From Broke in Their 30s to Millionaires in Their 50s | Making a Millionaire

Jason (54) and Candida (54) have seen a major transformation in their financial journey. In their 30s, their net worth was over negative $250,000. Now, their net worth is over $4,000,00. The major cause of their success (a 12-property portfolio) has now become the cause of their stress. We discuss a plan to simplify their wealth-building behaviors and give them their great, big, beautiful tomorrow even sooner than they thought. ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Jump start your journey with our FREE financial resources⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Reach your goals faster with our products⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Take the relationship to the next level: become a client⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Subscribe on YouTube for early access and go beyond the podcast⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Connect with us on social media for more content⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 0:30Speaker 01

  Thirty-one years old, we started dating and I think you had over a hundred thousand in student loans. I had over a hundred thousand in student loans. I had a car loan, credit cards. We've probably had about $250,000 of negative net worth.

• 0:44Speaker 02

  From negative 250 in your early 30s to now $4.2 million at 54. That's insane. I think there's a lot of people out there that are going to hear that. They're not buying their first home until the 30s. They're not taking finances serious. They're not even getting out of the starting gates. And here you guys are, a success story of folks who were actually able to do it.

• 1:06Speaker 02

  Who are you guys? What do you have going on? Why are we sitting down here chatting today?

• 1:10Speaker 03

  I think we want to retire within, you know, before we're 90. Maybe within the next five, six, 10 years, something like that. And so just how can we get there? What position are we in to get there as quickly as possible within five years? I mean, we've been toying with real estate probably since we first got married, you know, 21 years ago. You know, we've been pretty lucky. You know, you start out and you don't know what you're doing and then you, you know, you buy your first property and you buy a second property and you learn a little, you know, a couple of things and watch some YouTube people or some podcasts. And you learn some stuff and I'm very thankful that we've learned a lot of stuff from just watching TV and, you know, doing some research on our own.

• 1:52Speaker 03

  So we've learned a lot and we've gotten really, not just lucky, but I think we purposely put some things into place that made us be smarter investors. And we got lucky. We've been lucky. It's just, you just know two ways about it.

• 2:05Speaker 02

  Lucky, like, were you buying real estate in Detroit and you got lucky at the time you bought it? Like, what do you mean you got lucky? You just found the right properties?

• 2:11Speaker 03

  We found the right properties. So we, um, when we, we lived in Kansas. And the townhouse that we lived in, our neighbors, there were some college kids and their son, their father bought them the townhouse.

• 2:24Speaker 02

  Okay.

• 2:25Speaker 03

  And then they graduate and of course, he keeps it and we're like.

• 2:28Speaker 01

  That was smart.

• 2:29Speaker 03

  That was smart. We should do that. We should do something like that. So we moved to Georgia soon after that.

• 2:35Brian Preston?

  Which part of Georgia?

• 2:36Speaker 03

  Um, Atlanta.

• 2:37Speaker 01

  Northeast Atlanta.

• 2:38Speaker 03

  Uh huh.

• 2:39Brian Preston?

  So everybody says Atlanta though.

• 2:40Speaker 03

  I know, right.

• 2:41Brian Preston?

  Which city?

• 2:41Speaker 03

  Brazelton. We're actually from Atlanta. So you know what we're talking about. So north, forty five minutes north of Atlanta.

• 2:46Speaker 01

  Yeah. Or some people say South Carolina.

• 2:48Speaker 03

  Right, right, right. So we moved to Brazelton. And he was going to a lot of conferences in Savannah a lot. So we go to Savannah, we're like, oh, this is lovely. We should try to buy something. We didn't have any money, but we were going to try to buy something. Had no idea that it was a popular tourist place for, you know, vacation, all that good stuff. We find a property, we buy it. The owners at the time, they didn't have a short-term rental certificate. Am I correct about that?

• 3:17Speaker 01

  Yep, that's correct.

• 3:17Speaker 03

  So we kind of worked that into the deal. Like if you will get the certificate, you know, so we kind of worked that into the deal. Long story short, that was, that was luck because we had no idea that it was the market that it was. And it's been a really, really good introduction to.

• 3:33Speaker 02

  So Savannah was your first, first property you bought?

• 3:36Speaker 01

  That was one of the very first ones.

• 3:37Speaker 03

  It was our first short-term rental.

• 3:39Speaker 01

  Yeah, we had done a couple of like live-in, fix up and then sell and make money. So we, we had done that the first, you know, on the first couple of homes. And then I would say Savannah was probably the first real, like legitimate investment.

• 3:52Brian Preston?

  Who told you all to get the, the short-term certificate? Was that, you're like, you had a really good real estate agent or did you all just kind of know that that was part of it?

• 3:59Speaker 01

  It was kind of what we knew.

• 4:00Speaker 03

  Yeah, it was kind of what we knew at the time, but our real estate agent was like, well, you know, because, because it's in the historic district, it's very prime property. And it's like, you probably want to, we're like, you're right.

• 4:09Speaker 01

  Yeah, she pointed us in the right direction.

• 4:11Speaker 03

  Yeah.

• 4:12Speaker 01

  With where to buy and that was fantastic.

• 4:14Brian Preston?

  And it's usually easier to get the existing person who's got the legacy connections versus you coming in.

• 4:21Speaker 01

  And we slid in right as they started to put short-term rental restrictions in place. And it would have made it much more difficult or maybe impossible because they limited it to a certain number per, you know, block or whatever.

• 4:34Speaker 02

  So what do you guys do professionally? Are you in real estate professionally? What are your vocations?

• 4:38Speaker 03

  My daytime job, I'm a speech pathologist.

• 4:41Speaker 02

  Okay. And that's what you want to retire from?

• 4:43Speaker 03

  Yeah. You know what? Now this is weird. I'm one of the few people, I really like my job. I work virtually. So if I can do this until I'm a hundred years old, I promise to goodness I'd do it.

• 4:54Speaker 02

  Okay.

• 4:54Speaker 03

  Seriously.

• 4:55Speaker 02

  Okay.

• 4:56Speaker 03

  Now I want to probably go down part time when we, because we want to travel and I'm itching to get to Vietnam and Paris. So, you know, we want to travel, but I'm 100% fine with working till I die.

• 5:07Speaker 02

  Okay. So retirement for you is like a pseudo retirement, backing down now or something like that. Love it.

• 5:12Brian Preston?

  You just want to have confirmation that you're working because you want to work.

• 5:15Speaker 03

  That's it.

• 5:16Brian Preston?

  Right now, you don't, that's kind of in the air, right?

• 5:18Speaker 03

  Uh huh. That's exactly it.

• 5:20Speaker 02

  Jason, what about you?

• 5:20Speaker 01

  And I do work at a real estate firm, but for them, I oversee their senior living portfolio. So we do anything from, you know, acquisitions, developments, and then lease up and then ongoing operations. And so I oversee everything that is age restricted for our company. And so, and that's what I've done for the last 20 plus years.

• 5:42Speaker 02

  So when we think about this five year timeline to retire, are you also going to back down? Are you like, no, no, I'm going to stop working and not do that anymore?

• 5:50Speaker 01

  Yeah, no, I think I'm just going to switch completely. Yeah. Unlike, you know, I, I think I would like to try and do nothing. Everyone says that will be impossible for me to do. I'm like, let me give it a shot.

• 6:00Speaker 02

  Yeah.

• 6:01Speaker 01

  I'll, I'll like to try that. So.

• 6:03Speaker 02

  So if nothing doesn't work out, what would you then do? You said switch.

• 6:06Speaker 01

  I, I love real estate and I, and in real estate, right. So I think we want to keep a small portfolio. So right now we've got a portfolio of real estate and I think we want to pare that down.

• 6:17Speaker 02

  Got it.

• 6:17Speaker 01

  And just keep a few select properties that'll be easy to manage, close in proximity to one another, provide some cash flow in retirement, et cetera. So that's, and I just look to manage those.

• 6:30Speaker 02

  Awesome. Well, you guys were so kind. You shared a net worth statement with me and with us and it looks fantastic. Like as you guys sit here right now, total net worth is right at about 4.2 million dollars.

• 6:40Speaker 03

  Whose sheet is that?

• 6:41Speaker 02

  Right? Which is wild, which is wild.

• 6:43Brian Preston?

  Because y'all, in the notes I had read, zero. I mean, y'all might've even had some debt that was out there. So it might've even been below zero, right? Where was the starting point?

• 6:53Speaker 01

  Oh, oh, the starting point was quite negative.

• 6:56Speaker 03

  Quite negative. Oh, definitely.

