How to Invest in Real Estate with an AVERAGE Salary (Under $75K) in 2025

Ashley:
Everyone. I am Ashley Kehr.

Tony:
And I’m Tony j Robinson,

Ashley:
And welcome to the Real Estate Rookie podcast. Today we’re looking into how we would invest in today’s real estate market if we were completely starting over from scratch right now.

Tony:
So we’re breaking down a plan on how to invest from a rookie’s perspective given all the challenges right now in the real estate market. We’ll give you our best ideas on what we would do if we had to start our real estate journey over today,

Ashley:
And we have an awesome guest to give a fresh third party perspective who’s invested in all types of asset classes and knows what it’s like to invest starting from scratch. So welcome to the podcast, Luke. Carl,

Luke:
Thank you. Thank you for having me.

Ashley:
Luke. Thank you so much for joining us today.

Luke:
Oh, it’s my pleasure. Huge fan. Huge fan. Met you guys Tony many times, and Ashley met you at a couple BiggerPockets conferences and it’s just an absolute honor to be here. Thank you so much for having me.

Ashley:
Yeah, we’re excited to have the rookie listeners get some insight from you. So let’s kind of start off with the scenario we’re going to talk about today. So we really want to talk about if you’ve never had a property or maybe you’re trying to get your next property, this will be really relatable, but here’s the breakdown of the scenario we’re going to set the table with. So somebody with an average $66,000 salary in a hybrid role and there’s really no opportunity for overtime. They pay rent of $1,600 a month, lives in a two bedroom with a roommate or a partner, and they have no kids. They live in a market outside of a major metro. They’ve saved $20,000 and there is no debt except for a car payment. And in their market it’s a US median home price of $300,000. We’ll have Tony go first. So Tony, with this scenario, you’re in this situation, what would be the first thing that you would do?

Tony:
Yeah, so 66, almost $70,000 in salary, 1600 bucks in rent, no kids mid-size, kind of third tertiary type market, 20 K, no debt. Alright. They’re in a good position given that they don’t have a lot of debt that they’re holding right now or really any except for their car payment. I do think that the $20,000 saved would be a little tough to go out and buy a traditional rental property. When I say traditional, I mean like 20% type conventional loan where you’re just going out and buying. Some of that’s turnkey, kind of ready to go. I guess. Technically they could go out and buy something for maybe 15,000 bucks and a few thousand bucks left over for closing costs and maybe a little bit left in reserves. But if I’m looking at this financial picture, the strategy that I’m probably going to go after is a house hack and a very specific kind of house s, or I should say, maybe using a very specific type of loan.
We’ve interviewed a few people on the podcast who have leveraged this loan product, and I had a little bit of experience with it when we were shopping for our first residence as well, but it’s called the NACA loan, so NACA. And again, we’ve had a few guests that have talked about this loan product, but it stands for Neighborhood Assistance Corporation of America, and it’s a nonprofit. They work with bigger banks actually fund the loans, but NACA basically does all of the underwriting. And when I tell you that it’s like going through a police interrogation or getting the highest level of security clearance, that’s what it is. They’re asking you all the kinds of questions about who you are, what you used to do, where you’re spending your money, why’d you buy this, why’d you buy that? Because the way that the NAC alone works is that, I guess lemme frame it this way.
A traditional lender will look at Tony and say, Tony, based on your debt to income ratio, how much you make and how much you owe, we can qualify you for a purchase price of x. NACA does it in a slightly different approach where they look at your monthly income, your monthly expenses, all of your expenses, and they say, this is the monthly payment that you can afford, and they back into a purchase price based on that monthly payment. But in order for them to really understand what type of loan payment you can afford on a monthly basis, they have to really get into the weeds of your financial picture. So it is an absolute pain to get approved, but once you’re approved, it’s one of the best loan products I’ve seen. You can use it for up to four units. It’s a 0% down payment.
There are virtually zero closing costs, and the interest rate is typically about a point lower than whatever the prevailing interest rates are. So I think today they’re like six and a half, somewhere in that ballpark, you’re probably paying about five and a half through naca. Now, once I get approved, I would go to those roommates that I currently live with and I’d say, Hey, do you want to come with me? I just bought this fourplex live in one of the rooms with me. So the unit that I’m in, I’m going to rent out the other room and I’ll try and rent out the other three units as well to some other tenants. So if I can offset that $1,600 a month I’m paying in rent and potentially maybe get a little bit on top because I’m really maximizing every room that I’ve got. Hopefully that’ll be a good start for me with this financial picture. So that’s my master plan.

