From Broke in Their 30s to Millionaires in Their 50s

Introduction: From Negative Net Worth to Real Estate Success (0:00)

Jason: 31 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 probably had about $250,000 of negative net worth.

Bo: From negative $250,000 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 their 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.

Who Are Jason and Candida? (0:36)

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

Candida: I think we want to retire within, you know, before we’re 90. Okay. Maybe within the next 5, 6, 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 5 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 start out and you don’t know what you’re doing and then you buy your first property and you buy your second property and learn a little, you know, a couple of things and watch some YouTube people or some podcast 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. 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 there’s no two ways about it.

Bo: Did you get lucky like were you buying real estate in Detroit and you got lucky at the time you’re buying? Like, what do you mean you got lucky or you just found the right properties?

Candida: Well, we found the right properties. So, we lived in Kansas and the townhouse that we lived in, our neighbors there, there were some college kids and their father bought them the townhouse and then they graduate and of course he keeps it and we’re like that was smart. That was smart. We got to think about that. We should do something like that. So, we moved to Georgia soon after that.

Bo: Which part of Georgia?

Candida: Atlanta. Northeast Atlanta. Okay. And so everybody says Atlanta though, which city you know. So 45 minutes north of Atlanta. Yeah. Or some people say South Carolina. Right. Right.

The Savannah Discovery (2:21)

Candida: So we moved to Braselton 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? 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 luck because we had no idea that it was the market that it was. And it’s been a really good introduction.

Bo: So, was the Savannah the first property you bought?

Jason: It was one of the very first ones. Short-term rental. Yeah, we had done a couple of like live in, fix up, and then sell and make money. So, we had done that on the first couple of homes. And then I would say Savannah was probably the first real like legitimate investment.

Brian: Who told y’all to get the short-term certificate? Was that you like you had a really good real estate agent or did you all just kind of know that?

Jason: That was kind of what we knew at the time.

Candida: But our real estate agent was like, “Well, you know, because it’s in the historic district. It’s a very prime property.” And like, “You probably want to.” We’re like, “You’re right. You pointed us in the right direction with where to buy.” And that was fantastic.

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

Jason: 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 limit it to a certain number per, you know, block or whatever.

Professional Background (4:04)

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

Candida: My daytime job, I’m a speech pathologist. Okay. And that’s what you want to retire from? 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. Okay. Seriously. Okay. 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.

Bo: Okay. So, retirement for you like a pseudo retirement backing down hours or something like that. Love it.

Brian: You just want to have confirmation that you’re working because you want to work. That’s it. Right now, that’s kind of in the air, right? Okay.

Candida: That’s exactly it.

Bo: Jason, what about you?

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

Brian: So when we think about this five-year timeline to retire, are you also going to back down or are you like, “No, no, I’m going to stop working and not do that anymore.”

Jason: Yeah. No, I think I’m just going to switch completely. Yeah. I think I would like to try and do nothing. Everyone says that it’ll be impossible for me to do. I’m like, let me give it a shot. I’d like to try that.

Bo: So if nothing doesn’t work out, what would you then do? You said switch. What would you do?

Jason: I love 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 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. So, that’s and I just look to manage those.

Bo: Awesome.

The Net Worth Statement: $4.2 Million (6:02)

Bo: 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. Whose sheet is that? Right. Wild. Which is wild.

Brian: Y’all, because in the notes I had read zero. I mean y’all might even had some debt that was out there. So it might have even been below zero, right? Where was the starting point?

Jason: Oh. Oh, the starting point was quite negative. Quite negative. Oh, definitely. I mean, when we met, our first date, 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 a hundred thousand in student loans. I had over a hundred thousand in student loans.

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

Jason: Absolutely. I had a car loan, credit cards. Yeah. We probably had about $250,000 of negative net worth. When we met.

Bo: Holy cow. When we met. And how old are you guys now?

Jason: 54.

Bo: 54. So obviously I wasn’t going to ask you. Of course, I wasn’t going to ask you. You’re 54. We don’t know how old Candida is. Candida gets an exemption. Give her age.

Brian: She’s still 31.

Candida: That’s right. That’s it. That’s it.

Bo: From negative $250,000 in your early 30s to now $4.2 million at 54. That’s insane. Like that’s a, I think there’s a lot of people out there that are going to hear that because a lot of folks, they’re not buying their first home until their 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.

