BiggerPockets Money Podcast - 399: Financially Free in 10 Years by Using Real Estate the Right Way

Episode Date: April 7, 2023

Want to retire early in your 30s? Early retirement may be closer than you think. With smart money moves, intelligent investments, and the ability to save more than you spend, you could trade forty-hour work weeks for full days with your family. But, before you do, you’ll need to set yourself up with some killer cash flow, so your assets can pay for your lifestyle while you sit back and enjoy ultimate time freedom. This is exactly what Jenny Bayless did over the past ten years. After college, Jenny was able to score a well-paying job but realized only a few months in that the “work for forty years, retire at sixty-five” plan wasn’t worth the grind. So, shestarted aggressively saving, doing whatever she could to get into her first property. From there, she stumbled upon the BRRRR strategy of real estate investing, allowing her to recycle her cash to buy more properties in far less time than it took to save up for a down payment. In this episode, Jenny explains precisely how this method led her to financial freedom, what FIRE-chasers in 2023 can do to retire even earlier, and why EVERYONE should have a financial exit plan, no matter how much they love their work. Jenny’s repeatable system to financial freedom through real estate isn’t as complicated as you might think, and she gives three crucial tips that, when followed, will lead to FIRE even faster! In This Episode We Cover How to retire in ten years (or less!) by using the BRRRR investing method Leaving your W2 and how to know it’s the right time to walk away from a paycheck Three tips ANYONE can follow to hit financial freedom faster  “Failing forward” and why those that make mistakes are the ones who get ahead Cash-out refinances and how to recycle your down payment funds to buy more property Life after FIRE and why you’re still allowed to make money even when retired early And So Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Scott's Instagram Connect with James Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Subscribe to The “On The Market” YouTube Channel Listen to The “On The Market” Podcast: Spotify, Apple Podcasts, BiggerPockets Money Moment Meet Scott and James at BPCon2023 Grab The Book on “Investing in Real Estate with No (and Low) Money Down” Click here to check the full show notes: https://www.biggerpockets.com/blog/money-399 Interested in learning more about today's sponsors or becoming a BiggerPockets partner yourself? Let us know! Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast where we interview Jenny Bayliss and talk about her financial journey. Hello, hello, hello. My name is Scott Trench and with me today is my guest co-host from our sister podcast on the market, James Dainerd. Hey, you doing, Scott. I'm doing great, great. Thank you for joining us today. I'm excited to be on. Absolutely. James 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 that financial freedom is attainable for everyone, no matter where, or when you're starting. And whether you want to retire early or travel the world, go on, make big investments and assets like real estate or start your own business will help you reach those financial

goals and get money out of the way so you can launch yourself towards your dreams. James, I'm so excited to be here with you today. And I understand that you have a very special guest joining you for today's show. Yeah, random way. So at BPCon last year, you guys, BP did an auction where a lot of donations went out. and someone bid and they bought me. They've actually bought me for an eight-hour Zoom call, and we ended up shipping them out here for two days instead.

So this is Justin. He's from Austin, Texas, bought us at the BPCon. Now he's here hanging out with me for two days. You got over, he actually, we over-delivered. He got way more. It's been amazing. So BP-Con, amazing opportunity, and it's been a great time hanging out with James

and getting to understand his operation. So highly suggest going and hanging out there. Are you going to bid on Scott next? Yeah, Scott is next. He's on the list. I was his second choice. So, you know, James was right here. He told me right before we recorded and I was right there.

Now you got to come out to Orlando and secure Scott on the next one. That's it. That's it. That's right. Will you be going to this year's conference in Orlando? Oh, yeah. I already got tickets and going to go a little early and take the family to Disneyland. That's awesome.

We'll see you in Orlando and we're thinking about bringing our little girl there as well to see Disney World. Yeah, it's an amazing opportunity to do so. Thanks, Scott. And if you're interested in going to our conference this year, 2023, check out BiggerPockets.com slash Orlando. And you can find tickets. We actually just opened those up last week. We're recording this in late March. So we're really excited about that and hope to see you there. All right. We have a new segment of the show called Money Moments, where we share a money hack, tip, or trick to help you on your financial journey. And today's Money Moment is, need a break, but want to save, try a staycation. Before you spend thousands of dollars,

to feed the travel bug. Try taking a couple days off and being a tourist in your own city or even surrounding cities near you. I've actually done this two or three times in the last year, and it's amazing. Here in Colorado, we have just 40 minutes away, a wonderful fairyland in the mountains in the summer, and it's a wonderful getaway just for a little weekend right near home. We don't have to get on a plane or go anywhere far away. So check that out. There's probably incredible sites near you that you can go to very affordably. If you have a tip for us, Email Money Moment at biggerpockets.com, and we'd love to hear it. Please give us your name and contact information so we can give credit where credit is due. Before we bring in Jenny, let's take a quick break.

