BiggerPockets Money Podcast - 5: Jump Starting your Early FI Plans by Live-in Flipping with Mindy Jensen

Episode Date: January 29, 2018

Mindy was born in a small town, and then she moved and moved and moved. In fact, moving doesn’t phase her at all, which plays right into the core component of her investment strategy -- The Live-In-Flip. Mindy moves every two years to take advantage... Learn more about your ad choices. Visit megaphone.fm/adchoices

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 Pockes. 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. I love that, said no one ever. Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes. But somehow, every small business owner ends up doing it. Your dreams of creating, selling, and growing get replaced by late nights chasing receipts, juggling invoices, and wondering if that bad sushi lunch with Scott counts as a right-off. Change all that with Found.

Found is a business banking platform built to take the pain out of managing money. It automatically tracks expenses, organizes invoices, and even preps you for tax season without you doing the heavy lifting. You can set aside money for business goals, control spending with virtual cards, and find tax write-offs you didn't even know existed. It saves time, money, and probably a few years of life expectancy. Found has over 30,000 five-star reviews from owners who say, Sound makes everything easier, expenses, income, profits, taxes, invoices even. So reclaim your time and your sanity. Open a found account for free at found.com. That's F-O-U-N-D-com.

Found is a financial technology company, not a bank. Banking services are provided by lead bank, member FDIC. Don't put this one off. Join thousands of small business owners who have streamlined their finances with Found. Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audiobook completions on Audible alone, and I still regularly re-listen to the highest impact titles.

Lately, I've been listening to Bigger Liener Stronger for Fitness, the Anxious Generation for parenting perspective and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful as its breadth. Beyond audiobooks, you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more, all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years.

Kickstart your well-being journey with your first audiobook free when you sign up for a free 30 day trial at audible.com slash BP money. Welcome to Bigger Pockets Money. Show number five. So that's a personality flaw that I have. I just know that I can do everything. Like I, it sounds really cocky and it is kind of cocky, but I don't think, oh, what could happen?

I just, like I said before, I jump in with both feet. It's time for a new American dream, one that doesn't involve working in a cubicle for 40 years, barely scraping by. Whether you're looking to get your financial house in order, invest the money you already have, or discover new paths for wealth creation, you're in the right place. This show is for anyone who has money or wants more. This is the Bigger Pockets Money Podcast. How's it going, everybody?

I'm Scott Trench here with my co-host. And actually, I don't know if you're my co-host today. You might be my guest. I'm just the guest today. How are you doing, Mindy? I am doing very well, Scott. How are you doing? I am doing okay.

I think I had a bit of an embarrassing morning today. What did you? What happened this morning when you came to the office? So when I came into the office this morning, I saw a pair of men's underpants on the floor near the bathroom. And I'm like, hmm, what's going on with those? Why would somebody just leave their underpants on the floor? So we have an internal chat in our company and I took a picture of it and posted up there. I'm like, who left their underpants on the floor?

And it turns out that our very own Mr. Scott Trench left his underpants on the floor. Scott, do you just make a habit of running around the office naked? Why were your underpants on the floor? So let me see if I can explain this away. Yesterday, I was wearing, I have one pair of jeans and I needed more pair of jeans, but. One pair of jeans? You're taking frugality too far. Too far.

I took it too far. And I spilled hot chocolate all over the jeans, just huge gaping mess right down the side of my right leg. So I was like, okay, I'm going to change. And I took off my boxers and my, I mean, I. I went to the bathroom and then I had some boxers put on some athletic shorts spent the rest of the day and athletic shorts as an exception. And then when I was going home, I must have walked past the bathroom with my jeans and my boxers over my shoulder. And they must have just fallen out. And I didn't notice to come back in every picture of my boxers are all over the internal.

I'm very, very embarrassed today. Things are not going well. I was just surprised that there were underpants on the floor. And then I wasn't even the first person in. Evan was the first person in this morning. And he said there was some R&B music playing like Barry White and, you know, ooh, romantic music. I'm like, oh, I don't know what's going on at work.

But that's not appropriate office conduct. I don't know how to explain that one away. Somebody else is just listening to music. I think it'll be a couple of years before I live this one down. So I hope my mom's not listening. I hope she is. I'd like her to know that I'd like everybody to know that there's actually more than one pair of underpants in your office. I went in there today looking for a copy of your book and there's those red and blue ones right there. No, no, no. Those are flannel shirts.

Oh. I have in my office right now. I can see those are my flannel shirts. I don't have multiple pairs of underpants lying around my office. Just the one that got ruined and I had the other pair in my car. Do you have any socks in your office, Scott? I don't know, maybe. I'm going to restock my little drawer of clothing just in case for that exact reason something happens. Don't you have 42 pairs of socks in your office, Scott? Oh, yeah.

So I mentioned on Bigger Pockets podcast that I needed more socks for Christmas. And I don't know what I was just kind of joking, I guess, but somebody sent me 42 pairs of socks, seven boxes of six pairs of socks. And they're actually right here in the office. I can probably show them on the, if people are watching the video version of this. Yeah, go grab those. They're kind of pretty. There's a couple. There's like some, there's some definitely male socks.

There's some could be male or female socks. They are. There's a, their Christmas style socks. Hold them up a little bit more. We can only see three pairs. Four boxes of these. And I got another type of stock. I also brought home.

