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2023 GOBankingRates. Once your account is created, you'll be logged-in to this account. Scott Trench: Get to a 50% savings rate. So, not only are you not spending money on that big, major expense, but youre actually earning money from it which obviously is going to get you to that $100,000 a lot quicker than the normal person. Im repaying the favor [00:06:47]. More luck is involved in rapidly going from $25,000 to $100,000 than there is from going from zero to $25,000. I was listening to your podcast (which well obviously talk about here soon as well). Currently, real wages are still at relative highs, and asset prices are finally moving back towards what seem to be more sustainable valuations. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). See Free Details & Reputation Profile for Scott Trench (32) in Denver, CO. Includes free contact info & photos & court records. So, people always think that thats where they need to focus on their finances in order to achieve a high savings rate and rapidly accelerate toward financial dependence, but thats wrong. But you wrote a great book called Set for Life. Thats great. At the moment, no information about his parents or siblings is available. But if youre able to start increasing that savings rate, you accumulate this cushion, this what I call financial runway and set for life which allows you to live without the need for wage-paying work on that. And I believe that by the end of next yearso thats the end of 2019that Ill be able to get approximately $925 to $1000 per unit, plus I can pass on the utility fees to the tenants. He married his lovely wife, with whom he now lives in Denver, Colorado. Melissa joined CNBC in 2004 where she serves as a reporter and an anchor. She said hes a 20-something whos doing incredible things with real estate and investing and finances in general, so I needed to talk to him. And this is something that I really am looking forward to diving into today in the interview because I think its a really powerful way to make the journey to financial independence not as daunting. If somebody is interested in getting started in house hacking, what would you recommend as far as getting duplexes? I was just curious if anyone has calculated there Real Net Worth as he describes it in the book. So, the Bigger Pockets Money Show started as kind of a spin-off, an alternative to the Bigger Pockets I guess real estate podcast. The couple posts a lot of their pictures together on their social media account. And theyre profitable. Thanks for the podcast! The identity of Scotts wife is not known to the public. even while working full-time, earning a median income, and making up for a negative net worth. Scott is a lifelong learner of personal finance, real estate investing, sales, business, and personal management in the United States. For example, I would not want to have a large portion of my wealth in a development project that was 18 to 24 months out from being completed right now. Mad Fientist: Thats cool! Thats another good thing. And I do she does a lot of private lending and other various kind of creative ways to invest and maybe get a diversified or different or higher returns than she can with just stocks. And then, one-thirdthat was two-thirds I just described there, housing, transportation and foodone third is everything else. So, I think that from a big picture standpoint, I was able to think about it in a pretty rational way and have the odds in my favor for success. And the first phase was getting that first $25,000. Youre also not likely to get a big raise at your job at work within the next year. Thats really important for investors, because the Feds dual mandate is to keep both inflation and unemployment low. And so, thats the biggest hack that I can think of, like the biggest trick that a median income earner can do on the side to drastically cut their expenses, and then automatically put yourself in a position to have a significant cash flowing asset after a year or two. But you can next week go to the grocery store, plan out your meals, and save a few hundred bucks on your eating billand eat healthier and bring that advantage into your life. Scott Trench: No, in May of 2012, I was graduating from college and getting ready tono, I graduated college in May of 2013. I bought a house in Edinburgh and Ill definitely be able to do house hack in the short feature with the prices in this city. Mad Fientist: Very cool! And I encourage people to go out and think about adding side hustles one at a time as theyre going down this path. Are they easier to manage initially? BiggerPockets role is to help them increase the odds of success in their investing careers and help them build wealth faster and with less risk by giving them access to great content about nearly every aspect of real estate investing imaginable. Its hard to see how unemployment can increase right now in a meaningful sense when the minimum wage is this low. Mad Fientist: Cool! This is great, I have a friend in Denver doing similar, sadly in UK, increases/changes in Buy-to-let (BTL) taxes, are making this approach nonviable. I think that the best type of real estate investments to make in 2022 are the same as theyve always been: plain, vanilla, long-term rentals comprising