How to get started with real estate investing (Buy first rental property)
I have no money or have little money, I have no knowledge or little knowledge but I want to buy rental property
then follow this steps
1. Understand the process – you do that by
Read books or watch videos or attend seminars and grab coffee with people who owns Properties
2. Figure out what strategy fits your current situation
No money –
Once you understand the process and figure out the strategy the find the deals and take it the people you trust you the most who can lend you money and get mortgage
Like your 1. parents 2. Best friends or girl friend or boy friend
If you don’t have no way get that money then first focus on making money by saving and working extra or get into selling
If your working full awesome all you need 5% down in Canada
In USA less than 5% down for owner occupied
if your still lost don’t know what to do then reach out to me –
On social media
1. Real Estate Investing in Canada: Creating Wealth with the ACRE System (
2. Rental Property Investing by Brandon Turner (
Social Media Websites that can help you regarding Real Estate
(Real Estate Investing Network Canada)
Remember: Formula for Success RAN(do RESEARCH, take ACTIONS and NETWORK with right people)
I’m currently living and Investing in Windsor Ontario Canada
I have no idea where to start but I want to buy my first rental property I have some money for little money I have some knowledge or little knowledge that is this something your situation than this video is for you Namaskar ah de bercy's recall when I come good morning good evening everybody this is Aditya welcome to my channel if you haven't hit that subscribe button please do so right now for an awesome content regarding my real estate investing and realtor journey so without any further ado today I wanna help you if you haven't purchased any rental properties then this video is for you if you're wondering where to start from then this is the first step for you I'm gonna share particular things in this video watch till the end make a notes if needed follow that has this I promise you you will have a rental property within a couple of months it could be you can buy if you are like really aggressive you can buy it in one month if you are like a little bit slow and steady it still you can buy it in next three to four months but stick with me with the process and follow what I'm gonna suggest in this video so step number one you have to understand the full process that involved to buy a property you know how to write offers so what is mortgage what kind of things involved in it you have to understand those whole process obviously I'm not going to detail those steps because I already made a video you can check out here thus 10 steps involve in order to you know understand the process so that's the first step go check out that video second get on to books which are specific about rental property how to invest in rental properties there are a couple of books if you're Canadian and the best book I love about rim written by I don't remember the author name but I will pop in the picture here I will put a link in the description and also a couple of other books they're like really gives you a solid knowledge on what are the you know what is the process involved and what are the type of strategies that involve you you can understand a overall picture of about rental properties so check out that then also get on to social media platform that is specific to the rental properties that is specific to real estate investors which is bigger pockets that's really really a useful resource just get on to it go meet local investors on on that group you will see people who are investing in your location if you don't find any just you know pick up a phone and call a realtor in your local area or find a realtor who is a investor specialist and ask him for suggestions so if you go through the steps and also get on to bigger and bigger pockets podcast or a couple of other podcasts who are like talk about investor stories so when you go through this multiple stream of sources you will first understand the process so that's really important before you buy a property once you understand the process in that simultaneously second thing will happen which is you figure out a strategy that fits your criteria because this is really important where many people fall aback because you know they look at some people who are like they preach that hey buy six unit building ten unit building or some people preach that buy a property which neat enough work drin you a tit and refinance your money and some of people will taste that just buy a turnkey property which has good cash flow or some of them will tell you that buy student rent out oh my god what the heck there's many strategies but if you understand the process if you learn from other people who are doing this now you know what are the strategies are available out there now take a step back and look from your point of view because everyone is made differently me and you are different no matter what it may you might have some commonalities but we might be starting from a different point I'll give you some examples for example you have no money at all you're a young kid you are like 22 or 23 but you're really enthusiastic about it you already in the process of learning about the process now where do you start from so for you the best option is to go talk to your parents ask if they can joint venture which to you if they can give you some money like 20% down so then figure out and if you want to get out from if you don't want to do any job just take the investing as a main source then find the properties that cash flows so that might be your criteria or for example if you are working full time you already have a solid job which is your active income but you want to build some passive income for your family you know to have a solid return on your money then that's a different scenario you have to look for something maybe you don't have enough time to you know find the contractors or do the renovations then just go find a property which is already a turnkey in a good location in a good you know which can appreciate well but at least it will sustain by itself you know without any negative cash flow so that might be a criteria for you or you might be someone who just started working full-time you you have a little money maybe like you know ten thousand or five thousand or twenty thousand then you can go look for property that with a 5% down with a price range whatever makes sense to you maybe you can live in one bedroom and rent out the other bedrooms like I used to do before so who how do I know or how do someone who is talking about specific strategies know your situation so what I'm trying to tell you is it's really important figure out what situation you are in right now are you with money or without money or with credibility what I mean by credibility credit history are you do you qualify for mortgage or you don't qualify for a mortgage so figure out your situation and find a strategy that fits your criteria because this is where many Falls now if you have a specific criteria based on your scenario now go start looking for properties so the third step is go start looking for properties keep on making offers keep on making offers until you get it and find the people to you know work with because if you have done the step one and step two already now you're in inner circle with the different people to work with hooray just keep with it buy the first property this will help you if it doesn't then reach out to me on social media or let me know in the comments below if you have like you know if you couldn't figure out why that way the hack to start from just reach out to me I will help you too and there are many other people who can help you too so reach out to people find out the solutions for your problems and with that thank you so much for watching this video if it's helpful let me know in the comments below if it sucks still let me know in the comments below because comments can give me an idea what you how I can help you so that way I'm not wasting your time with that have a wonderful life
With the ODA unit, you can protect your house and save money on bills as well.
To calculate your potential savings please Visit
this is Kevin he is angry and tired of losing money when his windows and doors are left open his electric bills skyrockets Kevin is not aware that every hour a window or door is left open it can cost an extra two dollars in electric bills that means if they're left open two hours a day he's losing a hundred and twenty dollars in one month luckily Kevin is smart and found a solution he ordered a tamper-proof open door alarm system it arrives pre-program installs in minutes and his secure and tamper proof now that Kevin has his new Audi a unit every time his doors or windows are left open the secured alarm sounds off and stays on until the door is closed Kevin's new Oda unit is keeping his house cool the humidity out and is hard-earned money in his pocket are you throwing your money out the window protect your home and keep utilities cost down with the ODA secured alarm system
In this video I share 8 Frugal Living Tips that I’ve used and you can use to save money and start investing it such as owning rental property. Living a Frugal lifestyle is how we did it and you can too! Instagram:
Share This Video:
How To Buy A Rental Property Series:
Why You Shouldn’t Buy a House:
Buying Rental Property Out Of State:
Health Insurance Alternatives:
Here are 8 Frugal lifestyle ideas that will help you start building wealth to invest in real estate.
1. Housing – The standard rule thrown around is to spend about 1/3 of your income on housing. If you’re able to lower this or completely eliminate this expense then this going to help you save a lot more money. One great way of doing this is house hacking which is buying a 2-4 unit property, living in one side and renting out the others. Another way to do this is living with family. This is what we have done so far and living in Los Angeles where rents and mortgages are sky high, it’s helped us save a lot of money.
2. Transportation – Too many people make a big mistake buy purchasing nice fancy cars they can’t really afford. This sets them back and they never get ahead because they’re throwing all their spare money into a depreciating asset. My frugal tip with this is to either purchase a cheap car all cash or if you really want to step up your frugality, I would live close to work so that you can bike to work. This will not only save you car payments but also, car insurance, maintenance, and gas expenses.
3. Food – Eating out is another huge expense and when we found we were spending $1,200 on food for us, we were shocked! Lowering your food expenses can dramatically impact your overall savings rate. My frugal tip for this is to Not eat out as much as possible. It’s much cheaper to shop at the grocery stores than eat at restaurants so just plan ahead during the week to make time for grocery shopping. Even things like coffee can add up. If you spend $5 a day on Coffee, that’s almost $2,000 a year so you need to be careful or your food expenses can become another house payment.
4. Travel – Travel is another thing people like to do that costs a lot of money. You don’t have to be frugal and just not travel, Instead credit card hack. This is when you take advantage of all the reward points credit card companies offer these days. These days, we never pay for our flights as we have enough points to travel for free. Thepointsguy.com is a great website to check out if you want to learn more about credit card hacking.
5. Health Insurance – Health insurance is pricey in this country and if you don’t qualify for government assistance, check out Samaritan ministries or Medi-Share. These are two private programs that offer much cheaper health insurance including some plans that cover a family of 5 for as cheap as $250/month. There websites are listed above in the description.
6. Consumer Debt – This is the worst kind of expense because you don’t get anything in return. Anytime you’re looking to change and start saving, tackle all of this type of debt first! I recommend starting with your highest interest rate loan first and then working down to your lowest interest rate. You will start to pocket more money every month and it will be a snowball effect helping you get out of debt faster.
7. Cut The Chord – You don’t need Directv when there’s options like Hulu or Netflix as low as $8.99 a month. Cut the chord and start potentially saving over $100 immediately.
8. Misc. – I’ve covered most of the expenses to tackle at this point but things like shopping, entertainment and other personal luxuries can still add up if you’re not careful. I just get what I need and not what I want. If you still want to enjoy some of these luxuries, I utilize my birthday and Christmas gifts to get these type of things like nice clothes or tickets to a basketball game etc. That way I’m still not paying all that money but I still get the experience.
