016 - House Hacking with Coach Carson

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1 - 43 Jonathan Mendonsa Welcome to Episode 16 of the Choose F-I radio podcast today we have Coach Carson stopping by to teach us a new skill how to hack your housing live for free and start investing in real estate. Today this is a tool that you can use to supercharge your path. to FI and it's one of these unconventional choices that we talk about that radically changes the math. Definitely check this one out. Welcome to the show guys. As I mentioned earlier there are certain things that you can do that you'd never considered that can so radically transform the equation that you absolutely have to just take a step back and look at it and see if maybe it's realistic for your life or for your family or for your kids. And there's no one better to help coaches through this process than the one and only coach Carson hi Coach thanks for joining us today.
families, podcaster
43 - 45 Chad "Coach Carson" Carson Hey good to be here guys. Thanks for having me.
45 - 96 Jonathan Mendonsa I think yesterday you just released a article on hacking your housing. You know I think it's one you've been teasing is coming for a while and we're very excited to finally get access to it. And today we just want to take some time and actually talk about what that actually looks like. So real estate there's several different ways that you can get to financial independence if you make a great income. Then you could probably just focus on tax optimization and savings rate but that's not always an option for everybody but everybody can get started in real estate in some shape or form. And so the next question is how do you do it without screwing yourself over financially because if there's a safe predictable way to do it where it's a realistic amount of risk to return then at some point it becomes to look like something that everybody should consider and I think that what you're putting together Chad is that model you are modeling it for people. And I think that there's going be a lot of value to what we're going to talk about today.
househacking, housing, savings, tax
96 - 166 Chad "Coach Carson" Carson Yeah. Well I mean I appreciate you guys mentioning that. And I think one of the things about housing. You know you mentioned that everybody kind of touches real estate and is one of those unique things that everybody lives in a house right. So there's a few people who live out in tents somewhere but pretty much everybody lives in a house. And so if you're you're in that case you're going to be at least having the potential to consider real estate and how does it affect your bottom line. And really when you guys talk a lot about budget and you're you're trying to cut your expenses. And one of the things that first struck me when I first started investing in real estate was if you look at your monthly budget how much of that's going to housing. How much of your budget has been going out the door. Whether that when it is rent whether that's a mortgage whether that's maintenance on our house. And so if you can figure out a way to get that right, even if you don't even if you want don't have to buy a big apartment buildings or do any of that a lot of my focus on the very first step with real estate is hey let's look at your own housing situation. and let's not Be stupid with that or at least be super smart with it and really hack it and really figure out a way to make money on your housing. If you can do that you just totally flip the entire equation of kind of retiring early. of achieving financial independence. You know the whole thing.
166 - 188 Jonathan Mendonsa Yeah. So I think probably to be fair to our audience we really do need to introduce you. I would love to just hop right into content just because you did such a great introduction in telling your story on the mad Fientist but just for the sake of catching our audience up and giving him something to point to. Tell us a little bit just a little bit about your story and how you got where you are and where you are because you're not currently in the United States although you have 90 rental units.
188 - 340 Chad "Coach Carson" Carson Yeah. So my story in brief is I graduated from college I was actually a footballplayer in college at Clemson South Carolina. So anybody who follows college football you know they won the national championship last year. Go Tigers. But as I live in a little college town and the same place I went to school 15 years ago I started instead of going out the traditional route. I was a biology major kind of pre-med or out. I just decided to become an entrepreneur from the very beginning didn't have much to lose at that point. I had my Toyota Camry free and clear so I was willing to live in that if I had to. And we just with a business partner two of us started figuring out how to find good deals on real estate buy and sell. So we bought sold a lot of houses fixed them up eventually and then we started buying some rental properties and keeping those then you know kind of through some ups and downs we kind of grew into the 2007 2008 downturn and kind of made it through that. And that's a whole other story. Maybe we can do a podcast on that one. But you know in the end The end result for me is that real estate has been my engine for not only for making a living you know that's how I put food on the table but then also parallel to that I used it to build wealth. And I think that's the most relevant. Thing for everybody there's a few people who kind of go into real estate and flip houses and do that full time. But there's a big broad range of people who can benefit from even just owning one rental property or owning a couple of rental properties, flipping a house here and there. And so that's that's really where my passion as we're helping people is you know how do you figure out how to do that one first deal that one deal that can kind of get you over the edge or you know if you can just own one or two properties free and clear that that can produce a thousand or two a month which puts a lot of people in a much better position financially. And so that's that's kind of my story in a nutshell. But you mentioned that in the end. Living off rental income was always our goal and we built our own little management business and I have a really awesome person back in concept right now that helps me out. I have a business partner back there who helps a lot too but. My family and I this year moved to Ecuador that's been a big big goal for us is to go abroad. So my wife and I and our two kids are living here for about a year year and a half and. Immersing ourselves. My wife's a Spanish teacher so she's already fluent but I'm going to try to become more fluent. Our kids are learning Spanish living in another culture. It's just part of that kind of part of our why. Why. Why were there when all of this is to be able to have those kind of experiences.
college, families, househacking, housing, podcaster, teacher, traditional
340 - 378 Brad Barrett Yeah that's so cool. I mean we actually last week we had Justin from Roof of good on the podcast and we talked a lot about it with you know and you certainly know Justin great blog and we talk a lot about kids and how financial independence impacts your kids and I mean what a cool thing that you and your family were able to pick up move to Ecuador I think you told us for a year year and a half and you still have this thriving real estate business going on back in South Carolina. But you guys are living the life and just spending time with each other. I mean that that to me is just it is the perfect way to describe financial independence.
blogger, families, housing, podcaster
378 - 430 Chad "Coach Carson" Carson It's we love it. We got to pinch ourselves when we wake up. My wife and I were eating breakfast this morning and this is where I can't believe we're doing this this is really amazing. So it's a lot of fun and I hope this story can inspire other people too and maybe we can link to this in the show. But I wrote an article about how difficult it is to detach yourself from your existing life. And we spent basically a whole year last year we feel like we're fairly frugal people you know we don't buy tons of stuff. We don't have a new piece of furniture in our house but it was an enormous like pulling your wisdom teeth kind of detachment to try to get yourself out of a situation and some it was. You know you're contributing to a community you're here and there. But I think that that part of it. So people who are considering travelling even if you're not a big traveler forcing yourself out of your normal situation just kind of get rid of that and get rid of that attachment was a big exercise for us.
430 - 447 Brad Barrett Yeah that's really cool. We will have everything linked up on the show notes and that's at choose FI dot com forward slash 0 1 6. So Chad I mean did you guys literally sell everything you own. I mean did you get rid of your house or wherever you were living. I mean talk us through that real quick. OK I'm I'm just so interested in this.
447 - 531 Chad "Coach Carson" Carson Yeah we rented our house as another benefit of being a real estate person as you know you go when you have an asset like that you know I'm going to use that asset and selling houses is great at times and I think it's because that we we kept that we rented our house out for a couple of years and our main plans to go back to the house after we're done. So we have a cool couple in there who live in it for two years and then we we will see how it goes. So that gives us a big window though to be flexible in the interim. And we did. But my wife spent tons of time selling yard sales and all the kids stuff babies stuff you know all this stuff you can't believe how much junk accumulates. in the basement we did a lot of that kind of cleaning and then and I was just surprised how many connections you have both good and bad. We're just nonmaterial stuff just meetings and clubs you're in. And I was a star helped start a nonprofit a year two years ago that's trying to make Greenway trails in our home and how many how much how involved I wasn't that you don't realize until you step back and leave how busy your life is. So you get I mean Latin America is perfect. I love the Spanish culture. siestas and taking it easy and hey you gringo Americans are working too hard. Yes they do work hard here but it's more like the family. On Sundays you hang out at the Plaza and you walk around. It is for hard hardworking A-type like me. This is like a perfect situation. to Say chill out. dude take it easy.
families, housing
531 - 533 Jonathan Mendonsa You're getting younger every day.