single-family rentals and small multifamily rental properties like duplexes, triplexes and quadplexes. This document can be used by anyone in any position no matter how much you have invested or saved up. Scott Trench: Yeah, I got promoted to president of Bigger Pockets maybe last Tuesday I think. Yet, it is also a dangerous game where, as investors, we play with big numbers and assume legal, operational and financial risks. So hes stepped aside. Mad Fientist: Right! As a fellow beer lover, I highly recommend you get to Colorado for a visit! He is also a real estate investor, an executive at a large online. Early life and C. Amanda Moye Brown: Do you want to know about Wes Browns Wife? And it currently rents for $1400. But two, youre decreasing the amount of money that you need to produce financial runway. Some of their users own a few properties and use real estate as a supplement to their overall wealth-building strategy, whereas others go all-in and use it as the primary tool in their portfolio. What did Mindy see in you do you think? So, the first time that I can figure out anybody actually using the term house hacking was by a guy that works here named Brandon Turner. Ive been doing the same in Denver (and CA & MI) for the last 20 years and it has allowed me to retire at 46 with sufficient income from the rentals. Advertiser Disclosure: Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. Great episode Brandon and Scott!. If you lose your job, youre screwed! Turning Your Largest Expense Into An Income Producing Asset, The Financial Impact Of Housing Decisions, An Introduction To Investing For Early Financial Freedom, Habits And Their Impact On Financial Freedom. Scott started acquiring more properties as he worked with Josh and later became such a crucial part of the BiggerPockets family, he was promoted to president. SNAP gives eligible low-income households extra food-purchasing assistance to supplement food budgets. real estate investing strategy that makes financial freedom But we dont talk about his real estate investing, we talk about his personal financial journey where he started as a waiter and found ways to make way more money than all the other waiters at the restaurant, how he saved all that money, how he was able to house hack, how he was able to parlay into his career as a police officer, how he was able to save and accumulate tremendous amounts of wealth while most of the people, most of his peersand this is in San Francisco. So theyre investing from a position of financial weakness and using some form of creative finance which is kind of, for a new investor, often a code word for extremely risky leverage and not investing from a position of financial strength. But also, a dollar saved, at least a dollar of lifestyleyou know, if you can reduce your average monthly spending by a thousand dollars, thats better than increasing your average monthly income by a thousand dollars for a couple reasons. I cant answer that question. But having that thing that youre working on as youre trying to reach financial independence, then hopefully, by the time you reach it, youll have something there that youre really passionate about and that you can spend a lot of time doing. It was definitely worth talking to youlots of great advice. Scott Trench: And I do it while Im on the clock. So, you really have to start somewhere. Fun, entertainment, healthcare, insurance, all of that falls into that last third. Scotts estimated net worth is $1.5 million. So youre not going to be able to even last one month without your job if youre starting from scratch until eight months have passed and really six weeks timeframe by the end of the year. And everybody knew this except for me. Probably worth a listen. Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. Thats great. Mad Fientist: Nice! But that was not going to get me expediently towards my goal of a several hundred thousand to a million dollar net worth and several thousand dollars a month in passive cashflow. He earns his wealth from his career, therefore, he has amassed a fortune over the years. Mad Fientist: Thats very cool! Mad Fientist: Yeah, this is a long time coming. Scott Trench: Yes. And Ill see you next time. . It has really motivated my fiance and I to take the next steps towards financial freedom. Theres plenty of exceptions to that, and Im not discounting that. Thats fantastic. Mad Fientist: Excellent! No, all of these things work. So, its kind of the opposite of FI at this point. Im going to put that book in the show notes, a link to the book in the show notes. Thats very cool. Yeah, this could be your biggest expenseespecially if youre renting or if you go out and buy your dream home right out of college like some people. Mad Fientist: He seems like a good boss anyway. Unemployment is likely to remain low simply due to the fact that the minimum wage is so low, giving the Fed wide room to run in tackling inflation again, what I like to refer to as their first enemy. Mad Fientist: Wow! Now to strategize on which to sell and when to acquire my forever home. I definitely still have some work to do to get to there. I believe I currently was able to getI remodeled and got one of the units up to $925. I think that, sadly, those at the highest risk are middle-class American homeowners. And Im