For any one on one coaching or other business inquiries email me at: [email protected]
#Frugalliving #Frugalhacks #Frugaltips
have you ever wondered how some of these guys get the money to invest in real estate and how they even got started what's up guys it's James Allen the out-of-state investor and today I want to share with you eight frugal living tips that have helped me to get out of debt and save enough money to start owning my own rental property now living frugally is something that I've done over the last few years and it's been amazing the way it's helped me to get started in real estate and now get to the point where things are really starting to snowball I can't wait to share with you how you can do the same thing but before I get started go ahead and push that like button and subscribe to the channel to get notified about new videos like this one with that said let's get into it living frugally is not something that i've always been focused on I used to be the kind of guy that would never get into any debt but at the same time I was very much a paycheck to paycheck kind of person I got married a couple years after college and after about two and a half years of marriage my wife quit her job so that she could stay at home with our newborn baby now at this point we were literally losing about $2,000 a month and got to the point where we got in twenty five thousand dollars of debt and to make it worse most of this was high interest credit card debt it was a terrible time for us but I remember thinking that I just couldn't take it anymore and I needed to do something about it so I started researching online about how to get wealthy and real estate kept coming up I found out that 90% of all millionaires invested in real estate so when I saw that I decided that I had to do whatever it took to start investing myself the thing is if you want to start investing in rental properties it's gonna cost a decent amount of money to do it so how much money does it cost to start in real estate well for me it was saving up my first twenty five thousand dollars to cover my down payment my closing costs and a bit of reserves so that I could buy a single-family property now we knew that we didn't make huge salaries and we also knew that if we were gonna acquire a lot of money to not only eliminate debt but also invest in real estate then we would have to dramatically lower our monthly expenses so here are eight ways that we used frugal living to start owning rental property number one housing expenses housing is normally the biggest living expense that you'll have so if you can do something to lower or even eliminate that expense this can be huge in saving you a lot of money fast the standard rule that's always thrown around is to spend about a third of your income on your housing expenses some people will stretch themselves so thin to use as much as 50 percent of their income on housing now for us we live in Los Angeles where the housing prices and rents are absolutely insane so it didn't leave us with a lot of options the way we dramatically changed our housing expense was making the choice to live with family now this is not the easiest thing to do and it's a massive sacrifice to not have your own place to live in with your family of four but honestly this has played the biggest role in us getting back on our feet starting in real estate and scaling as fast as we have we actually still live with my wife's family to this date in order to help us scale even faster and as you'd expect when I tell people this I get some really strange looks from them but you know what we just use our goals as fuel to keep us going every single day another great way to lower or eliminate your housing expenses is called house hacking now this works particularly well in Cheaper markets but it really can work anywhere house hacking is when you purchase a two to four unit multi-family property and live in one of the units while you rents out the others now this will allow you to use your rents from your tenants to cover the whole entire mortgage payment and lower your cost of housing even to the point where you could live for free the cool thing about this is not only will it lower or eliminate your housing expense but you're also building equity as your tenants pay down your mortgage for you and you're also gonna gain appreciation over the long run as well number two transportation transportation is the next biggest expense that most people come across many people in today's society they like to get these nice luxury cars and the funny thing is that while some of these people may well be rich a good portion of these people actually live paycheck to paycheck and they can never get ahead because they invest all their money into depreciating assets and even worse than that many of these people will actually buy these cars to try and impress people that they don't even like this is a typical middle-class mentality and sets you back from building serious wealth when we made the decision to start living frugally my wife and I sold our brand-new Honda CRV and purchased an old 2003 PT Cruiser for $1,200 cash my car had just been paid off and we still drive both of these cars to this day now we may not impress a bunch of people as we drive around as a family of four in a beat-up purple PT Cruiser but it has been helping us to save an extra six to eight hundred dollars every month just by doing this and a way to take this to the next level and save even more money on your transportation costs it's to live really close to your job and bike to work instead this will save you money not just on your car payments but also on your insurance gas and any maintenance costs that you typically deal with on a car plus a little exercise never really hurt anybody number three food food can be another big expense that's stopping me from pocketing lots of money this is the one that we struggle with the most because we were such big foodies and when we were first getting out of debt and saving for our first property we set a tight budget of a hundred and twenty-five dollars a month for groceries including food for our newborn daughter and it's funny because when we set that budget we had no idea how we were even gonna stick to it but when you set goals on paper somehow you find a way to make it work we found one of the cheapest grocery stores in town and when we shopped there we would buy all no name brands in fact I actually remember a time when we were walking down one of the aisles of the grocery store and my wife was like oh let's get those Aunt Jemima pancakes and I was like Aunt Jemima no we're getting Krusty's and she didn't take that very well to the point where on our first day of grocery shopping we ended up getting in a big old argument about it and my wife was literally crying outside the store so my point in sharing all that is that it's gonna be hard if you're adjusting from a completely different way of life but the best way to change is just to rip off that band-aid now aside from that we also gave ourselves an extra $25 a week to spend on a eating out now it was extremely hard but really effective and when we looked back on our previous bills we realized that we were actually spending $1,200 a month on food so by being frugal like this we were able to save almost $1,000 a month also things like bringing food to work and eliminating consistent trips to Starbucks go a long way did you know that if you spend five dollars on a cup of coffee every day then you're actually spending almost $2,000 a year just on coffee to avoid this we purchased a 250 dollar coffee grinder to make some awesome coffee at home and eliminate those trips to Starbucks today we've decided to get more lax with our food costs since it's something that we actually enjoy but we still mostly eat in our house and limit ourselves to going out twice a week for food along with the occasional Starbucks number four travel everyone loves to go on vacation and travel when they get the opportunity the problem is traveling is expensive but with every problem there is a solution and for traveling the solution is credit card hacking credit card hacking is basically taking advantage of all the reward points that credit card companies are offering a lot of credit card companies today offer over fifty or seventy thousand bonus points just for signing up and spending a few thousand dollars in the first few months obviously the specific terms are gonna depend on the company but the point is utilizing cards in a smart way can give you the opportunity to vacation for free for us this has been the way that we've been able to travel so much we hardly ever spend money on flights anymore I take advantage of any rehabs on my properties and get literally thousands of points for doing that there's also a perk to having multiple credit cards aside from the initial signing bonus some cards will offer two times or three times points on certain products or services now when you have multiple cards you can use the strengths of every card depending on what you're spending your money on for instance one credit card may give me three times points on all transportation costs so when I'm pumping gas or I'm taking an uber I'm gonna use that credit card whereas another card may give me three times points on dining out so every time I go to a restaurant with my wife I'm gonna use that card so that I get the maximum points with that said I make sure to never carry a balance so that I avoid paying any kind of interest there's so many ways to take advantage of this and if you go to thepointsguy.com they have great reading material on how to utilize credit cards in a smart way number five health insurance health insurance is well known for being overpriced in this country it amounts to one of the largest expenses that you can come across if you're looking into getting a discount on your insurance but you don't qualify for any government assistance there are still options available to pay less on your health insurance there's a couple of private programs out there called Samaritan ministries and Medishare they're both different programs but with Samaritan ministries you can get coverage for a family of five for as low as two hundred and fifty dollars a month with 90 percent coverage of up to two hundred thirty six and a half thousand dollars or you can use their classic package to get a hundred percent coverage of up to two hundred fifty thousand dollars and that is as low as four hundred ninety five dollars a month for a family of five now I haven't personally used either of these programs but I do have friends that have and they had nothing but good things to say about both of these programs I've also put their websites in the description below so that you can check out all the finer details such as deductibles and other things like that number six consumer debt one of the biggest ways to stop yourself from saving money is having high interest consumer debt getting involved in this kind of debt is the worst because you're paying money every month and you're not getting anything in return consumer debt would include things like credit cards personal loans you get the idea now most of these loans or credit cards carry interest rates of at least 10% interest and can be as high as 36% interest if you get the new first premier bank credit card when you get into this high interest debt you can't make you feel like you're fighting an uphill battle that you're never gonna win when you made the decision to start saving throw everything you can first into killing your high interest debt make sure that you know what the interest rates are for all your credit cards and loans and start off by paying the highest interest rate card first this will be a snowball effect that will allow you to save more money the next month and even more money the following month after that as your monthly credit card payments go down you can easily increase the amount of money you pocket by hundreds of dollars a month just by eliminating debt so make that your first priority when you start saving money number seven cut the cord you don't need to have Direct TV or other television services these days when you have access to great options like Hulu and Netflix DirecTV always starts at a semi reasonable price but before long it's easy to find your bill in the range of a hundred to two hundred dollars a month Netflix offers packages as cheap as $8.99 a month so when choosing the live frugal switching from your traditional television service providers to a Netflix or Hulu account can save you over $100 a month we continue to use streaming providers like Netflix and Hulu to this day and honestly I've never felt like I'm missing out number eight miscellaneous so for the most part I've covered the biggest expenses that you can tackle there are of course other expenses that you'll come across such as shopping entertainment and other personal luxuries now my thoughts on this is I really just get what I need and not what I want sure it'd be nice to purchase NBA tickets here and there go see my Clippers play go clippers or go see some of my favorite artists in concert but every time I make a choice to do that I'm delaying myself from hitting my goals so I don't normally pay for anything like that but what I do is I'll ask for my birthday or Christmas gifts to be entertainment events like that so I still feel like I get to do those fun things for clothes I normally shop at H&M or somewhere relatively cheap and you know what making the occasional exception is not a big deal my philosophy on eliminating debt and saving money is that if you can tackle those first seven things I talked about and particularly the first six then it really won't matter too much if you're making the occasional exception for a nice shirt a Starbucks drink or other minor things like in conclusion if you start to utilize these 8 tips I promise you that you will be able to start eliminating debt building up your savings and giving yourself better opportunities for investments and growing your wealth as always guys thank you for watching this video if you enjoyed it go ahead and push that like button and comment down below to tell me what your biggest takeaway was or if you have any questions also if you haven't already done so go ahead and subscribe to the channel for more videos like this lastly stay up to date with me on Instagram at the out-of-state investor thanks again for watching and I'll see on the next one
Dawn Brenengen’s money story begins a bit differently than most. Dawn’s parents shared their finances with her. She knew what things cost, she knew her parents worked hard to pay off their mortgage, and she saw her mother writing checks to pay bills every month.
She went to college and graduated with relatively little debt—around $21,000 in student loans and credit cards combined. After graduation, she stayed at her low-paying college job until her father suggested she get a real estate license.
Dawn completed the work for the license and got a job making almost the same money, working for a builder and selling their new homes. But she was the assistant to the agents who were making the BIG BUCKS, and she knew that’s what she really wanted to be doing.
At the time, real estate agents were eligible to take the test to open up their own brokerage simultaneously with the licensing test, so she did that. While working as an assistant, she laid the groundwork to strike out on her own, eventually ramping up her income to multiple six-figures—with virtually limitless potential.
Here Dawn share her story of how hard work and determination paid off tenfold—and all in just four short years!
