BiggerPockets Money Podcast - 530: Reaching $1M Net Worth and FI in 6 Years with a “Home Run” Rental Property

Starting point is 00:00:00 Do you ever wonder what it would take to grow your net worth to $1 million? How about in the New York City metro area? What are the steps you would have to take? How aggressively should you be saving? What should you be investing in? Today, we're speaking with a longtime listener, who his story is going to show you exactly how he did just that. Hello, hello, hello.

Starting point is 00:00:21 My name is Mindy Jensen. And with me, as always, is my very own million dollar co-host, Scott Trench. Awesome. Well, great to be here with my real. estate co-host Mindy Jensen. As always, we're here to make financial independence less scary, less just for somebody else, to introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter where or when you're starting or what industry you work in. Today we're going to talk to Eric, who posted in our Facebook group that he

Starting point is 00:00:46 hit a big financial milestone in late 2023, I think it was December 2020, 23 after just six years of getting serious about financial independence and discovering kind of the fire world and concepts there. You can listen to a story about how if you start taking these meaningful steps, maybe getting your PhD in personal finance as you referred to it, you can also achieve a really significant outcome potentially in five, 10 years or maybe even a little less. Eric, welcome to the Bigger Pockets Money podcast. I am so excited to talk to you today. Yeah, I'm super excited to be here too. This is surreal a little bit. Let's go back to December 2023 just a few months ago. You hit the one,

Starting point is 00:01:29 million dollar mark in your net worth after about six years on your journey, which is awesome. Let's all celebrate this. Hooray! Yay! What did life look like six or seven years ago? One of the pivotal moments, I think, for me was I work in advertising. So I'm a creative director. And I had never really thought about money before.

Starting point is 00:01:49 I had, you know, saved a little bit. I had, you know, had enough money for down payments for houses in the past. But one of the most pivotal moments for me was. I had a coworker who was by far the oldest person that I'd ever seen in advertising, period, over the age 50. And one day he was just quietly gone. There was no retirement party. There was no announcement. Just gone.

Starting point is 00:02:14 And when I look at my industry, I realized that no one ever really makes it to 50. And that 40 is when that target sort of appears on your back. You know, you're old, you're not cool. You're expensive. You're constantly trying to sell things to the new generation of consumers and you're the, you know, the easiest cost cutting. So that was the first realization that I needed to do something. And then the second thing was I had moved from one of my houses to a little further commute. And I had a long drive now. And I drove to this part of the state that

Starting point is 00:02:49 had only one radio station. So around 6 p.m. every night, you know, you can imagine on a conservative radio station, what's on on the radio. It was Dave Ramsey, of course. And so I started listening every day. And for all his faults, I feel like a lot of that information was the baseline and what really changed my life and got me into looking for other things. And how could I improve my finances? Awesome. I'd love to just kind of keep diving into this part of the journey here. So, you know, leading up to this moment where you realized, oh, shoot, like this is not going to be a 30-year career in advertising sales here.

Starting point is 00:03:29 And this person's exit really, you know, struck a chord. What was your overall situation? What year was this that you purchased this house? This was 2013. So the asking price for this house was 265. Again, I was a young kid. I was single. I didn't have a lot of money.

Starting point is 00:03:49 It was across from a cemetery. It was on a busy street. The house was in pretty good shape. But the owner who sadly passed away, luckily had taken out a home equity loan and he fixed all the big stuff. So the siding, the windows, the furnace, the driveway, but inside it was super, super dated. And where is this in proximity to New York City? This is about an hour outside of New York. In Connecticut. Yep, right on a train line, easy access to the city. So even back then, you know, you can get houses for 265. I don't know about

Starting point is 00:04:22 that anymore. But this was also 2013. And I think you guys probably remember that. there was still a lot of foreclosures. So this house was dated, but it was, you know, it was nice in terms of all the mechanicals. And I knew right away when I saw this thing, I was like, I got to buy it because I had seen so much rough stuff that I had no money or no business trying to take on as somebody, you know, as young as I was. And I didn't know anything about renovation whatsoever. And I think that what I learned from this house, too, is kind of like, a term I've coined is in its grandpa's house. Like this was grandpa's house. Grandpa, you know, owned this house, took care of it. He knew what to do. You know, I think that

