BiggerPockets Podcast 035 with Paula Pant Transcript

Link to show: BP Podcast 035: Quitting Your Job, Lifestyle Design, and Being a Traveling Landlord with Paula Pant

Josh: This is the BiggerPockets Podcast, Show 35.

You're listening to BiggerPockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hype, you're in the right place.

Stay tuned and be sure to join the millions of others who have benefited from, your home for real estate investing online.

Josh: Hellooooooo everybody. Did that get your attention?

Brandon: It got my attention.

Josh: What's going on everyone? This is Josh Dorkin, host of the BiggerPockets Podcast. A big hello to all of our listeners and an even bigger one to my co-host, Brandon Turner. Hey Brandon.

Brandon: What's up everyone? I want to apologize for Josh's loud, obnoxious yelling at the beginning of the show.

Josh: Wow. Okay. Starting it off on the right foot, aren't we?

Brandon: There we go, there we go.

Josh: Yeah, how are things doing?

Brandon: Things are good. I burned myself on my lawn mower yesterday. Seriously -

Josh: Weren't you supposed to be working while you were mowing your lawn?

Brandon: No, maybe it was Sunday. It was Sunday. Yeah terrible. Anyway. Apparently, lawn mower gets hot and you're not supposed to touch that little metal thing on it and melt your skin to it.

Josh: That's why there's a big warning triangle on it and for anyone listening, this is also why you may not want to take actual advice from Brandon Turner. Guy can't figure out how to not burn himself on a lawn mower, you know.

Brandon: Well, I’d have to know how to read in order to know how to read a warning label, so. Anyway, moving on.

Josh: Yes. Yes. Yes. Yes. Alright. Well, I’m glad things are going mostly well, except for your poor, little booboo.

Brandon: Yeah, I got a Band-Aid.

Josh: And he does indeed.

Brandon: It feels better.

Josh: Good, good. Alright guys, so we've got a pretty cool show for you today and we'll get into that in just a minute. Before we do...

Brandon: (sounds off the Dead March tune)

Josh: Isn't that the Death March? Is that the Death March?

Brandon: (continues) It is.

Josh: Okay, so Brandon is playing the Death March and I think he's playing the Death March because unfortunately, or fortunately, whichever you think. Today we're going to be featuring the last of our...

Both: Quick Tiiiiips.

Josh: Yep.

Brandon: Plural.

Josh: Today is the last Quick Tip. You know, we may decide to bring it back but anyway. This is the last Quick Tip, at least for a while. Instead, we are going to be starting a new segment on the show and we'll get into that. There's so many great quotes on each of our shows. What we want to do is we want to encourage you to leave a quote on Facebook, on Twitter or G+ from this interview with a link back to Be sure to use #BiggerPockets. One word. In a tweet, your Facebook status or of course your Google Plus status.

What we're going to do is we're going to pick one person with our favorite quote and send them a free digital copy of the BiggerPockets' Book on Flipping Houses and BiggerPockets' Book on Estimating Rehab Costs. Of course, what we'll do is we'll announce the winner on next week's show. So you've got to wait to get out there, listen to the show, find your favorite quote and share it with everybody and link back to the show notes here.

Brandon: The important thing is the #BiggerPockets, one word, because that's how we are going to be able to track it.

Josh: That's right, that's right. Hopefully that'll help us to spread the word about this awesome podcast and all of our future podcasts to come.

Brandon: Yeah.

Josh: That is today's last and final Quick Tip.

Brandon: Quick Tip.

Josh: Yep, yep. Alright, so on today's show we are going to talk with Paula Pant from Paula is a awesome, really funny lady. She's a personal finance expert who's actually been featured on NPR and of course she is also a contributor to the BiggerPockets blog at BiggerPockets. You guys know, a lot of our guests have done dozens and dozens of deals. We've had everybody from super experienced investors to some folks who just finished their first deal.

We wanted to talk to Paula because she actually hasn't done a huge number of deals so far, but she's very, very successful in finding just incredible deals and buying smart, which has really been helpful to her. There's a lot of great stuff in here, particularly about personal finance and saving and preparing yourself to get into the real estate game. You'll actually learn about some of the properties that she's picked up. A lot of fun.

Anyway, her blog, AffordAnything, the way she describes herself, she's a journalist, a globetrotter, an entrepreneur and of course she's a real estate investor. She's really interesting. Let's bring her on the show and before we do, make sure if you've got any questions for her, jump on the show notes at and hit her up and let her know what you want to know. So, hey Paula. Good to have you on the show.

Paula: Thank you. Happy to be here.

Brandon: Awesome. Yeah. We are happy to have you.

Josh: We are, indeed. Alright, so Paula Pant, tell us your story. How'd you get started? Actually, you know, even before that. What did you do before you started investing?

Paula: Well, in my early life, I was a newspaper reporter. I worked for three years at a traditional newspaper and then decided, "You know what? I don't really want to have a nine to five job anymore." So I saved up some money while I was working. Quit my job. Went and just sold all of my worldly possessions and traveled for a couple of years. Roamed across the Middle East, Southeast Asia, Australia, New Zealand. Just hung out for years and years doing absolutely nothing.

Brandon: Nice.

Paula: It was awesome.

Josh: She's a Nomad, that's cool.

Paula: I am a committed Nomad.

Josh: Awesome.

Paula: And at the end of it, I was like, "Man, I'm eventually going to run out of money and then I'm going to need a job. How can I avoid this?" And so that's when I started thinking about ways that I could build just streams of passive cash flow and voila. Real estate was born. At least, in my life.

Josh: Nice, that's awesome. That's awesome.

Brandon: Nice. That's cool. That's very four-hour work week of you. Was that inspired from the Four-Hour Work Week, or?

Paula: No. You know honestly, when I read the Four-Hour Work Week, I was like, "I could have written this book."

Josh: Yeah, a third-grader could have written that book.

Paula: The first time I read it, I didn't feel like he was saying anything new and I didn't understand what the hoopla was because I had that mentality for so long that I was like, "Yeah, of course. This stuff is obvious."

Josh: I don't get it. I don't get the hype.

Brandon: You haven't read it yet, Josh. You have to read it and then you'll get it. You'll get the hype.

Josh: Brandon has been preaching for like, 34 episodes of the...

Brandon: Every one, yup. Every one. Four-Hour Work Week.