So I'm good on socks for now. I just thought it was funny. Scott sends me a Slack message. It's like, Mindy, did you send me socks? I said, no, I don't think so. It's like I have 42 pairs of socks in my, somebody just sent me. That should cover you for a few days. That should.

42 days, 42 days before having to do laundry. Well, moving on from Scott's wardrobe, the visibility of my wardrobe, my Tommy whole figure underpants, let's go to the purpose of today's show, which is to learn about you and your story and how you got here in life. And I'm really looking forward to this because I know Mindy's story, but it's really exciting. It's really repeatable. It's something that I think that everybody that listens to the show will learn from and be able to kind of, you know, just see how the decisions that she made enabled her to move toward financial freedom, free up time for her husband, free up time for the ability to hang out with her children. Just a great story.

I'm really looking forward to hearing again. Oh, well, thanks, Scott. So I was born in a small town in Southern Illinois and then I moved. and I moved and I moved and I moved and I moved and moved times like 27. I've never in my whole life lived in a house for more than five years. And moving around as a kid kind of sucked. I went to three different schools in second grade. Oh, wow.

But what that taught me, my first school in second grade, I was very shy. My second school in second grade, I was still pretty shy because it was like I hadn't moved mid year before. And I was a new kid and I was just, but I love to talk. as evidenced by the past episodes of this show and the future episodes of the show, I really love to talk. So you can't be shy and talk to a lot of people at the same time. So the moving really got me out of my shyness. It also taught me that moving is easy and okay to do. And that has set me up in life to do the kind of investing that I like to do, which is called live in flipping.

And what that is is you live in a house and while you're flipping it while you're doing the rehab work. And the reason that you do that is not because you love messes and untidiness. It's because you can, if you live there for two years, you can defer is not the right word, avoid capital gains taxes up to since I'm married up to $500,000. It's tax free. It is tax free. Uncle Sam never sees it. This is a gift that the IRS gave me because they love me so much and it's only for me. Just kidding.

This is a gift for everybody from the IRS because they love you so much. If you live in a property for two out of the past five years and you own that property for two out of the last five years, any capital gains, any gains that you make outside, which is the difference between the price you purchased it at plus any improvements you made and the price that you sell it at. Let's say you buy it for $500,000, you put $100,000 into it. You sell it for $700,000. You just made $100,000.

If you lived there for two years and it was your primary residence, you pay $0 in capital gains taxes, which is quite a gift, quite a bonus from the IRS. So I have taken this model and I have done it eight times. Wow. Can you tell us, I would love to hear about the start of this journey, but because it's so relevant and kind of fresh, can you tell us about the property that you currently live in and how you bought that and rehabbed it and what it's worth now and all that? Yes, I would love to. So I bought the property that I live in now.

We'd moved to the state of Colorado and bought a big brand new house. It turned out we didn't like that neighborhood in that area at all. So we moved to a different city in Colorado called Longmont. And by the time we moved there, the market was starting to go up. And we couldn't find anything. We had, we wanted to sell our current house before we bought a new house. So we couldn't get a contract on our new house. We had to buy a new one.

We, we found this house because it was a Fannie Mae home path foreclosure property. And in the first 30 days that a, what year was this? This was 2013. Okay. The first 30 days that a home path property is listed, they won't even look at investor. offers. They will only accept owner-occupant offers, and they'll kind of accept anything. I saw this on day, like, 32, and made an offer, I think we were at day 40 when we made the offer, and there was one other offer. It was now opened up to investors, but there was one other offer.

Fannie Mae wants to put owner-occupants into properties. So they said, if you will live here for a year, you will get preference over this other bid. Well, I'll live there for a year if I get preference, over this other bid. I had been outbid and lost out on all these properties just in the short time that I was looking. So we put in an offer. We said we'd live there for a year, which we did because if you say you're going to live there and then you don't, that's mortgage fraud and that's a whole another story. We bought the house. We moved in and when we bought it, it was two bedrooms and one bathroom. We paid $176,000 for it. It was $1,300 square feet. And it was one of the ugliest houses I've ever lived in. I've lived in a lot of ugly houses and this one was pretty tops. We put in pretty much

new everything. We have new siding, new windows. We popped the top and added 500 square feet upstairs. We took this large, unusable space in the back of the house and turned it into a dining room, bedroom, bathroom. So now the house has four bedrooms and three bathrooms, and it is 1,800 square feet. and I estimate as a real estate agent, I estimate that I could put it on the market today for $550,000 and get an offer instantly. So what would your net profit after tax be? Oh, you're going to make me do math now. Okay, so we paid, let's open up a calculator, we paid $176 and we probably put $200,000.

I'm sorry, we put $100,000 in so it's worth $276 minus 550 equals, I'm sorry, I'm sorry, I would probably make $274,000 if I sold this property today. And if I listed it at $5.50, I could sell it today. So that's, and that's all after tax. What kind of, you know, I don't even know how to do this one, but what kind of income do you think someone would need to make in order to achieve that level of after tax income in a year? $400,000, $300,000, $350,000, because up there, you're at the top tax bracket and I have not paid attention to the new tax. just yet. What is the top tax bracket? Like 38%. Oh, I couldn't tell you that one either. I think it's like 38%. So let's see. This is this, this is such a phenomenal way to create so much investable

liquidity. Just like at the ability to create so much equity and be able to harness it tax free is just such a powerful thing to do. And, you know, was this a big part of your ability to achieve the current level of net worth that you have, those eight other flips? Yes, absolutely. There, I'm looking through my mental stack and I made $20,000 on my first one, which was a total accident. I bought a condo. I lived in it for four years. I got married. My husband had a house. So we sold the condo and we sold it for $25,000 more than I paid for it. And I think I put in like a thousand I put in a new tile floor that I did myself. I mean, with the help of my dad, I didn't like pay somebody to do it.