Starting point is 00:05:08 generation was really good at, you know, taking pride in there where they lived. But it was dated. And it was something that I could move into. I could fix it slowly. And yeah, I bought it. And over the next four years, I, you know, my wife at the time was my girlfriend and even friends. We slowly transformed that house. We took a wall down, you know, we readed the kitchen, did the bathroom upstairs. Yeah, I learned so much. Like, that house actually was the best teacher I've ever had. So you said it was on a busy street across the street from the cemetery. And that's not going to change no matter how much you change the interior. Do you still own this house? I don't. And I can get to what I did with that later because that's what got me into basically being a landlord is that house.

Starting point is 00:05:56 Well, let me ask a couple questions here. So in 2013, when you purchased this house, you know, you said you put two and a half percent down. Did you have any other meaningful financial assets at this point? Can you give us a snapshot of your financial picture? And then maybe into that, you said, four years, what was yours, you know, can you give us an idea of your financial snapshot around 2017, whenever the next event with this house happens? Yeah, sure. I think that that house, just to get to the two and a half percent was all the money I had. You know, I don't, I don't even think I had much more. I might have had a small 401k that was basically just the batch from a prior company that I had never even looked at. And I had probably

Starting point is 00:06:37 still at that time, $26,000 in student loans. I had a car note, which was probably $20,000. So I was definitely negative net worth at this point. And the only money I had was put down on that house. So that was kind of the start. Awesome. And one of the things that I think New York City offers, like the challenge is housing all these things, like you're having to lever up to your eyeballs just to get a house an hour away from the city with it. But New York City also offers incredible career growth and opportunities. And so there's an investment there. Was that happening for you in your industry at this point in time as well? It was. And that's actually what kept me in that area is I had a lot more, you know, options, flexibility.

Starting point is 00:07:22 I wasn't super concerned about if I lost my job. And I actually only, in the time that I lived in Connecticut, I only had two jobs. So I only jumped once. And the second job was really sort of the big agency experience, the fun clients and all of that. So it was definitely advantageous to be that close. Awesome. And can you give us a picture of your income kind of relative to New York's standards during this time? Yeah, 2013, I was still sort of a, you know, a young buck at that time. I think I probably

Starting point is 00:07:57 made $80,000 a year. I think that was probably the salary that, and I was barely able to qualify for that 265. So that was just me by myself. That was probably what it was in 2013. So that's a, I don't know how much that's changed, but clearly that was a kind of a starting point for me. And is this when you started listening to Dave Ramsey? No, that, so that, Dave Ramsey. wasn't for a while yet. It was probably another four years before I heard about Dave Ramsey. So you could think of 2013 to 2017 as just like drift, you know, I didn't know what I was doing. I was just kind of, you know, moving through the stages of life. I didn't really have a plan. And that, that house kind of was the start of it. It kind of got me to budget for projects and buying tools and other other things

Starting point is 00:08:48 like that. So I really do owe a lot to that house. Now that Eric has painted us a picture of what his financial situation looked like before he discovered fire, after this quick ad break, we'll hear about the steps he took to get out of debt and propel himself towards financial freedom. 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.

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Starting point is 00:11:08 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 Leaner 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 mass. massive back catalog across business, health, parenting, and more, all accessible in one app.

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Starting point is 00:12:21 Yeah. So we moved once after that first house. And what happened was is we were about to have our first child and we got trigger happy. Like wait a second. We don't want to be here. We got to buy another house. Right. again, another sort of decision without any forethought.

Starting point is 00:12:38 We moved a little further north, but to qualify for that mortgage, I had to get a renter in my first house. So that is why I essentially became a reluctant landlord. And I joke because you can go back in my bigger pockets history because I started an account probably right around then, 27, 2018. And I, people roasted me. Like, it roasted me. You're not accounted for cap bags.

