BiggerPockets Money Podcast - 315: From 400 Credit Score to Making $17,000/Month in Passive Income

Episode Date: July 4, 2022

Passive income and credit scores. While they don't entirely rely on each other, having good credit does allow you to build passive income streams far faster. Andrew Brazell learned this the hard way, but thankfully profited big time by making some needed changes. Less than a decade or so ago, Andrew was living in a rat-infested apartment, riddled with credit card and student loan debt, spending all of his money every month. He felt financially hopeless until he struck up a conversation with his Rugby teammate, and BiggerPockets CEO, Scott Trench. Scott personally helped Andrew dig himself out of a debt hole, start house hacking, and get well on his way to financial freedom. From there, Andrew understood the formula—save your money, buy income-producing assets, and repeat until financially free. Andrew took this lesson to heart, and shortly after paying off his debt, began rental arbitraging his apartment, helping him eliminate his cost of living. That’s when he met Haley Ferguson, his future wife, and a soon-to-be top short-term rental host. The duo saved their money and bought their first house hack property. And, because of smart landlording, they were able to bring in more than double their mortgage payment in rent alone, allowing them to live at a profit. Now, they’re well on their way to buying even more properties, helping them go from financial fiasco to financial freedom, and finally financial abundance. In This Episode We Cover How to save money every month so you can pay off debt, invest, or just have peace of mind House hacking, rental arbitrage, and other ways you can eliminate your cost of living Reducing your credit card, medical, or other debts by making a simple phone call Lifestyle creep and why every financial freedom chaser should resist it Vacation rental investing and the massive profits that come with it Purchasing properties with the VA loan and using low down payment loans to scale your real estate portfolio And So Much More Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Mindy's Twitter Scott's Instagram Apply to Be a Guest on The Money Show Podcast Talent Search! Subscribe to The “On The Market” YouTube Channel Biggerpockets Bookstore Listen to The “On The Market” Podcast: Spotify, Apple Podcasts, BiggerPockets How to Create Financial Security (From Scratch!) and Become “Set for Life” 300 Doors, 100% Creative Financing with Pace Morby Airbnb Learn more about your ad choices. Visit megaphone.fm/adchoices

The opinions expressed here are my own and do not reflect those of the Marine Corps, the Department of Defense, or the United States government. Welcome to the Bigger Pockets Money podcast show number 315, where we interview Andrew and Haley and talk about their journey from his financial messes to their real estate successes. When we saw the potential, though, we realized, like, we're not compromising. Again, we're just loving future us. You know, we're living in, and it was an upgrade for us,

I mean we're coming from Denver where you know square footage here is not cheap so we moving into the mother-in-law suite and it was an upgrade so you know we still that's how we looked at it yeah we could be in the big two-bedroom house and have a nice guest room and all that other stuff or we can you know live in the small mother-in-law suite and just pay to have our friends stay at a hotel whenever they come visit you know like that was the options that we had and we don't regret it at all I love that little place hello hello my name is Mindy Jensen and joining me Today is my hard-hitting co-host, Scott Trench.

That's a rucking good intro, Mindy. Scott and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter where or when you're starting. That's right. Whether you want to retire early and travel the world, go on to make big-time investments in assets like real estate, start your own business, or simply get out of a hole where your credit score is 412. We'll help you reach your financial goals and get money out of the way so you can

launch yourself towards those dreams. Scott, you just mentioned a magic number of 412, which, spoiler alert, is the lowest that our guest Andrews credit score was at at one time in his life, which is, I feel super judgmental, but that is really, really low. But why was it low? Because he didn't know what he was doing with his finances. He was never taught about financial literacy. He was never taught about how to, you know, do his thing. What I want to make sure that we celebrate is the fact that he took charge of his financial situation. He recognized it was a problem. He saw that somebody else was having success and reached out to that person and said, hey, how are you doing it so that I can do it to? And that takes a lot of guts.

I mean, you could very easily be like, well, I guess I just have credit card debt for the rest of my life. I guess I just have a 400 credit score for the rest of my life. And he didn't stay there. He wanted better so he sought out the information to do better and then took action in order to get better. And I think that's really important to note. Yeah, I mean, Andrew is a longtime friend of mine. We played rugby together. And, you know, I worked with him through his financial difficulties.

difficulties was it now five, six, seven years ago at this point. And it's just been amazing to see what he's been able to do, how he's been able to kind of get current on all his students, all his debts, build a financial success story, and now owns a number of rental properties that are cash flowing tremendously well. So it's been a phenomenal privilege to watch his journey and kind of start learning from him on this. And I couldn't be more thrilled to invite him on the show today. He has a great story. And he's a great story. And he's, joined by his wife Haley, who didn't have the struggles that he had, but joined him on his real

estate journey. And I really like where they are in their real estate investment space. They're making money in this market. They're continuing to buy in this market. They're not letting the market define what they're doing. They have decided what they want to go after. And they're still buying properties. They're still making it work.

So, you know, people who say, oh, well, the market's changed so I can't make money anymore. Well, sorry, Andrew and Haley are doing it. So you could do it too if you wanted to, but you have to do the work. I think it's a fun, fun story today. Awesome. Let's get to it. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening.

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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. Andrew was your typical 20-something. He didn't know anything about finances, so he just spent his money without any thought. He racked of tens of thousands of dollars in debts, many of which were delinquent.

In 2017, he made a hard pivot and changed his financial situation dramatically. Now he's in a great financial position, owns six rental units across two properties, which would not have been possible if he had not taken notice of some young kid buying beer for the rugby team so many years ago. Haley, on the other hand, is perfect in every way. Andrew and Haley, welcome to the Bigger Pockets Money podcast. Hey, guys, how's going? Thank you so much for having us. Thanks for coming on. We're excited to have you.

I'm super excited to talk to you guys. And since Haley is perfect, Haley, I'm sorry, we're going to have to push you to the side and focus on Andrew. Andrew, tell me all your faults. Oh, man. True confessions. Yeah, where do we start? I guess. Let's start in high school?

High school, okay. My dad was a fighter pilot instructor in the military and that had kind of set up, you know, my family's expectation of once my dad gets out of the military, we will have the opportunity to, you know, he'll go to a major airline. We'll have a bit of a nicer lifestyle. And so we moved to Colorado. We experienced 9-11 shortly after, and my dad basically lost everything. He lost his high pain salary, his, you know, his pension, his security, his seniority, all this other stuff. And from then on, like, financially, like my family, they struggled. My dad had to refinance the house a number of times to pull out equity to pay off credit card debt.

And then also he went back to the military part-time and started working weekends and days off as a reservist out in Colorado Springs. I kind of just didn't have a ton of great financial education growing up. So I joined the military myself in order to pay for school. I wasn't aware of all these amazing scholarship opportunities for lower income people. And I thought, you know, I had to work or have somebody pay for college. So I decided to do the work route. I joined the military, went off to Air Force Basic Training, and was in the process of becoming trained to be a loadmaster in the Air Force out of Colorado Springs.

when President Obama kind of scaled back military funding and I wasn't an essential personnel, so my job basically got cut during the sequestration. But I had kept up my end of the deal, so I had full benefits and went off to college. And this is kind of where things took a turn south. Instead of using my GI Bill, I decided... What year is this, where you went off to college? This was 2010. So I had a...

already done about three semesters before I joined the military. My dad did have enough to help me go through the first three semesters and that gave me enough college credits to get a really good job in the Air Force at his unit, which he set up. He was amazing doing that. So I had a little bit of experience, but in 2010, I, you know, cut ties with the Air Force officially and went up to Colorado State up in Fort Collins and my my thought process was you know I'm not going to use the full GI Bill benefits and waste them on a state school which doesn't really cost that much I'll save that for medical school because that was my plan at the time you know I'll use the GI Bill on it to the maximum potential and and use it for

medical school so what ended up happening was I pulled out all the the subsidized and some unsubsidized loans as I could and then I was working part-time and then my my last little bit of financial runway I guess was provided by a credit card and I ran the credit card up pre-med studies were a lot harder than I thought I couldn't end up working as much as I wanted to so maxed the credit card out and then couldn't make the payments had to had to eat so Chase Bank you know took a hit for for a while I had maxed it out and then, you know, they closed the account, sent it to collections, all that stuff.

And I graduated, you know, like many graduates at the time, you know, had a difficult time finding a job. So I moved back in with my parents for a little while. I was working, you know, waiting tables, doing all that stuff. Finally got a job at a local hospital doing oral pharyngeal cancer research. And can you give us a couple of year time stamps on some of these two? You graduated what year? How long did you wait tables? When did you start this new job?

Yep. I graduated in 2013, left Fort Collins and came back to Denver. And then I worked at a blood bank for about six months doing blood draws for like plasma donations. I waited tables for a couple months. And then at the tail end of 2014 is when I. I got a job over at Porter Hospital in Denver doing some cancer research, which is what I wanted to do. That was kind of my dream of doing medical school and all that stuff and getting into oncology.

