Finance Friday: Single Mom Making 20% ROI on Detroit Rentals

Mindy:
Welcome to the BiggerPockets Money Podcast, show number 204, Finance Friday edition, where we interview, Alicia, a single mom with a very average income and a real estate investor, who is looking for ways to speed up rental acquisition.

Alicia:
I do tend to take a pretty conservative approach. One is knowing that I don’t have a very large monthly income to be able to pull from if something goes wrong. Also, as a single parent, I have two people who depend on me, and I don’t have anyone to depend on for myself. So, in order for me to be the most stable, I’m going to have to work harder and smarter, and not necessarily faster.

Mindy:
Hello. Hello. Hello. My name is Mindy Jensen, and with me as always is my kitty cat owning co-host, Scott Trench.

Scott:
Oh, I’m really feeling these new interests, Mindy. Thanks for coming up with that.

Mindy:
Scott and I are here to make financial independence less scary, less just for somebody else, to introduce you to every money story, because we truly believe that financial freedom is attainable for everyone, no matter when or where you’re starting.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, or start your own business, we’ll help you reach your financial goals and get money out of the way, so you can launch yourself towards those dreams.

Mindy:
In the spirit of your kitty cat owning co-host, of my cat owning co-host, I want to give a shout out to Feline Good Social Club in Long Beach, California. We were just there. My daughters wanted to adopt every single one of those cats. So, if you’re in Long Beach and need a cat, go to Feline Good, you can play with their cats for like $15 for an hour or something. It is money well worth it. Anyway, okay.

Mindy:
Today’s show is Finance Friday, and we’re going to talk to Alicia. And Alicia is a single mom who has made some pretty big strides in the last few years. And her finances are in a good place. She’s in that slug period, but she’s getting to the very top of that slug period. And pretty soon she’s going to have a really, really great financial life.

Scott:
Yep. And I think she’s doing a lot of right things and she has chosen a path that’s going to require her to hustle very hard for the next couple of years, but that may reap a lot of dividends over the next three to five years. And so, we’ve had some interesting stuff here on Finance Fridays, where you probably have heard us in the past have discussions about how to simplify people’s financial positions and make sure that they’re able to have a simpler or a lower stress environment. Not Alicia’s choice on this show, she wants to be aggressive and go all out. And so, we had a fun time crafting a strategy that I think gives her the best odds of realizing that benefit. Not going to be the easiest path, but I think we’ll be a pretty… I think she’s got a good shot with this.

Mindy:
I think so too. Before we bring in Alicia, should we about what our attorney makes us say? The contents of this podcast are informational in nature and are not legal or tax advice. And neither Scott, nor I, nor BiggerPockets is engaged in the provision of legal tax or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal tax and financial implications of any financial decision you contemplate.

Mindy:
Okay, let’s go talk about Alicia’s financial situation. On today’s show, we are joined by Alicia, who is a single mom, who works two to four jobs, including one that is a professional saloon girl. I’m super excited to hear more about that. She’s also a real estate investor with a different look at financial independence. She doesn’t have a FI savings number. She has a FI passive income number, which I think is a really important distinction. And she’s doing it all, in her words, on a very average salary.

Mindy:
Alicia, welcome to the BiggerPockets Money Podcast. I’m super excited to share your story today.

Alicia:
Thanks for having me, you guys, I’m really excited to be here.

Mindy:
This is going to be so awesome. First of all, what’s a professional saloon girl? Because that sounds like a lot of fun.

Alicia:
Okay. So, I am based out of Fort Worth, Texas, and of course, lots of different conferences and meetings, and things, parties. And when people come to Texas, they want the Texas experience. So, that also involves the old West kind of thing. And I got involved with a company having a theater and performance background as a professional saloon girls. So, we do photo ops. I can run a mechanical bull. We also teach line dancing, things like that, to help for corporate events and things. So, if you’ve met me inside of my costume, my name is Miss Demeanor.

Mindy:
I love this.

Scott:
All right, that’s awesome.

Mindy:
Okay. So, two to four jobs is not real specific. What does two to four jobs mean?

Alicia:
So, I have my main full-time job. I work for a dental media company in business development and partnerships. I also work part-time within the owner’s personal dental practice, handling anything from calls, marketing, things like that. Those are the two main jobs that I do, that typically takes anywhere from 60 to 65 hours a week. And then I also have supplemented both with the saloon girl, as well as professional singing in the area.

Mindy:
Oh, wow. Okay. Well, what do you need our help with?

Alicia:
So, my biggest thing is that right now I’m just getting started in real estate investing. And I’m investing in a market that a lot of people are scared of. They shy away from. And that is Detroit. I know a lot of people are like, “No way.” They think it’s a war zone, but that’s where I moved from, whenever I moved back to Texas, which is my hometown here in Fort Worth. But I know where to look in Detroit, where the path of growth is, where those neighborhoods are, that can be beneficial or not. And so, for those people who know the opportunities, there’s great cash flow.

Alicia:
What I ended up doing in order to afford that was taking the money from the CARES Act that you had allowable up to a hundred thousand dollars. I took the maximum out and purchased a duplex.

Mindy:
From your 401(k).

Alicia:
Correct. It was from the IRA. But I did that and took that draw on the CARES Act, so that I could purchase in cash to get my real estate investing started.

Scott:
Okay. Well, great. So, the challenge is, how do you scale this? How do you continue to advance your real estate business and move towards your passive income number? Is that the challenge we’re going to be thinking about today?

Alicia:
Absolutely.

Scott:
All right. Well, let’s get some of the other information out before we go and tackle that. So, let’s build a profit and loss. What’s your income and expenses, and your monthly cashflow that you’re able to generate?

Alicia:
So, salary one take home is about 4,180 per month. Then my second job within the dental office, I usually bring about 750 a month. So, total take-home is about 4,930 per month.

Scott:
That’s great. And what about your expenses?

Alicia:
Regarding my expenses, my mortgage payment runs 705 per month. I do my own taxes and insurance escrow myself. That’s another 525 a month to 550. I’ve been pooling 550.

Scott:
When you say mortgage and expenses, are you talking about your primary, and each of your business as a completely separate entity, or is this including your business, your real estate portfolio?

Alicia:
No, this is businesses completely separate.

Scott:
Perfect.

Alicia:
So, this is just my personal mortgage is the 705.

Scott:
Love that. Thank you.

