BiggerPockets Money Podcast - 458: Finance Friday: Pay Off Debt, Invest in Real Estate, or…Buy Vending Machines?

Episode Date: October 13, 2023

What if one part-time side hustle could replace your entire income? Even better, what if you could keep your full-time job and spend a few hours a week making thousands extra a month, raking in cash, and reaching financial freedomfaster? If you’re today’s guest, Ryan, then this is the situation you find yourself in. Don’t know which super lucrative side hustle we’re talking about? Stick around because you may have never thought of it before. Ryan works full-time as a registered nurse in one of the most expensive areas of the country, Northern California. He’s made some ingenious money moves that allowed him to quadruple his income in just four years and live close to free every month in his own house. But, with a baby on the way, Ryan’s lucrative house hacking lifestyle may be coming to a close, and he’s debating what to do next. Should he pay off student loans, buy another home for his new family, stay in his current property, or expand his successful side hustle? The good thing is that any of these moves could make Ryan richer, but he’ll be strapped for time with a sixty-hour-per-week working schedule and a newborn requiring constant attention. So, what’s the best money move to make for his future family? And should he go all-in on this wild side hustle that could make him even more than his job? In This Episode We Cover Ryan’s unbelievably profitable side hustle that almost anyone can start NOW House hacking 101 and how to live-mortgage free every month When paying off debt DOESN’T make sense (and what you should do with the money instead) Investing in real estate vs. your side hustle and why mortgage rates have changed the game Buying businesses from retiring baby boomers and the HUGE opportunities out there How Ryan quadrupled his salary in just four years (without burning out!) And So Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Join BiggerPockets for FREE Scott's Instagram Mindy on BiggerPockets Grab Scott’s Book, “Set for Life” Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Money Moment Alex Hormozi on The “Weak Links” That Will Make Anyone a Millionaire Leila and Alex Hormozi’s Unbelievably Simple Investing Advice Codie Sanchez: These “Boring Businesses” Will Make You Rich How to Make Extra Money in 2023: 21 Ideas for Part-Time Gigs & Side Hustles Passive Income, Aggressive Retirement Click here to check the full show notes: https://www.biggerpockets.com/blog/money-458   Interested in learning more about today's sponsors or becoming a BiggerPockets partner yourself? Email us: [e-mail] Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pockets Money podcast, my dear listeners. We are on Finance Friday today where we interview Ryan and talk about the nursing industry, owning a vending machine business, and we're going to discuss where to live, a house hack versus living alone. Hello, hello, hello. My name is Mindy Jensen. And with me as always is my smart cookie co-host, Scott Trench. Great to be here with my baking co-host, Mindy Jensen. Scott and I are here to make financial independence less scary.

just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where 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, or start your own vending machine business, will help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams. Scott, I really, really, really am excited about the conversations surrounding the vending machine business. There's a lot of other interesting conversations too today, but that vending machine has really piqued my interest. Yeah, I'm really looking forward to

to discussing Ryan's situation here. I think he's got a fantastic set of options in front of him in a very complicated situation, which is always the most fun type of problem set for us to unpack here on Finance Friday. Before we do our Finance Friday, it's time for our Money Moment segment, which is the part of our show where we share a money hack, tip, or trick to help you on your financial journey. Today's Money Moment is. is, do you find yourself mindlessly buying too many treats throughout the day? You go to a coffee shop to get a coffee, but then you'll also find yourself buying a croissant, a cookie, and ooh, that banana bread looks so good. Did you know that there are apps like Too Good to Go, Food for

All, Karma, if you're abroad, that partner up with local establishments and offer discounted goods towards the end of the day. Not only will you be saving a bunch, but you'll also be helping local restaurants and cafes combat food waste. All right, if you have a money tip for us, email Money Moment at BiggerPockets.com. 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 together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place.

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Ryan works in the healthcare industry as a registered nurse in California. His income jumped from $50,000 in 2019 to over $200,000 in 2022. While he's now in a strong financial position, Ryan's next step is to figure out which opportunities are worth pursuing in his effort to not only optimize his financial position, but also to leverage his time. Ryan, welcome to the Bigger Pockets Money podcast. I'm so excited to talk to you today. Thank you.