I painted all the walls. I put a new light fixture in the kitchen. Like that's it. Over the course of four years, I did pretty much nothing to the house. And I made $25,000, which I put right in my pocket and then moved on to another one. I'm like, I want to do this again. So we flipped my husband's house. And we flipped a condo in the city of Chicago.

And then we moved out to the suburbs and flipped a bunch of houses out there. And living in it for two years means that I don't have to pay any capital gains taxes. So, you know, $100,000 from this house, $150,000 from that house, $50,000 from that house. You know, that's a salary. That's a couple of salaries. That's, you know, three or four salaries. And it's all just tax-free. Yeah.

And one of the, so, you know, I like to house hacks. I buy duplexes to live in them. One of the things that happens with the house hack is I had to treat my property as, you know, three quarters of an or at least half, you know, if I live in a duplex in one half, half of it is an investment property, half of it's a primary residence. So when the way I was doing and I had a roommate in my half. So three quarters was a investment property and one quarter was a primary residence. I'm excluded from three quarters of this benefit that you are able to receive by doing a live in flip. And that is a huge drawback of one of the, of my strategy of house hacking

and a huge advantage of what you're doing. You get the house to yourself. And, you get to exclude the entire purchase price from a potential sales tax, unless it's over $250,000 or $500,000. Yes. And let's clarify that for people who aren't so familiar with it. $250,000 is the capital gains tax exemption if you're single. So you would be $250,000. Since I'm married, my anniversary is tomorrow.

I'll be married 16 years tomorrow. Thank you. I have been, I've done this my whole married life and I have the exclusion up to $500,000. I haven't ever hit that. I think that my current house, I'm not anxious to move. I actually want to see if I can stay in a house longer than five years. But I really like the neighborhood. We had a massive flood about four months after we moved in to the property.

And they're like the neighborhood was kind of cut off from. everything else. So all of our neighbors got together. We had a big party. We really got to know each other. And I love the neighborhood. So I don't want to move. But so I think down the road, I am going to hit that $500,000. But honestly, that's a really nice problem to have. Absolutely. Quick, certainly has a couple questions here. One, how, you started in 2013. So and, and, and you have. On my current house. On your current house. Yeah, on the current house. And how old are your girls? My girls are almost 11 and just turned 8. So 10 years old and 8 years old.

How old were they when you moved into the house? Five and three. Six and three. Six and three. So this is something that you can do with small children, right? That's a barrier to achieving financial independence that some people have. And you're shaking your head. So what are the challenges of doing this with children?

Okay. So it sounds like all unicorns and rainbows. Like, yay, you get all this money. But you have to live in a construction zone. We are jumping with both feet kind of people. So we did the whole house. We tore out like everything but the kitchen and the bathroom and started like rebuilding. And we added the we added the second story.

And there was a lot of like we had plastic over the doorway to the back of the house for probably a month and a half. It happened to be extremely cold then, which was awesome. I had the washing machine actually in my kitchen. I knew I was taking out the floor and replacing it so I didn't care, but I had to drill holes in my kitchen floor to put the waste pipes and the water pipes to my kitchen or my washing machine so I could do laundry. There wasn't heat in the back of the house at that time. So, you know, there's a bit of sacrifice.

However, if you're going to live there for two years, you don't have to jump in with both feet. You can start by remodeling the bathroom. and, you know, remodeling the bedrooms and, you know, knocking out a wall or whatever it is that you need to do, I do recommend that you keep at least one room untouched at a time. So you have a place to go that isn't just covered in dust and construction supplies. And I would say, like, to kind of batch your projects together, I knew that we were going to have to rewire the whole house. I think it had 60 amp service, 60 amp electrical service. 60-empt electrical service and we had to go up to, we went up to 200.

Is it 200 or 220? I'm drawing a blank now. We went up to 200, I think. I think it's going to be 220, right? 220. I can't remember now. I am completely drawing a blank on that. 220 sounds right.

Whatever. We had the electrical service upgraded. And to do that in the whole house, you kind of have to open up all the walls at the same time. And we were pulling wires through like underneath the kitchen. and in the crawl space and up through the garage and a lot of stuff that if you do it room by room, you may have to call your electrician back multiple times. I am very blessed in that my electrician is my father-in-law.

So he just came and stayed with us for a while. He loves the girls. The girls love him. So they'd play in the morning and then he'd go rewire the house in the afternoon. Now suppose you don't have this advantage that you've got of the father-in-law. How much would that electrical work have cost you in that scenario? Oh. $10, $15,000.