Check the full show notes here:
welcome to the bigger pockets money podcast show number 72 it's time for a new American Dream one that doesn't involve working in a cubicle for 40 years barely scraping by whether you're looking to get your financial house in order invest the money you already have or discover new paths for wealth creation you're in the right place this show is for anyone who has money or wants more this is the bigger pockets and money podcast how's it going everybody i'm scott trench i'm here with my co-host miss Minnie Jensen how are you doing today Mindy Scott I'm having a great day how are you doing I am doing fantastic I'm excited to interview dawn and you know she's a longtime BiggerPockets contributor has a fantastic career as a real estate agent we're gonna hear all about her transition from kind of dead-end career but not really because they helped prepare her to become a successful real estate agent and just kind of how she managed to build an incredible financial position on the income and wealth building fronts over the last couple years yeah and you know what I like about Dawn's story is you know I'm a frugal person on the path to well I've reached the end of financial independence but I'm a frugal person who does it she is showing us that you don't necessarily have to be frugal you don't have to you know eat rice and beans and peanut butter sandwiches and you know spend ten thousand dollars a year to continue to be financially independent or continue down the path to financial independence she's more of a fat fire story and I just really like that yeah I think it's fantastic well should we bring her in we should dawn brenigan welcome to the BiggerPockets money podcast how are you today I'm doing great Mandi how are you I am doing fantastic I'm really excited to hear about your story because not only are you gonna tell us how you grew up with money but you're also gonna share with you with us how you increase your income which is you know and on the path to financial independence you can either reduce your spending or increase your income or do a powerhouse combination of both Ryan and I really like how you increase your income because it's repeatable it isn't like you're you know nuclear physicist and you went to school for seven thousand years to become this you have a really great story and I'm super excited to jump into it so you know before I tell your whole story why do you with where your journey with money begins yeah I grew up in a really money financially literate household so my parents were really good at um you know making sure I just kind of knew the date in and day out things to know about money right so my mom would sit at the kitchen table and pay our bills so I knew our mortgage was $600 a month I knew when our mortgage was paid off you know they would take a car loan out to buy a car but then you know immediately would start knocking down that debt you know we don't think we ever had a car loan for more than six or six or seven months you know I knew how much electricity costs I knew what our food budget was I shopped with my mom she was stay home on for a long time and you know started working when I was a little bit on the older side and my dad he was in the army and then he was an entrepreneur after he retired from the Army so you know they just kept me very involved with stuff you know I helped my dad make deposits from his store and you know I worked in a store when I was 14 and 15 years old and for free because he wouldn't pay me to do [Laughter] that's right um you know but I learned you know obviously I was office I was also an only child and quite spoiled in other ways but you know he didn't let me trade time for money you know and so I think I had a big head start when I went to college I was able to you know make sure my rent was paid on time my credit card bills were paid on time but I still did those dumb things that 20 year olds do like go into debt or you know buy cars you don't need or you know go out to eat everyday for lunch and you know I made all of those financial mistakes along the way I think I just had enough financial education to know that they were mistakes you know and to put myself back on the right track and you know I worked a w-2 wage job when I graduated from college and made about $27,000 a year when I graduated back in 2001 so now we're 18 years ago and $27,000 a year was not very much back then either and I had roommates you know I had you know people to share expenses with and stuff and so I was always able to pay my bills but you know just never really had a whole lot to put away for savings and you know like I said I spent my 20s having a lot of fun I went out drinking all the time with my friends and we would go out to eat and we would go on vacations and you know it was definitely spending a lot more than I earned you know but kind of quickly figured out like hey I've got to figure this out I think when I graduated from college I thought that I would make a lot of money and therefore would be able to pay back all this stuff pretty easily it didn't happen that way what were you doing what did you go to school for I was a psychology major and I worked in a therapeutic foster care agency when I graduated so I managed their medical records and then I also worked one-on-one with some of the high-risk kids in their you know in their community what were the debts that you accumulated with it in this time period what were you paying off a lot of credit card debt I probably had by the time I graduated from college probably had about 10,000 in credit card debt I had a car loan and then after I graduated from college I had a little bit of a student loan – fortunately I was able to work my way through most of college and my student loans were only about I think eleven thousand dollars when I graduated but the reason I took out the student loan was not to pay for school is to pay for Spring Break so so again you know bad decisions along the way well bad decisions I'm gonna give you a little bit of a pass because it sounds like you graduated college with $21,000 in debt give or take yeah so that's I mean that's nothing compared to some of the people that we've talked to although when you're making $27,000 a year if I'm huge that's still huge so how did you pay off your loans and when did you pay off like all of this debt you know I kept everything um you know like student loans I just kept on the regular payment schedule because the interest rates were so cheap you know I actually I say I took out that loan for spring break I actually used part of it for spring break and actually invested the other part because I knew when I wouldn't have to pay my student loans back until after I graduated so I had a few years of you know being able to earn interest on the money and then I could pay it off when I graduated so so it stood you know at the time my parents had a mutual fund that they had started a IRA for me when I was a kid and so I put some more money into that you know and the idea was and would grow a little bit and then by the time I had to pay it back I would have some money to pay it back unfortunately I also just kept spending money along the way so again you know it was like a tug of war of being smart with your money and not smart with your money I you know I had big ideas just not everything would always work out the way I planned on that's a really interesting though do you think that other people could apply that where hey I could I can take out a student loan and then just invest it instead of using it for education or disciplined enough to not spend the money absolutely huh I think there are deferred loans right I didn't have to make any payments or pay any interest until after I graduated so theoretically if you could pull out loans that first year of college and let it grow for four years you know you obviously you're counting on being in a bull market or whatever it is you're gonna invest it in you know needs to have a return at the end yeah hey invested in real estate no okay I want it I want to call it time out here and say if you choose to invest in real estate or invest here for your student loan money just know that past performance is not indicative of future gains and you could lose it all and you know so and we're at the what ten years into a bear market bull market so you know and that's kind of how it worked out for me question you know this was you know I went to school from 1997 and graduated in 2001 that was not a great market to graduate into you know the dot-com bust had happened shortly after that so you know stock market kind of took a dive or well it just was very very flat in my years of early investing so you know I just felt like I like my 20s were almost the Lost Decade of not making very much money not having great returns in anything you know it's still kind of floating along you know spending more money than I should you know but just kind of slowly increasing my income there it wasn't until my 30s that I took off how long did you work at the foster-care place I worked there during college for a while but once I graduated and started working full-time it was only a year okay and then where did you go after that and how much were you making so I realized that I was not going to make any money at the foster care agency and so I started looking at things I could do and my dad suggests that I go get my real estate license and so I did that and I start you know once I had my license in hand I just started applying for every job that was real estate-related and ended up getting an assistant position in a new homes subdivision I didn't even know new homes were a thing I didn't know builders were out there building communities I you know I knew nothing about nothing I started working there and actually took a little bit of a pay cut to work there but I had the opportunity to make a little bit in bonuses as well so you know when you're not making very much money and you've learned I'll kind of live off on nothing you know you could kind of take a pay cut and not really affect you all that much so so was this a real estate like what kind of position was that you said it was an assistant position were you selling the new homes were you the agent there so there were two agents that worked as partners at the at the model and we work for a real estate company because it was a builder team so was a custom builder team and they hired the real estate company to go hang out at the model and sell homes for all 13 builders that were building in the neighborhood so those two they made awesome money so this was 2003 um and I was probably there for three years or so at that particular neighborhood and I remember looking in the home prices range from you know at the time probably 250 over a million because there's like a little lake and had some beautiful lake houses um and you know we get the breakdown of Commission for every house that we sell and you know I'm doing the math to see what these other ladies are making they're just paying me an hourly wage with a small bonus they're making $200,000 a year now it's like huh it's like okay I'm gonna keep doing this and try to work up and get my own neighborhood and you know try to do their job in this thing so would you that that that realization was the point where you kind of like got serious about making money and building your finished position or where did that kind of moment happen for you if that was not that was definitely my goal I wanted to have their job so you know the problem with new home communities though is that eventually they run out of lots and you have to move on to another and the some communities are better than others some are super popular you sell tons of homes and some are just small you know entry-level you know in today's market they would do really well but small entry level homes that you know don't sell as well especially when you hit the recession so 2008 brought the beginning of the recession around here and you know nothing was selling so I had moved from that assistant position to another assistant position in a very you know in a very active neighborhood where they were selling a ton of homes and my income increased there to probably you know depending on the year somewhere between 45 to 60 and my goal was still to get the job where you know I was making the bulk of the commissions and not just the assistant level of the Commission's so I did eventually get my own neighborhoods I think weren't like those kinds of neighborhoods where you made a ton of money so you know I kind of capped out doing new home sales around 60,000 and but it was a comfortable job right like you don't have to chase clients you know they you have a neighborhood full of listings you have a set schedule it was easy schedule 11:00 to 5:00 every day but you didn't have to work weekends I know 11:00 to 5:00 it's awesome expecially in your 20s and hanging out at night till 2:00 a.m. you'll have to roll into work till 11:00 yeah just fit my lifestyle for a while you know so I did that and then it comes the recession right so now we're sitting around not selling anything and I was bored and you know I was just used to being inactive neighborhoods were you know sullen homes left and right and you know just stayed busy all day long you know when the recession hit we just had very little to do and you're stuck in your office you can't go do other things though you know you're just sitting in a sales office and nobody's coming by so I wanted to open up a property management company and I approached my broker to see if they would allow me to do that separately from you know the company I was already working with and they wouldn't so I didn't quit right away but I started to kind of get my ducks together I spend a lot of that time sitting on site you know not having customers coming in and spending that time planning my exit so you know I was getting my LLC paperwork together and I was figuring out how I was gonna market you know just coming up with a lot of different plans and so when I finally pulled the trigger I was you know ready and hit the ground running so in my state and in several other states there's different levels of real estate agent certifications or qualifications and in Colorado there's the real estate agent and then there's the employing broker did does your state do that as well did you have to take additional coursework it's called different things so and it's changed since the time I got my license so when I first got my license the test was the same the state tests was the same for your salesperson or your broker license and I went ahead and took both classes so that when I got my license I was already a broker so the day I got my license I could have just run out and started my own company if I wanted to really yeah so somewhere along the way does they decided that was a bad idea so now you have to be now everybody is a broker but they call provisional brokers and then full brokers so if you get your license you're a provisional broker you have three years to take another 90 hours of coursework over those three years you can do it all the first year if you want to and then there's also a an employment requirement that you have to I think works two years full-time don't want me to that under somebody else before you can go hang your own shingle so and then there's just a broker in charge class that's what we call it once you take that broker in charge class then you can qualify to be an employing broker okay so you did it a little differently