Starting point is 00:13:04 You know, that's not cash flow. I assume cash flow was basically, you know, mortgage minus or rent minus mortgage. And that's obviously not the case. So that kind of got me started into learning about real estate, but I still wasn't really, you know, learning that much about, you know, other personal finance. So now this is like around 2018. Let's just say this at the beginning of that year. That rental was making okay money.

Starting point is 00:13:30 I think it was $1,600 my rent or the mortgage was $1,600 of the rent. was 2,400. Now I'm about to have a second child. And of course, we want maybe another bigger house that's closer to my wife's job. She did get a new job. I want to say I had some equity in the houses that I had, the two that I was one that I was about to sell in the first one. But I still had $24,000 in student loans, which blows my mind. I had a car note again. I had a new car. And now I was about to have higher expenses with a family of four. This is when I started to get, I think, like, a lot of people feel this way. Old Dave just wasn't doing it anymore. I didn't have any new advice. It's almost like you get to the last baby step, which is invest and grow rich.

Starting point is 00:14:16 And it's like, well, what is that? So this is where I did, you know, I'm bored at home one night and I'm like, best money podcasts. And of course, the first two results are a show that just started Bigger Pockets Money. And then the other one was mad scientist. And so the first two episodes I ever listened to of a personal podcast or personal finance podcast that wasn't Dave Ramsey, the guests were Mr. Money Mustache and J.L. Collins. So this is where like the fuse was lit. You know, all those years leading up to that where I kind of did stuff right.

Starting point is 00:14:55 I got lucky a lot of times, right? Like buying that house was luck. I had no idea what I was doing. I was lucky that, you know, I didn't lose any money with the tenant there. That's kind of where it just went into turbocharge. It was reading. It was listening. I listened to you guys.

Starting point is 00:15:11 And then I choose a file, all that stuff. It was just daily. And I slowly just picked up things and started going with information that I learned. So I want to observe something here because, you know, I think Dave Ramsey has done a lot of good for a lot of people out there in terms of helping their financial positions, you know. But the carrot of, hey, you can become a millionaire probably less than a decade with a little bit of luck and some hustle and a couple of swings in addition to, you know, the formula of saving and investing here. Really, I think, is something that Mr. Money mustache and I'll credit bigger pockets before I ever

Starting point is 00:15:50 joined as an employee kind of got into my head. And I think it just totally changes the motivation in the game to a certain degree. and I wish that was like, I wish that was presented to people who are in debt up front where it's like, yeah, you're going to have to slog through this for like two years to chunk out your debt. But like if you do that, then you have like another six or seven and you're going to be really cranking it out with a couple hundred thousand dollars in net worth and the snowball is going to begin churning here. And it sounds like that's what got, that's what got you going there. Do you think that if that had been presented to you in that fashion five, six, seven years earlier that your trajectory would have changed that that would have been highly. motivating? 100% because Dave Ramsey, I didn't mention this. The reason why that was a pivotal thing is from the moment I started listening to those episodes, that was when I want to say this was 2018. I did everything I could to be a pauper essentially that year to pay off all the debt. I sold my car. Did you just pop you bet me for Corolla? It was a it was a souped up Volkswagen Golf. So that's what, you know, it was still a $35,000 car. Um,

Starting point is 00:16:58 I sold that. I took the equity and the little cash I did have and I paid off my student loans. So that year, that was the whole job was the student loans were gone. The car was gone. So from 2018, I kind of started fresh from a, you know, consumer debt perspective. I did cut up all the credit cards, right? I'd never used them until I learned about travel rewards. But yes, as soon as I would have known a little bit earlier that, you know, that that next phase was there, I think it would have happened a lot faster. It took me a couple years to figure that out. Those moves are the life changers right here.

Starting point is 00:17:34 That's why I want to drill into it because, you know, the housing is another one that's like huge and I do want to get into that and hear what you did there, if anything. But that's sometimes really hard because you're going to uplift your family and like actually change where you live. The car is something that like almost anybody could change overnight and do and have a several $100,000 outcome in five, six, seven years alongside I'm sure there's, you know, other lifestyle changes that we'll get into here. But I just love it.