Okay. So you're still up $240,000 even after the electrical bill on the property, right? Yes. And I put in, I put in, you know, a couple thousand dollars just in supplies and permits. I did everything permitted. And I totally recommend that you consult your permit office of your city and get everything permitted because if you're going to significantly increase the value of the home, significantly increase the layout of the home or, you know, upgrade the electrical, the plumbing,

whatever. You want to get that permitted and approved by the city so you don't have to go back later and try to get it re-permitted. When you go to sell the house, people are going to ask about permits. And having the permit there is a better choice. So you mentioned that, you know, it's not all sunshine and roses in this process. Tell me about moving with the family, you know, because I am single guy and I don't like moving. I understand the value of moving and and to, you know, I can, I do so every year or so to buy a house hack. But that's a big thing that families don't want to do. What's it like moving a school age girl at six years old to a new, a new place? Well, it's a lot of work. You have to, you know, you pack up, you start packing up things that

you don't necessarily need. We moved in the summer. So we, you know, it was very easy to pack up all the big coats and the, you know, the sweaters and the winter gear as you're starting packing. And then you just, you know, you pack up some toys that they won't miss. You pack up, it's just like moving as a regular person. You just have more stuff to move. And if they're school-age kids, they're not going to be very helpful with the packing. The three-year-old was not all that helpful packing. She would be like, oh, I want to play with this toy.

I'm like, I just put it in the box. But, you know, you get through it. I was a stay-at-home mom at the time, which I think. was really, really helpful. Being a stay-at-home mom allowed me to do a lot of the running around and a lot of the errands that my husband, because we do most of the work ourselves, he didn't have time for during the day he was actually working a real job. And then at night, he would stop working and, you know, you put a movie on for the kids and you work on the house. And one of the things, I mean, if I'm correct here, you bought a house that was probably

well within your means to purchase at that 175 price point. Is that correct? That is correct. And I don't want to be like preachy, but we could have paid cash for the house because we had sold another house to. So we lived in Wisconsin. We moved to Douglas County, Colorado and put down 25% on the house there, which was like $400,000. So we put down $100,000 there. And then we had, I mean, we made more than $100,000 on the other house. So we just had this extra money. It's not extra money. I mean, you can always put a use to it. But we had this extra money sitting around. We had gotten a loan or applied for a loan for the house in the current house in Longmont, but there was a series of snafus and we thought we weren't going to be able to get the loan. We applied for a loan because we could have a low down payment, 20% of $176,000 is like, what, $40,000, $36,000, something like that. So I only had, I took my $100,000 that I made from selling the other house or that it got after selling the other house. and I didn't have to put it all back down on this next house.

I could put down a small percentage of it and then just keep the rest and invest it. So I had the low down payment and I think my interest rate is 3.25% for 15 years, which is kind of unheard of. That's like the low, almost the lowest you can go. It's fantastic. You finance at a great time when rates were super, super low and you got a 15 year mortgage, which allows you to get even lower rates, right? Yes.

And in hindsight, I would have gone with the 30 year because it was like 3.5. or something. And I can take that money and invest it in the stock market in other rental properties in other real estate ventures and make more money than that 3.5% that I'm paying out. So we're actually looking at refinancing the property back into a 30-year loan while I have a job. My husband does not work anymore at a job that pays. It still works. Well, yeah. I mean, to summarize what we've talked about so far, you started off by house hacking and you made a cool 20 grand, and you've just parlayed that, I'm sorry, not house hacking, live in flipping.

Live in flipping. You've parlayed that eight times now. And each time you have more and more, plus you're, I'm assuming saving in your personal life and being financially responsible throughout the whole process, through stockpiling cash and then realizing these huge gains that are all after tax, readily accessible wealth that you can use. And then you get to the point where you get where you are now,

where you bought this $175,000 home and can easily put down $100,000 in expenses. for, you know, the rehab. And now you're sitting on a big pile of equity and you're financially independent alongside, you know, alongside your husband who just quit his job, right? Yes. He has been retired or financially, financially independent. He's been, he quit his job in April of last year. 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. 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 focus 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 in Edle. 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. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That

means you can stop struggling to get your job notice on other job sites. Indeed's sponsored jobs helps you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored posts. The best part? No monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of this show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash bigger pockets. Just go to Indeed.com slash bigger pockets right now and

support our show by saying you heard about Indeed on this podcast. Indeed.com slash bigger pockets. Terms and conditions apply. Hiring, Indeed is all you need. When you want more, start your business with Northwest Registered Agent and get access to thousands of free guides, tools, and legal forms to help you launch and protect your business all in one place. Build your complete business identity with Northwest Today. Northwest registered agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They're the largest registered agent and LLC service in the U.S. with over 1,500 corporate guides who are real people who know your

local laws and can help you and your business every step of the way. Northwest makes life easy for business owners. They don't just help you form your business. They give you the free tools you need after you form it, like operating agreements, meeting minutes, and thousands of how-to guides that explain the complicated ins and outs of running a business. And with Northwest, privacy is automatic. They never sell your data. And all services are handled in-house because privacy by default is their pledge to all customers. Visit Northwest Registeredagent.com slash money-free and start building something amazing. Get more with Northwest Registered Agent at Northwest Registered Agent.com slash money-free.

Marvel Television's Wonder Man. An eight-episode series. Now streaming on Disney Plus. Here we're remake. Not exactly what we'd expect from an Oscar winning director. Action! Simon Williams, audition for Wonder Man. I'm going to need you to sign this. Assuming you don't have superpowers. I'll never work again if anyone found out.

