BiggerPockets Real Estate Podcast - 35: Quitting Your Job, Lifestyle Design, and Being a Traveling Landlord with Paula Pant

Episode Date: September 12, 2013

On today’s Podcast, we sit down with blogger, investor, BiggerPockets contributor, and perhaps “the most interesting woman in the world”- Paula Pant. Paula has a unique perspective on personal finance that is helping her build a strong buy-and-hold portfolio while maintaining freedom and mobility that most only dream of. This interview is sure to fascinate, entertain, and give some great real estate investing advice that you can use in your own life. Read the transcript to episode 35 with Paula Pant here. In This Show, We Cover How traveling the world for two years led Paula to real estate Tips for managing tenants while on vacation How to avoid “creative accounting“ Paying yourself when managing your own properties Paula’s definition of “financial freedom“ Why pinching pennies might actually hurt you What “Lifestyle Design” is – and how to do it How to quit your job and start living a life you want Tips for saving for that first rental Benefits of blogging about your investing Links From the Show Paula’s interview on NPR Paula’s article: You Know What Really Sucks? Cubicles How I Accidentally Bought Two of Kurt Cobain’s Former Homes and Why That’s Not Even The Best Part. (Brandon’s 1st Small Multifamily Property Story) How to Buy a Small MultiFamily Property: A Step by Step Case Study The Ultimate Guide to Tenant Screening Travel Hacking Books from the Site: The Four Hour Workweek by Timothy Ferriss Rich Dad Poor Dad by Robert Kiyosaki From 0 to 130 Properties in 3.5 Years by Steve McKight Tweetable Topics Theres a difference between active income and passive income. Know that difference. (Tweet This!) If I can make, in passive income, as much as the average us household earns – that’s financial freedom. (Tweet This!) Life is too precious to spend it doing something you hate. (Tweet This!) Blogging helps you clarify what you should be doing as a real estate investor. (Tweet This!) Connect with Paula Paula’s Blog: AffordAnything.com Paula’s BiggerPockets Profile Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast, show 35. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing, without all the hype, you're in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com. Your home for real estate investing online. Hello, everybody. Did that get your attention? That got my attention.

What's going on, everyone? This is Josh Dorkin, host of the Bigger Pockets podcast. A big hello to all of our listeners and an even bigger one to my co-host. Brandon Turner. Hey, Brandon. What's up, everyone? I want to apologize for Josh's loud, obnoxious yelling at the beginning of this show. Wow.

Okay, starting it off on the right foot, aren't we? There we go. There we go. Yeah, yeah. How are things going? Things are good. I burned myself on my lawnmower yesterday. Seriously.

What are you supposed to be working while you were mowing your lawn? No, maybe it was Sunday. It was Sunday. I burned my, like, yeah, terrible. Anyway, apparently, lawnmower gets hot and you're not supposed to touch that little metal thing on it and melt your skin to it. That's why there's a big warning triangle on it. And for anyone listening, this is also why you may not want to take five phyllabites from Brandon Turner. If the guy can't figure out how to not burn himself on a low one.

lawnmower, you know. Well, I'd have to know how to read in order to know how to read a warning label. So, you know. Anyway, moving on. Yes. Yes, yes, yes. All right. Well, I'm glad things are going mostly well, except for your poor little boo-boo.

Yeah, I got a band-aid. Yeah, he does. It feels better. Good, good, good, good. All right, guys. So we've got a pretty cool show for you today, and we'll get into that in just a minute before we do. Now that's the, isn't that the death march? Is that the death march?

It is. Okay, so Brandon is playing the death march. And I think he's playing the death march because, unfortunately, or fortunately, which, whichever you think, today we're going to be featuring the last of our quip tips. Yep. Plural. Today is the last quick tip. We may decide to bring it back, but anyway, this is the last quick tip, at least for a while.

Instead, we are going to be starting a new segment on the show, and we'll get into that. So there are, you know, there's so many great quotes on each of our shows. And what we want to do is we want to encourage you to leave a quote on Facebook, on Twitter, or Gplus from this interview with a link back to biggerpockets.com. show 35, and be sure to use hashtag bigger pockets, one word. In a tweet, your Facebook status, or of course, your Google Plus status. And what we're going to do is we're going to pick one person with our favorite quote and send them a free digital copy of the Bigger Pockets book on flipping houses and Bigger Pockets book on estimating rehab costs.

And of course, what we'll do is we'll announce the winner on next week's show. So you've got a week to get out there, listen to the show, find your favorite quote, and share it with everybody and link back to the show notes here. The important thing is the hashtag Bigger Pockets, one word, because that's how we're going to be able to track it. That's right. That's right. And hopefully that'll help us to spread the word about this awesome podcast

and all of our future podcasts to come. So that is today's last and final. Quirt tip. Yep, yep. All right. So on today's show, we're going to talk with Paula Pantt from afford anything.com. Paula is a

awesome really funny lady. She's a personal finance expert who's actually been featured on NPR and of course she is also a contributor to the Bigger Pockets blog at Bigger Pockets. And as you guys know,

a lot of our guests have done dozens and dozens of deals. We've had everybody from super experienced investors to some folks who just finished their first deal. And we wanted to talk to Paula because she actually hasn't done a huge number of deals so far, but she's very, very successful in finding just incredible deals and buying smart, which has really been helpful to her.

You know, there's a lot of great stuff in here, particularly about personal finance and saving and preparing yourself to get into the real estate game. And you'll actually learn about some of the properties that she's picked out. A lot of fun. Anyway, her blog, afford anything. I guess the way she describes herself, she's a journalist, a globetrotter, an entrepreneur, and of course, she's a real estate investor.

She's really interesting. Let's bring her on the show. And before we do, make sure if you've got any questions for her, jump on the show notes at biggerpockets.com slash show 35, and hit her up and let her know what you want to know. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question.