So I was in the environment I wanted to be, but definitely not making the money that I would have hoped for. So I was living paycheck to paycheck, living. I finally moved out of my parents' house to a rat infested apart. down in Denver and had a roommate who a good friend of mine, but he was on hard times at the same time as I was. So I was not in a good place. But the one good thing about it was it was very close to the rugby pitch and I could walk there. So I, my, my outlet was going and practicing rugby and it was a new sport for me and I absolutely fell in love and, you know, met some of my, my outlet was going and practice in rugby. And it was a new sport for me and I absolutely fell in love and, you know, met some of my, to this day, some of my, my best friends. So it was, it was definitely, um, uh, a trend upwards, uh, starting there. So, well, we got, we got to, we got to pitch the club. What was the club call? Yeah, queen city. Yeah. Yeah. Go Rams. Yeah. It was, uh, Queen City Rams. So I, uh, I was a Colorado State Ram and then I came to Denver and I was still a ram. So it was great.

So what's your position? Uh, this is two up 2014 we're in. How would you, how would you summarize your position at that point in time? Oh, I mean, I was living paycheck to paycheck. I had no savings. You know, the money that I had I spent on either food and what little I had left, I tried to spend on fun just to stay sane. You know, I had no dating prospects whatsoever. My car was a piece of junk. You know, it was pretty abysmal there for a little while. What was your income at that point in time? I think I was making around 32,000 a year.

which if I had the financial literacy, you know, I could have done good things with that. I just didn't know what I was doing. So I made the money. I spent the money. That's how it worked. And how much total debt did you have and what was your credit? My credit at the time was in the low 400s. So I think the lowest it ever got was a 412, if that's even possible.

Yeah, I look at it now. I'm just astounded that it ever got that bad. but having that card go to collections and not having done anything with it, I didn't know I could call and settle, you know, and try to close the account. You know, that knowledge came a little bit later. So my financial savings, I mean, were non-existent. I couldn't qualify for any new credit cards to rebuild my credit at the time until I, you know, settled with this defaulted account. Yeah, it was pretty bad. And how much total debt do you estimate you had?

So with student loans and that credit card debt, I was in the mid to upper 40s. I think 47 was the highest it ever got. So what happens next? So at a rugby social for the start of the new season, I hear this player who I, I, this player who, I, watch play, you know, I was kind of the second string, it being a new sport for me, but really admired him and some of the other guys in the backfield, you know, toast the team and say, hey, this is celebrating me closing on my second property. And I'm looking at him going,

I'm like, this guy is definitely younger than me. How is it possible that he owns property, like at all, let alone has closed on a second property in Denver? Like, I literally had a rat crawl across my bed last night, I kicked against the wall. Like, how is this, how is there so much disparity? Like, I mean, he plays rugby. He can't be that much smarter than me, you know? It's like, yeah, and that's when I, I, uh, I, uh, I, I pulled this guy aside and I was like, hey, man, you got to help me. I don't know what I'm doing. You clearly have some knowledge that I don't, point me in the right direction. And, uh, and that was that was Scott Trench. So, yeah, I, I've known you as trench basically our entire friendship but yeah professionally i should i should say uh

CEO of bigger pockets i just happened to bump into they're there at a dive bar i have very few personal friends who refer to me as scott so yeah all it's always trench uh and my uh with my personal friends so uh yeah uh that was awesome yeah that was uh i remember i remember meeting with you um after that um and talking through some of those things so do do you want to walk us through some of the situation like how things maybe changed or what that what that was like. Thinking through that and what how things progressed from there. Yeah, I remember you came into my apartment, sat down and said, all right, let's see the damage. What's what's going on?

You know, pull it up. And I didn't even know where to find that stuff because it had been, you know, it had been delinquents for so long. I didn't know the logins. So I remember sitting there for like an hour trying to just get into the actual results and, you know, the statement. and stuff. But when we finally found it, you said, all right, what you need to do is carve out some time and you're going to make some really long phone calls. And I got a little discouraged and I was like, you know, I don't want to do this, but you framed it in a way that made a lot of sense to me and motivated me to do it. And that was like, think of it as, you know, this phone call could

save you thousands of dollars. So even if it takes 10 hours. This was because there was a lot of debts in your position that, if I remember correctly, were old debts that, that were longtime delinquent had likely been sold from the original creditor to, you know, other loan, you know, collections agencies and such. And so they already discounted that debt. And so the reason you do that is you call the debt and, um, and you say, hey, can I pay off a fraction of this somehow? Yep. Um, you know, would you be, would you be, would you be willing to take a percentage of it? Yep. Yep. Yeah. So you, you had explained it as like, like, you can, you know, you can get rid of this debt for, you know, pennies on the dollar, possibly. So you're not going to know until you make

that call. It could take 10 hours, but I specifically remember you saying, if it saves you a thousand dollars and it takes 10 hours, you just got paid $100 an hour. And that really like set off a light bulb in my head. I was like, oh, that totally makes sense. So he says that to this day when we have to make phone calls. Yeah. So that's like a household phrase now. That's logic that I use to this day. and I passed it on to other friends, you know, like, do your due diligence, do your comps. You know, if you're looking at property, don't pay, overpay $10,000 if, you know, it's going to take two hours for you to realize like, hey, that's not where the market is right now. And so that's wisdom that I've been able to pass on.

But that's really where it clicked. And I was like, okay, like, I can dig myself out of this hole. It's going to take some elbow grease, but, you know, it's not impossible. And so we went through, like, all of my accounts. and, you know, set a plan, but you set a hard deadline for me and you said, I also want you to do some homework and you gave me your copy of the richest man in Babylon. You said, you need to finish this before we speak again. And that really, like, you know, lit a fire under me and said, like, okay, like, there's, you know,

it's not all information is free. Like, I'm going to have to put some work in. I'm going to have to make these calls. I'm going to have to, you know, do a little bit of homework. And I devoured that book. I think that's one, I mean, it's not a huge book, but I think I finished it in two or three days and just like total mind, mind, you know, mind, what's the word I'm looking for? Mindset shift. I don't know what you're looking for.

Total mindset shift. And, you know, I realize like, oh, I don't have to be the one putting in all the work if I put my money to work for me. You know, I assign a job to every dollar that I make. I pay myself first. and then I pay, you know, the rent or whatever. And that just completely, like, it blew my mind. And one of the biggest things I learned from that book wasn't even what I gleaned from the book itself, but it was just like, wow, knowledge and education is power.

Like, you don't know what you don't know until you meet people sometimes. But then after that, you know, I just started devouring all these financial literacy books and financial planning and investments and all this other stuff. And that kind of transitioned me into, I guess, the next stage of my financial journey. So I go into that now. Well, let me ask you a couple quick questions here. Did you, were you able to get any of those loans reduced? And do you have any kind of anecdotes about those calls?

Yeah. So the one I remember was that Chase card and it went over. 3,000 was my limit, but somehow I have. I got it up to like 3,300 or something. And I think I ended up settling for, I think it was just under 2000. So it was like 19, 1920, 1950 or something. And to be honest, had I known that a closed account and like a charge off how it was handled by the credit bureaus, I'm not sure I would advise people doing that again because that literally just fell off

my credit report last month. So a charge off somehow stayed on my credit history for seven years and it was because it was 2015 when I finally paid it off. And knowing that, I think I would, I'm not sure. It probably was too late to go to Chase and pay the full amount and not have it hurt me anymore. And I still would have had the delinquent, you know, payments and all that other stuff. But, yeah, that one stung for a long time. But after I paid it off, like I saw, I want to say it was like a 150 or 200 point bump like the next month. After it registered with the credit bureaus and all that stuff, like my score went up big time. And then I was able to actually.

You're saying because it was a credit card debt and I negotiated it down, that negotiating it down resulted in a charge off, which hit my credit score and stuck with me. But I didn't have to pay it. Yes. I mean, I did have to pay the 1900 or whatever, but once it was paid off, the way it was reported was kind of finicky. It was reported as something different than just paying off the original debt. And that was that was weighed heavier, I guess, in the way they score it than just being delinquent on an account, if that makes sense. Okay, so within six months of our conversation and you're reading Richest Men in Babylon, what are some milestones or what are some things that maybe changed? You said your credit score bumped up? were able to pay off this debt.

My credit score bumped up and we had, you know, after I finished the book, you came and sat down with me and helped me, you know, come up with a rough budget, a ballpark budget. And you said the next thing you need to do is you need to save up an emergency fund. You know, you can't have a blown tire, you know, wreck your finances. You know, you can't just be waiting for a disaster to wipe you out. So I saved up, I think $1,000 was my first emergency fund. And for me at the time, that was like, you know, three months rent, you know, at the time where I was living. So that was plenty of runway for me. And that saved me. I remember I got into an accident and I had to pay for some repairs on my vehicle. And I was able to do that without tapping into credit and, you know, paying interest and possibly defaulting again.

So that's kind of what set me up. And then after I had the emergency fund, I started, you know, I had. I had read a few books on investing, and I wish I had read some different ones before, you know, trying to invest myself and getting into the stock market and all that stuff. But I actually had enough funds to where I could start making some future money decisions instead of just living in the moment. Awesome. So you built up the emergency refund and then you began investing or did you begin paying off debt? What would you decide to do from there? So I got current on my student loan debt and I was basically, paying the minimum, I had very low interest rates on those.