533 - 575 Brad Barrett That's so awesome. Hey Chad Going back to the beginning of your story so. One thing that struck me and even as you described it here is your old Toyota Camry and cutting down life expenses to do what you wanted to do which is build this business and have some some ability to do that without this huge overhead and you know one thing that struck me was I think you lived in your business partners like spare bedroom with boxes littered around the can you. That was just such a cool story I'd love just to hear super quick about that and like and how that how that helped you and like. And the thought process that went into that as opposed to oh hey I'm a you know football player who was hugely successful in college and I deserve this. Like everybody else thinks like what made you think differently.
575 - 684 Chad "Coach Carson" Carson Yeah I think that will be a good segue and house hacking too because you know when I first started it was I think just by necessity is like all right. I'm not producing any income here I have no guaranteed salary. And I think a lot of college students to feel like that compulsion this particularly because you have debt and I didn't have any debt because I got a scholarship to play football in college so that's kind of an aside. I was very fortunate in that situation. But the fact that you know I said I have to be super lean here to be an entrepreneur,I think those two things go hand-in-hand. That to be an entrepreneur is you're taking you're taking a risk you're not guaranteed a success and you know going for financial independence it's very similar to being an entrepreneur. You know there's no guarantees in life. You have to take some risks here. At the same time entrepreneurs are also very risk averse. Very ironic. So you know I knew I was taking a risk and there was no guarantee I was going to make money next month. I had to hustle hustle hustle. But the thing you can control is how much is going out the door. And I knew that I just had a kind of an intuition for that for whatever reason. And so my business partner and I just talked about it hey we're going to start a business I'm going to back. And I started thinking housing is always the first thing you think about because that's such a big part of your budget. You had a spare bedroom I noticed and there just a bunch of boxes stacked up and I didn't even realize there was a bed until I moved my boxes in there just like this old single bed like Springs sticking out of it you know. And so I say hey I sleep on that bed for the first few months of while we're starting this business, and He is like I don't care you can whatever clean it up. And so that worked out and I think it lasted about 10 or 11 months and so we finally flipped a couple of houses and I had a little bit of money and I decided to kind of venture off. But the house hacking was the next you know it was soon after that it went right after that was the next step because. I like that not having a house housing payment. It was pretty cool thing.
college-loans, debt, househacking, housing, hustle, scholarship
684 - 689 Jonathan Mendonsa It does feel like a little bit of a hack doesn't. So this is no longer an issue.
689 - 726 Chad "Coach Carson" Carson Yeah. You take away housing and you get rid of your housing bill it's kind of hard to go back. Really I got to pay for housing that's you know with my family my wife and I finally moved into a real house where we're going to start a family. We can't live in a two bedroom one bath apartment anymore. It's kind of cramped. We will move up to. Fifteen hundred square foot house. We're just going to go all out and get a mansion. And so we had like a $400 a month payment. This is crazy. What are we what are we doing here. We're living positive 100 a month before that. So it's I'm just warning everybody when you learn about this kind of it kind of ruins it for the normal life.
families, housing
726 - 730 Jonathan Mendonsa All right Chad why don't you just hop right in and tell us what is house hacking.
730 - 858 Chad "Coach Carson" Carson OK. So you know house hacking first of all for people are a little skeptical about it. I'm not like a scammer or somebody who is like hacking what the White the White House or something the way house hacking means basically is you're living in a small multi-unit property typically. So instead of getting the biggest single family house on the block you're going to look for like a duplex a triplex or quadruplex. In a perfect world you live in one unit you rent out the other units. And by getting the rent from those other units you can use that to pay your housing. And so that that's really as you just want to simplify the whole concept. That is the concept of house hacking. You're finding some way to generate income from your residence instead of just living there and having all the money go out the door. And so that that you know that from that simple concept and we can get into some kind of a different variations of it. There's a lot of creativity going into and of course it depends on where you live and what kind of product. You know maybe your city doesn't have a lot of quadruplexes maybe it has duplexes maybe you know people who live out in the country. I know people who live in a house that's on a two acre plot and they can put they put three mobile homes on the second lot next door and then get like a little retiree mobile home community to pay for their housing. So there's all sorts of ways to make it work. But I think the idea that everybody wants to get in their head is that particularly early in your career. Now I'm not asking if you're if you're 60 years old and you want to do a house hack I'd say more power to you and I would too. But particularly when you're in your 20s and 30s. My mission is to make sure people know the how big of a deal it is to go 10 years living in a house with a thousand dollar housing payment instead of doing a house hack and we're cutting that in half or taking it all the way to zero. You know you guys talk about compound in math and in the future value of money all the time. I challenge to all the listeners to take away your housing payment. Put that in a future value calculator. Figure out what that means for you 10 20 years down the road and that'll even if you weren't that motivated before. I think that'll start. Getting you more interested in the concept.
career, househacking, housing, passiveincome
858 - 872 Jonathan Mendonsa I mean I'm just thinking out loud here. But you start putting an extra thousand dollars a month aside from the age of 20 because you just implemented this one hack and then you never are paying for rent or mortgage again because of this one choice you're that's a huge head start.
872 - 900 Chad "Coach Carson" Carson They've gone this. I mean I wrote an article on one of my first articles I got on rockstar finance it was about how to become rich by living by living in ugly houses and embarrassing old and using embarrassing old cars. And I basically talked about that concept where you said you know the future value of this kind of thing is $700000 or a million dollars 20 30 years from now. I mean it's A really big deal.
900 - 901 Brad Barrett Wow.
901 - 903 Jonathan Mendonsa Yeah we'll link to that in the show notes. That sounds awesome.
903 - 947 Brad Barrett And that's one of my favorite titles of an article by the way. Absolutely love it. And I mean it's so crucial not spending money on the major the major legs of most people's budgets are a brand new car payment or God forbid a lease and expensive house the rent that they have to keep up with the Joneses. And then we talk about food being a third major part of people's budgets and we've talked in prior podcasts about how to save on food. But man if you can cut between one and three of those things down significantly. I mean those are the life hacks that you need to go from a regular middle class keeping up with the Joneses to someone who can be financially independent in five 10 15 years whatever it may be. So yeah I'm totally with you on that.
housing, lifeoptimization
947 - 1068 Chad "Coach Carson" Carson And I found something interesting guys that you know so much of the financial world seems to be so complicated to people. And one of the one of the messages I try to convey out there is that it doesn't have to be that complicated. It's not easy. But I mean a house hack is not easy. You're going to have to there are some major objections people have got to live next door to tenants you know how aweful is that. And I have to you know have to do this or that but the fact is you can do a few simple things like you're talking about. You can hack your food you can hack your housing You can not have any credit card debt you can use travel rewards. to not have to pay for vacations once or twice a year. You really don't have to do that much smart fancy stuff. If you do those three or four things and in particular real estate you know one of the things that I did early on was I tried to get too complicated too fancy with it. When when in reality some of the best mentors I've had in real estate have said you know what. Just keep it simple. You know buy a house. A year. For five years and make make each deal better than the next one you know don't try to be fancy. You don't try to be crazy and I think that applies to everything in your life I think. Just keep it super simple. Try to do the fundamentals really really well. That's like one of our football things every day. You went to football practice all you did for the first 20 minutes of practice was do these little basic footwork drills and you know how do you move your hands move your arms and get low. So I think in Finance we need to do the same thing don't try to get fancy with it. Just be simple, find the strategies that really resonate with you, That don't seem that complicated and it seem like they're a little bit easier to apply because it's their super fancy. You have to talk to a person up on Wall Street who can explain this 150 page contract on how to become financially independent. No that's not for me. That's you know maybe somebody likes that. But I think the kind of people are listening to this show are you do it yourself or at least take control of your own destiny kind of people. And to me that the route to doing that is to keep a simple go with something you understand which for me is real estate.
debt, househacking, housing, travelrewards
1068 - 1113 Brad Barrett You know Chad I totally agree with that simplicity and that's like my guiding light in life is keeping everything simple trying to lower stress while still being open minded. I'm not close minded to anything but sure. But I know that if guided if my guiding light is simplicity then I'm going to do OK down the road. So yeah totally totally hear you with that. I have one question just before we get started. You know the nuts and bolts of house hacking and just as an aside to everyone we are going to have a link to this article in the show notes and also I highly advise everyone to sign up for Chad's e-mail list. He has a really great e-mail series. I'm looking to get started in real estate and I'm learning a ton from him so yeah it's just a little plug for his email series which is fantastic. But yeah.
