Hack Your Wealth

#35: When it comes to early retirement the most important (and difficult) thing you have to grasp is your safe withdrawal rate.

FIRE bloggers rave about “the shockingly simple math behind early retirement,” but they almost never talk about the shockingly un-simple math behind safe withdrawal rates.

So this week, I invited Karsten Jeske, PhD – a former professor, Fed economist, quantitative finance researcher, and early retiree – to the podcast to share insight on how to estimate your safe withdrawal rate in retirement.

This is the most important financial planning concept early retirees must grasp to stay retired and guarantee they never have to go back to a j-o-b.

What you’ll learn:

• The fatal flaw of the “4% rule” and why you might easily run out of money in retirement if you follow it blindly
• The importance of analyzing the conditional probability of failure based on the actual year you retire
• Why sequence of returns risk and safe withdrawals rates are inextricably linked
• Why the business cycle in the year you retire is crucial to your safe withdrawal analysis, plus how to use the Shiller CAPE ratio to estimate your safe withdrawal rate
• How Social Security factors into your safe withdrawal analysis
• Why sequence of returns risk is front-loaded for early retirees but back-loaded for wage earners

Have you analyzed your safe withdrawal rate? Do you think it is more or less than 4%? 3%? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• Early Retirement Now Safe Withdrawal Rate Series
• Trinity Study (4% rule)
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#34: The extraordinary market volatility the last couple months has been enough to wrench the stomachs of even the most battle-hardened investors.

Right now, the markets are on a tear and have recovered most of their losses since the coronavirus sent us running for cover.

But the kind of top to bottom -35% freefall we saw in one single month earlier this year is exactly the kind of whiplash that destroys an early retiree’s confidence when it comes to retirement withdrawals.

That’s why it is so crucial for at least part of your portfolio to be stable cash-flowing assets. Stable cash flows that don’t go poof when the market tanks will help tide you over to the recovery, whether recovery takes 3 months or 3 years.

We’ve been talking a lot about real estate the last few episodes. One richly cash-flowing real estate asset class we haven’t talked about yet is mobile home park investing.

In this week’s podcast, I chat with mobile home park investor Andrew Keel about this unique real estate investing strategy.

Andrew owns and operates more than 1,000 mobile home lots across 17 parks in 7 states. He shares insight on how wealth is built with mobile home parks by owning the land and not the homes that sit on it.

We discuss:

• Structure of the mobile home park industry
• How mobile home park investing differs from traditional real estate investing + what makes it especially attractive vs. other niches
• Why supply and demand for parks increasingly favors investors
• How to find mobile home park deals
• How mortgage financing works for mobile home parks (what kind of banks lend to park investors, typical loan terms)
• How Andrew found, acquired, and turned around his first mobile home park deal
• What are the markers of an attractive mobile home park deal
• Typical value-add improvements to increase park value
• Why a park’s utilities can make or break the deal

Have you or anyone you know invested in mobile home parks before? If you’re intrigued but hesitant, what concerns do you have? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• Keel Team
• Bestplaces.net – demographic data and stats about cities and zipcodes
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#33: Each summer, the real estate market turns into a zoo as buyers and sellers play a big game of musical chairs. Everyone’s trying to get a new seat before the school year starts up again.

Buyers who are also selling a home that has gone up in value will face capital gains taxes…

Or will they?

If you do things right, you can exclude from taxes up to $500k capital gain married filing joint (single filers divide by 2).

In this week’s podcast, I share how the home sale capital gains tax exclusion works, the rules you must follow, and common mistakes sellers make that cut into the tax benefit.

What you’ll learn:

• Basic rules of the home sale capital gains tax exclusion
• The 2009 change that made claiming your exclusion more difficult
• What qualified vs. non-qualified uses are…and how it impacts your tax liability
• The safe harbors that help you exclude more from taxes

Have you sold a home before and were able to get the exclusion? What’s the most confusing part of the rules to you? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• How to avoid capital gains taxes when selling your house
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#32: The last few podcast episodes have explored alternate real estate investing strategies like large-scale multifamily and fix & flipping.

But two more strategies worth deep-diving on are: private lending (i.e. hard money lending) + foreclosure auction investing/flipping.

So this week, I invited former BigLaw attorney turned real estate investor Ethan Gao to share about his experience as a hard money lender and foreclosure auction flipper.

