BiggerPockets Money

You may have heard the term “real estate syndication” thrown out quite a lot over the past few years. It seems like almost every real estate investor is either starting a real estate syndication or investing in one. So what’s all the hype about? Is this an investment opportunity that you’re missing out on, and if so, is it truly passive as many people claim?

We’ve brought the master flipper, rehab estimator, and syndicator himself, J Scott, back to the BiggerPockets Money Podcast so he can share some information (and advice) on real estate syndications. J walks through a handful of points worth examining before investing in syndications. We talk about what a real estate syndication is, where to find syndications, how to validate the syndicators themselves, what a limited partner is, what a general partner is, and more.

The most valuable part of this entire episode is about researching the syndication deal itself. Where is it located, what is the structure, who’s running it? These are all questions you should ask, along with some other key questions like:

What is the team’s track record, reputation, experience?

What is the location, risks, population size, employment, wage growth?

On the deal, what do the returns look like, what are the big risks?

Do they have an investor presentation?

What’s the minimum investment?

Are there capital calls? How do they deal with capital calls? Have they required capital calls in the past?

What are their accreditation requirements?

Can you get better terms in exchange for a larger investment?

How frequent are the distributions? Quarterly, monthly, yearly?

When will distributions start? 

Will they be doing a cost segregation study?

What fees are they receiving?

When will they give updates? Monthly, quarterly?

Can you invest using a 1031 or an IRA?

In This Episode We Cover

What is a real estate syndication and who qualifies to invest in one?

What an accredited investor is and the qualifications behind it?

Where can you find syndicators?

Whether or not investors have liability if a deal goes bad

Cap rates, NOI, and valuations on large deals

How to research a syndication deal

Syndications vs. funds vs. REITs

What happens if a syndication runs out of money?

And So Much More!

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Combining finances can be complicated, but what’s even more complicated is combining one salary with two inconsistent business accounts. How do you manage the household’s budget when you don’t know what will be coming in every month? This is the question Roshan and her husband have for us today.

Roshan works as a teacher making a very steady income and has access to retirement plans like her pension and a 457(b). Her husband, on the other hand, runs a seasonal flower business that brings in $30,000 in only five weeks, and an ecommerce store with a bit more consistent income. Together, they want to develop a formula that will help them plan for early retirement, while also being able to take some risks and reinvest in their businesses.

Scott and Mindy not only walk through the regular finance aspects like spending, retirement planning, and saving, but also more relationship-based financial aspects like having money dates, keeping a shared budget, and having a retirement plan that works with your family’s lifestyle. 

In This Episode We Cover

What to do if you have inconsistent business income 

Budgeting to cut down on items like eating out and random shopping

Creating “distributions” from your business and giving yourself a salary 

Investing in retirement accounts like your Roth IRA, 457(b), 403(b), and more

Creating a “financial formula” that will lead to you to (early) retirement 

Having money dates and staying on top of finances as a couple

And So Much More!

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Rahkim Sabree “aspired to be poor” when he was growing up. He saw his parents collecting section 8 housing vouchers, getting food stamps, and thought that this was the way life was. He didn’t grow up around many homeowners. All of his friends lived in apartment rentals and were in the same financial situation as him. There were no “financial literacy talks” at Rahkim's dinner table.

It wasn’t until Rahkim left college and got a banking job that he decided to look at where his money was going and what it was doing for him. He started reading books like Rich Dad Poor Dad and The Millionaire Next Door, which shifted his mindset and gave him the foundation to chase financial freedom. He bought a duplex, house hacked it, and started throwing all the money he could into investments.

As his own financial knowledge began to grow, he was able to share what he learned with others. He’s written two books, spoken at TEDx talks, and been invited to numerous conferences to speak. This didn’t bode well with his employer, who would consistently ask him whether his outside-of-work activities were clashing with his nine-to-five responsibilities. After hearing this over and over again, he decided to “fire his boss” and focus on building his own income, all without an emergency reserve stashed away! 

In This Episode We Cover

Why it’s so difficult to break out of poverty without financial education

Deciding to house hack so your mortgage can be offset 

Why you should always keep a safety reserve in case of emergencies 

Maxing out your 401(k), HSA, and ESPP contributions 

Thinking of low-interest credit as another type of safety reserve

Knowing when the appropriate time to leave your W2 is 

And So Much More!

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Amanda is making a teacher’s salary and spending her weekends working a part-time job at a grocery store. She contributes to her retirement accounts, but she could be sitting on a passive income gold mine that she doesn’t realize. 

Attached to Amanda’s home are a casita and a mother-in-law suite. The casita is rented out to long-term tenants and the mother-in-law suite has been used as a short-term rental for some time. But what if instead of keeping her casita as a long-term rental, she converted it into an Airbnb? Well, Amanda could potentially see a rent increase of almost 3x what she currently is renting at!