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Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the funds prospectus at fundrise.com slash flagship. This is a paid advertisement. Hey, Paula. Good to have you on the show. Thank you. I'm happy to be here. Awesome. Yeah, we are happy to have you. We are indeed. All right. So Paula Pant, tell us your story. How'd you get started? Actually, you know, even before that, what'd you do before you started investing? Well, in my early life, I was a newspaper reporter. I worked for three years at a traditional newspaper and then decided, you know what, I don't really want to have a nine to five job anymore. So I saved up some money while I was working, quit my job, went and just sold all of my worldly possessions and traveled for a couple of years.

roamed across the Middle East, Southeast Asia, Australia, New Zealand, just hung out for years and years doing absolutely nothing. Nice. It was awesome. She's a nomad. That's cool. I am a committed nomad. Awesome.

And at the end of it, I was like, man, I'm going to eventually run out of money and then I'm going to need a job. How can I avoid this? And so that's when I started thinking about ways that I could. build just streams of passive cash flow. And voila, real estate was born, at least in my life. That's awesome. That's awesome. That's cool. That was very, that's very like four hour work week of you. Was that inspired from the four hour work week? No. You know, honestly, when I read the four hour work week, I was like, I could have written this book.

Yeah, a third grader could have written that book. The first time I read it, I didn't feel like he was saying any. anything new and I didn't understand what the hoopla was because I'd had that mentality for so long that, you know, I was like, yeah, of course. This stuff is obvious. I don't get it. I don't get the hype. You haven't read it yet, Josh. You got to read it and then you'll get it. You'll get the hype. Brandon has been preaching this for like 34 episodes of the time. Everyone, yep. Everyone, four hour of week. Yeah. All right. So, so this whole epiphany comes to you as you're, you know, So you're, you know what, she's the most interesting woman in the world.

I'm not selling beer here. All right. So you're traveling the world. This epiphany comes to you. You're like, oh, my God, I'm going to get into real estate. What next? Well, really, when I was traveling the world, I was like, oh, my God, I'm going to figure out some way to avoid having a job. And I wasn't quite sure what that would be.

I thought I would be freelancing. But, you know, I tried that and I still do that. As a freelancer, you're still fundamentally trading your time for money. And I just wanted to get out of that. I wanted to avoid that. So not really knowing how I was going to avoid working, but determined that somehow I would, I came back to the U.S., moved to Atlanta, started working as a freelancer so that at least I don't have to go into an office and I can wear pajamas like 24 hours a day.

And she is wearing pajamas right now, everyone. And while I was doing that, I was renting. this like terrible little apartment and just crunch the numbers and thought about what my landlord was making and thought, hey, I could do that. And fortunately, it was the year 2010. We were in the middle of the greatest housing clearance sale of my lifetime. So that was instrumental. That helped a lot.

And I looked across the house across the street had a for sale sign in it. So I bought it. Nice. It was kind of an impulse buy. I didn't know what I was doing. You know, I was looking at a purse and I decided about a house. It was crazy. I didn't know what I was doing.

I had no idea. I bit off way more than I could chew. I started with a multi-unit fixer upper, a 110-year-old multi-unit fixer upper. Oh. So that was not the ideal way to get started. It was, I definitely just threw myself right into the fire and learned by, you know, sheer force of will. Nice. So, so do you still own said property or?

I do. I am sitting in it as we speak. Ah, very nice. Very nice. Do you mind me asking like what you paid for it? Yeah, of course. So my first property. Don't ask me.

The first property is a triplex, three units. I paid $225,000 for the initial purchase, and I've put about $60,000 into it. So I'm in it for about $2.85. Now, my boyfriend and I live in one of the units. We live rent-free, so not counting the fair market value of the rent that we're eating up. The rest of the house rents for $3,550, plus gives us an additional free place to live. That's awesome. That's great.

You know, Brandon, you wrote a post on why, I think you wrote a post on why you should start with a multifamily. Yeah, yeah, I'm exactly this, didn't it? Yeah, I'm an advocate of that. I did that with my, I bought a duplex. It was the, yeah, it was my second house I ever got. And I lived in one half, rented the other house, half out and lived for free. Same thing. It's awesome.

Nice. So, yeah, and I'll link to that, I'll link to that kind of story in the, in the show notes at, what are we at biggerpockets.com slash show 35. 35. Yeah. Woo. Yeah. And listen, I mean, I think it's, I think that's an awesome, awesome, awesome strategy for, for folks starting out. You know, you get the experience of managing. You get the income deferral.

Is that the right word? Am I thinking right? You get free rent. Yeah, you get free rent. Yeah. I mean, if, you know, if the numbers work out, you get, you got free rent. You get the experience of having somebody sitting on the other side. if it's a duplex or other people in a triplex and you really get to learn whether or not

this is for you, right? Totally. And it helps, I mean, especially as a beginner, it helps being right there so that if you have to quote unquote rush to your property to fix an emergency, you live there. You don't have to drive anywhere. Yep. Yeah, definitely. For those people who want to, like, I guess hear a little bit more about that same

strategy on podcast 25, I think it was, which was the newbie podcast, we interviewed four people And one of them, the first one was Nicholas Stevens. He's doing the same thing about a triplex. I think he was in Boston. So anyway, that's a biggerpockets.com slash show 25 if you want to check that out. And the only real thing that I would say as far as a negative on something like that is, you know, you do have the downside of actually living next to your tenants. And there are certainly negatives that go with that. Maybe you can talk a little bit about some of those.

Sure. I mean, honestly, I think that what it's done is it's weeded out the partiers. I think it's been a real positive because people who want to create a ruckus typically don't want to live in the same building as the landlord. So that's been the big blessing of it. I guess the downside is that issues, minor issues that normally people would never call their landlord about, they feel comfortable just telling me about because they happen to see me every day. So, you know, somebody will come to me and be like, oh, I don't think this works. And I'll suggest the most basic solution that I think any other renter would jump to trying before they'd place a phone call. So, I mean, yeah, there's that.

There's that minor inconvenience. Why is it dark in here? Turn the light switch. Oh, that's a great idea. We have a, in our apartment buildings, every single unit has like a light switch that turns on, you know, a lamp outlet somewhere in the room. I'm like, I don't know, that's how they do it a lot out here on the West Coast. But every tenant asked me that question, they say, hey, that light switch is broken. I mean, every time they say it.

And I'm like, I have to explain it. It runs an outlet, put a lamp into it. That's why there's no light in the ceiling. And so every time nobody gets it. There you go. All right. So you started with Reynolds versus, you know, doing other kinds of investing. You said it was, I guess, a bit of an impulse by that first one.

