BiggerPockets Money Podcast - 108: Starting Early & Finishing Strong with Real Estate with Kristi Tanner Smith

Episode Date: January 20, 2020

Kristi Tanner Smith considers herself privileged—she was an only child in a big house with lots of toys. But Kristi’s mom was diagnosed with a fatal disease and given six months to live when Kristi was five. While her mom did beat that estimate, she ultimately lost her battle when Kristi was 12. During her mom's final years, she tried to teach Kristi about money: "Save up and pay cash for purchases. Be responsible with your finances." Her father was the opposite. So Kristi was able to see both sides of the coin and recognize that being responsible was the better way to go. Kristi lost her father to a freak accident in 10th grade, and she used the insurance settlement to pay for college, where she studied Criminal Justice. Kristi’s husband worked at Nike; they paid for his entire college tuition once he went full-time with the company. (Pro tip: If you need your college tuition paid for, look for a company that offers tuition reimbursement!) After college, she took a job in the Probation Office. She didn’t like it. To make matters worse, on her honeymoon, she discovered they were looking to replace her! She knew she didn’t want to be dependent on someone else for money, so she turned to real estate. She discovered BiggerPockets, ChooseFI, and the concept of financial independence—this became her new focus. She started with the home she inherited from her mother, then bought a home from the MLS, followed by a primary residence, then another MLS purchase, and a cabin in the mountains. Her cash flow on these few properties covers her monthly living expenses, freeing her to pursue her passions. Because when you take care of the money part, you can pursue your dreams and live the life you TRULY want! In This Episode We Cover: Kristi's journey with money How her mother taught her about money Her experience with money during high school and college Her financial position during her first job Kristi's tip to get free tuition in college How she discovered financial independence Her first experience in real estate investing What she did on her dad's life insurance policy How she got her first property Advice on working with a real estate agent Tips on actively managed funds and commission-based financial planners And SO much more! Links from the Show ChooseFI MLS Financial 180 Airbnb Scott's Email BiggerPockets Money Podcast 85: From Financial Disaster to Financially Free with Jacob Wade from I Heart Budgets BiggerPockets Money Podcast 41: How to Find the Best Possible Certified Financial Planner (CFP) for Your Needs with Kyle Mast BiggerPockets Money Facebook Group BiggerPockets Money Survey Check the full show notes here: https://www.biggerpockets.com/moneyshow108 Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast show number 108, where we interview Christy Tanner Smith and hear her story of financial independence and how she's pursuing her financial freedom through real estate investing. If I could just go back and tell my college self, I would say to like not focus so much on what other people think, like your cars, your clothes, like none of that matters. Even if your family and friends think you're crazy, just do whatever makes you happy. Hello, hello, hello. My name is Mindy Jensen and with me as always is my spectacular co-host, Scott Trench. Scott and I are here to make financial independence less scary, less just for somebody else. And show you that by following the proven steps, you can put yourself on the road to early financial freedom and get money out of the way so you can lead your best life.

Wherever you are in your financial or life journey, you can begin rapidly moving towards a position capable of generating a great income, saving a huge percentage of that income, and setting yourself up to make larger and larger investments on your way to financial freedom. And whether you want to retire early and travel the world, go on to make big time investments in assets like real estate or start your own business will help you put yourself in a position capable of launching yourself towards this dreams. Scott, I am super excited for today's episode because I don't know if you know this. I love real estate. And Christy is working on her financial freedom through real estate investing.

Yeah. And we're really excited about Christy's story today because she just has a very unique perspective we haven't really come across someone quite in her shoes before. She lost both of her parents by the age of 16, and it's kind of on her own to figure out college, life, money, and all the rest of it. And she'll be the first to say that she didn't make optimal decisions there, but I think you and I are just amazed at how disciplined and how strong with money she was from an early age

and how she's been able to parlay that into financial freedom, what, like at 27? Right. Super impressive her story is because what I find interesting is she considers herself privileged. And I don't agree with her at all. I think she had some monumental hurdles to overcome, which she did amazingly well. And she's taken this idea of financial independence and early retirement. She's taken this idea of investing in real estate to provide a passive income stream or a passive-ish income stream. And she's not. She's not. not shooting for the moon. She doesn't want to have 5,000 rental units. She wants enough to cover her expenses. And I love that she's done that by age 27 without any special privilege that she thinks she has. And now she's able to sit back and say, okay, I can fund my lifestyle. What do I really want? Her husband wants to start a business because they have done a little bit of investing here, a little bit of investing there. He's going to be able to quit the job that he doesn't love and go out and pursue something that he does love. That's the whole

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Audible has been indispensable for me over 10 years. kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BP money. Christy Tanner Smith, welcome to the Bigger Pockets Money podcast. How are you doing today? I'm doing well. I'm excited to be here. I'm so excited to have you. I met you on Facebook a few months ago, I think, and I really like your story and I want you to share it with our listeners. Can you tell me where your journey with money begins? Yeah, so I actually grew up with what I would say most would consider pretty privileged childhood. I grew up in a big house, out in the woods, had four wheelers, all the toys.