Josh: Alright, so this whole epiphany comes to you. You know what, she's the most interesting woman in the world.

Paula: I'm not selling beer here.

Josh: Alright, so you're travelling the world, this epiphany comes to you, like, "Omigod, I'm going to get into real estate." What next?

Paula: Well, really when I was travelling the world, I was like, "Omigod, I'm going to figure out some way to avoid having a job." I wasn't quite sure what that would be. I thought I would be freelancing, but I tried that and I still do that, but as a freelancer, you're still fundamentally trading your time for money. And I just wanted to get out of that. I wanted to avoid that. So not really knowing how I was going to avoid working, but determined that somehow I would, I came back to the U.S., moved to Atlanta, starting working as a freelancer so that at least I don't have to go to an office and I can wear pajamas 24 hours a day.

Josh: She's wearing pajamas right now, everyone.

Paula: While I was doing that, I was renting this terrible, little apartment. And just crunched the numbers and thought about what my landlord is making and thought, "Hey, I could do that." Fortunately, it was the year 2010. We were in the middle of the greatest housing clearance sale of my lifetime. That was instrumental, that helped a lot. I looked across the house across the street. Had a "For Sale" sign in it. So I bought it.

Brandon: Nice.

Paula: It was kind of an impulse buy. I didn't know what I was doing.

Josh: "You know, I was looking at a person, I decided to buy a house."

Paula: It was crazy. I didn't know what I was doing. I had no idea. I bit off way more than I could chew. I started with a multi-unit fixer upper. A 110-year old multi-unit fixer upper.

Brandon: Woah.

Paula: That was not the ideal way to get started, but I definitely just threw myself right into the fire and learned by sheer force of will.

Josh: Nice, so do you still own said property, or?

Paula: I do. I am sitting in it as we speak.

Josh: Ah. Very nice, very nice.

Brandon: Do you mind me asking what you paid for it?

Paula: Yes, of course.

Josh: Of course she minds. "Don't ask me!"

Paula: The first property is a triplex, three units. I paid $225,000 for the initial purchase and I've put about $60,000 into it, so I'm in it for about $285,000.

Josh: Okay.

Paula: My boyfriend and I live in one of the units. We live rent-free so not counting the fair market value of the rent that we're eating up, the rest of the house rents for $3550 plus gives an additional free place to live.

Brandon: That's awesome.

Josh: That's great. That's great. Brandon, I think you wrote a post on why you should start with a multi-family.

Brandon: Yeah, yeah I’m a…

Josh: It came out exactly this, didn't it?

Brandon: Yeah, I'm an advocate of that. I bought a duplex, it was the second house I ever got. I lived in one half, rented the other half and lived for free. Same thing. It's awesome.

Paula: Nice.

Brandon: I'll link to that kind of story in the show notes at

Josh: 35, yeah.

Paula: Woohoo.

Brandon: We survived.

Josh: Listen, I think that's an awesome, awesome, awesome strategy for folks starting out. You get the experience of managing. You get the income to furl? Is that the right word? Am I thinking right? You get free rent.

Paula: Yeah, you get free rent.

Josh: Yeah, I mean if the numbers work out, you've got free rent. You get the experience of having somebody sitting on the other side, if it's a duplex or other people in a triplex and you really get to learn whether or not this is for you, right?

Paula: Totally, and it helps especially as a beginner, it helps being right there so that if you have to quote unquote rush to your property to fix an emergency, you live there. You don't have to drive anywhere.

Brandon: Yep, definitely. For those people who want to hear a little bit more about that same strategy on podcast 25 I think it was, which was the newbie podcast. We interviewed four people and one of them, first one was Nicholas Stevens. He's doing the same thing. Bought a triplex. I think he was in Boston. Anyway, that's if you want to check that out.

Josh: The only real thing that I would say as far as the negative on something like that is, you do have the downside of actually living next to your tenants. There are certainly negatives that go with that. Maybe you can talk a little bit about some of those.

Paula: Sure, I mean, honestly I think that what it's done is it's weeded out the partiers. I think it's been a real positive because people who want to create a ruckus typically don't want to live in the same building as the landlord.

Brandon: Yep.

Paula: So that's been the big blessing of it. I guess the downside is that issues, minor issues that normally would never call their landlord about, they feel comfortable just telling me about because they happen to see me every day. You know, somebody will come to me and be like, " Oh, I don't think this works," and I'll suggest the most basic solution that I think any other renter would jump to trying before they'd place a phone call. So I mean, yeah there's that minor inconvenience but...

Josh: "Why is it dark in here?" "Turn the light switch on."

Paula: "Oh that's a great idea."

Brandon: In our apartment buildings, every single unit has like a light switch that turns on a lamp outlet somewhere in the room. I don't know, that's how they do it a lot out here in the West Coast, but every tenant asked me that question. They say, "Hey, that light switch is broken." I mean, every time they say it and I have to explain it runs in an outlet to the lamp and that's why there's no light in the ceiling, so. Every time. Nobody gets it.

Josh: There you go. Alright, so you started with rentals versus doing other kinds of investing. You said it was, I guess, a bit of an impulse buy, that first one. Once you kind of got there, was there any reason that you decided to stay with rentals? Versus kind of getting into flips and stuff and of course you haven't quite said that's not what you do, but I'm presu -

Paula: That's not what I do.

Josh: There you go.

Paula: Well, like I said, my goal is to travel the world without having a job. I'm interested in monthly cash flow, passive cash flow. Rentals, to me, seem like the best way to do that. Once I bought the first house, once I bought the triplex, and saw how much passive income it could bring in, I got addicted. I just started loading up on rentals.

Josh: Nice. Did you focus always on multis? Or did you go to single family houses? What's your strategy been along the way?

Paula: You know, I love multis but my next three have been single family houses, in part just because the cost of entry is cheaper. I love multis. I would love to have another one, or two, or ten, but yeah. The next three that I bought were single, single, single.

Brandon: Where are you buying them all at? All in Atlanta?

Paula: All in Atlanta.

Brandon: Okay. All in the same neighborhood or do you look around?

Paula: No, they're scattered among different neighborhoods in Atlanta. I've stuck to Atlanta a. because I know it, I live here. I've lived in three cities in the US and of the three that I've lived in, I like Atlanta the best. Just personally, I'm not comfortable investing somewhere that I haven't lived in so that's what the decision for me.