because they usually differently yeah the rules have changed and frankly I like the rules better in Colorado when I got my license I could have waited two years sold zero houses done zero work and then taken the coursework and pass the test to become a employing broker mm-hmm which I've never felt qualified to do so I haven't done and just recently they changed that now you actually have to have done a set number of deals and been in the business for a while and all of that which I think it's better because makes marks are helping somebody buy the most expensive purchase they're ever gonna make you should probably know a little bit yeah you should know what you're doing yeah and if you're like leading people who are doing this you should be an expert yeah but but you've had your license since what two thousand two three yeah so I got it right at the end of 2002 and started working in 2003 it start my own company until 2010 and that's when I became a broker in charge okay so you opened up your own business and then all of a sudden you're a millionaire actually you know took the time to go through all of my tax records I'm the kind of person who keeps everything right so I'm going from you know my tax records back when I graduated from college to what they were all I didn't do my 2018 taxes yeah but 2017 just to see like how it ramped up and yeah 2010 was a lean year you know I just gotten started and I was spending you know more time trying to get the business going than I was actually out there doing stuff and I was really scared when I started it because I didn't know if anyone would ever hire me um you know I just I felt unqualified you know I think I just had a big case of impostor syndrome going on and um you know but I started to get clients you know I remember the very first time my cell phone rang that I had bought separately as a business line so you know I hear this like bringing sound in my house and I was like what is that you know it's not my regular phone oh my god it's my work number hello trollwood Realty how can I help you I was so excited to get that first phone call and it's funny because I remember that phone call and you know she's actually still a client of mom I know now I don't know that she knows that she was my first but when I started my business I checked in that first year I only made sixteen thousand dollars but by my fourth year I was making six figures I had made about 125 thousand so four years after that I was able to ramp it up into a six-figure salary and I know 2017 I had hit about two hundred thousand and last year I haven't done my taxes yet but I did you know figure out all my income and stuff and and I did take on a business partner last year beginning of last year which I think has helped increase the business because now we have two people out there and we can kind of focus on things instead of me trying to do everything by myself and I was able to increase my income last year up to about three hundred thousand and 2019 should be about the same if not maybe a little bit better hopefully and you know I did all that in my 30s Oh 20s I spent being broke and having a good time 39 years old now and so when I started that business in 2010 you know I was 30 years old and part of why I felt I was able to take the leap at that time is I'd also gotten married my husband has a stable w2b job with health insurance and stuff so I felt a little bit more grounded and able to you know take a little bit of risk because he was there to catch me if I fell but fortunately that didn't happen and you know he's had some income increases along the way obviously mine has ramped up a lot in the last five years and you know I think now we're kind of sitting on a net worth of about it's about 1.2 and so if we wanted to retire today theoretically we probably could do it I personally know how I like to also spend money so I'm not ready to retire until I'm like a fat fire tire before I do this I don't have to like think about you know the money that I'm spending do you enjoy being a real estate agent I really like it um you know it definitely has some trials and tribulations sometimes um but I I love that no no two days are the same you know we're out there you know all over town you know I'm meeting people all the time you know I'm having conversations with people all the time and I like that you know I just get to meet new people and you know kind of and I've started working a lot of investors so you know it's kind of cool to like watch them grow their net worth and to grow their portfolios and stuff so it's very you know cool to be able to help people kind of achieve those same goals sorry going back to that be kind of beginning stage of building your business right like imagine imagine that with some of our our listeners are out there and they're thinking hey you know I I don't mind my job but it's not got that great of prospects I want to kind of go out and do something like this become an agent and building a a a a a brokerage business like if you went back and looked at those couple of years what did you need to have prepared it sounds like low expenses it sounds like the stable job from your husband was helpful in that with the health care but what kind of personal like business outline do you have to have what would be reasonable expectations for a new agent starting out yeah I went and you know tried to learn as much as I could before I started my own business so and I didn't have any money really to go out and pay people to figure these things out for me so you know I had to figure out the legal stuff you know how to create my own LLC and I had to build my own website I literally learned how to build a website and I am NOT a I mean I went back and looked at my website a few years after that you know I kind of built it and then just forgot about it and went back I looked at it five years later I was like oh it looks like a child built this website and uh you know so and I didn't have a CPA in the beginning so I made some financial mistakes you know trying to figure out you know the best way to do my taxes and record things and stuff so you know I kind of just really bootstrap stuff in the beginning to keep my expenses low some of that stuff I probably should have paid to get the professional help from the beginning so that's definitely I think a mistake that I made it's not finding the money to pay a CPA and make sure if things come correctly from the beginning because to pay somebody to come back and fix everything that you messed up is way more expensive than having them just do it from the beginning um you know fortunately you know the LLC paperwork and all that stuff was fine I was able to do that on my own but you know if you have any questions about that type of thing you don't you don't want to mess it up so you know I hire the right people that you need besides the CPA who else would you recommend people hire out from the start because I think the CPA and you know hiring somebody to do your taxes oh I've got turbo tax it's so easy well yeah if you work a w-2 job and you have no extra anything and it's just a straight boring tax return sure you should probably do a turbo tax or if you don't feel comfortable you don't go to H&R Block or whatever but once you start adding these weird things these special little things you have your own business you know there's a lot of things that you can write off but you can only write it off if you know what you're doing if you know that these are right off of all expenses you know so who else would you recommend – yeah the CPA was definitely the big one you know once I got in good with a good CPA and a bookkeeper actually know it now I have both and there are two different people I you know we changed the business and from an LLC to a subchapter S corporation and you know kind of figured out some tax strategies to make things a little bit better along the way you know that's not stuff I would have ever figured out on my own we hired a lawyer to create a partnership agreement so we spent probably I think three thousand dollars for them to come up with a good operating agreement so that my business partner and I knew exactly how we were gonna run this business from this point on and what happens if somebody wants to leave the business what happens if one of us dies what happens you know we really want to make sure we covered every base that we had and so it's good to hire a lawyer to come in and do that you know it's like you can do stuff off a LegalZoom but who you know that seems like a bad idea unless you already know what you're doing if you're certain this business is tomorrow right and you're you know you're from scratch I pretend you don't know anything about this but how much would you say would be needed from money and time commitment just to get the t's crossed and I's dotted from a legal accounting all that kind of stuff perspective well when I think about real estate is that it is such a low overhead business if you want it to be so you don't have to go out and Brent office space and create like a big brokerage you can work from home you know half the time you're out in the community anyway so you don't really meet clients very often in an office you know so it just doesn't take very much money and but the requirements are gonna be different in different states because filing paperwork is gonna be different fees and being a broker costs a little bit differently here versus if you are just working under somebody's brokerage you need to get proper insurance errors and omissions insurance since I also do property management I have a liability insurance so you know I would say probably a good five thousand dollar budget to just get some of those things off the ground is it would be reasonable but you don't really need too much I mean you know you don't have to get you know a brand new website done you don't have to get the fanciest business cards you know some of that stuff is just the fluff and you know not necessary but good to have along the way per marketing and then you know the the challenge here you know these are these are definitely hurdles you have to overcome to started but the challenge I think is gonna be in the production of revenue generating clients generating business all that kind of stuff so what did what did that journey look like for you in those first couple of years how did you you talked about the first call how'd you get more well how did you get that first call right so that is typically where I see people fail when they get their real estate license and not just you know open your own brokerage but people go through the classes they get their real estate license and I'm not sure exactly what they imagined it to be but you go out there and you work for you know a broker and you're kind of thrown into the mix right and I think that they think that brokers are going to give you leads or there's some salary or there's you know some hand-holding that comes along the way and it you know 99% of the time and it's just not like that you have to go out there and hunt your own food so you you have to build a big Network you know I am every mom's group I am in every neighborhood gathering I am at every BiggerPockets Meetup I'm you know I'm everywhere so you know if we're on Facebook you know I've got past clients and you know everyone's used me before the lot of them are friends of mine you know further in a mom's group and somebody's looking for an agent they're in there tagging me and saying call Don so you know your name comes up over and over and over again people start to recognize it so same thing with bigger pockets um you know I bicker practices and wonderful lead source for me to get in with investors and you know now I'm getting calls regularly because people I'm in the forums and I'm posting all the time and you know people will write me and say hey I saw something you wrote four years ago and I really liked it and you know wanted to ask you some questions about Raleigh and you know so it always you never know where that business is going to come from but just kind of going out there and making sure you're in the places that people are looking so if you want to work with investors you should be on bigger pockets if you want to work with retail buyers maybe you should be on Facebook and you should definitely be in your own neighborhood in your community getting to know other local businesses getting good with a lender my lender gives me leads um you know he's they have a good website and so if he gets leads through his website he sends them to me because he knows I'm sending him all of my business so you've got to make sure like you've got some good relationships built with other people and that's does take time to ramp up so I think what people think is that they're just gonna go out there and start working you know your first year you might only have three or four clients you might have no clients you know you've got to figure out a way to weather that as you get your name out there so if you're new to an area it's hard you know you don't have a big sphere of influence of people to trust you um you know if you've been a stay-at-home mom for the last 15 years it's hard to get your license and then have people see you differently than how they've always seen you so you know you got to go out there and put a very like professional face on and if that's not who you've been for the last 15 years it's hard to watch your friends or your family choose a different agent because they don't see you in that role so you got to have a thick skin to you know make sure that if somebody doesn't use you that you're you know that you're okay you've got the next person yeah you know all of that is super super important and I cannot agree enough with what you're saying because it isn't that hard to become an agent the coursework the tests especially if you're good at taking tests like I don't think that the coursework really taught me anything about real estate in general how to sell how to work with clients any of that it taught me how to measure a house when there's a rock over there and a tree over there and like the lot and block system and every agent listening is like yep yep yep and everybody else is like I don't understand that don't worry once you go through the coursework you'll know it too but yeah it doesn't teach you anything about that and I think people see this giant commission that the real estate agents are getting when they buy or sell a house and they're like oh I could do that well it's a lot more than that and it's not just you you become an agent all the sudden breeze like wow I didn't know an agent before yeah everybody you know is an agent yes I got for sure like in my social circle there's probably ten different real estate and so my friends could choose to use you know so I've got to make sure that I'm always out there looking like the most successful the busiest you know the one who's out there making stuff happen all the time you know because yeah people absolutely choose somebody else you know sometimes you're just in the right place at the right time or in the wrong place at the wrong time and somebody buys a house with somebody else you oh I didn't know you were looking real like hey I called you and you know you didn't answer your phone so I just called the listing agent you know and therefore then they bought a house and you're like wait what just happen it happened so you've got to be able to like not get you know not see those things as you know super detrimental and just be able to