With this house hacking model that Amanda is using, she’s able to get owner-occupied financing with lower interest rates and better terms. So what if she could start doing this with other houses and slowly grow a short-term rental empire? As Scott and Mindy discuss, it’s possible! 

In This Episode We Cover

The importance of side-income streams when you work a lower-paying job

Turning extra bedrooms into short-term rental income

House hacking and the benefits of owner-occupied financing 

Calculating your hourly rate for different tasks and focusing on those with the highest ROI

Chasing financial freedom and the importance of using time how you see fit

And So Much More!

Links from the Show

BiggerPockets Money Facebook Group

BiggerPockets Forums

Finance Review Guest Onboarding

Scott's Instagram

Mindy's Twitter

Get Tickets to BPCon 2021

Short-Term and Vacation Rental Discussion

Avery Carl’s Short-Term Rental Interview

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After years and years of working in licensing, Diania Merriam opened up her credit report and saw that she was (collectively) $30,000 in debt. This forced her to ask the question, “what am I working for?” It made sense at the moment: you get your paycheck, you can go out to a fancy dinner, you get another paycheck, you can buy yourself something nice. But Diania wasn’t happy, or at least as happy as she thought she’d be.

She realized that she didn’t want to be stuck in a job she had to go to every day. She wanted autonomy, freedom, and financial independence that would allow her to rule over her schedule and pursue her passions and interests. So, she went to work and started saving whatever she could. She stopped eating out, started cooking all her meals, moved to a more inexpensive city, bought a house and house hacked, heavily invested in retirement, and did everything right.

Now, she’s self-employed, hosting the Optimal Finance Daily podcast and the EconoMe Conference in Cincinnati. She was able to create her dream roles because she came from a position of financial strength, she also had a plan in mind and knew what her “worst-case scenario” looked like.

In This Episode We Cover

Getting out of consumer and student debt as quickly as possible

Minimizing expenses and maximizing income to increase savings rates

Building a strong financial runway so you can start your own business

Buying a house and house hacking by renting per room

Understanding your “worst-case scenario” before you take the leap into entrepreneurialism

Finding your passions and cementing what you want to do when you reach FI

And So Much More!

Links from the Show

BiggerPockets Money Facebook Group

BiggerPockets Forums

Finance Review Guest Onboarding

Scott's Instagram

Mindy's Twitter

Get Tickets to BPCon 2021

The Shockingly Simple Math Behind Early Retirement

Get Tickets to the EconoMe Conference and USE CODE BIGGERPOCKETS for a Discount

BiggerPockets Money Podcast 01 with Mr. Money Mustache

BiggerPockets Money Podcast 120 with Michael Kitces

BiggerPockets Money Podcast 153 with Bill Bengen

Grab the House Hacking Strategy

Check the full show notes here: https://www.biggerpockets.com/moneyshow215

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It’s hard to imagine what someone is going through once they’re given a cancer diagnosis. The last thing many people want to think about during such a troubling time is finances. This was true for Zachary, who’s combined net worth with his partner more than doubled while he was supporting her throughout her chemotherapy and cancer surgeries.

Even though it was a medically troubling year, Zachary and his partner were able to almost double their income, while keeping expenses fairly low. This allowed them to set a 50% savings rate and keep enough to pay for treatments, retirement investing, and even save for IVF (in vitro fertilization). Since IVF is such an expensive treatment, Zachary wants to know how he can best position himself to pay for it while his partner reduces her time at work to take care of their future children.

In This Episode We Cover

Becoming cancer free after a stage three diagnosis (wooooo!)

Doubling your income by making intelligent career changes

Short-term rentals vs. long-term rentals and the risks of both

Planning for medical expenses like IVF

Contributing to HSAs, Roth IRAs, and 401(k)s

Managing a 10-bedroom “sorority house” 

And So Much More!

Links from the Show

BiggerPockets Money Facebook Group

BiggerPockets Forums

Finance Review Guest Onboarding

Scott's Instagram

Mindy's Twitter

Get Tickets to BPCon 2021

You Need a Budget

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Growing up in Mexico, Saul Tijerina didn’t fully understand the concept of financing. It wasn’t that he couldn’t conceptualize financing, it was more that he wasn’t around it enough to think of it as an option. In Mexico, everything was sold for cash, whether it was a home, a car, or a new TV. Owning something meant that you really “owned it”, not just “I’m paying this off.”

It’s no surprise that when Saul came to the United States to work, he was in for a financial shock. New car? Finance it. New house? Finance it. Want to eat out every day? Charge it to your credit card and finance it! This was the cycle that Saul was in for close to two decades, before discovering the FI movement.