I was an only child too, so that kind of explains it. And I wouldn't say that it wasn't without its struggles, though. So as I said, I'm an only child. My mom actually got diagnosed with a disease when I was five. and was given six months to live, but she ended up living almost seven years. And throughout that time, she kind of tried to teach me, like, what I would have to know for the rest of my life. And my mom was very good with money. Like, she always paid cash for everything. Like, she built our house when she was, like, 23, like, said cash for cars, all of that. And then she married my dad,

who was the complete opposite. He brought a lot of debt into the marriage. After my mom, mom passed away. He ended up having his cars repossessed, couldn't keep up with the bills. So other family had to step in. So I kind of had a little bit of both. And then my husband actually grew up the same way, like his mom and stepdad were great with money, dad, not so much. And we just kind of have merged since we found each other at 17 and started our journey into adulthood. So how did your mother teach you with money? How did she teach you about money? I mean, really just modeling.

She didn't say a whole lot. Mainly she's stuck with like, don't put a lot. Like if you can't pay for it, don't put it on credit cards, don't get caught up in a lot of debt. And that was basically all I knew. Like I said,

I saw my dad with the bad example. So I knew that I didn't want to go down that path. What was your kind of position coming into, be out of a high school and into college. Did you kind of pay for college yourself? Did you, what was your experience of the money during that period? Okay, so going back a little bit, my mom actually passed away when I was in sixth grade, and then my dad passed away when I was in 10th grade.

And my dad's situation was kind of a freak malpractice accident. So I got some money from that, and that actually put me through college. But leading up to that, I, since I was, young, I grew up doing rodeoing and all of the money that I made from rodeos, I saved. And at the time when I was 14, 15, I was just saving for my wedding because I got caught up in like all the wedding shows. And I was like, one day I'll get married. So I'm just going to save a bunch of money for that. So actually coming out of high school from rodeoing and all of that, I probably had a couple of thousand saved up. But like I said, college.

I already knew was covered. And what did you study in college? I actually studied criminal justice and sociology. Growing up, me and my mom watched a lot of murder shows, and I wanted to be a homicide detective, but I don't want to go to the science route. So I went the criminal justice route, and the closer to college graduation I got,

I was like, why did I pick this? And just majorly regretted my majors. So what did you do when you graduated from college? So after college, we actually moved about two hours away and I was a probation officer dealing with mainly adults who were old enough to be my dad and it was not an easy job. I didn't make enough money like I made like peanuts. I was dealing with a lot of tough people to deal with and then I worked there almost a year and that's when we went to

to away for our wedding and I saw that my job was posted while we were away at our wedding. Wait, they were looking for your replacement? Yes. While you were on your honeymoon? Yes. Oh, my gosh. Well, you didn't like it anyway. So that's, I mean, it's never something that makes you feel awesome. Like, hey, they're looking to replace me. Great. Yeah. You know, so that's kind of got to put a damper on your honeymoon. So even before we found fire and all of that, I kind of had in the back of my head because I did have this money to fall back on that I was a, like, I didn't have to go after the money. I could actually pursue my passion. So I've kind of always had that mindset. It was just kind of shocking once I got to adulthood. And I was

like, oh man, everything that I've planned since I was a kid, I don't actually like doing this. So what was your position in this first job? It sounds like you graduated largely soon alone free. what was your overall financial position more or less? We were okay financially. So my husband, like I said, we met when we were 17, and he did have some student loans. He actually graduated with like less than $10,000 because he worked at Nike throughout college

and they paid for his tuition. So coming out of college, all we had was his student loans. And I think his minimum payment was like $50 a month or something. So other than that, we weren't in a tough position. our rent obviously like tripled but after we left our college town. But other than that, we had money to fall back on because we had been saving since we were teenagers. So what did you do with the money that you had to fall back on?

Was it in investments? Was it just in a savings account? So, because like you said, my dad passed away the day after I turned 16. and my grandfather who raised me after my parents passed away, he had always been good with money. It was my mom's dad. And he had no idea how to assist me in this situation. So my eighth grade teacher actually stepped up to the plate and became like a mother figure to me. And her husband, she lovingly refers to him as Clark Howard Jr.

Because he is like super frugal. and she is the one who was like, look, we have to find something to help her because neither one of us have ever been in this situation. So they actually found me a financial advisor in our city. And I was their youngest client. They actually lowered their threshold for me because they usually only took like a million dollars or more. So they lowered their threshold and kind of took me on. So it was like right around the time I was 18. And with them, they set me up, got me started investing in a Roth IRA, and then they just put the rest in a brokerage account.

