BiggerPockets Money Podcast 19: The Ultimate Real Estate Retirement Plan with Chad Carson

by | BiggerPockets.com

Chad Carson has never had a “real job.” Instead, he has parlayed his experience helping with his father’s rental business into his own real estate rental business.

Now, Chad owns enough real estate that he’ll never have to work at a real job. In fact, when we spoke to Chad, he called us from Ecuador — where he’s been living for a year in order to submerse his children in the Spanish language. His rental business ran itself while he was away. He was able to take an extended vacation and truly delve into the area — and now his children are bilingual!

Chad’s take on “mini” retirements is very interesting. He obviously loves what he does, but he also enjoys spending time with the people who matter most: his family. Real estate provides him the opportunity to work at his own pace.

This episode gives you an alternate look at early retirement — it doesn’t have to be permanent.

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Listen to the Podcast Here

Read the Transcript Here

Scott: Welcome to BiggerPockets Money Show, Show Number 19.

I was working for this guy who was obviously pretty wealthy, like he was this boss or something like that. And the guy said, hey Louie, you want to learn how to become rich? And Louie’s like yeah, yeah. I want to learn how to become rich. He’s like all right, Louie, here’s what you’ve got to do. Right now, you’re making $30,000 a year. You’ve got to learn to live on $30,000 a year. Got it, Louie? Louie’s like, oh yeah, I got it. Okay.

The next thing you’ve got to do is you’ve got to learn how to make $60,000 and still live on $30,000. Got it, Louie? Yeah, I got it. And then he kind of kept on going and in the story, the next thing you’ve got to do is learn how to make $120,000 and you’ve still got to live on $30,000 a year, Louie. You got it? And he kind of like was driving it in and he’s like, I got it, I got it. Good. And he said, if you can do that, Louie, then you can’t help but become rich”.

It’s time for a new American dream, one that doesn’t involve working in a cubicle for 40 years, barely scraping by. Whether you’re looking to get your financial house in order, invest the money you already have, or discover new paths for wealth’s creation, you’re in the right place. This show is for anyone who has money or wants more, this is the BiggerPockets Money podcast.

Scott: How’s it going, everybody? I’m Scott Trench and I’m here with my co-host, Miss Mindy Jensen. How are you doing today, Mindy?

Mindy: I am doing great, Scott. I am really excited about today’s show because we interviewed Chad Carson from CoachCarson.com and I just really enjoy every time I get to talk to Chad. He’s such a nice person. He’s so smart. And he’s so giving with his information.

Scott: Yeah, I have known Chad for a number of years now and just really impressed at what he built and how he did it immediately. He’s just a hustler throughout his entire life as evidenced by him playing Division One football at Clemson as a linebacker. And then obviously building this huge real estate portfolio from scratch after graduating.

So, really impressed with the guy. We’re going to hear all about his story today. He’s coming out with a new book, I think in August, which is going to be awesome about how to retire using real estate investing. Just really, really excited about it.

This episode is probably best geared towards folks who want to use real estate as a tool to achieve a lifestyle result. So Chad is very outspoken about how for many of us, a small real estate portfolio that covers the basics that provides more than enough, is plenty and that there’s a stopping point. You build your real estate portfolio, you achieve your desired amount of cash flow and wealth and then you use that to design your lifestyle.

A lot of people when they hear about using real estate investing or entrepreneurship, you get carried away and you keep going bigger and bigger and bigger and bigger and end up missing what they were doing this all for in the first place. That’s what I think you’re going to get out of today’s show and I’m really looking forward to it.

Mindy: Yeah he’s a big advocate on focusing on the end result and making a goal, hitting your goal, and then you know, stopping and taking a break and looking around and see if this is where you want to be.

Scott: Yep, absolutely. So really excited to bring him in but before we bring in Chad, let’s hear a quick word from today’s sponsor, FreshBooks.

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All right, big thanks to FreshBooks. And without further ado, let’s bring in Chad.

All right Chad, welcome to the BiggerPockets Money podcast. How’s it going?

Chad: It’s awesome. Thanks for having me on. I’m excited.

Scott: Yeah, I’m very excited. I know you’ve built an awesome real estate portfolio living a unique lifestyle that’s been made possible because of that and I’m looking forward to hearing about it. So maybe we can just start from the beginning. What do you consider the starting point? When did you get the idea to begin pursuing financial freedom and how did you kind of take those first steps to move in that direction?

Chad: Yeah so my story begins right after college, I think, with financial independence. I graduated with a degree in biology and German which was absolutely nothing to do with the stuff I currently do.

Scott: Let’s take one quick second. Where did you graduate from?

Chad: I was at Clemson University so Go Tigers.

Scott: What sport did you play there?

Chad: I was the middle linebacker and I had a much bigger neck and big old shoulders at that point. So yeah, I guess that is the beginning of my story. I was playing football at King College and I got a college scholarship that paid, so I didn’t have any student debt which is awesome. Then I graduated and I was actually thinking I was going to go into the NFL for a split second. And the reality of NFL and how good they really are kind of brought me back down to Earth. So I started thinking all right, what do I want to do now? This is kind of exciting.

Let’s figure it out and I thought about med school. I actually applied to about five med schools so that was sort of my natural path so I was interested in that, interested in science. I also thought about business. Ironically, a lot of football—not ironically, but a lot of football players got recruited to be like investment bankers and people like these intense financial positions that pay pretty well.

So I thought about that too but then my dad had rental properties growing up and I always hated rental properties, actually, come to think of it. Because back in middle school, my brother and I, he would drop us off at a foreclosure house he bought in Georgia during the summer and it’ll be like 95 degrees. The refrigerator would be full of old food. There would be like mice running around in this vacant house and he would say, all right boys, I’ll be back in three or four hours to pick you up. Clean this house up.

Scott: This is crazy.

Mindy: That’s why you have kids. Slave labor for your real estate empire.

Chad: Yes, exactly. And we were horrible labor. I can’t imagine how he got any kind of return on his effort and time. But we complained about it. Who would ever do this? And then when I graduated from college, I was just sitting at home kind of thinking about what to do and I picked up one of the books off the shelf. Oh, Dad kind of knows what he’s talking about. He was actually buying rental properties growing up so I had the benefit of a good example of entrepreneurship. I think that’s something a lot of people don’t have.

So I decided that you know what, I don’t have any college debt. I own my car free and clear. I could sleep in that if I had to. I’m just going to start investing. So I had a buddy of mine from college, and he graduated a couple of years ahead of me and he and his father had owned mobile homes growing up. So he had kind of a similar background and interest and we decided to start investing in real estate and that was it. I got started with that as an entrepreneur, not only investing but I was a bird dog finding deals for other people, beginning with my father and then continuing on.