Starting point is 00:17:59 Like, that's the, like, if you're trying to change your trajectory and you're not willing to do what Eric did and sell the fancy car and use that cash to chunks to begin the snowball effect, like, you're just going to be tread and water for a lot longer. Like, it's going to, it would have extended your journey by probably three, four years, potentially. So 2018, you sell the car. You're starting to make these moves. What else?

Starting point is 00:18:24 What else happens? How do we? Where does the journey take us from here? Yeah, so the house, the real estate side of it, I kept that house. And in 2020, that's sort of like COVID just hits. And this is where, again, it's something I learned from the podcast, the two out of the five year rule, right? Cap gains, exclusion. I had bought that in 2013. And I had, I'd lived there for two years, three, four years, whatever it was, but it was still counted for two. And then 2020 was my last year to be able to sell it. And so my first house that I had rented all that time. I decided to sell it. So I paid $2.65, but at that time, the mortgage was down to $220, sold it for $3.80. So after realtor fees, I probably netted $130, $140, $140. This is like well into financial independence, you know, Ph.D where I'm like, I'm not going to

Starting point is 00:19:17 touch that money. I'm going to take all of that and put it and go shopping for my next rental. So I never took a penny from that one. The second house that I bought, we did the same thing. Mindy talks about doing live-in flips. Like, that's what we were doing. We'd fix each house, do what we could ourselves. And then when we'd sell it, it would be a little bit more than probably what it was worth if we hadn't done anything.

Starting point is 00:19:39 The second one, the numbers are okay. But we had enough equity in the second house that I didn't use all of it for the next house. We put 20% down. And then I kept some of it. So those two things combined. Plus, in that time we did 401K, are maxed out, 403Bs, we opened Ross, we did HSAs. Like I got continual raises and promotions.

Starting point is 00:20:05 And now we had this spread that we weren't spending and we were putting towards all those things. Yeah. That's kind of 2020 is where things went crazy. Obviously, the stock market did too after that. But I think for us personally, that's where things really started to take off. Do you have a FI number? Have you gone through the 4% rule and created a number that you will get to to make yourself feel financially independent?

Starting point is 00:20:35 I don't anymore. And I think partly because of inflation, like I've just, I've given up. You know, you look at what your spending is now and you're like, okay, I think I need another year of tracking spending to figure out a more realistic number. But I did at one point. Obviously, I think a lot of people that, especially live in the Northeast, a million dollars isn't going to cut it. Right. Like $40,000 a year, 4% is not all that much money, but I think, you know, $2 million-ish. Like now you're getting into a more comfortable spending level where if you had a little bit of extra coming in from rentals or you're able to do something part-time, I think that that would be totally doable. So I would say that that's probably more in the ballpark for, at least for today. But again, I'm, who knows what the future holds, but that's,

Starting point is 00:21:26 that would probably be a target next. Okay. And with your $1 million net worth, what comprises that number? I would say 60% of that is equity in real estate. Primary residence. And then I do have a larger rental, which I can talk about. That was a home run. It was a lucky home run. But that accounts where I was 60% of it. The rest of it, I think 10% of it's cash. that's kind of like my cash number is 10% net worth is my cash, and then the rest of it is in equities in all the different accounts.

Starting point is 00:22:04 All right. We'll be right back after the break. 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.

Starting point is 00:22:25 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. 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.

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Starting point is 00:26:12 2018 comes around. You get really into it. You get your PhD in personal finance, as you referred to it here. The snowball begins to begin churning here. and we've skipped over a couple of things that there's this real estate deal and there's a move that happens to even farther northeast away from New York City. Can you tell us about those and any other big milestones on the journey to this million dollar number? Yeah, so this was the fun one. So this is right coming up into 2020 again and a lot of people had nothing to do, right?

Starting point is 00:26:49 We're sitting at home. I decided to sell that house. So I took all the equity from that. and I started shopping and in my new town. What was that gain like for the second? Oh, that was $130,000-ish gain that we just talked about? So I moved to, you know, like this bucolic town in Connecticut, it has the picture postcard, main street, all the grand Victorian houses on it. And what's interesting about this place is there's never any rentals ever. And it's within commuting distance in New York City.