So when me and my husband were in college, like I said, he started working at Nike, and he was able to invest in his 401k, purchase employee stock, and they paid for his tuition. So by the time we graduated college, we came out probably on the plus side, 30 or 40 grand. Great. So you start out with $30,000 to $40,000-ish financial position out of college, but a not-so-great job. And do you get married during college or after college? We got married a year after college. Great. Okay. And what's your husband, fiancé, doing in that time period? Is he have a great job or does he have a job that's kind of similar to what yours was? So he stuck with Nike the whole time. And right before we graduated college, he got promoted to

another store and he was probably making around $60,000 when we came out. So what was he doing for Nike? You said he worked for another store. Was he in the retail Nike stores? And was he in management? Or do they just pay for college for everybody? So he was working out at outlet store that was about 45 minutes away from our college. We went to the University of Georgia. So there's not really anything like that in Athens. So he was driving a good bit. He worked five days a week. His only off days were Monday and Tuesday or Tuesday and Thursday. So those were the two days he piled all his classes into. And he started out as a seasonal employee during the summer after our freshman year. And then he worked his way up to a lead position. But once you go full time, they would pay for your tuition. The entire tuition? Yes. Oh my goodness. This is a huge tip.

If you're looking to get your college paid for, work for Nike. Or there are other companies. There are other companies. It's not just Nike is the only one that pays for college. But that's huge. I mean, I don't want to say you need a job in college, but you need some source of money stream coming in to help you pay for rent and food. And, you know, if you've got a scholarship, that's great.

But if you don't have a scholarship working at a company, I mean, 40 hours a week is like your regular life. You can do full-time work and full-time college. I know I did it. And there's a lot of other people who've done it. Your husband did it too. It's not like maybe the most fun, but to come out with how much student loan debt did you say you had when you graduated both of you together? It was like $8 or $9,000. $8 or $9,000.

And that was mainly from his freshman year when we like had to live in on campus and pay for the meals and all of that stuff. That's amazing. That's huge. Work at Nike. Okay, this episode is not sponsored by Nike, but it should be. Yeah, he, and he was a finance major, so it wasn't like he had an easy course load because he definitely didn't. And yeah, we didn't have a normal college experience, but it paid off tremendously after we graduated. Well, what's a normal college experience? Is it just like going to school and never working and partying? And I never had a normal college experience either. So I'm not like, that sounds judgy. I'm not trying to be judgy. Scott, what was your college experience like? Did you work during college?

I worked in the summers during college. I did not work during the semesters. Okay, so what was your college experience like? I did a lot of the fun stuff there. No, I was captain of the rugby club and heavily involved in a fraternity and all that kind of stuff. I kept my grades up and did not work the way that you did through college for sure. That's okay. Your experience is valid too.

Yeah. I don't know if that's the normal college experience. But okay, so you graduate in this great position where you have a $30,000 to $40,000 in assets, $9,000 student loan debt. You both got, you both work in full time. How much are you able to accumulate on an average monthly basis in the first couple of years post-graduation? We would save a couple of grand a month.

Okay, great. And what did you put that money towards? What was your kind of use of that capital? So we bought a house about a year after, it was actually right around the time we got married. So a year after graduation and it was like your typical suburbia house, just cookie cutter, brand new construction in metro Atlanta. There's millions of those going up right now. And we lived there for about a year until my husband realized that he needed to get out of retail.

Hill and he wanted a more normal job. So he started applying for jobs in a few months later. He got a job in Jacksonville, Florida. So we had to figure out how to sell our new house that we had been in right out of year. And by that time, because where we were in Georgia is a booming area. And we were able to make, I think about 15 grand on that house in those couple of months. And once we moved to Florida, a few months after we got here, my husband realized that corporate life wasn't cut out for him. And right around that time, we found bigger pockets. And choose FI had like just gotten started at that time. So what year is this? This is in the summer of 2017. Great. And this is a year after you graduated. We graduated in May of 2015. So two years. Okay. Okay. Perfect. 17, you moved to Florida

with new jobs. Hussein realizes he doesn't like his job and you discover financial independence. All right. I think we're, I'm sensing a turning point here in the story. What happens next? So we had always talked about real estate. Like, real estate has always been a huge love of mine. Me and my mom used to just drive around and look at houses. And we had always talked about, like, even when we were in college. So we were in college during like 2011, 2012. So the market was still down.

And we lived in a duplex. And we even looked at duplexes while we were in college. And we could have bought one so cheap. But at the time, we thought it was just like, rich old white men that invested in real estate because that was what we knew personally from the guys we knew who were real estate investors or had rentals. So once we found bigger pockets, it was just like our whole mind exploded. So you and your husband bought a duplex in Jacksonville, Florida. No, we were looking when we were in college to buy one in Athens, Georgia. Oh, okay. I'm sorry. I misunderstood.