Ashley:
Yeah, that’s awesome. One other loan that I would throw in there too is the USDA loan where it’s for rural areas that has similar terms to it where it can be more of an advantage to you for purchasing a property with less money down and better interest rate in terms. So Luke, let’s move on to you as to if you were in the same scenario. Is there anything that you would do differently than what Tony is doing?

Luke:
No, I love it. And I was in a scenario not too dissimilar from this when I was in my younger days, so it does ring a bell. My question is here, how old is that person? And we don’t have the details, and I guess we’re going to just say they’re fairly young being that they’re living with roommates and not married and no kids, or possibly not married with no kids.

Ashley:
Let’s say they’re 30.

Luke:
Okay, 30, yeah, 30. So I think that Tony’s totally right. I would spend most of my time studying loans and mortgages and figuring out what’s going to be my next move. But if it’s me, I’m quitting that job right now because if I’m at 66 grand and no opportunity for overtime, that tells me that I’ve probably climbed that ladder as high as it’s going to go, and I’ve always lived by if you can’t go up, get out. Definitely one thing that I’ve really stuck to through my whole life in every career, I’ve had several careers, been an entrepreneur since day one, is that when you find you’re at the ceiling, you have no choice but to either stay there for the rest of your life and kind of rot, at least the way I looked at it or move on to somewhere else. It is not so cut and dry as just I’m getting out to try and go up somewhere else because it doesn’t always work like that.
So you have to listen to your gut a hundred percent and your gut’s going to say, you know what? It’s time to move on. And especially since this person doesn’t have any kids, I’m moving on right now. If this person had kids, this story would be a whole lot different. But I would move on, try and figure out a way to get that 66 grand up to 80 in the next 12 months and then a hundred in the next 24 months because you’re going to need that money for down payments anyway. But I do totally agree with Tony, we’re going to need to go ahead and buy a house sooner than later, whether it’s a house or a duplex and move into it and the loan product, I’m actually not hip to that loan product, so that’s really cool. But the good old FHA would be a good scenario here as well. A little out of pocket as possible I think is what I’m looking for as a younger person in this role and get myself with a foot through the door on my first property so that I can get ready to move on once that money starts flowing in from my new, more awesome job.

Ashley:
Luke, let me ask you this on the personal finance side. So what do you think about if someone is trying to save that money for the down payment, do you think it’s better to focus on increasing your income as far as moving to another job or getting a side hustle or decreasing your expenses and really looking at ways to cut there? If you were in the situation, what would you be doing to kind of revamp your own personal finance foundation?

Luke:
I know I did all of the above. I set out a personal budget for myself. I lived on nothing back in the day when we were trying to come up with down payments. We set a very strict budget on how much we’re going to spend every day, and if we run out of money, that’s it. No more, no more fun. And if you spend money on fun, then you don’t have gas, and that’s not a good day. I mean, we really did get that strict with it back when we were in our younger days, but at the same time, simultaneously I’m working on raising that income. It’s very difficult what we’re talking about right now. It’s a stressful situation. I think really that this person needs a decent support system from some people that are maybe a little bit older and already climbed a ladder or two to cheer them on.
I think that’s where I would be reaching out for a mentor of sorts. So not necessarily a paid role, but maybe a brother figure. Somebody within my family even that has already kind of brought themselves up a little bit in life that I can ask some questions. That would be my number one goal. The saving the money and the raising the annual income are very difficult, and the right candidate can make that happen by being shot out of a cannon. And I know I sure was, and I still am, but I think the primary objective for this person right here is to find somebody that they can ask questions like ridiculous repeated over. I’m just constant firing questions at this stage in my life.