I moved back up to South Carolina. I was originally from Atlanta, Georgia, and I moved to South Carolina. My business, I started buying and selling houses, finding deals. Eventually owning rental properties and that was sort of my financial agenda that took me the rest of the way.

Scott: Can you maybe go into a little bit of detail about how you prepared yourself financially to buy those first few properties. What did you do on the personal finance side of things, maybe outside of the real estate strategy piece to get access to those first few deals?

Chad: I think the lifestyle is one of the most important parts of it because my first year, I lived in my parent’s house so I made a little bit of money finding deals for them but then I was just living at home, living cheap. So it sort of began this pattern of just living frugally which I remember hearing other guests on your show, that’s not an uncommon type of thing. So I was able to save almost all my money the first year.

The second year I was in business, I started with my business partner and I just lived in his spare bedroom. He had this—I didn’t realize he had this extra room in his house. I walked in there one day and there were boxes everywhere and underneath the boxes, there was an old single bed and I was like, can I sleep on this bed and stay here for a little while? So I kind of bummed off of him for another year and we lived off Ramen noodles and it was awesome. We had a good time.

Those two or three years, we didn’t have any rental properties at that point and really, it could have been any job. It could have been an entry level entrepreneurship job but it was even worse than job security at most jobs. If I made $30,000, it was all at one time, six months into the year. The rest of the time, I was just kind of keeping crumbs and living off savings, that kind of thing. And so I think that kind of added to it, as an entrepreneur, there’s no guaranteed cash flow. That was just instilled in my brain really early on. Therefore, your lifestyle has to be flexible and resilient because you just don’t know what’s going to happen.

And like fast forwarding down the road, 2007-2008, everybody had some hiccups. If you were in the real estate game and you owned properties and you’re buying and selling, 2007, 2008, 2009 were pretty difficult but I think having those early kind of lifestyle type cushions made it so that it wasn’t as big of a deal. We were able to tighten our belt. We didn’t use most of the earnings that we made and now we were able to sort of kind of keep that margin really high on our lifestyle.

Scott: So what was that first purchase in 2007-2008, or when was that first purchase in relation to what you guys started and how much money did you have to bring to the table for it?

Chad: Yeah, so we began in 2003 just doing the wholesaling and that kind of thing and then three years later, so 2006 probably, 2006, that was when we really started holding properties. So 2006 and 2007, we actually bought a really good number of rental properties. Most of those were owner financing type purchases and that kind of goes back to my particular story, which I don’t think it’s normal for everybody but I wasn’t at a W-2 job.

I had good credit but for me to go out and get mortgages and get my five to ten mortgages—it wasn’t in the cards. It wasn’t what was my strength that I had. I was really good at finding deals and so I had to get really creative with the financing with seller financing—it was a pretty good source of the deals that I had. And then also private money so I had just people with self-directed IRAs, other people who just had some money in the bank.

I’ve built relationships with them over time and so they would let me buy the properties and to answer your question, Scott, I didn’t have a lot of cash early on and so some of those rental properties, it might have been $5,000 on the first rental. $100,000 purchase, $5,000 down, with seller finance

ing. That was like one example and I had several deals like that afterwards.

So it was just mainly from savings, some of the flips. So I make $20,000-$30,000 on a flip and then we save. We live off of some of that, a little bit, build up some reserves, usually about $5,000-$10,000 for a down payment and then start building those on the side of our flip business.

Mindy: So you were bringing almost no money to the deal. You had a partner. Did your partner have a job? You said you had good credit. I thought you had to have a job to have good credit.

Chad: I didn’t have any credit early on. I had like one credit card in college and so I was just paying a credit card. That was basically all I had. And my business partner was a little bit better off than I was but not much. He had an internet business and in 2003, like having an internet business was pretty much like, what does that mean? The ad revenue wasn’t as good as it is today. It’s actually done a lot better for now, but at that time he was just making enough money to sort of pay—he owned a home and he was able to pay his bills and just kind of live for a $30,000-$40,000 lifestyle, sort of what his internet business did.

So between the two of us, our partnership was basically like a labor partnership. We split up the labor of this flip. So we said, all right, Chad’s going to go find the deals. He’s going to work on financing. And then as soon as we bought the property, I would pass it onto my business partner and he would work on managing the rehab, remodeling it, fixing it up. He would also manage getting usually a flip for us, that was kind of the typical early on scenario. So he would kind of work on those two parts of the business. I would work on the other two and we just had sort of like an assembly line of two people just kind of hustling and making the deals work.

Over time, that’s evolved a little bit. His other business has gotten much more busy and it was much more lucrative and so he’s spent a lot more time with the more passive and that kind of day-to-day managing properties whereas I was the person who would manage our rental properties that we have. Eventually, we hired some help to do some of the kind of day-to-day work. I’ve never done any contracting work. I’m not one of those handy people who can fix anything like Carl and Mindy.

You guys amaze me but I’m really good at making a punch list. I’m really good at figuring out the vision for the property and then hiring other people to do it. Just write the checks, which has kind of served me well back to financial independence because there wasn’t much of a transition to stop doing all that because I never was doing all the kind of in-person stuff.

So I’m long distance managing people from abroad where I am right now, from Ecuador, for example. It’s not much different from when I first started. I’m just picking up the phone, calling somebody and saying hey can you get that done for me?

Scott: Where are these properties located and how was it going through the recession there? You said you got started in 2006-2007.

Chad: Yeah, we’re in South Carolina and our main holdings are in upstate South Carolina. So you have lower state with Charleston on the ocean and we’re kind of near the foothills of the Appalachian Mountains, a little small college town. So when we first started, we were just buying single-family houses and kind of in the area, families would rent them and that was our sort of normal rental.

We also kind of evolved because we’re in a college town, to doing student rentals. And so our niche primarily, it started off with a house hack for me. I lived in one unit and rented out three other units. I’m in the house-hacking club. I joined you guys. But the main thing for us was student rentals, was these lower-priced kind of student rentals. We would buy like a duplex, triplex, quadruplex, and in a college town, you had this sort of range of rents.

So you have like the upper-end rents of people, like the luxury housing people with these big huge pools and clubhouses and expensive kind of nice finishes, luxury type apartments. That’s kind of the top end of the market. We were trying to be like, find the grad students, the students who are going to stay there for three or four years and get a degree as a PhD student or something, or international students.