So we remember looking at the time. We just didn't know that people actually bought rentals and you could do that. So once we found bigger pockets like four or five years later, we were just like, oh my God, our whole mind just exploded from that combination of bigger pockets and fire movement. So then you went on a spending spree and you bought 57 units? No, not quite. So we had the childhood house that I grew up in that I mentioned earlier in the middle of the woods had been sitting there vacant for a little over three years since my grandfather had passed away.

And we knew that once we, we had always talked about renting that out, but like emotionally, I couldn't get to that point. And once we moved to Florida, I was like, we have to do something because this house can't just keep sitting. here. So we decided that we were going to start fixing that up, hired a contractor and everything, and then a couple weeks into the renovation, over the weekend, the air conditioner pipe busted and completely flooded like half the house. So that was our first experience in real estate investing. And literally a week after that, my husband found bigger pockets and was like, I want to start real estate investing.

And I was like, are you freaking kidding me? There's a hole in the roof right now. We're not doing this. You're crazy. And then after a couple of weeks of me dealing with that whole issue, that's when I was like, okay, I want to do this. Let's make a goal to buy a rental here in Jacksonville by the end of the year. By the end of 2017.

The end of 2017. This was in July of 2017 at this point. and off we went. We had a broiliter. Because at this time, too, we were also thinking about buying like our primary home because, again, real estate investing was nowhere in the picture. Let me ask you this real quick. But your financial position at this moment in time,

you had you'd have pocketed some cash from the sale of your Georgia residents, right? And you said you'd net it about $15,000. So around how much cash do you think you had at the time that you were going into? this? Between both of us, probably like 60. 60,000. Great. And you had, and you're a couple of years out of college from great savings habits all the way through college and post-graduation in the first couple of jobs. You're also, are you contributing to your 401K and Roth IRAs throughout this period? Yes, I had been maxing my Roth IRA and then, like, since I was about 19 because of the financial advisors. And then my husband had been contributing to his 401k at

Nike and buying employee stock at that point. Wonderful. And how about on a monthly basis do you think you're saving at this point? So you have all that pile of cash. You backs out your IRAs and you're saving money on a monthly basis. So actually, when we moved to Florida, I didn't have a job. Okay. And then my husband actually took a pretty big pay cut. So we could move to Florida. Fair enough. We weren't saving a lot of that point. Were you still cash flow positive? Yes.

Okay, great. All right, fair enough. No, I just, I admire the strength of your position going into it because real estate can be very scary and a big challenge for a lot of folks. But from the position that you guys are sitting in at this moment in time, you're in a perfectly appropriate financial position to begin making large real estate investments. Yes. And as I said, like we,

did have a pretty privileged life. Because after my father passed away, when I got the financial, I don't know what to call it. What do we call it? It was, it's not an inheritance. You're being, a settlement.

It's a settlement. Yeah, it was a malpractice settlement. Okay. But the way we looked at that was we never planned on touching that, like, at all. But at that time, too, I also didn't have the financial literacy to even know what to do with that. But you don't sell yourself short because you didn't spend it. Yes, yes.

And I interviewed Jacob Wade a few months ago and he got a settlement similar to yours and he blew it on some truck. And I don't want to talk smack about Jacob Wade. He figured it out later. But he fully admits like this was the dumbest thing. I spent all this money on a truck. And I struggle with that because, like, sometimes I feel like my story can be discounted because of that. But then I also have to remind our, like, remind myself that, like, no, we also made some pretty smart decisions during that time period, too.

You absolutely made smart decisions during that time period. And we haven't talked about how much this settlement was. Yeah. So, and to go to take. up Wade's story. My dad had a small life insurance policy and I did blow that because I was 16. So, well, I wouldn't say I necessarily blew it. I set some aside for college and then the others like I redid the floors at the house that me and my grandfather were living in. And then I did buy a truck, but that truck that I bought has turned into the vehicle that I now drive and have driven for

the past eight years that's 13 years old. So I wouldn't say I necessarily blew it all. I wouldn't say you blew it spending money to live to redo the floors in the house, to buy a truck to get you to school and get you to work and all of that isn't blowing it. How much did your truck cost? I think it was like 15,000. Yeah, Jacobs was a lot more. Pretty fancy truck. Not as fancy as Jacobs. Didn't he put like neon lights underneath it and put like, an $8,000 stereo in it or something. I mean, it was, he went big in his. And I don't want to, you know, Jacob figured it out.

