. There's saving up the down payment for it, and then there's qualifying for the mortgage itself.

Take the higher of the two numbers. If you were to buy a home that's 314,000 and if you were to get an FHA loan, which you could qualify for because you would be a primary resident, then an FHA loan, it requires a minimum 3.5% down payment. So 3.5% of $314,000 is $10,990. Basically, it's $11,000. I know you can save $11,000. It might take a year. It might take a year. It might take a year. year and a half. I looked at the show notes for the May 24th episode. You earn an income of $77,000 a year. With an income of $77,000, I've got to believe that within, certainly within 18 months, within a year and a half, you should be able to save $11,000. Even if you needed to pay a little bit more for the FHA loan, let's say they wanted you to make a 5% down payment. A 5% down payment is $15,700. Again, I'm confident you can do that in the next 18 months. And if you have to spend Saturday mornings, you know, babysitting or walking dogs, or if you want to spend your Friday nights getting like a bartending job, something like that, that can all fuel that down payment fund. So in terms of getting the down payment for a $314,000 home with an FHA loan, which requires a very low down payment, I'm fully confident that you can get that. Now, there's a separate issue of would you qualify for the mortgage?

Broadly speaking, you need, if you take your annual income, divide it by 40, that is as a general ballpark, assuming that you don't have any other debts, that is as a general ballpark, the amount of mortgage that you would likely be approved for. So $77,000 divided by $40, that is a monthly payment of $1,000. $925 per month. So likely you would be approved for being able to make payments of $1,925 per month. So then the question simply becomes, does the mortgage, the principal and interest, plus property taxes, plus homeowners insurance, plus HOA, if there is one, does all of that together come to around 1925 per month? If it does, if it comes to 1925 or less, then you would likely qualify for it. If it doesn't, if it comes to more than that, then you would likely not qualify for it.

You mentioned older condos that are in need of repair that have $500 HOA fees. I want to caution you against unduly putting too much priority on the HOA fee. I see a lot of people do this. It's a huge mistake. Nobody gives a rat's butt what your HOA fee is. What matters ultimately, from the perspective of the mortgage lender, is what is the total monthly payment that you are required to make? And that is HOA plus property tax plus insurance plus principal and interest, right? What is that total amount?

And in a condo, the insurance is often going to be a lot less than what it would be for a single family home. Property taxes are likely to be a lot less. So, yeah, there's an HOA fee. But what a lender is going to care about is what's that total, what are you on the hook for in total every month? Now, that leads us to a third point, which is the monthly payment that you qualify for is not necessarily the monthly payment that you yourself are going to make because you yourself are smart and you are going to have roommates. I know that you already have a roommate because listening to the question that you left on. on the May 24th episode, you mentioned that you currently have a roommate. So given that you currently have a roommate, I have no reason to think that you would stop having

one just because you were to buy a home. And so let's say that you have a two-bedroom home, or better yet a three-bedroom home, in which the payment is 1925 per month, but that split between you and your one to two other roommates. That's awesome. That means your personal share of the rent is one-half of. of 1925 or one-third of 1925, right? Fantastic. So, so long as you can qualify for a mortgage and to qualify, you need to find a property in which the total monthly payment is 1925 per month,

and you need to save up a down payment of, if you put a 5% down payment, you need around 15 grand. And you can do that in a year and a half. So when you say that this loan from dad is the only way, I don't believe that for a second. Even at the $314,000 price point. And that's not even going into the fact that the median necessarily means that 50% of homes on the market sell for less than that. So if the median price point for a home in Jacksonville is $314,000, $350,000, that means literally one out of every two homes costs less. So what about the homes that cost $260,000, $270,000? Yeah, what about those homes? I think there definitely is to your point. There are lots of opportunities without relying on

dead's money. Yeah. And honestly, I also don't see the problem with an older fixer upper condo that has an HOA fee. I love condos. I own a condo. Every property that I've ever bought has been an older fixer upper. Manouche, because you are going to be an owner-offer. occupant, you have the benefit of being able to shop off of the HUD home store, which is something that investors can't do. So you can look at the HUD home store. And for the first two weeks that a property is on the market, you can make an offer on those properties without competing with any other investors, right? The only people who can bid on HUD home store properties for the first two weeks that are on the market are owner occupants like yourself or nonprofit organizations. As an owner

occupant, you have access to this catalog of inventory that investors only dream of, which puts you in an even better position for being able to find a fixer up. Yeah, it's going to be a fixer-upper. That's where the opportunity is. And that's where you can slowly fix that property up over time. It doesn't need to be like sparkling condition, stainless steel appliances on the day of moving. Like, that's something that comes with time. People often, look at the finishes of a property. They'll look at the countertop. They'll look at the appliances.

They'll look at the surface level finishes and form an immediate, like, knee-jerk reaction to the property. And they'll be like, ah, this is a dump or this is great. That is like judging Cinderella from before she met the fairy godmother, right? She may have been dressed in rags and she may have been unshowered and her hair unkempt. But underneath that, she was still beautiful. The structure was there.