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And we're back. All right. Jenny has been investing in Colorado Springs since 2016 and has experienced sourcing deals to the MLS, wholesale, for sale by owner, and networking. And she's performed a variety of different financing methods to include conventional, hard money, and seller financing. She currently owns 18 units. Jenny, I was so excited to hear your story. at the Bigger Pockets meetup on February 23rd, where I think actually James, my co-host today,

was there as well. It was fantastic to hear the story and we thought we have to get you on the Bigger Pockets Money Show. I'm so glad you accepted our invitation and I'm so excited to talk with you today. Scott, James, I'm so excited to be here. Thanks so much for having me on. That was a fun meetup.

Yeah, it was a good time. Well, Jenny, could you tell us a little bit about yourself and your money story? Absolutely. So kind of as you touched upon, you know, if we fast forward to today, I own, you know, a couple handfuls of units in Colorado Springs. But kind of starting back to the money story origin is pretty typical, I would say,

just work through high school, you know, service type jobs, college. I had a, you know, an internship in my field. Worked there during summers and during the school year. So I graduated college with pretty decently paying entry-level jobs. in a pretty high cost of living area just right outside Washington, D.C. And I would say that our first major money milestone was that my now husband and I saved for a little less than two years and bought our first primary residence. We thought that you had to use 20% down.

That was the only way you could do it. I really wish going back in time, I would know a little bit about house hacking. that would have been an amazing start to our money journey, but hindsight's 2020 now. And we really continued to just do the typical thing. We went to work, contributed the match to the employer retirement account, saved cash, really nothing out of the ordinary for quite a few years. And then a couple years of working my W-2, I started to realize that the thought of having my job for the next 30 to 40 years.

Didn't really sound like my idea of a great time. So I started researching how to retire early. And, you know, per Google, real estate was the resounding answer, stumbled upon bigger pockets and just became obsessed at that point. Just studied as much as I could reading the forums, listening to the podcast, blogs. Yeah, so definitely a huge plug for bigger pockets because it's literally. all right there. So fast forward to 2016, my job allowed me to take a position out in Colorado, which happens to be the same year that we started to invest in real estate. And we actually started

investing out of state with turnkey properties. And I wasn't really loving it due to really just kind of a lack of control. And at that same time, I began exploring purchasing buy and hold property. in Colorado, specifically Colorado Springs. So that was really the nexus of our investment journey. So between 2016 and 2019, we bird about 10 times. And that's kind of when it dawned on us. Like, this is an incredibly powerful way to expand our rental portfolio very quickly. So we sold off all the out-of-state properties and focused exclusively in Colorado. And then about In 2020, I took that major leap from my cushy six-figure stable W-2 job to self-employment. So, yeah, that was very, very scary point.

I probably could have quit my W2 job earlier from a financial standpoint due to our rental property cash flows as a backstopping. But it was just a really scary decision to give up a stable, great paying job for really the unknown. And the catalyst to making that decision was that we had just had our first child and I literally woke up one day and decided that I didn't want to go to work anymore. And I wanted to have the flexibility with her. So I put in my two weeks notice. And at that same time, a local real estate investment agent team was looking to expand. I was able to connect with them. and now I'm working as an investment-friendly real estate agent. I absolutely love it. I'm helping people

and educating them on buying rental properties, which is just incredibly fun for me. And I would say, you know, kind of getting to where we're at now between 2020, 2020, we did a couple of major rehabs on our existing properties. So I don't know if you want to call them a double burr or what you want to put a name to it. But we kind of took them from rental grade to just as the neighborhoods kind of turned, we made them more higher end. And actually, you know, we're able to get higher rents behind that. And we're also able to use the equity from the previous properties to almost double our portfolio. So now we have 17 units in Colorado Springs and one in Pueblo. And that's where we're at today. I think, Jenny,

that is such an amazing story because you get to that breaking point. as an investor is that where I like to call it the jump off point or that moment of clarity where we all go through it's like we have this like light introduction into real estate where you start testing it you got your first home which is probably one of the best ways you can build wealth is buying that first home wealth I mean that's your story matched up a lot with mine I did the same thing I was in college I bought my first home and then you get to that jumping off point like you did at year four and after you bought 10 properties and that's where you make that decision to go all in, right?