Tony:
Luke, you make a great point because I think a lot of the talk in personal finance focuses on the defense, and it seems like this person, this standard person, have done a decent job on the defense side. They’ve got no debt, relatively low expenses to maintain their lifestyle, but the offense is another piece that can really unlock a lot of potential for you and for me personally, I did exactly what you did, Luke, I couldn’t go up. So I got out when I graduated from college, my very first job, I think I was making 35,000 bucks a year, and I was there at that job for, I dunno, four months. And then I got another opportunity to go make, I think it was like $42,000 a year. And I took that job and I was at that job for literally six weeks. And I remember this, they were pissed when I left.
I was there for six weeks. I got another offer in a totally different industry, something I’d never even done before, but they were offering me I think $65,000. And I was like, heck yeah, I’m going to go do that. I was there for two years, then I got another job for a hundred thousand dollars and it just kind of snowballed from there. But I think people are so committed to the companies they work for when they realize that sometimes the best thing you can do is go out there and test your value in the marketplace. Because if you can keep your expenses at that person who is making $40,000, but you get a job that’s paying you a hundred thousand dollars, you just got a big, big increase to what you can go add to your savings every month, which would then help you get that first deal. So really, really impressive point. Luke, and I just want to give you some of my own context in there as well.

Luke:
We got to get yourself in a situation where you can fight to go up. In other words, you’re going to make that it’s a lateral move to begin with, but if you’re already at the top of the move you’re at right now, where are you going to go? But you need to make a lateral move that can get you to the point where you can keep kicking and screaming and prove your self-worth and then start getting that up to that six figures, what Tony’s talking about.

Ashley:
Well, we have to take a short quick ad break, but we’ll be right back after this. So welcome back from our short break and we’re here with Luke and of course always with Tony. So I have a question for both of you, I guess, and Tony, this is more towards the NAC alone, but what are some of the things that this person should be doing to prepare themselves for the pre-approval? So Tony, you had mentioned with the napal alone, it can be like a police interrogation. So why don’t we start with you as far as what are some of the things you can do to prepare for that interrogation?

Tony:
Yeah, first thing I’ll say is that it is been, gosh, I dunno, almost 10 years now since I went through this process. I’m a little, I don’t remember all the details, but I do remember a couple of things. Number one, they want all the things that a typical lender is going to want, right? Your tax returns, your pay stubs, all those things that usual lenders want. But one of the big things that they’ll want to see is can you afford whatever new payment it is that you’re working towards? So for example, I was renting at the time and whatever, let’s say that my rent was a thousand bucks and the house that I was trying to purchase was $2,000 per month. They want to make sure that you can actually cover that difference. So they called it a payment shock. So they said, Hey Tony, you have to for at least three consecutive months shows that your savings account is growing by $1,000 per month to make sure that when you do get approved for this mortgage that you can actually approve it or that you can actually afford it. So that was one thing, right? They just want to make sure that you’ve got the room or you have to show that you can reduce your monthly expenses by $1,000 per month. So you’ve got to have an idea on what payment amount it days you’re trying to get approved for, and then make sure that your financial picture, either from your expenses or from your income or from your savings so that you can afford that. So just really, really tight documentation on what’s coming in and what’s going out.

Ashley:
And Luke, what are your thoughts on things that you should be doing right now to prepare yourself for that first property?