Ethan has made over 120 hard money loans and flipped over 100 foreclosure auction properties, making serious double-digit returns in the process.

Bigger risk, bigger reward, right?

…Except Ethan would argue, the risk isn’t necessarily bigger. If you know what you’re doing, it’s actually smaller. It just requires more upfront cash.

Tune in to our interview to learn all about:

• Why Ethan pivoted from syndications and crowdfunding to hard money lending and foreclosure auction flipping
• How he finds and vets hard money borrowers, how much he typically lends, on what terms, and what happens when a hard money loan goes bad
• How foreclosure auctions work step by step (including bidding strategies, and why you need to bring tons of cash on top of cashier’s checks)
• How to get the list of auction properties in advance and how to diligence them before auction day

Have you invested in foreclosure auction properties or loaned hard money before? Did you earn higher returns? What key lessons did you learn? What other questions about lending / auctions do you want answered? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• ethangao at gmail dot com
• Foreclose Houston
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#31: So, we’ve been talking real estate the last few podcast episodes.

So far, though, we’ve only talked about buying and rehabbing rental properties.

But buying/rehabbing isn’t enough.

You need tenants to actually make money – and build wealth – from real estate. Tenants pay the rent!

But how do you find great tenants? Manage them? And, importantly, keep them around?

In this week’s podcast, I talk with Mark Ainley in depth about how to manage rental properties effectively by attracting and retaining quality tenants.

Mark is a long-time real estate investor and co-founder of a Chicago-based property management company that currently manages ~1K residential doors + 2M square feet of commercial real estate.

We chat about:

• Best practices for attracting quality tenants to your listing (and screening applicants)
• Tips for managing tenants effectively – including key lease provisions, dealing with lease expirations, and regularly inspecting units
• How to retain good tenants and handle bad ones
• Key things to look for when hiring & reference-checking property management companies

If you own rental properties, what are your best practices for finding, managing, and retaining great tenants? Do you use a property management company? If so, how do you make sure you’re getting good service from them? Let me know by leaving a comment when you’re done!

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Links mentioned in this episode:

• GC Realty & Development
• Get Mark’s Tenant Scoring Matrix to help you screen tenants effectively
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#30: Juggling work and family is always hard.

Adding serious real estate investing to the mix is even harder.

But juggling toddler + newborn + investing in 19 doors your first year as a buy and hold real estate investor + rehabbing and flipping properties remotely from out of state + building an online real estate coaching/consulting business all at the same time is…insane.

Or crushing it.

And today’s guest has done just that. In this week’s podcast, I talk with Erin Helle, an army veteran turned “take-massive-action” real estate investor and house flipper.

We deep dive specifically on tips and strategies for rehabbing fixer-upper properties for maximum impact.

What you’ll learn:

• How to evaluate which upgrades will give the biggest bang for buck when you have a limited budget
• Erin’s step-by-step process for rehabbing, from first inspection to project complete
• How much $/time to budget for a rehab
• Tips for finding good contractors at reasonable rates
• How to manage contractors (dealing with poor communication, staying on schedule, etc)
• Simple rehab tasks that are worth learning yourself to save time and money

Have you rehabbed and flipped real estate before? What key lessons did you learn? What are your tips for finding and managing contractors effectively? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• BC Global Investments
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#29: How do 2 guys working on their own build a $175M multifamily real estate portfolio in 7 years spanning 1,700 apartment units?

That’s $25M of real estate acquired…every year.

In this week’s podcast, I talk with Andrew Campbell about large-scale multifamily real estate investing.

After building a personal portfolio of 76 doors ranging from single family homes to 4-plexes, Andrew switched to large-scale apartment complex investing – raising private capital to acquire 200+ unit complexes.

Since real estate is a powerful vehicle for building wealth, I wanted to learn from Andrew how he transitioned from small-scale to large-scale investing and lessons that other real estate investors can apply to their own real estate portfolios.