I don't want to sit here and dog on Jacob, but that's a, you know, that you handled it very intelligently. I know 16 year old Mindy would not have been so good with a settlement. And I, I have to credit like, like I said, Ms. Taylor, my teacher who found my financial advisors for me. Like, that was exactly what I needed at that time because I need the distance between. me and the money. Again, because I was a teenager. I mean, even if I wasn't a teenager, I think most people are in that position, like who are in that position need distance. So they can't

make crazy decisions. But. Christy, I actually have a couple of observations here, right? You, you had a series of very unfortunate events happen in your childhood, life-changing, life-altering. And from my seat, in no way do I sit here and say, oh, you had a privileged upbringing, which discredits any part of your financial or money journey, right? And we see this from time to time where folks are like, oh, I had this advantage or this advantage or that advantage. You know, I guarantee you that most people who are listening to this episode of the Money podcast are not thinking, oh, she's in an unrealistically privileged situation, right? I mean, you overcame some tremendous difficulties. And guess what? There's big lessons we learned here.

I bet you that a lot of people who could find themselves a situation like yours, they go out and they make very bad decisions downstream. It seems like you had a level head on your shoulders even at 16 and made a set of reasonable decisions. Were they the most optimal long-term choices to move you towards financial independence as aggressively as possible at 22? No. But they were like very, like buying a five-year-old,

truck as a 16-year-old with what sounds like a large amount of cash, a large cash infusion, right, at that time is not a ridiculous situation or circumstance. It's not, you know what I mean? And I just think it's just an interesting thing that in today's world, you feel that you need to kind of qualify your journey as privileged. I disagree. I agree with Scott and I disagree with you that you did overcome quite a few things and you still have a lot to show for it. I mean, you had a nest egg of $60,000 that you and your husband saved up. That's at what age 22? Somewhere around there.

Yeah. I didn't have a $60,000 nest egg at age 22. So, yeah, you're way better than both of Scott and I. And I had spent some of my savings on our weddings. But you saved up for you. for it. Scott, here's you and I

trying to convince her that she's good with money. You saved for your wedding. You didn't borrow, you didn't put it on credit cards

and figure it out later. That's commendable. Since you brought up credit cards in our wedding, like again, we regret not finding like travel hacking. Because I was like,

oh my God, our wedding would have been perfect. I don't think travel hacking existed when I got married. I think you've done a great job so far. in this story and don't judge any of your actions as being inappropriate or unfavorable

at any point in your story so far. So I love it. Okay, but let's go back to 2017. So you're in this position. You're not working. A husband took a pay cut. You're in Jacksonville, Florida. You're interested in real estate investing. How do you get into that first property? So we actually just found our first property. Well, like you said, we had a realtor and turned out she was not that great. We ended up losing like four houses because of her because she was just taken forever to get back to us. So we missed out on a lot and at that point we fired her, found another guy and like right away he showed us probably like 10 houses and three weeks later we were under contract on our first property here in Jacksonville and it was from the MLS. Awesome. I want to jump in here and say

if you are trying to invest in real estate and you are not hearing back from your agent in a timely fashion, don't let that drag out and drag out. If you're agent, I'm an agent. And if your agent is not getting back to you, stop using them. Because you, like you said, you lost out on four houses. And, you know, they weren't meant to be and whatever. But that's still really frustrating when you're calling up your agent, texting your agent, emailing your agent saying, hey, I want to see this house. I want to put an offer on this house. And there's crickets. Unless they're in the hospital, they need. need to be getting back to you. And if they're in the hospital, they need somebody else to be

answering their phones, getting back to you. Yes. Sorry, let me step down off of my soapbox now. Yeah, because it would be, you know, I would text her on Wednesday, text her again on Thursday, and she would get back to me on Sunday and be like, oh, it went under contract yesterday. Unacceptable. Are you freaking kidding me? So yeah, after the fourth one, my husband was like, find someone else. I'm tired of dealing with her. So, yep, unacceptable. I would, We'll give you a bit of advice, though, to people who are listening because you don't need this advice anymore. But if you are working with a real estate agent and they have you sign a contract, it's called the exclusive right to buy contract or something like that. If they have you sign that contract, you need to break that contract, cancel that contract before you go into a contract with another agent.

Because the agent that you have that exclusive right to buy contract with is technically guaranteed a commission. or earns, how am I supposed to phrase this, Scott? I'm screwing this up. But they have the right to your commission if you buy a house while you're still under contract with them to buy a house, even though they didn't show you. And I disagree with that, but that's my opinion. But you just want to make sure you're not in a contract, you're not contractually obligated to buy from a different agent.