Alicia:
For food, I usually do about 550 a month. I do have two teenagers plus myself. So, I’m essentially feeding three adults, that includes our dining out budget, usually I do 400 for groceries, household, incidentals, and then another 150 for eating out. We don’t always use that. So, lately it’s gotten moved more towards our regular grocery budget.

Alicia:
As far as the transportation, I only spend about $50 a month on gas because I’m working almost entirely from home now. So, that’s a nice savings there. I do have sinking funds for a lot of things. So, if you’re not familiar with sinking funds, I just set a little aside each month in a separate account, so that whenever those things come up, I have the funds ready. I do that with both insurance and tolls. So, I’m doing about 125 a month for insurance, gas, tolls, that kind of thing.

Alicia:
As far as my miscellaneous expenses, my doctor health insurance, things like that, because I don’t get benefits through my work, runs about 440 a month, life insurance of 20. Hair blow money, miscellaneous usually accounts for about another 50 to 60 per month. And then I do ballroom dance as a hobby and for exercise. And that’s about 200 a month.

Scott:
All right. What is that total for the expenses come down and how much are you able to save every month on average?

Alicia:
So, every month I have about a thousand dollars a month leftover.

Scott:
To me based on what you just said there, you seem like you’re in complete command and understanding of your expenses on an average basis. You really have those numbers dialed in and seem to have a pretty solid budget here. Do you think that there’s room in the expense category? Is that where you’d like us to focus? Or do you think that the opportunity to get that passive income is going to come from other areas?

Alicia:
I feel like the passive income will be from other areas. I really, I do fine tune my budget. I try to be really careful on those. One thing that I’m trying to strategize that I could definitely use your help with is whether or not to pay the CARES Act money back, and then be able to use those funds. Or if I should take, I’m currently processing through a cash out refinance for that rental property, now that I’ve had some months of rental income, and do I reinvest that money and continue to let it grow, or do I pay that back, so I’m not getting the tax hit? And then I can take that $20,000 or so from taxes that I paid to apply to my next property instead.

Scott:
So, you’re saying, you pulled out a hundred grand, penalty free, but you’re going to owe taxes on the distribution of that a hundred grand. And so, now you have to make a choice, “Do I pay back the a hundred grand in my 401(k)?” And let’s call the tax is 30 grand on that. Do you cash out refi your rental properties and plow as much as you possibly can back into the 401(k) to avoid the tax bill with that? Or do you pay the tax bill and continue on with the rental property investing? That’s the question you’re asking, right?

Alicia:
Yes.

Scott:
Interesting. Let’s get a little more information before we tackle that problem, because I think it’s a great question, and wow. But let’s go to your assets and liabilities here. So, how much cash do you have? What other investments do you have? What kind of debts do you have? That kind of stuff.

Alicia:
Okay. So, as far as assets, I have the rental house, which I purchased for 105, but because of the market, it’s now worth 135. That’s great because I’m actually able to cash out the full amount that I had paid for that purchase price. So, that one, like I said, is valued at 135. I have my personal home. I owe 170 on a 30 year. I just refinanced that one back out in November. It’s at 2.75. I think current value is probably around 275. I’m not in a position because of DTI to be able to pull that out for a HELOC to get into other rentals through that avenue. I do have an IRA worth a little over 55,000, that’s after pulling that additional money out. And I of course, have my emergency fund set aside. That is about 21,000.

Scott:
Okay. Can you walk through the primary number one more time? And you said $175,000 mortgage at a 275 valuation.

Alicia:
170 on the mortgage, and 275 on the value.

Scott:
Okay. And you said for some reason, you’re not able to get a HELOC as an option right now, is that right?

Alicia:
Right. I wouldn’t be able to pull much out because of my debt to income ratio. I don’t have enough rental history, because I just purchased this rental to be able to apply that to the additional finances.

Scott:
But you can get a mortgage on the rental. You could cash out refi, but you can’t get a HELOC. Okay.

Alicia:
Correct.

Scott:
And do you expect that situation to continue for some time here? Or do you think that problem will go away with more rental history, like early next year?

Alicia:
I’m hoping that will go away. So, maybe not next year, I’m projecting into the following year, because I want to make sure that I have sufficient funds and that I’m really doing the best by my business first, before I start trying to pull personal money into the business money as well.

Scott:
We didn’t talk about the rental properties income, I don’t think. How much is that producing right now?

Alicia:
So, after expenses CapEx, all of those, it’s going to bring about $1,100 per month.

Scott:
When it’s all cash, without a mortgage.

Alicia:
No, this is after a mortgage.

Scott:
After. So, what is it bringing in right now before you refi?

Alicia:
It’s bringing in 1700.

Scott:
Okay. So, you have 1700 a month. And so, your cashflow, are you saying that you’re saving $1,000 a month leftover before this? So, you’re really bringing in 2,700 a month right now at cashflow.

Alicia:
Correct.

Scott:
And after you’ve refied, the 1100, you think?

Alicia:
Mm-hmm (affirmative).

Scott:
Okay. So, you’re generating cash at a clip of $25,000 a year, give or take some of that on annualized basis. And you have a net worth in the ballpark of 350, somewhere in that ballpark range across a number of these assets. Is that-

Alicia:
Until you get to the debt, unfortunately. So, that brings it down. As far as my debts, I have a credit card with about 5,600, 3,400 of that is at 0.9% till October. So, I’m trying to channel more money to finish that one off. The remaining is at 0.99% until April. That was for some repairs on my house. I like Mindy M doing the live-in flip. So, I’ve gotten the inside done, which was a challenge, but now I’m at the point where as things are coming up, and that was one that I just wasn’t ready to pull out money from my emergency fund. And given the interest rate, I went that avenue.

Alicia:
I do have a car that is IO 15,857 on, values about $20,000. I bought it last year. And it’s at 0%. Then I also have the clunker of a student loan. That one is 48,000, and that’s at 4.6%. But right now that’s being in deferment. So, my overall savings rate would decrease by about 375 a month when that kicks back in.

Scott:
All right. So, you are a hustler here. You’ve got a lot going on. You’re clearly, you’re working four jobs. You’re clearly, it sounds like listening and learning, and absorbing real estate information to some degree. And you’re thinking about using all your advantages that you have, the live-in flip, the expertise of the Detroit market, all that kind of good stuff. I think this is great. And I don’t think you’re going to give us any easy questions here.

Scott:
So, let’s get to the fun stuff. So, the first, the biggest question you have right now is, when do you have to pay back the a hundred thousand dollars in order to avoid the tax penalty? Do you have a deadline?