So we started finding that niche of people initially through my house-hacking business and some other properties. But the issue we had, going back to your question about the recession was, we were sort of in our growth mode where we were buying and flipping properties, living off of that, using some of the flip money to buy rental properties. But as most people know, rental properties don’t make a lot of money early on. You’re leveraged, for sure, and we actually grew too much in 2007.

I actually got too good at finding deals. I was getting really good at sending direct-mail out. I got really good at getting referrals coming in. I just had lots and lots of leads and I was getting better at negotiating different kinds of seller financing, creative financing, so we found ourselves in 2007 in a position where we had 50 closings, acquisition closings in one year. 2007. Right before everything hits the fan.

So it’s kind of comical now to think about that. And so we did some things well. We did some things not well. But things we did well, like I said earlier, we were pretty disciplined with our lifestyle. It didn’t change from college lifestyle. Even though we were making hundreds of thousands of dollars flipping houses, the year before that, we weren’t spending more than we did when we first started off.

And then, the other thing that we did well is we saved a lot of that money and put it aside as reserves, just because we were a little bit, I don’t know—we just didn’t know what was going to happen. The thing we didn’t do well was, I think, was getting undisciplined with our fundamentals of buying assets. So we bought some properties where, oh man, the financing is great. This is seller financing and this is a 3% interest rate, something like that. But the location was horrible. It wasn’t going to attract great, long-term tenants. It didn’t fit into the business model of what we were trying to do.

Or we bought some properties where we underestimated repair calls, those kinds of things. A lot of those aren’t abnormal for somebody getting started or anything but it’s kind of come to me now that if you grow really fast, really early, everybody is going to make mistakes. But if you go really fast, you’re actually going to compound those mistakes and they’re going to bubble up even more.

So that was a mistake we made. We had a group of properties. They weren’t a majority of our properties but they were a group of properties that had negative cash flow, were not good tenants. It took us through the recession and then a couple of years after and we even still have, today, a couple of those properties to get rid of them, to deal with those problems. So we used up a lot of our reserves. We ate into those reserves but dealing with the recession, people losing their jobs, tenants turning over. Kind of that kind of normal stuff.

And then also just eating some of the mistakes we made just having to spend cash to pay for those mistakes. We survived it though and I think that going back to why we were able to make it through the recession after growing and making some of those mistakes were living inexpensively, saving money, and also these relationships of private lenders that I’ve mentioned. Instead of having local bank commercial loans where if they think you’re overextended, they could the loan due.

We went and talked to private lenders and to our seller financing people and we didn’t have any balloon notes. We didn’t have any kind of things where we had to pay all the money back right away. It was just all right, we’ve got these properties, I know you’re reading the news right now that things are kind of bad. But we’re going to still keep paying or make our payments. We’re getting rent. Things are kind of a little bit tough but we’re going to be fine. So it was not a pleasant experience but it wasn’t like a disastrous experience for us either.

Mindy: Yeah, I think it’s really important to note that one of the best things you just said was you had reserves. And one of the most common questions that we get on BiggerPockets forums is how do I get started investing in real estate with no money and then bad credit is usually part of that, too. And there are ways to get into real estate without using your own money to purchase the property. But you do need some sort of way to pay for the repairs that always come up. Something breaks every time you buy a house. The next day, something that’s broken, like not even noted on the inspection report and it just—that’s like Murphy’s Law, rules, real estate.

And having those huge reserves that you didn’t touch is really, really, really important and I want to just make sure people hear that and realize that you made it through in an over-leveraged situation by having this huge set of reserves. You didn’t just spend all your money. You had 50 closings in 2007. You could have probably easily had more if you would have just spent all your money. So that’s really important—I just want to highlight that part.

Chad: For sure. It’s just like a personal life. Everybody here in their personal life, they’re supposed to have some kind cash set aside for a rainy day or for an opportunity. And your business, it’s the same way or even more important. Thinking back about it, the reason we felt that those reserves are important is because I felt an obligation. I wanted to make a profit. I wanted to survive. But it’s more like, to these people I made a promise to, being leveraged.

I mean, they were individuals. They had loaned me money. They were including my grandmother, who was my first private lender. My grandmother—she heard about me paying 10% interest to these private lenders off some of our clips, like at Thanksgiving dinner or something. First, she was worried about me. She was like you can’t be paying 10% interest. That’s ridiculous. You’re going to lose your shirt. And then the second thing she says was wait a minute, could I loan you and make 10% interest?

Because I had these individuals like her and these other people whose retirement was depending on us doing well for them. And so having reserves is a way of insuring that you can keep your promises. I think that kind of did it for me as much as anything. But it’s just a good habit to get into because I think the main thing I’ve learned about markets and about ups and downs is, if you think you can predict what’s going to happen next, you’d be the first one.

I mean, Warren Buffet, some of the smartest people in the investment world, called people who tried to predict markets, not any better than fortune tellers. People reading your palm or something. That’s something that we all need to take home with it. So instead of trying to predict what’s going to happen, try to be resilient and flexible with whatever’s going to happen. This applies right now in 2018 as well.

What’s going to happen next? We can make some guesses. But if you want to be flexible, you’ve got to hedge with cash reserves, with quality properties, with fixed interest loans. There’s a lot of things you can do as a financially savvy person to hedge for those next steps. And then it just comes down to personal wants, too. I didn’t mention that a lot but just the fact that if you’re willing to hustle, if you’re willing to when it gets tough, go 80 hours a week instead of 40 hours a week.

If you’re willing to do that extra step, that’s kind of that entrepreneurial hustle muscle that people—you’ve just got to use it. You can’t account for what kind of results you can get by doing that. I remembered listening to David Greene’s interview with you guys and I was like, yes, yes, yes. When he was hustling in college, when he was hustling early on, that’s a wild card. That served me so well in football. That was a thing that I had a little bit less talent than a couple of other guys I was competing with but that hustle and that want to and that desire, it’s just amazing.

You can’t underestimate what it does, particularly when things go bad, badly. That’s kind of when that resilient—that are you going to just back down from it or are you going to actually step up and do what you have to do and make it happen? That’s sort of the way it works in the down economy as well.

Scott: I love that philosophy because you know, I would even add one more thing into that. You mentioned a couple of things that were reducing your risk there, the cash reserves and the hustle. I’d actually add two more things that I think also probably helped you reduce your risk, maybe unconsciously. Let me know if I’m wrong here.

But first is the spread between your cash flow and your expenses with the property. Not just your cash reserve but the fact that you’re even in a down market, hopefully you’re at least breaking even or even having a small positive cash flow, just slightly less positive cash flow than you had previously.