Thank you for having me. It's a pleasure to be here and speak with both of you today. Well, let's start off the show with a little bit about you and your money situation and how you managed to jump from $50,000 to $200,000 in three years because that seems like a story worth pursuing. Yeah, definitely. So, yeah, I've been in the healthcare industry now for almost 10 years, you know, started in the kitchen. while I was going for my undergrad and then was a CNA for a few years and started going for nursing school and finally finished my degree in 2019. So prior to that, I was working as an A in the Bay Area, just 36 hours, you know,

but I was doing full-time schooling at that same time. And the schooling I went to, it was a little expensive, you know, had to take out a nice $100,000 student loan for that bad boy. but I looked at like the opportunity cost of that and the program I did was hey you start and you do it in a year and you're out in a year working as a nurse so that accelerated option really seemed a way out to do that so yeah finished that in 2019 and 2020 got a job in nursing literally right before COVID and yeah so luckily was able to get in at that time and have been working since then and can you just confirm that your current financial situation for me to, I think we provide all the numbers in advance. Let me just go through it and make sure that I have it all right here. Yeah, of course. Awesome.

So we earn about $200,000 a year. And that is coming in from $13,000 in paycheck, basically, income from your job, the nursing job. You have rent collection from your house hacking of $1,500 for the assuming two other rooms in your three bedroom house hack. Correct. It's all right. Yeah. You have a $2,000 vending machine operation, which I'd love to ask about and get into a little bit there. And then total expenses of $8,500 a month, which include mortgage as a big chunk of it, very reasonable grocery and eating out bill of 870 utilities, internet phone and streaming. I see you have tickets to the wrong NFC football team here in the 49ers. We're both four and oh. You know, we're going to put up a good fight this year. Yeah, go Eagles, go birds. on there. Love that. You're in a responsible position to be able to afford that with what you've got here. And about, you know, a number of miscellaneous things that add up to about 8,500.

You could clean up a few things by getting rid of the car payment, for example. And we can talk about those. But I think there are other issues that are going to be more in the 80-20 category of propelling your financial situation forward on life decisions coming up. How am I doing on the income expenses? You agree with all that? Yeah. Yeah, definitely. And most of the, of those things too. I definitely like pay off extra on my debts and that's another thing I kind of wanted to speak to you guys about. You know, my mortgage, what I put down $2,000 a month, my mortgage is only $16.20. So I put a little extra on that, but it's a 3% mortgage. Same thing with my private student loan, you know, at 3.5% my payments like $6.70, I just put it up to $1,000 a month just

to pay a little extra on that. And it always comes to that question like, should I be saving this instead, or is that the best way to kind of optimize is kind of attack it from both hands? That I am putting away money, but I also want to get that debt off my back too. Awesome. Well, at the highest level, net of what you're currently doing, you're saving about $5,000 per month, not including any bonuses or unusual extraordinary income. Is that, is that right? Yeah. Okay. So you have $5,000 or $60,000 a year to play with in terms of where we can allocate it. And then, yeah, to your balance sheet, you've got about $390,000 in assets around retirement accounts, 401K, 403B plans, a healthy amount in savings, a small, a couple months of cash and savings,

about $9,000. I guess it's one month of expenses the way you currently have it out here. And then you have some stocks and brokerage and pension accounts, sound right? Yeah, that's about the total of those. And, you know, what is your house, what is the house hack worth currently? As far as like what the mortgage is on the house? Yeah, how much is it worth and what's the mortgage? So it's worth, I looked on, you know, little Zillow's estimate.

I was like to take the lower end and it was about $400,000. When I bought it, I bought it at $2.80. So, and now I was still about $2.65 because I did refinance, pull some cash out. And then just to round out your position, I see about $87,000 in student. loan debt, $28,000 in car loans, and $3,000 in credit card debt. Correct. Okay. So that's your financial position and a brief overview of how we got here.

It sounds like the first question you had was where you should be allocating cash going forward, or are there some bigger goals you could maybe share with us about the things going up that would help us contextualize this and help out with the next phase? So I think the next phase of where I'm at, because I do make a good amount of money doing what I do, but I do have two jobs that I'm working right now. I have a part-time gig, and then I also have my per diem. I end up working about 48 to 60 hours a week, which right now I love it, but there's those stressful days, right, just like any job. It's very rewarding at times, but it's very taxing at the same time. So it's one of those things that within the next, let's say,

three to four years, I'd like to set myself up in a decent situation where I wouldn't need to work as many hours where I can maybe just go down to part-time as my nursing jobs still have benefits, still be contributing my 403B and everything, but have some extra income coming in on the side. But then it comes down to, I do have a pretty big expense on my hand, right? I mean, $8,500 a month, but first of it is, is a decent amount. So if I could chuck away some of the debt is why I thought, or to just add into that income area and supplement through either vending machines, housing, anything like that is. kind of the goal to get ahead. And I will frame that here as well and just react and say,