Which is actually pretty terrifying for a lot of investors. But for me, I had made zero dollars and I was like, all right? I'm going all in, right? And it was scary. Let's talk about that a little bit because you're an accountant. Accountants like to be very right in my experience work with them. And they like to have like a steady, they like to know what the, they want to have a good game plan. They want to see the good pathways. And so that's an unknown, right?

You're switching careers. You went from payroll to all commission self-employed. that's a scary thing for a lot of people. So what was that moment of clarity that you had to get that jump off point going? Yeah. So we had talked, my husband and I, we had talked for, you know, several years, probably like 2018, 2019, you know, early 2020. Hey, from a financial standpoint, I could take a pretty big pay cut doing something that I would

enjoy a little bit more with the supplement of our rental properties. to make up for what I was making in my job, you know, just from a numerical standpoint. But yeah, it was just that mental block of leaving a high-paying job. It just honestly, it seemed foolish to give that up. And, you know, it just, yeah, it was just kind of coming to that conclusion that, you know, from a practical standpoint, I, you know, why would I give up this good job for, going into the unknown. But it was when I had my first child, it kind of like there's an emotional catalyst for me and that took over. That was a more powerful than the logical side of things.

That, hey, I'm lucky enough to be in this position. I absolutely need to take advantage of it because a lot of people are not in that position. They would love to be in that position. I'm so lucky. why else did I work so hard to get to this point? So absolutely. Could you define this position in a little bit more detail? How much cash did you have? How much passive income? And what puts you over the edge to feel confident? Yeah. So I pretty much matched my take home pay via our cash flow. With the exception of benefits, which my husband's W2 job that he loves, we could hop on his benefits. And then, of course, retirement, you know, the employer match, that sort of thing. But then I came to the conclusion that, hey, these rental properties are the retirement.

So it's okay. So, yeah, it was pretty darn close to take home pay in that case. Okay. And then a few additional questions. Could you give us some idea of the degree of magnitude of the cash flow was this, you know, $5,000, $10,000 a month? And then second, how much cash on hand did you have in the bank at the time? of that transition because I find that that's often a really good, a powerful, I guess, safety net to have in this transition process. Yeah. So I would say we, at that time,

we were probably cash flowing about, I don't know, $6,000-ish a month. We definitely had six figures of padding in the bank. So, you know, all the, all the logical pieces were there. It was just taking that leap, I think. And I think that is really important. You know, I've seen a lot of people go from like W2 tech into full-time real estate, but following that, okay, you want to mitigate your transition, which is having cash in the bank, you supplemented your income with rental properties, which is like the definition of financial freedom, right? You buy properties is that you slowly bring it back. One question I had, did you wait, you know, being in W2 makes a lot easier to get access to money, which is a huge deal for investors.

did you know you hit magical 10 and then it was that part of the strategy like okay I maxed out my credit lines for traditional loans with my W2 so this is a good time to leave or was it just by chance you kind of maxed it out and then went on um so my husband and I have always taken turns purchasing rental properties in each of our names so um you know like he would buy some I would buy some so that we're not both at that 10 the magical 10 number right for 50s. Danny Freddie. So to answer your question, it was just kind of by circumstance, happenstance, that we hit the 10. But I had also been doing real estate agent work part time, you know, a few years prior. So I was actually able to qualify to purchase additional rental property

in, I guess, 2021. Because I did have history of, you know, small self-employment income. but, you know, it worked for what we needed it for. Awesome. Well, let's go back a few minutes to the Burr strategy. You bird 10 times successfully. Can you walk us through the systems you put in place, kind of a bread and butter deal? If you had a loser, we'd love to hear about that.

How did that process go in building this portfolio that allowed you to make this transition? Yeah, so I would best describe the strategy as failing forward. So we messed up a lot. especially on the first couple properties, you know, our first burr was, I consider it, an accidental burr, thinking that we knew everything that there was to know, of course, right, after having just done one property, jumped into the second and literally made every single mistake possible. You know, I didn't understand that there was seasoning requirements.

So we had our money stuck in there for a long time. I didn't get an inspection done because, you know, I wasn't going to win the property from the wholesaler if I was going to get an inspection done. Highly don't recommend that. You know, come to find out the sewer line was totally collapsed and all that and trying to do some of the work ourselves. And I'm just not a very handy person. So it takes me, you know, 10 times longer than it would take a professional to do it. So really just kind of, making every single mistake in the book and kind of dialing it back and saying, okay, what are we good at? What are we not get at? Let's kind of get an understanding of all the

requirements like lending requirements. What do hard money lenders require? What do permanent finance lenders require? Trying to get that in order, trying to segment the rehab part of it. How much is this on estimate? How much is, you know, painting, flooring, that sort of thing. And just really just collecting data through messing up. And then we're able to turn things around a lot quicker for our subsequent properties thereafter. So that was that's kind of how I would recommend doing that. And I'm actually really glad you brought up seasoning requirements, right? Because we all make our own mistake. Like I still make mistakes on property today, right? Like I'm like, oh, well, I skipped a step. Access to money in debt is you have.