move on and go on to your next client so you know trying to build up that client base is absolutely the hardest part about real estate but if you've got a good social circle if you can go out there and be a professional it'll happen and to give you kind of a s to give you the listeners akka scope of what just what this looks like cumulatively over the years right I mean Don has posted to bigger pockets 2.1 thousand times over the course of how many years you've been on bigger pockets I mean I'd probably say three four years I don't I'm has a tendency to apply actually looks like it looks like a 2014 so two to two thousand times over the course of five years and that's just the posting on bigger pockets has not all the events that usually we she just mentioned that she's attended and the always on it sounds like in receiving these calls and recognizing have got to respond immediately are gonna lose business yeah person's gonna go next agent right that's just one component of your business is that is those posts on bigger pockets and and adding value relations in your area you know that's and it's just like that's the scope of activity it looks like that's needed to develop into this $300,000 a year real estate agent and and that by the way give more context that means you're selling about ten million dollars or more in real estate annually right now this all sounds like a lot of work oh wow you have to post two thousand times on bigger pockets you don't have to but I know that when I need somebody in Raleigh I see some because I'm in the forum's all the time that is my job outside of the podcast is to be in the forums and you know help people out and answer questions and I see somebody you know saying hey I'm thinking about investing in this area or Raleigh the anybody know about them I know to tag dawn brenigan hey you should reach out to dawn brenigan she knows the Rolly market or you know when I see people send me emails all the time hey do you know anybody I'm looking for an agent here check out dawn she can help you out she knows the area you know she's been there forever she's and I know this because I see you in there now all that said how much time do you spend working in your real estate business now let's say on an average week or month well now that I have a business card I actually work a lot less than I was the previous year I mean it was a grind you know I'm not gonna lie I'm not gonna say that ramping up your income like that is a breeze you know you do have to work hard when I first started my business and I wasn't making much at all I mean from the time I woke up to the time I fell asleep I was on my computer I was marketing I was you know trying to just come up with new ideas of how I was going to run my business or how it's gonna earn clients um you know so I I think I just kind of worked all the time at the beginning now I've been able to dial it back a little bit Therese my business partner she handles a lot more the property management stuff now so she can kind of take on the day-to-day operations of that and you know before she came on I was managing about a hundred properties on my own and I was selling about you know at that time probably 40 45 homes a year you know I brought Therese on last year I was able to sell 57 homes and then she sold a handful of homes too and she's doing the property management so you know and breathable I think the two of us combined just you know had an exponential force on what we were able to do together so I don't know how you do that I've got two deals going right now and I am the mortgage guy called me up this morning and I'm like uh wait what property well you also have another full time job at bigger pockets you know you've got kid it's like you know there's always all these balls in the air and I like that like I'm a I'm a busy person because I'd like to be a busy person and you know if I sit around for too long I think you know I start to grow roots and I don't get up so I like to just keep it moving you know but I like that every day I can go pick up my kids from school so three o'clock I tell clients I have an appointment I'm sorry I can't make it we'll have to do that showing a different time but I go and I pick up my kids and you know and then my husband doesn't come home from work till maybe five thirty six o'clock or so so if I need to show home in the evening he can cover the kids at that point but usually from like 3:00 to that time it's me and the kids we're hanging out we're on the front porch you know playing outside and and I just love that time so you know that's not always something I could do before I had my business partner before I had to always be on my computer okay kids you play outside but I'm gonna answer all these emails here you know type type type so having her and we also now have an assistant that we whose license and he's full-time with us so you know having his help means that if an investment property hit the market that I think looks good I can send him to go see it take a video of it you know I've taught him how to walk through and what to look for and then I'll you know pull constant stuff and send that to my clients so you know we're just being like leverage other people's time at this point you know but again that's something you build up to right you know I had a conversation with a Cody Berman from episode something on our show I saw him this weekend and he was telling me about his company and now that he has got it up and running it is running much smoother but in the beginning you know he was putting in all this time and now he's putting in ten hours a week and still making full time money which is just amazing and Cody was in episode 26 of the money show yeah I'm a big fan of the 4-hour work week concept you know I love the idea of leveraging out as much as he possibly can so you get your time back cuz that's the one thing we don't have you know we can't make more of yeah but it sounds like the the price of this outcome right is those years and years of 80 hour plus logs that you're going through optimizing and every front just working figuring it out experimenting all that kind of stuff is that right you know you say years and years but it was really only about three or four years of really having to put in the energy to get it going and then I had a couple years of it was going and now I'm just trying to keep all the balls in the air and you know that's when I started looking into getting an assistant and now now that America able to leverage other people's time you know can I kind of coast a little bit more which is nice I mean I'm 39 years old you know I think I've got a pretty good work-life balance at this point you know my kids are only in first grade so they've got 11 more years of school left I doubt that I'm gonna go anywhere between now and then so I have all this time that I can work the way I work now and be happy and then by the time they graduate from college my husband also be a little eligible for his pension at that point so you know worlds are always serious you know the kids graduate how are you applying all of this money that you're making in terms of your wealth building philosophy what you're you're buying real estate but how are you what's your kind of investment approach to back into that outcome you just described 11 years down the road we've got a few things going so I do invest in rental properties I've got five right now they probably cashflow they don't cashflow a lot you know the Raleigh market it's not a high cash flow market but when these homes are paid off they'll be bringing in you know in today's dollars about $8,000 worth of rent so you know obviously some of that would go to expenses but you know I'd say 60% of that I could live off of once everything's paid off and they're you know they're in various stages of being paid down we also I invest everything I can into any tax deferred account so before the S corporation I was able to invest in s CP IRA so I did that I've got the Ross now because of the income limitations where you're having to do the backdoor Roth's my husband has a 403b at work he's got a pension you know so basically any kind of tax advantage account that we can put money into we do we've got the real estate and then I've also gotten into doing a little bit of private lending so there's a couple of flippers in our area that I'd lend money to what when you're thinking about when you're kind of describing this investment philosophy let's back into like those early years so you start your business you have some debt right what is that what is your kind of approach look like in those first couple of years of your business formation in terms of how you're applying any surplus money so I was able to actually pay off most of the debt before I ever started my own business um you know combining mine and my husband's income I think kind of gave me enough breathing room that I was able to pay off what little debt I had back then so um you know the the student loans we just kept on track cuz a low interest rate but we knocked out the car and when I would say good thing about not making a lot of money as an assistant in the heyday of real estate before 2008 was that I made just enough money to pay off my debt I did not make enough money to run out and go get a brand-new house and a you know Mercedes or anything because I watched a lot of people do that you know you're making $200,000 a year and you inflate your lifestyle to accommodate that well you know 2008 nine comes and now you're making $40,000 a year like that's a big cut you know so I I was just making enough to aggressively pay off debt I bought my first house back in 2003 and I did that with like no money down at all because banks would still do that at that point and you know just started just sucking money away in little increments once the debt was paid off so you know I I'd live fairly frugally you know frugal for my standards versus you know when I was in my 20s my husband was pretty good about you know listening to me when I said hey we can't spend money okay this is why you know I had the spreadsheets going I had you know the payoffs here and you know the spending trackers here you know I just kind of kept track of everything that was coming in and out which was good because you could see the debt numbers getting smaller and you can see the bank accounts getting bigger and that is super motivating yeah I love it I think this is all fantastic fantastic stuff it sounds like you kind of approach this zero net worth position around the time you're starting your business or a little bit beforehand is that is that accurate or am i I think um I was definitely a zero net worth when well probably not a zero net worth that's not true because I had a couple of houses when I started my business so yeah I had I bought my first property in 2003 and I lived in that one and then I turned it into a rental property in 2006 and then I my parents buy two properties in 2004 that I eventually bought from them so you know I had a handful at that point and that's actually why I decided to get into property management is because the sales market was so flat and you know nothing was selling so I figured why don't I just made into properties for other people it's gone well for myself and you know so that's why I went in that direction so I ended up helping a bunch I accidentally in Laurens at that point and that's how I grew the business and the big in the beginning on the property management side okay let's take a moment on that first house then because you know that came up just a few minutes ago for the first time was that an important component of your wealth building overall approach or was that relatively minor in the scheme of things relative to your other investment approaches and income generation you know I I would say it helps on two fronts right you build equity in this house and then you're also not paying rent to somebody else right so my first house like literally I paid nothing to get into the property 2003 was a great year for being told to just you know do whatever when it came to getting a mortgage I had a first aunt I can't loan on it in 8020 and I paid $1,000 for my refrigerator because it's new construction and it didn't come with a fridge and that was all it took for me to get into that house but what I did was I got a couple of roommates so it was a 3-bedroom townhome and I rented out two of the rooms and you know I'm virtually would for free and the other one so I wasn't paying rent somewhere else I had roommates bring my mortgage I was building back witty and you know prices did go up after the recession so you know I think I paid 134 and now it's worth maybe about a hundred and eighty I'm and but that one's probably done might the worst out of everything that I've owned but because I put no money in it somebody else is paying my mortgage for me you know I'll take the 380 when it's done no or very low risk huge leverage and we heard this story before waiting journeys of entrepreneurs and people who were very early advice this sounds like she's talking about house hacking but Brandon didn't invent that term until 20 fifteen so I don't know what this is yep and then I moved out of that house and kept it as a rental property and because I had bought it as an owner-occupant I had those wonderful financing terms I moved out of that one and bought another house not too far away but a single-family house and my roommates with me and so they helped me pay down the second mortgage I refinance that one right before I moved out to shorten the loan term for that just for that it would be paid off by the time my kids graduated from high school so I'm trying to you know stagger some properties to be paid off at certain times so I should have to paid off by the time to graduate from high school and then I can start paying down the others should I want to but they're all 4% or less so I'm really in no hurry anything are your rents covering all the mortgage payments and yet plus them okay yeah they do cash flow you know of course I'm doing my own property management but you know I'd say between the five of them you know I'm probably cash flowing I mean it it doesn't work out to be a ton maybe twelve thousand dollars a year or so so but still over five properties that that includes the mortgage pay down and I'm assuming that you know how to calculate for expenses and capex and all of those other things that some people may forget to account for but what I will say is that you know yeah they're only cash flowing that much but I mean the appreciation and those has been awesome you know I don't think it's Denver level appreciation but it is definitely awesome for our area and you know my plan is to just keep these properties until I die and then my kids can sell them and they'll enjoy a wonderful stuffed-up basis and not have to pay any taxes and they can sell it and go live on an island some what so your your overall plan here it sounds like at least one proponent of is to pay off the mortgages on these properties over the next 10 years 11 years think you said is that here is that the bulk of your approach is that how you're applying all of the excess surplus in your life no I do not prepay any of those mortgages and I kind of regret getting a 15-year loan and its one-year loan on two of them that I um just because it creates a little bit more of a debt to income ratio problem if you're trying to get additional mortgages you know it hasn't been an issue so it's fine but you know if I really wanted to ramp up