1113 - 1118 Jonathan Mendonsa And On the same line his toolkit I can't believe some of the stuff you're giving away for free on that it's just fantastic.
1118 - 1140 Brad Barrett It is. Coach Carson is just a great site. So my question just right off the bat is OK. How do you find one of these duplex triplex fourplex. How does someone even start for me at least with real estate. It's the mental hurdle of. Wow. I have no idea how to even start or know how I'm getting a good deal or how would I find a fourplex. I have no idea.
1140 - 1463 Chad "Coach Carson" Carson Right. That's a really good question and I think that the typical part mentally and also practically is finding that Neal. And so I think my recommendation was the first skill I learned when I first started investing in real estate. I was a bird dog for other people who actually had money because I had no money so I was just I went out and just kind of sniffed around a bird dog for those who don't know I'm from the south and there are people that look around the country to hunt for birds and that kind of thing so a bird dog is like somebody points you know to that deal or a bird or point to the birds in the bush and the hunter would shoot the birds and take them home for dinner. And so what you do as a bird as a bird dog I would learn to kind of. Go out find those deals for other people. But the skill set I learn was really to have two parts of that equation. One part Luckily for everybody. You don't really need to learn like the part of real estate that's really important is the qualitative part. What does it mean to be in a good neighborhood. What does it mean to be in a good house. And I think if you've ever hunted for houses as a rental property or can you just want to go live you're looking for a rental if you ever look for a house to buy you sort of know the qualities that make good real estate. And so those things are you know it depends on the location of course but you know if you're if you're in kind of a big urban area or you're going to look for the neighborhoods that had a little bit of charm that had the big trees that have sidewalks that are walkable they have public transportation nearby but they're not too busy. They're safe and so like Think of those little checklists that you would put just for a place to live yourself. And if you're totally a that's you know a numbers numbers person the numbers and then your spouse or your partner or somebody else is like the person who recognizes that good quality kind of stuff you know go with your spouse. Let them. Let them choose the neighborhood first and you want to start with that. So I'm saying all that and I met a teacher in real estate and used to call it say you wanted to look for romance in a city you wanted to look for something that kind of drew you an emotional appeal. So that's completely opposite of all the numbers that we'll get into next. But it's really important because all of the numbers in real estate are derived from the emotional decision that people have to either rent a place or to buy a house. It all starts from that. all the money you make in real estate comes to you because you deliver a product that has emotional appeal because it living in a home is emotional. That's Where you raise your family and that's where you. You know that's kind of when you get home from work that's where you go to kind of you know get away from everything else. So you start with that and whatever it means in your city that's where you go you want to go hunting in neighborhoods and you want to ignore the neighborhoods that don't have any romance. So for me I like that new kind of cookie cutter neighborhoods on the edge of town. That are have to drive on the interstate to get there and there's nothing appealing about it at all. Yeah that's not there's something not as good a quality about that kind of real estate as I like end fill neighborhoods that are the places where it's already been good for 30 40 years and it's kind of getting better and better and I read a study one time at Starbucks if you follow Starbucks they do some kind of really complicated research. But you know there's a trend that any time Starbucks is in a neighborhood. It typically goes up in value and so there's little little hacks like that you can figure out. But once you get those neighborhoods the question is how do you find a good deal. And you know I would recommend particularly if you're brand new to actually hiring an agent to help you out with that. You know I do have my real estate license something I don't think everybody has to do especially early on but if you find a good agent and you tell them some of those neighborhoods that you're looking for then they can run a very very simple search for you and say I want to find duplex triplex and quadruplexes in these five neighborhoods and there might be I should say there's 20 listed properties in those neighborhoods. Then you could just go on your own on the weekends and go kinda ride by those. Take a look at them. Even better get out of the car and walk around and look at them. And so that's my favorite way to do it is just to walk the neighborhoods and actually look at stuff. And then a real estate agent or maybe you know you can use Zillow you can use these other ones too there are pretty good search engines online. But the first step of course kind of going back is choosing neighborhoods and then doing some kind of online search to kind of get a get a working list of what's out there what kind of inventory is out there. And then just go explore around the start you know walking around neighborhoods actually talking to neighbors. You know if you if you get out from behind your computer in real estate and actually get in a neighborhood and if you're walking you know with your you know if you have a daughter or son or kids you know push the stroller because you're going to get to talk a lot more people that way you're not as intimidating. And just ask people and I'm looking for a duplex in the neighborhood I really love this area. You know anybody who is looking to sell. You have any ideas or houses that are available or duplexes that are available. And if you go out of five hours on a Saturday and make it a goal to talk to 10 people in a neighborhood you will learn an incredible amount. You'll probably get four or five leads on some deals you'll probably look at four or five vacant houses that you don't even realize are vacant. Until you started walking the neighborhood and that could probably keep you busy for two weeks of just kind of finding kind of following up on those leads saying you know calling signs that.
families, househacking, housing, teacher
1463 - 1484 Jonathan Mendonsa I've heard about the idea of just walking neighborhoods and I could just never visualize myself actually doing it going and knocking on a door and saying hey I'm you know anything about this house down there I just don't could visualize my doing that but I could visualize you're out there with your kids you're in and you're not in an intimidating manner and you're just you know anything that's going on in the neighborhood. I could see how that would work.
1484 - 1627 Chad "Coach Carson" Carson And Saturday morning is important too because people are out cutting the grass or in the wintertime they're doing up and you know blowing snow if you're in the north somewhere. But that's the important part and you want to go and people are just naturally out in their yard. And I'm not a natural like outgoing person and when the especially when I first started this business and it was sort of a growth challenge for me to do that to go out and talk to people. And so I think I think that. This might like disqualify some people from real estate that might draw other people to it. But the fact is if you're wanting to kind of passively buy index funds and press a button on a computer. I love that stuff. Jim Collins stocks seires as much as anybody but real estate both the benefit and the drawback of real estate is that you have more control over it. It kind of goes through you. So the positive of that is you want to have some control over how fast you get financial independence. All you need to do is try to learn faster do more talk to more people. But the downside of that is you have to do it. you have to be the one who does that. And one of those skills is actually having conversations with people and if that is totally outside your comfort zone. You don't have to do that. I understand it as the best way to do it. You can also hire an agent to do that. And so if I hired a buyer's agent I would say I want you. Buyer's agent to go out walk the neighborhood you know on Saturday morning and see what's out there and there will be open houses that be going on. But I think that's the key thing a lot of people miss. It was so easy in 2009 and 10 buying properties because there was a lot of foreclosures. Banks were selling houses but that was the anomaly. That was a weird time for those two or three years were just easy pickings buying real estate. What it is now is more competitive and it's kind of hard. People say gosh it's hard to find a deal. Well these people are just looking on the MLS on the list that properties and there's nothing available list that that seems like a good deal. So they say oh there's nothing available. Well I promise you because the 15 years I've been doing the 30 40 years history I've been reading about real estate people investing. Nobody's willing to go out and do these extra steps of walking the neighborhood of talking to people. Yeah but there's some more that strategy sending letters out there so that extra steps you know if you're willing to do it you know put a little bit more effort in upfront. There's a lot of benefit to doing that.