She just hadn't yet showered or worn makeup or gotten the ball gown. That's essentially what people do when they look at the surface level finishes and make a judgment about the quality of the property based on that. The true quality of a property, from a construction point of view, how structurally sound is the property as a whole? You know, is it on a slab foundation or on a crawl space, if it's a single family home or a multi-unit, if it's not a condo, right? Is it slab foundation or is it crawl space? Are there cracks in the foundation? Is there bowing? Is something, you know, if you look at a floor and it's concave or convex, like, yeah, it's a bit of a worry. If you look at a crack in the

foundation wall, is the crack zigzag along the pattern of the bricks or is the crack straight up and down vertical, right? That's going to give you information as to the structural stability of the foundation. Moving from the foundation up to the roof, is the roof leaking and is there water damage that's accumulated over time and that has turned into mold or that has turned into rot? And maybe you can't see it. Maybe it's in the attic. But is there accumulated water damage? Or is the roof really well sealed? Like, is the property just incredibly well sealed? so that no outside water has made its way into the interior, which means there's no water damage. So is it well sealed from water? Is it well sealed from termites? Does it have a stable foundation?

How up to date is the electrical? How up to date is the plumbing? Right. Those are the things that you cannot see at first glance. You need a general contractor at a minimum, ideally an inspector, to really help you understand that. So if you're seeing a client, condo and you're thinking it's a fixer-upper simply because the surface-level finishes are not up to snuff. And I don't know, Manus, if that's what you're doing or not. Maybe you have dug through the property records of the condo and you have seen lawsuits that have been filed against the governing board of the condo based on deferred inattention to water damage complaints, right? Maybe you've done that legwork and based on that, you know that there is ongoing,

water damage to the structure. And if that's the case, great. But if you're simply looking at the unit and you're saying, man, the carpet's dirty, it needs some paint, the countertops come from, they're peeling laminate from the 1970s, who cares? Like, that stuff is easy to fix. It's, it's putting a ball gown on Cinderella. Those are the cheapest things that you could possibly do, and they're not urgent. So you can use the rental income from your roommates to replace the countertops, replace the carpeting, you can use that rental income from your roommates to offset the costs of giving it a facelift. So to answer your question, no, it does not change my answer.

In fact, it only reinforces my idea that your job is not to fall into the scarcity mindset that leads you to think taking this loan from my dad is the only way to do it. Your job is to embrace the abundance mindset that says, I have the authority, the autonomy, the creativity, the gumption to figure out how to do it. And I'm going to do it. And I'm going to do it without having to tie my fate to somebody who might use this to make me his marionette. reinforces yours and changes mine because of the aspect that if he demands a property price you're not comfortable with, I would only take the money if there were no demands, which was also my original position.

Yeah. And because there is, then I am on board with both Paula and Molly. All right. Well, welcome to the club, Joe. It feels so much better over here on the right side. with the right people. Can I put my hands in the air too then? Yeah, of course.

Well, Joe, we have come to the end of our time together. No, say it's not so. It's true. It is so. It's one small step for man. One big step for podcasting that we're finally on YouTube. Giant leap for podcasting. You're welcome.

You're welcome, America. That is. my favorite, when I found out what Prego meant. Oh, what does Prego mean? You're welcome. Ah, I didn't know that. So when whatever company makes that, that kind of crappy tomato sauce, no offense, if you're listening and you make that tomato sauce, I've put Prego on my spaghetti before and it's, you know, it's fine. But it is kind of funny that, could you see the boardroom of people sitting around? What do we call this? It's, it's a canned. spaghetti sauce in America.

Let's call it, you're welcome. So good. I do have a particular affinity for, I don't buy Prego, but the name that's on my birth certificate is Pragya. That's my Nepali name. And when I came to America and started daycare, I came here as a baby. and I started daycare, like daycare, I skip pre-kindergarten, so whatever is the thing that you're in preschool. That's right.

Preschool, preschool. When I started preschool, like, none of the other kids could pronounce the name Pragueia, especially in Cincinnati, Ohio, but probably anywhere. You know, it's a tough name. Sure. But I mean, but where I was, I was the only brown kid, like, and there was nobody else with a, with a difficult to pronounce name. And so the other kids called me Prego. And so that became my name until I went to court and had it legally changed to Paula. So your name is very close to, you're welcome.

I suppose. That was my nickname. That was like my preschool nickname. Was you're welcome. Yeah. Hey, world, you're welcome. That was my, yeah. Prego and then later it turned into pregnant.

Oh, yeah, yeah, yeah, yeah. Yeah. My last name, see-high. Yeah? I was the sea hag from Popeye. There was those old Popeye things in the Sea Witch called the Seahag. So I was the Seahag. Pregnant and the Seahag. Ah.

I feel like that's like those are characters that could form the basis of a really interesting children's book. Kind of messed up children's book. We all mess up your kids. Well, Joe, where can people find you if they want to mess up their kids? You will find me at the Stacking Benjamin show every Monday, Wednesday, and Friday. And as part of Paula and my continuing partnership, we also have the Stacking Deed Show, where we're big proponents of Paula's, you're opening again, coming soon. Yes, yes, absolutely.

And so Paul is going to be a big part of our show there, stacking deeds, our brand new real estate show. So that is once a week on Tuesdays. Nice. So thank you, Joe. And thank you to everyone who is part of the Afford Anything community. If you enjoyed today's episode, please share this episode with a friend or a family member. That's a single most important thing that you can do to spread the message of good financial thinking. subscribe to our show notes, afford anything.com slash show notes. And check out our YouTube

channel. If you haven't seen it yet, go to YouTube. YouTube.com slash afford anything. If you are watching this on YouTube right now, hi. Thank you for being here. Please make sure that you're subscribed to the channel. Hit the bell so you get notifications. Leave us a comment. We check every single one. So yeah, I'm excited for this to be our first full YouTube episode. So exciting. Cool. Well, thanks. This is the Ford Anything podcast on Paula Pan. I'm Joe Sal Si-hi.

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