BiggerPockets Money Podcast - 114: Paying Off Debt Through Conscious Spending and Real Estate Investing with Ashley Kehr

Episode Date: March 2, 2020

Ashley Kehr married a dairy farmer. With a dairy farm comes farm equipment. And with farm equipment comes farm equipment loans—to the tune of around $169,000. Three years ago, she read Total Money Makeover by Dave Ramsey, and it CHANGED. HER. LIFE. Ashley knew she needed to get rid of their debt, but her husband wasn’t totally on board with the plan. So she tackled her student loan debt first—and proved to her husband that this was the right financial plan for their family. She quit the job she didn’t like and transitioned into property management, which introduced her to her current love of real estate. Real estate started providing a very generous income stream to help supplement her family’s income. When she didn’t have her own money to invest, she partnered with someone who did. When she didn’t have experience to do the project at hand, she partnered with someone who did. Ashley’s story is a delight to listen to. She walks us step by step through the process she took to find these partners, find these properties, and generate this income stream for her family. If you’re thinking about getting into real estate as a source of passive income, this is a must-listen episode! In This Episode We Cover: Ashley's money journey How Ashley and her husband accumulate both rental properties and debt The moment she purchased her first rental How her rental income helps her to be more conscious about money Ashley and her partner's agreement on their investments 2 rules to analyze markets for rentals What a portfolio loan is and how to use it Ashley's method of recycling her cash to buy more properties What her lifestyle looks like after reading Dave Ramsey's book Debt snowball method How Ashley managed her various properties with various partners And SO much more! Links from the Show BiggerPockets Forums BiggerPockets Real Estate Podcast BiggerPockets Business Podcast BiggerPockets Calculators BiggerPockets Podcast 348: Full-Time Job, Full-Time Mom, and Full-Time Wealth From Rentals with Ashley Kehr BiggerPockets Money Podcast 20: The Simple Path to Wealth—Index Funds Explained with JL Collins BiggerPockets Money Facebook Group BiggerPockets Money Survey Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast show number 114, where we interview Ashley Care, the host of the new real estate rookie podcast and hear her debt payoff story through conscious spending and real estate investing. And I felt a lot more comfortable too as my portfolio has grown because if one property is vacant, I have the other property's cash flow to cover that. So it would have to be a significant amount of vacancies for me to ever have to pull money out of my own pocket. to pay a mortgage. Hello, hello, hello. My name is Mindy Jensen, and with me as always is my magnificent 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, saving a huge percentage, of that income and setting yourself up to make larger and larger investments on your way to financial freedom. 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 build a financial position capable of launching yourself towards your dreams. Scott, I am super excited for today's guest because she is the host of the new real estate rookie podcast that

Bigger Pockets is releasing on Thursday. Spoiler alert. We're launching a brand new podcast. and I'm so excited for her show. I'm so excited for her and her podcast host. And I just, I feel like the show fills a hole in our light up. Yeah, you know, our bigger pockets of real estate podcast, the OG podcast, as was referred to later in this episode, is really kind of getting to be a little bit more advanced, which is a good thing, right? Because, you know, Brandon and David Green are so advanced as investors and their, their

portfolios are scaling so much. I imagine, you don't know for sure, but I imagine they're both multi-multimillionaires. And we thought that a show that would come back to the starting point with Ashley and Felipe. Felipe will be our guest next week on the Vigger Pockets Money Show podcast would be a great way to kind of get back to the roots of helping some of our newer investors get really comfortable speaking the language and preparing to make their first or next investment on their journey to financial freedom through real estate. Yep, Brandon and Josh Dorkin started the original podcast, the OG podcast, seven years ago. And it makes sense that they would have grown in their investing.

And I know there's a lot of listeners who have grown with them. But seven years ago, we were a touch smaller than we are right now. And we've attracted a new crowd of investors. They still need to learn the basics. So I'm super excited for Ashley and Felipe. They were both featured on the OG podcast in the past, and we just thought they did such a great job. We decided to bring them back as now the hosts, where they can teach you the intro, the beginner, the, you know, here's how I did my first deal.

It's super inspiring to listen to somebody who just bought their 17th 100 unit apartment complex. But when you're struggling to buy your first one, or you're not sure, where to go to, you know, well, if you're not sure where to go to find the information, you go to biggerpockets.com. But if you're not sure what to do with the knowledge that you have, if you're not sure how to put that into place, you listen to the rookie real estate, the real estate rookie podcast someday that'll flow off my tongue. And you will learn from the beginnings. And you can hear people who are more closer to your level. Yeah, this is, it's going to be real. It's going to be people who are making mistakes, figuring out as they go along and getting

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Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audiobook completions on Audible alone, and I still regularly re-listen to the highest impact titles. Lately, I've been listening to Bigger Leen or Stronger for Fitness, the Anxious Generation for Parenting Perspective, and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful is its breadth. Beyond audiobooks, you also get Audible originals, podcasts, and a massive back catalog

across business, health, parenting, and more, all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over 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. Ashley Care from the brand new, bigger, Rookie Real Estate podcast. Welcome to the Bigger Pockets Money Show. I'm super excited to have you today. I cannot wait to share your story with our listeners. Thank you very much for having me. And I'm really glad to be

here to share it because I feel like I have a unique way that I did it using real estate. Oh, oh, using real estate. Maybe in your real life, that's a unique way. But you're in your pocket. Yeah, that is true. I don't mean to belittle your accomplishments, but that's not so unique in real. But you know what? That's really interesting because in my real life, nobody cares about real estate. Nobody talks about it.

Nobody wants to hear me talk about it. They're all like, I don't want to hear it unless they have a question. And they're like, oh, hey, what about this? Oh, well, here's the answer. And by the way, they're like, no, I'm done. Good. Thanks. Bye.

Yeah. I think of the Dave Ramsey method as the way to do your money. And it's different from that. I guess I should say that way. Well, so Dave Ramsey has a great model, but it's certainly not the only model. So, well, let's hear your money story. Where does your journey with money begin? Okay.

Well, it started with Dave Ramsey. And I am a huge fan, big supporter. I just varied off of his path, per se. So about three years ago, I read the Dave Ramsey's book, The Money Makeover, and it absolutely just changed my mind, changed my thinking. Up until then, my husband owns a dairy. farm. So we had a lot of farm equipment that we had loans on. And we never struggled. We didn't really live paycheck to paycheck, but we also weren't saving, investing, or doing anything like that.

So after reading the book, I approached him about, why don't we start paying down some of our loans? So he wasn't completely on board. So I started with my student loans. We were fortunate enough to live on just his income. So any of my income, we would put towards the student loans. I was able to pay those off pretty quick, about 15,000. Well, let's go back even before this. So what was your position leading up to the discovery of Dave Ramsey? Did you have debt? What were you guys doing? What was kind of your asset income-ish allocation there? So when I graduated college with a finance and accounting degree and I lasted at a CPA firm for about six months before I quit and he did it. And my husband had a dairy farm. So he actually lived in his grandmother's old house on the farm.