• 6:58Speaker 01

  When we met, our first date, I was, that was my birthday. I was 31. I remember that. That's a good marker. 31 years old, we started dating and I think you had over 100,000 in student loans. I had over 100,000 in student loans.

• 7:14Speaker 02

  And this is in your early 30s, not like early 20s.

• 7:16Speaker 01

  This is 31.

• 7:17Speaker 03

  This is early 30s, absolutely.

• 7:19Speaker 01

  I had a car loan, credit cards. Yeah, we probably had about $250,000 of negative net worth.

• 7:26Speaker 02

  Holy cow.

• 7:27Speaker 01

  When we, when we met.

• 7:28Speaker 02

  And how, and how old are you guys now?

• 7:30Speaker 01

  54.

• 7:30Speaker 02

  54. So, or obviously, I wasn't gonna ask you. Of course I wasn't gonna ask you.

• 7:34Speaker 03

  I'm like, did you see my eyes?

• 7:36Speaker 02

  We don't know how old Candy is.

• 7:38Brian Preston?

  Candy gets an exemption for somebody to give her age.

• 7:40Speaker 02

  The only way I'm gonna disagree. Wild is to go from negative 250,000.

• 7:43Speaker 01

  She's still 31.

• 7:44Speaker 03

  That's it. That's it.

• 7:45Speaker 02

  From negative 250 in your early 30s to now 4.2 million dollars at 54. That's insane. Like, that's it. I think there's a lot of people out there that are gonna hear that, because a lot of folks, they're not buying their first home until the 30s. They're not taking finances. They're not even getting out of the starting gates. And here you guys are, a success story of folks who were actually able to do it.

• 8:05Speaker 01

  We spent our entire 30s getting out of that $250,000 worth of debt and then 40s building, you know, what we've, what we've built thus far. So, yeah.

• 8:15Speaker 03

  Yeah. But I have to give him all the credit because he, I'm a planner. You know, I like to plan out things and know what I'm doing in life. Financial stuff, I, you know, I'll do it because I have to. He thinks it's fun. He's like, oh my God, conversions, yes. I have no interest in that. But thankfully, he finds it fun and was able to kind of put a plan for us together to kind of get out of debt. Because I, I don't think I would have done it by myself.

• 8:42Speaker 02

  Well, as you sit here right now, you guys have cash and equivalents of about 338,000. Your liquid investments are just a touch under a million bucks at about 970,000. But then you do have a big chunk of real estate assets between your primary residence and then the real estate that you've invested in, almost five and a half million dollars of real estate. So it certainly seems like real estate is Has been the main avenue through which you guys have built wealth. Is that an accurate assessment on our end?

• 9:07Speaker 03

  Definitely.

• 9:08Speaker 01

  Yeah, I think that that's accurate. I think our, our growing incomes helped us to eliminate the debt, get out of debt and then save up for down payments, which started our real estate journey. So, you know, our W2 incomes helped us to kind of get started in that.

• 9:23Speaker 02

  And when you guys started investing in real estate, I just think it'd be helpful for the audience to hear, were you guys putting 20% down, 25? Like, how do you guys approach? Cause you have, again, you have a $5 million real estate portfolio.

• 9:36Brian Preston?

  I think we even have a detail of all the different places too.

• 9:39Speaker 02

  And then your mortgages, your total debt is about $2.5 million. So a lot of equity in the real estate. How'd you guys go about like, what was your strategy for acquiring real estate? And timeline, like walk us through how you guys thought through that.

• 9:51Speaker 01

  Initial primary residence was 5% down. And I think our very first home was even FHA finance. So started just with what we could do. And then that property we fixed up. And when we moved, we sold it and made some money. Then we put 20% down on the second home. That was in Atlanta. And ever since then, I've done that just because I don't want to pay PMI. And, you know, I like to have an equity position and especially in the rental space. So, you know, I think I've been pretty conservative in making sure that our, our cash flow is there to where we don't get into a tight situation where we've got to feed these things every month. So that was kind of the strategy. So put enough down. And I did some fix and flips along the way as well. And use some of that money to buy other properties

• 10:36Speaker 01

  and did a couple of cash out refis to buy, buy more properties.

• 10:40Speaker 02

  Okay, so you had some, had some equity in the homes, but you would go take cash out and then use that.

• 10:45Speaker 01

  I did that a couple of times just to be able to acquire more properties, but still keep, you know, some decent equity in there and make sure it cash flows after that cash out refi.

• 10:55Speaker 02

  We noticed on the network statement, you have this thing called self-directed IRA cash. And then you also have, in addition to your IRAs, you have these self-directed IRAs, which is a little unique. What, what's going on with those on the network statement?

• 11:07Speaker 01

  We had some, you know, rollover 401ks. We moved into IRAs and then we I decided to self-direct those because real estate is what I really know. And you know, at the time, we didn't have, you know, financial advisors or anything. So it was just me and my comfortability is with real estate, right? So I'm not picking stocks, the bonds and mutual funds. So what I know is real estate. And so I moved that money over into self-directed IRAs, you know, checkbook control IRA. And I invested in real estate with that money. And so that's where some of that comes from.

• 11:40Speaker 02

  Investing in real estate through an IRA is different than investing on it, investing in it with just after-tax dollars. How'd you guys educate yourselves? Cause there's some like stuff you gotta be aware of and stuff you have to know so that you don't run afoul.

• 11:53Speaker 03

  I love to start by saying, and I told you guys this, Jason and I, we don't come from wealthy families. We didn't have a whole lot of, you know, financial education from our parents. Our parents are great, don't get me wrong, but you know, that just wasn't our story. And so when I say we watched TV and looked at, you know, podcasts and YouTube, that really, really served us well. So for your audience members that are like, you know, I'm not rich, look at me, neither am I. But it can be done and it really can be.

• 12:28Speaker 01

  Yeah, and then we went to a couple of conferences based on, you know, podcasts I had found in online search. Just in, you know, research, I love to learn and learn and learn, you know, all I can about this. And so we went to a couple of conferences as well and spoke to some people that had done it. Gave us a little bit of comfort level, enough knowledge. I felt like we could kind of venture into it. And we started with one, you know, we just started with one property. It was a short-term vacation rental in Gatlinburg, Tennessee. So we bought, that was our first purchase with self-directed IRA funds.

• 13:00Speaker 02

  And so how'd you think about that? Like when you did the self-directed thing, like what was the thought process when you bought that? First, I think that'd be helpful for a lot of folks.

• 13:08Speaker 03

  It would be, yeah. First was location, I think both of us, so my, my family is from Alabama and Virginia. And when we were, my dad was in the military. So we would drive up to Virginia to visit my grandparents, we would always stop in Gatlinburg. So, you know, it was near and dear to our hearts. His parents left, they eloped essentially and left Michigan, got married in

• 13:31Speaker 01

  North Carolina.

• 13:33Speaker 03

  I think honeymooned in Gatlinburg and came back. So it was kind of near and dear to his heart.

• 13:37Speaker 01

  And then we would, we would go down as kids. So my parents and my brother and I, we would drive down from Michigan and visit Gatlinburg. And so, and we didn't know that we had that in common.

• 13:47Speaker 03

  Right, right, right.

• 13:48Speaker 01

  Until we were well into marriage.

• 13:50Speaker 03

  Right, right.

• 13:51Speaker 01

  And we were living in Atlanta. Uh huh. And we decided to go up to the mountains.

• 13:54Speaker 03

  Yep.

• 13:55Speaker 01

  You know, and come to find out, she's gone there several times as a, as a child. And I had gone there several times as a child. So we're curious on how it had changed and what it was like. And so we went up there to vacation.

• 14:07Speaker 03

  Right. So we, we find this property. I think you had watched a YouTube video or something about the directed IRA. And we were like, well, maybe we should try this with this property. So we, we buy the property. It, it did fairly well.

• 14:22Speaker 01

  Really, yeah, really well, actually.

• 14:24Speaker 02

  How much was the, how much was the property? Like, what was the cost of the property?

• 14:27Speaker 01

  Hundred and eighty seven thousand.

• 14:28Speaker 03

  It was. Oh, this is a sore subject. This is a sore subject.

• 14:31Speaker 01

  Yeah, this is, this is a touchy one. I don't want to think about, don't ask me what it's worth today.

• 14:35Speaker 03

  That's what he's mad about.

• 14:37Speaker 01

  We sold it. And we didn't make a lot on it. And I'm, I'm, you know, the, the, the missed opportunities hurt more so than the, the wins are exciting, but the missed opportunities will stay with you.

• 14:48Speaker 02

  So when you, okay, so you have this, this, this property, a hundred and eighty seven thousand dollars.