on that it could create an issue you know if your interest rate is 4% I mean there's literally just no reason to pay that off and you know on a rental property that is going to going against your income so of course you know that you know that's money you don't pay taxes on you know you get to account for depreciation so tax wise it's wonderful benefit for me to have these rental properties you know and if my kids can inherit them and not pay any taxes on them with that wonderful loophole you know there's you know that's just awesome what what so what are you doing with this the surplus cash then are you buying more rentals are you I started doing some private lending I have not find a great deal for a rental property that I've wanted to buy partly because I had so many investors that I'm working with that I have to find stuff for them so you know it's kind of the shoemaker has no shoes sometimes so I'm spending so much time helping other people find stuff I don't have a whole lot of time to find my own but I had a couple of flippers in my market approached me and you know did small amounts there was one who got like 50 I tuned another one I've got 40 out too and so I kind of just tested the waters with that a bit but you know it's 12 percent interest so it's like you know better than what most things would return and fairly low risk as compared to stock market um okay so I want to unpack this a little bit right now private lending is when you are acting as the bank mm-hmm so how did you meet these flippers you said it's a relatively low risk do you have a first position lien on the property there's like a thousand questions I throw at you when I have done a little bit of private lending as well and I lent more to the person than the deal I know the person isn't gonna default and if they do then I have an amazing property I just don't want to own that amazing property I'd rather have the money back you're lending out at 12% interest and the going rate is like four and a half or five ish at the time of this recording so how did you find these people and you know how is it low risk to you one it's in my market so I know these areas right as I know these houses I know the people and I actually did beat both of them I probably threw bigger pockets one of them was a client of mine who bought a property and he flipped it he was new at the time but he did well on he had taken on a partner for that he did well on it and then he just he decided to just quit his job he had a nice w2 job and just said forget it I'm going all-in on real estate and he started flipping full-time so um you know so I son lent some money to him to kind of keep a couple projects going I have a second position lean on two properties for that money it's not based on an individual project right now he just borrows it for six months at a time at a time I got a second position lean on two of his long-term rentals that he's holding and the first position loan is well under what he could sell the property for so if we had to foreclose on that there should be enough to pay off both first and second positions on those properties and then the other one that I'll m4q actually just got the check back today he closed on it on Friday and I got a check today and it was funny because it came like FedEx and you know open envelope it's from an attorney and I was like oh gosh what did I get today very important looking envelopes can be scary a lot of times I've noticed talking to investors that they'll do this kind of lending inside of an IRA are you doing that or is this with after-tax dollars this is with after-tax dollars I am interested in learning more about that though yeah I've got probably just now enough in any one individual account to be worthwhile to lend out to somebody else but because I do like to diversify you know all of those tax advantage accounts are mostly in VTS ax very simple I don't know enough about the stock market really to do anything different nope it makes perfect sense the the advantage to doing it with with a IRA is that you don't pay income tax that's equal interest always at a higher tax rate so so anything else besides the private lending or is that kind of your major approach with your surpluses right now so I am looking for a good flip property in our area to do myself so I've run quite a few renovations for clients who needed to renovate their rental properties or you know help somebody buy something that needs a lot of work and to get it rent ready so I've got plenty of experience and rehabbing homes but I have not found a good project for myself yet I've been making a lot of offers but nothing has come to fruition yet so I've actually got a pretty good cash position right now just waiting for a good deal to get into you the the flips are my favorite I really love walking into a house being like this is so gross I can't wait to make this pretty thing yeah yeah and you know it I think you're coming at it from a position of extreme advantage because you've run these properties for are you've run these projects for other people so you know oh this is the carpeting guy who never shows up on time I'm not gonna use him this is the you know the electrician who shows up early and is always on time and on budget and you know that's that's a huge advantage for you oh yeah I have great subcontractors that I can use you know just from the years of having the property management business I've vetted quite a few people um so yeah I've got some great subs to work with it really is just a matter of finding a deal that makes sense it is a very competitive market here so you know a lot of these are going for over where I can see anyone making any money so yeah I don't understand how some of these houses are being purchased right now but that's a different story okay is there anything else you want to talk about in increasing your income because this I mean I don't I don't know how to say this without making it sound like I'm belittling what you did but there's not a huge knowledge investment into becoming a real estate agent to actually getting your license there's a huge knowledge investment in to becoming a successful agent but to actually get your license is really just not that hard it's not that much work you're not going to school for four years to get a real estate license in Colorado which is one of the strictest it's a hundred and sixty eight hours that's like four weeks of you know rather leisurely time and somebody I did a big research project on in some states it's like 40 hours Wow so you know there's not a huge time commitment you said maybe $5,000 for the first year there's not a huge money commitment and you turned 5,000 dollars into $300,000 last year I do that yeah I take that all day yeah you're right I mean it's not huge you know there's a very low barrier to entry and you know I was thinking the other day and I was picturing all the people who live on my block and my block of homes probably goes for about you know 400 to 450 thousand dollars if you were to sell a house here and so you know good incomes but not great for a lot of people here and most of people bought them and uh I'd say low to mid 300s and everybody on my block is in some sort of sales position I mean there's a handful of you know accountants and teachers and stuff like that but for the most part at least one member of the household this isn't some form of sales and I've realized like you know I really think it's yeah to be able to increase your income there has to not be a ceiling on it so you know if you're a teacher there's ceiling on how much you're gonna make and somebody else is going to dictate how much that is you know but if you're an entrepreneur or if you're in sales where you get commissions and bonuses or whatever the case may be you know there's no ceiling on that and I think that those are the types of jobs that people should go out there and try to get if you really want to ramp it up to be able to increase your income there has to not be a ceiling that's like brilliant and sales there really is no ceiling you don't I think you should be to be a great real estate agent I think you should be knowledgeable about how a house works how a mortgage works how you know the area in general but you know you don't have to know a lot to be a really successful real estate agent and I don't please don't think that I'm talking smack about real estate agents I'm an agent – you know I see some really great agents out there who just have a really good knowledge of their local market they don't know how a house works and you know that's okay too but there's just you know it sales is wonderful obviously I'm partial to real estate but like real estate is just it's not that hard and there's so much income that could be made but you don't like like you pointed out you did the work upfront yeah you busted your butt you did all of this in the beginning and then you know once you get the ball rolling it's like a snowball down al why don't you get it rolling you can't even stop it people just call you all the time hey John can you help me buy a house mm-hmm yeah absolutely yeah once the ball gets rolling it's it's yeah I won't say easy but it is relatively easy to get the clients you know at that point it's just managing your time and you know making sure everything is serviced properly so and that's the hard part for somebody to get started it's just to get to that point but once you get to that point it's it's awesome you know it's very easy I think to kind of keep all that momentum going um you know I after you do a budget deal is you're gonna have the process down you're gonna know you know what the pitfalls are and you know how to guide your clients and stuff so you know I think for people who are just starting out it's it's maybe a good idea to be somebody's assistant or to work on a team where you have a little bit more support because if you're just kind of thrown out there and said all right you know go make it happen with no support you know I think a lot of people can't do that um and some people can but a lot of people cannot so you know sales in general and yes I'm partial also to real estate but you know I know pretty wealthy insurance sales people or software sales or pharmaceutical sales you know and they just have like I said no and no ceiling on their income so you know as hard as they're willing to work you know it's oh right there as hard as they're willing to work it doesn't just come to you you didn't just hang out your shingle and be like okay come on yeah and I'll also point out that I see a correlation here between your life choices and how you're spending just as a household can impact your ability to go after that because you're so there's no ceiling there's also no floor and a lot of these gigs that can have these unlimited unlimited potential or high income and so the fact that you guys had a household budget you know you talked about spreadsheets you touched on that very lately but you were able to keep your household running even on $16,000 just from your income down from what sounded like 60 a few years prior on that that's that's a set of life choices that most of middle-class America don't make right in terms of running their household on one income so you could go into that into this new role and now you're you know that that has led to a path in less than a decade where your household income is likely to be close to if not above the top one percent for all of America yeah right and and that's the difference I think that that comes in there that allowed you to propel towards that or at least that was a one important factor I think yeah you're right it wasn't just financial independence through the income side of it which is you know obviously probably where I was able to do the best job but you know in those early years you should have seen me Sunday mornings I was running around getting newspapers so I could grab all the coupons out and then I'm you know on the coupon blogs figuring out like what are the sales for the week and you know I had my grocery budget down to you know two hundred fifty dollars a month and you know I just I was very regimented about a lot of things saving money was you know like I said as frivolous as I was in certain areas of my 20s when I wanted to dial it in and take care of stuff like I really good yeah I mean if you hadn't house hacked right instead if you if you had a you had both making 60k are you and your husband right and you were spending a hundred and 111,000 right with the house and the two new cars and all that kind of stuff this wouldn't have been inconceivable and you'd be listening to the show right now thinking this person is full of it that's not even a potential outcome for me and my family because we've got bills to pay with these things right and that's the difference I think that you know this whole world of opportunity was available to you in part in one small part because of your discipline on the other side of the equation yeah I mean the big trick is right don't spend more than you make it really math problem and aim for a lot less mm-hmm I mean you're you're spending what is your annual spending do you know ish yeah it's probably around $100,000 a year between but you're making 300 yeah I would say I won't even say I mean some of that I think is also going into like you know Roth IRAs and things like that so so it's maybe a little bit less than that you know our mortgage is reasonable of seventeen hundred dollars a month which to me when I was 20 I thought that was insane I was like you know I I thought if you could commit $1,700 a month man you better be like a doctor now like I'm here it's very comfortable and I'm able to save money it is very relative to what you make of course well but you're also making like doctor level salaries today but the thing about real estate is that all of that could poof in an instant go away if we hit another recession I have to be very careful about what I spend and make sure we save that money and again you know when that last recession hit you know my co-workers were making in the 200 to 50 range per year they were doing awesome but they were spending that money just as fast as they could make it and so when that recession hit I mean you know their income may be dropped to 40 maybe $60,000 a year which is reasonable for most people to live off of but when you're used to making 200 and now you've got that $2,000 a month house payment and that's $600 a month carking and like you know that's you're not making enough to cover your you know to live that same lifestyle that you used to be accustomed to so you know just making sure you don't get accustomed to the two finer things in life I think is the key because yeah 300 you know I could afford to do a lot of things but I don't because I want to make sure that if my income drops to 100 next year that it's fine you know or if it drops to 50 or if I don't make anything if I lose my license for some crazy reason you know worst-case scenarios of what could possibly happen to you I want to make sure being broke is not gonna be the ultimate Inc outcome yeah and you know I'm glad you make that point I said you're making doctor level salaries like well it could go away yes it could and I hope it doesn't but right now you're making three hundred and spending one hundred so you are saving sixty six percent of your income plus her husband's income plus her has we're not even talking about him he's not on the show this is the dawn show sixty-six percent of your income you're saving you're not