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

Candida: So yeah, I have to give him all the credit because I’m a planner. You know I like to plan out things and know what I’m doing in life. Financial stuff, you know, I’ll do it because I have to. He thinks it’s fun, you know, 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 don’t think I would have done it by myself.

Breaking Down the Assets (8:12)

Bo: Well, as you sit here right now, you guys have cash and equivalent 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 $5.5 million dollars of real estate. So it certainly seems like real estate has been the main avenue through which you guys have built wealth. Is that an accurate assessment on our end?

Jason: Definitely. Yeah, I think that’s accurate. I think 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 W-2 incomes helped us to kind of get started.

Bo: 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, because you have a $5 million real estate portfolio. I think we even have a detail of all the different places, too. And then your mortgages, your total debt is about $2.5 million. So, a lot of equity in the real estate. How did 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?

Jason: Initial primary residence was 5% down and I think our very first home was even FHA financed. 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 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 then I did some fix and flips along the way as well and used some of that money to buy other properties and did a couple of cash out refis to buy more properties.

Bo: But still had some equity in the homes but you would go take cash out and then use that?

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

Self-Directed IRA Strategy (10:25)

Bo: One of the things we noticed on the net worth statement, you have this thing called self-directed IRA cash and then you also have in addition to your IRA, you have these self-directed IRAs which is a little unique. What’s going on with those on the network statement?

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

Bo: Investing in real estate through an IRA is different than investing in it with just after-tax dollars. How’d you guys educate yourselves because there’s some like stuff you got to be aware of and some stuff you have to know so that you don’t run foul.

Candida: I’d love to start out 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 television and looked at, you know, podcasts, listened to YouTube, that 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.

Jason: And then we went to a couple of conferences based on, you know, podcasts I had found and online search, just 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. And we 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.

The Gatlinburg Property Story (12:30)

Bo: So walk us through how did 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.

Candida: It would be. Yeah. First was location. I think both of us, so 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. Yeah. Okay. So, you know, it was near and dear to our hearts. His parents left, they eloped essentially and left Michigan, got married in, was it in North Carolina, I think, honeymooned in Gatlinburg and came back. So it was kind of near and dear to history.

Jason: And then we would go down as kids. So my parents and my brother and I, we would drive down from Michigan and visit Gatlinburg and stuff. And we didn’t know that we had that in common, you know, when we were dating until we were well into marriage and we were living in Atlanta and we decided to go up to the mountains, you know, and come to find out she’s gone there several times 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, right?

Candida: So, we find this property. I think you’d watched a YouTube video or something about the self-directed IRA and we were like, well, maybe we should try this with this property. So, we buy the property. It did fairly well.

Bo: How much was the property?

Candida: $187,000. Oh, this is a sore subject.

Jason: This is a touchy one. I don’t want to think about it. Don’t ask what it’s worth today.

Candida: Okay, that’s what he’s mad about.

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

Bo: So when you, okay, so you have this property $187,000. You had these IRA rollovers, 401ks. So what did you do? You opened up a separate self-directed IRA. How much money did you put in there? You put a down payment. You went and got financing. How did that whole process work?

Jason: 50%. So on the $187,000 plus closing costs, we could get a non-recourse loan for 50% 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 that account at the time. And so it was approximately 50% plus closing cost that we had to put forth and then 50% non-recourse debt.

Bo: You end up renting the property. You have income coming in from it. Pay on the mortgage and then you sell the property.

Jason: Yes.

Bo: When’d you sell the property?

Candida: Two years later. Yeah. Yes. About two years later and bought another place which was great. Well, 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. Yeah. We sell that property, bought something that had a little bit higher elevation, which is, you know, nice for rentals. And it was a little bit bigger. Not like a 12-person place. Probably slept six or eight. Six or eight. 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.

Jason: Yeah. I think we made just a little bit of money on that first one. It went up in value, right? So they had these wildfires unfortunately in Gatlinburg. It was really sad. After that, of course, there were, you know, about 500 less cabins or something and so prices went up and we thought, oh well, 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 we sold it and then we took that money and we went and bought a nicer place, a little bit bigger place, nicer view.