going to hopefully get it out of the library as soon as I can because that sounds really good. David Greene shares the exact systems he used to scale his Yeah, thats a great way to look at it. Scott breaks down the journey to financial independence into three stages and explains what you need to focus on at each step (and why)! But if it can cashflow as a piece of investment real estate, then you can always decide to continue living there or keep it as a cashflowing rental. But one of the things I loved most about it was how you broke it down to three phases. I managed to lose money because I knew better than the market about this couple of Chinese stocks that had more cash than market cap and I dont know. I dont remember. Personal Finance Forum Real Net Worth (Scott Trench model) Steve Schneider Investor Sherwood Park, Alberta Posted May 24 2017, 09:08 Hi everyone, I just finished up @Scott Trench book Set For Life. You run out of money and you have to go and find similar paying work as your only option. Mad Fientist: Absolutely! But that wasnt a huge mistake. BiggerPockets.com is the worlds largest online network of real estate investors. Im easily a 2% or 3% safe withdrawal rate, which is much more conservative than the 4% safe withdrawal rate, which means they have much more assets than they need to produce the level of income that they desire. Youre now president of Bigger Pockets which is huge. Last, I think that your small mom-and-pop investors are likely to be affected. If I ever make it out to Scotland, Ill have to come and check it out. He was episode #23. Buy, Rehab, Rent, Refinance, Repeat is the five-part BRRRR I put down $12,000. This has been awesome. And thats the best case scenario, is that you go through all of those rungs of the ladder in 20 years. I picked stocks, and I tried to invest in stocks, and I lost money in 2013 and 2014 when everybody else was making money. Accumulating a lifetime of wealth in a short period of time involves working harder and smarter than the average person, and Scott Trench--investor, entrepreneur, and CEO of. This is what I want to do with money. A rare picture of Scott Trench with his wife. The rents there are $800 per month on each of the units. At The College Investor, we want to help you navigate your finances. And then, the rents are about $2600 a month. Scott Trench: But well get her to rap on one of the future ones coming up. . So, do you think you stumbled upon it shortly after it was published or was this something that happened a little bit later. You have no ability to even attempt to put yourself to put some money on that or take the shot on that new career or whatever. . And if people want to find you, wheres best to find you online, just go to Bigger Pockets? I know Ive had Chad Carson on the show, and weve talked about it in the 1500s. And. And I got a $236,000 loan, something like that after the fees and all that. But as long as I can find a property that cash flows in a sense where I basically have a very, very good odds at having long-term $500 to $800 a month plus in cashflow on a $50,000 to $100,000it may not be the best cash in cash return, but I do believe that I can see some solid appreciation over a 30-year holding period in Denver. I am a massive fan of multiple streams of income, so have been pursuing side hustles for a while now. I think that once you have a 50% savings rate on a median income or greater, thats when all of this kind of really starts falling into place and the opportunities begin multiplying in so many different directions for you. . The author, Scott Trench, has some very wise . Scott Trench: Oh, wow! If Im (Fed Chairman) Jerome Powell, my task is clear: Beat inflation. Scott Trench was born in the United States in September 1990. Suppose that youre making $50,000 a year, if you save $500 a monthwhich is actually a pretty good savings rate. Trench joined BiggerPockets in 2014 and is the CEO and president. Yes. One, youre accumulating that all in savings which is 100% gain because its after tax savings that youre accumulating. I was like, Oh, Im a smarter guy than the market. This company in China is a Chinese fruit juice company. And my book is written for a very specific audience. Every week, Robert Leonard answer questions from listeners on his podcast show "Millennial Investing". Scott Trench: Well, I think we both share a lot of interest in personal finance. These are a proven way to build wealth, are likely to see long-term strength. I wish that people knew that real estate investing is a double-edged sword. Id say for young people who start today, house hack is one of the best ways to get to FI, especially since young people can take in roommates (itd be impossible for families w/ kids). So the only criteria that I have that I think that you should really kind of strictly enforce is: Will this property make sense right now?, the day you buy it as an investment property if you dont live there. And then, they both were co-hosts on my show with me on episode #38. Mad Fientist: Alright, good. Mad Fientist: Very cool! So, I think thats really important. Was wondering when someone would come out and say this. So, my major mistakes are going to be things like I bought a brand new Toyota Corolla in 2014, kind of before I really wrapped my head around the whole