The second one that I would add in there would be education. The more educated you are, the more—and maybe networking as well. The more people you know, the better educated you are, I think can go a long way to reducing risk as well, as of these things.

Chad: So I mentioned a couple of negative cash flow properties but there were some positive cash flow properties as well that kind of brought us through there. If you win three and you lose one, I mean, in the end you can still do pretty well. So you’re right on with that. And education is absolutely—and network—education, having like, even if it’s something you already know and you listen to like podcasts and it just kind of confirms what kind of path you’re already on, it gives you hope. It gives you—yeah, I can do that. Or that could work. Or I’m going down the right path and I had a lot of that.

BiggerPockets was a big part for me, just being on there, knowing that people are going through the same thing you’re going through. That’s really big and for me, like, local networking and local Meetups were really helpful. I had two or three kind of private investors who, we knew each other well. We went out to lunch or coffee every once in a while. They knew what we were working on. And so having that trust and that confidence with a real person is something that brings you through.

One of the things that made me nervous about having a long-term portfolio in real estate of all like bank commercial kind of debt is that you kind of lose that person-to-person relationship that you had with partners and with private lenders. So I’m not saying bank debt’s bad, but I know for sure in our case, having those people that you can reach out to and say hey, here’s where we’re doing.

We’re having like really bad situations but if they’ve got it bad where we had to refinance or we had to extend the loans, something like that, talking to a real person and having that relationship with them is a much different proposition than going to the bank and saying hey, can you extend my loan? And they say no. Pay us our money. That’s just the bottom line. And I had friends who went and bought properties in 2008 because of that exact phenomenon.

There was a guy who had a million plus dollar equity portfolio, these rentals, and he owed about a half a million bucks to the bank. And he couldn’t get refinanced. There was a balloon on the note and he had to get it extended. And they wouldn’t do it. They needed their money because they needed to pay their creditors back as well and so he ended up losing the properties—I think he sold them before foreclosure or something like that.

But the point is he lost a bunch of equity because of relationships with the lender. I think that’s something for people to think about not only like your reserves, not only your cash flow. If you do have leverage, what kind of leverage do you have with the terms? Who is it with? Those kinds of things can make a big difference on whether you can be resilient in the next up and down.

Mindy: Okay, so I’ve got some questions here. You studied, what was it, German and—

Chad: Biology.

Mindy: Biology and German. Okay. So what sort of financial education did you have as a kid? I don’t speak German, I didn’t study German, so maybe they talk about finances a lot there but—you’re very financially savvy but you grew up in America, going through the American school systems where they don’t typically teach a lot of financial education.

Did your parents talk about money? I’m so impressed, I keep coming back to this one point. I’m so impressed that you didn’t spend every dime that you had from your flipping business and that got you through the 2008 crisis—it was really, really, really bad and so many people lost their shirt, especially real estate investors because prices were so high. So where did you learn how to do all this? 

Chad: I think I’m going to borrow another one of Warren Buffet’s phrases. I won the Ovarian lottery in terms of the things observed. My parents, they made good money so I came from like an upper-middle class or good money kind of background. But at the same time, that doesn’t guarantee they’re going to talk about money.

My dad was an entrepreneur, was a real estate investor, but they had some failures. He had some businesses that did not work. And I think that was the most educational thing to me was like seeing how an entrepreneur has to be resilient, has to keep going. He would come home at the kitchen table and my mom and dad were business partners and they would talk about it, the good and the bad stuff.

And that was so helpful for me and I kind of formed my own ideas about how to discuss things with my kids. I have a five and seven-year-old, two little girls. Not only with money but just like with everything. Are you struggling with something? Are you having a challenge in your business? Don’t hide that from your kids. That’s a really big educational experience that they get to be at the kitchen table, seeing mom and dad or whoever, if it’s just mom or it’s just dad, talking about this. It was really helpful.

So that was helpful for me, observing. Also just seeing mentors and seeing other people. I think one of my early mentors was a professor at Clemson. He kind of took me under his wing and he was teaching a business class and he told me about real estate investing, how he was looking at rental properties. So I asked him if I could ride around with him.

So I rode around with him during while I was taking classes and kind of looked at what he was doing. He told me a story about when he was 20, about my age—22 or 23 years old. He was working for this guy and he was obviously pretty wealthy. He was this boss or something like that. And the guy said, hey Louie, do you want to learn how to become rich?

And Louie’s like yeah, yeah. I want to learn how to become rich. He’s like all right, Louie, here’s what you’ve got to do. Right now, you’re making $30,000 a year. You’ve got to learn to live on $30,000 a year. Got it, Louie? Louie’s like, oh yeah, I got it. Okay.

The next thing you’ve got to do is you’ve got to learn how to make $60,000 and still live on $30,000. Got it, Louie? Yeah, I got it. And then he kind of kept on going and in the story, the next thing you’ve got to do is learn how to make $120,000 and you’ve still got to live on $30,000 a year, Louie. You got it? And he kind of like was driving it in and he’s like, I got it, I got it. Good. And he said, if you can do that, Louie, then you can’t help but become rich.

And it was like a lightbulb for him and I remember him telling me that story. And also reading like The Millionaire Next Door and some of those other books. It was kind of like, it was just all right, that makes sense. That’s rational. That makes—you live off less. You create this gap which is, in the financial independence community, it’s like that’s the core fundamental. You just build this big savings rate and you live inexpensively.

But then on the other side, you try to make more money. You try to get good at making money and just creating this big gap between the two. And so I think that story hit home. Also seeing my parents who made good money not living that high on the hog. Those were both pretty informative for me.

Scott: I love this story. This is exactly how—what you kind of said earlier about how you just were able to observe these things and pick up, oh, that’s obviously the correct common sense. I’m going to follow it and apply. That’s how I feel about doing things. And I think our stories are similar in the sense that we both started this kind of pursuit of financial independence, just like really good habits financially. Immediately out of college as kind of young, maybe single folks that kind of just apply those things.

Why didn’t other people do this? Why doesn’t everyone else do this straight out of college? We know that it gets a little bit more difficult. You have to make some changes, maybe roll back that lifestyle later on but it’s so easy if you just start and apply this immediately after graduation before that lifestyle kind of hits them.

Chad: I think part of it is culture which is one thing I love about BiggerPockets, is like I think what you’re doing and what we’re doing is creating this culture of people who value these things. And so it’s kind of like the Dave Ramsey Show. He comes on at the beginning and says, I forget exactly what the phrase is, but he’s like, the BMW is not the status symbol of choice anymore. It’s having debt paid off.

Mindy: Yeah, the paid off mortgage.