Starting point is 00:27:21 And one house popped up. on the market. And it was a big 1899, 3,300 square foot Victorian house. And it was a mess. It was zoned office, first of all, which I thought was weird. Why is it on the MLS? But it's zoned office. And then I just kicking the tires. I had no agent. I called the listing agent being like, has anyone come to see this thing? I live two minutes down the road. Can you show it to me? 15 minutes. I just do want to do a walkthrough. She's like, sure. sure, you're really the only person to even come to see it. So I went to go look at it. And yeah, it was like four offices all cut up on the first floor. The second floor was an apartment though.

Starting point is 00:28:07 Like it was definitely an apartment. So I went to the town and I said, can you pull the records on this thing? I know you have a really strict zoning in this town. What is technically this thing zoned as? And I said, could this be used as a duplex or a triplex? And the town got back to me. after days with a report saying, yes, it was never actually technically rezoned to office. It is since 1964 in our records a duplex. So I was like, okay, awesome. That's first step. Second step was, oh, by the way, it's actually an estate sale and it's in probate still.

Starting point is 00:28:46 Okay? So there's like a bunch of waiting around for a lot of information on this thing. So because of all this hassle, it ended up being the last piece of an old estate, right? That was like all of it had been sold off. And this was the last, you know, annoying piece that they wanted to get rid of. And once I found all this out, I was like, I'm just going to lowball them. I said they wanted $400,000 for this house. I offered $300,000.

Starting point is 00:29:17 Since it was in probate, I kind of threw a stink about that because I'm like, I don't even know you can actually technically sell this thing. So they counted at 315. And I was like, I'll take it. Yeah, I'm going to take this for sure. Because I had projected at that time, if that were renovated, it was worth 600 at least, $5.50, $600.

Starting point is 00:29:37 But I didn't know at that time, I didn't know any, I had a guess about what it could cost to renovate it. But here's a BP plug, right? So as soon as they accepted that offer, I had an inspection done. And I used that inspection, and I had remembered back in my sort of early days of real estate reading, I read Jay Scott's book, the book on flipping houses.

Starting point is 00:30:02 And he had a spreadsheet, downloadable spreadsheet in there to build a scope of work. So I downloaded that, and I took the inspection line for line and made a scope of work out of that. And then I added all the things that I wanted to do to the house, like where the bathroom's going to go or the kitchens are going to go. I'm fortunate I use like, you know, vector graphics programs. I can do like a floor plan. So I designed a floor plan over an old drawing and I put where I wanted the kitchens and bathrooms were and then I put that in the scope.

Starting point is 00:30:32 And this thing ended up being 19 pages long. It was 19 pages and every contractor that I met to go over what the bids were going to be would laugh at me. They're like, we're not going to give you a scope on this. No one's ever even done this before. And the one who did it, I was super lucky because he actually made the contract exactly like the original scope. So I knew exactly, you know, from this item to this item, I knew what cost it was going to be. And that made that process really good when we went to renovate it. So to finance this thing, I ended up using hard money.

Starting point is 00:31:08 My friend was a partner. He was 50% of the money, but I got 60% of the equity because I did basically all the work. you was happy with that. And everything was good. Like we had the contractor lined up. We were about to close on this thing. And here's the trick that I learned, or the rub that I learned about a town like this,

Starting point is 00:31:29 where there are no rentals. So the hard money lender backed out the week of closing because they were using comps from far away and the final underwriter said, no, we don't have enough comps here. We don't know what the rents are going to be. this deal could be bad, he's not going to make any money. And so they just walked away.

Starting point is 00:31:50 And so here I'm stuck with a closing date. I had to delay that. I had to scramble to find another hard money lender. And I got so lucky because my attorney, who was working with me on the closing, said, I have a relative. They're a bunch of old New York accountants that do hard money on the side.

Starting point is 00:32:08 You know, it's like a small private fund. All you got to do is like old school, go meet them. you know, walk through your finances, you know, shake your hand and, you know, be true to your word. And they'll probably give you the money. And they did. So I delayed closing by a couple weeks. I, I closed them in the house. But what they did require is they did in escrow, the first six month of interest payments up front. So I had to come up with more than 20% because I put all the six months of interest up front. So then the draws were easy. They just took the money out every month. I didn't have to pay them.