Once you kind of got there, was there any reason that you decided to stay with, with, uh, rentals versus kind of getting into flips and stuff. And of course, you haven't quite said that that's not what you do. But I'm presumptuant. That's not what I do. There you go. Well, like I said, my goal is to travel the world without having a job. So I'm interested in monthly cash flow, passive cash flow. And rentals to me seem like the best way to do that. So once I bought the first house, once I bought the Triplex and saw how much passive income it could bring in, I got it. addicted and then I just started loading up on rentals. Nice. Nice. And did you all, did you focus always on multis or did you go to single family

houses? What's your strategy been along the way? No, I love multis, but my next three have been single family houses, in part just because the cost of entry is cheaper. I mean, I love multis. I would love to have another one or two or ten. But yeah, no, the next three that I bought were single, single, single. Okay. Where are you buying them all at, all in it? All in Atlanta. All in the same neighborhood, or do you look around? No, no, they're scattered among different neighborhoods in Atlanta. I've stuck to Atlanta, A, because I know it, I live here.

I've lived in three cities in the U.S., and of the three that I've lived in, I like Atlanta the best. And just personally, I'm not comfortable investing somewhere that I haven't lived in. So that's what made the decision for me. Yeah, that's great. That's great. And, you know, different people are going to have different criteria for what their comfort level is. And I think what's important is that, you know, you clearly understand what that is for you and for anybody listening. They also understand the same factor for themselves. Yeah, yeah, I agree. By no means am I saying that this is the right way to do it.

This is just my comfort level, my risk tolerance. Absolutely. Absolutely. Now, are you buying properties that require work or are you buying properties that are kind of quote unquote turnkey. Tell us a little bit about that. Sure. Well, the first property required a ton of work. Lots of it. It choked me whole. And every property since then has been progressively better and better. The first one required the most work. The second one required a bit, a fair bit of work, but less. And then by the time I bought number four, it was pretty much ready to move in ready. Right on. Right on. So I'm going to ask a question. I'm guessing other people are probably thinking at this point. So you know, you were this nomad traveling the world who burned through all your cash and then you went and bought this three unit property. How did you go about doing that?

Well, the first one I bought with just traditional bank financing. Okay. And then after that, the second one I actually bought in cash, but that one only cost $21,000. So. I'm sorry, how much did it cost? That one only cost $21,000. This was for a dog house. Very fancy one. This is for a three two, a single family three two. In Atlanta.

In Atlanta. No kidding. Wow. It's not Detroit, right? I promise you. This is Atlanta, Georgia. Wow. Wow.

Okay. Okay. I put another 10,000 into it, so I'm in it in total for 31. Okay. And what does that rent for? I think Brandon was doing it. 900 a month. So that's like the 3% rule like Don was talking about a couple podcasts ago.

Yeah, exactly. that one, that one's been one of my favorites. That one is my favorite. Is that, you know, now that we're talking about that particular property, is that in a tough part of town? Or, you know, how does one find a $21,000 house? It's tough-ish. It's not a part of town that I would necessarily want to live in, but it is a part of town that I'm comfortable going into. Sure, sure. And how did you go about finding a deal that's a 3%? We haven't quite done on the math on it.

Presuming it's somewhere around that 3% number. Yeah, exactly. I look at a lot of houses before I buy one. I just searched and I probably searched for a good eight months before I found this one. And then once I found it, particularly because it was a cash deal, I just, I jumped. Yeah. And was it on MLS? or was it just for marketing that you found it?

It was on the MLS, and I was talking to a real estate agent who also led me to it. After that, I went and got my own agent's license, so now I can search the MLS on my own. Oh, okay. So that's helpful as well. Gotcha, gotcha, gotcha. Okay, so, you know, you pick up this, this, you know, $21,000 dog mansion. and I guess at that point, you know, moving further along to other properties, were those also traditionally finance, or how did you do that?

So I've also used private lenders. Okay. So I've gone sort of, I've done it, I've done a little bit of it all. I've done banks. I've done private. I've done it all. Cool. And any quick tips on the private stuff?

Just network, meet people. Just go to your local. organizations and start talking. Perfect. And who's doing the work on all these houses? Do you do it yourself or your boyfriend or how does that work? You know, that's changed a lot. When we bought our first house, the Triplex, we thought that we were going to do all the work ourselves. In reality, that was that thought was born of us not valuing our time. It was such a big project. It took so long. I just, it was a big mistake. And honestly, I feel like it held us back. So we learned from that. And ever since then, we've been outsourcing everything except for the property management.

Nice. Okay. So you do manage all your own properties? All except for the 21,000 dog mansion. That one I shipped out to a property manager. Nice. And any reason why? Was it just because of the neighborhood?

Because of the neighborhood and the tenant quality that I would get there, as well as the fact that that one is half an hour drive from where I live. So just every time I go, it's an hour round trip. That's too much. And I'm curious on that property. because it's in a tougher part of town, presumably the screening is a lot more challenging it. Is that correct? I definitely get a lot of prospective tenants with credit issues. And so it requires having to make some judgment calls. Yet another reason why I'm glad to have a property

manager. Nice. So you still travel, though, a bit, right? I mean, like, I know I see you online. You travel. Yeah. So how do you manage your stuff while you're gone? Do you have any good, you know, tips on managing? So the one that has a property manager is taken care of. The other ones, I get just an interim property manager. When I'm gone, I pay them a flat fee to babysit the houses. And I mean, half the time nothing happens and they've just gotten, the PM has just gotten some great free money.

But when they, when stuff happens, it's great to have them there. Yeah, that's awesome. I never, I never really thought about having an interim property manager. So that's cool. usually I just like grab my family and my mother-in-law and say here will you answer phones while we're gone and hopefully nothing bad happens yes Brandon I'll answer the phones I'll make sure I uh I'll let my mother-in-law know you're uh mocking her on the podcast don't let her listen yeah hopefully she was not listening I'm in trouble I'll be all right so uh um yeah so you travel uh still um I do I'm Cool. I've been to 29 countries at this point, and I'm about to go to country number 30. Cool. Where are you going? I have no idea. But I need to get there sometime in the next month because I promised myself 30 countries before I turn 30. I turn 30 next month. So go to the smallest country in the world. Go to Indora.