look, $2,000 of your expense is your mortgage payment. $1,500 of your current monthly total is going to be your federal and private student loan payments. Another $700 is going to be your car payment. So, and then you also are paying how much for credit cards here, $500 a month. So we have, what is that? That's $2,700 in non-mortgage expense. That changes the game. It's much easier to generate $6,000 a month in $8,500 if those debts are gone, right? And then we also have another $2,000 in the mortgage, which may be super low interest and not worth paying off, but just as a consideration, most of your expense is going towards debt service. Yeah. So, Scott, we don't have $2,000 a month in mortgage. We have $1,600 a month in mortgage, and he's paying extra $400 a month.

That's right. Yeah. On a 3% mortgage, if I was in Ryan's position, I would stop paying anything extra. If you still want to pay extra, put it into a savings account. So it's there in case you need it, but you're not paying off this killer 3% rate any faster than you have to. I mean, you could, I have a high yield savings account that's paying 4.99% interest right now. So you could be making money on it if you just put it into a bank account while still having access to it as an emergency fund. But we're kind of getting ahead of ourselves. Let's look at this house. And it is, you're currently house hacking. What does your house hacking situation look like? Is it a single family home or a multifamily? It is a single family home. This is a three bedroom,

two bath. I bought it when I decided to go to nursing school in Sacramento. I grew up in the Bay Area. Moved out here. I was looking at rental prices and thought, you know what, I'd rather buy a house. and see if I can get some roommates for the time being. And, you know, I kind of still been doing that for some time. And people laughing me at work, they're like, wait, you have two jobs. You're working so hard yet you still have roommates. Like, what are you doing? But I honestly don't mind it.

I love it. They're cool guys. We all get along really well, watch football together, play video games. So it's a good environment to everything. But yeah, it's a single family home, just three bedroom, two bath. I have the master and then they have the two other bedrooms. Okay. And you have a.

life-changing event coming up in the future. Yes, just a little bit, definitely. So still a little soon, but, you know, my girlfriend did find out that she is pregnant. And yeah, so we're looking at maybe May is the one there. May. Expecting the due date. So I still have a little time, but definitely, you know, the timeline will come quick. Yes, it runs very, very quick.

Okay. So what is your girlfriend's rent? You know what? She lives at home with her family. She moved back there about a year ago. to live with her family. So right now hers is her's a zero.

And yeah, her expenses are actually really low. She doesn't have much payments on a car, anything like that. So she's fortunate on that. Good. You're both fortunate that you are both conscious about money, sounds like.

Yeah. No, it works very well. So is the plan to have her move in with you at some time in the future? Or is the plan for her to stay with her family. The plan would be for us to move in together sometime in the future. Definitely. I think it would just be easier, of course, when raising a kid, right, having both of us under the same roof.

I think it's one of those things we've talked about and said like, ah, it doesn't need to necessarily be on a timeline. So I'm like, oh, we need it. But it would be nice to, of course, have a house set up and established prior to the baby coming just so we can, you know, be a little more comfortable because I know once we have that baby working, everything else, that'll be a lot of moving parts. and then I'll make it a lot harder. Would the current house you live in be appropriate for that if you didn't have two roommates? Definitely. So that's an option on the table.

That is one of the options that I'm thinking about on the table is that, hey, if I cleared this out, because who said, I mean, it's killer mortgage, right? It'd be hard to find somewhere else that I could live for that cheap. So that is one of the options that I'm considering is staying here, kicking out the roommates and turning one of them into a nursery. then her moving into here. Okay. Awesome. What's another option you're considering for housing? Because that, to me, seems like the way to go. Yeah. And I'm leaning heavy towards that way. The other way I'm thinking is, you know, housing prices out here aren't too crazy. Some are, right? But you could still get in a place for $4 to $500,000 in a pretty good neighborhood. And I've thought about like getting a place that, you know, I could put a little work into and rehab it and bring some,

value to that place and still get into it. But now the question is I'm going from a $3,000, $260,000 mortgage to a 7 plus percent, a $400,000 mortgage, which the payment will be like $3,000 plus a month. So that would really hurt what I'd be able to invest per month. But then, on the other hand, I've thought I can also cash flow this place for a good $900 to $1,000 a month if I rented this place now. Walk me through how that would work. What would be the rents when you moved out?