Starting point is 00:32:44 And then the construction was fairly straightforward. I don't think I ran into any major problems. I did. I had to, you know, scope of work trading where you take one thing that you wanted and say, oh, but you got to spend more on this a couple times, but it wasn't bad. So, yeah, we got it renovated. I think at the end of it, we were, it ended up being about 200,000 to do it. So we're in it three or 515.

Starting point is 00:33:11 And then I rented it in three weeks. I had renters in three weeks. And the gross rent was just shy of $6,000 at that time. So this is 2021. And how long did the renovation take? Started in January. I was done in July. You had renters in there by August.

Starting point is 00:33:26 Yes. Yes. I actually had one renter in before it was even done because the real estate agent who sold me the house knew a friend who was also an agent who sold their house. The kids moved the way and they wanted to downsize. And she knew what I was doing to the house. and she said, oh, go check out Eric's house. And so she walked through it while it was still tore up.

Starting point is 00:33:47 She's like, I'll take it. And this is a burr, right? This ends up, is that right? So it was supposed to be. This is where it gets fun again. You know, this is the town coming back again, like this town where there are no rentals. So I go to refinance it and right before closing again, they couldn't find enough comps.

Starting point is 00:34:05 So the money that I wanted to pay back the hard money lender plus have a little bit extra. They basically gave me just barely enough to pay back the hard money lender. So I walked away with, you know, zero extra money from the burr. But the silver lining was the mortgage is only $320,000. I think it's worth probably $750 now. So that's where if you think about the equity spread and part of my net worth, like a lot of it's in there. Okay. So I have a bunch of comments about this because I'm hearing things that maybe somebody who was a little newer to real estate might not here or, you know, might not be able to read between the lines. You were the only person to go see this house. On the MLS, the only people that can enter information into the MLS are real estate agents.

Starting point is 00:34:51 And I am a real estate agent. I have seen so many mistakes on the MLS from fat fingers, from lazy entries. This was zoned office. If I'm looking for a house, that's not even going to show up on my search. So you're in there seeing these properties that other people aren't. seeing right there. Number one, great tip. The second floor was an apartment. You actually walked through. If I know it's zoned office, oh, it's all offices. I'm going to write it off. You took the time to go in and dive into it. You said, I know the town is really strict and I know there's not a lot of rentals, but it's still a desirable neighborhood. You said it was built in 1890 and you didn't have any problems with construction. And that is a unicorn, my friend. If your house is built in 1899, this is not a

Starting point is 00:35:39 lipstick on a pig flip. This is a hardcore renovation. You made a 19 page scope of work. There's a lot of contractors that are going to look at that like you found out and be like, oh, this is ridiculous. You found one that didn't say that. Keep talking to contractors. Don't just interview three and pick like the cheapest of those three. Pick somebody who can actually do the work that you need done. Make a realistic scope of work. Make a realistic budget. You couldn't do that for $20,000. And I see people buying houses and they're like, oh, I'll just put 20 into it. Well, you can just put 20 into it if that's all it needs. But if it needs $400,000 worth of work, 20 isn't even worth putting into it.

Starting point is 00:36:18 And this is a super inefficient market that you found here, right? This is the only, that's the whole, all the problems you had with this deal are because there's no comps for it. That's also where the biggest spreads are and opportunities are. And your specific skill set, proximity to it, and opportunism, made this deal achievable for you and almost nobody else, right? And so that this is, this is, this is, this is wonderful. And opportunity comes knocking when you have some cash and a long history of earning more than you spend and a progression along this discontinuum. You wouldn't have

Starting point is 00:36:55 been able to seize this opportunity 10 years ago, right? This was because of the, the, the trajectory you put yourself on three, four years before, uh, that this lucky chance was, was available for you to seize. Yeah. It was definitely, And what's interesting is I remember this. I wasn't scared because of that little first house I had, right? Like, I sort of took my lumps from people saying, you don't know what you're doing. And I just went and learned as much as I could to the extent that I felt comfortable doing this. But I also kind of, I learned to enjoy construction, if that sounds weird.