And so we got married. We had our first child. I started working as a property manager. And we decided to build a house. So at this time, we lived in a paid-for house. And so we took on our first mortgage building this house. And at the time, my husband had loans on his farm equipment. We had my student loans and we also had two vehicle loans. And then the mortgage? Yep. Yeah. And my parents and his parents were never big on credit card. So neither of us ever had any credit card debt or anything like that, which we're both thankful for that our parents kind of taught us the evil side of credit cards. How much total debt outside of the mortgage did you have when you discovered Dave Ramsey? That was about 169,000. Oh my gosh. Okay. So you had 169,000 non-mortgage debt.

And what was your kind of general trend in a given year for debt accumulation? Were you steadily accumulating debt or were you starting to pay it off? Were you generating any savings or investments throughout this period? Well, about every year in November, my husband would look at his profit and loss from the farm and say, I need to spend more money. I'm, going to go buy this piece of equipment and just put a loan on it. And he was very good about it. He usually paid off his loans ahead of time anyways. And like our vehicles, we always paid those off early. But it just, it could have been a lot better where we just were debt-free and paid all in cash. So the big turning point was when we actually took all of those loan payments and saw

what those monthly payments were and what they told it up to. And it was actually without our mortgage, it was about $3,500 a month. Wow. And so you went through that exercise after reading Dave Ramsey. Yes. So after reading that, yeah. Okay, awesome. So you see that you size all these things up, $169,000 in debt, $3,500 a month. And what happens next? So we tackle my student loans first. That was about $15,000. And then that was a low minimum payment. But so I was like, hey, we have this extra, you know, whatever it was, $250 a month. And so then we started, to tackle a home equity loan we had. And we had put this on our old house to help pay for our new house. So we paid that off, just throwing as much money as we could. And at that time, I had had

rental properties for about three years then. And so any rent income, any of my W-2 income, and then any extra money my husband had from the farm, we would just throw it towards that. Okay, let me ask you a couple of questions. So I'm trying to get a chronological picture of how this all developed. So when you discovered Dave Ramsey and you had $169,000 in debt, did you already have rental properties as well? Yeah, so I had the rentals and that's why I kind of feel like I did Dave Ramsey's plan backwards, where and as we were paying off that, I still continued to buy properties too. Okay, so let's start this. What year did you graduate college? That'd be 2012. All right, 2012. And what year did you discover Dave Ramsey? 2017. 2017. Okay. So in those five years, you accumulated $169,000 in debt. You started what sounds like a reasonably successful dairy farm here or continue to grow it.

And you were able to accumulate three rental properties in that period as well. No, I accumulated more than that by the time we found Dave Ramsey. I bought my first property in 2014. And then between 14 and 17, I had three properties. And then in 2017, early on, I bought about another six properties. And then we started paying off debt like the fall of 2017. But then in 2018, I bought another six, I believe it was too. Okay. So what I'm trying to kind of put together here is out of college,

you had some student loan debt and this farm. How did you go about in the early years before the, it sounds like a turning point in your financial journey was when you discovered Dave Ramsey and began paying off at least all of your consumer debt. We'll find out with the real estate stuff later, I'm sure. Yeah. But what I'm trying to figure out is how you and your husband were able to accumulate both rental properties and debt and whether that was intentional or what kind of the approach was in those years following your graduation. So I've kept my real estate business separate from my family, I guess. So I never take any money from our family fund or, you know, my husband's income or my income. I've either, you know, save some extra rental income. But a lot of times I've taken on partners. So I've money partners. And most of my deals, I've put like little, very little of my own money into them. So the startup cost is so low that it's,

not hurting my family financially to put in this 20% down payment. Got it. So you started a CPA firm. Would you have any other work after that? Yeah. So my husband told me that if I got pregnant, I could quit my job. So I got pregnant and I got my job. And I was just going to be a state-home mom and be a farmer's wife. And my neighbor growing up, he owned a bunch of investments, auto dealerships, a bunch of different businesses. And you wanted someone to keep them organized. And it's like, it'll just be part-time. And so I started working about 15 hours a week. And then it ended up, I took over 80 residential units that I was managing for him in some commercial. So it became a full-time job from there. Got it. Okay. So this is starting to come together for me. So you quit your

job and then you get pregnant. And then you start taking on part-time work and then slowly more work. And that leads to property management. Around what time do you start managing those 80 units? Well, I started with 40 right away when I first started working for him. It would have been 2013. And then by 2016, I had taken on the other 40. And then recently I helped him develop a 16-unit patio home complex. We build a 40,000 square foot dealership together. And so we started an insurance agency. I got my insurance license. So it's been really great to learn all these different things working for him. but now I'm also earning insurance commission so that really helped pay off

the last of our debt was that commission too. Love it. So in 2013, you start managing rental property. And at this point in time, what I'm guessing is that you guys are still accumulating lots of consumer debt. You're in the years of buildup in that period. It sounds like you don't have a lot of disposable income as a family in this time period.

Is that right? 2013-2014? The problem was, was that we were spending as we would. We were spending whatever we wanted on groceries. We weren't budgeting at all. I was traveling with our newborn. We did have the disposal income where, you know,

sometimes we would take a couple thousand and throw it towards a loan or whatever, but we had no plan in place. And we were just spending frivolously. There was, you know, nothing saved. Got it. We could have paid debt off a lot faster sooner. if we had been conscious of our spending.

Well, love it, love it. And it's in this context that you're able to purchase your first rental property, right? So can you walk us through that journey maybe with your first rental? Yeah, so my first rental was actually with a partner, and it was the guy that I was working for his son. I didn't have enough money to buy it. I had never, I didn't really know what to do to get a mortgage, stuff like that on an investment property.

So I knew that he had cash. that he had saved up and I started talking to him about investing. So we started looking at properties and the first one we looked at actually, we ended up buying and we became partners 50-50. But I had the experience because I had worked for his dad for a year and a half, managing his properties. And my partner, he wanted to be 100% passive, but just have a good investment in place. So what we did was we were 50-50 equity partners and then he held the mortgage on the property also. So he also received five and a half percent interest. And every month, he received a principal and interest payment from the LLC we created on the property. Then after that,

we just refinanced that property with a bank. And he continued to hold the mortgage on that property while we took the refinance money and bought another one. And then we just continued to do that to buy several more. Love this. So you didn't have any money. And you found somebody who was willing to take on the mortgage for you in exchange for basically doing none of the work on this property. And you're willing to do all the work. And that's how you get a 50. Now, and this is something that comes up a lot with new investors. What would your kind of thoughts be on someone following in your footsteps in your financial position? Do you think that's, is it different in 2020? Or is it kind of the same approach there? I think it's the same because it didn't, it didn't

affect my family at all where I was telling my family, you know, you're going to be. we can no longer do this because I'm taking this money and putting it into real estate. And at the time, you know, we were just spent, we didn't think we had money, even though we did. We were just spending it on whatever. And we probably could have saved to buy a property. But I couldn't have paid off my dad as fast once I was money conscious without that rental income. That really helped expedite the process for sure. And I think that's still possible today to do.