Chad: Yeah, the paid off mortgage is the status symbol of choice. So like, for us like savings rate is the status symbol of choice or the freedom and flexibility is the status symbol of choice. We flip your priority levels and your values of a culture from, I want to go get this house and I have this dream house right out of college and I deserve that and I earned that. This is me.

That’s a cultural thing. There’s nothing built into that. This isn’t something that says, you can choose to have that priority but even better is you can be around people who also have those priorities. You can listen to podcasts that have those priorities. It’s not any easier for you to make those choices and you’re going to have kind of your crew of people who kind of did the same thing you did.

Scott: It’s not an intelligence thing.

Chad: No, I don’t think I was more intelligent. I think it was hanging around people who are doing it.

Mindy: You’re much more money smart than other people. So kudos to you for not getting distracted by the waving of my hands. You said, I deserve this. No you don’t deserve it. If you can’t afford it, you don’t deserve it. You didn’t—why do you deserve a big house? You don’t deserve a big house just because you got a job that pays you $10,000 a year more than your last job. You don’t deserve a brand new car just because—if you’ve got a car that runs, if you’ve got a house that covers your body and shelters your body, I guess—fits your needs, you don’t deserve a bigger house.

That’s not why you buy things. You buy things because you need them. And you don’t need a bigger house. Who needs a 10,000 square foot house? That’s the most ridiculous thing I’ve ever heard in my life. And there isn’t one person that I’ve spoken to on this show or at FinCon, which is the Financial Media Conference, that have recommended spending every dime you make. The story about Louie—live on $30,000 a year. It doesn’t matter how much you make. If you can live on $30,000 a year and be happy, stay there.

Everybody who comes on this show talks about how frugality is a part of their financial independence path. And frugality doesn’t mean living with nothing. I think that’s really important to point out. A lot of people are like, oh I could never do that. I would never—I could never give up ‘insert luxury item here’. But you don’t have to give it up. You don’t have to give up the things that are really, really important to you. You give up the things that don’t matter. Like what kind of car do you drive when you’re at home?

Chad: 2000 Toyota Avalon. We have one car now.

Mindy: One car for four people. How could you possibly live like that? Don’t you feel deprived?

Chad: Yeah, I know. We’ve been living here in Ecuador for 15 months without any car and I’m kind of dreading having to go back and like drive it. This has been really nice.

Mindy: I didn’t realize you had been in Ecuador for 15 months.

Chad: Yeah, I can’t believe it either. It’s kind of flown by but yeah, we came here in January one year and then now it’s May, or April, and so we’re coming back in May. I think it’s my story here in Ecuador but also going back to like 2007 and that kind of downturn, there was something else I forgot to mention that was probably the biggest aha for us. It had to do with frugality. It had to do with happiness.

When we got so big and we were growing and buying and selling and doing all this stuff, it was really a wake up call and I have to credit my business partner—he was more in tune to it. I was just like, let’s go buy some more. And he said, wait a minute, let’s kind of step back and think about why are we doing all this? What are we actually trying to accomplish in our lives? Is this business serving some goal?

I was like, wait a minute, we had basically kind of borrowed goals from listening to other people. It’d be like the equivalent of listening to a podcast and somebody said, we bought and sold 50 houses this year, and the person listening says, I want to do that, too. That was kind of like what we were. There’s some value to copying goals from other people or modeling other people but at some point, you have to kind of own your own destination.

So for us, we looked at it and said, we’re busy. We’re buying and selling houses. Let’s just write down, what would we do if we had all the money in the world, if just you wave your magic wand, money was not an issue, like right now and also five or ten years from now, what would you do differently? For me, and for both of us, we loved playing pickup basketball for two hours in the middle of the day.

Now, how much does pickup basketball for two hours in the middle of the day cost moneywise? It’s free and we can just go to the gym and play with these people. But what other things are limiting us from playing basketball for two hours in the middle of the day? Well, buying and selling 50 houses per year. So it was like, wait, what are we doing? We’re not even pushing our goals.

And as I met my wife, who would become my wife, we started thinking about our own goals. It was about travel. It was about starting a family. It was about spending time together. It was about learning. It was about growing. It was about a lot of other things. I love business. I’m never going to stop doing that. But there was these other things that money can’t buy. That was like the biggest aha for me.

And so, that’s sort of where I started thinking about this real estate business as more of a tool in a toolbox and not letting it become this all-encompassing dominant thing that controls your life. I think, I had noticed that with myself and also with a lot of other real estate entrepreneurs, it can take on a life of its own. It can get its own importance and then you can kind of manufacture goals to support this idea that you need to have this big business, taking over your life.

Then you go, I want another 100 deals. I want another 100 deals. When really, you might have five properties and that might do exactly what you need to live your life. And so that was like such a big aha moment that I think a lot of people need to hear somebody else say that. You know, it’s okay not to be the biggest, the fastest, and all that because your life and what you define for your life is the most important thing and that the money and the business is just a tool for that.

Mindy: Yeah I think of that every time I read on the BiggerPockets forums, I want to have a thousand units. I’m like, why? How much money do you need? I think this comes back to my frugal background and my frugal nature. I am a grandchild of the Great Depression and so my parents both come from huge families who ran through the Great Depression and they didn’t have any money. They never spent anything. A thousand properties is a lot of people you have to deal with. I don’t want to deal with that many people every day or every month. How many checks can you cash? How much money do you need in this whole, I want it all? It isn’t really the best choice in my opinion.

Chad: And I’m glad there are like capitalist mavens who like take over the world and I’m glad Elon Musk is like a workaholic who wants to send rocket ships to Mars and I’m really like excited there are entrepreneurs in our system who want to go for it. But my point would be like, if you want to buy a thousand units, do it because you love it. Do it because you want to build this thing that is just—this is like your purpose in life to build a thousand units because you know what? You can live just fine on ten units.

Somehow, just saying, if you’re going to buy a thousand units, make sure you’ve got the right reasons. I’m not criticizing anybody who wants to get big and do that because that’s awesome. That’s what’s really cool and it’s cool to see people are doing that. But on the other end, so many of us who don’t want to become this real estate entrepreneur, you know like, empire builder, because we just want to like spend more time with our kids or you want to travel to Ecuador and learn a new language. Or we might want to go take a break for a while and take a mini retirement and that’s okay, too.

There’s a huge variation of what is defined as success. But success on the surface can seem like more and more and more, better, better, better, faster, faster, when that’s not the case. And financial independence is such a unique individual thing and we’ve got to start with that, which I did not when I first started. I just let the business control it as opposed to starting with the wife goal and then working backwards from there.