My lips are sealed. Marvel Television's Wonder Man. All eight episodes now streaming. Only on Disney Plus. I mean, I think it's awesome. One, I guess one question I would have here is, suppose that you are, at what point did you become competent and confident in your ability to manage the rehab work yourself? You mentioned that you do a lot of it yourself, right? It scares me.

I own real estate and I work and I have worked on my houses. It scares me to think about doing electrical work or drill a hole in my kitchen floor so I can connect the wastewater pipe from my washer and put and, you know, I'm assuming attach it to the sewer system. You know, like, like that's, That stuff that's like pretty outlandish. It seems like pretty scary. It seems like it's going to be a lot of work and a lot of money and could go horribly, horribly wrong. How did you develop that confidence to do all that stuff?

So that's a personality flaw that I have. I just know that I can do everything. Like I, it sounds really cocky and it is kind of cocky, but I don't think, oh, what could happen? I just, like I said before, I jump in with both feet. I read a book. I mean, I didn't just cut open the sewer pipe and be like, oh, I'll just stick this in this hole. But I, you know, I checked out books at the library, how to do, you know, how to repair

your plumbing, how to, you know, YouTube will show you how to do literally everything. So a lot of YouTube videos. The electrical work came mostly, that's my father-in-law and my husband, and they do the work. And, you know, my father-in-law was a union electrician for 40 years. So he went through the apprenticeship and journeyman and all the steps to be an electrician. And my husband grew up with it. So he would just watch him do it and, you know, learn from him. But the plumbing, I mean, plumbing really isn't that hard. You could do plumbing. I have a hard time getting the, like getting everything tight enough. I don't have the physical strength to tighten all of the clamps and all of that, you know, with the plumbing so that it doesn't leak. But they have this new thing called, it's not even new.

It's called pecs, and it stands for some giant chemical word, but it's called pex tubing. And it goes together with like this little ring and a connector and like a $75 tool. And all you do is close it like this. It crimps the thing completely closed. I can't explain it any better than that. Go to YouTube and look at a like a YouTube video. And it really is as easy as it looks on YouTube. The tool is $75.

dollars and that has saved me thousands of dollars in plumbing repairs and plumbing costs and you know hiring a plumber because we were able to do it all ourselves awesome i love the deal i love the do it yourself mentality and how you how you're able to just i don't know confidently approach all of this stuff well and and another thing is we had a hard time finding contractors i mean if you have a project that you need a bid for call up a contractor there's They're not going to call you back 10 times out of 10. They're not going to call you back. You have to call 25 people and maybe three of them will call you back, which is not 10 out

of 10, but still, like, that's just illustrating a point. Maybe three will call you back. Possibly one will actually show up to give you a bid. It's so difficult to find a contractor. And especially now in the real estate booms that the Denver area is experiencing. But even like back when we were, we first started doing this, we were experiencing the same, you know, early 2000s, the same market where it was just going up and up and up and up. And we couldn't find anybody to do it.

And finally, my husband's like, forget this. I'm just going to do it myself. And I don't even know if YouTube was available that. I think you just got a book at the library. So all you people just starting out, you're even more advantage because you have YouTube. That's awesome. So when you're, let's say that you're approaching the project and you're like, oh, if Mindy can do it, I can do it too.

you're listening. What kind of planning needs to go into this? I assume that you didn't just buy the property and then I'll figure it out after that, right? You had some sort of plan. You kind of had a vision of what it was going to look like. How did you get the knowledge and confidence and expertise necessary to know what you were going to do with the property once you bought it? We knew we wanted to add more bedrooms. We have two kids. When I was growing up, I always had my own bedroom. I wanted my kids to each have their own bedroom. We knew we had this. Like, we just walked around the house.

Okay, this is a, this space is unusable as it is. How can we change it? Oh, we can make it into a bedroom. Well, we should add an extra bathroom. Oh, I would like to have a dining room, which in retrospect was a stupid idea. We never eat there ever. We always eat at the kitchen table. But I have a dining room.

Just off the kitchen, like towards the back of the house as you walk out to the backyard. Oh, yes. I've been to Middys house several times. That's actually a dining room. It's just a space where I keep my kitchen table, my dining room table. So I would definitely recommend if you're buying a house, live in it for a couple of months and really get a feel of the house. Oh, it would be really great to have this.

The sliding glass door that was there off the kitchen was not there. It was just a solid wall. And the only door in and out of the house was the front door. And there was a garage door and like a door to the backyard. But you had to walk out the front door. And we don't even use the front door now. Now, in retrospect, I would have liked to change the windows in the front of the house and wall off that stupid front door. I put a couch in front of it right now.

We never, ever use it. So, you know, walk around the house and live in it for a couple of months and see how it works and see what you would change differently. You know, this is our eighth house. So we've, you know, we knew we wanted to do this. We knew we wanted to do that. Pete, actually, Mr. Money Mustache, suggested the sliding glass door. and that was the best suggestion I've ever gotten from anybody. That was such a helpful suggestion.

And I don't know that I would have come up with that by myself. It gives good in-person advice too. He gives great in-person advice too. Wow. So, yeah, I just, I don't, I don't really know that I learned at any one place. You know, you, you know, it sounds to me like it's a, it's a lifetime confidence and mindset of I'm able to do this myself and I'll figure it out. And what I can't, you know, but I can't figure it out, I am good enough with money that I'll

have the resources necessary to go hire it out in those few cases. I assume you hired out the pop top portion, right? I did. Where you added new structural components to the property and a new roof and all that kind of stuff, right? I did. I hired a guy off Craigslist, which I recommend zero percent doing again. I hired a guy and he came out. He was so excited to do this job.