have to have that to borough property, right? Like, that is one of the key components is you got to find the right deal, but you also have to layer the right debt on there to make it work right. And that's that rush in because you want to get into your deal. You got the great buy, but then not being prepared. So how did you deal with that seasoning? And what do you do, what did you do moving forward? Because that's a lot of times people don't even know about that, that the banks don't want to refinance you in conforming debt because it's like it looks weird in the time period. And that kind of stems back from the 2008 banking crisis and fraud, that they want that layer of time in there to figure out why the property increased in value so rapidly. So how did you get around that,

or how did you deal with that? Because that can trap money, which is bad to grow your money. And what do you do forward to make sure that doesn't happen? Yeah. So with the caveat that this was several years ago, I'm sure everyone knows out there that the seasoning requirements are changing. So I'll just speak to the past what the requirements were there. So, yeah, it was, we're, you know, a few days before what I thought was going to be a cash out refinance. And the lender calls me and said, hey, we're going to have to do a rate in term refinance. We cannot cash you out.

So, well, what do you mean? Oh, well, you didn't own the property for, at the time, it was six months before you can do a cash out. And I said, I had no idea that that was the case. She's like, yeah, sorry, you're going to have to, you know, we're only going to be able to do a rate and term refinance to basically pay off the hard money lender. But you're going to be stuck, you know, with the note essentially for what the hard money loan was for six more months. And then you can do a cash out refinance. So luckily we had other capital that we could deploy during that time on subsequent projects.

And believe me, I learned my lesson the hard way on that. but yeah so kind of what we are able to do to be able to turn our properties over a little bit faster during that time now that I learned that hard lesson we had you know a lot of money stuck in this one property for six more months is we spoke with the lender and said okay well what's the best way of a quicker turnover on this process well if you can get a private note or a hard money note at 75, 80% ARV, we can immediately do a rate-in-term refinance. And I believe that's changed since then. But that was kind of the turning point that we were able to prove ourselves with our hard

money lender through these past couple of projects that we had done, show them our plan forward, and then we're able to utilize our rate and term refinance to just continually, you know, turn out of these properties into permanent financing. So that was how we mitigated it in the future. So it actually ended up probably being better because we learned a hard lesson that way. I'm glad you're able to figure this out. Otherwise, you would have been supporting financial freedom for your hard money lender for way too long in the context of this property.

I just want to alert everyone who's listening that the seasoning requirements have actually been updated and are now, if you had taken on that project today, you'd be even more screwed. than you were at that time because the seasoning requirements are now one year before that refinance for many conventional loans. Something to keep in mind. Don't make the same mistake Jenny made because it'll be much more costly this time around. Yes, for sure. And nothing's worse than having your gumpowder trapped in a vault. You're like, I want to get access because I want to get the next deal, right? And so setting it up and other things, Jenny, have you ever looked into working with like, you know, for me, I'm a private lender too? And so I network with other private lenders. And so if I'm

actually looking to buy a burr, though I can get a first and a second on there because then I'm also giving them loans out too. Have you ever looked into that network because you can still rate and turn refi it? And I think that's important for this year's seasoning right now. It's all about setting up your debt structure correctly up front. And sometimes you can mitigate enough risk by getting pre-qualified or like Jenny's talking about, she built a reputation, which gave her more experience, allowing more leverage. And by reputation and mitigating risk would take out financing and a good plan. Sometimes you can get a first and a second and then rate and term refi it to where your money is not subject to that seasoning. So I have not done the first and the

second, but I have used private financing towards the end of our Burr phase, I guess you'd call it. I wanted to be able to prove ourselves before we went to a private individual and be able to provide a track record that, hey, we actually kind of know what we're doing here. I felt, I guess, less guilty in a sense doing it from a hard money lender because they're the ones, they're vetting the deal as well. So they're not going to lend me the money if they think the deal is terrible. But a private lender doesn't necessarily understand it as well. So I really wanted to have that track record down for the private lender. But yeah, I enjoyed working with the private lender because it was obviously less expensive. And it was also had the same ability to do the

right in term refinance at that point. 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. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning

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We just put the 20% down and that stems back to the whole, hey, I don't really know what to do other than just save cash. Like work a job, save cash. Work a job, save cash. So we were able to put 20% down on that. And we also funded the rehab. And how big was this property financially? Was this a $50,000 down, $100,000 down? Yeah. It was about a hundred thousand dollars down. Yeah, it was about a 125,000 purchase price and I think we put 20% down. So it wasn't, you know, earth shattering or anything, but it was still scary for an investment property. So, so yeah, so we were just able to put that down, didn't think anything of it, you know, yeah, it needed some work. So let's, let's pay for some work to happen. And then at that time, I was actually in our garage painting the kitchen

cabinets to this home. And I was listening to Brandon Turner's audio book, the book on low and no money down. And it dawned on me like, wow, I actually think that maybe what we're doing could be a burr. I don't know. Like the whole concept of burr, like I kept hearing it, but I didn't really understand it in practice. And that's when it kind of clicked for me. I'm like, hey, we're doing all this rehab. I know that there's properties down the street that are selling in the high 100s, maybe this is what this birthing is all about. So, you know, I didn't really think too much of it for that point, but, you know, got a tenant in there. And then happened to be like six, seven months after having bought it, that's when we did the cash out

refinance. So that's why I didn't know about seasoning period was because just we took our time on it. And that's when, yeah, that's when I kind of got bitten the butt on the other side of it for our intentional burr after that. So you were able to accumulate, this isn't an extraordinary amount of money going into this deal. This is $25, $30,000, something that is achievable over a few years of saving and being frugal, which it sounds like is what led you that. And then how much cash were you able to pull out when you refinanced? We were able to pull out pretty much our entire down payment and rehab costs. And that's when the light bulb clicked. That was kind of when we went, peddled to the metal on that, because it was

funny. I remember having this discussion with my husband's, you know, I'm like trying to tell him like, okay, this is what we're going to do and this is how we're going to pull money out. And he said, why would the bank give us money? That doesn't make any sense. Like he just thought it was just like the most foreign concept. And then when we had that check, he's like, okay, I understand it now. Like, this is amazing. Let's, let's keep doing this. But yeah, so we still had, you know, we rolled that fund into the next property and so on and so forth, but we still really made sure to make sure that our cash savings was still a very healthy amount. So yes, we were able to pull out the money and reuse it, but we didn't like go on a vacation or buy a fancy car or anything with it. It was all

business purpose. So I'm listening to this. This is amazing. I wish I could go back to 2016 and do exactly what you did 10 times and achieve financial freedom and quit my job, right? Although I love my job. I don't want to quit this point. But anyways, I'm listening now and I'm thinking, well, geez, that worked in 2016,

but is that going to work today in 2023? Can you give us some advice or input on what you're thinking about personally and maybe how you would have gotten started again in 2023 today if you were starting over? Yeah. So I agree with you. I don't really think that today's environment lends well to Burr. There's just, you know, the deals are just real thin, especially if you're not, you know, a full-time professional

investor and you're just kind of seeing like wholesale emails, MLS type things, not enough equity in the deals, you know, more or less. You have interest rate risk. You have rehab cost risk. You have appraisal risk. So it's just a very risky endeavor to try to do Burr right now, in my opinion. So, you know, what I advise my clients currently, like at least in Colorado Springs, I think house hacking is an amazing option. And I also think that room by room or renting room by the room is also an amazing option. I think room by room renting is a lot of time involved. Like you have five leases now. But if you're willing to put in kind of that effort, the same way that we were willing to put in the effort on the birth side of things, if you're willing to put in the effort

that's kind of like painful in the moment to get that first property up and running, but it's going to cash flow pretty well. That's kind of what I would recommend to people is look in your market, it might not be the easiest strategy or it might not be the easiest option. But if you want to optimize your rental property performance, you probably have to roll up your sleeves a little bit. And I love that you have shifted the focus, right? Because one thing that, you know, sometimes I feel like people forget, including myself, it's like, this is a transitioning market. And markets change. And as the market changes, you have to evolve as an investor and look at for different strategies, like going from Burr, which I don't think is dead. You can get

it done in this market. The cash flow is just not that great. I call it like a temporary where it's like you're just waiting the rates to come down and then you're looking good. But switching to house hacking and the fact that you've learned these things and you're also a real estate broker that special that works with first time investors or investors and and I love that because as you switch your pit your your your your your strategy you get to educate your clients and we I did the same thing when I was a I was an investor a flipper buy and hold and then we became licensed and now we get to teach people what we do right and so how is that affected like being able to change your strategy how has that been able to help you