Scott: Well, let me chime in here. I’m 27 here and still kind of working out what my life’s going to look like in five, ten, 20 years. I don’t know that versus you guys have families and kind of know exactly where you’re at and what you kind of need to get to that desired end result there. So what kind of advice would you give to someone like me who’s like, I’m building for this future that’s a little less certain, and maybe what you guys have already got here. You kind of determine a number there or end goal for your business.

Chad: Yeah, I was in a very similar situation where it’s undefined and in many ways, my own future is undefined, too. I’m 38 and I don’t know what I want to do when I grow up either. The thing is financially, I borrowed this term from some non-real estate financial thinkers and bloggers where you try to have like, two different goals. One is like an income goal. For me, like I always had an income goal. I want to make a certain amount of income every month. I want to have real estate pay for an amount of income to cover my basic expenses. So let’s just like choose a number. Let’s just say it’s $5,000 a month. Let’s say you want to have your real estate cover $5,000 a month. So when you get to that level, maybe that’s your like, my family can live very comfortably on that or if your number is $10,000, your number is $10,000. Some number like that.

When you get to a place where you have a portfolio producing that much income and it’s stable and it’s resilient and it’s safe, that’s a really big milestone. That’s sort of like the peak of financial independence in some ways. You’ve done something well. But the other thing to kind of note was, that I had to learn for myself, was there’s a bunch of plateaus as you’re climbing towards that kind of big plateau of having that income. You might get $1,000 a month and then $2,000 a month, and then $3,000.

You’ve got these milestones and for me, so my recommendation for people in their twenties is yes, shoot for these big goals, like long run. Like I want to have this big number but also realize that’s on the peak of a mountain. That’s way up there. This is a mountain climb. It’s going to take a long time to get there even like a short climb is five to ten years. That would be really quickly reaching financial independence.

So like take your time. Push it really hard for two or three years. Take a break. And for me, like, I would take these many retirements where I would take three months at first, sometimes six months or right now we’re at 16 months or 15 months where you sort of detach yourself from your lifestyle. And this is like super hard for me to do. Because like as soon as I get into my groove and I’m going, maybe some go-getters like me are like this.

It’s really hard to step back from that go-gettedness and say you know what? I’m just going to like detach myself and kind of make myself get out of the bubble that I’m in right now. And every time I’ve done that, that has been the best kind of life-centering, goal-orienting thing I’ve ever done. Like I went in 2009, in the midst of the recession, I took a mini retirement.

My wife and I went for four months. We started off in Spain for six weeks and just kind of roamed around there. Then we went to South America to Peru, Chile, Argentina, just kind of had our backpacks and went along and I remember physically, it was like four or five weeks into Spain and we were sitting in this little fishing town called Caraques on the Mediterranean coast. It’s this lazy little fishing town and we were just sitting there all day, reading a book, or walking, eating good food.

And by the end of the day, I had this physical sensation like a knot untying in my chest somewhere. I was like, wow, this is just so relaxing and six weeks before that, I would have been like, I’d be bored sitting there just thinking and reading or reflecting on my life. That doesn’t mean I didn’t get back into the entrepreneurial game after that.

But like, having that moment to sort of take yourself out, I had so many insights about which direction I wanted to go with my life. I had some insights about what I did and what I didn’t want to do. And so I can’t recommend that enough. So whether it’s every week, take one day where you’re just completely off. Every year, take you know, a month off every three or four or five years, take six months off. It’s just like a natural rhythm.

We’re not meant to be these machines. We just go, go, go, go for 20 to 30 years and then retire. We are more built for these like go, stop, go, stop. And not only does it make you a better investor, a better entrepreneur, it helps you realize what your priorities are. And so I did that some, Scott, and that was sort of on accident at first. And it was super helpful.

As I continue, I plan to just do that the rest of my life because life is just one big climb, right? You’re just always having some kind of goal to go for and you’re enjoying the scenery around you. You look around and smell the flowers, have fun, enjoy it while you’re also climbing towards the cool, ambitious goals.

Scott: I love it. I’ve got to try one of these trips. The last time I did a trip like that was after college and I just spent all my money and did not relax.

Mindy: You did it wrong.

Chad: It’s all good. Whatever floats your boat.

Scott: Awesome. Well maybe we can transition here. I know you had some things you want to talk about and relate it to kind of these practical early retirement tips that we kind of discussed in the pre-interview. Do you want to kind of maybe move into that area now?

Chad: Absolutely, yeah. It’d be good. I sort of touched on one. It was sort of kind of a core plus for me is number one, if you have a goal for financial independence, particularly real estate but really, any kind of vehicle, work it backwards from your life. What’s important to you? What matters to you? What an ideal day might look like. You’re not going to figure that out in one sit-down. It’s always going to be evolving but at least maybe identify some things you don’t want to do in financial independence and I think that’s important and then you’ll also eventually maybe have something to move towards.

For me, real estate investing is always going to be kind of part of my story. But for me, travelling was something I wanted to go towards and once I had kids, I was like oh my gosh, I’ve got to spend more time doing this, being there for them, especially early in their lives. So that was something I wanted to move towards. Once you have that, whatever it is for you, then you build your financial plan around that.

And so, I talked about the income floor. Just set a simple number. It doesn’t have to be exact. I think sometimes we get so kind of wrapped up in the details, these kind of future dates. They’re out there. We can figure out. And so the $60,000 or if it’s $30,000 and it’s $100,000 a year—just pick any number that excites you and you think is going to be pretty well. And then you start building a plan around that. That’s why I think BiggerPockets is so awesome for—I’m actually writing a book for BiggerPockets about this topic of how do you use real estate to kind of move towards that particular goal that you have?

There’s a lot of different ways to do that but some of the ones I can talk about, some of the ones I really like, for example, are let’s just say you work it backwards and you say all right, $60,000 per year or $5,000 per month is kind of my number. What would that look like for a real estate portfolio? You might do something really simple. You might start looking in your area and you realize that I could buy a duplex or a house that rents for $1200 a month, let’s say.

Let’s say that each one of those houses, when you pay all your expenses, taxes, insurance, maintenance, capital expenses, vacancy, everything—you have about $600 left over every month on each one of those houses, right? So the question would be how many houses do I need to own and have them—let’s just think of a real simple scenario—I have them paid off free and clear, no debt on them, because that would be a really resilient, flexible portfolio to have in an early retirement.

I would have those properties paid off. How many properties do I need at $600 a month to meet my goal? I figured my math out here–$5000 at about $600. What is that?

Mindy: Let’s say $500.

Chad: Yeah, $500.

Scott: Ten properties, yeah.