housing, indexfunds, stocks
1627 - 1708 Brad Barrett And Chad I knew in my little town just driving the one mile to our elementary school when I actually look around there are a couple of houses that just kind of look like nobody's living there. And you just never know right to your point about writing letters or something like that like if I actually took the initiative and said oh here's this house that looks pretty nice. It looks like it has good bones if you will. Mean it's in a great part of town but it looks like it's being neglected or abandoned. What if that's a house that someone's looking to get rid of or maybe it was you know a will got passed on and they just want to get rid of it but they don't know how. Like that's something where I would not have even front honestly to write that letter or even know how to go about contacting someone. But I suspect if we talked outside of this or if you had it on your Web site of how to physically contact those people how to find that information. You know that's outside the scope of this but I think it's important for people to start just thinking differently like you're describing and so I get walking around. And to me that's just that's a really cool way to look at this. But the accountant sid of me says OK. At what point do you just running the numbers come into it. Because my fear would be are you going to slip my kids out for five hours on a Saturday and we're going to walk through some communities that just financially don't make sense either the real estate is too expensive or the rents aren't good and you know whatever it may be. So that's my concern so I'd love to hear. Like when does that come into play.
accountant, housing
1708 - 1771 Chad "Coach Carson" Carson Yeah you're exactly right. And so when you're a real estate investor you're like a walking dichotomy. You've got the emotional kind of appeal neighborhoods side of you and you can call that your right brain and then you've got the numbers crunching you know lizard brain is all about the numbers. You know that's it. And so you got to do both all the time. And so you kind of go back and forth. And so what I would do before I went out and walked neighborhoods I would put together a little profile of what I think a good deal is from the very beginning so that we could talk about the numbers of real briefly because you know sometimes numbers are easier on paper but I'm out. But that the bottom line of real estate and particularly with House asking the most important number you want to look at is how much rent you have leftover. Every single month after paying all your expenses and then you compare that to what the price is say for for the stock. People out there that's like your P E ratio. That's like your earnings to price ratio at what ratio of earnings. Am I going to get a piece of real estate compared to what I'm going to have to pay a price for that real estate.
housing, stocks
1771 - 1774 Jonathan Mendonsa Do you want to use this as number two to walk us through your first example.
1774 - 1976 Chad "Coach Carson" Carson Perfect. Yeah I'd be great. So you're talking about my house acking article I gave an example of like my house. Right. The one I moved into and the number and I'll give these numbers just because some people are going to be listening to this in Canada or Great Britain because I've gotten e-mails from some people there say That's Ridiculous. I've never heard numbers like that. You know I was probably like 50 years ago. And then got California to say the same thing. And then and you know I don't know Indiana are saying that's exactly the numbers I'm looking at so you know you got to kind of use this is all relative ending or where you are. But the concept of house hacking works anywhere because it reduces whatever your payment is on a house or a duplex is going to reduce that by getting rent from the other side. It's just going to matter whether your rent is going to pay for all of your mortgage payment or pay for half of it or a quarter and either one is still a win like my number is for example when it when I'm shopping a neighborhood when I first started looking I would do something. And this is a very simple rule that everybody can kind of take with them when they're looking. I was always looking for something called the 1 percent rule. All right and said a 1 percent rule means that if you look at the monthly rent. Of a property unless you use simple round numbers if you ask the real estate agent or property manager on Zillow and the average rent for a apartment around your area is a thousand dollars for about's let's just use that number if that's the case then you probably a decent deal or a good deal on house hacking would be that you could buy that that one unit for $100000. So if it was a duplex. You would have two units renting $72000. So like a rough number what would be a good deal with the $200000 all in for buying that property. And so you could go into the the real nitty gritty numbers including and especially go through all your expenses and figure out why that's the case. But that typically produces a decent cash flow particularly for a house hack if you can borrow that 30 year mortgage at 4 percent or three and a half percent and live in one side and rent the other side out you're going to be in pretty good shape. You can kind of stick to that. That kind of number. So that's that's just that's called the 1 percent rule. As a rule of thumb there are going to be some areas of my town that is still a challenge to find a 1 percent particularly with the nicer neighborhoods. But if you're going to be if you're in the higher price you know if you're in California you're in some of the higher priced areas that's going to be really really difficult because the prices tend to become detached from the rental rates as you get into higher and higher price areas. But it's still a goal as is a good go. And in my case with the property I bought my first quadruplex the numbers were much better than that. They were really good. I had bought the property for $70000 and we put 45000 into it. And so in repairs and all those costs so was at 150000. And then I refinanced. I had a little bit more and this I kind of rounded up to $120000 was my total kind of all an investment in a quadruplex. And so that if you for I like to divide it out by units so you know for four units that's $30000 per unit. And when I first moved into that property the rent three to one of those units was $400.
1976 - 1980 Brad Barrett Way above. So 1.3 3 percent I guess in that case.
1980 - 2083 Chad "Coach Carson" Carson Yeah it would have been following the 1 percent rule. My rent was $300 per unit. I would've tried to have it I would had 30. So $440000 per unit or $160000 in that property I think I would have been in good shape but it was a really good deal. And I ended up having 120000 in the property instead. So if you look at the article and you look at all the numbers on what kind of cash flow I had that the bottom line was I lived in one unit I rented the other three units out so I had twelve hundred dollars coming in every month And my mortgage payment including taxes and insurance was just under a thousand eighty six or so. So I had eleven hundred twelve hundred dollars coming in. A thousand eighty six going out. I think I'm I think that was my all and with all my calls and I'm not looking at my my numbers right now in the article. But the bottom line was when I paid all my expenses including maintenance and other things I had about 100 bucks a month positive in the bank on that deal. So it was a it was a very very good deal. I called it like a baseball analogy. That was a triple. You know I was on a wall triple standing up. Not all good deals are that good. But you know it demonstrated the concept of what how powerful it could be if you can live in a house rent free, actually live positive every month and then the beautiful thing for me was you know my wife and I moved and we got married actually Soon after I bought that we lived there for two or three years decided we want to start a family. But that gave us an awesome start to our you know into our marriage financially. We didn't have a lot of costs going out. We had two incomes coming in and so we were really able to rack up some big time savings during this. Before we started moving on to other other things.
families, househacking, insurance, savings, tax
2083 - 2129 Jonathan Mendonsa I love this. I think especially what's powerful about this is this is just potentially something that everybody that's in their early 20s and they're getting that first home. This could be something that just this is what you do if you're in a certain community. This is the norm because totally make sense and you're just leaving hundreds of thousands of dollars on the table by not doing this and the math that you just shared on how you kind of approached it and is it a good deal is it not a good deal. It's pretty simple math. I mean there wasn't anything really magical or complicated about what you just said I mean you might need to practice it a couple of times put it on an excel sheet but you could very easily go on to zillow and filter for some apartments that are selling or some for quadruplex has tried flex as duplexes and run those numbers very very quickly and get a feel for what it is that you just described.
2129 - 2186 Chad "Coach Carson" Carson Exactly. I'm not bad in math but I'm certainly not there's some people in the fire community who like run circles around me with spreadsheets you know I love. I love hanging out like smart people and mad fientists and these guys do all that stuff. But one of the cool things about real estate in addition to the fact you have more control over it is that the math for for your deals is super simple, it is addition and subtraction and maybe some basic algebra you know that's that's about as far as you get. There's no calculus there's no you know gradual curves of winds and things like that. I mean you're super simple math is more about identifying what I said earlier you know find the romantic neighborhoods find the places where they're attracted and then go back to Brad's point try to marry that good neighborhood with some reasonable numbers. That's that's the challenge here. That's that's that's the thing that makes it not super easy and you've got to do some hunting is not a it's not going to fall in your lap. You've got to actually go out there and hunt over it. But it's worth it.