So, you know, I actually have spoken to my roommates, one of the roommates about this and said, hey, if the chance comes that I moved out, they both do want to stay. So they would just have to start paying the utilities for this portion. I told them that's the only thing that would change for them. And then one of them wants to move into the master bedroom. So if I did the master bedroom for 1,000 and the other two rooms for 800 apiece, I'm looking about 2,600. So I'm right around $1,000 cash flowing off this property. Okay, so they're paying utilities and you're getting $2,600 in rent. And your mortgage principal interest taxes and insurance is...

It's about $16.20 something, 1630, yeah. I would bake it an allowance for vacancy, for maintenance, for all those other things to the tune of probably $500 bucks annual or $500 a month somewhere in that ballpark. total. And then, you know, you'd also have to factor in property management. But yes, you have a cash flowing property in that situation, not a ton, but a good amount. So this is a good, good deal here with that, uh, that mortgage based on my napkin math. But then his expenses go up significantly. Right. And that's where it is. My, my mortgage would dang near double. So that was one option. Another option I'm considering is, uh, a duplex option. That might be a little more money, but at least I

to pull in half the rent from one side. So that would be somewhat of a house hacking and doing that. But that would also be in the hopes that four to five years from now interest rates drop, which we don't know. We don't have a crystal ball to see where that will be going. You know, just in general, you have the option to leave the house and have it be a cash flowing asset. You could literally move anywhere in the world, in theory, and it would be a cash flowing rental property if you left it. So that gives us lots of options there, not just limited to a similar house with a $100,000 mortgage or a duplex. But it's a good option. You have a good buy here, a good property, in my opinion here, on this one. 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 tax 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 together in one dashboard on your phone or your laptop.

Feel aware and in control of your finances this tax season and get 50% off your Monarch's subscription with the code pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves the needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code Pockets at Monarch.com for half off your first year. That's 50% off at Monarch.com code Pockets. You just realized your business needed to hire someone yesterday.

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This is not an insignificant part of your situation. And how did we get to a place where we're getting $2,000 a month in net cash flow from this business? No, that is gross. That is gross. So it's about $1,000 a month. And, you know, I'm still pretty new to this. Being on night shift, you know, we have some time to read some books. So I read Rachel Richards' book, Passive Income, Aggressive Retirement, and just different options you can have to make some passive income. And I thought, oh, this vending machine idea sounds pretty good.

So I called around, got a hold of a gentleman, and he sold me a couple that I put into my gym. And I had those for a little over a year now. And then, you know, just keeping a good relationship with them. I know I've heard you guys mention this too, that there's, becoming this population of aging adults that may not have children or anyone to pass their business down to. Well, he ended up telling me, hey, I know this lady who wants to sell her vending machines. Would you be interested in buying some of her vending machines? So he connected me with her, and so far this year, I've bought two of them that do about $1,000 a month, two locations between the two.

They do about $1,000 a month. I just bought another one from her that does about $7,000. $700 a month. And then we're looking in buying another one this next month that does about $800 a month. So from that money, I've been kind of taking my profits and kind of just recycling, backing into the business right now. What do you buying these vending machines for? So the first one, she did it for about half of the year's gross income on those. So if they did $12,000, she sold me it for $6,000 for that first location.

The next one, same thing. So it's six months gross sales. You got a year payback on these things and you're on the machine free and clear. Or you're back in the money, basically. You're buying them in cash. You're not financing these. And they're just immediately starting to put essentially 100% annualized cash flow back in your pocket. Correct.

So first one, I bought cash. The second one, she said, hey, you know, I don't mind just since she has the card reader on her. She said, we'll just keep this card reader going in my name and we'll write it off until you pay zero percentage. So I'm like, hey, we'll do that. So I just basically stock and vend that one. I get the cash portion. She gets the credit card portion. And then at the beginning of the year, we'll look at how much that will be.

So that's pretty cool, too, because I basically get, you know, double up my income. Because basically you put $200 in the machine, you get $400 kicked out. So it's pretty cool to be able to. I really like this. So let's keep going down this track. Yeah, I've got so many questions. What's the work of stock and a vending machine? How much are you putting time are you putting into for these three machines currently?

Yeah, so actually right now I would have four locations, seven machines. Oh, okay. Sorry, my apologies there. No, no. But yeah, so with those, I have the one in my gym. You know, I check on that about once a week, but doesn't mean I have to service it every week. I at least have my eyes on that one. And that one, I mean, it takes me probably 30 minutes to load it up when I do go and load it,

given that no problems come up and arise from that. I have one down the street. That's my busiest one. It's 10 minutes from my house. And that one I load up weekly. And it takes me about another 20 to 30 minutes to load that one. So altogether with making the runs to the stores and everything, I'd say I'd probably spend less than 12 hours a month on it right now. Okay.