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

Brian: We’re sitting on a pretty large net worth. We all are going to have would have, should have, could have. There’s those things just haunt all of us. I mean, but I think you focus on what you have had success with.

The Real Estate Portfolio Breakdown (16:40)

Brian: I was curious because seeing a $5 million, you know, real estate holding and then I know there’s a little over two million of still mortgages. How much is self-directed IRAs versus how much do you guys just own? Do we have a list of the real estate? Which of these are self-directed or are these all outside of that?

Jason: Short-term number three is self-directed. Okay. And that’s it. Everything else at this point is outside.

Brian: Okay. Got it. Awesome. Now that I know this thing because, 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 not for the faint of heart. That’s why I want our audience to know. It is not. And I was really impressed. You can tell you did your research. It’s because you were talking about how big of a down payment you had to do because of non-recourse financing. There’s also, you know, 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 contribution that you’re not allowed to make. So, you have to run everything through. That’s right. And then you also have a clock in the background because, you know, the thing with IRAs is the government gives you this money and this deferred growth and so forth. But in your 70s, I mean, once you get in your 70s, they’re going to say, “Okay, now start giving me the money.” Yep. It’s hard to do that with real estate because it’s not liquid. But and then also 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.

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

Brian: 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 IRAs.” So, you actually made me feel, this just, I felt like a weight just came off my shoulder because I was trying to figure out how we were going to navigate this.

Bo: We thought you have nine or ten properties inside, right?

Jason: We had two. I sold one in December 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. The non-recourse.

Brian: That doesn’t always show up in the brochure. They’ll tell you that stuff is in the fine print.

Jason: Yeah, it’s definitely in the fine print. You’re like, “Oh, okay. I guess we’ll figure this out.” For your audience, let’s say this. I sold, so, we bought a property, was $280,000 and we sold that with a self-directed IRA. We sold that in December for $549,000. So we did well on that. However, there’s UBIT taxes on that 50%, on that non-recourse debt. So, we’ve got a tax bill sitting out there about $40,000. Now, I set aside the money, I mean, it’s fine. And we still did well on the investment, but that’s one of those things, right? That can trip people up.

Candida: It hurt.

Self-Directed vs. Traditional Real Estate Investing (19:31)

Bo: Well, I was going to ask, having invested inside the self-directed IRA, but then also invested outside where you 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.” What do you like?

Jason: Oh, no. Hands down. I mean just outside. This is not a brochure for doing self-directed investing but I think it’s an option. We’ve learned a lot from it and so I would recommend that investors consider it.

Brian: But you know the problem is we love real estate too but we take a bad rap sometimes because people say they just don’t like it. But we love real estate but we like real estate when you truly can do real estate. And sometimes I feel like the self-directed IRA feels like it’s a bridge. 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 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.

Candida: True. I think that’s true, but it’s timing. And the way I think about it is timing. Like 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. Yeah. But Gatlinburg was booming at the time. We had the money. We went for it.

Brian: But that’s where luck does come into play because I think about my, like I was one of those people back during the collapse of housing in Georgia. I was on an interest-only loan for my primary residence. I mean but it worked out great for me in the long term because I mean, I didn’t treat it like an interest only. I made, if you read the book I talk about all the negative equity. I prepaid because the house got crushed and I didn’t walk from it like a lot of my neighbors. But it was one of those things where I look back though and this was a tool that was probably too aggressive in the market but I was able to use it and just like you have been able to use this and now leverage it and you can educate people to know don’t get too greedy with these products.

Jason: And I would agree I think it was a little bit aggressive looking back on where we’re at today. When we used the self-directed IRA funds to buy that second property, it was probably a little aggressive at that time for us, too. You know.

Candida: You ever heard the saying, the Lord takes care of fools and babies.

Bo: That’s right. I love it. There you go.

Planning for Retirement and Simplification (22:00)

Bo: So, here we are and we’re thinking about, okay, in the next five years, we want to 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 breaking even? Are they an income source? You said you want to, I think the word you used was simplify a little bit. Walk us through when you paint the vision of what 5 years from now looks like. What’s that look like sort of in the perfect scenario for you guys?

Jason: For me it’s simplification because I think you always say that it becomes complex, right, the more and it is 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. I still want to have the ability to do a deal here or there that pops up and keep that very small portfolio perhaps, but I need to simplify everything else.