Unless you count Indora as the smallest country. Unless you count Vatican City. Vatican City. Yeah. Some people call Vatican City as a country. Some people don't. I don't know. And I have to stay there for at least a week for it to quote unquote count. Really? Yeah, you better go. I can't just, you know, go to the Frankfurt airport and claim that I've been to Germany. Like, that's not fair, you know? So I have to stay at least seven days for it to count.

You know, now that you said the 30 before 30, now that's like my new goal. So I think I've got like 10. So I've got a ways to go. But I'll do it now that. Now that you said that, I have to. Nice. I challenge you. Yeah.

Now that's out there in front of what, 13? thousand people or whatever. So yeah, awesome. So why don't we talk a little more in the managing properties thing because, yeah, I think that's something that most of our listeners probably have a property or will soon have, you know, rental properties. So we talked about while you're traveling. So what about like working? Like you still do like you said freelance stuff and you probably do other stuff for a job. I'm assuming to make money. I mean, I'm not sure what you do, but nobody really knows. Well, so I work for myself. I do online marketing and freelance writing.

Okay. And honestly, having a flexible schedule is super helpful. Because if I need to run out at 2 p.m. on a Tuesday, I can do that and just sort of make up the hours later on in the evening. I have no idea, honestly, how a person with a very inflexible job would be able to do this. Because I can just, I can pick up a phone call in the middle of the day. That's not really a problem. Yeah. If you do have an inflexible job, get a property manager.

I mean, they're great. And one piece of advice that I often give to people is when you're running the numbers on a rental property, even if you plan on managing it yourself, run the numbers as though you're going to hire a property manager. That way you can at any point remove yourself from the equation and the numbers don't change. Well, not only that, but your time is actually worth something, right? Exactly. So you have to account for that time. If you're not including your costs, your time, your energy,

in the equation. And you're doing creative accounting. Doing creative accounting. Exactly. Because, you know, there's a difference between active income and passive income. Ultimately, I think most of us are in the rental property game because we want to make passive income. The active income that we pay ourselves as a result of doing the actual property management,

I mean, that's a different thing entirely. But it's a cost. So, yeah. Yeah, it's cost. Maybe we could talk a little bit about that because I think, a lot of new landlords really screw the pooch when they under account, right? They say, oh, this is great. This property is going to cash flow.

You know, the mortgage is X. The rent is Y. So cash flow is Y minus X. Cool. And so, you know, obviously that's not true. Right. There's things like CAPX and other expenses that you're going to deal with. maybe we can kind of talk about, you know, things like that.

What kind of, you know, random occurrences have you dealt with? And I'm guessing some of them have probably popped up more frequently on that $21,000 house. Sure. Oh, random expenses that I've dealt with. One time a storm knocked over one of our trees onto the neighbor's property and it cost us $2,000 to get it cut and hauled away. I mean, stuff like that. That stuff happens all the time. Just this morning, I met with a lot of the time.

Just this morning I met with an HVAC guy because while I needed thousands of dollars of emergency HVAC work on one of my units, that stuff just happens. It's par for the course. And so when you're running the numbers, just over account for that because it will happen. Yeah. And I think where so many landlords fail is they don't do that and they end up buying a property and not having enough reserves, right? They don't have the cash sitting on the side.

And when something like the tree falls on the neighbor's property and you've got to pay the two grand out of pocket, they don't have it. Right. Right. Exactly. And then the other investors come in and scoop it up because they're now a desperate landlord who's trying to dump their portfolio, right? Right. Right. Exactly. So yeah. I mean, and to what you said earlier about people, especially new investors thinking that mortgage is this, the rent is this, and therefore I'm set. You know, we sort of made the same mistake. When I impulse bought the Triplex, honestly, I didn't know what I was doing. I wasn't thinking about vacancy and how expensive that is. I wasn't thinking about the cost of hiring a property manager or, and like I said, we did a lot of the work ourselves, at least in the beginning.

And we were paying ourselves zero for our time, which is creative accounting. It was a huge mistake. Fortunately, we happened, the year happened to be 2010. and we happened to be in the right place in the right time and the numbers worked out in our favor, but that could have easily gone the other way. Yeah. Now, do you feel, though, that because you did all your own work at the beginning, like, let me try to phrase this correctly.

When I started out, when I started out, like, I did everything on my own. I did all my own work. And I look back now and say, man, that was stupid. I shouldn't have done my work. I wasted forever. However, when I look back also, I say, I probably wouldn't be where I am if I hadn't done my own work. Now, I don't know if that's true, but do you feel that way at all? Like, do you feel, I know earlier you said you maybe it held you back, but like you maybe wouldn't have bought that

triplex because you would have had to pay that $60,000 would have turned into $200,000 if you hired it out? Like, is there anything like that? I think that I'm the type of person who likes to learn lessons the hard way. And so you're right. If I had seen the big number of what the repairs would have cost, I probably would have been sticker shocked and not bought the triplex. So, So in that regard, yeah, I guess it was good that I wasn't accounting for hiring it out. Although, in hindsight, when I look back on all of the evenings and weekends that I lost, time that I could have spent searching for my next property, I mean, wow. Yeah.

That's a huge lesson there. Yeah. Right on. Right on. So what are your goals? I mean, obviously your goal is to pay for your, you know, what is it, seven days and a week in every country around the world. But, you know, is there a goal above and beyond that?

Are you just trying to create this portfolio to support your travel habit? Or do you want to become, you know, some kind of magnate? So according to the U.S. Census Bureau, the average American household makes somewhere in the neighborhood of about $50,000 a year. I think it's about $52 or $53,000 a year. So I've set that as my benchmark. If I can make in passive income as much as the average U.S. household earns, that's my definition of financial freedom. That's a tweetable topic right there, Brandy. That is.

I will be sure to tweet that and add that to the show notes, which are at BiggerPockets.com. slash show 35. See, I haven't screwed up this time, Josh. I've been saying it correct every time. Not yet. There's still time. I'm counting on it. I'm counting on it.

Yep. All right. So, all right. So you are a blogger as well. You blog for us on Bigger Pockets. You write about your real estate. On your own site, you write about personal finance and things like that, correct? That's true.