I really like this. I like this a lot better than a duplex, frankly, right now in your situation. Same because if you go to a vending machine and you're like, oh, everything's out, whatever, you just find another vending machine. If you go have a duplex and the power goes out or the furnace goes out, you have to fix that right away. So once you have a baby, as somebody who has had a baby, there are a lot of work. A lot of time. There are a whole lot of work. I really like the vending machines.

You mentioned that she has more to sell. Does she still have more to sell? Oh, yeah. So, you know, just casually the other day, because I was mentioning to her, and she said, you know, in this warehouse that she has it all in, all her supplies. She said, yes, push about $400,000 worth of product out of this. I'm like, oh, that's not a small little amount that she's selling out there. And she's 71, 72.

And it has kind of mentioned to me that she is looking for one person to buy most of her accounts. And she wants someone that's like, it's her baby, right? So, and this is where I'm at. And this is where I'm trying to understand and be like, hey, that this is your baby, what can I do to care for this thing, right? And I've kind of showed her that I am interested in the business and have been trying to put a lot of time and effort into that relationship. So she does have another one that she had mentioned at a casino and does about $3,500 a month in sales, gross sales. So that's another one that could be coming up within this year. So within by the next year, I think I could get up to over $100,000.

dollars of sales, gross sales in these. So that'd be 50,000, you know. So let me just zoom back out and point with a couple of observations about your holistic situation now that we're a couple minutes in the conversation here. So first, your expenses, if you, actually, I have one more question here before I do that. When I'm looking at your expenses, are you paying more than you need to on any debts besides the mortgage? Yeah. So the mortgage, I pay an extra 300, my student loans for my private one. I pay an extra 300 for my federal one that just started this month. I pay an extra two and some change.

And then on my car payment, I pay extra on those. So all my debts, basically, I take a little chunk out of each of them. So that's what I say. Like, if I just went down to my minimum payments on all those, it'd be about a thousand less than what I spend per month. Perfect. Okay. So we had $5,000 a month, $60,000 a year prior to this conversation of cash flow. But if you were to go to the minimums, which would be totally reasonable in your situation,

you could accumulate up to $72,000 in cash in the next 12 months. And the question then is where do we deploy that cash best? Well, the vending machine is a no-brainer here if you're able to do this. Now, it will eventually start conflicting with your job. So you've got to figure out like, okay, I would encourage you to potentially trial with a couple of vending machines. Hey, can I get somebody else to do this for me and sit on that for six months and see how that goes? It'll cost you money in the near term, but it'll prove out whether you can actually scale this business and operate it once the owner, you know, allows you to completely take over, adopt her baby here in the vending machine business. So that, that I think is a super important kind of test because you will not be able to run 50 vending.

machines while also making 200K a year at your day job. That will just be completely untenable. So you got to figure out that's the problem. But if you can solve that problem profitably, this is a gold mine. This is a great potential opportunity. And then the second observation is, okay, so we have $72,000 a year, give or take, in aftertax cash generation. Where do we deploy? And by the way, you're also contributing to your 403B and 401K, right? How much are you contributing annually to those? So I already maxed out my 403B for this year. I just kind of front load it. I do 20% from both jobs.

So I get that paid off by about June, July time. And how much total? So I did 22,500. 22,000. Okay, so we got another, let's call it $14,000 after taxes that we could deploy if we were to stop that. And I'm not saying you should. I'm just saying, I'm just framing this up. We have close to $100,000 in liquidity you can generate in the next 12 months.

if you were to make the minimum payments and not fund those plans. And then you have a choice about where to deploy that here. You can pay off the debt. You can buy more vending machines. Or you can invest in the next real estate project. Essentially, are the three options that we've discussed here. Is there another one or other options that we should be considering with this cash? No, I think you kind of did that.

I mean, or instead of paying off the debts, just kind of focus more on my brokerage account or after tax or just savings, right, build up a nice emergency fund, I think would be a good goal to have. I'm going to frame a bias I have and you can confirm if this is correct or not. Okay. But with nursing, I've seen salaries skyrocket for many folks in the last couple of years. Like $200,000 seems very high from an income perspective for nurses, especially relative to a couple years ago, right? You saw it 4x increase.