He came out every day for the first week, gung-ho on time, stopped at the store on the way there or gave me a list of stuff to go get and just like jumped in with both feet doing this. And then by the second week, he was, I don't know if he was bored or if he just doesn't have good time management skills. But he started coming later and later and leaving earlier and earlier and taking a longer lunch and arriving and then, oh, I have to go to Home Depot to get this. Well, I could get it. I'm a stay-at-home mom. I'm not doing anything except, you know, clean in the house. I could wait to go get this. You know, let me do these things.

And it just kind of turned into a debacle that devolved over a couple of months. And we eventually fired him. And we hired people that as we were walking around the neighborhood, we saw them working on somebody else's house. And they did really amazing work from the outside. And we went up and talked to them. And they said, hey, you want to come in and check out the house? go ahead.

Drywall is next week so you can still see everything that we've done right now. So we went in. The guy showed us how he did stairs, which I still don't exactly know how he does his stairs to make them so amazing. But they don't squeak. They don't shift. They don't move. I mean, they're not supposed to shift or move.

But a lot of stairs squeak. And his stairs are like rock solid. And it was just beautiful work. He didn't just nail things together. he glued them and then nailed them so it's more secure. And just the way he did things was really amazing. And it was great to see it in person. So I would recommend if you're contemplating starting off on this, when you find a contractor,

if you're not comfortable doing it yourself, go to their current job site and look around. Also, this job site was spic and span. They were so neat and tidy. They would clean up every day after themselves, which really makes a difference when you're working when you're living in the property. Now, one thing I've heard in the Bigger Pockets, real estate podcast is if it's contractors, I forget who said this, but you with contractors get two out of three things. You get on time, high quality, and on budget.

Would you say that those clean guys who are doing the high quality work, was he a pretty expensive guy? No, actually, he was the unicorn that did it on time, on budget, and high quality work. and there's no other guy like this. He actually moved to San Diego. If you're in San Diego and you want a house hack, let me know, I got a guy. But yeah, they did an amazing job. They did phenomenal work.

And on time, I think it was, it might have been delayed because of supplies or something. We were doing it over the winter or it extended into the winter. We started the project in June and it extended into winter because of the first guy. So, but I mean, the delays were not their fault. It was like supplies or it was too cold to work or whatever. Awesome. I mean, I think it's fantastic how you've solved many of the problems yourself, found high quality contractors, fixed problems, got this thing together and have achieved hundreds of

thousands of dollars in financial benefit. Can we talk quickly about your story? So what point, we know that you've been doing this for a long time for eight different house flips, live in flips. At what point did you and your husband decide, hmm, we're going to actually parlay what we've been doing here into financial independence. And what did that process look like? How did that kind of transform what you were doing from the before and after from that

decision to pursue FI? So we discovered the concept of early retirement and financial independence. One day my husband was having a terrible day on the job. He worked for a government and he was doing some sort of medical device that could kill people. and they had found a bug in the code. He was writing the code and they found a bug in the code. And he was like, I can't do this anymore. How do I quit my job?

And he bangs this into Google and Mr. Money Mustache pops up. He's like, what is this? And he reads this site. He's like, this is garbage. There's no way this is true. But he keeps reading and he's like, oh, math doesn't lie. This is actually the real thing.

Like this, I could do this. This is before you were neighbors with Mr. Money Mustache, right? This is before we were neighbors. We're actually neighbors because of his love for his city. He just keeps talking about how great this city was. And we're like, hey, would you ever give us a tour? He's like, sure, come on up any time. He was super nice about it.

This was, like I said, this was five years ago. And he just showed us this amazing city. But anyway, to parlay this and to financial independence, we discovered that you can retire early. We read about this concept called the 4% rule. We did our math and we're like, oh, we're halfway to the 4% rule right now. And the 4% rule, by the way, for you guys, are listening is a concept.

I believe it was started by this thing called the Trinity study. William Bengen did the first study. And then the Trinity study came. I want to give credit where credit is due. Fair enough. I did not know that. So I'll have to look him up. But basically the theory is that if you achieve, let's say that you want to spend $40,000

per year. The theory is that if you amass a portfolio of a million dollars, you'll be able to withdraw $40,000 or 4% of that per year and have a, extremely high likelihood of never running out of money. Your portfolio will regenerate itself because of the, you know, you're pulling out a small enough percentage of the gains that you'll last through most market scenarios. And I believe that that study focuses mostly on having that money invested in stocks. But if you, you know, there's other ways to tweak your portfolio that so that, you know, maybe you're, you're more conservative or you have even higher probabilities than that.

But the 4% rule is often touted as a rule of thumb that if you have, you know, if you have accumulated 25 times the amount of your annual spending, or you spend 4% of your total asset base, that you'll be able to retire indefinitely. And that was your goal. You were halfway to it. Just you automatically realized it at the point where you discovered financial independence. Right. Just by being frugal. And we knew that we had to invest in our 401ks. So every year, we would max out our 401ks. We were frugal enough that we could do that. He had a job. I had a job. And basically my job covered the 401K contributions. So I would start off the year.