Josh: That's great, that' great. You know, different people are going to have different criteria for what their comfort level is and I think what's important is that you clearly understand what that is for you and for anybody listening, they also understand the same factor for themselves.

Paula: Yeah, I agree. By no means am I saying that this is the right way to do it, this is just my comfort level. My risk tolerance.

Josh: Absolutely. Absolutely. Now are you buying properties that require work or are you buying properties that are kind of quote unquote turnkey? Tell us a little bit about that.

Paula: Sure. Well, the first property required a ton of work. Lots of it. It choked me whole. Every property since then has been progressively better and better. The first one required the most work. The second one required a fair bit of work but less. Then by the time I bought number four, it was pretty much move-in ready.

Josh: Right on. Right on. I'm going to ask a question, I'm guessing other people are probably thinking at this point, you were this Nomad traveling the world. You burnt through all your cash and then you went a bought this three-unit property. How did you go about doing that?

Paula: Well, the first one I bought with just traditional bank financing.

Josh: Okay.

Paula: Then after that, the second one I actually bought in cash but that one only cost $21,000.

Josh: I'm sorry, how much did it cost?

Paula: That one only cost $21,000.

Josh: This was for a dog house? Very fancy one?

Paula: This is for a 3/2. A single family 3/2.

Josh: In Atlanta?

Paula: In Atlanta.

Josh: No kidding. Wow. It's not Detroit, right?

Paula: I promise you. This is Atlanta, Georgia.

Josh: Wow. Wow. Okay. Okay.

Paula: I put another $10,000 into it so I'm in it in total for $31,000.

Josh: And what does that rent for?

Paula: $900 a month.

Brandon: Nice. That's like the 3% rule like Dawn was talking about a couple podcasts ago.

Paula: Yeah, exactly. That one's been one of my favorites. That one is my favorite.

Josh: Now that we're talking about that particular property, is that in a tough part of town or how does one find a $21,000 house?

Paula: It's tough-ish. It's not a part of town that I would necessarily want to live in, but it is a part of town that I'm comfortable going into.

Josh: Sure, sure. How did you go about finding a deal that's a 3% or, we haven't quite done the Math on it, presuming it's somewhere around that 3% number?

Paula: Yeah, exactly. I look at a lot of houses before I buy one. I just searched and searched. I probably searched for a good eight months before I found this one and then once I found it, particularly because it was a cash deal, I just jumped.

Josh: Yeah. And was it on MLS or was it just from marketing that you found it?

Paula: It was on the MLS and I was talking to a real estate agent who also led me to it. After that, I went and got my own agent's license so now I can search the MLS on my own.

Josh: Ah. Okay.

Paula: So that's helpful as well.

Josh: Gotcha. Gotcha, gotcha. Okay, so you pick up this $21,000 dog mansion and I guess, at that point, moving further along to other properties, were those also traditionally financed or how did you do that?

Paula: So I've also used private lenders. I've done a little bit of it all. I've done banks. I've done private. I've done cash. I've done it all.

Brandon: Cool.

Josh: Any quick tips on the private stuff?

Paula: Just network. Meet people. Just go to your local organization and start talking.

Brandon: Perfect. Who's doing the work on all these houses? Do you do it yourself or your boyfriend? How does that work?

Paula: You know, that's changed a lot. When we bought our first house, the triplex, we thought that we were going to do all the work ourselves. In reality, that thought was born of us not valuing our time. It was such a big project. It took so long. It was a big mistake. Honestly, I feel like it held us back. We learned from that and ever since then we've been outsourcing everything except for the property management.

Josh: Nice.

Paula: Okay, so you do manage all your own properties?

Paula: All, except for the $21,000 dog mansion.

Brandon: Oh okay.

Paula: That one I shipped out to a property manager.

Josh: Nice.

Brandon: Any reason why? Was it just because of the neighborhood?

Paula: Because of the neighborhood and the tenant quality that I would get there, as well as the fact that that one is half an hour drive from where I live. Every time I go it's an hour round trip. That's too much.

Josh: I'm curious on that property because it's in a tougher part of town, presumably the screening is a lot more challenging. Is that correct?

Paula: I definitely get a lot of prospective tenants with credit issues. It requires having to make some judgement calls. Yet another reason why I'm glad to have a property manager.

Brandon: Nice, so you still travel though a bit, right? I see you online.

Paula: Oh a lot.

Brandon: Yeah, so how do you manage your stuff while you're gone? Do you have any good tips on managing?

Paula: The one that has a property manager is taken cared of. The other ones I get just an interim property manager. When I'm gone, I pay them a flat fee to babysit the houses. Half the time, nothing happens. The PM has just gotten some great, free money. But when stuff happens, it's great to have them there.

Brandon: Yeah. That's awesome, I never really thought about having an interim property manager. So that's cool. Usually, I just grab my family, my mother-in-law and say, "Here, will you answer phones while we're gone and hopefully nothing bad happens?"

Josh: "Yes, Brandon. I'll answer the phones."

Brandon: I'll let my mother-in-law know you're mocking her on the podcast.

Josh: Don't. Don't let her listen.

Brandon: Yeah, hopefully she was not listening.

Josh: I'm in trouble, aren't I?

Brandon: Yeah, you will be. Alright, so you travel still.

Paula: I do. I've been to 29 countries at this point and I'm about to go to country number 30.

Brandon: Cool, where are you going? I'm just curious.

Paula: I have no idea, but I need to get there sometime in the next month because I promised myself 30 countries before I turn 30. I turn 30 next month so...

Josh: Go to the smallest country in the world. Go to Andorra. Andorra is the smallest country.

Brandon: Unless you count Vatican City.

Paula: Vatican City?

Brandon: Yeah, some people count Vatican City as a country. Some people don't. I don't know.

Paula: I have to stay there for at least a week for it to quote unquote count.

Josh: Really?

Brandon: Yeah, you better go.

Paula: I can't just go to the Frankfurt airport and claim that I've been to Germany. Like, that's not fair, you know? I have to stay, at least, seven days for it to count.

Brandon: You know that you said the 30 before 30, now that's like my new goal. I think I've got 10 so I’ve got ways to go. I'll do it now, now that you said that. I have to.

Paula: Nice. I challenged you.