That is all true. Okay. So maybe we can talk a little bit about the personal finance stuff because, you know, A, I think it's a topic that we probably need to be talking about a little bit more on bigger pockets. And it's a topic I don't think we talk about enough. about enough. I think that's the same thing. Anyway, disregard what I said, but my point was,

did I have a point, guys? I don't know, but I can jump in here because I was actually, I was reading your blog this morning for a while actually because you're kind of preparing for this interview. And one thing I noticed that you're, you're very like, maybe not anti, but maybe anti, like pinching pennies. Like you're not about clipping coupons and spending eight hours getting the 12 cents off a roll of toilet paper. Right. I learned if you can talk about that a little bit. And like, why are you different than most, you know, personal finance bloggers?

And your advice is a little different. Why? Well, I very much believe that the human brain, like your mental bandwidth is incredibly limited. There's only so much that you can focus on. You're talking directly to branding, correct? I wish. I, I, with Josh being the exception, of course. Of course.

Of course. And given that limited mental. space and that limited mental energy, it's important to focus only on the stuff that's going to move the needle. Focus on the stuff that's really going to change your life. And I'm sorry, but clipping coupons is not going to change your life. That's my philosophy. That's my belief. You can disagree with me if you want. But that's what my blog states. But what about those like extreme coupon people? Those guys have, they have got like 7,000 rolls of toilet paper in a shed somewhere and they saved hundreds.

They might have even paid like five bucks for it because they put all these coupons out there. I mean, come on. That's cool. What are the property taxes they're paying for that shed? There you go. There you go. That's funny.

What about another thing you talk about on your blog a lot is lifestyle design and those who have read the four-hour work week know what that phrase means. But for those who don't, what is lifetile? I don't know because I haven't read it. You haven't. What is lifestyle design? So a lot of people say, oh, I. I would love to do X, Y, Z, but I can't because.

And then they'll talk about how their job won't let them, or some circumstance of their life won't allow them to do that. I say, put your lifestyle first. You'll figure out what kind of life you want to lead and then force everything else, your career, all of your life circumstances, make those fit that ideal lifestyle. I am envious of you and your philosophy. Well, you can have the same philosophy.

Then you've got to implement it. that would be the problem. That is true. No, I, when I read the four-hour work week, I love that. In Rich Dad, Poor Dad, and I know a lot of people have very opinionated views on Rich Dad Port-A, but almost every guest has said that's one of their top favorite books. But in Rich Dad Port-Dad, there was a line where he said, don't ask, don't say I can't afford it, ask how can I afford it?

And that was one of the most, like, fundamental changes in my mind when I read Rich Dad-Port-D was that question of, Because I grew up in a family where it was you can't afford this. We can't afford this. And everything was that. And that's, I think, a huge part of what lifestyle design is is not just shutting your brain down and saying no. It's saying, well, how do I get there? Exactly. Exactly.

When I, I mean, when people find out that I travel, the first question they ask is, well, how could you afford that? Or worse, they say, oh, I could never afford that. Yeah. And it's just not true. It's just simply not true. Like, you can afford it. You can do it. You just need to make it a priority.

This is totally not real estate related, but I'm curious. Do you have any tips? People who want to travel more cheaply, how do you do it? Just do it. Just start doing it. For me, it was helpful to go to countries where the dollar exchange rate worked in my favor. It's a huge blessing to be able to earn money in the U.S. dollars and then go spend it in Laoshen Kipp or Thai bot or Nepali rupees. So start there.

You'll get the hang of it once you go to some of those countries. And once you learn some of the basics of shoestring travel, you'll then have the skill set to be able to go shoe string travel in in euros or in pounds. You'll be able to get to that later. Okay, so hold on. Hold on. So I'm going to call you out here a little bit. We're talking about shoestring travel.

And just like a minute ago or two, we were talking about not pinching penny. So are we talking about shoe string travel because Brandon brings it up? Are we talking about it because does that work in the same line as Pinching Pennies? Yeah, absolutely. My anti-pinching Penny's philosophy comes from preserving your mental bandwidth and your mental energy. So if you've got a clip coupons and stack double things on top of rewards points, it just adds this layer of complexity to your life and weighs down your brain.

But if you're in Thailand, I mean, you can walk into a restaurant and get a great dinner for three bucks and that doesn't require any mental energy. That's just what it costs. True that. True that. I had my honeymoon in Thailand. So it's, it's awesome. Go go places where the dollar is strong and you, you know, you've got it. Yeah, absolutely. Nice. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value, in top rental markets across the country. Their local teams handle the build, the property

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Head to costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. All right, so let's jump back back into finance here a little bit. Debt. Mm-hmm. Is there a good debt, bad debt, or is all debt just bad debt? I definitely think there's both good and bad debt. In fact, I don't even like to call good debt debt debt.

I like to call it leverage. That being said, you know, I think that good debt is this. A lot of people think that all educational debt is good debt. I disagree with that. You know, I think there are definitely student loans. Some student loans are good and some are bad. Some primary residence loans are good and some are bad. but if you're leveraging into a rental property that cash flows, I support that, at least up to a limit.

I support that. Nice. Nice, nice, nice. Okay. So then if some debt's okay and then we're really talking about debt that helps you kind of build your passive income, then that would be okay. I'd say positive cash flow debt is good, in my opinion. Okay. Okay. Yeah, that works. That makes sense. Yeah, because, I mean, that goes back to the whole asset liability thing, the whole rich dad thing that that is. Yeah, you buy things that make you money. Even if it costs you some, you're still making more.