Every year I would donate to my 401k or I'm sorry, contribute to my 401k 100% of my salary. And it would take, you know, three or six months to get to that. And then I would start collecting my salary. So that's called frontloading your 401K where you load it up in the beginning of the year. And then he would continue to contribute to his 401K. So that counted for a lot. But then, you know, 2007, 2008 happened. And our portfolio lost a lot of its value.

But we were still doing this real estate stuff. And we just kept, you know, churning that over and over. So you had that portfolio going to 2007, 2008. Did you discover financial independence before the Great Recession or after the Great Recession? After. It was in 2012. So we were still kind of at the bottom, but Denver was starting to pick up. He had read a couple of blogs like Get Rich Slowly, Early Retirement Extreme.

Early Retirement Extreme is a great blog, but just like the title says, it's extreme. It's like eating beans and rice for dinner every night and having peanut butter sandwiches for lunch. And then you can retire and have like $12 in your bank account. And it's not doable for a lot of people. But these other blogs were like, hey, if you're just a little bit frugal, you know, save money on things that don't matter so you can spend money on things that do matter. We don't live a Beads and Rice lifestyle. But like, I don't have brand new clothes all the time because I don't care.

I have, you know, I have a really cool car because I wanted one since high school. So I bought it when I could. But I bought it now instead of, you know, in high school when it would have cost me a lot more opportunity cost wise. So what was your, what was your timeline like once you realized you were halfway there and you kind of discover this. You know, do you set yourselves a target or anything like that or a timeline in order to move towards this?

We did. What an amazing question. We set a timeline. We set a goal of 1,500 days from January 1st, 2013, which was sometime in February of 2017, that we wanted to hit our target, original target was a million dollars. And our, then we adjusted it because we don't believe in paying off our mortgage early. We had about 120,000. thousand dollars left on our mortgage. And so we adjusted our goal to $1,120,000 so we could pay off

the mortgage if necessary. But if not, we could just keep, like if everything was still going great, we could just keep going the way we were going. So we don't have a paid off mortgage. We ended up hitting our goal in 2016 right before my husband turned 40, 2015. I don't even remember now when we hit the goal. But we hit the goal significantly early. You hit your goal in late 2015 or early 2016. Yes. So, and it just has kept going the stock market is on a super tear right now. We've actually pulled some money out of the stock market and put it into real estate investments.

I just bought a 46-unit mobile home park in Maine with Brandon Turner and Ryan Murdoch. Ryan actually lives in Maine, so he's kind of our boots on the ground. I've invested in real estate syndications. and I do private lending, which is me lending money as the bank to individuals who pay me a higher percentage rate. I think I'm making 10% returns on that, which is probably not as good as I could get in the stock market right now, but significantly safer. I mean, it sounds like you have what a lot of people, what I've discovered, a lot of

millionaires have, which is their hands in a couple of different investments. You've got a large amount of home equity. You've got a substantial stock index portfolio. You've got a real estate investment. You lend money. This is what I think a lot of people who have achieved financial independence realize is that they have a lot of options in ways to diversify and sustain their investments in really smart, creative ways that makes sense with their portfolios.

I agree. So, who does to you? Thank you. I think diversification is really important when you are building your, your portfolio, especially when you're first starting out, if you have all your money in Apple stock and then all of a sudden it turns out that Apple, you know, is, goes out of business, like that would happen. You have nothing. Ask all of those people that invested in Enron. Not only do they not have a job, they don't have any investments. And now they're working at Walmart

as greeters because they're, you know, 65 and nobody's going to hire them. So I actually took a slightly different approach when I was starting out. I would actually have all my money in index funds. and then I put it all into a house hack, one asset that I could work on and guard very closely. But as I've got past six figures, now I'm starting to diversify a little bit more because of exactly what you said as well. But do you think it's sometimes hard for someone with like 25K to really diversify and maybe build up these first few properties? Well, I think that an index fund is pretty diversified. You're not in just one stock. You're in the entire stock market.

So a rising tide, what is it? A rising tide lifts all ships. So when one, you know, the market is on a tear, you're on an index fund that is going up with the market going up or, you know, if the market's going down, then your index fund is going down. But it's not dependent on just one company or one stock. Regarding starting out, I love the house hacking idea. I love, you know, and I think you could safely argue that live in flipping is a form of house hacking. hacking. I am generating, I'm forcing a ton of appreciation by making improvements on the property. So if you need a place to live, why pay rent to somebody else when you could own the property and rent out a room? Or you could own the property and fix it up. Or you could own the property and rent out a room and fix it up. And, you know, there's a lot of different ways to cobble something together, but it doesn't have to be, you know, this huge outlay of cash. I mean, granted, if you're in New York city, you're probably going to have a harder time, but you can go across the bridge is and get a far less expensive home.

Awesome. Do you have anything else you want me to ask you about to cover before we move on to our fire round equivalent? No, I don't think so. I think we covered pretty much everything, or not pretty much everything, but the big high levers of how you got started, what you did after that, how you, the big lever, which I think is is live and flip for you. Oh, excuse me. Yes. All that good stuff. Yeah, no, I think we covered a lot of it.