Brandon: Yeah, that's out there in front of what? 13,000 people or whatever? So yeah, awesome. Why don't we talk a little more on the managing properties thing because I think that's something that most of our listeners probably have a property or will soon have rental properties. We talked about why you're traveling. What about working? Do you still do, like you said, freelance stuff? You probably do other stuff for a job, I'm assuming, to make money. I'm not sure what you do but...

Josh: Nobody really knows.

Paula: Well, so I work for myself. I do online marketing and freelance writing. Honestly, having a flexible schedule is super helpful because if I need to run out at 2pm on a Tuesday, I can do that and just sort of make up the hours later on in the evening. I have no idea, honestly, how a person with a very inflexible job would be able to do this, because I can pick up a phone call in the middle of the day. That's not really a problem.

Brandon: Yeah.

Paula: If you do have an inflexible job, get a property manager. They're great and one piece of advice that I often give to people is when you're running the numbers on a rental property, even if you plan on managing it yourself, run the numbers as though you're going to hire a property manager. That way you can, at any point, remove yourself from the equation and the numbers don't change.

Josh: Well, not only that but your time is actually worth something, right?

Paula: Exactly.

Josh: You have to account for the time. If you're not including your cost, your time, your energy...

Paula: Right.

Josh: the equation, you're...

Paula: Then you're doing creative accounting.

Josh: You're in creative accounting, exactly.

Paula: Exactly, because there's a difference between active income and passive income. Ultimately, I think most of us are in the rental property game because we want to make passive income. The active income that we pay ourselves as a result of doing the actual property management, that's a different thing entirely.

Josh: Plus it costs.

Paula: Yeah, it costs.

Josh: Maybe we could talk a little bit about that because I think a lot of new landlords really screw the pooch when they under-account. They say, "Oh, this is great. This property is going to cash flow. The mortgage is X. The rent is Y. Cash flow is Y minus X. Cool." Obviously, that's not true.

Paula: Right.

Josh: There's things like cutbacks and other expenses that you're going to deal with. Maybe we can kind of talk about things like that. What kind of random occurrences have you dealt with? And I'm guessing some of them have probably popped up more frequently on that $21,000 house.

Paula: Sure. Oh, random expenses that I've dealt with? One time, a storm knocked over one of our trees onto the neighbor's property and it cost us $2,000 to get it cut and hauled away. Stuff like that. That stuff happens all the time. Just this morning, I met with an HVAC guy because, well, I need thousands of dollars of emergency HVAC work on one of my units. That stuff just happens. It's part of the course. So when you're running the numbers, just over-account for that because it will happen.

Josh: Yeah, and I think where so many landlords fail is they don't do that and they end up buying a property and not having enough reserves, right? They don't have the cash sitting on the side and when something like the tree falls on the neighbor's property and you've got to pay the two grand out of pocket, they don't have it.

Paula: Right. Right, exactly.

Josh: Then the other investors come in and scoop it up because their now desperate landlord is trying to dump their portfolio, right?

Paula: Right, right. Exactly. So yeah, and to what you said earlier about people, especially new investors, thinking that mortgage is this, the rent is this and therefore I'm set, we sort of the made the same mistake. When I impulse bought the triplex, honestly, I didn't know what I was doing. I was thinking about vacancy and how expensive that is. I wasn't thinking about the cost of hiring a property manager. Like I said, we did a lot of the work ourselves, at least in the beginning, and we were paying ourselves zero for our time. Which is creative accounting. It was a huge mistake. Fortunately, the year happened to be 2010 and we happened to be in the right place in the right time. And the numbers worked out in our favor, but that could have easily gone the other way.

Brandon: Yeah. Now do you feel though that because you did all your own work at the beginning. Let me try to phrase this correctly. When I started out, I did everything on my own. I did all my own work, and I look back now and say, "Man, that was stupid. I shouldn't have done all the work. I wasted forever."

Paula: Exactly.

Brandon: However, when I looked back also, I probably wouldn't be where I am if I hadn't done my own work. I don't know if that's true, but do you feel that way at all? Do you feel that way at all? I know earlier you said maybe it held you back, but maybe you wouldn't have bought that triplex because you would have had to pay that $60,000. It would have into $200,000 if you hired it out. Like is there anything like that?

Paula: I'm the type of person who likes to learn lessons the hard way, and so you're right. If I had seen the big number of what the repairs would have cost, I probably would've been sticker shocked and not bought the triplex. In that regard, yeah I guess it was good that I wasn't accounting for hiring it out. Although in hindsight, when I look back on all of the evenings and weekends that I lost, time that I could've spent searching for my next property, I mean wow. That's a huge lesson there.

Brandon: Yeah.

Josh: Right. So what are your goals? Obviously your goal is to pay for your seven days a week in every country around the world, but is there a goal above and beyond that? Are you just trying to create this portfolio to support your travel habit or do you want to become some kind of magnate?

Paula: So according to the U.S. Census Bureau, the average American household makes somewhere in the neighborhood of about $50,000 a year. I think it's about $52,000 or $53,000 a year. I've set that as my benchmark. If I can make in passive income as much as the average U.S. household earns, that's my definition of financial freedom.

Josh: That's a tweetable topic right there, Brandon.

Brandon: That is. I will be sure to tweet that and add that to the show notes, which are at See, I haven't screwed up this time Josh. I've been saying it correct every time.

Josh: Not yet. Not yet. I'm counting on it. I'm counting it.

Brandon: Not yet. There is still time.

Josh: Yup, yup. Alright, so you are a blogger, as well. You blog for us on BiggerPockets. You write about your real estate on your own site. You write about personal finance and things like that, correct?

Paula: That's true. That is all true.

Josh: Okay, so maybe we can talk a little bit about the personal finance stuff because A., I think it's a topic that we probably need to be talking about a little bit more on BiggerPockets and it's a topic I don't think we talk about enough. I think that's the same thing.

Brandon: Yeah.

Josh: Anyway, disregard what I said, but my point was... did I have a point guys?

Brandon: I don't know, but I can jump in here because...

Josh: Yeah save me.

Brandon: I was reading your blog this morning for a while actually, kind of preparing for this interview and one thing I noticed is that you're very, maybe not anti, but maybe anti, like pinching pennies. You're not about clipping coupons and spending eight hours getting the 12 cents off of roll of toilet paper.

Paula: Right.

Brandon: I wonder if you can talk about that a little bit. Why are you different than most personal finance bloggers? And your advice is a little different, why?