• 14:53Speaker 03

  Mm hmm.

• 14:54Speaker 02

  You had this, these IRA rollovers, 401Ks. So what'd you do? You opened up a, a separate self-directed IRA. How much money did you put in there? You put a down payment, you went and got financing. How, how'd that whole process work?

• 15:06Speaker 01

  Fifty percent. So on the one eighty seven plus closing costs, we needed, we could get a non-recourse loan for fifty percent of the value. And so we moved money from a rollover 401K into the IRA, opened up a self-directed IRA, had enough to do that in, in that account at the time. And so it was approximately fifty percent plus closing costs that we had to put forth and then fifty percent non-recourse debt.

• 15:31Speaker 02

  End up renting the property. You have income coming in from it, pay down the mortgage, and then you sell the property.

• 15:36Speaker 03

  Yep.

• 15:36Speaker 01

  Yes.

• 15:37Speaker 02

  Okay, when'd you sell the property?

• 15:39Speaker 03

  Two years later, yeah.

• 15:40Speaker 01

  Yes, about two years later. And bought, and we bought another place, which was great, and we.

• 15:45Speaker 03

  But what we learned was that, at least in the Gatlinburg market at that time, if you can go bigger and better, do it, because you make better money.

• 15:53Speaker 01

  Yeah.

• 15:53Speaker 03

  We sell that property, bought something that was, um, um, had a little bit higher elevation, which is, you know, nice for rentals. Um, and it was a little bit bigger. Um, not, not like a 12-person place, probably slept six or eight, six or eight. Um, so we, so we gradually were able to, you know, learn from our mistakes and be able to apply what we learned to the next property that we bought in Gatlinburg.

• 16:18Speaker 01

  Yeah, I think we made just a little bit of money on that first one. Uh, it went up in value, right? So they had, uh, these wildfires, unfortunately, in Gatlinburg, it was really sad. After that, of course, there were, you know, about 500 less cabins or something in inventory. So prices went up.

• 16:35Speaker 02

  Yeah.

• 16:35Speaker 01

  And we thought, oh, well, let's, let's exercise this option and sell it. We can make some money because, you know, home values were going up in that market because of low inventory. We should have just held on, obviously hindsight, but, um, we sold it and then we took that money and we went and bought a nicer place, a little bit bigger place, nicer view, yeah.

• 16:54Speaker 03

  No, I, I think that was the right move. You feel differently, I think that was the right move.

• 16:58Brian Preston?

  We're, we're sitting on a pretty large net worth. We're all, we're all gonna have woulda, shoulda, couldas.

• 17:02Speaker 01

  Well.

• 17:03Speaker 03

  Right.

• 17:03Brian Preston?

  There's, there's, there's things just haunt all of us. I mean, but I think you focus on what you have had success with. I was curious, because seeing a $5 million, you know, real estate holding, and then I know there's a little over 2 million of still mortgages. How much is self-directed IRAs versus how much do you guys just own? Do we, I think we have a list of the real estate. Any of these, I mean, which of these are self-directed or are these all outside of that?

• 17:30Speaker 01

  Short term number three is self-directed.

• 17:33Speaker 02

  Yeah.

• 17:33Speaker 01

  And that's it.

• 17:34Speaker 02

  All of that, everything else.

• 17:35Speaker 01

  At this point, that's it.

• 17:36Speaker 02

  Okay, got it. Awesome.

• 17:38Brian Preston?

  Now that I know this.

• 17:39Speaker 01

  We had, we had a couple, but now we have one.

• 17:41Brian Preston?

  Cause well, self-directed IRA, real estate investing is kind of like pigs get fat, hogs get slaughtered. And the fact that you can use it, but it is, it is not for the faint of heart.

• 17:50Speaker 02

  It is not.

• 17:51Brian Preston?

  That's why I want our audience to know.

• 17:52Speaker 02

  It is not, right.

• 17:52Brian Preston?

  And you, you, I was really impressed. You can tell you, you, you did your research. It's because you were talking about how, how big of a down payment you had to do because you'd non-recourse financing. There's also, you know, you, you're not even allowed, like if the plumbing goes bad, you can't show up and fix it. Because that's considered like a, a contribution that you're not allowed to make. So you have to run everything through.

• 18:14Speaker 01

  That's right.

• 18:15Brian Preston?

  And then you also have a clock in the background. Cause you know, the thing with IRAs is the government gives you this money and this deferred growth and so forth. But in the 70, I mean, once you get in your 70s, they're going to say, okay, now start giving me the money.

• 18:27Speaker 02

  Yep.

• 18:27Speaker 01

  Right.

• 18:27Brian Preston?

  It's hard to do that with real estate because it's not liquid.

• 18:30Speaker 01

  Right.

• 18:30Brian Preston?

  But, but, and, and then also you have, you have to, you're kind of in business with your bank. Because whoever your custodian is, has to be good at this and make it accessible and keep everything compliant. Or it could go sideways really quick.

• 18:44Speaker 01

  Oh, there's a lot of details to it. It's not for the faint of heart.

• 18:47Brian Preston?

  Yeah. So when I heard this, when I saw the portfolio, I was like, oh my gosh, I wonder how much of this $5 million is in these IRA. So you actually made me feel, this just, I felt like a weight just came off my shoulder. Cause I was trying to figure out how we were going to navigate this with you.

• 19:01Speaker 02

  We thought you had nine or 10 properties inside of an IRA, right?

• 19:04Speaker 01

  Okay. We, we have, um, we had two. I sold one in December of, of this last year. There is a lot to know about it. It is not for the faint of heart. There's a lot of details to it. And you can get tripped up very easily. And then the tax implications on like the non-recourse debt.

• 19:20Brian Preston?

  That doesn't always show up in the brochure.

• 19:22Speaker 02

  No.

• 19:22Brian Preston?

  They don't tell you that stuff.

• 19:23Speaker 02

  It's in the fine print.

• 19:24Brian Preston?

  You figure it, yes, definitely in the fine print. And you're like, oh, okay. I guess we're going to figure this out.

• 19:29Speaker 01

  For your audience, let's say this. I sold, so we bought a property. It was 280,000. And we sold that with a self-directed IRA. We sold that in December for 549,000. So that we did well on that. However. There's trust rate taxes on that 50% on that non recourse debt. So we've got a tax bill sitting out there about 40 grand.

• 19:51Brian Preston?

  Yeah.

• 19:52Speaker 01

  Now, I said aside the money, I mean, it's it's fine. And we did still did well on the investment, but that's one of those things, right? That can trip people up.

• 20:00Speaker 03

  It hurt.

• 20:01Speaker 02

  I was gonna ask, having having invested inside the self directed IRA, but then also invested outside where you can can take advantage of depreciation and you can have long term capital gains rates and those sorts of things. Which one do you like better? Have you decided like, oh, when it comes to real estate investing, I would do it this way?

• 20:15Speaker 03

  What do you like?

• 20:16Speaker 01

  Oh, no, hands down. I mean, just with outside of.

• 20:19Speaker 03

  Yeah.

• 20:20Speaker 02

  So this is not a brochure for doing self directed investing.

• 20:23Brian Preston?

  But I think a lot of people.

• 20:24Speaker 03

  But it's an option. Like, we've learned a lot from it. And so I would recommend from that point. Yeah, definitely.

• 20:30Brian Preston?

  Yeah. But you know, the problem with real, we love real estate too, but we take a bad rap sometimes because people say they just don't like, we love real estate, but we like real estate when you truly can do real estate.

• 20:40Speaker 03

  Right.

• 20:41Brian Preston?

  Is we, and sometimes I feel like the self directed IRA feels like it's a bridge very much, it's not like a credit card, but it is in some ways is that sometimes debt is used as a bridge to do things earlier than you should. I feel like self directed IRA investing into real estate is one of those things where hey, you've got a big pot of money left over from a former employer. Let us help you get into this and you just don't know what you're getting into.

• 21:05Speaker 03

  It's true.

• 21:05Speaker 01

  I think that's true.

• 21:06Speaker 03

  But it's timing. And the way I think about it is timing, like at our, at that point of our lives, real estate was a smart move for us to do. Gatlinburg was booming at the time. It's a little different right now.

• 21:18Brian Preston?

  Yeah.

• 21:18Speaker 03

  But Gatlinburg was booming at the time. We had the money. We went for it.

• 21:22Brian Preston?