And there are money partners out there. So let's look at the numbers for this first property. You bought it. It sounds like your partner paid 100% of the purchase price. Yep. It was 74,000. Okay. So he gives 74,000 to buy a house. And now when you say your 50, 50 partners, does that mean when the rent comes in, you first pay the 5% mortgage and then split the profits after that? Yep. So after any expenses, the profit, the cash flow would be split between us. Okay. And that is an exchange for him giving you money and then hands off completely. Now, this sounds like a unicorn situation, but it's really not a unicorn situation because there are people out there. They're called private money lenders. There are people out there who want to invest in real estate because they know it's a good investment, but they have

no interest in doing it. They may not know what they're doing. They know it's good, but they don't want to put any time into it. So for people who are listening who are in Ashley's similar situation, you know, this does exist. And how did you find him? Did you just sit there and he called you up and said, hey, any chance you want to invest? Or did you put this out there and talk to him and say, hey, I'm looking? Yeah, I definitely had to approach him about it. But it was, I call it, planting the seed. I, you know, first would just bring it up and not even say anything about being partners. And then I'd bring it up again and say, you know what? Like, would you be interested in investing? And I tried to try to make it an opportunity for him and not that I needed him, which obviously

he knows now. But it's worked out really well. So we bought the house for 74,000. And then we actually just sold it. So we held it for five years and it sold for 105,000. And the whole time, the the tenants paid down some of the equity in the house too. And they paid rent and they paid the mortgage. And yeah. Well, and big part of the context here is that you worked for this, this investor's father, right? Right. So you got you got to know that family over time and use that. Now, this deal, this was, was this one of the best deals you'd come across in your searches? Or was this kind of just one that you thought was very repeatable? It was definitely not the best deal because when I first started out, I did not fine-tune my numbers and from my numbers. And that's why we actually sold it was because I can find better deals now.

But it was great to start out with. It was a little duplex. We only had to remodel one unit. It was just the cosmetic updates and the upstairs. It was a perfect good first property because I like the duplex for first property because you get that experience with, two tenants instead of just one for a single family, and it's not overwhelming having more than two. Got it. Okay. And what market is this? South of Buffalo, New York and the South towns. Got it. Okay. Yeah, because some of our listeners are thinking, $74,000 duplex. That doesn't exist. That never existed in 2013. What is this lady talking about? But yes, these exist all over the place. Some of our hopes are saying that too. Yeah. And to some people's astonishment, I think, New York actually has some of the very best cash flow market.

in the country as far as we can tell right there in the northeast under everyone's nose. Yeah, I've actually bought a couple duplexes for 20,000 from a retiring investor. But yeah, the only thing that kills us is property taxes here because, you know, you can get that mortgage paid off, but you're still paying those, that high property tax every year. So you know what? That's a really good point because out here in Colorado, we are positively spoiled by practically free property taxes. And I have lived. in those places where, like, my last house, my property tax payment monthly is my mortgage payment here. My taxes were $14,000 a year. When I sold the house, they bumped up to like $20,000 a year.

That's something that's really important to keep track of that I think a lot of people kind of gloss over or don't even think about it all because they are what they are. There's not a lot of negotiating and property taxes. But there's a lot of choosing markets. And if you're investing out of state anyway, if you're listening to this and you're thinking, oh, New York would be great. Make sure you factor in those high property taxes. What are your property taxes on that that just sold for $105,000? Those ones were $2,500. But I have like the ones that were $20,000. Those are $1,500 a year. I mean, it really varies by town in here. But I just think it really is important to look at the property taxes too because I almost would rather go out of state. And that's why I,

I've been looking and it's a higher entry where, yeah, you can come here and get your, you know, $70,000 duplex and it's a lower entry fee to get into real estate investing. But once I have the house paid off, you know, my cash flow will be higher and that high going out of state to a higher price point. I, yes, I'm paying a lot more upfront, but once that is paid off, you know, I'm just paying the low property taxes. And, you know, your high mortgage payment is building you equity where your property taxes are not. It's money gone. You know, nothing you'll ever see return to you. Yes. That's fascinating. A lot of investors look at the complete opposite way. So I think your contrarian approach here is really interesting where they want to go to the lower price

markets, most of which, by the way, I'm unable to find very many markets at all with low price points in that $70,000 duplex or $70,000 per unit even that have low property taxes as a percentage of their rent or property value. They're all very high, it seems like. Yeah, and one thing around us, at least, is the school taxes are the highest. And so what I found our county does is every year they set out an Excel spreadsheet. They can find on their website. So maybe other counties have this too. And it shows if you live in this town what your property taxes are and then it has some overlapping. So like there might be a town with like really expensive property taxes for that. And school, but you might be on the outside that you're paying school taxes for, you know,

another school that's a lot cheaper. So right now we've been trying to look in those little like niches where, you know, it's a great town. Everyone wants to live in, but you're paying property taxes for this cheaper school. And that doesn't necessarily mean that you're sending kids, you know, to that school. You know, you look at your, you know, your senior residence, which have been great for us or even young couples that aren't sending anybody to school that would still love to be in that town and not care what actual district they're in. So there's two rules that rental property investors use when kind of like analyzing markets, right? One is called the 1% rule. And that means that if your property's $100,000 in price, you'd expect $1,000 a month in rent to meet the 1%

rule. So around the country, some people are thinking that's insanity. There's no such thing as the 1% rule, and that's probably the increasing the sentiment around this country lately as the market's been booming. And other people are like, oh, that's easy. I can find that anywhere I like, which is probably what you're thinking, Ashley. A corollary to that rule is the 50% rule where you say, okay, if my rents are $1,000, then 50% of that is my fixed expenses like taxes, insurance, CAPEX, maintenance, vacancy, property management, those kinds of things. And that allows you to do a very rough and dirty analysis. And I hate both of these rules for a Exactly the reason that we just discussed here, which is that property taxes can vary dramatically,

right? Your insurance rates are dramatically different than what a Hawaiian or Californian investor is going to get or a Florida investor is going to see. Your capex and maintenance expense, in my opinion, are much more highly correlated with your vacancy expense than with your rents, right? Because I'm going to have more, I'm going to have more, repair and rehab my property more frequently if I have higher tenant turnover and much less frequently if I have lower tenant turnover. And so I think that all of those things are correlated to give a dramatically different profile of cash flow than what some people expect in certain very low rent markets and certain very high rent markets.