Paula: Well, I very much believe that the human brain, like your mental bandwidth, is incredibly limited. There's only so much that you can focus on.

Josh: You're talking directly to Brandon, right?

Brandon: Ouch.

Paula: With Josh being the exception, of course.

Josh: Of course.

Brandon: Of course, of course.

Paula: And given that limited mental space and that limited mental energy, it's important to focus only on the stuff that's going to move a needle. Focus on the stuff that's really going to change your life. I'm sorry, but clipping coupons is not going to change your life. That's my philosophy, that's my belief. You can disagree with me if you want, but that's what my blog states.

Josh: But what about those extreme coupon people? Those guys have got like 7,000 rolls of toilet paper in a shed somewhere and they saved hundreds. They might have even paid five bucks for it because they put all these coupons out there. I mean, come on, that's cool.

Paula: What are the property taxes they're paying for that shed?

Josh: There you go, there you go.

Brandon: That's funny. What about another thing you talked about on your blog a lot is lifestyle design. Those who have read the Four-Hour Work Week know what that phrase means, but for those who don't, what is lifestyle design?

Josh: I don't know because I haven't read it.

Brandon: You haven't. What is lifestyle design?

Paula:  A lot of people say, "Oh, I would love to do XYZ but I can't because," and then they'll talk about how their job won't let them or some circumstance of their life won't allow them to do that. I say, put your lifestyle first. Figure out what kind of lifestyle you want to lead and then force everything else. Your career, all of your life circumstances, make those fit that ideal lifestyle.

Josh: I am envious of you and your philosophy. 

Paula: Well, you can have the same philosophy. Then you've got to implement it.

Josh: That would be the problem.

Brandon: When I read the Four-Hour Work Week, I loved that. In Rich Dad, Poor Dad, I know a lot of people have very opinionated views on Rich Dad, Poor Dad. But almost every guest has said that's one of their top favorite books. In Rich Dad, Poor Dad there was a line where he said, "Don't say I can't afford it. Ask how can I afford it."

Paula: Yes.

Brandon: That was one of the most fundamental changes in my mind when I read Rich Dad, Poor Dad was that question. Because I grew up in a family where it was, "You can't afford this. We can't afford this." Everything was that. I think a huge part of what lifestyle design is not just shutting your brain down and say, "No." It's saying, "Well, how do I get there?"

Paula: Exactly. Exactly. When people find out that I travel, the first question they ask is, "Well, how could you afford that?" or worse they say, "Oh, I could never afford that." And it's just not true. It's just simply not true. You can afford it. You can do it. You just need to make it a priority.

Brandon: This is totally not real estate related, but I'm curious. Do you have any tips to people who want to travel more and cheaply? How do you do it?

Paula: Just do it. Just start doing it. For me, it was helpful to go to countries where the dollar exchange rate worked in my favor. It's a huge blessing to be able to earn money in US dollars and then go spend it in Laotian Kip or Thai Bhat or Nepalese Rupees. So start there. You'll get the hang of it once you go to some of those countries, and once you learn some of the basics of shoestring travel, you'll then have the skill set to be able to go shoestring traveling in euros or in pounds. You'll be able to get to that later.

Josh: Okay, so hold on. Hold on. So I'm going to call you out here a little bit. We're talking about shoestring travel and just like a minute ago or two, we were talking about not pinching pennies. Are we talking about shoestring travel because Brandon brings it up or are we talking about it because... does that work in the same line of pinching pennies?

Paula: Yeah, absolutely. My anti-pinching pennies philosophy comes from preserving your mental bandwidth and your mental energy. If you've got to clip coupons and stack double things top of rewards points, it just adds this layer of complexity to your life and it weighs down your brain. But if you're in Thailand, you can walk into a restaurant and get a great dinner for three bucks and that doesn't require any mental energy. That's just what it costs.

Josh: True that. True that. I had my honeymoon in Thailand, so it's awesome. Go places with a dollar is strong and you've got it.

Paula: Yeah, absolutely. Absolutely.

Josh: Nice, nice. Alright, so let's jump back into financing a little bit. Debt.

Paula: Mmhm.

Josh: Is there a good debt, bad debt or is all debt just bad debt?

Paula: I definitely think there's both good and bad debt. In fact, I don't even like to call good debt debt. I like to call it leverage. That being said, a lot of people think that all educational debt is good debt. I disagree with that. I think definitely think some student loans are good and some are bad. Some primary residence loans are good and some are bad, but if you're leveraging into a rental property that cash flows, I support that. At least up to a limit I support that.

Josh: Nice, nice, nice. Okay, so then if some debts' okay, then we're really talking about debt that helps you kind of build your passive income and then that would be okay.

Paula: I'd think positive cash flow debt is good, in my opinion.

Josh: Okay. Yeah that works. That makes sense.

Brandon: Because that goes back the whole asset liability thing and the whole Rich Dad thing that that is. You buy things that makes you money, even if it costs you some, you're still making more.

Paula: Exactly, exactly.

Brandon: That makes sense. Alright, so on your blog you wrote an article called, You Want to Know What Sucks? Cubicles. I wonder, do you have any advice for those who are in cubicles and hate it?

Paula: Get out. Get out. Life is too precious to spend it doing something that you hate. You've got to spend the majority of your waking hours at your job. Do something that you love. I know that it's a cliché, "Oh, follow your passion blah, blah, blah," and in fact I have a nuance view of the "follow your passion" advice. I believe that, largely, passion is a result of the work that you do, rather than the other way around. You go in and you do the work every day. You'll develop a passion for it, but that's only true up to a certain limit. If you are in a cubicle or in an oppressive work culture doing something that you will never get excited about, get out.

Josh: Yeah, that's great. That's great. Okay. I am in an oppressive work environment right now. I've got Brandon harassing me every day. I've got all these people yelling at me.

Brandon: Those are your kids Josh. They're supposed to yell at you.

Josh: Oh. Okay. Well, pretend it's not me. Pretend it's somebody else. I'm in a cubicle. How do I go about kicking this off? You know, "I want to be like Paula. I want to travel. I want to quit my job. I hate my boss. I want to take a bat to the printer, like Office Space style." You know, what do I need to do? How would somebody go about starting to do exactly what you've done?