  But that's where luck does come into play. Because I look, I made, I think about my, like, I was one of those people back during the collapse of of housing in Georgia. I was on an interest only loan from my primary residence. I mean, but it worked out great for me in the long term because I mean, I made a responsible, I mean, I would have, I didn't treat it like an interest only. I I I've made, if you read the book, I talk about all the, the negative equity I prepaid because the house got crushed. And I, you know, and I didn't walk from it like a lot of my neighbors.

• 21:52Speaker 03

  Yeah.

• 21:53Brian Preston?

  But it was. One of those things where I look back though, and it was, this was a tool that was probably too aggressive in the market, but it did, I was able to use it and just like you have been able to use this and now leverage it.

• 22:05Speaker 03

  Yeah.

• 22:05Brian Preston?

  And you can educate people to know, don't, don't get too greedy with some of these products.

• 22:10Speaker 01

  And I would agree. I think it was a little bit aggressive. Looking back on where we're at today, when we use the self-directed IRA funds to buy that second, it was probably a little aggressive at that time for us.

• 22:23Brian Preston?

  Sure.

• 22:24Speaker 03

  You ever heard the saying, the Lord takes care of fools and babies?

• 22:27Speaker 02

  That's right. I love it.

• 22:30Speaker 02

  So, so here we are and we're thinking about, okay, the next five years, we'll look at some sort of transition. We want to transition to part-time or less time traveling. Walk us through what things change. Like when that happens, because one of the things we don't know, like are these rental properties, are they cash flowing? Are they break-evening? Are they an income source? You said you want to, I think the word you used was simplify a little bit.

• 22:53Speaker 01

  Yes.

• 22:54Speaker 02

  Walk us through when you paint the vision of what five years from now looks like, what's that look like sort of in the perfect scenario for you guys?

• 23:00Speaker 01

  For me, it's simplification because I think you always say that the, you know, it becomes complex, right?

• 23:07Brian Preston?

  You don't mean for it to.

• 23:08Speaker 01

  And it's complex right now. Okay. So, and I feel that. I feel that way. So as I feel as though when I transition to retirement, I don't want to feel that. I want things to be simple. I still love real estate and I still want to have the ability to do a deal here or there.

• 23:24Speaker 02

  Sure.

• 23:25Speaker 01

  That pops up and keep that very small portfolio perhaps, but I need to simplify everything else. So.

• 23:31Speaker 02

  What is a very small portfolio? Is that a dollar size? Or is that like a number of property size in your mind?

• 23:35Speaker 01

  In my mind, it's a number of properties. Like we already kind of have them earmarked sort of what we would like to keep. So we own some townhouses in northeast Gainesville, Georgia.

• 23:46Speaker 02

  Yeah.

• 23:47Speaker 01

  Okay. So in Gainesville, Georgia. So right now we have four. We've got one under contract. So we'll have five there. And I'd like to keep those.

• 23:54Speaker 02

  Okay.

• 23:55Speaker 01

  Because they're all in one. Now, think about diversification, maybe not the greatest strategy, but I, but simplification, it's a good strategy. And I feel like in that. They're all within the same area and they they're easily managed in their townhouses with low HOA that do allow rentals and we've had the four of them for a while now and they do well. They cash flow really well. They're small. They're easy to maintain.

• 24:18Speaker 02

  Do you know off the top of your head which one which ones they are on the list?

• 24:22Speaker 01

  Long term, one, two, three, and four that have the 220, 225,000 value.

• 24:28Speaker 02

  And those rates are not super crazy. Five, it looks like it's from 3.375 up to 5.125. Not horrible rates. And you said all of those cash flow?

• 24:38Speaker 01

  Correct.

• 24:39Speaker 02

  And you're acquiring one more?

• 24:40Speaker 01

  One more and I'm paying cash for that. We're paying cash for that one, for that fifth one.

• 24:45Speaker 02

  When you look at all five of those, how much will they generate net cash flow to you guys?

• 24:49Speaker 01

  Right now, I'd have to do the math with the debt. So my other thought is that we maybe pay them off.

• 24:55Speaker 02

  Oh, okay.

• 24:55Speaker 01

  And for retirement. So, because then they'll cash flow about a thousand a month. And I feel like 5,000 a month of free cash flow would be really nice in retirement.

• 25:05Speaker 03

  Yeah.

• 25:05Speaker 01

  Right, right. Because, you know, I would like to retire before I'm eligible for social security. So I think that would, that would be nice.

• 25:12Speaker 02

  So that each cash flow about a thousand dollars a month if there were no debt on them?

• 25:16Speaker 01

  Correct. Yes.

• 25:17Brian Preston?

  The other question, because you have a mix here. You've got long term, you know, and for those who who aren't real estate investors, that means that you're typically signing year leases beyond nine months or so. Whereas short term is like, that's your VRBOs, your, your Airbnbs.

• 25:34Speaker 01

  Yes.

• 25:34Brian Preston?

  How have those been? Because those, because I'm also, when I see the interest rates.

• 25:39Speaker 02

  People get really excited about short term.

• 25:39Brian Preston?

  Well, yeah.

• 25:40Speaker 03

  They do.

• 25:40Speaker 02

  They get really excited.

• 25:41Speaker 03

  Till you get into it.

• 25:44Brian Preston?

  There's some great, there's, because everybody, you know how they do. They use cost segregation. They do the appreciation. They do all these things. There are a lot of cool things in the brochure for why this is awesome. But I know from my own experience, and that's why I wanted to hear from you guys, because now y'all have got a mix of both long term, short term. It's no different than like a rental car. People, you know, they're going to slam on the accelerator. They're going to, you know, skid on the brakes.

• 26:06Speaker 01

  They ride it hard.

• 26:07Speaker 03

  We got some good stories.

• 26:08Speaker 02

  They're going to drop it like they rented.

• 26:09Speaker 03

  That's right. That's right.

• 26:10Brian Preston?

  I remember when we had a beach rental, I tried to put nice mattress pads on the houses. I had nice pillows.

• 26:17Speaker 03

  That was so sweet.

• 26:18Speaker 01

  I did that too.

• 26:19Brian Preston?

  You know, because you're trying to create the best experience.

• 26:22Speaker 03

  You do.

• 26:22Brian Preston?

  Next time you go down there, you're like, what happened to my mattress pad?

• 26:26Speaker 03

  Yes, yes.

• 26:26Brian Preston?

  What happened to the pillows?

• 26:27Speaker 03

  We had a, we had a place in Memphis. Loved it.

• 26:30Speaker 01

  Yeah.

• 26:30Speaker 03

  Would I tell you, people would pee in the bed?

• 26:33Brian Preston?

  Oh.

• 26:33Speaker 03

  Just awful.

• 26:35Brian Preston?

  Yeah, you have to replace mattresses every two, we had a beach rental and we had to replace couches, it seemed like every two years, mattresses every two years. You couldn't do nice stuff.

• 26:44Speaker 01

  Nope.

• 26:45Brian Preston?

  Because people just.

• 26:46Speaker 03

  That's what we had to learn.

• 26:46Speaker 01

  We learn that.

• 26:47Brian Preston?

  Steal it or break it.

• 26:48Speaker 03

  Steal it or break it. That's right.

• 26:49Brian Preston?

  So it's just had a lot of, of transient replacement of everything. So.

• 26:54Speaker 03

  Right.

• 26:54Brian Preston?

  When you talk about simplification, I'm like, are y'all enjoying the short terms?

• 26:59Speaker 01

  Well, we do use property management companies for sure. There's no way that we could do that with our W2s. You know, so we do have property management. And then also going back to the self-director, I write, you have to have property management, right? Because to your point, you can't do it yourself. So what's your take on short-term rentals moving forward?

• 27:16Speaker 03

  This is, this is my take. Um, yeah, of course, time is everything. You know, when we first got into the Gatlinburg market, it was great. Right now, you know, everything is just so overbuilt that, you know, that they're not renting like they, they used to. Um, having a great management company is key, particularly when you're long distance. And, you know, and you have to get used to, you know, you can't have nice stuff in, in these places. I'm the kind that, like, like I said, my parents were in the military and they took pride. And we had people come over that had their, they made their favorite meal. They had, you know, all that good stuff. And that's how I handle our short-term rentals. You can't do that.

• 27:57Speaker 03

  You just can't.

• 27:57Speaker 01

  I have a great example, because this is another lesson learned. I've got a lot of lessons, because of, from a lot of mistakes. Do you remember when I did the soap?

• 28:05Speaker 03

  Oh, yeah.

• 28:05Speaker 01

  Yeah. So I bought these amber glass shampoo bottles and I, I branded one of the, um, short-term rentals. This is one I've sold. So it was called Hello Sunshine.

• 28:16Speaker 03

  Okay.