And my strategy at the time was I want to get into a better financial position and then I can pass up on, you know, good returns in the market and pay off, you know, pay off the student loan. So I still have student loan debt, especially since it's been in forbearance, you know, forever at this point now with COVID. but that has been a, you know, if I can make 8 to 9% in the market, you know, before this month started, it doesn't make sense to pay off a student loan that's at 3%. So I paid the minimum and that had gotten me current and then the rest of my money was going towards saving and

investing. At the beginning of 2014, you were negative. You're spending more than you're bringing in for the most part or treading water with that. By the end of 2014, How much of a monthly surplus do you think you're generating if you had to guess? Yep. So this was mid-2015. So it was a little later than that. But I was coming out ahead like maybe 150, 200 bucks a paycheck. So, I mean, it didn't seem that substantial.

But, you know, I reigned in the, I got a little smarter with happy hours. And, you know, like, for me, a big expense is food and socializing. So it always has been, you know, to this day, it still is. But that is where my biggest expenditures were. And so, raining that in, you know, I said, you've got X amount of dollars to spend. I think it was $30 a week I got to spend on fun. And that was movies and, you know, extraneous meals and stuff like that. So I really had to plan.

And once I had that emergency fund up, I had just finished a book on negotiating. And so I was able to negotiate a new position at a different hospital that almost doubled my salary. So having understood how lifestyle creep works and all that stuff, that really just catapulted my savings and all that stuff. because I basically continued living on what I was living on, and all the extra income just went straight to savings and paying off debts. Did you feel like you were giving up things? Did you feel like you were being punished or that you weren't able to enjoy your life while you were going through this period?

Because a lot of people feel, or a lot of people when you talk about this financial independence movement or, you know, oh, you have to pay down your debts, oh, now I have to give up everything and live like a pauper and everything's going to be horrible. No, I just, I was more intentional. Like I made, I would make plans, you know, to go see a movie with friends later in the week. And that would be the carrot that I'd dangle in front of me and say like, okay, you know, don't go, you know, throwing on, you know, extra beers tonight at dinner because we're saving it for the movie with our friends. And so having that as a goal in the future, I basically fell in love with future me. I was just like, future me is more important.

let's set it up for future me to enjoy. And that worked. Yeah. That's a really great framework. I'm falling in love with future me. And I'm going to make sure that they're taken care of. That was before I met Haley and fell in love with Haley. Well, great.

So you get this new job. You double your income. What's next? What are some other milestones on this journey? So at that point, you know, you and I were talking about just lowering the cost. of living and you had talked to me about your house hack over here in Denver and all this other stuff so I was I was cognizant of that and I wanted to do something similar at my next living situation so I found a friend of mine an old hockey buddy who wanted to live downtown Denver

worked for Deloitte you know made very good money but traveled for work so often he told me, it's like, it doesn't really make sense for me to have an apartment all to myself. I'm basically just, you know, spending money to have it sit there empty half the year. And so I told him, I was like, hey, let's join forces. You know, I'm looking to upgrade my lifestyle a little bit. That apartment that you met me in actually got condemned because of the rats. I'm not kidding. So I was looking to kind of upgrade my lifestyle a little bit and we found a great apartment really close to Coors Field and everything. And I told him, I was like, I'm happy to split the rent with you, but let's do something to where cost of living is even lower for us. When you're out

of town, let me Airbnb your room. I'll manage it. I'll be here. You know, let and we'll split the profits. I'll manage it. You know, you basically, you'll pay less. And, you'll pay less. And You know, he basically lived out of a suitcase anyway, so cleaning his room wasn't super difficult, but I did everything. And that was my intro into like house hacking. And, you know, that's what we did. And there were a few months where, especially during peak season, where we both lived for free because that one room in downtown Denver across the street from the baseball stadium was prime real estate at the time. In 2015, Airbnb was getting up off the ground. and there weren't a ton of units in Denver at the time.

So that was really where I noticed the potential of Airbnb, and then I met Haley shortly after. The first night I met Haley, I had guests in my apartment. I was planning on being out of town for that weekend. And so I had the entire apartment rented out, rooms and met Haley and decided hey I'm actually going to stay in town this girl's awesome and we wanted to go down to the swimming pool it's an amenity at the at the unit but I didn't have my bathing suit so I had Haley go over and be like hey my

I was like to tell him your your boyfriend forgot her suit and I was like we'll see how this goes over and she did it she went over knocked on the door the guest came to the door and she's like my boyfriend forgot his bathing suit she went in and got it. And yeah, that was the first night we met. So yeah, I forget that. It's kind of fun. Yeah. That's awesome. I flew to Denver to check it out, and this will be come in later in my story, but I flew to Denver to check it out to see if I wanted to live here. And two hours later, I was sitting at a table at the nickel downtown in Denver with my friend who was going to host me and her apartment next door neighbor was this guy.

So that was pretty cool. Decided on Denver pretty quickly. Let's just say that. It's pretty fun. That's a wonderful meat. What is that? Meat cute, right? Meat cute.

Yeah. Yeah. Yeah, it was interesting for sure. So it came straight from the airport to the restaurant and we met and the rest of history. so yep very pretty quickly denver uh gripped her i'll say yeah well you did too yeah we're 2015 you've got uh you're you're doing this really ingenious house hacking um solution that i think that i think is awesome you've got your new job i presume you're you're saving quite a bit um and you're just you're generally being very methodical about what you do spend on or intentional about what you

spend on. What is your savings rate at this point? And what what is what's happening to your overall wealth position, your credit score, the other types of things? So around this time, I had I had devoted most of my, I guess, my extra income to investing. I had a decent run with Redfin when they went public. I had a great run with Tesla there a couple times. But I was really seeing some great gains with my my personal investing and I was at the looking back on it now I realized I was getting lucky because I don't know why to be quite honest there were just a few of those where I got really excited put all my extra money into it and it and it worked or I broke even so I wasn't wasn't too heartbroken about that but I was also putting I was putting

more of it towards student loans at the time because yes you know uh market gains will come and go, but I'll still have this, I'll still have these student loans like looming over me. So I wanted to just be out from underneath those. So I'd say at that point, I was, uh, I was saving about 20 to 25% uh, of my, of my monthly income and putting it towards, uh, towards investment or towards paying off debt. And so what is that? Is that like a 2000 a month kind of thing or 1,000, 2,000 a month? So at that, at that, at that time no it would have probably been about 700 800 um yeah i still wasn't making that much yeah okay but the snowball's turning we've gone yeah oh yeah it's to 700 bucks at this point and it's

starting to pick up yep it's it's rolling now yep and about you're a wonderful lady life's getting better throughout this period throughout this this this period is yeah it's it's taken time and it's taken like conscious decisions but you know i don't i don't regret any of them um You know, I'm, I'm starting to devour more books. You know, around this time is when you sent me set for life, when it was still in the editing phase. And that book was so heavy. I mean, it took me forever to get through. I think by the time I finished it, you'd already published it.

So I wasn't able to help at all. But there were so many concepts in there that just like blew my mind. I didn't, I couldn't get through it very quickly. But, you know, you had mentioned just like, set. setting your investments on auto pay, which is something ram it, saithy. You know, I loved, I will teach you to be rich for that point. You know, he just gives you a play-by-play of like, do it this way. You'll never see it.

It'll never hurt type thing. And that's kind of where my next steps were at that point. And this is, we're in like the middle of 2017, tail into 2017 at this point. So it's, yeah, it's been a couple years at this point. But, you know, and there were bumps in the road where, you know, I made a stupid purchase of a toy or something I felt like I deserved. And I can't even tell you what that is at this point. That's how important it was to me. So, yeah.

Okay. I want to make a comment. You said that, you know, that Scott really set you on this path. but we're overlooking the fact that it's so impressive that you actually did the work. I have had these conversations with people in similar situations that you are. Hey, this is the stuff you have to do. And then I never hear from them again. And there are so many people who want to be in your current position.

But they don't want to do the work necessary to get into your position. So we need to celebrate the fact that you actually took this information and did something with it. And that is the hardest part. Scott had the knowledge. Great for him. You did the work. And it sucks to do this work. And you did it anyway.

And that is the thing that we need to celebrate. So hooray for Andrew for doing it right and doing the work and taking the time to do it. Because it takes a while. I mean, it's not like you picked up the phone. And you're like, hey, Chase, I want to pay this off. And they're like, great. Now you're amazing. I mean, you had to do this a bunch and you had to slog through this.

Where did we start? 2013? 2014 and now we're in 2017. I mean, this was not just an instant. Wow, I had a 420 credit score. And now it's 800. Five minutes later. It's like four years later or three years later, you have a good financial position.

When did you buy your first property? We didn't buy our first property until, October of 2020. So like seven years later. I just jumped way ahead. Okay. But still. Yeah.

But, but, but, I mean, it's, it's, this is a, I mean, you were,

you had a terrible financial position, right? And you articulated that. There's a rat crawling across your bed. Yeah. In the middle of the night. And, and, and,

and, and, and, and, and, you're, you're willing to come in and confront the reality of a situation head on, say, here's what I'm up against.