Bo: So, what is a very small portfolio? Is that a dollar size or is that like a number of property size in your mind?

Jason: In my mind it’s a number of properties. Like we already kind of have them earmarked, sort of what we’d like to keep. So, we own some townhouses in northeast Gainesville, Georgia. Yeah. 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 because they’re all in one area. Now, think about diversification, maybe not the greatest strategy, but simplification it’s a good strategy and I feel like they’re all within the same area and they’re easily managed and they’re 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.

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

Jason: Long-term 1, 2, 3, and 4 that have the $220,000 to $225,000 value.

Bo: And those rates are not super crazy. Five it looks like is from 3.375% up to 5.125%, very reasonable rates. And you said all of those cash flow? And you’re acquiring one more.

Jason: One more. And I’m paying cash for that. We’re paying cash for that one. For that fifth one.

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

Jason: Right now, I’d have to do the math with the debt. So, my other thought is that we maybe pay them off for retirement. So, because then they’ll cash flow about $5,000 a month. And I feel like $5,000 a month of free cash flow would be really nice in retirement. Right. Right. Because yeah, I would like to retire before I’m eligible for social security. So, I think that would be nice.

Brian: So that each cash flow about $1,000 a month if there were no debt on them.

Jason: Correct. Perfect. Yes.

Long-Term vs. Short-Term Rentals (24:47)

Brian: The other question because you have a mix here. You’ve got long-term, you know, and for those who aren’t real estate investors, that means that you’re typically signing year leases beyond 9 months or so. Whereas short-term is like that’s your VRBOs, your Airbnbs. Yes. How have those been? Because I’m also when I see them, I’m interested about short-term. You get into it. Well, because everybody, you know how they do, they use cost segregation. They do the depreciation. 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 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, skid on the brakes. We got some good stories. I remember when we had a beach rental. I tried to put nice mattress pads on the houses. I had nice pillows. That was so sweet. I did that, too. You know, because you’re trying to create the best experience. Next time you go down there, you’re like, “What happened to my mattress pad? What happened to the pillows?”

Candida: We had a place in Memphis. Loved it. Yeah. I tell you, people would pee in the bed. Just awful. Yeah.

Brian: You have to replace mattresses every two years. 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 because people just had to learn to seal it or break it. So, it’s had a lot of transient replacement of everything. So, when you talk about simplification, I’m like, are y’all enjoying the short-terms?

Jason: Well, we do use property management companies for sure. There’s no way that we could do that with our W-2s, you know. So, we do have property management. And then also going back to the self-directed IRA, you have to have property management, right? Because to your point, you can’t do it yourself. What’s your take on short-term rentals moving forward?

Candida: This is my take. 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, they’re not renting like they used to. Having a great management company is key, particularly when you’re long distance. And, you know, you have to get used to, you know, you can’t have nice stuff in these places. I’m the kind that, like I said, my parents were in the military and they took pride in, we had people come over that had, 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.

Jason: I have a great example because this is another lesson learned. I’ve got a lot of lessons from a lot of mistakes. Do you remember when I did the soap? So I bought these amber glass shampoo bottles and I branded one of the short-term rentals. This is one I’ve sold. So it was called Hello Sunshine. Okay. So I got custom soaps and labels for the shampoo, all this, you know, like really I had the Hello Sunshine throw pillows, you know. Yeah, that didn’t last.

Candida: All this stuff. You know what I did? I knew it was going to work.

Jason: She knew I was wasting my money.

Bo: I love it. But again, lessons learned, right? For the next one. Absolutely.

The Simplification Plan (28:12)

Bo: 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?

Jason: Just that. I think we’re, oh, yes. Yes. Sorry. There’s one long-term rental in Northern Michigan we plan to keep as well.

Bo: Which one is that?

Jason: It’s probably number eight. Number eight. Yeah. That one cash flows really well. It does, but I’ll refi it. It’s got a 5-year note on it anyway.

Brian: 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.

Jason: Absolutely. That or 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. Awesome. And it’s a really great cool building and we like owning it. We love the tenants.

Brian: It’s only worth $425,000?

Jason: I know. I know. Northern Michigan. Don’t tell everybody.

Bo: Yeah, it’s too late. Not too late. Property values just went up.