All right. Well, this has been awesome. Let's move on to our famous form. Put you in the hot seat, Mindy. What's your favorite finance book? My favorite finance book is called The Richest Man in Babylon by George S. Clayson. And what of the, so what I really love about this book is it was written in the 1920s. And a hundred years ago, that information is still valid today. And it's basic concepts like, be frugal, don't spend all the money that you make, invest the extra money that you don't spend outside of your living expenses, invest with people that have experience in this or expertise. It's just, it's really basic information. Investing isn't hard. And I think that just saying, here's this book that's 100 years old, giving you the exact same advice that you're getting now. Yeah, I think it's fantastic. It's one of my favorite books as well. So I love it. And there's timeless wisdom in that book that applies.

It's crazy how well it applies to the real world today. It really is. Like we've got all this technology. Think about like the world in 1920s and the world in 2018, vastly different. Investing advice is still the same. Awesome. What is your best piece of advice for people who are just starting out?

So you're going to make mistakes. Maybe you started too late. Maybe you invested poorly. Maybe you didn't invest at all. You spent every dime you had. Tomorrow is a brand new day. Start tomorrow. Start today. Today is a brand new day. Spend less, save more. The best way to spend less is to track your spending. If you are not currently tracking your spending, start today. Use mint.com to track your spending. Use a spreadsheet that you make. Do it yourself. Like write it down in a notebook. That actually helps me. I use a notebook like a spiral notebook. I put it on the island. And as I walk in, that's the first thing I see. If I spent any money, I write it down. And as you track your spending, you'll see things that you can cut out.

When I first started tracking my spending, I was shocked to discover that I went to the grocery store every single day. And it was on the way home. I lived kind of up a hill and the gym was over here. So I would drive past the grocery store. Oh, I need that one thing for dinner. Well, that one thing turns into like seven things. And you do that every single day. You're buying like 35 things you don't need every single week.

And it adds up and the money adds up and the space adds up. So my best piece of advice for people who are just starting out, track your spending. There you go. Awesome. I love it. I love it. It's not necessarily a budget, right? It's just tracking your spending and knowing what's happening so that you can make those

decisions and figure out, hey, this was not worth it, right? Yeah. I love it. I love it. What is your favorite joke to tell at parties? Ask me if I'm an orange. Are you an orange? No.

I have small children. Aren't you glad I asked that question, though? No. Sorry, that's a terrible joke. Yeah. That's your favorite joke. That's all right. It's still awful.

I got a put in there. Yes, you did. You always slip the bin. All right. Before we peel out of here, let's ask one more question here and ask you, where can people find out more about you. Well, funny you should ask. I am on biggerpockets.com. I am all over biggerpockets.com. I am the community manager there. So I am in and at the forums all day, every day. You can email me at Mindy at BiggerPockets.com. You can tweet me at Mindy at BP. So that's

M-I-N-D-Y-A-T-B-P for Bigger Pockets. Instagram is the same, Mindy at B-P. I think Facebook. I think is also the same Mindy at BP. Pretty much I'm everywhere and I would love to chat with you. Mindy is everywhere. Mindy is a legend who has been so ridiculously active over the last couple of months doing writing books, starting podcasts, hosting podcasts, doing all this stuff. Ask me about my book, Scott. Oh, yeah.

Did you have a book? Can you maybe mention that? I do. I wrote a book called How to Sell Your Home. And the reason I wrote this book is because there's this guy named Morgan Housel. And I have been following him forever. He's unbelievably brilliant. You know, he'd be a good guy to have on this show.

He is so smart about money. And he wrote a post after he bought his first house. He lives in like a major metro area like New York City or something where it was like normal not to have a house. And he finally bought a house. And he's like, every time I talked to my real estate agent, I was back on Google looking things up because there's so many things you don't know about buying a house. And the way that our publishing schedule worked, it made more sense to publish how to sell your house, how to sell your home first. And then we are next year, we're publishing how to buy a house. And if you're reading two books.

I, well, I've already written one. I'm writing one more. What a legend. And that'll be out in 2019, I think January, but that's not said in stone yet. But yeah, so if you have a house to sell, There's so many things that you have to do in order to do it right. And you don't know what you don't know. And your agent may not know what they don't know, right? Your agent might forget to tell you something. I mean, maybe they've been doing this for a thousand years. And they're like, oh, everybody knows you need title insurance.

I was in the bigger pockets forums and somebody said, you know, oh, I didn't know I needed title insurance. Oh, well, I know you needed title insurance. So I put that in this book. And I'm going to put that in the How to Buy a House book, too. So there will be a link in the show notes to how to sell your home. It is available wherever books are sold. It's also available at biggerpockets.com slash store. Awesome.

Well, that was a nice plug. Thanks. Thanks for the opportunity to plug my book. Well, this has been great. Do you have anything to add here before we close out and let everybody go home or do whatever they were going to do? I do not have anything else to add. If you have any questions about today's topic, please hit me up.

We've got a new forum on the Bigger Pockets forums, specifically to discuss the Bigger Pockets Money podcast and the episode. So if you have any questions, hit me up in the Bigger Pockets forums. If you are not a member of BiggerPockets.com, the membership is free and always will be. And we would love to have you. You can come over and talk about money or real estate investing or real estate in general. We have more than 900,000 members who are happy to help you out with almost every aspect of finance. Awesome.

Another great plug. Thank you, Mindy. Sorry, wrap it up. Let's do it. From episode five of the Bigger Pockets Money Show, this is Scott Trench, over and out.