• 28:16Speaker 01

  So I got custom soaps and labels for the shampoo, but all this, you know, like really, I had a Hello Sunshine throw pillows.

• 28:24Brian Preston?

  Yeah.

• 28:25Speaker 01

  Yeah, that didn't last.

• 28:26Brian Preston?

  It didn't work.

• 28:27Speaker 03

  It has to be boring and all this stuff. You know what I did? I didn't say a word.

• 28:31Brian Preston?

  She was quiet.

• 28:31Speaker 03

  Didn't say a word.

• 28:32Brian Preston?

  You got it, sir.

• 28:33Speaker 03

  I knew it wasn't gonna work. I knew it wasn't gonna work.

• 28:35Speaker 01

  She knew I was wasting my money.

• 28:38Speaker 02

  But again, lessons learned. Yes, absolutely. So, okay, so when you think about simplifying, right? You want to get down to these five townhouses in Gainesville. Are there others you want to keep on the list? Or is it just that really? Everything else you're looking to probably liquidate?

• 28:53Speaker 01

  Just that.

• 28:53Speaker 03

  Not even?

• 28:54Speaker 01

  Oh, yes. Yes, sorry. There's one long-term rental in northern Michigan. We were, we plan to keep as well.

• 29:00Speaker 02

  Which one is that?

• 29:01Speaker 01

  It's a, um, number eight.

• 29:03Speaker 02

  Number eight.

• 29:04Speaker 01

  Number eight, yeah. So that one cash flows really well.

• 29:07Speaker 02

  That's a seven and a half percent interest rate on that one, right?

• 29:09Speaker 01

  It does, but I'll refi it.

• 29:11Speaker 02

  Got it.

• 29:12Speaker 01

  It's got a five-year note on it anyway.

• 29:14Brian Preston?

  But also, as you started selling some of these other ones, you could probably, you know, come up with some proceeds also to pay down that debt.

• 29:22Speaker 01

  Absolutely. That or just, just flat out refi. It's a commercial loan because it's a mixed-use building. So there's like an attorney's office on the first floor, and then there's three long-term rental units.

• 29:32Speaker 02

  Awesome.

• 29:33Speaker 01

  And it's a really great, cool building. And we like owning it. We love the tenants there.

• 29:38Brian Preston?

  It's only worth 425,000?

• 29:39Speaker 01

  I know.

• 29:40Speaker 03

  I know.

• 29:40Speaker 01

  Northern Michigan. Northern Michigan values.

• 29:43Speaker 03

  Don't tell everybody.

• 29:44Speaker 02

  Yeah, yeah. It's too late. Property values just went up. Okay, so, okay, so we're going to simplify. So that's one of the goals when we get there.

• 29:53Speaker 01

  Absolutely.

• 29:53Speaker 02

  What else? Like when we think about like, have you guys figured out? Because you mentioned I want to travel. When it comes to living the life you want to live and doing the things you want to do, how much does it cost to do that? Like, what's the burn rate you guys are going to have when you're doing those things?

• 30:07Speaker 03

  Yeah, so in, in my mind, I have what I call quarterly living.

• 30:12Speaker 02

  Okay.

• 30:13Speaker 03

  And I like to go somewhere, I say I. I would like for my husband to go with me.

• 30:17Speaker 01

  I'm coming along.

• 30:18Speaker 02

  You get to come too.

• 30:19Speaker 01

  Awesome.

• 30:20Speaker 03

  Every three months, I want to go someplace different if we can.

• 30:23Speaker 02

  Okay. Like live someplace different or like visit?

• 30:25Speaker 03

  Live. I want to live in Vietnam for three months. I want to live in Paris for three months. I want to live in Mexico for three months.

• 30:32Brian Preston?

  Does that freak you out or is that exciting?

• 30:33Speaker 01

  No, I'm ready.

• 30:33Brian Preston?

  Oh, that sounds exciting.

• 30:35Speaker 02

  This sounds great.

• 30:36Speaker 01

  Love it.

• 30:36Brian Preston?

  I love it.

• 30:37Speaker 01

  Yes.

• 30:38Speaker 03

  What that's going to cost? We're hoping that you'll tell us.

• 30:40Speaker 02

  No.

• 30:43Speaker 03

  You know, in my mind, yeah, I think we would like to have... $10,000 a month and that, that we would spend that.

• 30:50Brian Preston?

  Let's firm this up a little bit.

• 30:51Speaker 03

  All right.

• 30:52Brian Preston?

  So if you're living somewhere three months, you're not going from that three months to another three, is, are we saying out of 12 months, three months away or six months away? How, give us, give us some plans so we can actually build something around this.

• 31:03Speaker 03

  In my mind, if, if I want to go to at least two places in a year.

• 31:07Speaker 02

  Okay.

• 31:07Speaker 01

  Or at least three months.

• 31:08Speaker 03

  Yeah. For three, three months.

• 31:10Speaker 02

  So six months a year.

• 31:12Speaker 03

  Yeah.

• 31:12Speaker 02

  Living somewhere else.

• 31:14Speaker 01

  Yeah. And then six months a year here, of course. So.

• 31:17Brian Preston?

  Now, I know, now, now, look, you, you've given out too broad. We're, we're all over the place.

• 31:22Speaker 03

  We're all over the place.

• 31:23Brian Preston?

  You can go to Asia and some of those areas, like you said, Vietnam. The cost of living in those areas is, is very affordable. So you might actually, as long as you cash flow, you might actually have a cash flow pickup.

• 31:33Speaker 03

  Right, right. We might stay there six months instead of three.

• 31:36Brian Preston?

  But Paris, a little bit more to Paris, it's, it's a completely different. So we probably need to balance some type of assumptions into that.

• 31:44Speaker 03

  That's a good idea.

• 31:44Speaker 01

  That's, but that's exactly what I was thinking is balancing it, just like you said. So if we're going to go to Paris, then we need to go somewhere else that's, you know, a lot less expensive. So we've got some.

• 31:55Brian Preston?

  So you wouldn't go Paris, Singapore.

• 31:56Speaker 03

  Exactly.

• 31:57Brian Preston?

  Those two wouldn't go in the same year.

• 32:00Speaker 01

  Precisely.

• 32:00Speaker 03

  It's Paris and then come home.

• 32:02Speaker 01

  I think the budget's going to kind of dictate, you know, where we go and how long we stay and that sort of thing.

• 32:07Speaker 02

  So is the question not, okay, do we have enough to live X lifestyle? And it's more, okay, based on what we have, what lifestyle will that support? Which one of those questions are we trying to answer?

• 32:20Speaker 03

  Gosh, I think the question is, as I visualize this, I, I don't see us living in the most expensive place. I see us living in the cheapest place, but being able to have experiences in the places that we're in.

• 32:35Speaker 01

  Like the countryside outside of Paris, is what you're saying.

• 32:38Speaker 03

  That's it. That's it. I'm sorry. What was the original question?

• 32:41Speaker 02

  Yeah, so what I was trying to figure, I thought you were gonna say, hey, we figured out it's gonna cost us $15,000 a month to live, to be able to do the things we want to do and live the life we want to live. But what I'm hearing you say now is, hey, the, actually, the language is, hey, the budget is going to dictate. So is what you're looking for us to say is, okay, based on what you've accumulated and based on where you'll be five years from now, we think that that amount of money, that portfolio can sustain $11,000 a month.

• 33:05Speaker 01

  Yeah.

• 33:05Speaker 03

  Part B, yeah.

• 33:06Speaker 02

  And then you're gonna figure out how to fit your retirement into that.

• 33:09Speaker 03

  Into that, that's it.

• 33:10Speaker 01

  That's exactly it.

• 33:11Brian Preston?

  That helps us with the planning assumptions, because we want to be able to give you parameters and essentially guardrails, and then y'all structure it, live your best life and then have fun with it.

• 33:19Speaker 02

  So we want to simplify. We're gonna figure out this sort of living thing. You said your work can be done virtually, so in terms of this quarterly living, you can do it anywhere, anyhow, right?

• 33:30Speaker 03

  That's it.

• 33:31Speaker 02

  In terms of income sources, so we have to make some sort of assumption around like, uh, income from working and real estate and that sort of thing, or do we want to figure, okay, will the portfolio pay for all of your living expenses and we pretend like there's no other income coming in? Or can we use some number for working income? And like, what do we want to assume is a base level of income that will be coming in for you guys in that stage?

• 33:52Speaker 03

  Like, post-selling properties?