Alicia:
So, yeah, with the taxes, you’re able to spread it over three years. So, I’ve already paid the first one, which was a painful bill, but because I also qualified for a lot of the stimulus program. It ended up being almost a wash. So, that was a blessing in disguise there. But what I can do is I can take that over the next three years to space out that hit. But if I go back and pay any amount, I can always amend my return to collect the difference. So, that’s where I could do it, is I can spread it out over the three years and grow my business that way, or I could pay it all back and file an amended return.

Mindy:
So, I need a little bit more information. First, you are in the process of a cash out refi on the rental property in Detroit?

Alicia:
Correct.

Mindy:
How much are you going to get from that?

Alicia:
105.

Mindy:
105. Okay. So, you could pay this off completely?

Alicia:
Mm-hmm (affirmative).

Mindy:
You could pay taxes or there’s a third option, you could pay some of it back and pay taxes on some of it that you have taken. And while you can spread it out over three years, you can also just push it to the farthest year, if you want, and pay taxes on a hundred thousand dollars, extra down that road, which is, if you save for it, I don’t know, maybe that’s a good idea, maybe that’s not. This is really interesting. So, what would you do with that 105,000, if you didn’t pay it back, you would buy a new rental property?

Alicia:
Correct. Possibly two, because I’ve found a commercial lender that I could work with that would be able to take 25%. So, I’ve been looking at possibly a quadplex that could increase my cashflow, or maybe doing two more duplexes, something along that line.

Mindy:
Okay. And would that also be in Detroit?

Alicia:
At the moment, I’m also looking for some opportunities here in the Dallas Fort Worth Area.

Mindy:
So, Dallas Fort Worth is a lot more expensive than Detroit. And with your local knowledge of Detroit, you’re right, you can make money in Detroit, if you know where to look, and you can lose a lot of money, if you have no idea, and you’re just going willy-nilly. I like the idea of buying another rental property, especially if the numbers are anything close to what you’ve got now. That’s the big question. Would they be anywhere close to what you’ve got now? Because you have a duplex that’s cashflowing 1700 after all expenses. Oh I’m sorry, 1100 once you refinance. So, I mean, that’s nothing to sneeze at. That’s an extra thousand dollars a month. I’ll take that.

Scott:
Yeah. That return, that’s a seven, you put down a hundred grand on that place. You said you bought it for 105. Let’s round to a hundred. If you’re really bringing in 17,000 on… I’m sorry, you’re bringing in 17 times 10 or 17,000, plus another 34. You’re bringing in $20,400 in cash flow on a hundred thousand dollars investment. That’s close to a 20% return without any appreciation. And you generated a 30% appreciation over the last year on this property with that. So, if you think you can sustain that, that blows your 401(k) return completely out of the water. There’s no way that you can reasonably expect that from the 401(k) in comparison.

Mindy:
100%.

Scott:
You may not be able to expect that type of return on future investments. That sounds like a home run deal that you got on this one. So, I think you’re going to have to make that call, but if you think you can get in that ballpark, I don’t see how a reasonable person could say that the 401(k) is better than that, if you think you’ve got additional opportunities that are close to that. Is that what you’re thinking?

Mindy:
Remember about the tax hit that she’s going to have. It doesn’t sound like you’re in a super high tax bracket right now.

Scott:
She will be, if she keeps buying properties like this.

Mindy:
Well, yeah. Hey, that’s a good problem to have. I like paying taxes. I like writing checks to my taxes. That means I’m making money. But yeah, so if it’s worth 135 now, are you able to find other ones that are… I mean, what is that? $70,000 a door?

Alicia:
Mm-hmm (affirmative).

Mindy:
Can you get anywhere close to that in Texas?

Alicia:
There’s a few places that I could probably get closer, but even the 1% rule is really difficult. I live in an upgraded starter neighborhood right now, and we just had one go for 35,000 over asking that. It’s just not realistic for even doing a good BRRRR right now, which would be a different question to have.

Scott:
It’s great for a live-in flip.

Alicia:
Yes, which is what I’m currently doing.

Scott:
This is good news for you. This is not bad news. Yeah.

Alicia:
Absolutely. But I would like to look, my son’s going to graduate from high school in two years. And so, I’ve been scoping out where my next live-in flip is because I’ll still have one more at home. And I would like to take those two years to do it again and rent this place out.

Mindy:
I like what Scott’s thinking about, you’re not going to get a 20% return in the stock market. And even paying taxes on this hundred thousand dollars, it still seems like investing in a rental that’s kicking out that kind of cash would be the better option. And I wouldn’t be real quick to pay back the loan, and may even push that tax bill to, what are we in? 2021, so you paid taxes on it for 2020. So, don’t pay taxes on it for 2021. Pay taxes on it for 2022, which come due in 2023, that gives you a lot of option. And you’re not paying any interest on that tax liability for the loan for a hundred thousand dollars from the 401(k). Right?

Alicia:
Correct.

Mindy:
So, and that’s-

Scott:
Yeah. I think the big thing is what’s the spread between the investment alternatives, right? And for me, I think that I would not be comfortable. I do not believe that I would not liquidate my 401(k) and go and invest in real estate, because I don’t think that I can get enough of a spread to justify that risk profile, for me personally. It sounds like you’re at a completely different spot, because you’re willing to live-in flip and you have markets that you think you can actually access and invest in reasonably based on your circumstances, where that spread is very, very large. And so, that I think changes the math based on why I wouldn’t be doing it, but maybe why you could or should potentially be doing that.

Scott:
I think that as far as paying the taxes, you’re going to pay the taxes, whether you pay them now, or you pay them in 40 years. And when you start withdrawing from this, you’re going to pay the taxes on that. So, it’s about the after tax liquidity, regardless of how that’s going to go at the end of the day. And it could be that you’re in a lower income tax bracket based on what you’re doing now, than you will be at retirement, if you keep investing in real estate and thinking about how to stockpile a lot of assets with this. So, it may still be good arbitrage at this point, if you think tax rates are going to increase over 40 years, or if you think you’re going to be wealthy over the next 30, 40 years with that.

Scott:
So, I think that that’s where you’ve got a number of things going on with this. I don’t know. But what’s your reaction to all of this? What’s your lean and has anything we’ve said helped you, or given you some things to noodle on?