Paula: First, save up a big batch of money, which sounds daunting but it's really not because a lot of people run on this hamster wheel and fritter away money. They work these jobs they hate and then they spend money to make themselves feel better about it. Quit doing that. Stop eating at restaurants. Stop spending money on junk. Save up a big ton of it and you'll feel a lot more psychologically secure about quitting. Take up a couple of freelance opportunities or consulting opportunities. Take up some clients. Create a side gig. Test drive it while you're still employed and once you're making a bit of money at it, then cut the string and go at it full time. In the meantime, create multiple streams of passive income through traditional investments like index funds and mutual funds, through rental properties. Create passive income in addition to having side gigs.

Josh: I don't know if most people know this, but that's pretty much what I did. I was actually teaching high school in Los Angeles, a special ed school, when I started BiggerPockets. Long story short, I was working on this business for years while I was working full time on another job and putting all my effort and energy into that other job. But every night, every weekend that's all I did. And one day, I wasn't making nearly as much when I quit as I was when I was working the job, but I saw that there was a potential, so I did that. I picked up the rental properties and I eventually did that. It's a great path. If you can follow it, I know a lot of people and a lot of our guests that we've talked on the podcast are kind of working towards that or have already done that. So that's fantastic.

Paula: That's awesome. That's great. That's a great story.

Josh: Yeah. I've got great stories once in a while.

Brandon: Well, if I could add to that. I think one thing that I think is key for people is to have kind of a plan for where you want to get to. I don't know, maybe you guys don't agree, but if you need $2000 a month of passive cash flow to quit your job, then figure out how you're going to get that and then start going toward that direction. A lot of people just end with that whole, "I want to quit my job," and that's as far as they ever take it. They don't know what that actually means.

Paula: Right.

Josh: Well, they get frozen at that point because they don't have the plan or a path to get there.

Brandon: Yeah.

Paula: Right.

Brandon: And that's where like, shameless plug, but you know the BiggerPockets forums, like if somebody goes on there and says, "Hey, I need to earn this much money. I want to do it in five years. I need to earn $3000 a month in the next five years. Can somebody help me with a plan with this? How can I get there?" You'll get dozens of guys who have actually done that very thing to jump on and say, "Yeah, let's work through this together," and there's no cost to it or anything. Anyway, that's my shameless plug to the forums so jump on.

Anyway, so do you have any tips then for people who want to quit their job soon, they need to start saving up for their first investment property. You talked a little bit about not eating out and those kind of saving money tips. Do you have any other good ideas for saving for that first investment property?

Paula: Sure. Saving money is not rocket science. I wrote a post recently called Radically Redefine Necessary Spending. A lot of the stuff that people think is necessary is actually just discretionary. If you really think long and hard about what you actually need, you don't really that much. I don't know how a lot of the listeners, I don't know how you lived if you went through college, how you lived in college. For me, when I was a college student, I was completely broke. I graduated debt-free but I was completely broke the entire time that I was there. Just trying to make ends meet and when I got my first job I continued to live at that lifestyle. It was instrumental in helping me quit my job after only three years.

Josh: Yeah, and I think you bring up a good point about living at a specific lifestyle level and I think what happens, you know you see these NFL guys or baseball players that go broke. I think it's just programmed in us, right? As you make more money, you need to spend more money. You need a bigger house. You got to go hang out with the fancy people and wear better clothes and all sorts of stuff. That's a quick way to burn through cash.

Paula: Right, exactly. So pare down. If you hate your job, pare down to the basics. Save that money towards putting a down-payment on your first rental property. Pick up a side gig, pick up some clients. Do some consulting work. Do some freelance stuff. There are so many opportunities out there. Just so many.

Brandon: Yeah, and one of those opportunities is something that both you and I have done and that's starting a blog. Not that that's the world's best way to make money, but people do make money that way. So I'm wondering if you can talk a little bit about the blogging? Kind of the benefits of it and you talk about real estate on your blog. Do you think that's a good idea for other people to do as well?

Paula: Sure, yeah a lot of my readers love the real estate posts. On my blog, I'm very open about what I paid for each property, what it rents for. I run the numbers. I talk about the 1% rule and cap rate and this and that and the other. I think my readers really appreciate that level of disclosure and that level of transparency. It does get a little bit awkward when my tenants find the blog and see how much of a profit I'm making on their rent.

Brandon: Yeah.

Paula: That happened at least once and that was kind of awkward but I still would recommend it.

Josh: Yeah.

Brandon: I had a tenant two weeks ago, google me and found out everything. Yeah. That was fun.

Josh: Well, and that's one of the downsides of living next to your tenant and it's one of the reasons that there's a fairly strong debate. We've seen some posts and stuff about this on BiggerPockets, where a lot of people will advocate if you're the owner of the property, first of all, you buy your properties in entities to protect yourself. Because once you do that, you are now no longer the owner of the property, the entity is. So now you can actually, rightfully so, many will argue, and I think I would agree with them, you're now the manager of the entity, so to speak, as a result, a manager of the property.

I think people see a distinction, particularly tenants, between owners and managers. They'll beat the hell out of an owner and they'll be a little nicer to a manager potentially.

Paula: That may be true, but at the end of the day, they'll still google your name. And if you've blogged about what you paid for it or what your company paid for it, they'll still know that profit and loss data. So if you want to blog about your properties, that's just something that you have to be willing to go through. For me, I am because the benefits far outweigh the costs.

Brandon: Yeah.

Josh: Yeah and what benefits? Are you finding additional deals? I guess the benefits for you then are in terms of just that passive income that you get from your blog at this point, correct?

Paula: Yes, some of it is passive income that I get from my blog, although I don't know if I'd call it passive.

Josh: That's not passive because it's a blog right?

Paula: Because I do all the work of maintaining a blog, yeah. A lot of it, I mentioned that I do freelance writing and online marketing, all of my clients these days come as a result of my blog. Basically the blog has turned into a giant, dynamic business card that serves as a lead generator and that people find me through.

Josh: Nice, and you might get a couple more people after this podcast. Be prepared.

Brandon: You know one thing that I thought when I started blogging that I advocate everyone should do it. It's because it helped to clarify what I was doing as an investor. It helped me to kind of like, as I was writing out these posts of what I wanted to do and what my plan was and how you should properly screen a tenant. I mean I wrote that super, super long post on BiggerPockets on The Ultimate Guide: The Tenant Screen, which I'll link to in the show notes. But after that, I realized like this is the ideal way to screen a tenant, I should follow this every single time. So why don't I? Why do I sometimes slip or sometimes let other people in? By blogging it, it really focuses you on what you should be doing because you're teaching other people how to do it.