• 33:54Speaker 01

  Mm-hmm. Well, you're looking at going part-time, right? So it'd be your part-time wages, maybe the 5K cash flow from the townhouses, and that would probably be it, you know, the bridge on, well, and whatever, you know, our investments earn, right? So whatever the investments earn, we could use some of that to supplement. And then probably, you know, the thought was 62, she would do social security, I would postpone mine till later for spousal benefit purposes, so, yeah. So there might be a little bridge there between whatever it is, 59 and a half, let's say, and 62. And I think we want to be mindful of Irma, too.

• 34:30Speaker 03

  Yeah.

• 34:31Brian Preston?

  How about health insurance? What are y'all thinking about for retirement on health insurance?

• 34:34Speaker 03

  Yeah, we would switch to mine.

• 34:36Speaker 01

  So right now, we're on my health plan from my W2, so we would switch over to hers.

• 34:41Brian Preston?

  And getting some benefits out of you keeping this thing rolling.

• 34:46Speaker 03

  You know, when we got married, he said, what am I getting out in this marriage? I was like, here's a AAA membership.

• 34:54Brian Preston?

  She keeps that renewed every year.

• 34:57Speaker 01

  Twenty one, twenty one years.

• 34:58Speaker 02

  We're gonna potentially sell some of the properties. We're gonna take the proceeds, satisfy the debt, right? But there's likely, even once we simplify these properties, it'll be a big chunk of assets. So we gotta figure out something to do with. And he said, hey, I've been a real estate guy. I'm not, I haven't done stocks and bonds and mutual funds. But is the idea, you're gonna just be sitting on a bunch of cash to look for additional real estate opportunities? Or is it, hey, I'm gonna take that money, we're gonna deploy it to a diversified portfolio that can grow for us into the future?

• 35:26Speaker 01

  The latter.

• 35:27Speaker 03

  He's shaking his head, but I know him better than he knows himself. He's gonna wanna buy something.

• 35:32Speaker 02

  Okay, so there.

• 35:33Speaker 01

  I need a little bit of play money, bro. I need a little bit of play money. But yes, the remainder of it, we wanna invest. We just wanna invest in, in the market, whatever makes sense. Just so I'm more hands off and kinda have the freedom that I'm looking for. But yes, right now, we set a little bit of cash aside where it says real estate fund. And it's 160 right now.

• 35:54Brian Preston?

  We don't have the list up. How many houses y'all have right now? If y'all don't know off the top of your head, this is an issue already.

• 35:59Speaker 01

  Well, we've sold a few recently.

• 36:02Speaker 02

  What's future primary? What's that?

• 36:04Speaker 01

  Oh, that is, we already own that. That's in East Tennessee.

• 36:07Speaker 02

  Okay, got it. So it looks like there's about 12 here?

• 36:09Speaker 03

  12, yeah.

• 36:10Speaker 01

  Yeah, I mean, we, yeah. And we, we've sold four in the last year.

• 36:15Speaker 02

  Okay, so you've already begun this wind down process.

• 36:18Speaker 01

  Correct, yeah.

• 36:18Speaker 02

  Not acquired anymore in the last year.

• 36:20Brian Preston?

  But when you say you wanna have some play money, you're not trying to get back to 12 properties again?

• 36:24Speaker 01

  No.

• 36:24Brian Preston?

  Okay.

• 36:25Speaker 01

  No, but I like to have, so, you know, it's kinda the Warren Buffett thing, invest in what you know, right? And I know, I feel like I've got a good grasp of real estate and in particular markets, right? And so I, I'd like a little bit, like that 160 that's for real estate fund, that's what we're gonna buy that other, that fifth townhouse with.

• 36:46Brian Preston?

  I wanna ask, on the townhomes, you're not using a management company on that, though, are you?

• 36:50Speaker 01

  No.

• 36:51Brian Preston?

  So that is, I'm just pushing back a little bit.

• 36:53Speaker 03

  Yeah.

• 36:53Brian Preston?

  Cause you guys are gonna be living over in Vietnam or Paris, living your best life.

• 36:57Speaker 01

  Yeah.

• 36:57Brian Preston?

  And then all of a sudden.

• 36:58Speaker 02

  The toilet breaks.

• 37:00Brian Preston?

  Yeah, they're gonna, they're gonna start telling you, hey, we got water. We need somebody out and you're gonna, oh my gosh. And the time zone differences, we just need to probably build some realistic experience. I'm okay with you dabbling in the real estate, but let's, let's be honest with ourselves is that if we want true passive living in retirement, you're not gonna be wanting to be the Roto-Rooter in the.

• 37:21Speaker 01

  Oh, no.

• 37:21Brian Preston?

  I don't wanna be the Roto-Rooter. And everything else.

• 37:24Speaker 01

  But I, we do have my mom that lives in one of those townhouses. And, and she's fantastic. She's a real estate broker.

• 37:34Brian Preston?

  Okay.

• 37:35Speaker 01

  And she oversees those for us.

• 37:38Speaker 02

  He has a management company. It's a mom management company is what he's got. He's got the mom management.

• 37:42Speaker 03

  No mom management.

• 37:43Brian Preston?

  Oh, man.

• 37:44Speaker 03

  And she's awesome.

• 37:45Brian Preston?

  Mom management turns into the consideration instead of paying the property management fee.

• 37:51Speaker 03

  It's love, it's consideration.

• 37:52Brian Preston?

  She's gonna see this and she's gonna be like, look, I love you, son.

• 37:55Speaker 02

  I know too much now.

• 37:56Brian Preston?

  But now I know way too much. Maybe we oughta add a little fee to this.

• 38:00Speaker 03

  That's right.

• 38:00Speaker 01

  She's, she's awesome. We've, we've, you know, worked together for a number of years, um, aside from her being my mom. And, you know, you know, we've done some fix and flips together and things like that. She's fantastic. So she does oversee those for us right now. So, you know, she's kind of the point person, you know, I'm still the decision maker and, you know, we collaborate with her on, when that Roto-Rooter stuff comes up.

• 38:24Brian Preston?

  Long-term rental, so it's usually a one-off thing like that is much easier.

• 38:27Speaker 01

  Yeah. And, but to that point, she won't be able, she won't be able to do that forever though either. And I don't wanna burden her with that, you know, for however many years.

• 38:36Brian Preston?

  But the big takeaway, I don't wanna go too, too far into the weeds on this. You are okay if some of this isn't like index funds and diversified portfolio, cause that way we can.

• 38:44Speaker 01

  Absolutely.

• 38:44Brian Preston?

  Simplify this thing as much as possible.

• 38:46Speaker 01

  I want the bulk of it to be there.

• 38:48Speaker 03

  Yeah.

• 38:48Speaker 02

  So right now you have, I'm doing some mental math here, about $3 million of equity in your, in your real estate portfolio.

• 38:55Speaker 01

  Correct.

• 38:56Speaker 02

  Uh, you know what it feels like to have $3 million invested in real estate. You've only got about a little under a million dollars invested in the liquid markets.

• 39:05Speaker 03

  Right.

• 39:06Speaker 02

  Have you thought through, this is gonna be sort of a significant shift to where now the vast majority of your wealth is gonna be in the liquid markets. And you're gonna see the values go up every.

• 39:15Speaker 03

  And down.

• 39:16Speaker 02

  Up and down every single day. Any reservations, hesitations with that or like, okay, no, that's what we want. We're comfortable with that.

• 39:23Speaker 03

  I think having the short-term rentals probably helped us with that a little bit. Like, the toll is out, okay. The, oh, you got a new A.C. Like, it's still up and down. It's just a different type of up and down when you're investing differently. And I'd rather be a little bit nervous about the market than knowing that, okay, their shower isn't working. To me, that's worse. Like, I want, I would not, and I stand by this, I do not put people in places that I wouldn't live in. If someone's shower's not working, I'm up all night thinking about that.

• 39:54Speaker 02

  I love that.

• 39:54Speaker 01

  Yeah, we fix it.

• 39:55Speaker 02

  That's what a great landlord is, what that makes you. That's awesome.

• 39:57Speaker 03

  Sometimes.

• 39:58Brian Preston?

  But it does work against you as a realtor, because that's the problem I have with too far on real.

• 40:01Speaker 02

  You're too nice.

• 40:03Brian Preston?

  Well, also, there's a reason, when Bo and I buy real estate, he knows, he has to kind of be the super on some of the stuff. Because I will, I'm worried, every pipe's freezing, I'm worried, I'm a worry wart on all this stuff. So that's why we're a good balance with each other, is because he handles a lot of that stuff. Sometimes he even says, there's something that happened, do you want to know? Or do you want to just write a check? I was like, I'll just write the check, don't tell me.