Retirement Lifestyle and Budget (29:20)

Bo: Okay. So, we’re going to simplify. So, that’s one of the goals when we get there. Absolutely. What else? Like, when we think about, have you guys figured out, because you mentioned I want to travel. I want to, 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?

Candida: Yeah. So, in my mind, I have what I call quarterly living. And I like to go somewhere. I say I would like for my husband to go with me.

Jason: I’m coming along. Awesome.

Candida: Every 3 months I want to go someplace different if we can. Okay. Like live someplace different or like visit? Live. I want to live in Vietnam for 3 months. I want to live in Paris for 3 months. I want to live in Mexico for 3 months.

Brian: Does that freak you out or is that exciting?

Jason: No, I’m ready. That sounds exciting. Sounds great. I love it. I love it.

Candida: Yes. What that’s going to cost? We’re hoping that you’ll tell us though. You know, we thought in my mind, yeah, I think we would like to have $10,000 a month. And not that we would spend that.

Brian: Let’s firm this up a little bit. All right. So, if you’re living somewhere three months, you’re not going from that three months to another three. Are we saying out of 12 months, three months away or six months away? Give us some plans so we can actually build something?

Candida: In my mind, if I wanted to go to at least two places in a year. Okay. For at least 3 months. And then 6 months a year here of course.

Brian: So now I know. Now look, you’re giving out too broad. We’re all over the place because you can go to Asia in some of those areas like you said Vietnam. The cost of living in those areas is very affordable. So you might actually, as long as you cash flow, you might actually have a cash flow pickup some months instead of Paris, a little bit more. Paris, it’s completely different. So we probably need to balance some type of assumptions into that idea.

Jason: 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.

Brian: So you wouldn’t go Paris, Singapore. Those two would go in the same year.

Candida: Exactly. Precisely. Yeah. Exactly. Paris and then come home.

Jason: 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.

Bo: 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?

Candida: Gosh, I think the question is, as I visualize this, 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, like the countryside outside of Paris, is what you’re saying. That’s it. That’s it. I’m sorry. What was the original question?

Bo: Yeah. So, what I was trying to, I thought you were going to say, hey, we figured out it’s going to 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, actually the language is, hey, the budget is going to dictate. So, what you’re looking for us to say is, okay, based on what you’ve accumulated and based on where you’ll be 5 years from now, we think that that amount of money, that portfolio can sustain $11,000 a month, and then you’re going to figure out how to fit your retirement into that.

Jason: That’s exactly it.

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

Income Sources in Retirement (32:50)

Bo: So, we want to simplify. We’re going to 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?

Candida: That’s it.

Bo: In terms of income sources. So, we have to make some sort of assumption around like income from working and real estate and that sort of thing. Or do we want to figure out, 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 would be coming in for you guys in that stage?

Candida: Like post selling properties.

Jason: Well, you’re looking at going part-time, right? So, it would be your part-time wages, maybe the $5,000 cash flow from the townhouses, and that would probably be it, you know, the bridge and 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 IRMAA too. Yeah.

Brian: How about health insurance? What are y’all thinking about for retirement on health insurance?

Candida: Yeah, we would switch to mine.

Jason: So right now we’re on my health plan from my W-2. So we would switch over to hers and getting some benefits out of you keeping this thing rolling.

Candida: You know when we got married he said what am I getting out in this marriage? I’m like, “Here’s a AAA membership, baby.”

Jason: And she keeps that renewed every year. 21 years.

Transitioning from Real Estate to Liquid Investments (34:29)

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

Jason: The latter.

Candida: He’s shaking his head, but I know him better than he knows himself. He’s going to want to buy something.

Bo: Okay, so I need a little bit of play money, bro.

Jason: I need a little bit of play money, but yes, the remainder of it, we want to invest. We just want to invest in the market, whatever makes sense, just so I’m more hands-off and kind of 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 $160,000 right now.

Brian: 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, we sold a few recently.

Bo: What’s Future Primary? What’s that?

Jason: Oh, that is, we already own that. That’s in East Tennessee.

Brian: So, it looks like there’s about 12 here. Is that right?

Jason: I mean, we, yeah. And we’ve sold four in the last year. Okay.

Bo: So, you’ve already begun this wind down process. Yes. Not acquired anymore in the last year.