Alicia:
Well, Scott, I would definitely say, yes, I expect my income to increase. That’s what I’m working towards. And yes, I also expect taxes to increase. So, I’ve been leaning towards not paying it back unless I do, if I were to do a flip or something where I could have a larger infusion of cash to do that, but I’m leaning more towards re-investing that just because as you both said, the returns that I’m getting, it would be much more valuable to use those funds to create more cashflow for myself, than to put it back in and rest on what the market is doing.

Scott:
Okay. So, I think that that’s a reasonable lean from my perspective. I mean, the next challenge here, the next question is, if you cash out refi your Detroit property and you take the a hundred grand, and you leverage that again, and you put that down as a 25% down on either one or multiple properties, you’re now creating a dramatically different risk profile for yourself, and potentially hastening the passive cashflow because you’re buying more properties enabled arbitrage that.

Scott:
I think the next question you got to ask is how much risk you’re willing to assume in order to move rapidly towards your goal. Right now you’re in a position where you’re accumulating $25,000 annually with this. And if you put that down as 25%, you’re going to go from about $170,000 in debt to $470,000 in debt with the mortgages. And you’re going to have an equity spread there. What’s your comfort level? And what’s your tolerance, I’d say for risk? Do you want to get there really quickly and be willing to lever up, or do you want a more sustained approach over a three to five year, or five, seven year period?

Alicia:
I’ve learned that patience is key for a lot of things. So, while I would love to be able to scale quickly, I’m also going to be incredibly mindful of what I do and how I do it. I’m a big systems and processes person. So, I want to make sure that with the first few rentals that I have great systems and processes in place. And also to make sure that I have enough emergency funds for my business as well. I don’t want to over leverage myself to, if we see 2020 happening again, I don’t want to be on the short end of that one.

Alicia:
And right now I have, my duplex has half section eight rentals. So, I do have that guaranteed income aspect, but that may not always be the case. So, I want to make sure that if everything falls apart, and in my life I’ve seen that things will suddenly fall apart, so I want to make sure that I’m prepared for that as best as I can, to not only be able to weight it out, but to myself in an even better position for the people who didn’t, to snatch those deals up when they come.

Scott:
I think that’s really wise. So, that says if you’re going to pull a 100K out, what is your… Mindy, you have a question, I think.

Mindy:
Yeah. I just typed in our notes. What does her business emergency fund look like? Because we have a personal emergency fund and you have very intelligently and very deliberately separated personal from business. So, do you have a business emergency fund at all?

Alicia:
I have a small business emergency fund. It’s got about a thousand dollars in there right now. Mostly because I just started, the house was gutted from top to bottom, new roof, windows. So, my capEx is really relatively low, and I’ve just started with new tenants back in March. So, I really haven’t had enough traction to be able to amass much of an emergency fund. Part of what I would be interested in doing is whenever I do that cash out refinance is to possibly get two more rentals, but setting aside a chunk of that to really have available as my business emergency fund, so that that pot is full as well.

Scott:
Yeah. I think that’s really wise. I like that a lot. I think that’s a great approach. Remember, you’re going to owe 30%, 35%. I don’t know what the tax rate will be for you, but based on all that, but you’re going to owe 30 grand, maybe it would be a reasonable ballpark assumption over the next three years and back taxes.

Scott:
So, I wouldn’t forget about that with the cash out refi, making sure that you have some of that set aside or that you’re somehow ready to take care of that overall. And then you take a little bit of that in addition to fund your business emergency fund, and then invest. I think that’s an appropriate or conservative way to think about structuring this stuff with that. That will eat into your returns a little bit. But I think that if you’re willing to set up, you’re going to invest in building systems for scale here. That’s 50 grand, if you save 30 for the taxes, 20 for the emergency fund, 50 to invest. And you’re accumulating 25 a year. You think you will based on the cashflow from this rental plus your personal saving. That’s a strong position over the next three to five years. You’re going to be buying a property or two every year and getting into a pretty good flow there, I’d imagine.

Alicia:
I do tend to take a pretty conservative approach. One is knowing that I don’t have a very large monthly income to be able to pull from if something goes wrong. Also, as a single parent, I have two people who depend on me, and I don’t have anyone to depend on for myself. So, in order for me to be the most stable, I’m going to have to work harder and smarter, and not necessarily faster. So, that’s been my strategy going forward, is to not put my personal liability at risk, as I’m trying to grow this business that will hopefully be able to get me out of the rat race.

Scott:
How are you going to qualify for the mortgage then? Are you doing asset based loans? Are you personally guaranteeing the mortgages like with a conventional loan?

Alicia:
No. So, it’s a commercial loan, it’s based on the asset itself.

Scott:
So, you structured this as an LLC, and you’re probably not getting the same terms that you would be getting with a 30 year conventional.

Alicia:
Correct. That’s the disadvantage. But again, because of my DTI with the student loans versus my current income, and not having that rental income available for most places to be able to add to the conventional loan, I felt like that was the best way to be able to pull my money out and be able to leverage myself a little bit.

Scott:
What’s a good position for you in three years from now or five years from now? What’s a target you’d like to be aiming for there?

Alicia:
So, overall as Mindy said, my goal is not a number sitting in the bank. I’m focusing more on a FI number that has to deal with cashflow. My cashflow number that I’m looking for is about 8,000 a month, which would be enough to give me the lifestyle that I would like to have. Still, I don’t have to go over the top.

Alicia:
The nice thing about having a mid income is you don’t have the persuasion of being part of keeping up with the Joneses. I drive the Corolla, and I live in my live-in flip, and that’s totally fine for me. I would like to use it for travel or to be able to create more experiences for myself. Ultimately, I’m trying to buy some time freedom. So, that 8,000 number would be what would be able to do that for me as a single person.

Scott:
I think that that’s a high number to attempt to strive for, for three years, but very realistic over, more like five to seven plus years with that. But I think, maybe not with the Detroit properties and these kinds of things, if you really know that market, but at a high level, it seems like that’s, probably a little bit of a long five year plus kind of-

Alicia:
Definitely five. I’m looking more five to eight.

Scott:
Yeah. But what about other things like your student loan debt and your car payments, and those types of things. You’re four and a half years left in the car loan, I presume, is there a goal to be without those debts, or are you thinking about those as part of the process here as well?

Alicia:
I am. Initially, I was trying to go to school to become a dentist. That did not work out, just limited by only getting to apply for one school, which is what led me into focusing more on real estate. But I do have additional student loans, I had to take out in order to do those prerequisite courses and things. So, it’s definitely something that I have a plan that I want to have everything paid off within three years, ideally. I do want to take some of what I’m earning from those rentals to be able to add to that, to hopefully speed that side up. And that would also help me with my DTI to be able to get out, to do another live-in flip. So, I just need to be able to position myself well on the personal side, as well as the business side.