Here's what I need to do. And begin attacking it. Piece by piece, one call at a time, 100, 100 bucks at a time and then start the snowball and the grind that takes a few years to get going. And then like the the magic that begins to happen when you commit to that, you know, it takes it's much harder month to month than you think it will be. And then you look back and

you're like, wow, I made a lot more progress in the last two years than I thought I could have possibly done. And that's the, yeah, go ahead. I was going to say there's a little story I'd like to tell just to kind of emphasize that and and in in those people's defense many and the and you know the people you talk to who you know just say oh it's it's too much work like I feel like most of those I was one of those people you know I feel like most of those people they don't have a good example to look at like um I I saw Scott and I was like this guy's done it like I don't have an excuse I can't say that some pie in the sky like oh that only happens to one and a million people like there's this you know regular Joe, if you will, that, you know, I play rugby with who has done this. And,

and I can't attribute it to, you know, him being a trust fund baby or, you know, all this other stuff. He, he worked and, and knowing. That's nice of you to say, but I will say that also you did have a lot of people would have had that excuse in your situation. I didn't have student loans, right? I had a higher paying job coming out of college than what you had with that, right? So there, there were advantages I had that you didn't have and you chose, no, I'm going to, I, I, I, I, I, I'm going to ignore that and I'm going to go after and begin attacking what I can control and what I can influence there. Yeah, absolutely. I definitely want to give you lots of credit with that.

Well, thanks. You are an example for other folks that have all of those headwinds that have piled against them to begin kind of overcoming. And there are people who see Scott buying the beer and saying, oh, trust fund baby, not even looking at how he could have done this. they just automatically make an excuse for him because there's no way he could have done this by himself. Clearly he had help. I'm going to make my own narrative for him so I don't have to dive further.

You asked him how he did it. And maybe his answer was going to be, oh, I'm a trust fund baby. And you're like, okay, fine. This isn't what's for me then. I'll just move on. But you had the initiative to even ask the question. Let me celebrate you, Andrew.

take it yeah fair enough well let's jump back ahead to 2017 where we where the snowball is turning what what are the next kind of a milestones there and how do we get to uh to to florida and that first property yeah so at this point um the journey kind of takes a pause um i originally had joined the air force and wanted to get a you know my college degree and all that stuff so i could kind of follow in my dad's footsteps of being an aviator in the military and when I was basically pushed out of the Air Force I thought that dream kind of died but I went into a Navy recruiter just kind of wanting to know what the chances are of me doing the military part-time like my dad did so I could have an additional stream of income and

And as I'm walking out, I had a Marine Corps recruiter just kind of call at me and it's like, why are you talking to them? You know, they don't do anything cool. And we just struck up a conversation. And unbeknownst to me, like, I was still eligible to be a pilot. And I didn't know that. So there were a lot of hoops I had to jump through. And I guess kind of to your previous point, Mandy and Scott.

about, you know, these things take time. I called my dad and I asked him, I was like, you know, should I do this? I'll be, you know, I'll be old by the time I get done. And they'll, you know, everyone I'll be going through training with will be younger than me. And he's like, well, what's going to happen in four years? Anyway, you'll be four years older regardless. So just do it if you want to do it type thing. It's like you'll get there whether you want to or not. You might as well come out ahead type of thing. And so that was kind of my mentality. But I started pursuing a pilot slot through the Marine Corps and I eventually got it. So in 2017, I was notified that I had gotten a slot, you know, pending I could pass their physical fitness standards. And so after about a year

and a half of training. The run was what killed me. I qualified for it and then went off to training in 2018, very shortly after meeting Haley. And my whole financial progress and journey and all that stuff was kind of put on hold for a little while because I didn't make it through training the first time. I made it to the very last week and then got hurt and had to get sent home and they said, you know, you can try again if you want to or you can just quit. I went back to my job at the hospital while I was waiting for another slot to open up so I could attempt it again. And I had that job for six months. That's all it was protected for through the USERA laws and all that stuff. They have to give you your job back for a minimum of six months.

but after that six months I was I was unemployed and so I ended up Airbnb being my current apartment and I would stay with friends or my parents or something like that whenever people would come in and that was my my sole income. Or me. Yeah, or Haley. Sorry, mom and dad. Sorry, mom and dad. I would stay with, but yeah, basically I realized that. earning potential of of Airbnb once again and then I did an arbitrage I found I guess it wasn't officially an arbitrage because the the landlord didn't know it was solely using being used for an

Airbnb but I I was like well I'll just find a property with without estate owners they'll probably never check in on it it'll be fine there's nothing in the lease that says I can't do it you know and so I had a I had another downtown apartment that I had a had set up strictly for Airbnb and managing those two, doing the cleanings, you know, doing the messaging, all that other stuff. Maintaining those was my full-time job until I got another chance to go back. And so in January 2020, I went back to Virginia to try the officer candidate school a second time. And my first awareness of COVID was when they told us that our graduation was canceled because of because of COVID. So I graduated 10 weeks later, which was right in the middle of

March, and that's when everything hit the fan with COVID. So my family wasn't able to travel out to my graduation, but Haley, you know, come hell or high water, she made it. And that was kind of my first indicator like, hey, I got to hold on to this one. That was your first indicator? That was the final. That was the final. indicator, I should say. That was a week after Denver Public School was closed. Yeah. Yeah.

And that was hard because those 10 weeks are grueling, especially the first time around and we couldn't talk to each other. You're radio silent. A number of weeks for that. And so that was also, I mean, now I guess I can speak as a military spouse, but as someone who has a loved one in the military, that was pretty bit of. or there are times when you can't be there for their graduations or, you know, celebrating is a big part of it. So after two 10-week experiences not being able to actually be there, our first kind of hurrah for your military career.

That was, that's not. Yeah. Yeah. But it was a, I mean, it was a hard time for the entire world. It was. Shortly after that, I went to the basic school, which is a requirement for Marine Corps officers. every Marine Corps officer becomes an infantry platoon commander. So you learn infantry tactics and how to lead a platoon and all this other stuff.

And that school's six months long. Same area. That was in Quantico, Virginia. And at this time, I bumped into one of my superiors, Dozer, Captain Dirt. He was a pilot, and he was the liaison. was the liaison for all the pilot contracts who were there at the basic school. And, you know, he mentioned, you're going to get down to Pensacola, be sure to grab property immediately, you know, it's a, you got to start your financial journey and all this

other stuff. And I kind of picked up that he had done this. And talking to him, he said, oh, yeah, you know, I do this kind of part-time. I have 14 properties in the area. And I'm going, okay, like, whoa, we got. got a talk type of thing and he he basically turned me on to um just you buy a property with the VA loan you kind of you know um you live in it while you can and then uh you rent it out once you once you PCS a permanent change of station when you when you get orders to another duty station

and so talked to him extensively you know asked him how he did it he had a whole bunch of JVs that he had done. He had, you know, he had some short-term rentals. He had some long-term. Most of them are long-term. But I told him, I'm, you know, I'm getting ready to go down to Pensacola. You know, can you give me any advice? And he said, yeah, buy as big as you can and get it, you know, as an investment. And so we were looking for... He said buy as many units. As many units. Yeah. When he said big, he met as many units. So the V. The VA loan allows you to get up to a quad, up to four units, and it's all dependent on the local area and what cost of living is and all that stuff. So, you know, I think we qualified for 493 is what I qualified for max.

And so we set that as our search. We found a realtor who is highly recommended down here. Shout out to Michelle over there. And she, you know, she did a number of virtual walkthroughs with us, you know, via FaceTime while I'm sitting there in full camo gear with a, you know, 90 pound ruck coming back from a 12-hour hike and all this stuff. And I'm trying to, you know, stay awake while she's doing a walkthrough of a property. And there was, there was one property specifically that it was the first one that I saw on Redfin, actually. It was the first MLS email she sent us. The first email.

Had a quad right near downtown. Yep. And Andrew was like, oh my gosh, this is a great property. And I was like, no, no, wait, we have to analyze like many, many properties. We have to look at 30 or 40. That's what Brayson Turner said. We have to go through many of them. Build that analysis muscle and then we'll be good.

This can't be the, you know, this can't be it. Yeah. It was it. Yeah. That was it. That was the one. And since then, we keep an eye on the property on the market. We have not found the same deal.

I mean, now that we're into expansion mode, we'll never find a deal like that one. I pray we will, but it will be unlikely. So they were originally asking, the way the house was set up was it was a, a two bedroom, one-bedroom bath that they added an office and a laundry room onto in like the 50s or 60s. And then in the 90s, they added on, to the back of that, they added a law office. There's law offices everywhere in Florida, if you didn't know that. But they, they, the 1920s home. Yeah, built in 1920s, very small. Very small. What, 1,100 square feet, maybe? I don't even know. officially in sections it's hard to yeah yeah because they added on twice they added on twice they closed

in the porch and made it a they call it a florida room um but they they have done basically all the work that a lot of people are doing now and adding adUs you know walling off certain sections adding kitchens all this stuff and so we we saw the photos and we're like this has a lot of potential um as well as a carriage house yep the law office uh could also be like a mother-in-law suite. It had its own kitchen and bathroom. And then they had a carriage house out back, a separate building, that was converted in the 60s to an upstairs and downstairs one-bedroom apartment each.

So it was billed as a triplex, but if you consider the mother-in-law suite, it really was a quad. So we bought it as a triplex, but, well, I should say... You bought it as a triplex, but once you close the door, you have four units. You have four units. And it was a two-sided security door, and we soundproofed it. Yep. So they were asking 489 for it, which was just under what we qualified for.