Is that likely to continue long term? First question. And second, do you want to be doing that long term? You know what? I do love nursing. I work at my main job. I'm pediatrics. I work with kids all day and families. And it's just a great experience overall. Very rewarding. Very, very fun to do. Right. So that's something that I would see myself continuing to do. And I put myself in a position where this last year, I took a part-time position there. And that was nice because now it's like, okay, cool, my obligation here. If I decided to quit my other job, I'll have to work 24 hours a week here.

But there's always options to work more, right? Two days a week. That's not bad. But it could be a very stressful job. Now, as far as like the income going up, I think California's, for whatever reason, a little different on nursing's pay, right? Because I've heard a big discrepancy. I remember when I was first in nursing school, I was looking at moving to Florida.

And then I saw, oh, Florida nurses only make 60,000 a year. I'm like, I'm a nursing assistant making 50. Like, I'm not going to move out there, right? So that is one benefit. And I think Sacramento is kind of one of those areas where, because we're so close to the Bay Area, we get pretty close to comparable to Bay Area wages for nurses, but we have a little bit lower of cost of living than the Bay Area. So that's kind of like a good spot to be like, I feel like for nurses.

And then it also is, I mean, our base salary is probably about 150, 130 to 150,000. And then just with my extra job working extra, it brings it up to 200 plus. Awesome. Okay. So you're happy with the situation. You think it's likely to continue. It sounds like, it sounds like pieces of this are coming together in my mind. Like you'd love to work 24 hours a week. What does that allow you to do in the next 16 hours a week? Is there a side business that could be highly lucrative that you could pursue with that time? That's highly synergistic with other parts of your life. And then, and then again, we have this, again, I'm calling it $100,000 in cash to play with in a, in an all-in state. You may not choose to do that.

But I think that a potential next step I would explore is to sit down with this business owner and say, here's my situation. And I'm really excited about this opportunity. I want to, I want to keep doing this. But I can devote 15 hours a week starting next month to this business, if there were the right opportunity. Would there be an opportunity to earn either cash compensation for that or essentially earn into new vending machines by operating them for you and eventually put myself in position to seriously take over this business? In this situation, if you were to pursue that angle, that would make your housing situation fairly clear. Roommates, it's been a fun ride. Hope to see you at the next 49ers game, but we're going to move in here and we're not going to do

another house hack with it with by assuming more debt and that's going to allow me to uh to go all in on on or to allocate at least more of my my resources towards um this business no i think that's where i'm at definitely with that i think i'm just the type that's always kind of like have my hands in all pots or kind of you know go go go with everything but i also realize like with a kid coming on the way i'm going to have to be at home a little more and i'm not going to be able to do these 60 plus hours a week, gone, you know, all the time like this going forward. So I think that would give me that option to have a little more flexibility in the life with that and maybe not taking out that mortgage right now. Yeah, because I think that is a good option. Because like you said, I mean,

the best situation I have right now would be to stay here. And that would keep my expenses low, because if I went into another property right, now I'm taking my expenses, what, from $7,000 and now they're going to be up to 10, 12,000 with everything included, which would be, yeah, a little too much. I didn't like that option before I heard about the vending machine. Now that I know about the vending machine, I like that option even less because you're increasing your expenses for not really, I mean, now your housing expenses are going to be $3,000, but you're going to make $900 a month. You're still paying more. I like staying. And you can always buy another house down the road. Like maybe next year she decides to retire, gives you her entire vending machine business at zero percent mortgage. And you're making so much money that you quit your nursing job and you just do vending machine full time. Then you can go buy 100 houses or whatever. But right now, I would pay nothing extra on any of these debts that you have because the interest rate is so low. And instead, I would hoard. cash for the next vending machine opportunity. If she's offering a zero percent interest,

take that. That's awesome. But also having the cash available and letting her make the decision, you know, oh, I would love to take this as a zero percent payment, you know, but I also have the cash available if that's better for you. So she knows that you're a solid bet instead of somebody who is not able to fund the purchase. Maybe she needs the $12,000 or whatever. I would also start thinking about pulling back on working so much at the day jobs because you have to work 11 days a month. I want to disagree with this one point on Mindy's behalf here. I think you grind as hard as you can until baby comes. And then you start pulling back on that because this is a time to rack up a ton of cash, which,