Mindy:
Well, I think you’re positioned pretty well on the personal side. Every time we do these Finance Fridays, I have, I want to just caveat this. This is suggestions to Alicia, specifically, because of her specific situation. But you have section eight in half of your duplex. So, what does that rent for versus what your mortgage payment is going to be? Does that cover it or come really close?

Alicia:
The section eight exceeds. So, the duplexes that I’ve been looking at are three bedroom, one bath. So, those get a lot more stable families that will stay longer. And it also means that the section eight rents increase fairly significantly between having a two bedroom unit versus a three bedroom unit. So, even having half of it will more than pay for my mortgage itself.

Mindy:
So, that seems like a great way to mitigate your risk is buying duplexes or quadplexes, where at least one of the units is paying the entire mortgage. Essentially, the other rent is gravy. Having a fourplex with one or two section eight tenants who pay the entire mortgage, gives you more free space in your head, I believe. I don’t have any section eight tenants, but I believe the government didn’t miss any of their rental payments during COVID. Whereas, I don’t know how to say this, regular people missed some payments if they had lost their job or had COVID, or all these extenuating circumstances. So, that seems like a really safe way to, to hedge your bets with these future rental purchases.

Mindy:
I don’t love the idea of 16 units. And that starts to take up some of your time. Unless, do you have a property management company in Detroit?

Alicia:
I do.

Mindy:
Okay. Okay. So, that’s a little bit better. Yeah, lots to think about here. I really liked the idea of section eight housing.

Alicia:
It does come with its own risks as well, because typically you can’t do a deposit or it’s a smaller deposit. But that also means that I’m leaning more towards having little bit higher capEx for repairs and things afterwards, knowing that that money is not sitting there available for me.

Alicia:
So, I do tend to be pretty low risk. I’m willing to take risks, but I make very calculated risks. And my security level and finances, the threshold is pretty high. I need to really feel like my my groundwork is really well laid in making those financial decisions.

Mindy:
What does a well-funded emergency fund for the business side look like to you?

Alicia:
I would say at minimum, I’m looking for three months worth of expenses for every single property in there, just as a start. Ideally, six months just like I do for myself on the personal side. Plus an additional four, I would say at least 10 to 15 as a slush fund for a major system breaking, and one something like that as kind of a baseline. So, altogether probably about a 20,000 to 25,000, I think would be a good start for an emergency fund for my business.

Mindy:
Okay. So ,I can see $135,000 duplex, 25% down, and then another $135,000 duplex, 25% down, and still having the ability to have that $25,000 emergency fund fully funded.

Scott:
Well, she has got to hold some back for the tax liability.

Mindy:
Well, so that’s like what? $30,000 for each property. That’s 60, and then another 25, that’s 85. And then you’re saving a thousand dollars a month. They’re bringing in a thousand dollars a month, personally, and a thousand dollars a month per duplex. So, that would be $3,000 a month per duplex. I think the tax, I mean, that’s all I would do right now, given your numbers. I think that’s a nice moderate level of risk with still making intelligent decisions based on these numbers here, if you can get a duplex similar. And again, you said your duplex was gutted completely. These numbers will change if your duplex does not have a new roof, a new systems and new appliances, and all the things.

Scott:
I agree with Mindy, with the big caveat, that that’s all predicated on your ability to continue finding these smoking deals and in these areas that are generating these great returns. If you feel like that is no longer a true, that changes, I think the approach to a certain degree. And that comes back to a live-in flip, maybe putting as much as possible back into the 401(k), those types of things. But if you think that the deals are this good, then I think that I completely agree with Mindy.

Alicia:
Okay. And just to clarify, so I already paid one third of that tax bill in the 2020 taxes. So, that was about 8,500 or so. So, the remainder I would have would be for those other two years. So, if I choose not to pay it back, I have a little bit smaller amount due, overall, because I’ve already paid that first year.

Scott:
Okay. So, you need 17 grand then to reserve for that tax.

Alicia:
Yeah. I would say 17, 18, somewhere around there.

Scott:
Okay.

Mindy:
I will say that materials costs have skyrocketed, and you’re in the middle of the live-in flip. You probably know this too. But I would not go by last year’s numbers on material costs to estimate any rehab going forward. I would get actual quotes. And so, when you find the $135,000 rental, that is everything new, except a roof. I used to get roofs for $5,000, and now they’re like $15,000 or $20,000. So, that’s a big difference when you’re really trying to keep it tight. So, I would continue to look for the duplexes and maybe a quadplex in the Detroit area with the caveat that they are similar to this one. I actually really like that and wish I knew somebody in Detroit.

Alicia:
They’ve got some new schools and things opening up, trade schools in the area. So, getting in within a few blocks of those, you have a constant influx of students moving into the area as well. So, that’s a great perk.

Scott:
If they need any free training on construction, they could work on your property.

Alicia:
I like how you think, Scott.

Mindy:
I was going to suggest, fly out there and talk to all the people at the trade schools like the intake, what is it called? The enrollment staff, talk to them and say, “Hey, I’ve got this really great property right near you. I would love to make a deal for your students.” And then just, slide a deal.

Scott:
Well, I think we’ve really gone deep into this area about the a hundred grand and whether to repair or not. Do you feel like you have further questions there or are there other topics you’d like us to think about or cover?

Alicia:
No, actually, you guys, exactly what I was thinking as far as my next move. That’s exactly what I saw for myself as well as using that to revamp and keep growing my business. Part of my reason for hesitation is because, sometimes I feel a little bit unsure on my financial steps, because for many years I did not have the opportunity to make financial decisions for myself or for my family. And so, that can oftentimes put a lot of hesitation. Second guessing myself, even though I know I’m smart, I know I’m capable, making sure that I know that I can take those next steps with confidence, and that I have people with additional experience who can come beside me and say, “Absolutely, you’re on track. Keep going.”

Mindy:
I will say, absolutely, you’re on track. Keep going. You seem to have your expenses really dialed in. Your debts are what they are, 0% on the car. I wouldn’t pay a dime of that early. The student loans fall into Scott’s gray area of, don’t pay a dime early and pay it off as soon as possible, 48,000 or 45,000 at 4.6%. They are in deferment through October, September?