Once he started digging around online forums, blogs, and YouTube channels, he found a community that not only hit financial independence but hit it at an impressively young age. Now, about two years into his FI journey, Saul has made monumental progress with saving and investing. He’s on track to retire as a millionaire in 2026 and will live off of his taxable accounts until he is old enough to take out funds from his tax-advantaged investments.

In This Episode We Cover

Why lifestyle creep can be incredibly dangerous for young adults 

Paying attention to the interest credit cards charge and never falling into high-interest debt

Why financing a brand new car can be a huge blow to future wealth accumulation

Staying away from the “two-income trap” and keeping expenses low

Roth IRAs, 401(k)s, Conversion Ladders, and other retirement accounts

Saul’s 72 Hour Rule for spending (especially online shopping)

How to get your partner on board for FI when they may not know about financial possibilities 

And So Much More!

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Starting a strong financial position in your youth is probably the most important thing you can do to hit financial independence. Sometimes that strong position includes maxing out retirement accounts, like Roth IRAs, 401(k)s, or even HSAs (health savings account), but sometimes, it doesn’t. Scott and Mindy talk to Kirsten about the potential option of pausing her retirement contributions to buy a duplex so she can house hack.

While this may seem counterintuitive, pausing retirement contributions isn't always a bad thing. This is especially true if you’re trying to do something that will radically change your income or expenses, allowing you to invest more into retirement later on. 

This episode runs through house hacking, retirement contributions, FHA rules for owner-occupied loans, how to graduate with no debt, and when the best time to have a “money date” is. It doesn’t matter if you’re in your early 20s or mid-40s, these principles are key to having a financially successful life.

In This Episode We Cover

How to aggressively invest so you can retire young 

The importance of side-income and why you should have multiple streams of income

Roth IRAs, 401(k)s, and HSAs (health savings accounts) 

Graduating from college debt-free

Whether or not life insurance is necessary for young people

Having “money talks” and “money dates” with your partner 

House hacking and using real estate to catapult your wealth

And So Much More!

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It’s nice to hear a fan of the BiggerPockets Money Show talk about how they are on the path to financial freedom. It’s even nicer when we hear that the fan, Melissa Yi, went from a negative net worth to now $100k+ due to some simple tips from Scott and Mindy.

Melissa had stints in her childhood where she was facing homelessness, not knowing where her next meal was coming from. She worked hard after high school and ended up at a job that offered to pay for her college education. A year away from graduating, she made the decision to quit, without savings, another job lined up, or a way to pay for school. She took out student loans, auto loans, and sunk into credit card debt.

At one point, Melissa looked around and realized she had a lot of stuff. Stuff that wasn’t doing anything for her, except for filling up her garage. She sold what she could, started bringing in side income streams, and stopped eating out. These small changes allowed her to slowly pay off her debt and get to a positive net worth. Now, she’s at the $100k+ point and slowly coasting her way to financial independence! 

In This Episode We Cover

The importance of financial education when growing up 

Taking advantage of company-sponsored tuition reimbursement 

Why you should never cash out your 401(k) or other retirement accounts 

Credit card debt and why it’s so bad for uninformed consumers 

Using a live in flip to make a killer profit while paying $0 in taxes

Setting up retirement accounts and maxing them out whenever possible

And So Much More!

Links from the Show

BiggerPockets Money Facebook Group

BiggerPockets Forums

Finance Review Guest Onboarding

Scott's Instagram

Mindy's Twitter

Melissa’s Facebook Post

Cutting Your Grocery Bill in Half with Erin Chase from $5 Dinners

 Check the full show notes here: https://www.biggerpockets.com/moneyshow210

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Teachers do a lot more than we give them credit for (as shown throughout the past year and a half), but sadly, they don’t get paid terribly high salaries. Today’s guest, Stephanie, is a music teacher for young children and is debating whether or not she should make a career change to up her income to higher levels. Stephanie has a good amount in savings and investments but wants to take on a duplex to house hack and save money on monthly housing costs.

Scott and Mindy walk through the pros and cons of house hacking and answer questions about live in flips. The best part about Stephanie’s story is that she has the option to move anywhere in the United States. She has nothing holding her to New Jersey and may be keen to move out due to the high taxes she has to pay.

With the combination of a career change and the potential to do a live in flip/house hack on the horizon, Stephanie has a lot of great (and broad) options to help her reach financial independence!

In This Episode We Cover

Changing careers to maximize financial independence goals

Starting a side hustle so you can earn extra income

Roth IRAs, 401(k)s, and Solo IRAs

House hacking as a means to not only cut housing expenses but build wealth

Who should (and shouldn’t) do a live in flip

Should you pay off low-interest debt or invest?

And So Much More!

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