which can only fortify your position going into baby's birth. I was going to say as the baby gets closer. But yeah, I mean, you're making a ton of money right now and the vending machine isn't making a ton of money right now. So yes, but then as the baby comes, like I said before, spoiler alert, that baby's going to be a lot of work. And is your girlfriend working currently and does she plan to continue working after the baby becomes. So the plan she works in the hospital as well. So that's the good part that, you know,

if I went just to my part-time and she was there full-time, she does three 12s, I do two 12s. That's five days a week. We still have two days off together and we could like make that work. But we have what we have mentioned and talked about too, which I think we're really leaning towards, she's a nursing assistant right now. And you know, hey, we just said same thing. A couple years of schooling, a few years of schooling, you could literally triple your income. So I think our option for her will be, you know, stay at home with the baby for at least six months, see if she could go to per diem at the job we're at right now. And that way she does have that a little bit more flexibility. And then if I have to work a little more to help cover everything to do that, then that maybe we'll need to come to.

How are you going to handle finances once you move in together? Is she going to contribute to rent in the household budget? is that going to, in effect, reduce the costs that we see in your budget here to some degree? No, we talked about that. And I think it's just like we always say, right, with the income disparities between us and everything, I think it would just come down to maybe, hey, pay some of the utilities. If you can get, you know, internet and gas electricity, then I'll get the rest. If we could find some way to kind of balance it out with that.

So there will be, but I wouldn't expect her like, hey, split half of everything with me. You know, just, yeah, just a little help out with that. But it all depends, right? I'm very flexible to taking it all to my, paying it all myself, especially she's focusing on school. So, yeah, as far as expenses, I would think mine would be about the same as far as housing costs and everything. Okay. So, again, just popping back out here for the high level observations.

You've got the potential to unlock about $100,000 in after-tax liquidity on an annualized basis. That could go towards your savings account. it could go towards vending machines, it could go towards debt, it could go towards investments and, you know, a tax advantage retirement account and then your brokerage account, or it could go towards the purchase of your next property, which could be a fixer up or a secondary house hack. Of those, my personal preference and favorite based on this discussion is to set that aside into savings, into cash that is liquid and feel out over the next several months in particular, just how serious of an opportunity there is to scale and move into this vending machine business

that's already been so promising on that front. It doesn't work out. You can always use that cash that didn't pay off debt earlier, put it into retirement account, or you can pre-fund your retirement accounts like you did last year. I would bust it for the next six, seven, eight months until baby comes and really try to get as many hours as possible because this is the time to build up that cash position there and you're going to be grateful for it, I think, once baby arrives. If the vending machine business is not a viable option, then real estate's not ruled out.

It's just harder. And you're going to need to buy a property that really has a lot of value add potential. And, you know, take some lessons from Mindy and Carl here for that live-in flip component. Still could be a viable option. You'll still want the cash in that scenario, right? That would be an option that I would also be fairly interested in. After that, I think I would then favor, again, if for some reason, divinity machine business does not work out and there's not really the opportunity that

we think is there. And you decide, you know what, I'm just not going to mess around on the housing thing. I don't want to take on that level of debt and risk, not even though maybe, you know, I could go for it there. Then I would think about, okay, I'm not going to really have a math problem here. How can I just simplify my life? And I would go Dave Ramsey snowball in that scenario and just knock out these debts, right? I get everything but the mortgage paid off.

And that'll be a freeing thing. It'll give you more options a year or two from now. And you could knock that out within a two-year period. It would be slightly inefficient. The math wouldn't work as well on your spreadsheet. But you might pop up in a year and a half with a lot of really good options there, a really high spread between your income and your expenses and a really low cost of living with your housing situation.

So that would be my order of operations coming out of this discussion based on that. And it sounds like you were largely agreed at least with item one there as a fun one to explore. Yeah. No, I think you're right on that one. You know, keeping my expenses as low as possible right now, kind of put my head down and just grinding for the next few months. And then I think that'll be my big goal, though, is because every time I see something in my checking account, I just happen to, oh, let me throw more towards my brokerage or, you know, more towards the debts. And maybe I should just, it's okay to have that just sitting in the savings account, you know. I really want to go start my own vending machine.