Yeah. Here we can easily hit like the 2% rule very easily. But for 50%, that's very hard to get with the high property taxes. and actually one of the duplexes I have is in a flood zone too. So with that insurance, it's also, it's the low barrier of entry. It's hard to resist a, you know, a $20,000 duplex that's going to bring in, you know, $1,300 a month and rent. I can flood every three years. You know, that's a really good point, though.

It's hard to resist this really low-priced property. Yeah. But just because it's low-priced doesn't mean that it's priced well. It doesn't mean that it's a good deal. It doesn't mean that the rents are going to even remotely cover your expenses and your monthly outlay. And I think that a lot of people who haven't done the research and learned all the things that they have to account for during their analysis of the property, we'll see, oh, it's a $20,000 duplex. It rents for $1,300. that's the, what is that?

Like the 15% rule, I can't do math this quickly. I should have asked these numbers in advance so I could whip out my calculator and seem all smart. But that's huge. That's like the 7% rule. I just did in my head. That's the 7% rule. That doesn't really happen because how much is vacancy? What neighborhood is it in?

And I think, oh, wow, I feel a plug coming on. I think this is the kind of, information that will be covered in a new little podcast called The Bigger Pockets Real Estate Rookie Podcast. Am I right? And that is correct. So this episode is airing March 2nd and the real estate rookie podcast is airing on March 5th as an introduction. And then it's regularly scheduled day is Wednesday. So you will have an opportunity to listen to Money on Mondays. Oh, money on Mondays. Tuesday is the business show. Wednesday is the real estate rookie podcast. And Thursday will be the real estate investing podcast, the original podcast that Bigger Pockets has had for

a hundred years. The OG. The OG podcast. So yeah, I mean, when you go through these numbers and you look at it just on the outset, oh my goodness, I have to buy a hundred of these. Well, no, because then you have to buy 100 furnaces and 100 water heaters and 100 air conditions. Right. and 100 roofs and 100, like, you need to really realize that on paper is great, but you have to dive into the numbers a little bit more before you just jump in and buy a property that may actually end up costing you thousands of dollars a month. Yeah, and especially with these properties that hit the extremes, right? In these particularly, like the $20,000 duplex is an extreme, you know,

you're taking certain variables in this equation that we use to analyze properties and taking them to the far end of the low end of the spectrum there. And you have to be extra careful when you do that, which it sounds like you were, and really know your market and stuff and are aware of the risks and stuff that I go along with that. But that's the challenge that. Yeah. And there's so many rules and criteria and different things to take into account when finding a deal. And you know, some people want different things too. So you have to account for that. Are you looking for appreciation. Are you looking for cash flow? You know, down the line, are you going to self-manage now? Are you going to have a property management company? So that was my issue when I first started out was,

I'm like, I'm going to manage them forever. Like, this is what I do for a living. Well, yeah, at February 1st, I turned everything over to a property management company. So, I mean, the numbers still work on those deals, thankfully, but I didn't account for any of that. And I think there's just so many different variables and like the 50% rule, you know, the 1% rule. Like you can still make things work even if they're not hitting each of those criteria, but then there's also things you have to watch out for like for these low price point ones that I'm buying. Like yes, they were neglected for years. And I put, I think in the one that rents for $1,300, I put, you know, five grand into it, which still is not a lot for the $20,000

property, but it's not like I just went, paid that, was completely done with the property and moved on to the next. And that's four months of rent that you just plowed into it. And, you know, that's another way to think of it. Oh, it needs a new roof. Oh, that's okay. It's not that big a deal. Well, that's $5,000.

So that's four months of rent at $1,300. Plus, I mean, I'm assuming you paid cash for a $20,000 property or your partner did. But, you know, you're still, if you're not paying cash for it and it needs this, influx of cash before you can even get it rented. That's not tax deductible. That's not a part of business expense. There's a lot of different things involved. And maybe the furnace goes out, all the rest of your rent for the year just paid for all the expenses. So you don't even have a profit the first year. You're breaking even. You're coming to the property with money in hand in advance before you even start making a dime. So yeah, it's probably going to work out. I've been

you ran your numbers. So it's going to work out for you, but you knew that going into it. And I think where a lot of people get in trouble is they don't account for that. Oh, it's $1,300 every month. I'll just get that. Wait, what do you mean $5,000? I don't have $5,000. And I've said this a couple of times before.

Anytime you buy a house it needs something. The amount of the repair, the cost of the repair, is inversely proportionate to how much you have in reserves. And if you have nothing in reserves, you need a new water heater, a new furnace, a new air conditioner, and a new roof. If you have a ton in reserves, like you need a new light switch cover or something. So, you know, you really need to be prepared for these. Real estate is so fabulous for generating wealth,

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So we talked about this first deal. You found a partner. You had no money. So you went 50-50. The partner brought the down payment and covered and underwrote the mortgage or got the financing for it. After a few years, it depreciated a value. So you're able to cash out refi or the partner was and plow into future investments.

Can you walk us through? We actually did it right away. We did it within a month and bought our next property within the next year. Can you walk us through exactly that? Sure. So we actually found a small local bank that the guy that I worked for and my partner's dad had done some business with. And so we sat down and talked with him and they did it on the commercial side. So we did a commercial loan on the property and we had told them which property we wanted to purchase. So he actually did a portfolio loan that would cover both properties. And my partner could still keep his mortgage on it. And the one we had purchased appraise for 80,000, so 6,000 more. And the one we wanted to do a purchase was 62,000 to purchase. And that one appraised for 80 also. So we had a 160,000 that we could work with. And we ended up refinancing at 105 taking it out. If I knew then when I know now, I probably would have taken the max out and then put that towards another property. But so we did a

portfolio loan for the $105,000, and we then bought, use that to pay for his property, and then we bought another property with a little bit extra. Got it. Yeah, right now we do, and that loan was actually, it stays in place so we can pull, if we want to pull money back off of it again, we can. So like we have that, that max approval, $105,000 where we can go and say, yeah, we want to up our loan again. we don't have to go through the whole loan and mortgage process again.

So our plan was to keep using that. Well, then when I built my house and we had our firm house, I actually went and put a line of credit on that on our old house. And now what we do is we use the line of credit to purchase properties, refinance them, and then pay the line of credit off after we've fixed them up. Okay, we just threw out a couple of different terms. So can you clarify what a portfolio loan is for people who are listening who may not have heard of this? And the line of credit is also commonly known as a helix.

So if you could explain that too, so people understand. Sure. So the portfolio loan go to a small local bank because they will give you the best, not always the best rates, but they'll be the most flexible to work with for you. So this was where we could put two properties under one mortgage. We had one mortgage payment for two properties, and that way we were able to refinance more. Our closing costs were less doing one loan and set up two loans on the two separate properties. And then for the line of credit, we actually did a commercial mortgage line of credit.