Luke:
Ask questions to mortgage brokers. Call as many mortgage brokers as you can and find one that you get a nice rapport with. It’s going to be difficult because you don’t really have any business for them and they’re going to smell that and they’re going to be like, you’re kind of bothering me here kid, which is where that mentor type person, the family member, et cetera, might come in handy. That’s been through a lot of mortgages. Now you also have to understand that somebody that’s been in real estate for quite a while is not going to be doing the same type of debt service that you are when you first start. You’re getting as low down payments as you can and kicking and screaming on 30 year loans and then you quickly run out of those. And I’ll be honest, at this point in the game, I’m very grateful to be able to say this.
I’m not so sure I’d have super great advice on somebody getting a conventional loan. It’s been so long I’ve had to move on to commercial, et cetera. Just like Tony said, it’s been about 10 years getting your ducks in a row, learning what DTI is, figure out how to calculate your DTI, which is actually pretty easy. And getting familiar with a mortgage calculator. To me, mortgage isn’t always number one, especially when you’re first starting out. The thing you want to spend the most time on learning is the debt on the property and the different ways to do that. And so find yourself a good broker that’s willing to talk to you. Again, might need to be a family member in this case because you don’t have a lot of value to offer them, but you never know. You might find a mortgage broker that is just glad that you’re so eager. I know I would be, somebody came to me and was just shout out of a cannon and wanted to ask a million questions. I’d answer every one of ’em just because I was impressed. So you might be able to find a broker that would do that kind of thing. But learn debt to income, learn the different products that are on the market, learn the difference between commercial and conventional mortgages, et cetera.

Ashley:
Yeah, and one thing too, when you call up these loan officers, some small local banks have programs in place to actually assist you in buying your first property. So there’s one where it’s like you put money into a savings account at that bank, which is a plus for them, and they have saving goals for you and if you hit that savings goal, they’ll match your down payment or whatever you had saved in there or something like that. There’s a ton of different programs like that at different local banks to help you save. So they get deposits put into the savings account at their bank and then they get to finance you for the loan. So talking to loan officers I think is a great idea, and if you need help finding a loan officer, you can go to biggerpockets.com/lender finder to be matched with a lender who maybe has the specific skill and resources to assist you with what you’re trying to do in real estate.
So to wrap up what we’ve talked here as far as the best strategy for this scenario, we talked about house hacking. We talked about increasing your income, decreasing your expenses. Some other options are maybe doing a short-term rental, doing co-living and also partnerships. A partnership was the way that I got started. I was able to buy my first duplex by partnering with someone that had money because I had no money. So those are some of the strategies. So Luke and Tony, let’s kind of go into what’s the best type of property to make some of these strategies work. So Tony, maybe you can take on for short-term rentals. If this was going to be your first property, what would be your buy box if you wanted to do a short-term rental as your first property?

Tony:
Yeah, I think the answer is slightly different today than what it would’ve been pre covid. I think today, if you’re a rookie starting out for the first time, obviously the market’s going to be super important in terms of where you go. But the property itself, I think before it maybe was a little bit easier to have a property that was more like cookie cutter that looked like all the neighbors. But now it’s the properties that are a little bit more experiential that are standing out. And when I say experiential, it doesn’t necessarily mean you’re building like a tree house, obviously that’s like the pinnacle of what experience means, but it’s also just the design and the amenities and that the management, right? How are you interacting with your guests and that type of experience and focusing on those things. So it could be a single family home, it could be a unit in an apartment complex. It could be a mansion, it could be a cabin, it could be an A-frame, it could be a container. I think a lot of that’s going to vary depending on the market that you’re going into. But what’s most important is you’re focusing on that overall experience of your guest and that’s how you make yourself stand out I think today.

Ashley:
Okay, so Luke, let’s say you’re going to do a house hack, whether that’s renting by the room or maybe you want to take it a small multifamily route. If you were in the position, what would be your buy box? What type of property would you be looking to move into

Luke:
On a house hack? I’m looking for something that needs to be flipped and I’m going to move in and basically live in flip house hack and I might move, we do one room, get a tenant, a roommate in there, and then so on and so forth until we’ve gotten to the point where the house is ready for other people to just take over and I can go do the same thing at the next house. So I think honestly, if I’m house hacking and doing a long-term rental, my biggest buy box would be is it repeatable? I need to know that I can do this again within a mile or two or five of this first house. So if I’m feeling like I’m grasping at straws trying to make something work with this house, it’s probably not something you want to do. I want to make sure that in a year, whenever this thing’s ready, then I’m ready to move on and do it again. And perhaps I can refinance and reuse an FHA on the next property that I can do that again in a similar area with the similar vendors I was using on the first one. That’d be big for me. If I could go back and talk to the 26-year-old version of me, I would say make sure you can repeat it. You don’t want to have to buy one single family long-term rental in 20 different markets. Now, vacation rentals, different story. We can go on vacation in 20 different markets. That’s kind of cool.