2186 - 2212 Jonathan Mendonsa And then we'll three things come to mind one is. It is that exact process. It's that hunting that's going to allow you to find the inefficiencies in the market as opposed to stock market index fund. It's going to correct itself. Now we accept the fact and we appreciate the fact we benefit from the fact that over time it almost always goes up with index funds but with real estate it does not correct itself as quickly and you're often able to take advantage of those inefficiencies to to your benefit if you're willing to get out there and look for it.
housing, indexfunds, stocks
2212 - 2343 Chad "Coach Carson" Carson Exactly. And then there's one other benefit that I should have mentioned early on about house hacking is that real estate. You know you have the sticks and the bricks. The real estate which is very much what we've been talking about so far and the income that it produces. But the other really huge thing is that you can use some safe leverage to go along with that real estate. And so you know there's a whole gamut of people who are willing to either take a lot of risk with the leverage and very little risk to some real estate investors who use zero debt at all on any real estate from the very beginning. That's the Dave Ramsey model. I know you guys talk about Dave Ramsey a lot. So it mean any variation in between there is fine. But but you're really is. I personally think it is very reasonable particularly when you're getting an owner occupied mortgage like you do with a house hack, if you can get a 30 year fixed or a 20 year fixed at three or four percent. And you can live in the property and you can cover all or almost all of your mortgage or more with that rent. That leverage is what really catapults your financial growth as well because you can if you read the article that I talked about it kind of went from a double to a trip or maybe even a homerun because of the financing I was able to get on the property because I started off by going to a local bank and the local bank loaned me 80 percent of the purchase price. And I used private investors to help me come up with the cash for the fixing up the repair and all that. And so but then I had a bunch of cash and I was in private lender money. Higher interest rates. So what I did six months after moving into the property was my business my residence. I was able to go out and refinance it and get a very solid loan you konw long term loan fixed interest rate. But the really sweet thing for me was that the property had appreciated up to about a hundred fifty five thousand dollars and so I was able to refinance and pull out 100 percent of the money that I had and so I borrowed a hundred $120000 and essentially had you know had no money in the deal and it's still cash flow positive. And so I was I was I will take money that I had and go do another deal or invest in the stock market or whatever else you want to do.
househacking, housing, ramsey, stocks
2343 - 2379 Jonathan Mendonsa Yeah I always want to come back essentially with highlighter when you say something that's just you the audience you need to latch on to this point. So when he's doing this what he's just describing He was creative. He got in there and he used a process that he can replicate over and over again and he did have to get the money together to get the property. But now however many months later he's pulled all of that out so he has been able he just by doing this one thing he's essentially created a way to generate a thousand dollars a month in income for perpetuity and he has nothing invested in the deal anymore and now he can take take his income that he may have plus the extra $1000 a month rent and he can go and do this again.
2379 - 2380 Chad "Coach Carson" Carson Yeah.
2380 - 2393 Jonathan Mendonsa That's right. It's incredible. The other point I wanted to make sure that we didn't pass by is you specifically said duplexes triplexes and fourplexes and I know the answer but I want to just put it out there why not a 5 plex.
2393 - 2461 Chad "Coach Carson" Carson So this has to do with financing. And so financing is everything in realestate but when you when you move into a one unit to unit three or four unit the financing is basically the options are much broader. To get a loan and that's pretty much because if you're in the United States almost every mortgage out there is guaranteed or at least imply it will be guaranteed by Fannie Mae and Freddie Mac. Those are the big you know quasi governmental entities that buy a lot of the mortgages and guarantee a lot of mortgages in the market. And you know they have determined that owner occupied residential mortgages are one to four unit buildings. That's it. So when you get above 4 units your 30 year fixed four percent financing disappears it's just a whole other world you're getting into the commercial lending world. And there are some decent options out there. But by and large the best mortgages you're ever going to get are the ones on as 1 to 4 units. So that's that's why you want to stick with those you want to stick with something in that realm because the financing is so much so much better.
2461 - 2491 Brad Barrett Chad just jumping on the financing for a second which is you're doing this house hack and you're living in one of them. Right. And you got the owner occupant financing so little more favorable than not. Now let's see you move out at some point in the future. What happens to your mortgage then. I mean do you need to. Like literally this might be the most elementary question but it's a question that people out there have which is do you call up your mortgage company and say hey I'm not living in there anymore. Give me you know half a point higher interest rate. Does anything happen like it or.
2491 - 2599 Chad "Coach Carson" Carson No it's a good question and it does come up a lot and the answer is no. You're perfectly reasonable that your life changes and you know two or three years later you decide to move on. And there's no you don't have to pay the loan off. The only thing if you read the mortgage documents it says when you stabilize you have to be owner occupied when you borrow the money and you have the intention of living there. And so you know in my case you know I like to live there and I stayed two or three years and that's that's my residence. But after that one the most beautiful things about house hacking is you have this long term fixed mortgage and you bought it in the right neighborhood going back to the great romantic neighborhood. It's probably over the next 10 to 15 20 years are going to go up in value. The rents are going to increase the prices are going to increase. So you have this fixed payment your biggest expenses your interest mortgage payment and that's fixed for the next 20 30 years. And you had rent that is going up over time. That's the most beautiful financial arrangement in all of in all of the investment world because you have a right you have a fixed costs and rising income over time. And that's the kind of definition of a good rental property. And so that's a really good question because that's the next step of House hacking. You want to take it is that like I did three years later I moved out moved into a house. And what do we do after that. We've we rented out the unit that we used to live in and now it's producing you know another $400 a month in cash flow. So it's a $500 positive cash flow rental instead of a $100 positive cash flow rental. And and I had to say that my story the House hack was you know 10 12 years ago and they then the rent that I get now. It used to be 400 bucks is now up to five hundred twenty five dollars per unit. So that's that's the story.
househacking, housing
2599 - 2609 Brad Barrett Do you take that money and use it to purchase other investments or do you pay down the mortgage. I mean I know it's personal preference obviously but I'm just curious.
2609 - 2693 Chad "Coach Carson" Carson Sure. Now that's a good question. So I write a lot about strategy and real estate and how do you use that extra cash flow that you produce and it depends on your plan for us we use that to grow a little bit more. We'd save up and buy another property. But my favorite plan in all of real estate for financial independence is to do a real estate rental debt snowball. So instead of instead of you know keeping leverage perpetually whichsome real estate investors do. Is to do is to buy two or three properties get them producing a couple thousand bucks a month in cash flow or whatever that number is and then you make that minimum mortgage payment on all those properties then you take that extra thousand bucks a month in cash flow plus maybe another three or four thousand a month that you could set aside say from your high savings rate and you start attacking one rental property at a time and you can get a I wrote an articles on this too But you can get one property paid off. And you know in 4 to five years maybe maybe maybe sooner. And then now you freed up your mortgage payment on that one and you attack the next one and the long and short of it is 12 15 years you can have a nice portfolio free and clear properties that produce five six thousand bucks a month and you're set. That's your that's your income that you live up on and kind of move on for the rest of your life.
housing, savings
2693 - 2738 Brad Barrett Yeah that is that is really awesome. I love that. And then you know that kind of ties into another article you wrote about how many rental properties do you need to retire and maybe we'll talk about that either later in this podcast or in a future one. But I just kind of wanted to double back real quick so we look for actionable tips for our audience. And you've given a ton already but I want to put myself in the brain of a 23 year old kid who just graduated college like you obviously with this this first house hack. Let's say I don't have any money saved up. You described getting this $45000 in cash from a private real estate investor. How does someone get into that community. How does someone get access to that. You know if I was just I hate to call them kids but if I was a 23 year old kid who had no money and had no contacts How do I even start with this.