business now, Scott. I want to go connect with this lady, except I don't want to run them in California. So I have to go find somebody in the Longmont area. If you've got a Longmont bending machine business that you're looking to sell, reach out to Mindy at BiggerPockets.com. No, I think you've got a lot of really great options. I mean, you could just not do anything and continue to work the $200,000 a year job that you love. Who gets that option? I mean, we didn't even discuss. that option yet. Just stick to what you're doing and that's a good choice. You like your job and it pays well. Gosh, what a hardship. You know, it does. But there's those days, you know. I mean, it's a, it's a taxing job. So that's another reason that I'm like, okay, I don't mind working hard now,

but I definitely don't want to be continuing to do this 10 years right now. Yeah. So that's, yeah, like you said. There's a lot of great options out there. And I mean, I love the vending machine option. I do think that a conversation with this woman needs to be done. So she knows that you're serious. She knows that you're saving up cash for it. And I would also add to that conversation, ask her what her timeline is. You know, has she thought about a timeline? You know, she's looking to sell in the next year in the next five years. That'll give you some guidance to. Do you need to save up $100,000 in the next year? Or do you need to start looking into getting a loan for a million, billion dollars because she owns 500,000 vending machines and wants you to buy them, you know,

by the end of the, by the end of 2025. You know, there's, there's, you know, just just feeling her out and letting her know, reiterating your interest and, you know, whatever I can do to help you, do you have any problems that I can solve, you know, can get you really, really far. You're not just in it for the money. I mean, you are, but you're also like, how. helping her as well. So yeah, I'm excited about that, though. And I'm as much as I love real estate, I'm not excited about the idea of you moving out. Well, great. Is this, is this, uh, answer your

questions that you came in with today, Ryan? Oh, that was perfect. You know what? That was perfect. I was thinking more of the options of the housing of what to do with that. But I think that was turned a whole other way. It's like, nope, forget about the housing thing. Let's talk about this vending machine and this opportunity for a business, uh, going forward. And, you know, I really like where this did. And it, yeah, solidified some of the thoughts that I already had. Yeah. And awesome. And you'll know within six months to a year if the opportunity is real or not. And if it's not, then you just have a pile of cash that you can then deploy right back to your plan B, you know, the strategy you came in with today and those biases. So no harm there

except a couple of months of lost opportunity cost. But I think that's worth it in this situation. I'm excited. Well, thank you so much for coming on today. And we hope you have a great rest of week and I'm excited for you as your family get started coming up in 2024. Thank you very much and thank you for having me on here. It was a pleasure to talk to me both and thank you for the vice. Appreciate it. All right, Scott, that was Ryan and that was a fabulous set of problems. I really enjoyed hearing about his situation. I think he's got a good set of things that he's got to choose from. I love that vending machine idea. Yeah, and I want to call it a couple of things here, right? Yes, Ryan earns a $200,000 income. But three years ago, he was earning a $50,000 income and went back and got his

a two-year degree to increase that income from $50,000 to $200,000 a year. So this is not, you know, a high-powered tech job or whatever. This is something that I think, you know, is relatable and achievable by other folks who want to go down that path and that type of career here. So really, really impressed with his decision-making and how he got to this position. The big options and the big decisions that he's created for himself with the career choice that he's made, with the house hack that he put himself into here at a great low interest rate mortgage with a couple of roommates. That's going to give him the option to either cash flow it after he moves out or, you know, say goodbye to his wonderful roommates and have a very low, very affordable cost of living situation when his baby comes. So love all that. And then not to mention the big one, the vending machine business. Yes, the growing vending machine

business, which I think is the real winner here. So I'm super excited for that. I hope he stays in touch and not only sends us baby pictures, but also shares with us the success of his vending machine. And what happens when he emails, or not emails, when he talks to the woman with all of the vending machines in the area. I'm super excited for that conversation for him. Yeah, Mindy, I think we're going to see more stories like Ryan's of people finding opportunity in this space. The opportunity in the opportunity in the small business category, stuff that we talked about in the past year, stuff that Cody Sanchez is a big expert in Alex Hormozi and some of these other experts, I talk about there's real

opportunity there and not enough people buy in a lot of these small businesses that are coming down. And, you know, if you're, if you have the ability to accumulate enough for a down payment on a rental property, you may also have enough to begin being a serious contender in some of the purchases of these types of business opportunities. And I'd encourage you to keep an eye out for, for both. of those. Absolutely, Scott. All right, should we get out of here? Let's do it. First, let's say thank you to our listeners for listening to our show. We appreciate you. And please join us in our Facebook group at Facebook.com slash group slash BP money to continue conversations like this and others, where we're talking about money and all sorts of other things. We would love to join to have you join us.

All right. That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench and I am Mindy Jensen saying, be fair, little bear. 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. BiggerPockets Money was created by Mindy Jensen and Scott Trench, produced by Kailen Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the Bigger Pockets team for making this show possible.