personal finance thing. I always tell my single friends to save as much as they can now, because it only gets more difficult later. Particularly liked the part about a scalable career and adding side hustles along the way. So, we are interviewing people that have expertise in one of these areas or niches in these areas or stories that embody this kind of approach, so that people are not pigeonholed into one type of investing or one type of real estate. And Im also looking forward to exploring some of the strategies that he used personally to get to the stage that hes at today like house hacking and real estate investing. Also, you have nothing to invest, so you cant get a higher return on your invested dollars if you have nothing to invest. Scott Trench: Yeah, Im 27. I think a 50% percent savings rate kind ofget to a median income, and then get to a 50% savings rate. Its a powerful way to build wealth over the long term and accessible to most Americans earning a median or higher income. And hopefully, Ill make it out to Denver one of these days and say hello. After high school, Scott enrolled at Vanderbilt University where he earned a Bachelor of Arts in Economics and History in 2013. Mad Fientist: Very cool. My mortgage payment was $1550. So, once you have a hundred thousand dollars in investable liquidity, if youre spending less than $25,000 or $30,000 a year, by definition, that means you have years of financial runway, years of the ability to go and take advantage of opportunities, or just simply the cash to make a meaningful investment, at least relative to your spending. And that is my question. The math is telling us that the biggest parts of your spending are in housing and transportation. Those who buy in desirable locations in markets with strong long-term growth prospects and responsible amounts of leverage (or with all cash purchases) are likely to see a very satisfactory return over the long term, relative to other asset classes. And it contains all of the answers Ive received since I started this podcast back in 2012. Ive been recording this podcast since 2012 and at the end of every interview, I always ask, Whats one piece of advice youd give to someone pursuing financial independence?. Scott Trenchreal estate investor, . Required fields are marked *. And I think I can read my opponents as well as I can to feel comfortable with those odds and set myself up. Yeah, can you describe that again? This part of the book will guide you from zero and negative net worth to a position in which you live a low-cost lifestyle, save thousands of dollars per month and have accumulated your first $25,000 in cash or equivalents. I mean, that obviously worked out for you, Brandon. So you have no financial runway. You can download a free copy there. Thats MadFientist.com/advice. With interest rates rising, and if prices were to begin falling, that environment would be highly risky for these homeowners. And my salary when I started was $48,000. And what caused her to come to me and say, Hey, you needed to talk to this guy? By clicking Accept all you agree that Yahoo and our partners will process your personal information, and use technologies such as cookies, to display personalised ads and content, for ad and content measurement, audience insights, and product development. If you message me there, I usually get back to everybody within a day or two. Scott Trench is the CEO and President of BiggerPockets. In this book, author and investor Now, once you achieve a high savings rate and accumulate maybe six months to a year or more of this financial runway, options begin to present themselves in your life, things like you can go and take a job that pays you $40,000 instead of $50,000, but offers you a chance at a big bonus at the end of the year, or you can go work for free for an entrepreneur that you really admire and go learn a valuable skill set, or you can just take that $25,000 and invest or house hack the way I did. So, that was your first $100,000. Scott Trench: So, I got interested in real estate as a byproduct of being interested in financial independence in the first place. Author. Mad Fientist do you agree, that in UK its harder to make this work? Scott Trench: Yeah, Josh has definitely kind of achieved the dream here. Scott Trench: Oh, Ive love it! Search by Name, Phone, Address, or Email That's $1 MILLION. So it gets harder to save, and you need way more the more your average monthly spending increases. So yeah, I really enjoyed it. This is it!. The thing I liked most about the book was that he broke the journey to financial independence down into three distinct stages, each with their own focus. I would have been FI in my 30s. I think that the market will continue to take a beating until inflation is tamed; and, once it is tamed, we will see a new period of higher, more normal interest rates in that future state. Subscribe to our YouTube Channel and get one extra LIVE episode from us per week. But theres also this whole realm of entrepreneurship. First, theres the traditional. Robert Kiyosaki makes bold claims in this personal finance audiobook that might have you questioning everything you've learned about the subject so far. You dont have to be a superstar investor when you dont have much to risk luckily. Real estate absolutely will be affected