It's different than a home equity because it wasn't actually either of our home. So we couldn't get the home equity loan or the home equity line of credit. So we had to get a commercial mortgage line of credit. And so this was a mortgage filed on the property, but it acts like a line of credit. We still had to pay mortgage tax, but we can withdraw from it as we'd like, and we're paying interest only on it on the loan, and then we pay it back. So there's no principal payment on the line of credit. Now let me ask you this about the portfolio load,

because this is going to be a concept that some of the listeners in Bigger Pockets money haven't heard before. Would you have used a portfolio loan if you'd had $40,000 in cash and great credit and income that you could get a conventional loan on? Or was that, was a portfolio loan because you and your investment partner thought that that was just a better option in general than the conventional financing option? Well, our goal then and our goal now is always to put in as little cash as possible. So we, which I know that's not a lot of what, you know, the debt-free community is about, which I follow that community. So I struggle with it because some days I'm like,

Let's pay everything off. Let's own everything free and clear. But I don't think I would have gotten as far as I have if we wouldn't have done that portfolio loan. If we would have taken another chunk of cash, put it at the property. We did about two and a half years later buy a large portfolio from a guy, a bunch of properties from one guy, and he did seller financing. So we actually did put some cash up as a down payment for that. And then after a year, we ended up.

refinancing after we fixed it up and we were able to pay him back and pay ourselves back. Okay, got it. Well, I think that's a great answer and a great philosophy to go about it. It's different than how I would approach the business, but I think it's clearly a right way to go about it. That's been very successful for you. Yeah, and so, like, one thing that's very important about doing that, though, is that you're buying undervalued properties where every property that I've bought and then went to refinance has a praise for more than I've, purchased it for. And that's really important if you want to pull back all of your money. Yes, there's a lot of places you can finance, you know, the whole property and find ways to do it,

but you want to make sure that you still have equity. So every property at least has 20% equity into it after I've purchased it. So I think that's really important to keep in mind that I'm not just leveraging myself 100% on every property. It makes perfect sense. That sounds like a little concept called burr. Yes. Which stands for, but I never did get this right. Buy rehab, rent, refinance, repeat. So did you do rehab on these properties to make them appraise for more or did you just buy them at undervalue? I'm doing my first like full rehab right now. But before that, we only did cosmetic updates, vinyl plank flooring, painting, maybe new cabinets, new countertops, but no running walls or anything like that, but it still worked, just doing cosmetic

updates, increasing runs. Okay, well, that's still a rehab, though. So you did the Burr method, which is available as a book on biggerpockets.com slash store. Is that it? I'll put a link in the show notes. The show notes for this show can be found at biggerpockets.com slash money show 114. So, yeah, that is a really great method of recycling your cash and using the same. amount of money to buy more properties. And you said something that was really interesting. I think there are a lot of people who listen to the show who are on the Dave Ramsey, absolutely no debt at all ever, ever, ever train, which is great. But you can get so much farther by using leverage. And just because you're using leverage doesn't mean you have to use all the leverage. You don't have

to be leveraged to the hilt and hope that everybody is always rented all the time. because if even one property's out, then you can't make your mortgage payment. That's too much leverage. Any amount of leverage that causes you not to be able to sleep at night is too much leverage for you. So if you are in the camp where, you know, I can't possibly have a mortgage on my house, then maybe real estate isn't the best opportunity for you. But if you can use a little bit of leverage to get farther, I mean, how many properties did you say you own now?

I lost track because I can't count that high. 15 properties, so it's 32 units. Okay. Are any of those completely 100% paid off? Yes, two of them are. Okay. So you still have mortgages then on 13 units. Yep.

So some of them I have with partners and then, oh, I'm sorry, three would be paid off. Three of them are paid off. And then the rest have. But some of the mortgages, two of them are mortgages that are held by my partner. So it's not a bank financing. But yeah, then the rest have mortgages on them. Okay. Well, love it.

Love that we're, so you're starting to pay off some of these properties. I want to hear about the philosophy of that in a moment here. But first, I want to get back to the core story here. So it sounds like 2013, you buy this first one. You quickly reify the portfolio loan and buy another. Can you give this kind of a quick hitter overview of what the rest of your real estate investing activity was like until this moment of transition in 2017 when you read Dave Ramsey? Sure. So I had, when 2017 started, I believe I had three properties. We built our house in

2016 and I didn't buy any properties during them. So in 2017 is actually when I found bigger pockets and within a year and a half, I tripled my portfolio. Just learning that there's so many different ways to, you know, finance a property and it was just really eye-opening for me and it got me more motivated and excited. So then towards the end of 2017, I found Dave Ramsey. And then that's when we started paying down my student loans. And then after that, we started paying off our home equity loan. And then after that, we started paying farm equipment. And then actually, I had saved enough money from my rental income to pay off my husband's farm truck. Love it. So what is going on in your lifestyle that you change after reading Dave Ramsey.

It sounds like you're bringing in a solid income. I'm not sure what that range is or if you're willing to disclose that, but it sounds like you're bringing in more than enough if you make some changes based on your Dave Ramsey reading to begin paying down debt. What do you do? Do you cut out groceries?

Yeah, she cut out groceries. She stopped eating altogether. She said mentioned groceries earlier, which is why I bring that. Yeah. Well, yeah. So we didn't budget per se, but I was definitely more money conscious as to what we were spending on groceries because that was just a huge amount that we were spending.

You can grow them yourself on the farm? It's a dairy farm. So we have free milk. And then just like traveling, I cut back on that, spending on clothes, spending on things for the kids. We just cut back on everything because it really was just like the random spending that was. really hurting us or, you know, I'm going to stop at Walmart today and pick up one thing and walk out with a hundred things. We both became a lot and more me. I have to say that my husband, he never buys anything, but more me, just being more money conscious about that. And then as we

started paying them off, we did the Dave Ramsey debt snowball. So every month, my husband would give me this amount of money from his farm income and I would, you know, take whatever I had and put it into our debt payment. And a lot of it was we tried to do it automatic. So I would set up that he gets paid once a month for milk sales. So on that date, I would get, you know, the money transferred to my bank account automatically. And every month, I was also taking my W-2 income, a portion of that and putting it right into a specific account that we were using for our debt payments and the same with my rental income. The book, Profit First. I don't know if you guys have read that, but it's all about paying yourself first and then making sure you pay your expenses and stuff like that

and just puts you in the mindset to be a moneymaker to earn your income. No, I love it. So you go from paying roughly nothing, it sounds like, an excess on these debts to paying something. What is that? Is that a couple hundred a month? Is that a couple thousand a month? And how does that trend over time? Are you accelerating the amount you're putting towards debt over 2017-2018? Yes, it definitely didn't accelerate at first. It was just me using my debut to income. which really was in a lot. My take-home pay is about 20,000 after I pay health insurance

and contribute to my 401K. So I could pay off about 15,000 of my student loans within four months. That took just that. Then once my husband started to get involved, then I really started using my rental income, it definitely accelerated. We actually could have been done. We started the fall of 2017,

and we could have finished beginning of 2019. But our last loan, it was, I think, 18,000 was the balance on it maybe, but it was at a 3% interest rate, 2.99% interest rate. So I had a really hard time throwing money at that when we could make it a lot more putting, you know, in upping our retirement investings and stuff like that. So it took us a year to pay off that one just because we took our time. No, it sounds like you're paying thousands of dollars per month toward these debts within a couple of months of discovering Dave Ramsey. And what I'm wondering here is, yes, it sounds like you got some control over this random spending, but that doesn't sound like it would be $4,000 in random spending in a month, right? Well, by the time we had done our debt snowball, we had the $3,500.