So it's okay to sign those documents. Just know what you're signing and know that if it's not working, out, you can break that. Well, so what was this deal? Tell us about the property they ended up buying. It's in about a scene neighborhood. We ended up getting it for 75,000. It rents right out 1,000 right now. Oh. And it had a brand new roof, brand new HVAC, a brand new kitchen that they had just remodeled. You said this was a deal on the MLS. Was it a foreclosure? Was it any sort of short sale or anything. It was just $75,000 for a whole house? Yep. It's a three-bedroom, one bath. And it was just an older couple who was like liquidating their portfolio. Wow. So have you had it

rented out the entire time that you've had it, that you've owned it? Yes. So we actually closed on that property on our anniversary, my name is my husband's anniversary. And it's been right at two years. Awesome. So what happened next? Did you buy more? Did you sit up to sit on that one and learn how to operate it or what was kind of 2018 like? So we had, okay, also during 2017, my childhood home in Georgia had finally, we recovered from the water damage and everything and we also got a tenant in that property. And they signed a three-year lease. So we're on year two of that as well. And by that time, had the two properties. We ended up not getting anyone in the first property we bought until I think February of 2018. So after that, we had plans to buy two in 2018. However, the house that we were

renting our landlord didn't want to renew our contract because her daughter wanted to live in that house. So we were kind of forced to buy a primary home because we really didn't have any else to live and we were paying like way under market rent for our our house. So we had a primary home kind of fall into our lap and that kind of set us back on buying rental properties for a while because that was a huge expense. It took us a while. But toward the end of 2018, we ended up buying another rental that we found on MLS and we also closed on our anniversary a year later. December 19th is a big day for our household. That's amazing.

So we closed on that property in 2018, and then at first we kind of had some trouble renting it out. The kitchen hadn't been updated. It needed some paint. But other than that, it was livable. But we just decided to go ahead and spend a couple grand to update the kitchen so we could get a better quality tenant in there. Okay.

So the first property you bought for 75 and it rents out for $1,000 a month. This is well over the 1% rule, which is if you buy a property for $75,000, it should rent out for 750 or 1% of the purchase price. So you're killing it there. Did you get a mortgage for that property or did you pay cash? We got a mortgage. Okay. So what is your cash flow on that property? It's about $300 a month. $300 a month. Okay. And then the next property, How much did you pay for that? 98. And what does that rent out for?

1,100. Okay. So that's, what is the cash flow on that property? It's about 200. Okay. Okay, so you're making $500 a month from these two rental properties. Plus, you have the childhood home in Georgia. What is the cash flow in that property?

It's a little over 1,000. So you're making $1,500-ish,000. month just from your rental properties. And what is your, what are your expenses every month? Like you're just your regular living expenses? They're right around 2,500. Okay. So you are, you just have to have a job that pays you $1,000 a month to live. Are you working now? Yeah. So I currently work with a home staging company here. And I deal, I dealt with a lot of investors. So it was pretty interesting that I got to see the investing. I get to see both sides of it.

I get to see going all of these flipped houses and kind of see my competition, if you want to call it that. That's awesome. And what is your husband doing? So my husband is still in that same corporate job that he hates. And he works for a sports memorabilia company. I guess that's what you would call it. So what are you able to accumulate now on a monthly basis?

We save probably three grand a month. Wonderful. And do you still max out your IRAs? Yes. So my husband actually didn't start maxing out his IRA until last year, two years ago. So this is the second year. And then I've continued to do that. He's continued to keep up with his 401K.

I don't have any of those vehicles besides. the IRA. Perfect. So you contribute to these things and then you, everything else, do you kind of pile up in the bank account waiting for the next rental property purchase? Is that more or less?

Yeah. So earlier this year, we actually bought a house cash. How I said I wasn't planning on touching that settlement, we did bring some of it out to buy this property that we are going to burr and hopefully continue to increase. are cash flow. That is an outstanding use, I think, of that, that money that you set aside. Now

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Well, now I want to jump in and have Christy clarify. you said you're going to burr this property and not everybody who listens to the show is familiar with that term. So can you explain that, please? So we bought it cash. We're in the process of rehabbing it now. It's a lot longer process than we expected because we have run into some issues with it. And then we are going to run it out hopefully in the next couple of months. And once we do that, we'll refinance it and get some of our cash back. We probably won't get. We're not planning on taking it at all. out. Okay. So Burr stands for buy, rehab, rent, refinance, and then the last one is repeat. Do you have plans to repeat? We do. So to kind of jump ahead a little bit, as of Christmas Eve, we actually

went under contract on a little cabin in the mountains of North Georgia. And if all goes as planned, we are planning on quitting our jobs and moving up there for a couple of months and rehabbing that property. And then we are going to rent that out on Airbnb and kind of go from there. So you would move up there for a couple of months to rehab it and then where would you go? Would you come back home? No, we honestly don't know. So while we're up there, we plan on renting our primary house out here. So that'll be another income that we have. And even once we move up, there are expenses they're going to go down because the mortgage will be cheaper.