Exactly. Yeah, that makes sense. Exactly. So, all right, so on your blog, you wrote an article called you want to know what sucks, cubicles. I'm wondering, do you have any advice for those who are in cubicles and hate it? Get out. Get out. Life is too precious to spend it. doing something that you hate. I mean, you've got to spend the majority of your waking hours at your job. So do something that you love. And I know that it's a cliche, oh, follow your passion, blah, blah, blah. And in fact, I have a nuanced view of the follow your passion advice. I believe that largely passion is a result of the work that you do rather than the other way around. If you go in and you do the work every day, you'll develop a passion for it. But that's only true up to a certain

limit. If you are in a cubicle or in an oppressive work culture doing something that you will never get excited about, get out. Yeah, that's great. That's great. Okay, I'm an oppressive. I am in an oppressive work environment right now. I've got Brandon harassing me every day. I've got, you know, all these people are yelling at me. So do your kids, Josh. They're supposed to tell you. Okay. Well, pretend it's not me. Pretend it's somebody else, right? I'm in a cubicle. How do I go about kicking this thing off. Hey, you know, I want to be like Paula. I want to travel. I want to quit my job. I hate my boss. You know, I want to take a bat to the printer, like office space style. You know, what do I need to do? How would somebody go about starting to do exactly what you've

done? First, save up a big batch of money, which sounds daunting, but it's really not because you run on people, a lot of people just run on this hamster wheel and fritter away money. They work these jobs they hate and then they spend money to make themselves feel better about it. Quit doing that. Stop eating at restaurants. Stop spending money on junk. Save up a big ton of it and you'll feel a lot more psychologically secure about quitting. Pick up a couple of freelance opportunities or consulting opportunities, pick up some clients, create a side gig, test drive it while you're still employed. And once you're making a bit of money at it, then cut the string and go at it full time. Yeah. And it, it's a

In the meantime, create multiple streams of passive income through traditional investments like index funds and mutual funds, through rental properties, just create passive income in addition to having side gigs. And I don't know if most people know this, but that's pretty much what I did. I was actually teaching high school in Los Angeles at a special ed school when I started bigger pockets. And, you know, long, long story short, I was working on this business for years while I was working full-time on another job and putting all my effort and energy into that other job. But every night, every weekend, that's all I did. And one day, I wasn't making nearly

as much when I quit as I was when I was working the job, but I knew I saw there was a potential. So I did that. You know, I had picked up the rental properties and I eventually did that. It's a great path if you can follow it. I know a lot of people, a lot of our guests, I think, that we've talked to on the podcast are kind of working towards that or have already done that. So that's fantastic. That's awesome. That's great.

That's a great story. Yeah. I've got good stories once in a while. Well, if I could add to that, I think one of the thing that I think is key for people is to have kind of a plan for where you want to get to. And I don't know, maybe you guys don't agree. But if you want, if you need $2,000 a month in passive cash flow to quit your job, then, you know, figure out how you're going to get that and then start going towards that direction.

A lot of people just end with that whole, I want to quit my job, and that's as far as they ever take it. They don't know what that actually means. Well, they forget. They get frozen at that point because they don't have the plan to or a path to get there. Yeah. Right. And that's where, and that's where like, you know, shameless plug, you know, the bigger pockets forums. Like if somebody goes on there and says, hey, I want to, I need to earn this much money.

I want to do it in five years. I need to earn $3,000 a month in the next five years. can somebody help me with a plan with this? How can I get there? Like, you'll get dozens of guys who have actually done that very thing to jump on and say, yeah, let's work this through this together. And there's no cost to it or anything. So anyway, that's my shameless plug for the forum. So jump on. But anyway, so do you have any tips then, you know, for people who maybe they want to quit their job soon, they need to start saving up for their first investment property? I mean, you talked a little bit about not eating out and those kind of, you know, saving money tips. Did you have any other, I guess, good ideas for saving for that first investment property?

Sure. I mean, saving money is not rocket science. Like, I've got, I wrote a post recently called radically redefined necessary spending. A lot of the stuff that people think is necessary is actually just discretionary. And if you really think long and hard about what you actually need, you don't really need that much. And, you know, I don't know how a lot of. A lot of the listeners, I don't know how you lived, if you went to college, how you lived during college. For me, when I was a college student, I was completely broke.

I graduated debt-free, but I was completely broke the entire time that I was there, just trying to make ends meet. And when I got my first job, I continued to live at that lifestyle. And it was instrumental in helping me quit my job after only three years. Yeah, yeah. And I think you bring up a good point about living at a specific lifestyle level. And I think what happens, you know, you see these NFL guys or, you know, baseball players that go broke. And the reason is as people, I think it's just programmed in us, right? As you make more money, you need to spend more money.

You need a bigger house. You know, you got to go hang out with the fancy people and wear better clothes and all sorts of stuff. And that's a quick way to burn through cash. Right, exactly. So, pair down. I mean, if you hate your job, pair down to the basics. Save that money towards putting a down payment on your first rental property. Start picking up, pick up a side gig, pick up some clients, do some consulting work, do some freelance stuff.

There are so many opportunities out there. I mean, just so many. Yeah. And one of those opportunities is something that both you and I have done and that's starting a blog. I mean, not that that's the world's best way to make money, but, you know, people do make money that way. So I'm wondering if you can talk a little about the blogging, kind of the benefits of of it. And you talk about real estate on your blog. And do you think that's a good idea for other people to do as well? Sure. Yeah. A lot of my readers love the real estate posts. On my blog, I'm very

open about what I paid for each property, what it rents for. I run the numbers. I talk about the 1% rule and cap rate and this and that and the other. And I think my readers really appreciate that level of disclosure and that level of transparency. It does get a little bit awkward when my tenants find the blog and see how much of a profit I'm making on their rent. That's happened at least once and that was kind of awkward, but, you know, I still, I still would recommend it. I had a tenant two weeks ago, Google me and found out everything. Yeah, that was fun. Yeah. Well, and that's, you know, one of the one of the, one of of the downsides of living next to your tenant.

And it's one of the reasons that there's a, you know, a fairly strong debate. We've seen some, you know, posts and stuff about this on bigger pockets where, you know, a lot of people will advocate if you're the owner of the property, you know, first of all, you, you know, you buy your properties in entities to protect yourself. But because, you know, once you do that, you are now no longer the owner of the property. the entity is. So now you can actually, you know, rightfully so many will argue. And I think I would agree with them. You're now the manager of the entity, so to speak. So, you know, you're as a result of manager of the property. So, you know, I think people see a distinction between, particularly

tenants, owners and managers, and, you know, they'll beat the hell out of an owner and they'll be a little nicer to a manager potentially. That may be true, but at the end of the day, they'll still Google your name. And if you've blogged about what you paid for it or what your company paid for it, they'll still know that profit and lost data. So if you want to blog about your properties, that's just something that you have to be willing to go through. And for me, I am because the benefits far outweigh the costs.