blogger, college, househacking, podcaster
2738 - 3088 Chad "Coach Carson" Carson Yeah that's it's it's I think that's a challenge for a lot of people to think about the money. Like where does the money come from. It's kind of hard to get your head around it. And there's a couple ways particularly with the House act which is got to keep it on that idea. And you know I was a very creative investor a lot of times I had to do that because I did remember I had zero like guaranteed income coming in from from my best. I was an entrepreneur. I had good credit. But I just I was not your typical. I have a salary. I've got W2 income coming in. And that's the easiest borrower in the world like I was not an easy borrower in some cases like my having to go out get private money was maybe not the. Best example but what I would recommend first and if you look at the house hacking article I give some links to how like actual programs that do that. So there are some remodeling loan programs out there. There's one example right now called FHA two or three k. And so FHA is a government sponsored federally subsidized loan but they had a program where you can buy a house hack and you can buy a duplex. You can move on and you can give the lender like the specs what repairs you want to do. So let's say you wanted to remodel the kitchens and you want to change the roof out and you want to heat and air units. You say that cost 20 grand to do all the work you want to do. You could apply as part of your loan to do that $20000 of work and they would loan you the money as part of your FHA loan. To do To do that that work. And I think there's another way I think FHA has a three and a half percent down payment. And so that's that's one of the that's one of the reasons FHA is just like it is a downside like this higher mortgage insurance or there's some ease up front but if you can do that or there's another program called Fannie Mae remodelling loan like know our check goes out first because you can go to your mortgage broker and find an investment kind of oriented mortgage broker and say I'd like to buy this kind of property. I'd like to do some remodeling. Typically you know can you help me get qualified for an FHA to retailer Fannie Mae homestyle or forget that name that that mortgage you haven't used that lately. But one of those two options Brad would be probably where I would point people to at first. But down the road you know there's a whole kind of art and science to getting money from individuals as well. And that's something I've had to work really hard on early on and it really comes down to just boil it down to relationships. It's just being a trustworthy person and not trying to go for the sale right away. But just talking to people about all the time about your real estate best thing telling people to invest in real estate and talking about the numbers you know like I got around my original private lender was a professor at Clemson who was my business professor. I took some business classes after I graduated just for the fun of it. I thought I would go into that. And so I used to just tell him Hey I'm finding deals like this. My only problem is I have a thousand bucks that I can't buy. You know what do you think? and he would say all right you find a deal. I'll put up some money. Don't worry about that. And that's if you get relationships with other investors particularly the more experienced investors. My prior lender used to call me that I was that young pup and he was the old lion. And so like you need to find some old lions are kind of, you know, they really don't want to go out do all the work that you do. And you're the young energetic. Puppy Running around tripping on your ears but you do have a lot of energy and that's something going for you. So if you're a young pup. Find an old lion or two find these people who have some money and they're out there you just have to. Is not going to be an overnight kind of thing you've got to talk to people how to do and say I need some money for my deals. Would you be interested in making a 6 percent return if you loan me the money to buy the houses instead of putting them somewhere else and so then I can go I can make it really simple. And the numbers are going to vary depending on what your particular goals are. But if you're listening to the show I know you're the kind of people who are kind of tracking your finances and you're figuring out your budget. So I don't I don't have to go there. But what you want and you start off with what's your number. You know what kind of budget do you have that would be if I was financially independent. this is the income that would be enough to cover my family's expenses. That way I wouldn't have to work anymore. That's that's the starting point Just as with any other path to financial independence. So let's just use that number 5 thousand bucks a month because that's a nice easy round number and let's say that you that the goal then is to get enough real estate that pays you 5000 bucks a month and does it in a very low risk, passive, low time investment way. That's the goal is not only the money it's also the hassle and the time. And my favorite way to do that is just to say all right what if I owned a certain number of properties free and clear of debt with zero mortgage payment then all I'd have to do is pay my taxes or my insurance and other operating expenses and whatever's left over goes into my pocket. And that's how I that's what I live off of. And so really the math is super simple. It's just a matter of saying. All right let's say in my town. Five properties when their payed off, so five duplexes will be enough to pay me that five thousand bucks a month. Therefore my goal is to acquire five rental properties and then do some kind of plan and you can buy more rental properties and try to kind of get back down the side. Or are you going to say I'm just going to buy five rental properties. So one one property per year for the next five years and then I'm going to concentrate on saving as much money as I can both from the cash flow from the rental properties and then extra savings I can get from work, From a side hustle or whatever you do I'm just going to attack those debts like crazy. The next 10 years and I'm or are however much long it takes you know I'm going to get it paid off. And then that's it. The math is the math is super simple.
debt, families, househacking, hustle, insurance, relationships, savings, tax
3088 - 3142 Jonathan Mendonsa Yeah. No it really is and if you just take everything you just said and distill it down you're simply saying Hey you're 20 years old. Be creative. Learn how to do the math learn how to bird dog. Find some deals find a deal decide to do a house hack live in one side and rent out the other two or three or four so you know three sides. And then now you're essentially you don't have housing income potentially you're even making money with that thousand dollars a month in profit. I mean you combine that with almost any job. And now you're able to set aside money for your down payment living for free you don't have that living expense and then you do the math that you just talked about with how many real units do I need to retire he just basically said hey five might be the number for you. It might be that simple if they're bringing in five grand a month. Focus on building those out one per year for the next five or six years and then essentially just ride them out for the next 10 years and congratulations you're financially independent.
3142 - 3143 Chad "Coach Carson" Carson That's pretty much it.
3143 - 3146 Jonathan Mendonsa Sounds so simple why isn't everybody doing this right.
3146 - 3213 Chad "Coach Carson" Carson They have it. I mean the plan really is simple. You know the execution of like we talked about Brad asked a question earlier how do you find these deals put together that's kind of where the rubber meets the road. But I think what I would leave people with is it this kind of thing appeals to you this idea of buying real estate betting on it. You know it really is a game like I'm all my business partner and I looked at it like a game. I'm a sports guy I like I like game I like I like to keep score. And so you look at it like that and you say for five to 10 years of my life I'm going to play this game and I'm going to do it at as kind of like my one vehicle for creating financial independence or I'm going to do it parallel to like my other one I might be this one. Plus you know my Jim Collins passsive stock investing at the same time and then commit to it. And that's that's kind of the way we look at it. We we had a lot of fun with it. There's been some challenging times but instead of looking at oh man I'm going have to do a lot of work and real estate. Now I'm going to play the game for the next five to 10 years. And man it's going to be awesome in the end because I'm going to have this income coming in and I'm going to have. You know a lot of other cool stuff that I'm going to do along the way.
housing, stocks
3213 - 3233 Brad Barrett Hey Chad if you don't mind me asking. And please feel free. If this is too personal but what percentage of your net worth is in real estate and do you follow the you know the passive income or passive index investing strategy in your own life. You know I guess if you wouldn't mind just give us some sense of what you do personally.
housing, indexfunds, networth, passiveincome
3233 - 3338 Chad "Coach Carson" Carson Yeah I don't mind mine. I'm definitely very heavy on real estate and I would equate this to you know I'm basically an entrepreneur like I've used my entire my entire business for the last 15 years has been real estate. And so just like anybody else who starts a business that's kind of your big as a big chunk of your net worth. That's What kind of gets you there but at the same time you know we've had retirement accounts and so I think Percentage wise I looked at it you know I did personal capital and kind of keep track of that kind of stuff. I think it's about 15 percent for me as a stock kind of funds at the moment. I like that number to be big. There maybe that's a third lying around you know maybe I'm a third and stock businesses because I really do take that as a long term kind of diversification for me. But for me it was all about getting to the finish line. And I'm more like Warren Buffett in to value investing in kind of a philosophy in terms of real estate because I think that kind of philosophy works in real estate where you find you know instead of trying to diversify over the entire world. I'm just putting all my eggs in a couple baskets that I know or really solid. And I'm watching those baskets really closely. That's my real estate philosophy. But the long run I am a diversification. I see the value of diversification. And so you know after you achieve a certain plateau with a certain amount of networth a certain amount of income. I think it's wise to branch out so for me the diversification program has been had a lot of cash and a lot of real estate. I Also do some nodes like node investing instead of jsut having rental properties also loan you have some financing where I finance houses to other people. And so that's that's a nice kind of variation on real estate that also produces some income as well.
housing, indexfunds, networth, stocks
3338 - 3348 Brad Barrett Yeah that's very cool and I think from reading your articles I guess you and your business partner have somewhere in the vicinity of 90 properties. Is that approximately correct.