Ashley:
So Luke, let me ask you this. When you are looking for your house hacking this property and you said you wanted to do kind of a live in flip for it, do some remodeling, getting it updated, is your end goal as this person to sell the property after a certain amount of time? Is it to hold onto it as a rental and keep it as a long-term rental and repeat that process? And maybe you can explain the pros and cons of doing it either way?

Luke:
Basically at that point you’re going to have to decide is it better to sell it or to keep it, and it’ll be fairly clear cut based on some math. If you can sell it tax free because you were living in it and it was less than $500,000 gain, which would be a wonderful thing to have more than 500,000 on your first go, but probably not that likely, and you want to take that and move it into a bigger property, maybe move it into a six unit or something or a 10 unit, then absolutely. But if everything was working out the way I thought it was going to, when me personally starting this adventure, I would definitely want to keep the home. To me, buying hold is always the best way to go, but you never know. If you knock it out of the park and all of a sudden you’ve got tons of equity here, then we’ll go ahead and sell it tax free and move that equity into one or more or multiple properties.

Ashley:
What I would do is if I was somebody in my young twenties, I would not marry someone and I would be like, okay, we’re buying house hacks in my name. You’re going to go and live in a duplex right next door to me. We’re not going to live together and we’re going to do this for the next two years. As you’re going to put that duplex, you’re going to live into a year, then you can come back and live with me for the next year in the live and flip, and then we’re going to sell the property that is in my name for tax-free gains. Then we’re going to keep that investment property and then eventually we’ll get to live together. But until then, we’re just going to keep using the separate loans and the separate houses to accumulate wealth and to flip properties and to have buy and holds.

Luke:
Yeah. Well, Tony and I are married, our wives. I know my wife would probably like me to live somewhere else for a little while, so

Tony:
It might even work for Mary Couples Luke, I like that. That’s a good point, man.

Ashley:
It might work great for new development right next to each other too. Okay, so one follow up I do have, Tony is with the napal alone, is there any specific buy box that you need to have for using that loan product too?

Tony:
There is, and again, their rules may have changed a little bit, so this is just when I was kind of going through them through that process with them. But they do have loan limits and it’s not like the conventional loan limits, but they have limits based on the median home price and you have to be within a certain percentage of the median home price. And I think they either base it on county or potentially zip code. So say there’s no necessarily limit on how much you can spend, but it is limited based on the average four year area. So where I’m at, say the average home price is $800,000, whatever it is, and I can’t go out and buy a million dollar home and still get all the benefits of that macal alone. I would just have to come down with the difference of that. So that is one of the things to consider. So again, going back to this person who’s starting from scratch, I would ideally be looking for a four unit that fits within either at or below the median home price for that county.

Ashley:
Okay. We are going to take one final ad break and we will be back with more after this. Okay. Welcome back from our short break. So along with these strategies, what are some other things that you think are important for a new investor when going and looking for this first property? And let’s talk about maybe finding the deal and actually when they are going to look at the deal, what are some important things that a rookie must do before they actually put in an offer or before they actually close on a property? So Luke, let’s start with you. You’re a brand new investor. What are the things you need to do before you actually close on a deal?