Starting point is 00:37:29 Because of what I used to do myself, I started getting into, you know, how to, like, I had friends who were in construction. Like, how do you guys actually work? How does your business work? what are the sort of tips to find the best contractors, but also like I knew what I was talking about when I said, I need this instead of that, right? So that helped a lot too. It was just basic knowledge of construction

Starting point is 00:37:50 so that I wasn't getting ripped off with the Renault. But I did get lucky. I know that a lot of people today are struggling with finding good contractors and even finding any at all. So this was luck because it was 2020 where everything was slowed down. And I remember my GC came back, towards the end he goes, Eric, if I had to bid this job today, it would be like 260.

Starting point is 00:38:11 There's no way I could do this job today for how much I quoted you back last year because of everything. So it was luck, a lot of it. Luck is when preparation meets opportunity. You would not have been able to take advantage of it, like Scott said, if you didn't have the money to put in there in the first place. But also, would you have had the confidence to tackle it if you hadn't taken on that house? And I'm right there with you. I have a lot of construction experience because I used to have a lot more time. And now I'm trying to find contractors to do the work. And it's like you said, it's very difficult. But YouTube University is a great teacher. So let's, um, look, any other big moves that we should

Starting point is 00:38:52 be aware of. Um, and if not, could you just paint a picture of what your life is like today? And what's next? Yeah. So unfortunately, you know, the year after that house was all settled. I ended up getting a new job and I moved away. So I still have it. I'm just further away and I manage it remotely. But I ended up taking a new job, moved up to New Hampshire, where, you know, it was kind of a lateral move. But with all the things that are included in it, there's no state income tax. And, you know, it's more access to Maine and Boston. And it's kind of lifestyle change, but even from a financial perspective, it's worked out really well. And yeah, we're just kind of doing the same thing we've always been doing, trying to save a

Starting point is 00:39:39 little bit, put it in the different buckets, max out our 401Ks, put money into the brokerage when we can. We did buy a primary residence. Of course, we did the same thing. We renovated this thing. I won't even get into that project, but it's been almost as much as the other, is the rental, the big old house. I like old houses now. What can I say? We live in a 1900s house now. They've paid you very well these old houses. I'm sure that this one has also paid you very well

Starting point is 00:40:11 in the sense that you're able to live a great lifestyle for much cheaper than if you hadn't tackled if you had another project, it sounds like. What advice would you give to somebody who is just starting their financial journey? In terms of a first home, I know a lot of people that's like their biggest struggle. I keep going back to the grandpa's house advice, right? Like, I have so many friends who are younger who are looking for that forever house and they're just waiting and waiting. And especially now you're not going to find it, A, and you're going to pay a lot for it. Be happy with something that's, you know, in decent shape. It's easier to fix, easier to manage. It's going to teach you a lot if you do some work yourself. That was to me my biggest lucky

Starting point is 00:40:54 sort of thing that I did, which is buy that small house and learn on it. That's one advice, piece of advice is the, is the grandpa's house. I love that analogy. Don't be afraid to take action on information. It's almost like I tried everything I could. I tried everything I heard, whether I, you know, succeeded at it or not. Don't be afraid to make moves, big or small. And then I think some of my advice for specifically people in my industry is, you know, just remember that Reaper's coming sooner than you think and prepare for it. I am actually, I find myself secretly like going into advertising forums and trying to help people because I think one of the big cultural things about my job is that we are constantly trying to sell things to people that don't

Starting point is 00:41:50 need them, right? That's really what advertising is. But you sort of become that culture yourself. You're always hyped up about the next thing. You know, everyone's got to do sneakers that just came out. And no one talks about money at all. And that was a big sort of awakening when all these things started happening. I'm like, no one in my industry talks about money. And I think it's time they should because the end of their road is sooner maybe. And so start thinking about that. And if you're in the marketing or creative industry because money's important and your future is important. I love that. Can I add one more that I've picked up here? You let me know if you agree, which is sell the car. Sell the car. Sell the car and wait three cars and pay cash for what you want.