you as a broker working with these investor clients or people that are trying to get into their first deal, just like you did to keep the, get the ball moving. Yeah, absolutely. I mean, I kind of just like to explain to people that any one of my properties that I bought several years ago was never perfect on paper. Like, there was always some piece of the deal that gave me pause and hesitation, but I was able to kind of, you know, wrap my head around what the risks were and try to mitigate it as best as possible, either, you know, within the property itself or externally through, you know, cash in the bank, that sort of thing. And I think that is just kind of telling people that there is never a perfect time to invest. There's never a perfect property to invest in. But I think

you need to look at your long-term goals and really kind of work backwards from there. So, you know, a lot of our clients say they want one, two, three rental properties to supplement their income. Great. Just buy a single family home. You know, in this market, you might need to put 30, 35% down. Buy one every couple years and you're set in 30 years from now. Some people are a little bit on the more aggressive timeline. Great. Well, you're going to have to probably roll up your sleeves a little bit. You're going to have to house hack. You're going to need to do room by room. You know, these are the pitfalls that you're probably going to experience and just kind of work backwards, I think is really the best way of doing it while being, you know, shining a light on some of the issues that people might come across.

It's not all sunshine and rainbows all the time. So, Jenny, you're financially independent. You've got a big real estate portfolio, a thriving agent business. What does day-to-day life look like as a financially independent, I'm going to assume multimillionaire living in Colorado Springs? What do you do with your time? That's a good question. And so, you know, over the last couple of years, I was working really, really hard being an agent, like, you know, did phenomenal the last couple of years. Now the breaks have kind of, you know, been stepped on in the market and sentiment and everything.

And to be honest, like, it doesn't really bother me. I'm like, oh, this is a nice welcome break. So, you know, so if business is a little bit slow right now, just traveling, hanging out with my kids, just, yeah. Yeah, just like really enjoying life. And yeah, it's been great. I mean, obviously still having to deal with headaches when it comes to the rental properties. But, you know, that just takes up such a small part of my overall life right now. I couldn't wish for anything different is how I would describe it.

How many hours a week would you say you're working today? Oh, as a real estate agent or everything combined. Oh, man. Well, I hope my team lead isn't listening to this. but probably less than 20, I would say, over this year. That's a good gig. Yeah, yeah. Good gig.

And I love that you pointed out, yeah, I think all the brokers, man, the last two to three years were so busy. I feel like I shaved five years off my life by just how busy it was. And it was like, when the rate started going up, it was kind of like, all right, now we can kind of get settled. But then it's as a broker, though, are you looking forward right now? because like for us, as the market changes and you pivot the strategies, are you, because it sounded like you were working with a lot of for investors. Are you putting together as a broker to market yourself going after the house hacking first time home buyer sector? Or is it, what are you doing as a broker to grow, right? Because at some point, if it's your career, you got to make money with it and keep it moving.

Yeah, absolutely. So, yeah, I joke that, you know, my gray hair is like, oh, that was this fourplex. I was this house, you know, to get the deals done, like you said. Yeah, so we really, a lot of our clients are really just kind of set it and forget it, long-term horizon investors, which I love because I think that is probably the most reasonable. So a lot of our clients are really just, you know, they're in it for the market. They believe in Colorado Springs as a long-term market, and they're fine with, you know, thin cash flow. Of course, assuming contingencies built into it by the time you run your numbers. So, you know, we're still,

we're still moving. We just have a lower volume. So, you know, we have a couple house hackers, have a couple just buy and hold investors on, you know, smaller properties that I think are just really long-term holds. And like to kind of answer your, you know, make what you alluded to with the interest rates going down, like I actually kind of took it as a really welcome slum. am on the breaks because I had my second child last summer, like right around the same time that the interest rates rose. So I was able to just kind of just take it all in and be kind of appreciative of the timing of it. So, you know, going forward for this year, I mean, we're really just going to keep pushing, like, deals that our clients are doing in this market. Like, we still have people

doing good deals. There's nothing special about the properties that they're buying. But yeah, just kind of here's their 30-year hold plan. All right. I think that this would fit for pretty much most people that are looking to get into investing. So James, I think the answer to your question, what are you doing to grow is I'm perfectly happy with my life as it exists right now. It was wild to have all this business the last two years, but I've declared victory. I've won.