spending and you know IRAs and all that other stuff at least sixty six percent so if that 66 percent went away your life doesn't change if 70 percent went away your life isn't gonna be a huge difference than what it is right now and I think that you know that kind of well I'm I'm making 300 so I should be able to have fun with it well yeah that's great but that's not guaranteed right that's you know and that's in anybody's my salary isn't guaranteed because you know bigger pockets isn't gonna go to business tomorrow but what if it did like what if all of a sudden we decided you know we don't want to be here anymore sorry Mindy Thanks you know then my income isn't guaranteed having a cushion is so important because even with a regular w-2 job your income isn't guaranteed mm-hmm yeah I actually think one of probably the most positive things that happened to me was not making a lot of money in those early years because I learned and I could see what was going on around me and I learned from other people's mistakes instead instead of having to go out and make my own because I was kind of right there at that cusp you know like I had gotten my debts paid down the car was paid off you know suit loans get paid off everything gets paid off now you're starting to feel wealthier you're starting to feel like I can go out to eat today no big deal you know and I think once that happens is when that lifestyle inflation starts to happen yeah well then I had a very positive 20s – yeah okay so should we go on to the famous for now let's do it okay these are the same four questions and one command that we ask of all of our guests Don are you ready yes what is your favorite finance book I would say secrets of the millionaire mind I liked it because it was very it was about changing like your view on things you know basically if you view yourself as a poor person you will be a poor person if you view yourself as a millionaire you will act like one you know and it was really about changing like your mindset on how you truly see yourself you know if you find it you are just you know somebody who's never gonna get ahead because you know the world is out to get you then that is what is going to happen so I think it was a good like mind shift book awesome I'm off to check that out I hope to get read that one it's good all right so what was your biggest money mistake I would say by cars that I did not need to buy I have probably had five cars since I was 16 which at this point is not terrible because I'm 39 now so that's what 23 years of driving five cars doesn't sound awful well the first four group ribbon-like the first 10 years so well I guess I've had six Karsen six cars so you know I got rid of perfectly good working cars because I just didn't like them anymore or you know I got into real estate I had a Ford Explorer when I got into real estate and because it was a two-door car I decided I should get rid of it and get a four-door car to make it more comfortable for my clients except for I didn't drive clients around so it just really didn't make any sense videos are selling new home somebody no sense at all and so I I definitely could have made do with what I had for sure additional debt and making big car payments not not a good idea how much think that might have set you back you know my mom actually helped me out a few times along the way so if it weren't for her I probably a lot more setback but I probably spent at least $20,000 on one car that I just absolutely didn't need yeah so easily 20 thousand compounded over the last 20 years it's not work out so what kind of car do you drive now related question because you're a real estate agent I am a real estate and so I Drive to super fancy as Honda Odyssey minivan I generally don't have clients in my car you know we're meeting people you know places and stuff it's nobody really wants to get my car they can but I warn people it's sticky I've got kids you know they're seven they're kind of gross and that's what I Drive in so I don't look like a very successful like you know I see everyone else out there in their outies and their Mercedes and their BMWs and they're clean and they're fancy and it's lovely yes they do look successful but I confirm I paid off minivan it's like driving around in my living room it's wonderful they look successful but are they success you don't know they just maybe have a really car payment okay what is your best piece of advice for people who are just starting out and I'm gonna ask this as a two-part question starting out on their financial journey and starting out as a real estate agent I first as first starting out on your financial journey I would say to really work on your savings as a muscle I think mister money mustache talks about that like where he says you know your savings reflex is a muscle that needs to be worked out and I think if I had done a better job of just putting small amounts of money away you know like I said when I finally did do that seeing the bank account balances grow and the debt gets smaller was really really motivating you know which made me do better as time went on so you know we're spending a lot more money in the beginning as I saw the benefits of actually not going out to eat every day or spending money on cars that I didn't need to buy and putting that money into something that would actually grow a little bit made me want to do it more so it is kind of like working out like when you start to see the benefits it becomes less of a chore and a hassle and more of something you really want to do and then as far as starting out on real estate I really think you should start out working with somebody else so that you have a really good support system so whether it's an assistant or under a team or even just under a good broker who provides a lot of support and training you know I think a lot of times people want to rush out and you know work for a hundred percent commission companies or something like that that you know don't take a big piece of the pie but when they do that if they if that comes along with a lack of training you know it's a huge mistake because like you said when you go and get your license all they do is really teach you how to stay at a real estate jail they don't really tell you how to run a business you know so you might know the legalities and the ins and outs of that but they don't tell you how to get a client or how to take a contract from contract to close and who do you need to hire you know where the inspectors who are the good inspectors you know all that kind of stuff is just things you learn over time and it's better and stuff trying to figure out that stuff on your own to you know work with somebody else who's already a pro I would second that or than third that and vote for you a hundred times if there smoting available on a podcast because I was that person I was oh I'm not going to go and get my real estate license because they're gonna take 50% of my commission but then 50% of a deal is better than 0% of a deal and when you first get into that contract you're like oh god what do I do now and we got you know maybe you've got an experienced agent who's asking you for things and you're like I don't even know what those words mean working with it you don't have to sign on for a team and be there for the rest of your life right indentured servitude you're there to learn and you're not learning anything in real estate school you're learning how to pass the licensing test and that's kind of really all that you're learning and I wish they'd revamp it you know cuz this is such a huge part of somebody's you know if financial picture helping somebody buy a house that you know if you're I helped somebody buy a house I got a nine thousand dollar Commission I should know what I'm doing if you're gonna pay me nine thousand dollars mm-hmm yep okay Scott all right what is the most difficult question of the famous four here what is your favorite joke to tell at parties oh this is the whole reason I wanted to do the podcast nice yes all right what do you call a cow with no legs I don't know what ground beef what do you call a cat with two legs I don't know what lean beef nice that lives next door to me I haven't heard the lean beef I heard the ground beef but I forgot the answer okay all right I've got what I've got one this this week two actually so this kid goes it goes to swallow some coins and gets taken to the hospital right and the parents are worried sick but they have to go home for the night little kid stays over and so they call in the morning and the doctor says and they say how's my kid doing and doctor says no change yet okay Scott you need to have some kids so you can share with these yesterday Daphne said dad your dad jokes are terrible like yeah that's kind of the definition of a dad Jeffrey aha so my kids in the neighbor's kid doesn't they ask Alexa all the time for jokes and so we've come up with a handful of good ones yeah we just got a one of those things maybe it's Alexa and the girls are just sitting there all the time table okay dawn where can people find out more about you all right so my website is trailwood Realty comm I'm always on bigger pockets I'm a moderator there now so that's part of my job also is to be in the forums and chatting with people and really the only social media I use regularly is Facebook I have the Instagram and Twitter and all that stuff but on Facebook is where I will actually spend some time in my profile is Gio but that o is a zero so G zero heels yes in chocolate all Tarheels nice it's awesome okay done thank you so much for your time today this was really awesome I love this story because not just I'm a real estate agent but I love the story because it's an easy way it can be an easy easy it's not the right word Scott I didn't say repeatable way it is a repeatable way that does not cost a lot in time or money to get started that you can increase your income with no ceiling yeah it's a great alternative if you're feeling stuck like your career has a ceiling or something like that you know it tooks to begin exploring maybe moving one spouse into this type of of career with this kind of in this type of commission thing and what a great place to become learn how to become an agent when we're already talking about real estate all day long anyways great well and this is you know we didn't even get into this you don't have to quit your job to become a real estate agent you could take your coursework over the nights and weekends you can I mean when are you working as a real estate agent nights and weekends because you're helping people who have jobs buy houses and when do those people have time to go look at how is not in during the weekday it's nights and weekends and you know this goes it's just you know you can start off you can figure it out you have one closing maybe two closings and you have made all of your money back yep so you just really have to have that first one and it's you can represent yourself in your own first property deal and then figure out hey I like this I hate this you know whatever but you're you kind of make back everything and then your ongoing costs are not that expensive yeah outside of you've got like licensing fees and MLS dues and stuff like that so the cost the ongoing costs are are not terrible it's you know maybe very basic at least our area between licensing and paying your board dues and stuff maybe $2,000 a year you know you got to take continuing education credits you got to renew your license you've got to pay your MLS – I was trying to think I'm like I know I have expenses no yeah so very little upfront cost very little ongoing cost you know it's just if it's interesting try it out at least look and see how much time it's gonna take you to get licensed mm-hmm but this is absolutely repeatable so okay done thank you so much for your time today we really appreciate it thank you guys it was great talking to you it was awesome talking to you too and I'll see you around the forums yes you will okay bye bye great bye all right that was dawn brenigan Mindy what you think you know Scott I love her story I love that she didn't decide to just stay in this comfortable job that wasn't really making a lot of money she decided to go out and get a real estate job she didn't stay in that comfortable position where she was making what like $30,000 a year she saw that other people could make a lot more money and she took the leap she made all the all the choices that she had to make to get to the point where she is now at multiple six figures is that how you say $300,000 a year multiple six figures while still spending very low six figures I mean is she she doesn't have to limit herself to you know $10,000 a year or $25,000 a year and still on the path financial independence yep well then and I think you know I definitely point out also the the frugality component and the basic money management that I think was helpful contributor enabling her to pursue this career yeah the foundation that her parents gave her by not hiding how much things cost really put her leaps and bounds ahead of where everybody else was and you know she still made poor money choices but she made smaller poor money choices then probably a lot of her friends did yeah absolutely and that just all builds up and leads you to this financial position of peace and security well should we get out of here we should from episode 72 of the bigger pockets money podcast this is mr. Scott wrench and me Mindy Jensen signing off
Want to upgrade your network and your networth?
Come out to the Ontario Real Estate Conference in London Ontario! (and get $25 off by using my coupon code!)
OREC 2018 – will be a one of a kind experience for real estate investors – 2 Days, dozens of speakers, 3 halls, a massive trade show all at the London Ontario Convention Centre!
Learn from real people, that are taking real action and getting real results in your own backyard.
FRUGAL VS CHEAP – IS THERE A DIFFERENCE?
Why is being frugal good, but being cheap is bad? Let’s discuss
If you enjoyed: Financial Independence Retire Early – Frugal vs Cheap – Why Frugal Living is Good – SMASH that LIKE BUTTON! and SHARE on SOCIAL MEDIA!
Checkout Mike’s Channel:
Business Inquires: [email protected]
Coaching: [email protected] (Seriously though, you should watch everyone of my videos, before you contact me about this, if you watched all of my videos – I don’t think you’ll need this – but people keep asking anyways….)
Checkout the squad’s (Real Estate Rat Pack?) YouTube Channel:
Make sure you sub to the Humble Wholesaler if you want to learn more about wholesaling real estate in Canada.
Matt McKeever is a CPA, CA and Real Estate Entrepreneur in London, Ontario. On this YouTube Channel Matt will walk the viewer through how to invest in real estate using such strategies as the BRRRR method while also documenting his personal experience as a real estate investor. Matt began investing in real estate at age 25 by purchasing a student rental near Fanshawe College. In 2016 he’s acquired over 25 unit and in 2017 acquired over 25 units.
FIREpreneur: A person who has reached (lean) FIRE and uses this freedom as a springboard to operate a business or organization, taking on no significant risk (due to lean FIRE).
As well on this channel Matt will share his personal monthly spending and discuss the strategies and tactics needed to reach financial independence (retire early) at a young age. We’ll discuss such topics as safe withdrawal rates, how to build passive income streams and how to reduce your personal consumption.