And that was, at the time, that was overpriced. I spoke to my mentor, and he's like, yeah, that's a little steep. And the comps didn't support it as well. it and also it had been on the market at that point like we caught it when it was on the market about 20 days 20 or 20 days or so we made an offer I think at about 30 days yeah our first offer we made our first I talked to my mentor and he said make an offer like the worst they can say is no and they will most likely counter like the worst they can say is no and they will most likely counter. So we undercut the you know what out of it. We made a very low offer. We offered them

400 and they came back and just flat out said no, didn't counter nothing. And we're like, okay, they seem to be pretty set on their 489. And you know, with all the closing costs and all this other stuff, I'm not sure, you know, there's even with a VA loan, there's extra expenses. So I'm not sure we can we can do this. I don't want to have to liquefy my my stocks in order to pay for this, which now in hindsight, like, that's a no-brainer. But I'm glad it worked out that way because about a week and a half later... I mean, first, me being the analysis paralysis guru was like, great, no problem, we'll walk away.

Yeah, we'll find something else. Yeah, yeah, no, we'll find something else. And we did. We looked. We, you know, we sent our realtor poor thing. she went through probably six or seven more houses before they came back. But she's talking to their agent the whole time saying like, hey, you know, like, you know this is overpriced.

Like you got to come down a little bit and all this other stuff. So we didn't know that until later. She was amazing. Yeah, she was incredible. She really advocated for us. Michelle Bear with American Valor Realty is a rock star. But she came back and said, hey, they actually countered, you know, this is a week, week and a half later, 10 days later, they came back and they countered and they said, we'll sell it to you for 440.

And we were like, whoa, okay, we just saved, you know, what did we just save? We just moved the dial, like so much. So much just by making a, you know, a bold offer. And we talked about it and came back and said, we'll do you one better. We'll do 450 if you cover all the closing costs. So. We had no money at that time. Yeah, yeah, we did not, I did not want to, I mean.

We needed any liquid cash we had. Yes. So they agreed, they accepted, and our agent wrote it in that they would pay closing costs or up to, what was it, 3.2% of the purchase price. So, yeah, she wrote the initial contract. Yeah. And closing costs were 3.2% of the, um, price of the house or the sale price of the house, which turned out to be more than we needed for closing costs. But that was the initial contract where she expected the realtor to come back.

Yeah, we also had $5,000 of repairs written in, which, I mean, any real estate agent would go like, yeah, you're joking. Give me a break. Yeah. But we expected a little back and forth. We expected some pushback and they just accepted. So did you move into this problem? property? We did. This is a house hack, yeah. Yep. So they accepted, and long story short, we ended up walking away with cash in hand at closing. At closing. So like I said, probably won't be able to do that one again. But we moved into the mother-in-law suite. The upstairs and downstairs apartments had existing leases that we inherited that were like maybe 60% of the market rate. So we knew we had a room to increase the rents there.

But something safe to move into. But something, yeah, something to move into. And our goal was to work on the main house, the two one, and make it livable for long-term tenants. Our goal was to get military people in there because there's students coming in and out of Pensacola, you know, probably a thousand students a year go through there. and they're only there temporarily before they go from pilot training to other places. Our initial goal was long-term tenants.

Yeah. So we kind of fell into STR. Yeah. We knew Airbnb was a potential, though, just from previous experience. And so we put the two bedrooms there up on Airbnb, and it just took a large. Well, we were, yeah, we were initially looking at. We talked to a bunch of his pilot, his pilot school training friends and said, hey, you guys interested in living on our property.

We imagined that, you know, them all studying together. All of us kind of being nearby could be kind of fun. And everybody was just kind of finding other places farther away from downtown for a little cheaper. And so we started to get a little nervous. We also looked at the main house, which, again, it's core. is 1920 and then added on to and the couple before were kind of retirement. So the original plan was to put long-term tenants in there in the process of us repairing one of the bedrooms. We had put it up on Airbnb and the Airbnb just took off. We did not realize

what a huge market the panhandle is for short-term rentals until we put that first unit up. So then when the next lease expired, we didn't even think about putting a long-term tenant in there. We just went out, furnished it, opened it up as our second Airbnb. And then we wanted a little bit of insurance, you know, just in case, for whatever reason, this was just a quick flip of business for Airbnb. And, you know, in case it crashed. We kept one of the long-term tenants and renewed her, increased her rent, not nearly enough. She was very happy to keep the lease at that rate.

But pretty much regretted it almost instantly when we started seeing the second unit income. The second unit was making about 2000 a month on Airbnb. What was the total income from the property after you, or for the, from the rent, from the short-term rents and the long-term rent once you completed this? Long-term rental was $700 a month last year. So quick math, what would that be? $700 a month would be, what was that? Yeah, $700 a month from the long-term rental.

What will be getting per month from the second unit? So for Airbnb, I mean, it's seasonal. So we were doing between, I want to say, $1,500 to $3,000 per month just with one Airbnb, which was covering the mortgage. So double to quadruple. Yes. Double to quintuple, the revenue of the long-term rental. Yes.

And what was the main house getting? That's, the main house was getting about the same. So I'd say the main house was a little higher. Two to 45. I'd say 2,000 to 45. Yeah, we had some really good months in the summer. Yeah. I mean, obviously.

So on the low end, you're getting $4,200 a month. And on the high end, you're getting $4,200 a month. six, seven, eight thousand. Yes. Correct. Yeah. So this is phenomenal. And what's your mortgage payment on this property? Our mortgage payment at the time was 2820. Yeah. Yeah. This is a killer house hack. Yes. Yeah. We were living for free. Yes. I get a I get a housing allowance from from the Marine Corps. And my housing allowance, you know, was, was half of what the mortgage was. So I was willing to eat, you know, to eat it.

If everything went to hell, you know, then I would be paying out of pocket to live, which is what everyone does. So like worst case scenario, we saw this as a win. Like I'm at least buying equity, or the Marine Corps buying me equity. So, but it, I mean, we have, we have yet to pay to live in Pensacola.

So. Yeah, we've never paid a mortgage. Not a dime. Tax season is one of the only all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to

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because privacy by default is their pledge to all customers. Visit Northwest Registeredagent.com slash money-free, and start building something amazing. Get more with Northwest Registered Agent at Northwest Registeredagent. I have a couple of things I want to highlight really quick. First of all, the VA loan is not for investment properties. You have to live there. But that doesn't mean that it can't be used for a fourplex. I mean, the VA loan is not, the VA is not going to approve a loan that isn't, that doesn't qualify for, you know, they're not going to approve a property that doesn't

qualify for the loan. But I just wanted to clarify that you can't use a VA loan for a strictly investment property. So you've done a VA house hack, a VA hack where you're using this no money down, like truly no money down. You walked away from closing with a check in your pocket. You had a property that was miscategorized on the MLS. There was a mistake. It's a fourplex, but they listed it as a threeplex, and you changed it to make it into a fourplex. Or actually, you lived in the one unit and you were still collecting right from three other units. I have little acronym called the MLS is not dead yet. And if you go by the initials, it's Mindy. That's great. You knew it was a great deal because you could see, you could do math.

Not, I think that all investors have an opportunity to get that one rock star deal and not everybody takes advantage of it. This is again an opportunity to celebrate you guys because you could have been like, it's the first property. I don't know. And you. yeah, most of the time your first property isn't going to, like the first property you look at, isn't going to be the best thing ever. But that doesn't mean it's not going to happen. So know what a good deal is. And keep an eye on the market right now because things are changing. And maybe there will be another really great deal coming up on the market. I love what you said. I just want to agree with everything Minnie said and say, this was a perfect house hack with this. I don't think it was listed

incorrectly. It was a triplex. And there's a mother-in-law. suite, right? So you just moved into the mother-in-law suite, which is perfect for you guys from that and in the context of a house hack. And that allows you to Airbnb out the other units with that. Your only, quote-unquote, mistake is that you could have done all three units for a short-term rental perspective with this. You also were willing to do work on the property. I remember you tell me about this property a year and a half ago, I guess it was almost two years now. And like, yeah, it just seems like all that, like that's all the, that's all the stars aligning with that. The VA loan, zero percent down, this triplex quadplex, whatever you want

to call it on there. And then being willing to like obviously there's a lifestyle sacrifice. You could have qualified for a $400,000, $440,000 house. That was all to yourself with that. So there's a big sacrifice you're making in order to in exchange for that income. Absolutely. When we saw the potential, though, we realized like we're not compromising. Again, we're just loving future us. You know, we're living in, and it was an upgrade for us. Because, I mean, we're coming from Denver where, you know, square footage here is not cheap. So we moved into the mother-in-law suite, and it was an upgrade.

So, you know, we still, that's how we looked at it. Yeah, we could be in the big two-bedroom house and have a nice guest room and all that other stuff. Or we can, you know, live in the small mother-in-law suite and just pay to have our friends stay at a hotel whenever they come visit. You know, like that was the options that we had. And I don't regret it at all. I love that little place. A lot of good memories. So what happens next?