I have my passive cash flow. I've got my savings in the bank. We have two kids now and I'm totally fine working just a few hours a week and not looking to grow. And that, that to me, sounds like a wonderful answer and live in the dream. Is that, is that a correct phrasing interpretation of your response, Jenny? Absolutely. I'll just take it as it comes. If, if raids dip and the market goes crazy again, I'll, I'll just, you know, I'm along for the ride for sure. But otherwise, I'm just going to enjoy it and not let the lack of commission income coming in stress me out. I like your mindset, Jenny. I think I need to adapt

some of this. I have an inability to turn it off. I think, I think it's, I think it's, the early retirement police, the people who, you know, say you're not retired, we'll come after you and, and arrest you for, you know, violating the rules of early retirement and making money with your agent business. But I think that this is a one definition of victory in the path to financial freedom, early financial freedom. And it sounds like you're very happy with everything that's going on in your life from a business and family perspective. Absolutely. And I can't really ever picture myself not doing anything. Like, I can't picture myself being a able to just hang out on the beach all day. That's just not how I'm wired. So yeah, when I'm 80 and we

have this conversation, it'll probably be pretty similar. Well, you had a couple of tips that you brought in and some advice you wanted to share with folks when we talked about you coming on the show. Would you mind sharing those three tips that you think every investor should think about and any other advice you'd have for folks that are looking to repeat some of your success? Absolutely. So the first one is to track your expenses. And Scott and Mindy, you guys, I think every single episode, you say track your expenses. And I can attest we have been tracking your expenses since 2014. So about nine years now. Every single penny that, you know, gets spent, gets tracked. And so while I'm not as, you know, zoomed in on, hey, we spent,

you know, too much on on this this month or anything like that, it's good to just, kind of see where your money is coming in and coming out and being able to kind of adapt to, you know, how things change when you double your family size in a few years. Like, yeah, that was pretty, pretty jarring against the family budget, right? But it's just kind of good to be able to know where things are. And yeah, so absolutely track your expenses. Even though it's incredibly tedious, you will thank yourself for it. Jenny, how have you done in terms of moving the goalposts in tracking your expenses? Have you wanted to spend a lot more as you cross the threshold to financial independence

and has success with your agent business? Or have you been able to keep that spending pretty tight and pretty consistent? Yeah. So we used to be, I would say, way more frugal than we are currently, definitely have loosened the purse strings a little bit over the last couple of years. So I would say that there's definitely lifestyle creep that that's occurred, you know, in addition to just regular inflation and family expenses getting a little higher. But, you know, we are things that we don't place a lot of value on, you know, like that type of expenses.

We'll go through and cut it. Like, hey, we don't really need this. We don't really need that. So that we can, you know, have more in savings, have more to reinvest and, you know, pay down properties and that. So, yeah, absolutely. And then the second tip, I would say, for investors is probably focused and dedicated effort is needed for exponential returns in real estate. So what I mean by that is, you know, if you wanted to do a hands-on approach like doing burr, doing room by room, you're going to see those outsized returns that are kind of advertised as the benefit of real estate, as opposed to. to, you know, just buying a turnkey rental property and letting it sit. Like you can't expect to have the same type of return between those two products. And I think that's really important because people often think of real estate as just kind of being the end-all, be-all option to invest and,

you know, be able to quit the next day and, you know, go live on a beach somewhere. But it's definitely not the case. Like, yeah, we basically had a second job for many, many years. getting these properties stabilized. And then the third tip would just be be patient. How many hours did you pour into these properties after work hours in the period where you did these 10 burs before quitting your job? Oh, dozens and dozens. Like every single weekend we're down here doing work on the properties or meeting with

people or doing something hands on after work, just doing bookkeeping, calling people. you know, I would say at least 10 to 20 hours a week for years on top of that. So, yeah, it was not easy while having a full-time job, that's for sure. But I don't regret it for a second now that we're able to kind of get over that hump per se of that. Yeah, it's that short-term paying long-term gain. Just getting through that hump. Because how many hours a week do you work on it now? Like for just your rentals, not broker-self.

Yeah, not many, less than five or ten, probably, depending on, you know, if there's a turnover, that's going to be more. Yeah, it's a startup pain, right? Like when you're starting a new real estate business, which is buying rental properties as a business, that startup pain is people, it's like, that's where sometimes people just jump out of it. And it's like, no, no, no, just push through, get to the end goal. And then, you know, from being, I'm sure, being overworked for a couple years to now

you're hanging out with your kids all the time. that's the goal. It's that short-term pain. You just got to make it through. Yep. Absolutely. Yeah. And then the third tip is be patient. I'm sure, you know, you guys probably hear from a lot of aspiring investors that, you know, I want this property to cash flow. Day one, I buy it. I just don't really think that's too common. I'm not saying it's impossible, but, you know, a lot of times it takes a couple of years. to really get the property performing to where you want it to be or where you expect it to be just because things pop up. You don't know what you're doing. You're making mistakes.

Yeah. And for several years, we just constantly, we didn't, you know, take a dime out of our cash flow and just consistently reinvested it back into the properties. And I think that that is necessary as well for anyone that's looking to start. One last very quick question. How much were you spending per month in the early part of this grind, grind period? I'm calling it a grind for several years while you build up this portfolio. So I think I was spending about $3,500 a month. Great. So your three tips are track your expenses.