Chad: All right. Ten properties. I was supposed to do ten in my head and somehow I got $600 but anyways. Ten properties would be your work it backwards. All right, I’m starting with ten. All I need to do is buy ten properties and get them paid off and I’ve made $5,000 a month and there you go. So I think that’s kind of a starting point. You started your life goal. You get to this practical real estate goal, and then the only real estate question is like, all right, what do I need to do next in order to buy those ten properties and get them paid off?

And that’s where all these tactics and all these wonderful things you learn on BiggerPockets about debt snowballs or just paying cash for properties or trading up—there’s so many different routes up the mountain you could use. But if you don’t have some sort of kind of destination you’re going towards and have a general strategy, you’ll sort of do what I did and get off balance. You say, all right, I need to go do all this craziness instead of just being pretty focused on a strategy and figuring out tactics that are going to get you there.

Because tactics are going to get you distracted towards some kind of specific goal. I think that’d be one of my main messages, kind of a practical tip for early retirement. So think about what that orientation is for you and particularly in real estate, the math’s pretty simple there. You just figure out what an average house would make after all expenses and you just work it backwards.

Mindy: I want to counter an argument that I know that people are thinking right now as they listen to you say this—what about when my expenses go up? How do I know that $5,000 is going to be enough for me? Well, $5,000 is what it’s bringing in today. But rents go up, house values go up.

So your inflation—remember back to Louie who can live on $30,000 a year all the time—you’ve covered this. You’ve covered it really well and now your inflation is going to go up with your expenses, too. So I think this is a really great basic lesson in how to cover your living expenses with real estate. I mean it’s really—I hate to make it sound so simple but real estate really isn’t that hard.

Chad: It is not that complicated, yeah. And the other thing I would say is get to those goals first and then worry about some of the other stuff. I’m certainly worried about inflation. I’m certainly worried about the certainty of the future. But let’s take care of those first things first. Your life is the first thing so why not reach some milestones? Get that income and then let’s start thinking about it and one of the things if you can think about it, if you’re worried about $60,000 not being enough, is you can start moving from just rental properties to more quality rental properties.

Once you reach a destination where you have $5,000 coming in, this is an example for me—I had some trailers and I had some little, they call them millhouses in the South, these old textile mills from the 1920s. These are the cheapest houses you can buy in some little small towns in the South. And you know, just because they were cheap didn’t mean they were the best properties to buy.

So we’d been in the process ever since 2007 and 2006 of like replacing some of these properties. You sell them. You do a 1031 exchange and you just pay taxes on that and you replace it with a better rental property. You use that money from that bad rental property, the equity, to pay off a good rental property that is a long-term keeper and those long-term keeper properties, if they’re in a good location and a general region where the population is increasing, where economics are good, it’s a diverse industry, the chances of you keeping up with inflation are good with a basic little single family or small multi-unit kind of portfolio.

So that’s like one way of looking at it. You might hedge your bets just with that little portfolio. But the other thing that I do personally is I don’t want to just depend on that. I’ll also have a parallel in the background. Once you’ve achieved that goal, you can also own some other properties or you can have your self-directed IRA invest it in real estate or not invest it in real estate. This isn’t your only thing. This is like your foundation.

This is your income floor that pays for your lifestyle that does this and then you’ve got some other—I have some leverage investments. I have some properties that are still leverage today and I’m fine with that, with long-term mortgages. Those are like my inflation hedges. Down the road, those will pay off. Those will continue to grow. I’ve also had a self-directed IRA. Some of that is invested in like real estate notes where I’ve loaned money to other investors. Some of that is just invested in a passive index fund, the S&P 500 or you know the total stock market.

So there are like some ways you can build some resiliency and some long-term flexibility in your whole portfolio, but like the first point is get there. Get to a point where you can start worrying about that stuff. Because right now you’re working a job and you’re using your whole life, your time, your most valuable asset, working, working, working, working.

And if you get to that point where you have some income coming in from real estate to pay for your lifestyle, then you’ll have all sorts of time to think about it. You can start flipping some houses. You can start doing some other stuff but very few people get to that point where their income is actually paying for their lifestyle. That’s a big deal.

Mindy: Yeah, I want to pull back from here and talk about Joel from FI 180 had this amazing quote. We met him at Camp FI in January, Scott and I did. And he said, “What’s the worst that could happen? I have to go get a job. My worst case scenario is everybody else’s everyday life”. Like, what would be the worst that happens if $5,000 covers your bills anymore and for some reason, you couldn’t buy any more real estate? You can go get a job at Starbucks or McDonald’s or wherever you can find a job. Go get a job coaching football maybe.

Chad: I would love that. That’d be cool.

Mindy: I’ll put in a good word for you.

Chad: Yeah, thanks.

Mindy: So your worst case scenario is not really such a bad thing.

Chad: Exactly. And that goes back to what we talked about earlier during the downturn, with you and I and all of us. There’s so much more resilience than we give ourselves credit for. And I think particularly when you’re in a job that makes it—the better money you make, the more secure your job seems, the more difficult it is for you to have that kind of entrepreneurial security.

That’s why I think real estate is the ultimate early retirement plan and financial independence plan. It’s entrepreneurial. It’s half business, half investment. It’s not just you sit back and just wait for the stock market to do its thing. Which is fine. That works, too.

But with real estate, you are building your own skills. You are building your own knowledge, your own skills, your own ability to find deals. So for me, I tell my wife sometimes, yes I read these other blogs that say figure out all these spreadsheets that make sure we never have to run out of money and do all this stuff. I said, that’s pretty interesting intellectually but I’m really not that worried about it.

To me, those big portfolios that can support you for the rest of your life is kind of an insurance policy because I don’t count on ever—if I need it, I’ll go get a football job or I’ll be a bookkeeper or I’ll be whatever else on so many skills as a real estate investor that I’ve learned that you can go apply. You have so much ability to generate income and do some things. Why worry about it like Joel said? At some point, you’ve just got to live your life and go do it.

Scott: It’s almost like your challenge you kind of discussed here isn’t worrying about whether your portfolio will sustain itself. You’ve built this massive portfolio. You know exactly how to go about starting from scratch and building a multi-million dollar, I assume, net worth, with thousands or tens of thousands of dollars a month in cash flow. I assume you hit a target and maybe have surpassed it. I don’t know the specifics of your portfolio. Your challenge now is like yeah, I need to stop trying to build towards the 500-unit portfolio and get my mind out of that and more into enjoying life.