We won't be eating out as much and kind of those things mainly because we'll be in the middle of nowhere. But after that, we're hoping to kind of make a fully funded lifestyle change where we can figure out what we really want to do. because we just want to be happy. My husband hasn't been very happy at his corporate job. He knows that that's not for him. And he's always wanted to, on his own business. So we're going to kind of try to figure that out for a while. Great.

So, I mean, you guys graduated in 2015. And you might point out or think that you made a number of mistakes along the way. You're wrong. I think you've really done a pretty impressive overall job here at managing your portfolio, your life, and your personal finances, you are sitting in a position where you are seriously capable of firing this year in 2020 within the next couple of months here and maybe achieving that state semi-permanently. And your worst-case scenario is you go back to one of these jobs that you don't like downstream,

which is one of the many favorite quotes is Joel from A5-180. My worst-case scenario is everybody else's everyday life. But yeah, I think that it's just an awesome, awesome situation. It's just the power of getting the stuff more or less right in college and in the years following graduation, which you guys did. And that's what we've said. Like I said, we want to give ourselves a few months to kind of figure it out. And I told my husband, I was like, if we end up moving back to Jacksonville, like, he knows that he could go get another job like he has right now. And it wouldn't be an issue.

Yep. Well, when most of your expenses are paid or all of your expenses are paid, I mean, the $300 that the $300 that the $100 that the $1,000, that the $1,000. property cash flows, that's after mortgage, after taxes, after all the expenses, right? That's just extra money that comes into your pocket. After all of your expenses are paid, you could literally work at McDonald's or Starbucks or I think actually Starbucks gives their employees healthcare and Costco is a great place to work. I mean, there's a lot of things you can do that don't have these pressures that then you can go and live the best life you want. And that's, that's, that's, That's what we're shooting for.

And just five short years after graduation. Five years after my graduation, I was not doing this. And I don't really know how to fit this in. So I'm going to kind of go back a little bit. So my husband actually wasn't really focused on paying off his student loans. He was just kind of, he's like, oh, it's not a lot. I'll get there when I get there, you know, because like I said, his minimum payment was like $50 a month.

But since we found fire, he, like, it's funny when you look at his personal capital account, you can literally see the drop off on his student lawns because he's like, do, do, da, da, boom. So he's like made that a priority. So he's done with that. And then I also want to add another little snippet. So I talked about my financial advice earlier. And just the older I got and the more that I learned about personal finance, because like I was never a math person or a numbers person. I just didn't care about that. And I would get my mom. monthly or my quarterly statements and I would just hand him over to my husband because I'm like, you're the finance, like your degrees in that. I don't care about it. Just look at it. And he would be

like, oh, yeah, okay. I honestly don't even know if he looked at my stuff. But after we found fire, I just kind of like dove head in. And I was like, hi, this is awesome. Because before we didn't really have a plan, we were just, we knew we had made some smart decisions, but we just didn't know what for. So once we found that, it just kind of all made sense. And I was listening to one of the Cheez-A-I episodes about like the fees of the financial advisor and all that. And we sat down and started looking at it. And we like got mad at ourselves, honestly, because we were like, why have we let this go on for this long? So I actually ended up firing my advisors around this time last year. And that's going to save me, who knows how much money over the course of the rest of my life.

Well, let me ask you this, because I think that the non-fiduciary, non-feet only a financial advisors, the folks who make money by selling you financial products, I think they're a dying breed in that industry is going. And I think that hopefully shows like this one and other ones are going to contribute to that decline. Perhaps in your case, they actually were helpful to some extent. No, I totally agree with that. Because they might have helped influence you away from that money in a way that might not have been very productive. Yep. No, I 1,000% agree with that. It was exactly what I needed in my life at that time. It was just the older that I got and learned more about it to realize that I had

grown from that. Well, I think that's a good lesson. Lesson's not the right word. That's a good tip for people who are listening now. If you have had your money in an actively managed fund with a commission-based financial planner, now's the time to look at what you're paying for. Are you getting value out of what you're paying them? We had Kyle Mast on, oh, episode 41, maybe, and he was saying that actively managed funds pay commission. Some of these investment vehicles pay a commission to the financial advisor, and they're not always acting in your best interest. They could be acting in your best interest, and also they get paid for it. But I think Kyle didn't say this.

This is my own quote. The worst performing it is, the more money the commission pays. I don't know. I don't have any commission-based assets anymore, I don't think. But yeah, if you are not with a fee-only financial advisor, then look at what you're paying for and see how you can get more value out of that. And my fee was like one and a quarter percent of all assets under management. That's not the best.