• 40:26Speaker 03

  Right.

• 40:27Speaker 01

  We kind of play good cop, bad cop. With the same guiding principle, that if we wouldn't live in it, we wouldn't have someone else living in it. And so, but she's really, really great with tenant relations, and I handle the money and the bills and the, you know, this and that, and the leases and stuff. So I'm, you know, we, I think we make a really good team out of it.

• 40:47Speaker 03

  Yeah, we do well in that aspect. So to me, it's just trading off a different risk, like, up and down, up and down. So I'm, I'm okay.

• 40:53Speaker 01

  Yeah, and I think we expect market fluctuations.

• 40:56Speaker 03

  Yeah. He just can't look at it.

• 40:58Speaker 01

  I just don't look at it daily, you know?

• 41:00Brian Preston?

  And what we always, for retirees, I mean, what we try to structure, I know with our own clients, we try to set up the, what's coming from the portfolio, treat it like a direct deposit. So it's like, you're getting a pension payment in retirement. We just have an automatic amount of money that shows up in retirees. That way, when you are overseas, the money just is automatically replenishing. And then, behind the scenes, the rebalancing and the restructuring of the portfolio should be happening automatically.

• 41:28Brian Preston?

  If you're doing this right.

• 41:29Speaker 01

  That sounds great to me.

• 41:30Speaker 02

  All right. So our timeline, is it five years? Is it 60 months? Cause I want to have a timeline that we're working on as we're putting together the plan. Cause you just kind of said, we said a few different things.

• 41:39Speaker 03

  We did.

• 41:40Speaker 02

  What's the actual timeline that, hey, I want to know that by this date, we can move in this direction and begin living this life.

• 41:47Speaker 01

  So it's a great question and I'm not sure how to answer that. I think I like the peace of mind knowing that it could be tomorrow. But realistically, we've got a lot of moves to make, you know, with the divestiture of these assets and, you know, moving money around and all. And that's going to take time because it's real estate, right?

• 42:05Brian Preston?

  Three years?

• 42:05Speaker 01

  I don't, I don't, I don't know. I think it takes as long as it's going to take. I like the peace of mind knowing, are we good right now? If we're good right now, I like my job, you know? And I love the people I work with and everything's going well, so I don't need to.

• 42:18Brian Preston?

  But I do think we need to put some runway on it.

• 42:20Speaker 03

  Yeah, let's say five years, just to make it fun.

• 42:23Brian Preston?

  But I think we could say.

• 42:24Speaker 02

  What's it like end of year this year? What could it look like two years in the future? Or like five years in the future?

• 42:29Speaker 03

  All right, that's great.

• 42:30Speaker 02

  If you're going to continue working, all three of those scenarios look different, right? So we can kind of build all three of those out.

• 42:35Speaker 01

  And I think it'll probably take us realistically, you know, knowing our properties and markets, it'll probably take us through next year to be able to divest.

• 42:44Speaker 02

  Consolidated.

• 42:45Speaker 01

  Correct.

• 42:45Brian Preston?

  I think you're going to find it's interesting. When I sold my tax practice, I thought I was going to miss doing some of the taxes. And then Bo knows the rest of the story. I didn't miss doing taxes. And I think, because you're still going to have your foot still in the shallow end of the pool. I don't think, I think you're going to enjoy going more traditional in the long term on this. Because then it'll really free you up from some of the headaches that you probably just are ingrained in you right now.

• 43:11Speaker 01

  Oh, yeah. Well, I think about my situation a couple of years ago. I was stressed out. I mean, we had a lot going on, you know? We had construction projects going on and buying and selling and my job and her job and everything else. It was a lot. And I think that's when I mentally started to shift. Like, you know, I need to think about what's the, what's the end goal here? And maybe start working toward that instead of going, going, going. Cause it started to become a little too much. I was juggling a lot of things.

• 43:37Speaker 03

  That's something to think about, particularly with, some of your viewers may be younger and kind of, you know, building their career and it's great to be, you know, go, go, go while you're young. But think about your stress level, you know, when I. One thing that I feel like millennials and what's the next generation after that?

• 43:55Speaker 02

  Gen Z.

• 43:56Speaker 03

  Gen Z. I really, I'm proud of them for taking their mental health seriously. Cause my generation will work until we can't work anymore.

• 44:05Speaker 02

  Very deep down inside.

• 44:06Speaker 03

  That's it. You bury it and keep rolling. And so, um, so thinking about him during that time, and he was very stressed. It's, it's important to keep that in mind as you're building your career. Go for what you know, but you know, keep your mental health and your physical health.

• 44:23Brian Preston?

  I talk to Bo about this all the time because I think achievers, we all just go, go and trying to always check the box. And, and there's nothing wrong with being in that warrior phase of life where you are trying to conquer the world essentially. But y'all know, cause we're, we're all kind of in the same, Bo, I'm sorry, you can sit this one out. But I mean, there is something about when you get older, you don't want to have to carry so much because it's, the stress manifests itself in weird sleep issues. It shows up and what you can do in your twenties, thirties, and even early forties with no struggle, all of a sudden will show up if you don't take care of yourself. And then, and then you're going to find out as you're getting your fifties and sixties, health is wealth. So you better make sure that, you know, and if you don't think your mental,

• 45:09Brian Preston?

  you know, happiness is, is not impacting all the physical sides of it, it does. It's a weird dynamics coming to play. So I, I had this conversation with somebody I was on the phone with yesterday who was talking about the, cause he's in that, that conquer the world phase. And I was like, I promise you, take it from the older guy, you have to start building margin into your life now. So that you have, so that you can actually enjoy this. Because you know, maximizing and optimizing every transaction of your life works great in your thirties and forties.

• 45:42Speaker 03

  It is not sustainable.

• 45:43Brian Preston?

  But it's okay when your forties and late forties and early fifties and even sixties, you don't have to maximize every dollar. Now it's okay to let some of your army of dollars just be there for you for simplicity, for happiness. So you live your best life. And then that's something we, we balance and, and talk to people about all the time.

• 46:02Speaker 03

  We gotta click glasses on that. That was.

• 46:06Brian Preston?

  It's true. It's so true.

• 46:08Speaker 02

  Hey, I'm the young guy.

• 46:09Speaker 03

  That's right. Come on, young guy.

• 46:10Brian Preston?

  Bo's still conquering the world. I mean, because that's, he still brings deals to me and he's like, "Hey, what do you think about this?" I'm like, "Bo." Come on, man. I still need processing time for that.

• 46:22Speaker 03

  Bo, conquer the world. But pull about, you got kids, Bo?

• 46:25Speaker 02

  I have three, yeah.

• 46:26Speaker 03

  Okay. All right. Conquer it now, but think about, think about.

• 46:30Speaker 02

  All right, I've got some homework for you guys. You ready? Because I feel like we've got some good marching orders of a plan that we can put together. Obviously, you've already begun the process of selling the properties that you don't want to hold on to long-term. I encourage you to continue doing that. As you begin selling those properties, I think one of the things you're going to be able to do is consolidate the accounts. Even on the liquid side, you have a bunch of different accounts. You may not need all the self-directed IRA pieces. You might be able to consolidate those into IRAs and when you retire, 401Ks. So that way, really, you can have a pretty simplified account structure. Because then, you'll start doing stuff like, maybe we should be looking at Roth conversions or those sorts of things. So that'll be available for you. I do think it'd be helpful for you guys to really dial in your timeline, right? Like, it could be five, could be two. But you ought to talk about what you really, really want. Because from a logistical standpoint,

• 47:16Speaker 02

  retiring at 55 for you has different implications than retiring at 59 and a half. Or post-60 or post-62. And then, the people who have said they want to do, like, really fun travel, like, really exciting travel, but it's sort of like out there in the ether. "I want to do this." I tell them, "Hey, go and figure out the first places you're going to go." Whenever you retire, whether it's end of this year, two years from now, five years, is Paris going to be the first one you try to tackle? Or are we going to go spend three months in Mexico or in Canada, you know, figure out what that looks like? And the more clear you can have that defined, the easier the transition's going to be. Because a lot of people just say, "Oh, I want to travel, want to travel, want to travel." They put in their notice, they stop working, and then they're like, "Oh, what do I do now?"

• 47:57Speaker 02

  So if you can have a plan of not only what you're retiring from, but know pretty clearly what you're retiring to, at least in that first 24 to 36 months, I think that's going to help.

• 48:06Brian Preston?

  I think Candy's got that covered.

• 48:08Speaker 03

  Maybe I got you.