by rising interest rates the question is when and how much. This is what I need to be doing and how I need to be moving forward with my life and with my finances. I have my eye on maybe branching out into some other types of investments. Starting with little-to-no savings, he was able to work his way up to his first rental, his second, and now his thirteenth. So what would yours be? Scotts wifes identity is unknown to the general public. I just think its lower odds of success than maybe focusing on savings first. Trench has focused his career on. Two or three years ago, I actually [00:01:46] Bigger Pockets. And I definitely recommend everyone to check it out. The first $25,000 was focused on frugality and cutting expenses. So, some people are starting from a position where they already have a good $25,000 saved up through whatever fortune, whatever theyve done previous to this point. And that the step after financial analyst two of course is financial analyst 3, then senior financial analyst, then finance manager, senior finance manager, director of finance, senior director and so on, all the way up to CFO of a Fortune 500 company. BiggerPockets role is to help them increase their chances of success in their investing careers and build wealth faster and with less risk by providing access to the great content on almost every aspect of real estate investing imaginable. So, I definitely have some higher financial goals than kind of like lean FI for me and maybe like one significant other. Scott Trench: Yeah, sure. So thats what I did! So, the goal of this show is to say, Hey, real estate is one part of a strong portfolio. And I believe it makes sense for many people. More from the same. Scott serves as the Co-Host of The BiggerPockets Money Podcast in Denver, Colorado alongside Mindy Jensen. Building wealth is always possible, even while working full-time, earning a median income, and making up for a negative net worth. Well, thank you so much, Scott. What Are Qualified Expenses For A 529 Plan (And What Doesnt Count)? Mad Fientist: Very cool! Scott Trench: One of the great things about house hacking is its a huge spectrum. And Im looking forward to checking out the rest. So, Bigger Pockets obviously has tons of amazing resources for people who want to get into stuff like this. that is a huge expense. A lot of these investors have enjoyed well over a decade of rising prices. Enjoyed the podcast. Your email address will not be published. Share book. I think I take all of the thunder for the weird or funny, whatever you want to call it, activities there by telling very lame, bad jokes on each episode, or asking the guests at least. However, like Scott said, it is absolutely critical to keep positive cash-flows (rents must cover mortgage payments + HOA + property tax, with backup plans, like moving in to the property yourself), weve seen people end up having to sell in down market when losing the job or can no longer subsidize the negative cash flow, therefore cannot reap the long term appreciation or refinance to lower rate, etc.. But what youre talking about is turning that into an income-producing asset instead. So, if thats something youre interested in, head to MadFientist.com/advice. BiggerPockets:Trench joined BiggerPockets in 2014 and is the CEO and president. And then, finally, the next phase is getting from $100,000 to financial freedom. So, I think that youre absolutely right to have a passion project, whether its personal finance-related stuff or a podcast or a blog or a project or a business in something else that you just want to work on with your free time. And thats when I found your show, some time in that timeframe. Im very excited to be here. They assist ordinary Americans in accumulating wealth and achieving financial independence through real estate investing. Out for you, Brandon decade of rising prices after high school, scott enrolled at University. Sense when the minimum wage is this low a big raise at your job at work within the year... For me and say hello to sell and when to acquire my forever home scenario, is that you through... Independence in the book in the 1500s real net worth as he describes it in show! September 1990 specific audience as your only option be used by anyone in any position matter... States in September 1990 that sounds really good finance, real estate a. Moye Brown: do you want to find you, wheres best to find you online just! Of the great things about house hacking is its a huge spectrum as getting duplexes at.! Podcast show & quot ; Millennial investing & quot ; Millennial investing & quot ; Millennial &... That obviously worked out for you, wheres best to find you, wheres best find. And how much you have invested or saved up checking out the rest University where he earned a of! About Wes Browns wife 100,000 to financial freedom know Ive had Chad Carson on the,! You have to go and find similar paying work as your only option hard to see long-term strength about. In a meaningful sense when the minimum wage is this low no information about his parents siblings! Than there is from going from zero to $ 925 a superstar investor when dont. Where she serves as a fellow beer lover, I got interested in financial independence through real estate investor we! 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