Luke:
It’s a fine line because you do need to get knocked around like a lot when you’re first starting out. So we do want to plan and have as much getting knocked around mitigated as possible. But I do feel like in general, most folks are too worried about the bad stuff and oh my gosh, this is going to happen to me and it’s going to be so horrible in analysis paralysis and getting stuck to the point where they maybe don’t even get started. But I think at the same time, you should be embracing that. What bad things can you throw at me that I can pull myself out of the gutter and learn a lesson from this and move on to the next house and the next deal and the next duplex and the next vacation rental and be a better person and be a better investor and a better landlord as time goes by.
Because at the end of the day, the most important thing is providing a great place for people to live and have their vacations. But anyway, get knocked around. Don’t be afraid. Take some punches. That’s what I would say. And also my next thing there would be don’t get to walk to toe this fine line. Don’t get in over your head if you’re walking around that unit or that house or whatever it is, and you’re calling your uncle that’s a contractor and saying, Hey, do you know how I would fix this thing over here in the corner? You might be a little over your head at that point, water heaters, HVACs. We just shouldn’t be afraid of those roofs. Things that can just be replaced by calling a roof guy or an HVAC guy or an electrician. Those things shouldn’t be an issue. But if you’re looking at your first property, scratching your head and being like, man, I’m not so sure the back left corner of this house isn’t a little lower than the front right corner, then we probably want to stay away from that. But other than that, let’s get knocked around a little bit.

Ashley:
And Tony, what about you? Are there some things that you would do as a rookie investor before even closing on that first deal?

Tony:
I think a couple of things, right? So I think about the pre-offer accepted and then post offer accepted, but before you actually close, right? When you’re negotiating, when you’re actually under contract, I think before you actually get your offer accepted, you want to make sure that you’re just going into the right market. And in order to do that, you’ve got to understand what your own personal goals are for investing in real estate. Like Ashley, Tony, and Luke, we’re all here, but we may be investing for different reasons. Are we investing for appreciation over the long term? Are we investing for tax benefits? Are we investing for cashflow? Are we investing Because like Luke said, he wants a vacation in 27 different places. What is your motivation? And oftentimes you will not find a market that equally satisfies all of those motivations. So you’ve got to identify which one is most important to you.
So I think that’s the first thing in choosing the market, is knowing what your first, second, third, and fourth motivations are. Once you’ve understood that, or once you’ve got a grasp of that, now you’ve got to actually do the work to analyze a property. And I feel like a lot of rookies get into trouble because they don’t take the time to fully understand the numbers of the property that they’re purchasing. There’s no crystal ball, no one has the exact, I know for a fact that this property will do X, y, and z. I think all of us have purchased properties that didn’t perform the way that we wanted them to it as part of investing in real estate. But you at least want to give yourself a good shot at being successful. And that comes with doing your due diligence, understanding what the market rates are, understanding what your potential expenses are, and understanding what your potential profits are and saying, does this actually satisfy what I want out of the deal? So just from an acquisition perspective, Ashley, I think those are the first two things to focus on.

Ashley:
Okay, so my next question is, should you manage your house hack? So if you both had said house hack is your first thing, they’re renting out the room or doing a small multifamily renting out the other units, should you be the landlord, the property manager, or should you outsource it? And what type of things should you or should you not be doing? So Luke, let’s start with you.

Luke:
I would do everything. That’s just me. I think you need to learn that stuff way before you can pass it on to somebody else. And we are going to pass it on to somebody else a hundred percent. And when you grow to the point where you’re getting 10, 15, 20 units, you’ll pass that off to a professional. But until you know how to do that, I mean, you can’t even call your landlord, your property manager and say, Hey, is not right, or this is not, this is going wrong, this is not working right if you don’t know how to tell them how to fix it. So I definitely would want to get my hands dirty, learn the lingo, take the punches and figure out how to do all that stuff myself on the first two or three or 10. And then that way when you turn it over to a professional third party, in other words, how are you even going to know if that manager’s doing a good job if you haven’t already been through it yourself? And you might even just let things kind of go to the wayside and get maybe even taken advantage of in some ways if you don’t know how to do it. So take the punches and learn how to do everything and then we pass it off to a professional so that we can continue to grow and scale.

Ashley:
Tony, do you have a different perspective on this? I know that for your first two long-term rentals, you had a property manager in place.