• 48:10Speaker 02

  She's already got Vietnam on the list. That's early on. That's early on. Man, you guys are great. This is going to be fun. I'm excited to put some, put some numbers down and see what we come up with.

• 48:20Speaker 00

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• 48:50Speaker 02

  Brian, what an awesome conversation we got to have with Jason and Candy.

• 48:54Brian Preston?

  I absolutely love Jason and Candy because, look, I think a lot of people are going to get lost in how big their numbers are. But let's level set and bring this back into context. They didn't start when they were in their early twenties, even mid twenties, or even right at 30. I mean, this is a couple that started thinking about finances in their early 30s and they started at negative, meaning they actually had some debt built in the background, but yet they still built their great, big, beautiful tomorrow.

• 49:19Speaker 02

  Yeah, and it's really interesting. They used real estate to do that. That was the way that they built their wealth. But now, as they're sort of entering into this next phase, as they're going into retirement, they've said, hey, we really want to simplify. They kind of acknowledged to us, you know, real estate is not a passive endeavor and it's not something that's super simple. And they want to simplify their lives as they think about what this next season and phase looks like. And I think a lot of people are going to watch their story and say, ooh, I want what they have. I want to be where they are.

• 49:47Brian Preston?

  And another thing that I like about Jason and Candy is when we do a lot of Making Millionaires, we have to project out where we think things are going to be. What's unique about them, because, look, I resemble them in a lot of ways because we're in that same age group. We're actually getting to look at their actual assets. We're not having to project where they're going to be. We're saying, hey, how do we land the plane with the success that they've already created?

• 50:09Speaker 02

  So as a reminder, when we look at their real estate holdings, they had about $5 million in current real estate and about $2.3 million of debt. But they let us know, hey, there's a lot of these properties that we're not really planning on holding. We're actually be okay selling and unwinding these. We said, okay, let's put together a plan to get these down to just the holdings. That we want to continue to have. And then what we're going to do is with the ones that we sell off, we're actually going to satisfy the debt. Now, we wanted to be pretty conservative, so we just kind of took the values that they gave us. We added a 6% real estate commission. We assumed 1.5% for closing costs, and we came up with sort of a net number. So, selling down all of the properties they no

• 50:52Speaker 02

  longer want to keep was going to net them about $1.7 million, which is awesome. So, they're going to sell, simplify, net down 1.7. And then we said, okay, for all the remaining debt, for the properties that we do want to keep, let's take a chunk of that 1.7, and let's have you guys be completely debt-free. So, wiping the slate clean on the liability side, and that still left it with about $1.1 million to invest and grow for the future.

• 51:21Brian Preston?

  Yeah, I mean, this is fascinating to me, because not only are they going to be debt-free, but they're also going to have a little mini pension plan, if you think about it, because they're going to have five properties that are completely paid for, that go probably yield somewhere around $5,000 a month.

• 51:36Speaker 02

  Yep, thousand each property.

• 51:37Brian Preston?

  That's going to be a quite nice retirement they're going to get to work through as well.

• 51:41Speaker 02

  And then on top of that, they had sort of this mixed-use building, which, they're unclear if they're going to pay off the debt on that, but for our analysis, we said, hey, yeah, just if you pay that off, that's going to generate free and clear about $3,000 per month in free cash flows. You're talking about $8,000 a month coming from these real estate holdings that they plan on holding anyways. When we reframe their net worth statement, after they go back through this, you can see that they're going to have about $180,000 in cash, emergency fund, liquid investments, a portfolio, liquid portfolio of just under about $2.1 million, and they're going to have a real estate portfolio with about $1.7 million. So, their total net worth is right there at $4 million as they ease into this next stage of life.

• 52:26Brian Preston?

  But I don't think it's, we can't minimize the value that just 1.1 of that is going to come from these real estate proceeds. That's really going to firm up the liquidity of this portfolio. So, now they really will have $2.1 million kind of working for them. And the liquid assets, whereas if we didn't do the simplification, it would have been a lot less of liquid assets and counting on a lot more from the illiquid real estate side of things.

• 52:50Speaker 02

  So as they think about retirement, the question becomes, okay, well, what can $2 million do for us? So we said, okay, if we just said that, okay, we're going to wind down these properties and retire at the end of this year. So you've got that 2.1 million, that 2.1 million plus the $8,000 a month coming in from the real estate portfolio could generate about $180,000 a year in today's dollars right now. So that's like $15,000 a month if they wanted to retire right now. But they were unclear on exactly the timeline of when they wanted to leave the workforce. So we said, okay, what happens if we wait one year longer? So now the portfolio grows and we just assumed a six and a half percent rate of return. Well, now instead of almost 2.1 million, they could have a little over 2.2

• 53:33Speaker 02

  million a year from now, kind of letting the real estate stuff settle. And then we said, okay, well, what if we wanted to wait five years into the future? What if we got all the way out to age 59? What could the portfolio grow to if you decided you didn't want to fully leave the workforce? And the portfolio could grow to almost $2.9 million five years from now. And again, if we just think about $8,000 in the rental portfolio, we didn't even like grow it with inflation or adjust it. 8,000 from there plus 4% on a $2.9 million portfolio is almost $200,000 of year retirement income.

• 54:08Brian Preston?

  What I love about this plan is that we really have Goldilocks then. Because if they were, if they stayed in their present format, Jason and Candy were going to deal with a very complicated real estate portfolio. And it was just because they might not know it now. They do realize it, but I'm just telling it for the people who just think they're going to do real estate only, is that it's going to be illiquid in a lot of ways. You're also, it's very active. It's not going to be simplified. So that, that, that doesn't fit in my Goldilocks formula. If they just, Apple Cart sold it all, I don't know that that's a great thing either. I think they'd miss it a little bit. Plus, they got some great equity and some good holdings that really could be not fully mailbox money, but it's definitely more.

• 54:50Brian Preston?

  Of the passive side of real estate with these townhomes and the free cash flow. So that's why I say it is the perfect mix of they're going to have investments that are going to be working for them. They're going to have real estate income that's going to be flowing in. So they have multiple streams. This is going to be the best of all things and give them their best version of retirement. And here's what the crazy thing is, if you want to say, well, this is a pretty rosy situation. No, we left this still somewhat conservative. Doesn't even include social security.

• 55:19Speaker 02

  We didn't increase the rental income. We didn't factor in social security. We gave them a conservative rate of return. You were asking me, is this sort of the dream plan, the down to earth plan, the do do plan? I'd argue it's somewhere between do do and down to earth. This seems very, very reasonable. I think this is what their future could look like.

• 55:37Brian Preston?

  And it had to be somewhat passive because if you remember Candy said, hey, we want to be traveling. I think was it as crazy of a goal as six months out of the year?

• 55:45Speaker 02

  Six months, yeah, different places for a quarter.

• 55:47Brian Preston?

  It definitely needs to be Mel Bucks money, but I gotta tell Jason, now that we've actually run the numbers, I think you've got to be prepared that we got Candy going to Paris.

• 55:55Speaker 02

  She's ready. Paris better be ready for Candy.

• 55:58Brian Preston?

  So this is gonna be awesome.

• 55:59Speaker 02

  Awesome. Guys, you were wonderful. Thank you so much for getting hangouts. We love that you were willing to even open up your financial life and let us be part of it.

• 56:08Brian Preston?

  Yeah, they were phenomenal people, crazy goals that they're going to actually be able to accomplish. And it was just fun being kind of part of the story and getting to witness it. Bo, for others who want to go on Making a Millionaire, if they want to share their story, what can they do?

• 56:22Speaker 02

  Yeah, if you'd like to be a guest on Making a Millionaire, go to moneyguide.com/apply. Or if you want to play with any of our tools or resources, you can go to moneyguide.com/resources.

• 56:31Brian Preston?

  Jason Candy, we really did have a blast. Y'all were so fun to hang out with. I don't like, if y'all wish y'all were next door neighbors, I think we would have a lot of fun hanging out. And I love that you were so transparent to share your journey. There are going to be some financial mutants that actually learn something from this, but also probably see some of themselves. And we thank you for coming on and joining us. I'm your host, Brian, joined by Mr. Bo. Money Guy team, out.

• 56:57Speaker 05

  The Money Guy Show is hosted by Brian Preston and Beau Hanson. Brian and Beau are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities, laws, and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through Making a Millionaire. The information provided is for informational purposes only, may not be suitable for all investors, and does not constitute financial, tax, investment, or legal advice. All investments involve a degree of risk, including the risk of loss. The guests featured on Making a Millionaire are not clients of Abound Wealth Management at the time of recording. Their participation should not be considered a testimonial or endorsement of Abound Wealth Management.