Oh, I see. Yeah, so by then it was $4,000. And my husband had always taken $1,000 a month and put it in a savings account. So we started taking that $1,000 to and putting it in. And then with my rental income, I would pull out about $1,000 a thousand. from that and I can get about a thousand from my W-2 income about a month usually. Awesome. So all this begins to really play together powerfully for you in terms of your ability to accumulate cash. Now, in conjunction with that, you'd mentioned that your husband was buying

farm equipment for many years, and that was a significant portion of your debt and financing that. Were you delaying or stopping some of those big capital outlays for items like that during this period as well? Was that on your guys' mind? Yeah, that's a great question. So we didn't buy any farm equipment we bought. We paid in cash. So during this debt period where we were paying it off, we also cash flowed a lot of farm equipment. I bought a new vehicle. And we traded in my old one that was paid off. And we paid and, you know, I think 12,000 extra cash for the new vehicle. And then I think that those were the two things we cash for a couple farm expenses, smaller equipment, nothing big. And then, we also did our emergency fund at the same time and we saved another $20,000 on top of that. Love it. And where would you say kind of like the next evolution of your journey is? Like is it right now? Was it, you know, we had $20,000 in emergency debt and all of your consumer debt that was not high interest or not low interest paid off? What was that point for you?

We finished that last 2.99% interest loan on this past December, so December 2019. So we We've had like one full month. And actually what we did was we just put it right into my husband's IRA, the extra money to get that contribution done. Love it. I'm doing my victory fist pump here. So since 2017, you paid off $169,000 in consumer debt. You did that by cutting your expenses,

reallocating certain capital from savings accounts to high interest debt. just being more mindful of your spending and investment decisions overall and generating increasing amounts of investment income. And this all gets accelerated by the fact that you're paying down your debts, which frees up even more cash flow to attack the next debt, which is the whole premise of the debt snowball approach. Oh, go ahead. Oh, I was just going to say, like, even with my rental income, it was conscious spending too, because once we actually started to develop cash flow and it was significant. It was, oh, my partner's taking withdrawal.

He's going to Vegas for a weekend, though. Let's give him an owner's draw. Or, you know what? I want to buy a new laptop. We have the money. Let's buy it. And, you know, the LLC bought the new laptop and, you know, different stuff like that.

So even being conscious about where our rental income was going or even things like not bidding out snow plowing or lawn maintenance. Like after we started to do that stuff, you know, we started to save money and make more money that way. Love it. And so what is your position right now? You have 32 rentals that you either own a loan or in partnership, some of which seems like they're in various states of being totally financed or totally paid off. What is what is your position? I'm going on describing your position. Yeah. So February 1st, I handed all 32 of those units over to a property management company. So I'm no longer property managing. But I have right now four active partners.

One is my first partner. Then the second one, we are 50-50 partners on a duplex, a triplex, and now we're opening up a liquor store together. So very different, you know, roll we're doing, but it should be fun. And then I have my brother, he is an owner, 25% of, owner on one of the properties that's paid off for Christmas. We do a little family exchange and I had his name. So a couple of years ago, I gave him LLC documents of an LLC I created and gave him 25% ownership for Christmas. So he's really silent passive, but yeah. Yeah. How do I get in that Christmas pool? Yeah. Yeah, that's an awesome Christmas. I get socks. So he does it. I don't give of any cash flow or anything out of it right now, but, you know,

eventually maybe we'll sell it or something like that. But I just have one more partnership. It's with my sister. I used her to house hack. I bought a house with her. I gifted her the money for the down payment. She got an FHA loan and she's living in the upper part of a duplex. And we are both on the deed for the property owned at 50-50, but only she is on the mortgage. And then the tenant downstairs pays her mortgage and then she lives upstairs. I love the way that you've set a lot of these things up. Some investors are scared to go to partnerships with friends, family, and those types of things. And you have no fear about those things. You obviously are treating these people with respect and being a solid partner and investor with that. And I think it's just an awesome perspective that we

don't get a lot on this show, at least, for those types of things. And it's worked out wonderfully for you, it seems like. Yeah. And I think the key to that, and it's not always a good thing, is that I control everything. So for me, I don't worry because I'm the one collecting the rents. I'm the one paying the bills. I'm the one buying the property. And so I think that makes it a lot easier for me is that I've controlled that. I think that's a fair point. Even my sister's mortgage, that comes out of my account to pay it to me.

Not that she would ever not pay it, but I just like that. Interesting. So the rent comes to you from the tenant and then into a bank account of some sort and then that just pays the mortgage. So, okay. So your situation here, you have all these rentals with various partners. You have the, you still have the dairy farm, I imagine, right? And you have no consumer debt.

What do you do with all of this, you know, I'm imagining thousands and thousands of dollars in after tax or just cash flow that's in your life right now? What does it feel like? And what do you do with it now? What's next? Well, really buff up our retirement account. accounts. My husband is 40. And until, I mean, he probably only has about 20,000 in retirement accounts. It was never a priority for him. He was never going to retire and he still says that now the farm is

his retirement. So that's what we've been working on right now. We increased my 401K contributions to 20%. We're contributing to my IRA and we're probably going to set up some other kind of retirement an investment for him, like a simple IRA or something like that, since he's self-employed. Does he have any full-time employees other than you? No, and I'm not either. Oh, so he could get a solo 401K. Yes, yeah, that's what I was thinking of. And if you wanted to use that to invest in real estate, you get a self-directed solo 401K.

I'll give you some information about that. Okay, yeah, thank you. I have one of those, and it's an amazing way to generate. a boatload of retirement accounts or retirement money and it'll help him catch up. Yeah, because with, especially with the farm too, that he's hit out of all of our income, he's taxed the highest as being self-employed. So we try to, you know, we want to spot like get rid of that taxable income as much as we can. So we want to try and throw into retirement accounts. I love it. And one of the things to note here is, is you just got out of the

get out from underwater with a lot of these consumer debts. Not that you probably have had a positive net worth for a long time because of the real estate stuff, but the fact that you're now consumer debt free and you're basically one month out from hitting that milestone, which is awesome. I wonder if we have you back on in a year or two from now what's going to happen because I think you're going to find that given what you're describing here, you're going to be able to fund those retirement accounts pretty quick. And then it's going to be April. And you're going to be like, all right, what do I do now with all this massive surplus that we've got, which I think is going to be a great problem that I'm excited to see how you,

how you, how you kind of do that. Yeah, I'm excited too. And, you know, I spent a lot of time on my debt-free journey, like, planning out the years, like, okay, if we put this much towards that every month, like, well, this much by the time we're debt-free, what do I want to do with it? Where does it go? And so it will be exciting. And with me opening the liquor store too with my friend, you know,

that my money will go there at least for startup costs. Hopefully that will even bring in another stream of income. Love the diversification into small business. All right. So question here about a recent decision you made, which is to move your properties over to property management. I also did this. So we can maybe both discuss the why is behind this.