We talk about:

• How Andrew grew his personal portfolio to 76 doors in 3 years, including how he financed all the properties
• How he pivoted step by step to large scale multifamily investing
• How he found his first large multifamily apartment complex deal, the purchase price, the financing structure, and what post-purchase actions he took to increase its value
• His investment criteria for evaluating apartment complex deals today
• The key skills he believes you need to succeed at large-scale apartment complex investing

Do you invest in multifamily real estate? If you made the transition from single family to multifamily investing, what’s your story for how you did it? What other questions do you have about apartment complex investing that you want answered? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• Wildhorn Capital
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#28: Ever notice that wealthy people tend to own real estate, and real estate investors tend to be wealthy? #NotACoincidence

I’m not talking Forbes 400 kind of wealth (for that, um, please start a big successful company like Facebook)…but wealthy enough to FIRE comfortably.

In this week’s podcast, I share 7 powerful ways you can invest in real estate, from classic buy and hold to tax lien investing.

What you’ll learn:

• The 3 things that make real estate so attractive for building FI wealth
• 7 powerful ways to actually invest in real estate
• The 4 levers where wealth is actually created using real estate
• What I look for in investment properties and how I personally analyze them

Are there other powerful ways you invest in real estate? Any other factors you consider when analyzing a deal? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• My 4×4 FIRE framework for creating and protecting wealth (HYW002)
• House Hacking San Francisco Bay Area style
• How to do a residential property inspection step by step
• Real estate valuation spreadsheet to quickly compare properties side by side
• Free video tutorial: How to Analyze a Rental Property (What to Look For)
• RealtyMogul
• Fundrise
• Crowdstreet
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#27: Sometimes, you have to help loved ones learn a new skill, or else it actually becomes YOUR problem.

Teaching your kiddos about money is one of those skills.

You don’t want them to be clueless once they’re young adults and blow all their money…or make bad decisions and fall into debt.

If they fail at money, it becomes YOUR problem…just as you’re starting to enjoy more free time as an empty nester.

But the financial learning curve is long, so it’s important to start when they’re young and reinforce lessons consistently over the years.

That’s why in this week’s podcast, I share 9 crucial money lessons your kids must learn to succeed as adults.

Here’s what you’ll learn:

• The surprisingly young age when kids’ money mindsets/habits start to crystallize
• 9 crucial lessons to teach your kiddos from infant→toddler→tween→teen→young adult
• Tips for helping parents to actually make their kid internalize important money lessons
• Why giving kids decision-making control over their own budget early on will help them rapidly develop good financial judgment
• Why the most important lesson of all is to teach them how to find contentment in what they have, and how to know their self-worth is in who they are, not what they buy

What money lessons do YOU feel are most important to teach your kids? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

• How to motivate your kid to win the national spelling bee (and excel in life)
• How to make sure the cost of college doesn’t ruin your kid’s future
• The best parenting guidance I’ve learned for raising successful children
• Why child care is so damn challenging (and what to do about it)
• Hey, rich people. Wealth management includes telling your kids how rich you are.
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.

#26: College affordability is tough but 529 college savings plans can help you boost college savings.

529s have similarities to Roth accounts. They are (mostly) taxed going in, but grow and get withdrawn tax-free (if spent on qualified things).

But 529s also have complexities, and the rules changed significantly with the Tax Cuts and Jobs Act and, more recently, the Secure Act.

So for this week’s podcast, I invited Ann Garcia, a CFP who specializes in (and blogs about) college financial planning, to deep dive on how 529 college savings plans work.

We talk about:

• Key rules, tax benefits, and pros & cons of 529s
• What are considered “qualified” educational expenses, how it’s enforced, and what happens if you fail to spend on qualified expenses
• When it makes sense to invest in a different state’s 529 plan vs. your own state’s
• Strategies and tradeoffs of grandparents funding 529s
• Important changes to 529s introduced by the Tax Cuts and Jobs Act and the Secure Act
• How the Private College 529 allows you to lock in future tuition using today’s prices

Do you have a 529 plan for your kiddos? Do you invest in an out-of-state 529 (if so, why)? Do you plan to roll into a Private College 529? What other 529 questions do you have? Let me know by leaving a comment.

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I need your help, please leave a listener review :)

If you liked this episode, would you please leave a quick review on Apple Podcasts? It’d mean the world to me and your review also helps others find my podcast, too!

Links mentioned in this episode:

• College Financial Lady
• Independent Progressive Advisors
• savingforcollege.com – for comparing different states’ 529s
• Private College 529
• HYW private Facebook community

Intro/Outro: Old Bossa by Twin Musicom.