Now you have this place, how does that affect your cash position, you're investing? What do you do? How do we get to the present tier? So this entire time, you know, we haven't touched our stock. I mean, we've been continuing to maximize our IRA contributions every year, you know, all this other stuff. We have our retirement funds and, you know, we continue to contribute to that. But we realized Airbnb has some serious potential in this town.

Let's try to just... Lean into that. What's the word I'm looking for? Scale. Thank you. Let's try to scale with Airbnb. And so I started looking for another property. And we wanted to get as many units as possible.

We looked at a number of duplexes in the area. But by this time, this is late 2021. And the market is just insane. And properties are, you know, selling literally within minutes. People have offers on properties. There were two properties specifically that I told my agent. I was like, I want to make an offer, draft it up. And she calls me back and she said they just accepted an offer.

And I'm not kidding. It shows on the MLS, like listed 49 minutes ago. And you're just going, this is insane. So we looked at a couple of properties in this specific area in Pensacola that we were wanting to move because we had we had just hit our year mark in the in the home with the VA loan. So we are allowed to get out free and clear at this point. We also we also crunched the numbers and realized that it is costing us to stay that we could make more money if we move to the apartment the big old apartment complex downtown. we would we would cash flow a thousand dollars a month if we moved out if we started paying rent yeah yeah we would have made money so we said why pay rent let's just because the spread between your Airbnb and the mother-in-law and your rent would have been so large yes yeah yep so whenever we

traveled i mean we're doing it now whenever we travel we list our home as an Airbnb to kind of subsidize the cost of traveling and every time we traveled we would make more money on because we you know we furnished our home in the way we want to live. And so it was, you know, I had the smart lights and I had, you know, my my splurge of a big screen TV for watching hockey, you know, and all this other stuff. So whenever it rented out on Airbnb, it was getting more than the house. And so we realized, like, if we can, if we can make this standard, then we're losing money by staying here. And so we decided like, hey, we'll start looking for a property. If we don't find one, you know, then we'll move downtown to, you know, a very cute downtown area in Pensacola.

But we were pretty certain we'd be able to find a house. And if we could find one with, you know, a mother-in-law suite or an ADU or something like that, then we could get out ahead. And so we put offers on a couple. None of them got accepted. And a friend of mine, this goes into, you know, who you know and networking and all that stuff. I told my friend what my plan was and driving through the neighborhood, he saw the realtor hammering the sign out in front and was like,

call them right now. And within, I mean, I don't even, I think it had, by the time we made an offer, it had been on the MLS for less than an hour. So they actually didn't go with our offer, though. Originally, they were asking, they were asking, 360 for this house and the reason we went with it was they converted the garage into the master bedroom put a bathroom in it and it had an external door where you could walk straight from the driveway didn't have to go through the main front door and we saw it and we're like

okay there's one door from the from the garage into the house we'll just wall that off and that'll be another Airbnb it's just like a suite you know it doesn't have a kitchen or anything like that but it's like a hotel room. And so that's what we called it. We called it the suite. And originally we offered 360, which was their asking price, but we asked for $10,000 to go towards closing costs. So really we underbid them, which was bold,

but we thought that getting in there as fast as we could, you know, maybe they would just take it. And they didn't. They went with somebody else. and so we were in Colorado actually for Christmas. No, that was for Thanksgiving. Yeah. We were in Colorado for Thanksgiving and our realtor called us back and said the people that they went with.

Went with another property. Went with another property and lost their earnest money and all this other stuff. But they were willing to do that because they wanted this other property and now they want to go with you. And so we ended up getting it after all. So this is now twice where we have. bought property and had the seller give us money towards closing, which, I mean, is ideal. And I don't know if we'll be able to do it again, you know, three times in a row. So walk us through this property.

Where did you live? How much income were you able to produce? And what was the mortgage payment on it? So the mortgage on this one is 20, $2,300? Yes. This property is my property. Yes. Unofficially.

And this Airbnb is. Yeah. It's her baby. And she's crushing it. we went with a conventional loan. We were thinking of doing an FHA, but they offer conventional at 5% if it's your primary home. So we're thinking, okay,

one and a half percent extra is not a ton, but it gets us out from under Lifetime PMI. So at some point we'll get to the 20% down, you know, if we decide to pay that extra, but that's going to save us, you know, the PMI, I think, is $187. or something a month right now. And so over the course of, you know, once we get past 20%, which I looked at it, it'll

be in the next three or four years at the rate we're paying, then we'll get out from under that lifetime of PMI. And we saw kind of the writing on the wall, like rates are changing. We most likely won't be able to refy into a better rate to get out from under the PMI. So we just went ahead and just did the conventional of 5% down. did finally have to liquidate some of my stock holdings, but it was absolutely worth it. Put money down, yeah. We furnished it and...

It was turnkey, and we furnished it. We put it on Airbnb two weeks after we closed. We didn't have our place set up just yet, but that Airbnb was flawless. The first full month, we made $4,700 on. a one bedroom, one bath, hotel suite. Sweet. I knocked all of our units out of the water.

She has the number one, the number one Airbnb for two people in Pensacola right now. Yeah, I'm top of the algorithm at this point. So, you know, you did say perfection. I'll just throw that in there. So that has been my baby and it was super fun to see that. I do believe I said perfect in every way. Yeah.

Uh-huh. Yeah. Yeah. Except for that other, that third unit. Yeah. At the old place, yeah. Yeah. We blame Andrew for that one.

Yeah. Yeah. No, that was actually probably a security thing of mine. Maybe. Well, you know, let's look back at that. That was, they had just opened up Airbnb again after closing all of Airbnb's and returning all the money to the tenants or the renters or whatever. The guests.

Yeah. So to the guests, yeah, Airbnb closed it. You didn't have the option to close it. And Airbnb gave all of the refunds to the guests. You didn't have that option. So to keep one unit as a long term rental for the security a year and a half ago is not a bad choice. Yeah. That's fair. Yeah. With all the waves of COVID, we didn't know what was going to happen. Yeah. So we're now, and so you have the suite and you have the main house. Is there just one unit or are there multiple more units? I'm sorry. I'm I missed that on this property. Yeah.

So the property is a single family home with the suite as an Airbnb. So that was our fifth Airbnb. We have the four on the quad and now the one on the new property. And we live in the house. And we have a guest room finally. And this is your current situation. You own these two properties with these six units, the ones that include the one you live in. Yes.

And shortly after that, we set up the deal for our next. closing, which is in July. I had just listened to the podcast. Pace Morby. Yeah, with Pace Morby about doing sub two and seller financing and all that stuff. And driving, actually, we were driving to look at a property that we got turned down on. I was going to show my neighbor and drove past a for sale by owner sign and just pulled into the, the driveway and called the number and the owner was actually there in the garage and she walked out to me and talked to me and I just, you know, she told me what she wanted for it, which was so expensive, like so far out of my price range. But I had literally just listened to this podcast about,

you know, just talk to the seller, see if they're willing to accept terms or anything like that. And I just pitched it and she said, oh, absolutely not. And I was like, oh, well, you know, we tried. and about three weeks later she called me and she's like are you the one who was talking to me about seller financing and I was like yeah I am and she goes there's a trend to hear I think yeah yeah she came back and was like I think we might be able to set something up we talked to some lawyer friends of ours and I think this could be beneficial for everybody and so we went and sat down with them they were asking this is a duplex in the same neighbor which is, it's like the Wash Park of Pensacola, basically.

They're all... It's a very sought after neighborhood. Nice neighborhood. Yeah. What's that? Nice neighborhood. Yeah, it's coming up. It used to be a rough neighborhood.

And now it's, you know, people take a lot of pride in their homes. They're all, they're no, no copies of, you know, they're all, oh, sorry, yeah, we're short on time. Yeah. Nice neighborhood. Yes. But they were asking, it's a duplex. on the main street through there with all these cute, you know, breweries and restaurants

and all this other stuff. And they were asking $750 for this duplex, which I looked it up, you know, going through the county assessor and they paid about $3.40 for it a year and a half before. So they went through and they're both... We have to caveat that it's a $3.2 on each side. On each side, yes. So they're large. The three-two condo on each side.

Yeah. But they're both general contractors, so they gutted this house, completely redid it. And I walked through it and it is, I mean, they spared no expense. It looks very, very good. Still, though, our realtor ran comps for us and she said it's about $60,000 overpriced. So even with that, we looked at the potential. We paid for a survey and a report on Pensacola Airbnb's. through AirDNA or one of those.

I can't remember. Mash Pfizer, one of those, just to see what our competition was like. And the number one Airbnb in Pensacola is one property with two homes. And I went through all their reviews and everyone was saying,

it's so nice to be able to come here with my family. My brother had his own house with his kids. I had my house with my kids. And every single review was like that. And this property is not anywhere close to as nice a location as this one. And so we went in there and we're like, we can do some damage with this. So even at their asking price of $750, which we agreed to, we are looking to come out ahead considerably.

And a house about four houses down from them sold, same building, same style of duplex, not identical, but it sold for $350 a square foot. So at that rate, the house is already worth over a million. So we haven't even closed. We have it under contract. We're closing on it in July. So let's sum up your position right now. You have five Airbnb units currently with two more on the way or one more, if you're going to rent this out as one big Airbnb with two units on it.