Yeah. Yeah. And what benefits, you know, are you finding additional deals? What, you know, what, I guess the benefits for you then are in terms of just, you know, that passive income you get from your blog at this point, correct? Yes, some of it is passive income that I get from my blog, although I don't know if I'd call it passive because I do all the work of maintaining a blog, yeah. And a lot of it, I mentioned that I do freelance writing and online marketing.

All of my clients these days come as a result of my, my blog. It's basically the blog is turned into a giant dynamic business card that serves as a lead generator and that people find me through. Nice. And you might get a couple more people after this podcast. Be prepared. You know, one thing, one thing that I thought when I started blogging that I advocate everyone should do it, it's because it helped me to clarify what I was doing as an investor. It helped me to kind of like, as I was writing out these posts of what I wanted to do and what my plan was and how you should properly screen a tenant.

I mean, I wrote that super, super long post on Bigger Pockets on the Ultimate Guide of Tenant's screen, which I'll link to in the show notes. But after that, I realized, like, this is the ideal way to screen a tenant. I should follow this every single time. So why don't I? Why do I sometimes slip or sometimes let other people in? But by blogging, it really focuses you on what you should be doing. because you're teaching other people how to do it.

Exactly. You know, they say that the best way to learn is by teaching. And so if I'm blogging about real estate and about career and money and lifestyle design, I'm learning a lot by virtue of teaching it to others. And I love that quote because, you know, you just explained why the gurus continue to teach because they're just trying to learn and they need to catch up and figure it all out. And, well, you know, that's why. people should come to bigger pockets instead of paying them thousands and thousands of dollars for

information that they're still learning. Right. How is that? Ouch. Burn. Well, hey, speaking of burn, let's move on to the fire round. Fire, fire round. Yeah.

That was dramatic. All right. That was dramatic. All right, this fire round again. I'm nervous now. You should be nervous. All right, the fire round are quick questions, quick answers that all, they all come from the Bigger Pockets forums.

So these are questions that people are asking every day on the site. So if you're listening to this and you have a question, go ask your question in the forums. We might pick it. So first question,

what is the best piece of financial advice you've ever received? Ooh, I would say, and this comes out of Rich Dad, Poor Dad. I would say that wealth is measured in time,

not in dollars. That's good. Wealth is a function of how much free time you have. It sounded like something Yoda might say. Robert Kiyosaki, Yoda. Same thing. Maybe not.

Maybe not. All right. That goes back to passive income as well. If you've got enough passive income coming in that you've got all the time in the world, you're wealthy. End of story. Even if it's 50,000 a year, the average household, you're wealthy. And I think it's the, you know, that really does depend on the definition by the individual, right? Some people see wealth is having hordes of cash.

Others see it as, you know, having. a family that they can spend time with. And yeah, but I agree time is money. Yeah, I just think that wealth is measured in freedom. Yeah, awesome. Yeah, this is going to be the Freedom podcast. Freedom! Yeah, your new nickname, by the way, you have to change the name of your blog.

You're going to be the traveling nomad or something. I love it. I love it. All right, so I'm a college student looking to invest in real estate. What do I do? You know, I don't know if I would. it's hard to be a college student. You've got to hopefully get straight A's, do well in school,

and try to graduate debt-free, which unless you're independently wealthy means also working. I don't know if I would add investing in real estate to that platter. I would just focus on being a college student, wait until you graduate, study while you're there, study, get a mentor, but I don't know if I'd jump into the game, honestly. Okay, fair enough, fair enough. I think that's smart to, like what you said there,

just stay out of debt. Like if that's the only thing you graduate from college with is no debt, like that's successful in my mind. Yeah, absolutely. No debt and like magna cum laude. You're good to go.

Yeah. All right. So credit cards and real estate, did they mix it all? No. No, they don't. I wrote a post on bigger pockets about this and was called an extremist

for thinking this. You're extremists. What are you doing? But no, the credit cards can jolt up into double-digit scary, scary APR, avoid them. I am willing to be an extremist on this one. I happen to agree with you. So you don't do any travel hacking with credit cards and points of you?

Oh, yeah, I do a ton of travel hacking, but I pay them off in full every month. There's a difference between using a credit card as a proxy for cash with the money that's currently in your checking account versus actually carrying a balance on a credit card. I disagree with carrying a balance. Yeah, definitely, definitely. All right. So I'm pretty sure I know the answer to this one. Pay off debt or invest in real estate?

That's a tricky one, and I would say that it depends. Pay off, if you're talking about double-digit credit card debt, then pay off your double-digit credit card debt. If you're talking about a car loan at 2% versus making the down payment on a rental property, I might make the down payment on a rental property. Again, that's all up to a certain limit. You know, after four or five properties, you might be sort of at the end of your risk tolerance and wanting to start paying them down rather than accumulating more.

But, you know, at the end of the day, it depends on the interest rate. Debt is just too broad of a term to make an umbrella statement. Yep. Cool. All right. What should somebody with terrible credit do as a first step towards fixing that credit? Get a secured credit card. This is a credit card that almost anyone, even people with bad credit, can qualify for, and it will help you establish a credit history.

Use only up to 20% of the available balance on your secured credit card. And just do that for a while and let time go by. Time is the biggest healer of bad credit. And for those who don't know, what is a secured credit card? It's a credit card that's issued by a bank in which the amount of money that you can borrow is backed by the cash that you have deposited there. So there's no way that you could default on the loan because the bank could just take that that cash that you have backing it. Okay. So you're basically borrowing from yourself in a way.

Exactly. Nice. Exactly. And you can do it interest free by paying it in full. And it just is a great way to rebuild credit after you've dinged it. Perfect. Awesome. Awesome. All right. So should a new investor begin with a multifamily like you did or stick with single family for first investment? That's a great question. Go with the one that's going to give you the best returns. And by returns, I mean something that's going to give you a big fat margin of error because you're going to make a ton of errors in your first property especially. You're going to make a lot of them. So go with the best deal. That's great. That is really good advice. That's awesome. All right.