3348 - 3407 Chad "Coach Carson" Carson Yeah that's too many we have we have 60 before before last year we just bought a we just bought 30 30 units in the last year just because we couldn't pass them out. They were good deals. And so I think in the next year or two that will get reduced back down. Some of those units that we bought are development projects where we're turning the project around we're adding some value to some apartments we're raising the rents. There are some undeveloped land attached to it that we could sell off and there's a bunch of developers coming up from around the country in our town and buying up properties. I suspect that 90 90 number will go down because that's not our that's not our fun relaxing long term number but we're we're we're we're in the business. We like that. I'm kind of hesitant to say that number sometimes because then people think wow that's crazy that's not passive and I think for most people you get five or ten properties or even one or two properties. You take care of those you make sure there are good deals that can be a very very solid real estate portfolio for a lot of people.
3407 - 3437 Brad Barrett Yeah and that kind of answers. You know my follow up question which is going to be is this ultimately a let's get it as big as we possibly can. Empire does 90 turn into 900 into 9000 someday. Or is it. Are you guys playing the the free and clear plan which is let's have 90 or 60 or whatever you wind up with and then pay them off with an extra cash like is that something you and your business partners sat down and discussed that thoroughly or is it just oh we see a deal it's too good to pass up is it some combination of then gets here your thoughts.
3437 - 3521 Chad "Coach Carson" Carson Yeah it's probably more the latter. So I actually had some really good debates and articles I write on bigger pockets is the big real estate Web site where I'm on the set. Keep it simple. Pay them off. Don't try to get big kind of invest. So my article my debate part of the debate whereas light seemed like a common thinking for to kind of go getter real estate people as you know you get one property you get a duplex. You sell it. You use your equity to go into a 10 plex then you sell the 10 plex and you get into a 50 plex. You know you just keep moving up until you own the Empire State Building in New York City. That's that's kind of the normal route. I definitely push back against that. And I think that's more my kind of fire community early retirement community roots that's I is that you know at some point when that's enough you know you know what do you really need to do. You know gosh I got a hundred thousand dollars a month coming in and this is great. You know I can't even fathom the reason that I would want to get that big. And I think that's a it's just not necessary particularly because it goes back to what do you know why are you doing this in the first place. And for me my wife's really always a good governor for me is like you know what do we want to do. What do we want to do. Why would we want to travel we want to go learn Spanish we want to do some of these things. And I love real estate investing I'm a nerd. I like to do this and I'm allowed to teach.
housing, travel
3521 - 3521 Jonathan Mendonsa We're with you brother.
3521 - 3573 Chad "Coach Carson" Carson It. And at the same time though. There's this other you've got to you've got to find these other things in life and having a thousand units is ridiculous if you want to try to go be simple live your life and other stuff. And so you know we're not we're not perfect and I'm constantly looking for that kind of balance. I think 90 is over our balance point. But at the same time is just I'm opportunistic and we hired a third party party property manager to manage those extra units. We did try to do that ourselves. And so I'm opportunistic, but at the same time I think a long run is keep it as simple as you need it to be. Whether that's two houses whether that's 50 houses and keep it as simple as it needs to be to meet whatever that financial independence goal, that why, behind all your money is and whatever that number is for you don't let other people sway you from saying you've got to get bigger than that.
3573 - 3628 Jonathan Mendonsa That's so powerful. I love how rooted you are in the fire community. I find that I relate to you. You know what you're saying very much. And I think for us the common theme that here is at some point you just have enough. And isn't that in some way rewarding that the goal is not to be the person with the most money. That's not the conversations that are being had in the fire community. That's not what we're talking about. Our goal is not money. Our goal is freedom. Flexibility and spending time with family and developing relationships and real estate and investing in all these life hacks that we're unrolling their tools not to help earn you money although that may be a sign that you're hitting your ultimate goal but we're trying to help you buy your freedom and I was going to try and re say everything you said but you just you said it so well that it just you summed it up perfectly and I think that's encouraging for someone that may not think themselves you know I don't think I'm ever going to be able to have 90 units. Please tell them you don't have to. You don't need a five is a simple number.
families, housing, lifeoptimization, relationships
3628 - 3663 Chad "Coach Carson" Carson Absolutely. I think you're going to be happy if you look at your happiness quotient. I mean for most people that 1.5 range is perfectly fine. Yeah I encourage everybody run home. And when you add to you listen to this run some numbers there is a number do some simple math and say that a proper rental property in my area runs for a thousand bucks or 1200 bucks. And let's say I netted half of that. Yes 600 bucks a month is what I came out with after it's all said and done for house is that enough 600 good for me or do I need three properties I need to be 1800 bucks a month. You know just just run that simple math and make it work for you. That's the message.
3663 - 3699 Jonathan Mendonsa You know what's great about this Chad when Brad and I decided we're going to start doing this podcast we thought yourself you know what we're just going to do it in a short 20 minute conversations and we're just going. And Leachman piecemeal. But then we actually started doing it and how much we actually love this content and just discussing these ideas. We can't do it and so that's why you guys are listening to the podcast it's over an hour long. How can I let coach Carson go without digging into some of this information it would be criminal. So I hope that our audience appreciates the fact that these are now because it's not we're not wasting your time we're trying to give you the just hit you with actionable tip after actionable tip. And so I mean so Chad this has just been awesome.
3699 - 3702 Chad "Coach Carson" Carson And you guys you guys have done a great job of pulling it out I appreciate you.
3702 - 3720 Jonathan Mendonsa All right so it is time. Lucky you. You are going to be our guest on the hot seat today so don't be scared. But the epic music intro is coming. Wait for it. And enjoy it.
3720 - 3749 Speaker In a world drowning in debt and rampant consumption. Trapped by the chains of lifestyle inflation. These questions highlight the secrets of those who have broken free. Welcome to the choose F-I hot seat.
3749 - 3754 Brad Barrett All right. Number one your favorite blog that's not your own.
3754 - 3807 Chad "Coach Carson" Carson Yes I listen to a guy or read a blog by. Brian Johnson is caught and his website is called optimize dot me. It's actually not a personal finance blog but it's like a personal development. And the thing I love about it is it's kind of like everybody knows that clip notes they're the book summaries for the books you had in high school like a literature book you never really really want to read the whole thing but you you had to protest and you read the Cliff Notes Well he's done like 400 clip notes on everything from like Marcus Aurelius. You know the Stoic philosophy all the way up to positive psychology and modern kind of thinking on cognitive therapy. So if you're into that kind of stuff I think people in personal finance are going to improving yourself and becoming better. He's really I've been following him probably ten years and he's just a cool cool guy grounded down to earth that writes some cool stuff.
3807 - 3824 Jonathan Mendonsa That's awesome. I've never you know what I love about this is I always love being pointed to someone else. I didn't know about because you just don't find this stuff Google even though it's amazing unless you have something to look for you're not going to stumble into it. So we'll link to this guy in the show notes so he can go check it out.
3824 - 3824 Chad "Coach Carson" Carson He's good.
3824 - 3828 Jonathan Mendonsa All right. Question number two Chad. Your favorite article of all time.
3828 - 3909 Chad "Coach Carson" Carson So I listened to a couple of you got your other podcast and I know there's kind of the common answers that some of my initial answers I was like Mr. Money Mustache. Some of that stuff I love. But actually there's a friend of mine a blogger a friend who writes a blog at eat the financial elephant. And Chris is his name and get this article for this totally resonated with me called dirtbag millionaires and that concept was basically like he and his wife were outdoorsy people and they were to hike and climb mountains and do all that and they had some friends who were like these dirtbags who totally went into the outdoor life and they lived on the edge live for the moment they lived in the back of cars and you know just dirt you know sleeping on people's couches. They live for like a passion of doing what they wanted to do. And those are the dirtbags that everybody kind of admired but they well you know they're one illness away from disaster you know. So you couldn't bring yourself to do that. But you loved that lifestyle and at the same time he had he worked with a lot of people who are really new made a ton of money and were professionals and bought the nice cars. And you know lived that kind of. Higher money lifestyle and he could really resonate with that either. But he wanted he so he loved the idea of financial independence while kind of being. Being wealthy but living like a dirt bag and doing what you love. And so I totally resonated with. That was such a cool philosophy. I'll give you guys the links and you can link to it later.