You're going to have to focus. And you said focus and directed effort, but it's really this, I'm going to, you're going to grind 10, 20 plus extra hours a week on top of your day job in order to build this portfolio. And I'm going to sustain, I'm going to be patient, which means I'm going to sustain this low expense level and grind for multiple years to achieve my job. goal like four or five years in order to to really hit that inflection point where I can say that I'm financially free. So I just want to like this is this is an intense all out burst of effort

that is sustained for multiple years that allowed you to get to this hump. But in saying that it's nothing special, right? And I don't mean that to as a dis to Jenny. I mean it as it's it this is something that a lot of people could have done in this period of time. And a lot of people can do with a varied strategy, rent by the room, house hacking or something else in the future. It's not that glamorous, but the life you live now is as a result of that effort. Yeah, absolutely. And just to kind of tag along to the be patient side, I'd like to add that, you know, when I bought these properties in 2016 through 2019, looking back, interest rates for, I don't know, in the high fives, low sixes.

And I didn't think anything of it. But in 2020 and 2021, when some of these properties dropped, of course, they had to be on my husbands, you know, in his name, because he was the one with the job at that point. But we cash out refinance quite a few of those properties. We were able to keep the same mortgage payment, but pull out cash. And then we bought several, you know, other properties using that. So it's just kind of like that delayed, you know, the longer you wait in real estate, just the better it gets. So just, yeah, keep that in mind, too, that, you know, your equity can be a tool as well in the future. Instant gratification is not always a great thing. Just wait for it, and it's

way better. That quick hitters won't get you down the road as fast. Absolutely. Well, Jenny, thank you so much for sharing your story. This was wonderful, really inspiring and really admire all the success that you've had. We'll have to let you get back to your busy day and wonderful. You know, lots of free time life. Thank you so much. Well, thanks so much, guys, for having me on. It's been a pleasure. All right. That was Jenny Bayless from Colorado Springs. Met her at the Bigger Pockets Meetup here. We had February 23rd in Denver. James, you were there. What did you think of the show today?

Oh, Jenny's awesome. She is, she actually, it's amazing how we all kind of start from the same stories, right? Like, we have a job, we find real estate. And then she just built her portfolio enough to where she's having, the only difference is I, I, I, my, she's looking at her, her glass is half full. I'm looking at it's half empty. She's stopping and calming down, but I'm keeping going. But it's that, that, that, that, that, that just that investor story that everybody wants. They get into it, they buy enough rental property. Now they can live financially free. It's a really cool thing to see. Yeah, I, I just think that her journey is so, it just, it just fits the, the, the, the kind of, I'm going to use the word stereotype of the journey to financial independence in so many ways. It's so, it's so

classic. It's so repeatable for many folks, right? I mean, this is someone, yes, we're earning a fairly good income, but not an outrageous one. We're spending a reasonable amount. $3,500 a month is not a large amount to spend 2015, 2016, 17, 18, 19, 20, right? This is someone who has a tight control of their expenses, someone who's grinding it out for years, who shows up at work during the day and then fixes up rental properties during the evening, sustains this for several years in a row, and then stops, which I think is the part that I can't do quite yet. I haven't been able to stop, right, and actually say, I'm going to cut back now on hours because I'm addicted to building bigger pockets and building my portfolio. Perhaps you feel the same way, James. And now,

now she enjoys this life of relative leisure. And, you know, it's just, hey, if more money comes in for my agent business, that's cool. I'll take it. And she told us she, used all that money to pay off three of her rental properties. If it's not, my portfolio is great, and I'll just chill and enjoy my life on 20 hours a week or so of work. Yeah, she did the work. She made the decision to go passive, make the transition out. She suffered through that two to three year buildup period, and now she's getting to enjoy what she says she's working 10 to 20 hours a week, maybe, and just hang out with their kids and living perfectly comfortably fine. And that's, I think, the definition of financial freedom right there. Absolutely. So what an amazing story.

and really admire what she's accomplished. All right, well, James, should we get out of here? I mean, unfortunately, I'm not like Jenny. I've worked to do. So, yes. All right. Well, this is the Bigger Pockets Money podcast. I'm Scott Trench.

He's James Dainerd saying, peace out, Girl Scout. If you enjoyed today's episode, please give us a five-star review on Spotify or Apple. And if you're looking for even more money content, feel free to visit our YouTube channel at YouTube.com slash biggerpockets money. Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Kaylin Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the Bigger Pockets team for making this show possible.