House, speaking of that, somebody mentioned the other day that we say awesome too much on the podcast. And that we should have a drink. Yeah, we should have a drinking game. I think Don said that to me. There should be a drinking game

where every time we say awesome, somebody takes a shot. So maybe someday somebody can send us a video of that drinking game. I've been taking shots since the beginning of this podcast. What's your name again? Paula?

All right. All right. exterior paint color for a house boring or should it stand out stand out for sure i i took this a little bit too far the first time i painted a house and i i painted it like smurf blue and i had to tone it down a little so it's toned down but it still definitely stands out okay i want to know what happened so you painted smurf blue and like you know did Did the neighbors start throwing eggs at you? What happened? Pretty much everybody's jaw dropped. Actually, I had a tenant ask.

She was like, oh, so does the siding come in that color? And then you just paint it later? That's really funny. All right. Last question for the fire round is, what is your favorite country that you've traveled to? And why? That is a really hard question because favorite in what category?

Is it favorite for the food, favorite for eating locals, favorite beaches, favorite cities? Oh, just throw out a country. My gosh. I would say if I could go back to anywhere, Bali in Indonesia, Italy, Nepal, Nepal. She didn't answer the question. That's the re-answer. All right, moving on. Timar, I want to throw in Myanmar.

Nice. Burma. Aren't you? Aren't we not allowed to travel into Myanmar? Did you have to sneak in? No, no. It's easier to get a visa. Here's a tip.

What's a secret? Insider's information. The easiest way to get a visa is to go to the U.S. embassy in Vintyn in Lough. It's way easier to get a visa there than to get approved from the U.S. So just fly to Bangkok, catch a bus to VNTN, get approved for a visa, and then go back to Bangkok and catch a bus to Burma. That sounds like a, you know, worthwhile venture. Make sure you swim across the Arctic Ocean somewhere in between.

Cool. Well, I have to admit that that question was not from the forums. I just really wanted to know, so I threw it in there. Nice. All right. Cool. We are moving on to a section of our podcast called the famous. Do you like our harmony there? Wow.

You guys are calling us opera singers. We did. We have. We definitely have. All right. So what is Paula Pan your favorite real estate book? From zero to 130 properties in 3.5 years. Is that actually the title of a book?

That is the title of the book. It's written by an Australian. I believe his name is Steve McKnight. You might want to fact check me on that. and, well, he's Australian, so you have to ignore all of his tax-related information, but the rest of it is awesome. Awesome. Awesome. Take a shot.

Take a shot. All right. Favorite non-real estate business book or personal finance book? Ooh. My blog. We've talked about four-hour work week, which I still swear I should have been the one to have written that because I knew all that stuff before. Faris said it, I promise. He and I, we're of the same mind. But I recommend that to a lot of people. It's a great book. It summarizes my philosophy on life

really well. Nice. Perfect. Perfect. All right. And hobbies, and you cannot say travel. So whilst traveling. Whilst, what hobbies do you partake in? Snowboarding, snorkeling, hiking, just being in the wilderness. I like being outdoors. And you're not like snorkeling while snowboarding. Not yet, but I'd be willing to try. Nice. Get a video of that. And reading.

I do love reading. I read a lot. Excellent. Cool. All right. Final question of our interview today. What do you believe sets apart the successful investors that you've come across from, from those who just, I don't know, give up, fail, quit, don't even start?

Optimism. You know, I think at the end of the day, it's all about that. Do you have the drive? Do you want to do it? It's success is 99% mental. So just have the right mindset. Don't bog yourself down with details. Be really ruthless about what you allow your brain to focus on and what,

declutter your mind. I'm a big advocate of decluttering your mind. I think that's what sets them apart. That's awesome. I said it again. That was outstanding. Excellent. Fantastic.

Yes. Yes, indeed. All right, Paula, well, listen, we definitely appreciate having you on the show. Love having you as a contributor to the blog. And, you know, lots of really, really good feedback and advice here for folks, particularly on the personal financial stuff. I definitely want to thank you. Where can folks learn more about you? What's the name of your blog? Afford Anything. So find me at Affordainthing.com. Nice. Excellent. Well, we thank you again for being in the show. And of course, people who have questions for you will be sure to catch up with you on the show notes at biggerpockets.com slash show 35. Paula, thanks so much. Thank you. Thanks for having me. Yep. Thanks, Paula. All right, guys, that was Paula Pant. Pola was awesome. The traveling nomad. I like that whole concept of being anywhere and just kind of check. and living passively off your cashola. That is the dream. It is indeed.

Well, what's interesting is you can tell Paula works hard at everything she does. She just works hard and plays hard, which is kind of the goal, I think, for me anyway. Yeah. No, I think it's great. I think it's great. And she's a smart lady who's doing great thing. So it was very fun and very interesting to talk with her. For those of you guys who have made it this far, thank you very much.

Of course, I want to remind you about the death of our quick tip, and the last quick tip that we spoke about was sharing your favorite quote from the show. So please do that if you want to be in the running for a free Bigger Pockets, book on flipping houses and book on estimating rehab costs. You can find out more about the books at biggerpockets.com slash flipping book. Otherwise, definitely, definitely make sure you're following. us on various networks like Facebook and Twitter and Gplus and share our content, share our show, share our stuff.

That helps spread the word about Bigger Pockets, gets other investors, people that you know on the site and helps you and everybody else potentially do business and learn. And the more people we can get on the network, the better it's going to be for everybody on the network. That's the beauty of a site like Bigger Pockets. So hopefully you can help us expand the community. So we'll definitely be seeing you as you participate with us on our other networks. And of course, see you back on Bigger Pockets.

Make sure you are engaging and hanging out and participating. And that's all I got. So if you got questions for Paula Pant, ask it on the show notes of Biggerpockets.com slash show 35. As for me, I'm out of here. I'm leaving it to Brandon. This is Brandon Turner, signing off. You're listening to Bigger Pockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hike, you're in the right place.

You're to join the millions of others who have benefited from BiggerPockets.com. Your home for real estate investing online. Did you really think I would let you sign off with you? That's not happening. Do it. Do what? sign off. Do it.

Do it. Do it. There we go. Do you want to say your last line? He's going to let it hang. Let it hang. This is Joshua Dorgan. Signing off.

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