3909 - 3911 Brad Barrett All right. Number three your favorite life hack.
3911 - 3980 Chad "Coach Carson" Carson So I'm going to lay low tech on this one my my life hack is actually sitting down every week and also every year and just with a pen and a paper and planning so planning out my week planning out my day planning out my year and whether that's five minutes or an hour or whatever it's actually like thinking about it for the next week. What are the I think the analogy that always resonated with like what are the what are the big rocks and the little rocks like if you're going to go your week up like it's like a jar of time you're going to fill it up. If you put all the little rocks in first all the things that are not that important then you're just going to fill it up with the trivial stuff as opposed to actually like scheduling the things that are important to you but not necessarily urgent like exercise like eating well like. Working on your walking neighborhood find your house hack or whatever it might be and actually like scheduling putting that in a schedule whether that's paper schedule your Google calendar. I found that the last 15 years basically that practice has just been awesome in terms of effectiveness and getting things out of your week out of your year. It just kind of hard to be that kind of low tech planning hack.
3980 - 3988 Jonathan Mendonsa No that's great I love low tech hacks. Now you just do this on scratch paper or do you put it on a special like type binder that you reserve for just this type of thing.
3988 - 4008 Chad "Coach Carson" Carson I got a little like a three ring binder like a little day planner kind of binder with a leather leather binder that I carry around and that that was like the one thing is I can I can leave a lot of stuff behind when I act with like I could not like I can not leave that binder behind it has as has a calendar and it has a little sheet you know kind of notes I'm thinking of.
4008 - 4022 Jonathan Mendonsa And that's that's not to go back to the interview but I've got to say when you're talking about all the things that you would have to unhinge your life from to do the move that you know did I was kind of I was feeling a little of pain along with you because I can you get rooted in your community for sure.
4022 - 4026 Chad "Coach Carson" Carson It's tough. It was tough but awesome experience.
4026 - 4030 Jonathan Mendonsa I'm glad you're a legend. OK. Question number four your biggest financial mistake.
4030 - 4112 Chad "Coach Carson" Carson Yeah mine was right in my business. So you know we got through it. But in 2007 was it everybody kind of knows the timeline of the Great Recession and I guess that was sort of right before things started going down. Energy. Seven early 2008 things started going crazy and actually had our biggest volume year ever we had 50 closings that year when we bought 50 properties. And so a bunch of those we sold some of it we kept but the mistake was that we kind of bought into other people's goals we were going to seminars that were saying wow you could do that I kind of got caught up and I got really good at buying properties. But I got sloppy. And so I'd say like out of the 50 properties we bought three quarters of them are really good deals are made money on very good long term rentals. But that other 25 percent that we've been dealing with for the last 10 years you know what is called Bubble gum they get stuck on the bottom of your shoe like this takes forever like all that stuff off the bottom of your shoe and it's annoying and sticky and it doesn't help you. I think we would have been a lot better off. I think I've learned a lot of lessons I'm kind of one of those people has to get smacked upside the head before I learn a lesson so I learned a lot of lessons about that. But I guess the simplicity and the like. We really need that many deals or you just need to be have enough that you're affected and you keep moving forward. That was our big lesson.
4112 - 4118 Brad Barrett Yeah that's awesome. All right Chad. last one. Number five the advice you would give your younger self.
4118 - 4203 Chad "Coach Carson" Carson I would tell myself to do exactly what I did and I still have. That's all. I don't have any regrets. Particularly with being an entrepreneur. I don't know. This isn't for everybody entrepreneurial lifestyle. You know not having any guarantees every day you wake up you're unemployed you got to go out make it happen. It's not for everybody but I know looking in the mirror that it's just been awesome it's like you know as somebody who likes to play sports and challenges and entrepreneurship it's just a lot of fun and it was something that I really got a little out of the benefits of financial independence before I even got there. It's you know I used to play when I first three four years in business. My business partner and I love pickup basketball and we would go for two or three hours in the middle of the day play pickup basketball with all the coaches at Clemson and we play in the stadium where all the basketball team plays at the big arena and we were just like hack it you know just had this awesome pickup basketball games for hours and we'd be sweaty and every you know like I was always thinking of myself. I had some coat and tie live in New York City. I would never be never be doing this and yet I was doing that and then I go take a shower and go try to buy a house after that. And I probably worked until 10:00 or 11:00 at night anyway. But the thing was it was just so. Whether you're doing a side hustle or whether you're doing a full time entrepreneurship is just such a fun kind of challenging thing that I would I would tell my younger self to do it do it all over again.
housing, hustle
4203 - 4258 Jonathan Mendonsa Yeah. Two things going on. One is that to me anyways I don't think of you as a guru and I know in general I kind of have the same philosophy on that is that people from bigger pockets do a kind of it kind of makes me cringe. I don't like the idea of it. I want someone that I can relate to that I can see their decision tree and feel like they're always trying to upsell me into something. I think that that's the way that you present yourself. I think that's the way that's a reason that I relate to all the articles you write and the content you write. I mean it's just I understand your decision tree and I love the fact that you don't look back at your process with regrets that you can tell your younger self just do this man just do this it works. So I really think that's cool. This is a little bonus question super short. Brad and I want to know we're asking all of our guests going forward in the fire community when we make purchases. We always look at the value proposition but we do purchase stuff and you may be frugal with 90 percent of your life. We want to know what's the best thing that you purchased on Amazon last year.
4258 - 4288 Chad "Coach Carson" Carson I'm a I'm a book book nerd so I think I purchased a book Thinking Fast and Slow by a psychologist named Daniel Kahneman and I think or canman I don't know how to pronounce that name and it is really I brought that book with me like I was one of the toughest decisions I had come to Ecuador and what books I'm going to leave behind. So Amazon Amazon books if I'm up on the internet at 11 o'clock at night I'll wake up like a week later say did I order a book you know hey a book came in the mail. What is this. That's like my splurge you know.
4288 - 4304 Jonathan Mendonsa That's awesome. All right well this has just been absolutely fantastic. Brad. I can't believe just how much great content he was able to unpack he's already done two. Absolutely amazing. You know podcast and articles over mad fientists. But I got stuff out of this that I didn't get over there and I mean do you have any final thoughts on that.
4304 - 4314 Brad Barrett This was incredible Chad just really brought it and just gave us a lot of actionable information and you know that's what ChooseFI it's all about. And you know we can't thank Chad enough for being on.
4314 - 4377 Jonathan Mendonsa It just to me just it makes sense you know. We've been basically unpacking these different life hacks that you can start to implement you know we've talked about travel hacking how to travel the world for free. We've talked a little bit about college hacking how to optimize that we've talked about food how to decrease your food budget. We've talked about fitness how to do fitness in just a way that makes sense. It's just a little bit smarter you know and as we always say you don't have to do everything perfect and you don't have to do everything that we're doing. But if you can just you know lock up one to see if you can just lock up a few of these life hacks you are going to retired decades in front of your peers. And I think what superpowerful But what we're saying today and what we said already twice and I just want to reiterate it. The ultimate goal for the fire community is not money it's freedom it's flexibility. It's spending time with those that you care about. And these are the tools that you can implement. Every single time. So we hope that you enjoyed this awesome podcast and join us next time as we continue to go down the road less traveled.
Jonathan_Catchphrases, college, fitness, lifeoptimization, travelrewards

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