Alicia:
September to October.

Scott:
I’m hearing you say that you can generate a 20% unlevered cash on cash return in rental properties in Detroit right now with your money with leverage that might be even greater, right? Assuming no appreciation with that. So, there’s no comparison between that and the student loans, if you believe that anywhere close to that is realistic on a go-forward basis, which again is the giant assumption that we’re working with. That’s again, that’s the backdrop of everything else we’re discussing here. The moment that you feel that that’s no longer true is the moment that this whole strategy changes in my mind to a different approach with some of those things. But yeah, why would you pay off the student loans when you can put the money into something that’s doing that? That seems like a much more efficient use of capital than paying off the student loans.

Mindy:
Yeah. I was going to say that 4.6% pushes it into Scott’s, don’t pay a dime early category, simply because you’ve got this other better investment. However, can you sleep comfortably knowing you have that debt?

Alicia:
I mean, this is where you say, personal finances is personal. So, to me I have had college student loans since I was 17 years old. I didn’t have a chance to pay off my undergrad and then went back for these additional classes. So, for me it would be the personal satisfaction, but again, I’m not in a huge rush to pay it off. It’s more to set that chapter of my life aside and feel like I have a completely fresh start.

Mindy:
Okay. And that’s something that’s really, that is the personal really emotional attachment. I mean, we sound so detached here, because we’re not talking about our money. I’m perfectly fine with all the mortgage debt in the world, but any other debt I want it out, I don’t care what the interest rate is. I don’t want to have it. So, I can understand wanting an absolutely perfect fresh start. I’m wondering what your live-in flip can do for the student loan debt. If you’re going to make a significant… Boy, I’m at a loss for words.

Alicia:
Profit.

Mindy:
Profit. Yes.

Alicia:
You’re welcome, Mindy.

Mindy:
I quit. If you’re going to make a significant profit from the live-in flip, can you take some of that money and put it towards the next house, take some of that money and throw it at the student loans, and finally wash your hands of that period of your life, and get the fresh start that you’re looking for. What is the timeframe on your live-in flip? I don’t remember what you said. When did you buy it?

Alicia:
So, I bought it December, 2018.

Mindy:
Okay.

Alicia:
And now I refinanced it just this past November. I was trying back in February and of course, COVID shut things down, and then I got furloughed. And so, that mixed up my finances then as well. I’m trying to decide between selling it out right, or renting it out. It’s really hard to give up that low interest rate for even when I could rent it for today. So, I’m leaning towards keeping it and hopefully, finding my next flip would have an ADU or something like that, that I could use to help additional cashflow. But if I could get that HELOC, I don’t think that I would use that towards paying off the student loans, just given the difference in interest rates either. So, they may have to wait.

Scott:
Here’s an option with that, because the primary residence, a big thing, again, the tax tail should not wag the business dog. So, you’re not playing the tax game, but if you keep it as a rental, you still have a couple of years to make the decision, but if you don’t make it in the next couple of years, you may not be able to sell that property and realize the tax-free capital gain exclusion that Mindy is so fond of. That is a huge benefit of the live-in flip, since you’ve lived there for two years. And that’s not an option you’re going to have with a rental property downstream in the same way.

Scott:
And so, I often like the sell, the primary residence rather than keep it, because of that phenomena. And then it sounds like these properties in Detroit are way better from a return perspective than what you’re seeing in Texas. So, you might have an option now or in the future to sell this place, get a really great interest rate on a new primary, which would be your next live-in flip, pay off some of that student loan debt and have another 50, some odd thousand to place towards that, yet another rental property.

Alicia:
That’s a great point. I actually had not thought about that from the tax implications of holding it longer. Obviously, I’m looking at more of how to leverage what I have to get, the next from up the ladder, but that’s definitely something worth considering as well.

Scott:
And that would really clean up your balance sheet, which would really help a lot of your net worth statement, your debts, if you were able to do that, where you now are clean. And you’ve got no student loan debt. You’ve got all that kind of stuff. And so, you could see a reality in sometime next year or entering 2023, where you’ve now got the rental history as a landlord, you’re able to use current and future potential rents towards your income profile, which will help you get access to a lot more financing. You have no other consumer debt besides maybe a little, a small credit card balance, maybe the car note with that, that are in there. And that would really clean up your ability to get financing and sustain your investing approach there to a certain extent.

Alicia:
Okay. Those are great things to think about.

Mindy:
Where are you in the renovation process? Have you completed all the renovations on your live-in flip? You had said you’d done the inside.

Scott:
No live-in flip forever completes them all, until the day they move.

Alicia:
That is the truth. I was just telling, Mindy, my sod finally got delivered today. I’ve lived here two years, and I tried to clean up the weeds. And so, I did the inside prior to moving out of a rental. I got that livable. Mindy, I bet I can beat you on this. There was a lynx living in this house before I moved in, like a bobcat, and three squirrels in the attic.

Scott:
They pay extra for that these days.

Alicia:
Yeah. I didn’t believe that. Right. So yeah, I had to clean up claw marks on the wall. So, that was definitely new for a living for me.

Mindy:
I’ve never cleaned up claw marks.

Alicia:
Yeah. It was a surprise.

Scott:
The links by Captain Raccoon’s. Right?

Alicia:
Well, the squirrels though found a way into the attic. So, I had to evict them first, so no moratorium for squirrels. But I did do almost everything inside to the level that I would feel comfortable as a rental. If I were doing a complete live-in flip, I probably still need to do all three bathrooms to do a full upgrade, that kind of thing. But from the things that I did, the end game, being more of having it as a nice rental. Backyard, I’ve spent a whole lot of money on water. It was the standing water, then it was the gutters, and now putting the water back with irrigation. So, most of those things are done, and now it’s just fine tuning the little things that pop up.

Mindy:
Okay. So, if you were to list it today or tomorrow after your sod done, what do you think you could sell it for? Do you think you can sell it for the 275?

Alicia:
I’m feel pretty confident I can do 265, 275 in that range.

Mindy:
Can you find another house for less?

Alicia:
That gets pretty difficult right now. I’m locked into my current county due to my children’s school. So, I’m up in one small corner of the county. I live in a large one. But really the only place I can look is within about a three mile radius of where I am right now, maybe five miles. So, that really limits the scope of what I can do. I would love to find a duplex or something and house hack that. There just aren’t a lot of options in this area. So, I try to strip things down.