Brian: But when you say you want to have some play money, you’re not trying to get back to 12 properties again.

Jason: No. But I like to have, so, you know, it’s kind of the Warren Buffett thing. Invest in what you know, right? And I feel like I’ve got a good grasp of real estate and in particular markets, right? And so I’d like a little bit like that $160,000 that’s for real estate fund. That’s what we’re going to buy that other fifth townhouse with.

Brian: I want to ask on the townhomes. You’re not using a management company on that though, are you?

Jason: No.

Brian: So that is, I’m just pushing back a little bit because you guys are going to be living over in Vietnam or Paris living your best life. Yeah. And then all of a sudden the toilet breaks. Yeah. They’re going to start telling you, “Hey, we got water. We need somebody out.” And you’re going, “Oh my gosh.” And the time zone differences. We just need to probably build some realistic expectations. I’m okay with you dabbling in the real estate. But let’s be honest with ourselves is that if we want true passive living in retirement, you’re not going to be wanting to be the Roto-Rooter and everything else.

Jason: But we do have my mom that lives in one of those townhouses and she’s fantastic. She’s a real estate broker. Okay. And she oversees those.

Brian: So she has a management company. She’s the mom management company. He’s got the mom management. Love turns into consideration instead of paying a property management fee. Love is consideration. She’s going to see this and she’s going to be like, “Look, I love you, son. But now I know way too much. Maybe we ought to add a little fee to this.”

Jason: She’s awesome. We’ve worked together for a number of years. And aside from her being my mom and, 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. I’m still the decision maker and we collaborate with her on that. Long-term rental. So it’s usually a one-off thing like that is much easier. Yeah. And but to that point, she won’t be able to do that forever though either. And I don’t want to burden her with that, you know, for however many years.

Brian: But the big takeaway, I don’t want to go too far into the weeds on this. You are okay if some of this is in like index funds and diversified portfolio because that way we can absolutely simplify this thing as much as possible.

Jason: I want the bulk of it to be there. Yeah.

The Psychological Shift to Liquid Markets (38:18)

Bo: So right now you have, I’m doing some mental math here, about $3 million of equity in your real estate portfolio. So correct. 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, right? Have you thought through, this is going to be sort of a significant shift to where now the vast majority of your wealth is going to be in the liquid markets and you’re going to see the values go 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?

Candida: I think having the short-term rentals probably helped us with that a little bit. Like the toilet’s out. Okay. You got a new AC. 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 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.

Bo: I love that. Yeah, we fix it. Makes you a great landlord is what that makes you. That’s awesome.

Brian: That’s the problem I have with real estate. 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 this stuff because I will, I’m worried every pipe’s freezing. I’m worried. I’m a worry wart about all this stuff. So that’s why we’re a good balance with each other 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.”

Jason: 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 live in it. And so, but she’s really great with tenant relations and I handle the money and the bills and the leases and stuff. So, I think we make a really good team. 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 okay.

Jason: Yeah. I think we expect market fluctuations. You just can’t look at it. I just don’t look at it daily, you know.

Brian: 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’ accounts. 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 if you’re doing this right.

Candida: That sounds great to me.

Defining the Timeline (41:00)

Bo: All right. So our timeline, is it 5 years? Is it 60 months? Because I want to have a timeline that we’re working on as we’re putting together the plan because you kind of said we said a few different things. We did. 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.

Jason: 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? Three years. 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. Let’s say five years.

Bo: Just, no, but I think we could say, what could it look like end of year this year? What could it look like two years in the future? Like five years in the future.

Candida: All right. That’s great.

Bo: 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.

Jason: 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, consolidate.

Work-Life Balance and Mental Health (42:17)

Brian: 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 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.

Jason: Oh, yeah. Well, I think about my situation a couple 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 end goal here and maybe start working toward that instead of going, going because it started to become a little too much. I was juggling a lot of things.

Candida: That’s something to think about particularly with, may some of your viewers may be younger and kind of building their career and it’s great to be able to, you know, go, go while you’re young. Think about your stress level. You know, when I, one thing that I feel like millennials and what’s the next generation after that? Gen Z. Gen Z. I really, I’m proud of them for taking their mental health seriously because my generation will work until we can’t work anymore. Very deep down inside. That’s it. You’re buried and keep rolling. And so, thinking about him during that time and he was very stressed. 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.