When I look at your portfolio, you said you have 32 units, and I'm guessing that these units average about $800 a month in rent. Is that ballpark close? The lower, like $6.50 would be the average. I'd say it's $6.50 a month. So when you say you have that type of unit, it says about $20,000 a month in rental income.

And that's going to mean that you're going to be paying a property manager $2,000 a month, which I imagine is a sizable bite of that cash. That's $24,000 a year leaving your profit center because of that decision. How did you... I'm actually paying 5%. Five percent. It was a huge reason as to why I decided to do it. I mean, that is a big difference.

Absolutely. Where did you find 5%? I wanted to stop working as a property manager for the guy that I'm working for. So I started talking to property management companies and they said, well, we'll do a bulk discount because that was 80 units right there and three commercial units. And I said, well, what if I throw in my properties? So that's what we got 5%. because they make their money on the maintenance side of things.

So, you know, the more properties they have, the better. So we got the 5%. That's an important distinction because I have seen a lot of people throwing up their numbers in the BiggerPockets forums, biggerpockets.com slash forums, if you have a question about real estate. But I see a lot of people throwing them up and there's like, oh, 3% vacancy. No, you need to account for more than 3% vacancy. 5% for property management.

where are you finding this unicorn property management company? Because it's 10% like Scott said, it's a 10% charge. Now, because it's a 10% charge plus leasing fees. Correct. Thank you. It often goes beyond 10% and it's true effective cost to the landlord. Yes. So this is just another one of those instances where you need to use realistic numbers when you are running all of your numbers. And you know, you were able to find find which is awesome, huge kudos to you for being able to find that. But you put the time in to learn the business. I'm assuming you were interviewing more than just one property management company so you

could find somebody who would do a great job because you know what you're doing. Yeah, I actually tried to find someone to replace me first and to be the right fit. And then I just, to train someone would have taken too long. So we just decided to go with a property management company there. but they usually do charge. They used to charge 7.5% but they just raise their fees to 10% for anyone who doesn't have the bulk discount.

But I still, any time I'm running properties, even yesterday, I ran a property and I'm still using 10% as my number because those fees can increase. You're not locked into that 5% forever. And if for some reason it doesn't work out with the property management company and I switch to another one,

I probably will be paying the 10% there. Love it. You can't underwrite, the sweetheart deal here, but you should take it. Yeah. No, that's fantastic. And that's, you know, if you account for too much expense in your numbers, you just make more money. But if you're barely scraping by because you fudged all your numbers and then one thing changes, you could go from a, that's not a great deal property to that's a really horrible deal. You're losing money every month property. So I love that you're doing, you're running the numbers at 10%. And that's one of the things

we'll definitely be talking about on the podcast is how to finally tune your numbers because that was something I struggled with in the beginning. I think their second property I didn't account for lawn mowing or snowplow. I just did it. In Buffalo? How you got to make the tenants do that. It ended up the tenants do do it. But being in a duplex, it gets tricky as to who wants to do it. But it worked out. But still, and even property taxes, so I've been investing for five years and there's only been one, actually the city of Buffalo increased their taxes. And that's the only time I've had a tax increase. But still, it's, it's there and it made my, those taxes are escrowed. So it made my mortgage payment go up,

which, you know, you need to account for these things in advance. You need to not just look at the picture now, but look at the future picture of what this property, could be like, you know, in five, 10 years, your rents increase, your expenses increase. Absolutely. Cash flowing $50 on a property is not a good, not a good cash flow. You bought yourself a pain in the rear and not something that's going to give you life options. Yeah, you bought yourself a job. You bought yourself another expense because something's going to break.

Unless you're living in that property and you're living for free. Then you're cash flowing. 8, 7, 8, whatever the rent is, your cash flow, which is an enormous difference. Yes. Well, I actually want to make a statement on the property management decision. So I love the way you phrased it. You leveraged your personal network and profession to find a great deal that's going to give you increased returns in your business and free up a lot of time. Love it.

Just because I think this will help some of the listeners who are thinking about property management, I would love to share my quick little story on that. I recently transitioned to property management in December of 2019 as well, right around the same time as you within a couple months here, I guess. And the reason for that is because I would have been managing my properties, but I had thought that my time, when I started out, was worth a certain dollar amount where managing the rental properties was clearly within that band. I think I would have had to spend $800 a month on property management at 10%.

My gross rents for about $8,000. and I thought that I could, with a couple hours a month, that working out to be $100, $150 an hour or something like that. What I found is that lately, you know, I've got the privilege of being the CEO of Bigger Pockets and having my investments perform well over the years and those types of things, that my dollar per hour and time, I think,

is advancing past that position to where it was more economical for me to hire a property manager, free up that time, and use that to other pursuits. Additionally, what I also found was that the fact that I was managing properties and did not like doing that, made it so that I was less willing to buy the next property. So it was a big problem for me where I wasn't advancing my portfolio and I think I was performing labor that was below my dollar power rate.

And so that's just kind of a good, maybe one additional mental model for listeners to think about as they're going through that decision. It's very economical at first. And ideally, as things get going and your portfolio begins to scale and grow, then the decision becomes different in the out years. Yeah, that is 100% accurate. Or if you want to increase your hourly rate, property management is one of the easiest things to outsource.

And then you have more time to work on something else to increase that hourly rate too. Absolutely. But it's also a great experience that I think most landlords should get maybe a year or two under their belt at some point of learn how to do that because being able to recognize good versus bad in the context of property management, I think is a skill that will serve the landlord for life. Yeah. So, Scott, here's a question for you. When you purchased your properties,

did you run the numbers with property management? Oh, yes. Yes. I always assume property management, and then I pocket the excess by managing myself. Oh, I was going to make a point about how even the CEO of Bigger Pockets makes mistakes too. But apparently the CEO of Bigger Pockets is perfect. I make plenty of mistakes, but I didn't make that one. Did you run those numbers on the Bigger Pockets Calculator tool? I did. I always do. Which can be found at secretpockets.com slash calculator. Yeah, we're actually, by the time this episode comes out, we will have a new overhauled, revamped, bigger and better version of those calculators.