Tony:
Yeah, I did. And I think for me it was more so a limit of I wanted to do it. I think I had the desire to go out and learn those things, but just from a timing perspective, I found it challenging. We had family already. I had a very, very demanding W2 job. It was, I don’t know, 60 hours a week at least every single week. So it was very demanding just on the day job side. So for me, just getting the property was enough work, but the idea of managing it long term, it seemed very daunting to me. I will say though, that when we transitioned to short-term, we made the decision to do it ourselves. But I think because I’d already built up some confidence to say, well, hey, we’ve already had some experiences, real estate investors. I was tapped into a community of other people who were doing this. Luke and Avery were a big part of that as well, connected me to other investors who were doing it. I was like, okay, well if these guys are doing it, I feel like I can do it too. But I got started with the belief that I didn’t have the ability from a time perspective to really do a good job.

Ashley:
So in our scenario, we had said the person only had their car payment for debt, and the typical American has more debt than that. What is your take on paying off debt versus investing? What should be the priority if you are in that situation? Tony, let’s start with you.

Tony:
Yeah, I think it’s a very, very personal choice because I think everyone’s risk tolerance is slightly different. There are some people who are just like, I want to be able to sleep at night, and the only way I sleep at night is if I have no debt. And there are other people who are like, I don’t really care about how much debt I have. I’m just going to make more money and it’ll take care of itself. And most people probably fall somewhere on that spectrum. So I don’t know if there’s a one size fits all, but I think you have to ask yourself at what point do you feel good just sleeping at night and is it maybe, Hey, I’m going to pay off all my high interest debt, but I’m going to keep the low interest debt like student loans or I’m going to keep my house payment. And that’s kind of the approach that we took. When we started investing, we had our primary mortgage and we had student loan debt, and the student loan debt was all super low interest and it was very small payments. I was like, yeah, I’ll let that sit. Let’s go build the real estate portfolio. So I think you’ve got to ask yourself where you fall on that spectrum and then make the decision that aligns best with that.

Ashley:
Did you pay off your student loans or have you still just been making the small payment yet?

Tony:
No, no, they’re still rolling.

Ashley:
It’s probably a better interest rate than what you’d pay on a house. Right now.

Tony:
They’re like 1.8% or something like that. So it’s like they’re all federal loans, so they were all super low.

Ashley:
Okay. And then Luke, what is your opinion on that? Should you tackle the debt or should you start investing?

Luke:
Well, first of all, I would like to say I’m very proud of this hypothetical candidate here. I’m going to call him Steve. And I like Steve. I think Steve’s really cool and the fact that he’s just got a car payment, that’s impressive. If I was a single lady, I would go on a date with Steve because he’s rocking it and I think he’s doing a lot of things right. He’s making some good choices. But for me personally, what we’re talking about here is Kiyosaki versus

Tony:
Dave Ramsey.

Luke:
Ramsey, thank you. I got caught up in the Steve thing there, but it’s Kiyosaki versus Ramsey and it doesn’t need to be versus right now, of course in the real estate world, we’re all kiyosaki’s and Ramsey, as much as he says that buying real estate with loans is not good. He sure owns a whole lot of real estate. So I think I’m doing a little of both, but I’m taking that money that Ramsey’s teaching me how to save all those pennies that we’re teaching how to save on the Ramsey style of thing. And I’m using those to do exactly what Ramsey says not to do, and that’s to put debt on real estate. And I’m going to do that until I get to the point where after many years of kicking and screaming and fighting that I have, I’m to the point where I can maybe hopefully start paying some of these things off.
And that’s a little bit later on when you get some gray hairs like yours, truly over here. And it also depends on market cycles. There’s times where you need to be buying like crazy and putting as much debt as you possibly can. And then there’s other times where maybe it’s better in market in the market cycle to look at maybe paying one or two off. I would recommend starting with whichever ones you owe the least amount of money on. Although the gut instinct is going to be the pay off, the one with the highest interest rate. To me it’s better to start with paying off the lowest loan amount. And sometimes that can be painful. If you’ve got an 8% loan and a 3% loan and that 3% loan’s only got like 50 grand on it and you had a good year or whatever it is. These are all good things to look forward to and the future when the rents are really crushing it. And of course you keep that day job working hard and all that kind of stuff, but to me it is saving the money and penny pinching and using that to go and place debt. It’s kind of a hybrid type of a thing.