Paula: Exactly, you know they say that the best way to learn is by teaching. So if I'm blogging about real estate and about career and money and lifestyle design, I'm learning a lot by virtue of teaching it to others.

Josh: And I love that quote because you just explained why the gurus continue to teach because they're just trying to learn and they need to catch up and figure it all out. Well, you know, that's why people should come to BiggerPockets instead of paying them thousands and thousands of dollars for information that they're still learning.

Brandon: Ahem.

Paula: Right.

Josh: Ouch.

Brandon: Burn. Well hey, speaking of burn. Let's move on to the Fire Round.

Josh: Fire, fire round.

Brandon: Yeah, dramatic.

Josh: Yeah, that was dramatic.

Josh: Alright, this fire round, again...

Paula: I'm nervous now.

Brandon: You should be nervous. Alright, the fire round are quick questions, quick answers. They all come from the BiggerPockets forums. These are questions that people are asking every day on the site. If you're listening to this and you have a question, go ask your question on the forums, we might pick it. So, first question. What is the best piece of financial advice you've ever received?

Paula: Ooh. I would say, and this comes out of Rich Dad, Poor Dad, I would say that, "Wealth is measured in time, not in dollars."

Brandon: That's great.

Paula: Wealth is a function of how much free time you have.

Josh: Sounded something like Yoda might say.

Brandon: Robert Kiyosaki, Yoda? Same thing?

Josh: Uh, maybe not. Maybe not.

Paula: That goes back to passive income as well. If you've got enough passive income coming in that you've got all the time in the world, you're wealthy. End of story. Even if it's $50,000 a year, the average household, you're wealthy.

Josh: I think that really does depend on the definition by the individual, right? Some people see wealth as having hoards of cash. Others see it as having a family that they can spend time with. Yeah, but I agree time is money.

Paula: Yeah, I just think that wealth is measured in freedom.

Josh: Yeah, awesome. This is going to be the freedom podcast.

Paula: Freedom! Freedom!

Josh: Yeah, your new nickname by the way, you have to change the name of your blog. You're going to be the Traveling Nomad or something. I love it. I love it. Alright, so I'm a college student looking to invest in real estate. What do I do?

Paula: Ooh. You know, I don't know if I would. It's hard to be a college student. You've got to, hopefully get straight As. Do well in school and try to graduate debt-free which unless you're independently wealthy, means also working, I don't know if I would add investing in real estate to that platter. I would just focus on being a college student. Wait til you graduate. Study while you're there. Get a mentor, but I don't know if I'd jump into the game honestly.

Josh: Okay, fair enough. Fair enough.

Brandon: I think that's smart, like what you said there. To stay out of debt. Like if that's the only thing you graduate from college with is no debt, that's successful in my mind.

Paula: Yeah, absolutely. No debt and magna cum laude. You're good to go.

Brandon: Yeah. Alright, so credit cards in real estate. Do they mix at all?

Paula: No. They don't. I wrote a post on BiggerPockets about this and was called an extremist for thinking this.

Josh: You're an extremist! You don’t know what you’re doing!

Paula: But no, credit cards can jolt up into double digits, scary, scary APR. Avoid them. I am willing to be an extremist on this one.

Josh: I happen to agree with you.

Brandon: So you don't do any travel hacking with credit cards?

Paula: Oh yeah, I do a ton of travel hacking but I pay them all in full every month. There's a difference between using a credit card as a proxy for cash with the money that's currently in your checking account versus actually carrying a balance on a credit card. I disagree with carrying a balance.

Josh: Yep, definitely. Alright so I'm pretty sure I know the answer to this one. Pay off debt or invest in real estate?

Paula: That's a tricky one and I would say that it depends. Pay off, if you're talking about double digit credit card debt, then pay off your double digit credit card debt. If you're talking about a car loan at 2% versus making the down payment on a rental property, I might make the down payment on a rental property. Again, that's all up to a certain limit. You know, after four or five properties, you might be sort of at the end of your risk tolerance and wanting to start paying them down rather than accumulating more, but at the end of the day it depends on the interest rate. Debt is just too broad of a term to make an umbrella statement.

Josh: Gotcha.

Brandon: Yup, cool. Alright, what should somebody with terrible credit do as a first step towards fixing that credit?

Paula: Get a secured credit card. This is a credit card that almost anyone, even people with bad credit can qualify for, and it will help you establish your credit history. Use only up to 20% of the available balance on your secured credit card and just do that for a while and let time go by. Time is the biggest healer of bad credit.

Brandon: And for those who don't know, what is a secured credit card? 

Paula: It's a credit card issued by a bank in which the amount of money that you can borrow is backed by the cash you have deposited there. So there's no way that you could default on the loan because the bank could just take that cash that you have backing with.

Brandon: Okay, so you're basically borrowing from yourself in a way?

Paula: Exactly. Exactly. And you can do it interest free by paying it in full and it just is a great way to rebuild credit after you've dinged it.

Brandon: Perfect.

Josh: Awesome. Awesome, awesome. Alright, so do new investors begin with a multi-family like you did, or stick with single family for a first investment?

Paula: That's a great question. Go with the one that's going to give you the best returns, and by returns I mean something that's going to give you a big, fat margin of error because you're going to make a ton of errors. In your first property especially, you're going make a lot of them. So go with the best deal.

Josh: That's great.

Brandon: That is really good advice. That's awesome. Alright. Speaking of that, somebody mentioned the other day that we say awesome too much on the podcast and that we should have a drinking game. I think Dawn said that to me. There should be a drinking game where every time we say awesome, somebody takes a shot. Maybe someday somebody can send us a video of that drinking game.

Josh: I've been taking shots since the beginning of this podcast.

Paula: You just did before this recording.

Josh: What's your name again? Paula what?

Brandon: Alright, exterior paint color for a house? Boring or should it stand out?

Paula: Stand out for sure. I took this a little bit too far the first time I painted a house and I painted it like smurf blue and I had to tone it down a little. So it's toned down but it still definitely stands out.

Josh: Okay, I want to know what happened. So you painted smurf blue and did the neighbors start throwing eggs at you? What happened?