You'll still be able to use the old ones, of course, if that's what you're used to. But we think these new ones are going to be a little bit easier, more intuitive. You're going to be able to make changes in real time and slide and see like, hey, I'm and a flip, you know, and the longer my hold period goes, the more money I lose. And there'll be a slider there to show you how that impacts your financial return. So I think they'll be very exciting for people to go and check them out. And we'll have a, you know, I'm sure that we'll let everybody know when these things go live more officially than what I'm saying here. But yeah. Yeah, they're awesome. I use the rental calculator all the time.

Well, good. You know, we love plug in bigger pocket stuff. All right. Well, is there anything else that we should? ask you about or a cover here related to your money story before we move on to the famous four here? I don't think so. I think we covered how I use my rental income to help pay down the debt, how it's great to, you know, be debt-free and have that extra income. And I guess the only other thing is that, you know, technically I'm not completely 100% debt-free. I have my mortgage payment and I have mortgage payments on my rental properties. So, you know, each one has equity in them,

which has significantly increased our net income. There's still that debt there. But I think it makes me feel better that I'm not actually the one paying it, that my tenants are paying that. So I just have to keep an eye on vacancies and make sure they're not all vacant. I love it.

I think it's a very different profile to have debt on cash flowing investment properties in mortgage debt than it is to have the debt $169,000 in debt that you paid off for the last few years. Yeah, and I felt a lot more comfortable, too, as my portfolio has grown, because if one property is vacant, I have the other properties' cash flow to cover that. So it would have to be a significant amount of vacancies for me to ever have to pull money out of my own pocket to pay a mortgage.

Oh, great. That's awesome. Okay. If you would like to hear more of Ashley's story, you can listen to her episode of the BiggerPockets Real Estate Podcast at BiggerPockets.com slash show 348. She was on episode 348 of the Real Estate Investing Podcast. You can listen to her every Wednesday starting a week from Wednesday in this ham-handed segue. You can listen to her every Wednesday on the Bigger Pockets Real Estate Rookie podcast with Felipe Maha Hehey.

as your co-host. He will be on next week's episodes. We can get to know him too. And you can listen to the very first episode this Thursday, March 5th on the Real Estate Rookie Podcast. Okay. Ashley, are you ready for the famous four? I am. These are the same four questions we ask of all of our guests. What is your favorite finance book? The Simple Path to We're sure everybody says that, But I actually had one of my friends who were becoming partners. We're looking for a deal right now. And he's leaving for Arizona next week. And he texted me today and was like,

do you have a finance, personal finance book I could take with me on my trip? I'm like, you just made my day. Yes, I have one. Come get it. Wait a second here. I'm all confused now because we just spent the entire episode talking about your convoluted partnership by partnership, deal by deal, low price point property.

in the Northeast. And yet your favorite book is a simple path to wealth, which the premise of which is just put all your money in index funds and let it be. I know, I know. But that's what introduced to index funds, I guess, where anything outside of the real estate is investing. But I just love that book. It was just eye-opening for me in it because really it is, it is that simple. I love it. So do you invest at index funds now? Are you putting more and more money into index funds? Yeah, all of our retirement accounts are in index funds now. All right. Do you plan to continue putting money into index funds even after you max out your

retirement accounts? Yes, yes. I love to diversify, hence the liquor store. All right. I love it. Fair enough. And the simple path to wealth is written by J.L. Collins, who is featured on our podcast episode number 20. You can listen to that one at biggerpockets.com slash money show 20. And I'm a huge fan of that book. So not passionate all. I just thought it was funny, given the context. I know.

I know. What was your biggest money mistake? It would have to be that we built a house and mortgage that and took out, you know, more money to add on different stuff. Like we built a huge patio on the back. But I wish we would have stayed in the old house that was paid for a little bit longer because we were living there for free. because we were living there for free, basically, and we should have taken advantage of that longer. I mean, now it's rented out,

but I wish we would have stayed there longer and waited to build our house. What is your best piece of advice for people who are just starting out? Let's see. My best piece, is going to be real estate tailored to give you a little something different?

Okay. How about this? What is your best piece of advice for people who are just starting out, who don't have a rock-solid financial foundation but want to get into real estate like you. Okay. That fits my answer perfectly. Okay. So mine would be to get a job that's in, that has to do with real estate investing so that you're getting paid for the experience.

And you can learn, you know, what everything you need to learn. So you could be a property manager, but there are tons of other entry level positions that will get you close enough to real estate to learn the foundation and you're getting paid for it. So like a leasing agent, you could do this as a side hustle, you know, nights and weekends, tons of people want to view apartments then. You'll be able to see leasing documents. You'll get to see what apartments in your neighborhood look like, what they're renting for. You could be a maintenance tech. I met a police officer the other day that was telling me that he was in college a maintenance tech and he would get his work slips in the morning. He'd go and do a couple before his first class, and then he'd have a lunch break and he'd go and do a couple more,

go back to his next class, and then go and do some more. And that's what he did all throughout college was maintenance request for a property manager. You could be a realtor. And then another one is even an insurance agent. You're not as much on the rental side of things, but you're helping people value what their home is, how much they want to cover it for. You're seeing what property values are in the area, and then you're earning a commission check. Love it. That is great advice that I don't think we've heard before. So I appreciate that. Thank you. That is excellent advice. All right. What is your favorite joke to tell at parties?

Well, I don't have one. So I had to ask my six-year-old son. And luckily, it was a polar bear day when I asked him. So the joke is, what do polar bears eat for lunch? I don't know what? Ice burgers. Ah. Like iceberg. Fantastic. If you get a picture with a polar bear and a certain other type of brown bear,

it can be a true codiac moment with your son there. I'm reaching too hard there. All right. Where can people find out more about you? This is my favorite part of this particular episode. So, easiest way is on Instagram at Wealth from Rentals, and then I'm also on Bigger Pockets. And the Bigger Pockets, real estate rookie podcast.

Yeah, how can I forget that one? Every Wednesday is on bigger pockets and wherever you find podcasts. Awesome, Ashley, this was fantastic. We can spend and listen. Yes, subscribe and listen and leave a review on iTunes or wherever you listen to your podcasts. Okay, awesome. This was fantastic, Ashley. Thank you for taking the time today to share with us your story.

I think that real estate can be a super powerful wealth generator. it's a great source of income, income generating stream for when you are retired. But it's also, it can be really intimidating for people who have never jumped in with both feet. If you start out when you're 22, like I did, you know everything. So it's a lot easier. But as you get older, you know, have a little bit more caution in you. And it doesn't have to be scary if you know what you're doing. So it sounds like you learned.

And that's why you got to come listen to the real estate rookie podcast so that it's not scary. Exactly. Exactly. You learned on the job and now you can share your experiences, your mistakes so that other people don't make them too. So I'm so excited for your new show and I can't wait for it to be live so I can subscribe to. Yeah. Thank you guys so much for having me on. I really appreciate it. That was awesome. Okay. We'll talk to you soon. Bye.