What is your current Airbnb income that you project on average for a month? Or what's the range that you expect from the current Airbnb income across all of your units? Last month we made 17 grand. Last year we made $75,000 on one and a half units. Yeah, one and a half two units. We slowly brought them up. We're projecting in this coming year and it might be conservative to make 150. Just on the first property, I think.

Yeah, in the first property. Yeah, and then we're house hacking, the one we live in. And at the rate we're going, we can cash flow on that property about $20,000. So that's $170. Our primary home. And then this duplex that we have, we did seller financing with $60,000 down total in three chunks. So $20,000 at closing, $20,000 six months later and $20,000 at a year. We locked in a great interest rate.

We locked in. We locked them in. We have them under contract for 3%. It's a two and a half year balloon. So, you know, that's a big chunk of change that's come and do here soon. But we have no worries about it whatsoever. With the option to sell two and a half years if everything goes bust. Yes. What do you expect the income for that property to generate? We're expecting between $450 and $600 a night.

So that'll be about. it'll do the same as the quad. We're expecting about 15 to 20 a month through that. All right. Last question here. What's next after this? What's on the future for the next couple of years for you guys? Well, we're actually looking at a property here in Denver tomorrow. We want a place to come to come stay at. We are here quite often. So my sister's moving out of her apartment and her landlord called me and said, hey, it seemed like you might be the type of person who'd want to buy this. So we're going to have some dreams. and discuss it, but I would love to just to help other people in the way that you helped me in just helping educate and just basically showing people, you know, through, you know,

not to be arrogant, but through the example that what we've been able to do, showing other people in the military specifically, like what potential is regarding, like, real estate and investments and stuff. I've had a number of friends who've taken me up on the offer of opening their own Airbnbs, and they're doing quite well right now as well. So for those who are willing to listen, I mean, they've seen some benefit. All right, Haley, let's hear a quick background about your journey with money here. Could you walk us through how things start for you, maybe starting in high school college and up until the point you met, Andrew?

Yeah, absolutely. I grew up in a very money-conscious family, mainly surrounding debt. My parents have always touted that they just have not ever had debt. We didn't grow up super wealthy. We always had enough. But we were aware that we made certain financial choices to stay within certain margins. I loved growing up that they emphasized, you know, spending less than you earned, staying within your means, which was kind of a principle that I lived by for quite a while.

until I kind of expanded my financial literacy. Went to college, did an undergrad in psychology, graduated in 2012. Up to that point, I had kind of had jobs here and there, but mostly for fun money. Then after that, I didn't quite know what I wanted to do post-college. My parents had always dreamt of just paying for my college for me because their parents are able to do that for them. Instead, we were just in a spot where that wasn't totally feasible. So they shouldered half of the debt.

I shouldered the other half. I graduated with about $24,000 of unsubsidized student loans at that point. I moved home and my parent, I didn't have a direction I wanted to go. I considered graduate school. Didn't quite have the answer. And so I took my mom's advice and just moved home and started working at a hospital, paying off that debt and living for free, I would throw $1,000 each paycheck at 12-something an hour towards my debt. And I managed to pay off the $24,000 in two years. And along that journey,

I did the Dave Ramsey Financial University bit. And I credit a lot of just kind of doing that debt snowball and paying that off so quickly to that program and my parents' diligence about debt. And I remember my mom saying, you know, whatever direction you go, at least you can start here and you don't have something you're dragging behind you and bringing along. And I thank them for that. I did decide to go on and do a counseling master's degree after that. And having just paid off debt, I was not interested in getting into more debt. And so I stayed at home for the next four years, worked full time.

I mean, it was often 60, 70 hour weeks. On top of that, you have to do internships and practicums. So it was a hard fought four years there, this getting into now end of 2017, where I was wrapping up my degree. and I graduated with my master's in counseling with about $8,000 of debt, where I could have just kind of sloughed it off. And those were subsidized student loans. So I did, I graduated with $9,000 of subsidized student loans that had been kind of accruing debt or accruing interest pretty quickly. So where I could have graduate with $40,000. So I appreciate. So I appreciate. appreciate that at home time to kind of get through that. But it was at that time right after I graduated was when I decided I wanted to leave the Midwest and the cold and check out Denver. And Andrew and I met that early in 2018.

And I was very interested in the house hacking. He was doing Airbnb around that time on and off. and kind of shutting it down, heading into the Marine Corps. And it's just been really cool since then to allow him to be the acceleration where I'm in the break, learn from him with risks. I think he's learned from me on planning and being more proactive about things and strategic. and I think we make a great team on this. I'd be inclined to agree.

We're working it out. It's interesting in our relationship, I think, one thing when you're doing something with a spouse as well, if I can extrapolate, is we've had to figure out when we're in husband and wife mode and when we're in business mode. And to balance that all out, we have to call it out in moments.

of like, hey, this is not business time. This is our time. And we love it so much. We notice ourselves on date nights and stuff like that, starting to talk about the business. And as much as that's good, we really had to start balancing out how much we put into our relationship and keep nourishing that.

Because it can creep up on you because it's fun. But there's some distinction there that's really helpful. But it's been a wild ride and totally low. I loved it. Yeah. Totally loved it. It's been a good time. Well, that's awesome.

And so, and do you, are you both working full time right now or is the business taking up a lot of that time or what's that kind of look like for you guys? Recently, we finally got a chance to go on our honeymoon. And when we did that, we had to basically establish a team because we were going to be unreachable for eight days. So we set up a team and took a breath for the first time. took a breath for the first time in 18, 20 months-ish, and realized like, oh, my gosh. We should have been doing this way earlier.

We should have been doing this way earlier. So in the last month, our focus has been we need to set up a team because all the time we're spending on managing is time that we could be spending on expanding. And so we have realized that a small expense of 15, maybe even 20%, is a small expense when it's, comes at the cost of us being able to spend more time with each other, us being able to think of bigger picture goals, that type of stuff. So that is our current focus is just kind of handing off management. And instead of managing units and Airbnbs, we're going to start managing people, which, I mean, that's what I'm paid to do by the military. So I'm hoping it'll be an easy port over into our little side hustle. So. And yes, to answer your question.

Sounds like a great honeymoon. Yeah. Oh, it was phenomenal. Yeah. Yes. We went to the Galapagos and did a dive trip. Yeah. Yeah, it was incredible.

But, I mean, that's what it took for us to, you know, kind of step back. And I wish we would have done it sooner. I work a mental health agency job and just started a private practice small. and then did this on the side. And we haven't even mentioned that we own a Tesla only by putting it on Turro. And so that's another side hustle. So we were getting warning signs before the honeymoon to slow down, to get a higher help to.

But it's a total mind shift to go. I mean, I'm seeing us move kind of, when you move up socioeconomically, it is an adjustment because we are in the, the mindset still of thinking we have to do everything ourselves. We have to work super hard. We have to be hands in. And bringing other people on is the next level of doing it. So it's an adjustment. It's a function of profit and cash flow too. You have so much profit and cash flow that you can begin thinking in those terms. And guess what? Because you can do it

all yourself. If there is a problem in the market or something like that, you can always go back to doing it yourself and continue to slog those things through. Exactly, yeah. So you've got a large number of exit options with these properties, with the first two properties in particular, where you could just long-term rent them and they'll probably produce a reasonable cash flow. Exactly. That's what.

Or sell them with that. This next property, you're taking a big risk with the two and a half year balloon, but you've got your, this is after you've built your systems and have those things in place. So I'm optimistic. I think it'll be great. Going back to the doing everything yourself, if you know how to do it, then you're can hire somebody who will do it well. If you don't know what you're doing, it's really easy to hire somebody who also doesn't know what they're doing. But when you already know how to do it,

you hire some, you interview somebody and you're like, oh, you're full of garbage. You don't know what you're doing. I'm not going to hire you. But if you don't know what, how to do it, then it's easy to fall for a really, really slick talker. Absolutely. And we're still learning. I mean, like, we're, unfortunately, we're about to fire our first person. So, you know, just they're not doing as. Yeah, it's, it's not enjoyable, but it's, unfortunately, it's business. So, you have to have the right people on the bus. Yeah.

And yeah, doing it from the ground up really helps you know what you need. I think the, the lesson is to just not get caught in the scarcity of like, I have to do everything because, you know, Who knows if this is going to keep working, really? We have a year of data on Airbnb and what we've been able to do. But there are still parts of us that are like, if everything goes down, you know, and you have to fall back on those plans of like, yeah, there are long-term rentals. Overall, our properties have appreciated already. Significant.

Wildly. What do you guys think is a good cash position for someone doing this type of work, the type of investing you're doing? We agreed early on that our comfort level is six months of runway with no income whatsoever. So that was initially what we wanted to save up. And it got to the point where we were actually losing opportunity by having that much. And so we've scaled it back. We have about three months of runway for each property to pay the mortgage, no questions asked.

and we're very confident that we could find a monetary solution to whatever ailments we may encounter had we needed to tap into that. So 90 days is, I think, more than enough for us to kind of fix whatever goes wrong. So it's a little risky, I guess, but something cataclysmic would have to happen for both of those to go bust. at the same time. So that's where we're comfortable. Should we go ahead and do the Famous Four here? Let's do it. Absolutely. Famous for. What is your favorite finance book? I would have to say, I will teach you to be rich by Ramit Seiti. I know that's an intro book into the field of investment, but his straightforward instructions along with his, the relationship he's noticed between psychology and finance, just really spoke to me,

especially being the mental health field. Yeah. Yeah. Love that one. That's definitely like my number two. My first one would have to be Richest Man in Babylon just because it started this whole journey. So that one's super easy to digest. It's super short. And if you're a, you know, a former contact sport player like me and have a little bit of head trauma, it's really easy to understand. That was also my favorite. Oh, awesome. The fables are awesome.