become fertile ninjas don't be cheap bastards do not take this just verbatim as the only way to live please take this and has a guiding set of principles prioritize what's important to you make sure that you're getting the highest utility to cost ratio do not just focus on the lowest financial cost solution what is up you guys Matt McKeever here and so we we really need to talk so Jeff libel has been kind of poking fun at me he's been kind of grilling me bid on this recently and for longest time I didn't want to agree with him but I sadly I think I got admit Jeff's right and so what he's right about is there's a difference between being frugal and being cheap and so I'm really it's awesome that you guys are so excited about this idea financial depends this idea of retiring early that you guys have joined me on the early retirement extreme bandwagon that being said I think a lot of people when they initially go from being that crazy consumer of spendy pants they almost drift too far to the other extreme and they go full-blown cheap bastard and so in my opinion there's a huge difference between being a cheap bastard and a frugal ninja and that's what today's video is going to be all about and what really comes down to is thinking long term and so again we'll dive into all the details in this video this is not meant to be a judgement but Jeff Jeff actually did have a good point that far too often we get too hung up on trying to pinch every penny scrape every little piece of profit from a deal rather than thinking about the long-term consequences of doing so so that's what we're going to dive into today's video again this is not meant to be a judgment this is just my perspective I'd love for you guys to share your perspective in the video comment section down below smash that like button if you enjoyed this video if you knew my channel definitely hit that subscribe button and check out the other videos YouTube wants you check out thanks guys is there difference between frugal and cheap and does that difference matter and why am I even making a youtube video about it in my opinion there is a difference she really comes down to the lowest cost solution where and particularly without that the lowest financial cost solution frugal is all about the highest utility versus cost ratio or the lowest net cost and so what I mean by that is cheap people were really just focused on the financial cost so they're worried about the doll in the sense where the frugal person is more focused on the overall big picture the overall idea of whether this makes financial sense so usually a cheap person they're gonna really just be focused on the cost they're just gonna be focused on the cheap aspect of this triangle where the frugal person is gonna take in all the different factors and so usually when we're looking on personal finance blogs or personal financial vloggers often they're going when the topic sheep versus frugal the big debate is cheap versus quality and completely agree with that that's really what as a short firm I think that's the best way to think about the difference between frugal and cheap cheap is worried about the absolute lowest cost solution where frugal is focused on what's the best net utility what's going create the best value for myself until value isn't just about the financial cost it's also about the quality as well as just like the timeliness of receiving it you know getting a fantastic deal on a meal is great but if you're starving to death and that meal comes out two weeks from now and you're going die between now and then it's really not that great of a financial decision to go with the absolute cheapest solution if it's not going to be timely another way I like to kind of look at the difference between cheap versus free boys cheap is all about I win you lose we're I think through can truly be win-win so let's break this out of an example again of like say use in a restaurant so a cheap person's gonna be focused but how do I get the absolute lowest cost value for this meal for this product for the service so you know some cheap people they'll go let's say to a fast food chain and ask for a cup for water and instead go to the soda machine and get soda that's being cheap not only is that being cheap that's actually being dishonest and it's like micro stealing I'm not really judging you if you've done it you know we used to goof around do it in the past but it's one of those things for it's really I'm when you lose solution or being cheap is stacking coupons on top of coupons on top of a Groupon and then negotiating with the manager when you get to the restaurant to make sure that you literally never pay a penny Oh pocket that that is insanely cheap word frugal to me is looking at restaurant looking up their menu looking up their specials do they got daily specials often a lot businesses are slow on say Tuesday Monday Wednesday nights and so frequently they'll try and entice us customers to come out by making greater deals than they otherwise would during peak hours so usually the restaurants not gonna give you the best deals on a Friday or Saturday night because that's when a lot of people are going out to eat so alternatively maybe you figure out that hey Tuesday nights is cheap nacho night so cheap wing nights or cheap beer night and you go there that to me is actually a win-win restaurants already made it obvious that they want more customers coming to there because the restaurants already made obvious they want more customers coming to their establishment by offering these special night deals whereas the cheap person were going on the Saturday night and try and demand the two thing night deal because they were busy on Tuesday night and then wanted on the Saturday that that to me is cheap same with like I'm when you lose example for me is the idea of like just breaking these minimum wage workers have like a Best Buy or at wherever at Chapters Indigo doesn't really matter but you just rate them or the grocery store to the point where they just cave or they have to go get their manager or whatever the case is again that's being very focused on just one aspect of the value proposition here this is gonna be the value proposition triangle I shouldn't name that another example of being cheap versus frugal is let's say you notice that you're served or forgot to bill you for the second round of drinks a cheap person will immediately pay their bill and try and run out there as fast as possible we're a frugal person although the fact that they like to get things cheap they like to get low-cost financially they also understand that this isn't a win-win solution this is a win-lose solution that server or that restaurant will lose if you don't pay for goods or services you received that that's just how how the economy works guys so you know a frugal person will be like hey I think you actually forgot to charge me for that second round of drinks and they'll pay it and they'll even pay a tip on top of that where that cheap person they're running out as fast as possible and they probably didn't even pay a tip on top of that and so another big issue between cheap and frugal to me is the sustainability of something so first of all I think it's really easy a point I would like oh going to Walmart and buying nicknack or that widget for pennies on the dollar that someone that maybe manufactured and a more socially responsible manner to charge that that seems kind of unsustainable but even beyond that I mean I'm trying to see a lot of people they're taking this almost like us-versus-them mentality to themselves in any sort of business and well I can understand why just stick it to the big guy like say Walmart the idea of sticking it to your local merchants seems crazy to me if you love that restaurant if you love that micro brewery if you love this this activity you should want that business to profit if they're providing you net value you should be more than happy to pay them or reward them financially for the services or the goods they're providing you and so this idea that you literally never want to pay for anything think about it if you reverse the situation do you want to get paid for the services or goods you provide to your customers or to your employer yeah absolutely you do so the idea that you should literally get everything for free or that you should haggle and negotiate and absolutely get the bottom bottom dollar I think is a very short-term short-sighted solution another thing another major difference I see personally between cheap and frugal people is frugal people understand the value of relationships they understand the value of having people in their network where a cheap person a cheap person let's say is the landlord they're going negotiate so hard with that electrician or that contractor then they're gonna make no money working for you and then they're gonna complain about how next time that person doesn't want to come out and do their job site again well why should they if you've really negotiated so hard and beat them up so much so they're not making any money for their time why on earth would they want to come work for you again in the future we're a frugal person in my opinion a frugal person is going to find a great contractor or electrician and not only pay them but gonna make sure you pay them fast make sure you pay them accurately and make sure you give them positive feedback by maybe referring them to other people in your network by telling them you know that they're doing great work whereas the cheap persons always gonna find nitpicky things so they can try and get a bigger discount and their discount and they're just always saving money they're just all about saving money and that's all they're focused on in this value proposition triangle again that's so short-sighted and the thing is you got to be aware too that you eventually build up a reputation about this so if every contractor every electrician of Boyd's you like the plague because they know that under no circumstances are they allowed to make a profit on your job site why would they ever wanna step foot on your job site again and so another way to rephrase the cheap versus frugal debate in my opinion is scarcity versus efficiency so the cheap person is always focused on scarcity they're always thinking that they need to save as much money as possible they need to spend as little money as possible they need to get the maximum reward the maximum benefit for the least amount being given out where the frugal person is more focused on efficiency so a frugal person will pay for quality or pay for speed so the frugal person when looking at the value proposition triangle it's fine with any of these factors depending on what their priorities are and what makes sense from a net benefit proposition whereas the Qi person the Qi person is always just focused on this corner of the value proposition triangle again that's such a short term such a narrow focus but I think long term will come back to bite you in the ass if you're the person that's always getting the free drink and never bites around for your group of friends eventually your group of friends are gonna stop inviting you out for a free drink there's no such thing as a free ride and again I kind of see this as a bigger picture kind of with the tragedy in the comments so a cheap person will you know constantly use all kinds of free resources but never paid for words they're never going to reinvest they're never going donate so for example for myself there's a tax program I love called simple tax here in Canada that lets you file your taxes for free now it's donation based and I know I've referred it out to a lot of people on my youtube channel and sadly if i had to guess i guess the vast majority having donated a penny to simple tax whereas myself I use simple tax and when I do my own tax return I actually pay more than if I was to just buy an off-the-shelf solution you know I'll pay $50 just to do my one tax return because first of all I love the program they got I they're trying to do and I love that they make it free and donation-based so I want to support more of that in the world so to me paying that money out is a net benefit because it's I'm voting with my dollars at this point whereas when you're going to Walmart and you're always just buying the absolute cheapest trinket you're also voting with your dollars even if do you think they're losing on every financial transaction you do with them just think late do you only want to do business with other businesses that you actually dislike then you have a distaste for their business model I mean again it just doesn't feel sustainable again I'm not perfect I'm not saying anyone's perfect when it comes to the cheap versus frugal balance you know there's times in my life where I actually miss times when I act frugally I try not frugal ii more often and cheaply but sometimes only with hindsight you really realize that you were thinking cheaply versus frugally so the game no judgment here but what I often see is people focused on never spending so like they'll create admin rules that like I never spend on this or I never do that and so then when we come out to tons of different need up groups and meet up events we host at for-profit businesses and although ever ever ever gives water at the same time that business does deserve to make money they're providing us with a great service which is a great meeting space a great opportunity they got AV equipment they got this that and the other and so again personally for myself I'll often order a tea or a pop even if I'm not overly feeling it because I don't drink alcohol anymore or at least currently I don't and so I'll get something else and then I'll just round my bill up to the nearest ten dollars because I know that again that the servery of one of my financial dependents meetups they're not getting tipped well and it's unfortunate I think that we're doing ourselves a disservice and the financial depends retired early community by always being so cheap rather than frugal because our reputations do follow us and so it's important that you focused just not on the cost the financial cost focused on the big picture cost what's the cost here what's the cost to your relationships what's the cost to your network what's the cost to your long-term your long-term health your long-term prospect of living a longer life take all those different factors into consideration when determining whether you should be cheaper frugal again it really comes down to prioritize and what's important to you it's not about never spending another dollar in your life it's about spending only on things that actually bring value bring benefit bring joy to your life and so the last thing I just want to talk about the chief verse is frugal cheap people find it painful to span frugal people never spend without thinking and so there's a huge difference there I'm not I will never promote mindless consumption on my youtube channel that's insane that's ridiculous but finding it painful to spend money on anything is also crazy also in so this isn't necessarily judgment reflection but I think someone's going to anyway I'm just going to talk about situation I experienced in one of our financial defense retired early meetup groups where someone accidentally double tipped and they were like freaking out now I want to give a bad for the demo and I'm thinking you were playing it up a fair bit just for the laughs of it but if you're actually upset then you accidentally double tipper a person once in your life and that's causing you financial stress and that's causing you mental stress and mental anguish your your relationship with money's gone to fire in my opinion I think that you need to sit down and really think things through did that double tip really ruin you financially or did it actually probably just make someone's day and so you know how can you beat yourself up so much about one of those maybe little financial missteps when not only was it maybe just a mild financial Mystere but at least it was kind of a win-win where the other individual probably brighten their day a bit because they got double tip because probably there's lots of times they got stiffed on tips all together that day so again I just want to break things out with you guys please when you go out into the world do not just do not take this just verbatim as the only way to live please take this and as a guiding set of principles probably or tied to what's important to you make sure that you're getting the highest utility to cost ratio do not just focus on the lowest financial cost solution you're doing yourself a disservice you're not voting well with your dollars in my opinion either and I think you're just doing a bad branding for all of us when financial depends retired early community so that's just my opinion I'd love for you guys to jump in the video description down below share your experiences share your perspective you with me on the frugal versus cheap narrative or do you think that maybe I'm just saying up in my ivory tower now that I'm financially independent now I forget what it's like to grind and try and save every penny and I think that's a fair point there is a difference when you're starting out when you're just going from being a crazy consumerist to achieve bastard to a frugal ninja I think of that's a path a lot of us go on so a lot of us just inherently we choose the default solutions society presents us which is the crazy consumerist and that's where you just spend money for everything you never think about you mindlessly spend you never even consider the value proposition that's being made to you you just spend spend spend and then what happens is some of us discover early retirement stream we discover mister money mustache we discover fire preneur ship and then we go from one extreme to the exact opposite extreme when we become that crazy cheap bastard that person that reuses paper towels eight times that person that you know buys in bulk to the point where they need to get in addition to their house or they need to get another basement and another garage store there's a happy balance between the crazy consumerism and the cheap bastard and I think that's the frugal ninja so I want you guys go out there become frugal ninjas don't be cheap bastards if you enjoyed this video smash that like button hit the subscribe button if you in my channel and definitely check out the other videos YouTube wants to check out and until next time remember saving money is important but being the cheap bastard isn't thanks guys