Scott:
That challenge while real is irrelevant to your strategy, because you are going to consider doing another live-in flip, regardless of whether you keep this as a rental or if you sell it. Right? And so, you’re going to have to solve for that problem either way, it sounds like. Is that right?

Alicia:
Yes.

Mindy:
I like to keep an eye on the market and just see what’s coming up. And do you have an agent locally?

Alicia:
I do. I haven’t worked very closely with them, because I’ve mostly been focusing on Detroit as the market that I know well, and knowing that I’m priced out of the majority of the stuff in my area right now.

Mindy:
Yeah. I would just continue to keep an eye on the local market, because you never know when that awesome house is going to come on the market, and you can act on it, and maybe you haven’t found anything in Detroit, so you can’t act on that. And just keep options open.

Scott:
How long have you been intentionally pursuing building an investment portfolio and strong financial position?

Alicia:
So, I’ve always been very financially focused. I’ve always been very good with money. I’m good with financial strategies and much more conservative. I did not get the opportunity to do that so much until after my divorce, which it started in 2016, finished in mid 2017, when I was finally able to make those kinds of decisions on my own. So, I was in a situation where it was an abusive situation. Financial abuse is a component of that. So, for me to be able to make decisions for myself and to set my own financial picture, I always knew what to do and now I have the freedom to do it.

Scott:
No, thank you for sharing that. I’m sorry to hear that with this. That’s awful. But what I’m observing here is what appears to be an immense flurry of investing and asset allocation activity that has occurred in the last two years, mostly it seems. Is that accurate?

Alicia:
Yes.

Scott:
And so for me, that says some really good news, that you’re thinking about a lot of these different types of questions. And I think if you continue with that mentality and approach, without overextending yourself, you’re going to see a lot of results relatively quickly. You look back in three years, you’d be like, “Wow, that was an incredible amount of progress.” Even though it may feel like you’re not making a ton of progress in the immediate short run. Your fundamentals are really strong here. I think you’ve got a lot of good options with this kind of stuff. And it seems like you’re really still just getting started in the early stages of the big chess moves in your financial journey here, which I think is really exciting and something to feel proud of and good about with that, because I think you’re going to be in a good position in a couple of years here. You’re already in a good position. You’re going to be in a really good position in a couple of years.

Alicia:
That’s my hope. So, it took me about the first two and a half years just to have the financial stability to feel like I could make any moves, rather than just the survival strategy that I had been doing, working 16 to 18 hour days for three years. My rental, whenever I moved out was 47% of my take home pay. Yeah, it’s really hard to get get any kind of traction or feel like you get anywhere when you have to do that, just to keep a roof over your head. So, I was really thankful that even though I did not come anywhere close to that, three times the income for a rental that that landlord happened to take a chance on me, and never missed a payment. I was one of his best tenants. I just needed that opportunity to be able to start a new. And as I did that, I was starting to finally get some of those just the smaller goals along the way to be able to improve my financial situation. So, even to get my feet on solid footing still took me about two years of absolute grind.

Scott:
Yeah. I think you’re nearing the top of this grind right now. You’re not quite over the edge where you’re ready to be comfortable with this based on what I’m hearing. You need to probably keep it up for another year or two with this kind of stuff. But soon somewhere in that ballpark in the next one to three years, you’re not going to be the $8,000 quite there, but you’re going to be over the hump, where it’s all going to be downhill, I think, if you keep this up for a little bit longer with this. I think you’re doing all the right things and it’s awesome to see. And man, you are just a hustler from all that I can gather with this, and just crushing it with this. So, congratulations on all that you’ve accomplished with this, and all you’ve overcome. And I’m really excited to see what the future brings for you for this.

Alicia:
Thank you. I’m really excited as well.

Mindy:
Yeah. I see a lot of opportunity for you, and I would just continue to keep your options open. Now that you have options available, you don’t have to just focus on one market. You can focus on or keep an eye on both markets and see what happens. And I see a lot of millionaire status for you in the next, within 10 years. I will say within 10 years you will come back and be a millionaire. I know Scott, you’re shaking your head. You’re going to say less than.

Scott:
Well, I think you’re right. It could be a little less than that. But I do want to say that based on what I’m seeing here, you still have the 48,000 in student loans. You still have the mortgage on the house. You have the tax liability here. You are not in a position to take it easy and rest right now, but you are doing all the right things where if you can grind through it, make a couple of these deals work. And then, over the next, figure out what you’re going to do with this, what your current live-in flip, your next live-in flip. I believe within the next two or three years, you’re going to look back and you’d be like, “Whoa, my is dramatically different right now.”

Scott:
But the way you set things up is you have a lot of moving pieces, which is going to lead to a little bit of stress that you’re going to have to hustle through, I think, but based on what I’m seeing from your overall approach here. But if you can keep pushing through that inflection point, you’re going to be sitting really pretty in probably the next two to three years is what I’m observing about your position.

Scott:
So, I don’t want to sugar coat that about the way you’ve currently set things up. You’re not in a bad spot. You have a good net worth. You have access to liquidity, but you’re setting yourself up in a way that there is a lot of moving pieces, a little bit of leverage, and a couple of things there that is going to require you to make sure that that cashflow from your day jobs, your four day jobs continues. And that you’re continuing to spend very little. So, that will be a little bit of stress for the next, probably two-ish years, I would imagine with the way you’ve set things up. Would you agree with that observation, Mindy, or do you think I’m…

Mindy:
No, I agree with that. I think that now is, like Scott said, you’re like almost over the crest, but now’s the time where a lot of people get complacent, “Oh, I’m doing great. I’m just going to sit back.” And that’s when lifestyle creep happens. That’s when, “Oh, it’s only a dollar,” happens, and you start to slide back down a little bit. So, the intensity that you have shown the last four years, keep that up, and that will continue to shove you over the edge. I don’t even think you’re going to creep over the edge.

Scott:
You do not have to sustain it for 10 years, but you do have to sustain it for another two-ish I think as well.

Mindy:
Oh no, I wasn’t saying sustain it for 10 years. I was saying in 10 years, she will be a millionaire, not grind for 10 years, and then you’ll be a millionaire. I think that you have a very bright outlook.

Alicia:
I do have a tenure goal of being an accredited investor because my end game is that I would like to build a nice rental portfolio. But at the time when I no longer want to manage that or just feeling like I want to diversify myself a lot more, that I would like to look at more syndications and make it truly much more passive, even than it is for me now. So, that is a goal that I have in mind. Every day I’m expecting to hit it before 10 years, but it is that 10 year goal for me.