The fables are awesome. Yeah. What was your biggest money mistake? Do you know what? Do you know? I'm just running. Yeah, I can't. I can't decide.

I would say early on, we went, we decided to, we decided to do some long-term Airbnbs. And the tenants that we had at the time, were a little rough on the house and we looked at it and we're like, who cares? Like, they're giving us a great rate. You know, we have this secure and all this other stuff. And looking back on it now, they ate up our entire, like, busy season. They wrecked the house we had, you know, to replace a furnace.

We really regret letting these tenants stay in. And also allowing the, I guess, the claims window for air. Airbnb to expire before reading up on like our protections and all. Like Airbnb would have completely covered everything. But we ended up eating it just because I didn't do my homework. And, you know, I got scared and thought a sure thing was going to be better than, you know, risking it early on. So for the sake of security and, you know, we just went with a sure thing that actually ended up hurting us.

I would say that was one of our early mistakes. Me personally, I put, when I started to save my money after paying off all of that student debt, and I was in a higher paying job during my master's degree, I was contributing pretty heavily to my 401K. I was really excited about actually investing. But I was excited about keeping my money, and so I allocated my investments at that time to be very conservative. So for eight years, those sat in a 401K that was very conservative and did not earn the money that I, that I could have.

That compounding interest over time really could have done me a favor and missed out on that. But there were opportunities later to earn that back. She kept me from buying a timeshare once, which would have been the biggest financial mistake ever. Holy cow. I was like, man, you're getting suckered right in. Yeah. I think it was the moment when the salesman said, you can't run the numbers. This has to be an emotional decision.

This is an emotional purchase. And I was like, wait a second. My mathematical, like, logical-minded husband, I was like, where are you? Where did you go? How am I on the other end of the spectrum? Yeah. I was like, it'll be great. We can visit the mountains every year.

It's like, oh, buddy. So that was a close one, but yeah. fortunately dodge that bullet. Good. Yikes. Timeshare should be illegal. I can't imagine a situation where a timeshare is a good idea for anybody. And if you want to change my mind, you can email Scott at BiggerPockets.

I don't. No, you can email Mindy at BiggerPockets.com unless you're with a timeshare company, in which case, no. What is your best piece of advice for people who are just starting out? Time shares are a great way to help make the salesmen financially free. Yes. A time share is a great idea for the person selling them. Mm-hmm.

Yep. Okay. Haley, what is your best piece of advice for people who are just starting out? I would say, I mean, we're speaking from just our experience. The thing that changed my mindset was if you want to have large assets, have them in a way that they can make you money. You can have large assets, just have a plan for them. We have two properties. They make us money.

We have a Tesla, which we wouldn't be able to afford otherwise. And the only reason we have it is because renting it out on Turo for a number of days during the month. Right now, it's like four days, pays the bills for it every month. My uncle came to our house and joked and said, everything you own is for rent. huh? And I was like, yeah. You just kind of hold things loosely. And so that's just kind of where I see, you know, our mindset, how we shifted to making this money and using our assets well. Yeah. I would say don't look at setbacks as roadblocks. Look at them as just bumps in the road. I mean, you'll make an offer on a property and you won't get selected.

I mean, I can't count how many offers we made that got turned down. Don't be afraid of know. You have to be resilient. You have to be willing to, you know, to make lemonade's out of lemons. And even a roadblock will eventually be moved, you know, once the construction is done, you have to just be persistent and diligent at the same time. So, yeah, don't be easily discouraged. I think it's fantastic.

think that when you when you look at your story, Andrew in particular, where, you know, you came from 412, a credit score, and, and all these other problems in your financial position. And now you're, you're so focused on building this real estate empire and driving cash flow, making these investments and making deals with that. It's that you've done this incredible period of self-sacrifice, self-education. You've overcome all these hurdles. You don't even think about, Like you, we asked you what your biggest money mistake was. And you're like, oh, I rented some folks in Airbnb suboptimally. And like, we just spent the first 20 minutes, 30 minutes of this podcast talking about how you were living in a rat infested hotel because you couldn't afford anything else with all this.

And so like that's, it's just, it's funny how those roadblocks kind of just take the back seat. Yeah, they do. Absolutely. They paid away. Once you've really like overcome them and gotten this grind going and gotten to a stronger position, you know, you, you almost forget those. They proceed to the background, it seems like. And you're focused on what the recent things, the challenges you have today as a big time real estate investor. Yeah. I mean, to your point earlier, Mindy, like this is not a, this is not a short trip. This is a long road, you know. And you have to be willing to be in it for the long haul. and I hope that, you know, people can see, you know, through all of our examples here of the potential if you just decide to put in the work.

What is your favorite joke to tell at parties? So mine is a bit tailored to me. I would have to say my favorite joke is what is red and bad for your teeth? What? I don't know. What? A brick. Yeah.

So why is that one tailored to you, Andrew? So my name on the rugby team was ruthless-toothless, and that's because I lost some tea playing hockey, and yeah, I can drop them out at will. So for those of you watching, oh, it's a great party trick. It's a great party trick. I can photo bomb anybody. It's amazing.

It's pretty remarkable. And in Navy Medicine's defense, they are fixing these in like a month, we just happen to film at the right time. So, yeah. 10 years time. It will be memorialized here. Yes. These will go on to the mantel piece as a keepsake. So, yeah.

Oh, how charming. What's your favorite joke? Oh, gosh. I don't think I have one. No? How are false teeth like stars that come out at night? That one's great. Oh, okay.

All right. That would be Haley's tailored towards Andrew as well. There we go. I laughed so hard. I almost fit them out. Yeah, that's great. I will say part of my guest book in the suite is to ask people for their favorite dad jokes when they sign in.

So it's name, where are you from, what do you like about the area and your favorite joke? And none of them are coming to my mind right now, but jokes are so essential. I love them. Yeah. What was the most groundbreaking invention ever? You remember that one? The show. Oh, I got one.

Yeah. Well, this has been awesome, guys. Thank you so much for coming on. It's great to see you. Thanks for stopping through Denver and agreeing to share your stories here. and your incredible real estate journey. We appreciate it. I think this has been a fantastic episode.

I hope it helps a lot of people who may be struggling on the way that Andrew was at first and some folks who are struggling to get into real estate in recent years with prices the way they are. You guys have been really creative, really consistent, and I can't wait to see what's next. Thank you so much, guys. We really appreciate it. A real honor to be here. It's such a pleasure to meet you, Mindy. And, yeah, we look forward to keeping you updated on progress.

I look forward to those updates, and it was lovely to meet you, too, guys. And we will talk to you soon. Thanks, guys. Bye. Scott, that was an awesome story. That was a super fun little twist at the end with Andrew's teeth. What did you think of their show? Yeah, well, like I said, Andrew or Ruthless Toothless,

he self-identified at the end of the show. I wasn't going to out him. Is a longtime friend of mine, and it's just been so fun watching his journey. from really, you know, a pretty, pretty tough financial situation to the success that he's had. And it is not, it's an overnight success story in seven short years to see what he's been able to go from and to with us. And it's, and it's really combined every part of his life, his housing, his car, his career, all of those things have been made with, with financial freedom in mind. And I think he's got, you know, a lot to show for that now, a wonderful wife,

a property portfolio, the career of his dreams. It's, just been fantastic to watch. Yep. And I think the core on all of that is he took action. It is so easy to leave the military. He was separated from his original Air Force not by choice. It would have been easy to say, oh, okay, I guess I'm not in the military anymore and just go about his life. He could have decided to, oh, well, I guess I just have debt. Whatever, that's just how it is. He could have, you know, even with Haley, he could have decided not to take action with her. You have to take action in order to make things happen. And he is kind of the embodiment of what can happen when you do take action, when you are

intentional with your actions. That's such a terrible word. But, you know, when you are intentional, you can make things happen. You can change the course of your financial life, your your whole life, but you have to do the work. Yep, and you have to do the work, and the work always, or almost always, comes with a grind, a several years long grind to get from point A to point B or that next milestone. It's not even a several years grind to get from start to finish.

It's a several years grind to get from start to the next point of optionality in this journey, right? And I think Andrew demonstrated that through the self-education that he put that, that he, He has subscribed to through finding mentors throughout the journey, which is kind of weird, but I guess I was one of those on that journey. And then he has his military advisor that he, that or the person for the military who gave him some advice on rental properties in Florida. And he takes action based on that. And then the, the relentless self-education that is just enveloping in all of that. Yep. He's just a success. Like he said, overnight success in just seven short years. Love it. Okay, Scott, should we get out of here? Let's do it. From episode 315 of the Bigger Pockets Money podcast, he is Scott Trench and I, Amity Jensen saying you can change your financial future and Andrew is proof, but you have to do the work.