Brian: 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 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 because we’re all kind of in the same boat. I mean there is something about when you get older, you don’t want to have to carry so much because stress manifests itself in weird ways. Sleep issues. It shows up in what you can do in your 20s, 30s, and even early 40s with no struggle, all of a sudden will show up if you don’t take care of yourself. And then you’re going to find out as you get in your 50s and 60s, health is wealth. You better make sure that, you know, and if you don’t think your mental happiness is not impacting all the physical sides of it, it does. Some weird dynamics come into play. So, I had this conversation with somebody I was on the phone with yesterday who was talking about that because he’s in 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 can actually enjoy this because, you know, maximizing and optimizing every transaction of your life works great in your 30s and 40s. But it’s okay when you’re in your late 40s and early 50s and even 60s, 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 that’s something we balance and talk to people about all the time.

Candida: We got to click glasses on that. That was true. It’s so true.

Brian: 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 need, I still need processing time for that last one.” Bo, conquer the world, but pull back.

Candida: You got kids, Bo?

Bo: I have three. Yeah, three.

Candida: Conquer it now, but think about it.

The Homework Assignment (45:57)

Bo: All right, I’ve got some homework for you guys. You ready? Because I feel like we’ve got some good marching plans 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 would encourage you 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 IRA and when you retire, 401ks. So that way really you could 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? It could be five, could be two, but you got to talk about what you really want because from a logistical standpoint, 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, 5 years, is Paris going to be the first one you try to tackle or are we going to go spend 3 months in Mexico or wherever? Can you figure out what that looks like? And the more clear you can have that defined, the easier the transition is going to be because a lot of people just say, oh I want to travel, I want to travel, I want to travel. They put in their notice, they stop working and then they’re like, oh what do I do now? 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.

Brian: I think Candida’s got that covered. Just consistent.

Candida: Maybe I got you.

Bo: She’s already said Vietnam is on the list. That’s early on. That’s early on. Awesome, man. You guys are great. This is going to be fun. I’m excited to put some numbers down and see what we come up with.

Post-Episode Analysis (47:50)

Bo: Brian, what an awesome conversation we got to have with Jason and Candida.

Brian: I absolutely love Jason and Candida because look, I think a lot of people are going to get lost in how big their numbers are. Sure. But let’s level set and bring this back into context is that they didn’t start when they were in their early 20s, even mid-20s 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.

Bo: 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 acknowledge 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, “Ooo, I want what they have. I want to be where they are.”

Brian: And another thing that I like about Jason and Candida is when we do a lot of Making a 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 going 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?”

The Simplification Strategy (49:09)

Bo: So, as a reminder, when we look at the 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 where we should 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 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 million. 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 million and let’s have you guys be completely debt-free.” So, wiping the slate clean on the liability side. And that still left them with about $1.1 million to invest and grow for the future.

Brian: 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 probably yield somewhere around $5,000 a month. Yep. $1,000 each property. That’s going to be a quite nice retirement they’re going to get to work through as well.

Bo: 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 flow.” So, 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.

Brian: But I don’t think we can minimize the value that just $1.1 million 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 in 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.

The Retirement Scenarios (51:50)

Bo: 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 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 6.5% rate of return. Well, now instead of almost $2.1 million, they could have a little over $2.2 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 5 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? Again, if we just think about $8,000 from 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 a year retirement income.

Brian: What I love about this plan is that we really have Goldilocks. And because if they stayed in their present format, Jason and Candida 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 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. I think they would 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 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. 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 or the doo-doo plan? I’d argue it’s somewhere between doo-doo and down to earth. This seems very, very reasonable. I think this is what their future looks like. It had to be somewhat passive because if you remember Candida said, “Hey, we want to be traveling.” I think was it as crazy of a goal as that? 6 months out of the year. Yeah. Different places. It definitely needs to be mailbox money. But I got to tell Jason, now that we’ve actually run the numbers, I think you’ve got to be prepared that we got Candida going to Paris.

Bo: She’s ready. Paris better be ready for Candida.

Brian: So, this is going to be awesome.

Closing (54:59)

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

Brian: 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?

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

Brian: Jason, Candida, we really did have a blast. Y’all were so fun to hang out with. I 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 people 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.