Paula: Pretty much everybody's jaw dropped. Actually I had a tenant ask, she was like, "Oh, so does the siding come in that color and then you just paint it later?"

Josh: Nice, that's awesome.

Brandon: That's really funny.

Josh: Alright, last question for the fire round is what is your favorite country that you've traveled to and why?

Paula: That is a really hard question because favorite in what category? Is it favorite for the food? Favorite from meeting locals? Favorite beaches? Favorite cities?

Josh: Oh, just throw out a country, my goodness.

Paula: I would say if I could go back to anywhere, Bali in Indonesia, Italy, Nepal...

Josh: She didn't answer the question. That's three answers. Alright, moving on.

Paula: Myanmar. I want to throw in Myanmar.

Josh: Nice. Burma. Well, aren't we like not allowed into Myanmar? Did you have to sneak in?

Paula: No, no. It's easier to get a visa. Here's a tip. Insider's information. The easiest way to get a visa is to go to the U.S. Embassy in Vien Tien in Lao. It's way easier to get a visa there than to get approved from the U.S. So just fly to Bangkok, catch a bus to Vien Tien, get approved for a visa and then go back to Bangkok and catch a bus to Burma.

Josh: That's sounds like a worthwhile adventure. Make sure you swim across the Arctic Ocean somewhere in between.

Brandon: Wow, cool. I have to admit that that question was not from the forums, ironic. I wanted to know so I threw it in there. There. Alright so, let's move on.

Josh: We are moving on to a section of our podcast called...

Josh and Brandon: The Famous Four.

Brandon: Did I get harmony there?

Paula: Wow. You guys, this is your calling as opera singers.

Brandon: We did.

Josh: Yeah, we definitely have. Alright so what is, Paula Pant, your favorite real estate book?

Paula: From 0 to 130 Properties in 3.5 Years.

Josh: Is that the actually the title of a book?

Paula: That is the title of the book. It's written by an Australian. I believe his name is Steve McKnight. You might want to fact check me on that. Well, he's Australian so you have to ignore all of his tax-related information but the rest of it is awesome. Awesome!

Brandon: Awesome. Yes.

Josh: Awesome, take a shot! Take a shot!

Brandon: Alright, favorite non real estate business book or personal finance book.

Paula: Ooh. 

Josh: "My blog?"

Paula: We've talked about Four-Hour Work Week, which I still swear I should have the one to have written that because I knew all that stuff before Tim Ferriss said it, I promise. He and I, we're of the same mind. But I recommend that to a lot of people. It's a great book. It summarizes my philosophy on life really well.

Josh: Nice, perfect. Perfect. Alright and hobbies. And you cannot say travel. So whilst traveling...

Paula: Whilst.

Josh: What hobbies do you partake in?

Paula: Snowboarding, snorkeling, hiking, just being in the wilderness. I like being outdoors.

Josh: And you're not like, snorkeling while snowboarding?

Paula: Not yet, but I'd be willing to try.

Josh: Nice, get a video of that.

Brandon: That's not awesome.

Paula: And reading. I do love reading. I read a lot.

Brandon: Excellent. Cool. Alright final question of our interview today. What do you believe sets apart the successful investors that you've come across from those who just, I don't know, give up, fail, quit, don't even start?

Paula: Optimism. You know, I think at the end of the day, it's all about that. Do you have the drive? Do you want to do it? Success is 99% mental so just have the right mindset. Don't bog yourself down with details. Be really ruthless about what you allow your brain to focus on. De-clutter your mind. I'm a big advocate of de-cluttering your mind. I think that's what sets them apart.

Josh: That's awesome. Ugh, I said it again.

Brandon: Good answer.

Josh: Yes, that was outstanding.

Paula: Excellent! Fantastic!

Josh: Yes, indeed. Alright Paula, well listen. We definitely appreciate having you on the show. Love having you as a contributor to the blog and lots of really, really good feedback and advice here for folks particularly on the personal financial stuff. I definitely want to thank you. Where can folks learn more about you? What's the name of your blog?

Paula: Afford Anything. So you can find me at

Josh: Nice, excellent. Well, we thank you again for being on the show and of course people who have questions for you will be sure to catch up with you on the show notes at Paula, thanks so much.

Paula: Thank you. Thanks for having me.

Brandon: Yep, thanks Paula.

Josh: Alright guys. That was Paula Pant. Paula was awesome. The Traveling Nomad. I like that whole concept of being anywhere and just kind of chilling out and living passively off your cashola.

Brandon: That is the dream.

Josh: It is, indeed.

Brandon: Well, what's interesting is you can tell Paula works at everything she does. She just works hard and plays hard, which is kind of the goal, I think for me anyway.

Josh: Yeah. I think it's great. I think it's great and she's a smart lady who's doing great things so it was very fun and very interesting to talk with her. For those of you guys who have made it this far, thank you very much. Of course, I want to remind you about the death of your Quick Tip and the last Quick Tip that we spoke about was sharing your favorite quote from the show. So please do that if you want to be in the running for a free BiggerPockets: Book on Flipping Houses and Book on Estimating Rehab Costs. You can find out more about the books at

Otherwise, definitely make sure you're following us on various networks like Facebook and Twitter and G+ and share our content. Share our show. Share our stuff. That helps spread the word about BiggerPockets. Gets other investors. People that you know on the site and helps you and everybody else potentially do business and learn. The more people we can get on the network, the better it's going to be for everybody on the network. That's the beauty of a site like BiggerPockets, so hopefully you can help us expand the community. We'll definitely be seeing you as you participate with us on our other networks and of course, see you back on BiggerPockets. Make sure you're engaging and hanging out and participating and that's all I got. So if you've got questions for Paula Pant, ask it on the show notes at As for me, I'm out of here. I'm leaving it to Brandon.

Brandon: This is Brandon Turner, signing off.

You're listening to BiggerPockets Radio, simplifying real estate for investors large and small. If you're here looking to learn about real estate investing without all the hype, you're in the right place.

Be sure to join the millions of others who have benefited from, your home for real estate investing online.

Josh: Did you really think I would let sign off of it? That's not happening.

Brandon: Do it.

Josh: Do what?

Brandon: Sign off.

Josh: Do it.

Brandon: Do it.

Josh: Do it. Here we go.

Brandon: Do you want to say your last line? You're just going to let it hang?

Josh: This is Joshua Dorkin, signing off.