Yeah. But it prevented you from blowing it when you were 16 or 18 or 21 or whatever. So again, your mistakes, I don't consider mistakes. No, I totally agree with that. Like I said, I think it was exactly what I needed at the time. it was just the older I got and the financial advisor he's always like I hear him he has a podcast saying I always hear him like oh the millionaire next door is my favorite book I read it when I was 18 and I'm like hello like I was your youngest client at 18 like why did you not tell me to read that

like we could have avoided so much I probably want to got a freaking jacked up truck but oh I love it I love it so yes If you are, and still, what in a quarter is not a bad price to pay for the advice that you got at the time. I mean, look how much you've put in your Roth IRA. Yeah. Okay. It is now time for the famous four. These are the same four questions we ask of all of our guests.

Christy, are you ready? I am. What is your favorite finance book? Since I just touched on it, I'm going to save the millionaire next door. Great choice. Because, I mean, really, I should credit a little bit to rich dad, poor dad, because I bought it at a yard sale like three years before we found fire. And then I didn't read it until after that. And once I read it, I was like, wow.

But once I've read The Millionaire Next Story, it just kind of like all clicked. I was like, this is what we want. This is kind of how we've already been living. And we just need to continue that. And I told my husband, Scott, that I would give you a shout out as well. because he asked him this question last night, and he was like, set for life. I knew you were going to say that.

Because as soon as he read set for life, he finished it on a Tuesday night, and Wednesday morning, he woke up, and he was like, I need a mental health day. Let's go for a hike. So we, like, lived a day of fire after he finished that book. I love it. Well, great.

Thank you for the plug. All right, what was your biggest money mistake? What do you consider of the things we discussed today? I would necessarily call it an estate. I would call it a regret. And our biggest financial regret is not buying a duplex when we were in college and house hacking. I get that. I wish I would have purchased real estate way back.

Well, I started early. I just didn't. I kept selling. We were like, man, we even looked at it. Why didn't we do it? Well, I think that the house hack duplex, triplex, quadplex, even just single family with extra units, the ROI, the kickstart, it can give your financial journey is just so unbelievable, especially in this couple of years out of college where you're not going to miss the lifestyle

component very much. I mean, it's just like the biggest cheat code, I think, in this whole journey for most people working full-time jobs. No, I totally agree. And we're not totally excluding house hacking yet. It might be hard to go back to a duplex after we've loved in single family for so long, but I'm not writing it out just yet. Awesome. On the flip side of that, once you have a sizable nest egg, the advantage of house hacking can kind of become diluted because you've already got rental income and you've got a larger amount of assets now that you can deploy in something. So investing 12, 15K at a 5% down on a duplex isn't that meaningful to your overall financial position now that you spent several years making great choices and are on the verge of

buyer. So it's kind of an interesting trade-off where it's really the most effective in kick-starting you early. It can always be effective, but its utility diminishes as your net worth grows. On the other hand, if you buy a duplex and you live in one half for a year, you get the lower owner-occupant mortgage rate. And when you move out, you don't have to refinance. You can keep that lower-owner-occupant mortgage rate. Just a tip. Okay. What is your best piece of advice for people who are just starting out. If I could just go back and tell my college self, I would say to not focus so much on what other people think,

like your cars, your clothes, like none of that matters. Even if your family and friends think you're crazy, just do whatever makes you happy. And start early. I love it. I love it. All right. Most difficult question of the famous four. What is your favorite joke to tell it parties?

Okay, this was difficult. I had to pull the interwebs for this. So how did the butcher introduce his wife? Ooh, I don't know this one. Bit by bit. I don't know. That was a scary. Sorry.

Meet Patty. Even better. Even better. That's way better than your answer, Scott. Much better, yes. God. Oh, my goodness. We're totally leaving that in.

And if you have a note for Scott about how inappropriate that just was, you can reach it at Scott at biggerpockets.com. All right. Christy, where can people find out more about you? You can find me. I'm pretty active in the Choose FI group, but we also just started an Instagram where we're hoping to kind of post more about our little cabin and redoing our properties. So we are going to be over at Dreams 2 streams on Instagram.

Is that Dreams the number two? TEO. Dreams two streams on Instagram. Awesome. I'm super excited to see what you do with this little cabin. And I'm starting in Airbnb this summer. So I'm very excited about that. And I want to hear how yours goes so I can learn from your successes and any missteps.

I'm excited. Yeah, let's hope. Yeah, no, I'm excited. Our friends just bought a place up there too, so we're going to do it together. Oh, nice. Well, they're a little, they're a couple miles away, but we're going to learn it all together. Perfect. Perfect.

Well, that's awesome. Well, Christy, thank you so much for your time today. This was a lot of fun. Thank you for having me. You know, starting early, making small incremental steps towards successful financial management is going to put you at early, retirement, like super early retirement. How old are you now? Like 24? 24? 27. Oh, 27. Okay. Well, still, you wish. Listen, 27 and no job and all this money coming in from all your rental properties,

you're in a good place. Thank you. Okay. From episode 108 of the Bigger Pockets Money podcast, this is Christy Tanner Smith and Scott Trench and Mindy Jensen and we are out.