Ashley:
So before we wrap up here, Luke, I have one final question for you. What would be a piece of advice that you would tell your younger self if you were a rookie investor starting over again?

Luke:
It is not going to happen. You can’t tell young Luke anything. No matter what you told young Luke,

Ashley:
You can still tell him, but he doesn’t listen.

Luke:
No, he’s not going to listen at all. He’s going to say, Hey, old man, you’re full of junk, man. You don’t know what you’re talking about. And that’s exactly how I got to where I am. So I see a lot of that in my daughter. She’s got a lot of that fight and kick and screaming her and I love it and I don’t encourage it, but at the same time it’s like, I know she’s going to use that for good and it’s going to be wonderful and use it to your advantage if you’re that same type of person. A lot of us are in real estate because you got to kick and scream. There’s nothing easy about this. You got to work hard, kick, scream. And like I said, I would love to go back and tell him some stuff, but there’s no way he’s going to listen.

Ashley:
And Tony, I was just thinking you haven’t actually done this in a while, but for all the OG listeners, back when we first started the podcast, you used to tell us all the time, different inspirational quotes you would tell your son or lessons learned that you would tell him. So looking at this as, what would you tell Sean if he was just getting started in real estate investing?

Tony:
That’s a good question. I think the thing that I would tell him is probably what I told myself as we really started to ramp up. It’s to focus and build expertise on one thing, because I feel like especially just entrepreneurial people, especially when you’re younger, the shiny object syndrome is such a strong urge where you just want to go out and tackle everything. But I feel like you end up spreading yourself so thin. And when we made the transition in the short term, I told myself, Hey, we want to focus on this one asset class for five years after that five year timeframe, then cool, we can go out and experiment and do some new things. And we’re actually reaching that five-year milestone this summer. It was August of 2020 when we bought our first short-term rental. So now it’s like, okay, I’ve stayed true to that initial goal and we’ve built up and we’ve got our first hotels, we’ve done what we want to do in this asset class, and now I feel okay saying, this is good, this is where it’s at. Let me go explore some new things. So I think the biggest thing I would teach or try and teach to him, because like Luke said, I don’t know if he’s going to listen, even if I tell him, would be to really focus in and build some expertise in one area.

Ashley:
Well, listeners, you or Tony’s looking for his next shiny object. So if you have something that is going to entice this syndrome, makes you apply to be a guest in the show at biggerpockets.com/guest so I can help Tony pick the next strategy he’s going to go after. Well Luke, thank you so much for joining us today on the Real Estate Rookie podcast. We really loved having you come on as an expert to share your experience as to what you would do if you were a rookie investor getting started right now in today’s market. Can you let everyone know where they can reach out to you and find out more information?

Luke:
Absolutely. I can’t thank you enough, and I agree with Tony, man, there’s too many people hopping from one thing to another in the whole entrepreneurial world. You got to focus on one and stick with it, and then of course you can move on at a certain point. But very grateful, extremely grateful. I am so grateful for BiggerPockets and the wonderful things that it’s done for me in my life and all the learning I go back to. I started BiggerPockets, episode 87 was when I first started investing in real estate, and it was the first podcast I ever listened to. Huge fan. And watching Tony’s Journey’s just been absolutely amazing. I don’t know how much I can kiss your hands right now, but I would love to do that as much as I possibly can. Thank you. Thank you for everything short-term shop.com, thus short-term shop.com. I’m Avery, Carls husband, better known as Avery, Carl’s husband. She just had a new book come out on BiggerPockets called Smarter Short-Term Rental just recently. So please pick that up and check it out. And you can find us anytime at the short-term shop.com.

Ashley:
Everyone just went, ah, that’s who he is. Okay, that’s this. That’s

Luke:
Who that dude is. Yeah.

Ashley:
Thank you guys so much for listening. I’m Ashley. He’s Tony, and we’ll see you on the next episode of Real Estate Rookie.