Mindy:
That’s a good 10 year goal.

Scott:
We aspire to the same executive title in a ten-year period, that of limited partner.

Alicia:
Exactly.

Mindy:
Okay.

Scott:
All right.

Mindy:
Do you have any other questions for us? Did we answer everything? Did you get anything out of this?

Alicia:
I did. I just wanted to make sure that the path that I’m setting myself on is the most logical path, the best strategy for me, and to make sure that there were no other things that I had not previously considered given I love to learn and I will look up and learn anything, but sometimes it’s much easier to ask for direct experience.

Scott:
Yeah. And I think that based on your goal, I think you’re doing a lot of the right things. If you came in and said, “I want to live a much less stressful lifestyle for the next two years.” We would not be talking about these approaches. And we would be talking about cleaning up the debt, reducing some of those other areas. But if you’re looking to back into a three-year, five-year approach, that’s going to maximize your passive income, this is a great approach. It’s just going to require a lot of hustle from you for the next couple of years. So, I love it. It’s exactly how I would approach it, I think, or how I like to think, I try to approach some things, although with dramatically different, more advantages, and not being a single mom. It’s that laughable attempt to compare it actually with your situation. But I love that hustle and respect it, and I think it’s awesome.

Alicia:
Kids are a good motivation.

Scott:
Yeah.

Mindy:
Yes, they are. Okay. Well, Alicia, thank you so much for your time today, and we will talk to you soon.

Alicia:
All right. Thank you.

Scott:
Thank you.

Mindy:
Okay, Scott, that was Alicia. And I like her strategy, but I do feel compelled to say that we talked about cashing out a 401(k) in this episode. And if we had talked to her before she had cashed out her 401(k), I may have had different, well, I definitely would have had a different suggestion. I would have said, “No, don’t cash out your 401(k). She has taken that and turned it into a really great situation for her specifically. But I want to reiterate that this can be a really big mistake, if your choices aren’t as good as… She’s making what? 20% cash on cash return. I’m not getting that in the stock market. Are you?

Scott:
Yeah. Well, I think it’s a decision waiting, or what’s the correct bet here with a couple of these different types of things, right? And how do you think about that from a risk adjusted basis, right? That liquidating your 401(k), you know you’re going to get a, I don’t know, 8% to 10% return, if you have an index fund investment. You know they’re going to bleed you a little bit on the high fees that are inside a lot of those 401(k)s. You know you’re going to get a slightly below average return inside of a 401(k) on a tax deferred basis. There’s some tax advantage, that you’re at least able to defer those taxes. So, I have a lot of… I don’t know, it’s hard with those types of decisions. There’s probably no right answer. And you’re making a guess as to what the future is going to be based on what you think that a rental property might return versus the return inside that 401(k).

Scott:
So, I don’t think there’s a right answer. But I would agree with Mindy, that my bias in a general sense is not to liquidate 401(k). I have not, and probably would not liquidate the 401(k). I’d probably leave it in there. I have a little bit in a 401(k). I mostly contribute to a Roth, as we’ve discussed ad nauseum in a couple of other episodes. But I wouldn’t do it personally for the most part. But I’m also in a different situation. And I would have the ability to execute on some of those deals with other sources of liquidity of my life, like cashing out or taking a little bit of debt against the rental property, dipping into my very large emergency reserve or even selling off a little bit of stocks. So, I had other assets to redeploy towards that.

Scott:
When you’re in a position of just getting started with these types of things, sometimes you have to take a risk or have to be willing to make one of those bets, and you can lose, but it’s all about whether you’re willing to play the game, and whether you think you’re taking the shot that has the best odds of success. And she did. And it seems to be working out great for her so far.

Mindy:
Yes, she took an educated risk. She took an intelligent risk. She didn’t just jump in with both feet blindly. She has ties to Detroit, which has very low cost of entry real estate market. So, she’s got an advantage there. I would not have liquidated a 401(k) to go invest in Detroit, because I can guarantee you, I would have found the crappy house that loses money. She has different options, and this is where that personal finance is personal comes back into play.

Mindy:
With these Finance Fridays, I think our goal is to present a situation, present ideas and suggestions based on that specific situation. And maybe people who are listening have similar aspects of their own personal financial situation that they can take advantage of and take information from and suggestions and say, “Oh, I can tweak my situation this way.”

Mindy:
So, the underlying reason I want to just completely reiterate this is that I want you to make intelligent, thoughtful choices, and maybe liquidating your 401(k) is the best choice for you and your situation, but make sure that you’ve considered all the options. We don’t necessarily record these shows in order. And we have recorded a future show where the biggest money mistake she made was liquidating her 401(k), completely different situation, completely different setup. She didn’t take that money, and then invest into 20% cash on cash return, rental properties in Detroit. So for her, that was a mistake. For Alicia, I’ve not really seen it as a big mistake.

Scott:
Yeah. I mean, I think it’s interesting because Mindy and I, have a clear bias for things like 30 year versus 15 year mortgage, or not paying your mortgage early and investing in other assets. Yet, we had that couple a few weeks ago who have a pension and a really stable income with those types of things. And the game for them, I think had, there were some advantages to them, potentially paying down the mortgage early. And so, there’s no rules in this game, there’s only tools, and when to apply those tools in different situations. And when you have a very stable pension and your goal is modest financial freedom, you’re going to play by a different set of rules.

Scott:
When you have the goal of all out aggression in the next three years, you’re going to want a different playbook here, which may involve liquidating your 401(k) and investing in Detroit real estate, if that’s the right thing, right? I mean, that’s crazy, but that’s what she believes is her odds are successful for her. And I’m not one to tell her those aren’t reasonable. She seems to have a very educated opinion on why she thinks that’s possible and numbers to back it up, that she’s actually realizing right now. So, there you go. That’s the world of crazy personal finance that we live in.

Mindy:
I love it. Scott, should we get out of here?

Scott:
Let’s do it.

Mindy:
Okay. Oh first, before we do, if you would like to be a guest on the BiggerPockets Money Podcast, please go to biggerpockets.com/guest. If you would like to apply for your finances to be reviewed, please go to biggerpockets.com/financereview.

Mindy:
Okay. Now, Scott, should we get out of here? You already said yes. From episode 204 of the BiggerPockets Money Podcast, here is Scott Trench, and I am Mindy Jensen, reminding you that there are no rules, there are only tools. You heard it here first.