Starting point is 00:42:39 I think in three cars, if you're able to sell what you have now, drive a cheap one, a slightly better car the next time. The next car that you buy, you'll have more than enough money to pay cash for whatever you want. Awesome. Eric, this was a really, really fun show. Thank you so much for your time today. Yeah. This is like a full circle. It's weird. Well, congratulations and all your success. And thank you so much for listening all these years and now sharing your story with the community is so wonderful to hear those full circle moments. So look forward to hearing from you in another couple of years when you crossed two or two and a half for whatever it is. Yes, thank you so much. This has been fun. All right, Eric, we will talk to you soon. All right, Scott, that was Eric and his awesome story. What did

Starting point is 00:43:19 you think of the show? It was just so wonderful. I mean, this is, this is why we do what we do, right, to see somebody understand that this is available to them and then and then be a small part of that journey or a voice in their ears as they just build the healthy habits that progress their wealth snowball along here. Love to see that he had a couple of wins in real estate along that journey and that he was wise enough to see the booms and the busts in his industry, the advertising industry very early in life and begin planning around that. So that's awesome. And I just, I hope that he just enjoys it over the next 10, 20 years because he's, he's clearly coast by and super happy about it, it seems. Yeah. And he didn't take giant risks. He took chances. That

Starting point is 00:44:06 story near the end about the home run real estate deal, he would not have been able to do that had he not been a little more conservative in the beginning of his journey, buying a house instead of renting, and not that renting is always bad, but he decided he didn't want to rent anymore. He wanted to buy a house. So he did. But he bought, I mean, his story is so similar to mine. I didn't want to rent anymore, so I bought a house. I bought the only house that I could afford.

Starting point is 00:44:35 And it was very ugly. And I didn't want to live in an ugly house. So I made it nice. And then all of a sudden, you've got all these skills that you can then turn into a way to turn your home into an investment property. So his live-in flips are turning his primary residence, which is not normally an investment, into an investment. He takes that money, puts it to a rental property, takes more money, buys another house, fixes it up and on and on. And now he's got this net worth of a million dollars in six years. It took me longer. By the way, we found Eric's story

Starting point is 00:45:07 from the Bigger Pockets Money Facebook group. We'd also love finding stories in the bigger Pockets forums at biggerpockets.com slash forums. If you have a win like Erick's, like a success story building hundreds of thousands or a million dollars in net worth over the last five to 10 years, we want to hear from you. Please share them. And we'd love to hear your money story here on the Bigger Pockets Money podcast. Similarly, you know, times have changed with the higher interest rate environment. If you're someone who just got started on the money journey maybe in 2021 or 2022 and have kind of begun building wealth into this headwind of the rising interest rate environment, we'd love to hear about it even if your story is $50 or $100,000 in accumulation and a couple of

Starting point is 00:45:48 investments. And I think it's super powerful to take someone like Eric, go back in time, paint the picture of what his life was like six, seven, eight years ago when he caught the financial independence bug, the changes he made and have, has moved forward. I think it'll be equally powerful to hear stories about folks who have done that even more recently in the last year or two and to see what they're up to and what their approach looks like. So please reach out, Scott at BiggerPockets, Mindy at BiggerPockets.com, both of our email address is there. Go to the Facebook group, facebook.com, slash groups slash BP money, or go to BiggerPockets.com slash forums and tag us in those posts.

Starting point is 00:46:21 We want to hear from you. Well, Mindy, should we get out of here? We should, Scott. That wraps up this episode of the Bigger Pockets Money podcast. Be sure to follow Bigger Pockets Money on Apple or Spotify to make sure that you never miss an episode. He is the Scott Trench. and I am Mindy Jensen saying we got to kick it, Little Cricket.

Starting point is 00:46:39 Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Hajar Elda. Editing by Exodus Media, copywriting by Nate Weintraub, and lastly, a big thank you to the Bigger Pockets team for making this show possible.

BiggerPockets Money Podcast - 530: Reaching $1M Net Worth and FI in 6 Years with a “Home Run” Rental Property

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