It’s almost like if I ever had that problem even come up, I could easily go back and just stop that mindset again for another few years and build, you know, another huge surplus over and above what I need. It’s because of the four things you mentioned. You’re spending much less than you’re bringing in. You’re hustling. You’re learning everything you can and figuring out how to do this the right way.

Chad: Yeah and the other thing is once you free up your time, what I’ve found for myself, at least personally—some of my goals I had, I wanted to start writing. I wanted to start teaching. I wanted to start doing some of these things and those are like not financial hobbies. I didn’t plan on making money with those but over time, if you’re good at this stuff, everything starts making money. Even the things you don’t—not everybody’s mission in life is to do something that’s going to make money but like if you teach, if you write a blog, if you do these things that start off as hobbies but that’s your post financial independence goal, those might make money, too.

If you think a parent, that’s like the number one job, right? Doing that is like awesome. That doesn’t pay you money but I’ve seen moms and dads who might write about that and share information and that’s somehow made some money, too. So it’s not like we have so many opportunities out here that whatever your hobby is, whatever thing you do post financial independence, that could turn into a little business, a little side hustle business as well.

I’m just blown away by the opportunities and like the stories I hear of how many people are enjoying their lives and doing it because they’ve created this space of time. And that’s what—I didn’t do it first and I think a lot of people are stuck in, you’re working, working, working—you don’t have time. That time is like, that’s where we want to invest our life and that’s where all the cool stuff starts happening.

Scott: Love it. Well, should we get moving onto our Famous Four here or is there anything else that you wanted to add before we make that transition?

Chad: Well, I think you guys have covered it. Great questions and I appreciate just being able to be here and talk about it.

Scott: Awesome.

Mindy: I’m so glad you came on. I love talking to Chad. I only get to see him once a year and it’s never enough.

Chad: Yes, I agree.

Mindy: Okay so now we move onto our Famous Four questions. These are the same four questions—we can’t count, there are actually five—that we ask every person that comes onto the show. The first one is what is your favorite finance book?

Chad: Yeah, I mean the classic for me that sort of shifted my mindset was Your Money or Your Life, Vicki Robin. I think the main concept of that book was this concept of enough. They had this curve they put in there where you make more money, buy more things—there’s sort of this peak of the curve where you might not even realize it. That’s where you have the highest ratio of satisfaction and life happiness for money made and time spent.

And you start getting over that and you start buying the extra big house, the extra car, the extra vacation. And you start getting more cluttered and so that concept just like blew me away. That sort of led to me thinking about these different currencies like money and life and ability. The Four-Hour Work Week was another one that kind of talked about that but yeah, Vicki Robin and Joe Dominguez, that was an awesome book to read.

Mindy: Yeah, the concept of enough needs to be more understood in our consumerist lifestyle today. Or lifestyle? Consumerist society. Yes. Sorry.

Scott: You may have answered this second question already but—you’ve touched on a couple of mistakes you made, but what was your biggest money mistake? What do you think was the biggest mishap you had?

Chad: Yeah, I’ll zoom in on that mistake a little bit more. It was getting careless on the numbers in my case. You know, I’m pretty nerdy about running numbers in real estate but I just got careless on, you get into negotiation and I think this maybe is the tip is that it is difficult to have like your numbers brain and your negotiations brain on. They’re like, they must be something like deep down in the roots of our brain somewhere because it really is difficult.

For me to think about objectively the numbers, when I’m sitting face to face at the seller or I’m looking at his house or this multi-unit property that’s exciting and you get excited about it. You get emotional about it. So I think both of those can be useful when you’re negotiating because I think when you’re connected with the person sitting in front of you and you’re authentic and you’re a real person, that really helps you as a person and a negotiator. But that’s not the best place to make decisions I’ve found.

So I kind of have to separate those two where you think the numbers are the numbers like, it’s just like a cold hard fact whether those numbers work or not. And then in the negotiation is another thing. So for me, separating those two and not making the mistake of getting too into the deal, too emotional, too attached to it, and let the numbers speak for themselves and that was a learning lesson for me.

Scott: Awesome.

Mindy: What is your best piece of advice for people who are just starting out?

Chad: I think go back to the culture we were talking about. Like if you’re just starting out, it’s going to be easy to get wrapped up and borrowing other people’s goals and borrowing other people’s ideas of success. Particularly, it’s going to be like a family thing. Some of your family, or some of the things you hadn’t thought about are going to tell you what you should do. Buy that big house. Do this next thing.

I would just challenge you to sort of pick your own role models. Pick them not only based on whether they look like they’re doing well financially or something like that but look at like how they’re living their life. Is that the kind of lifestyle or are those the kind of values you also want to aspire to? And then model some of the values, model some of the habits they have and then build your own path around that.

Because it’s so easy to get caught up in a lot of the things that don’t serve you and that are going to lead to bad decisions financially. And so if you can get it right in your twenties—I mean if you can house hack once or twice and you can save some money, you are set for life. Somebody wrote a book about that, didn’t he?

Mindy: I’ve heard good things about that book.

Scott: You could retire on real estate. Someone wrote that book, too.

Chad: So, if I could talk to every single college kid and like evangelize house hacking and some of those core things in Scott’s book, it would change the country, right? That’s the message, is don’t get caught up in it. Read Scott’s book and you’ll be good to go.

Scott: Thank you for the plug.

Mindy: I like what you said a few—almost an hour ago, about how as soon as you graduated from college, you just continued to live like a college student. Some of the most successful people I know, some of the most financially independent people I know, did that very same thing. One year out of college, what does it matter if you’re still living like a college student? That’s what you’re used to. That’s what all your friends are doing except the one guy that got the really great job and now has this super cool apartment in downtown and is driving the 7-Series. But then he’s not all that happy.

Chad: Yeah, have a roommate. Why wouldn’t you house hack? You just went from a dorm room where you were stacked on top of each other to now you’re I your twenties. I mean, go buy the house and bring the roommates in. That one move—if you didn’t have to do any other real estate move your whole life, if you just did a house hack or two, it would change—

Scott: A million dollar’s difference.

Chad: Huge, huge difference. I can’t emphasize that enough. Your housing is about a third of your total expenses. So if you don’t want to cut lattes but you do want to save a bunch of money, I mean housing would be the number one thing you do. Particularly during a high-priced market. It might even be like just a survival mechanism to do house hacking if you’re living on the West Coast or Denver these days, just kind of hot markets. I mean, you just might need to do that just to make sure you can save some money. So yeah, that’s a big one.

Mindy: I house hacked back when it was called having a roommate.

Chad: Yeah, BiggerPockets has made a name so it works even better.

Scott: All right, this is the most difficult question of the Famous Four. What is your favorite joke to tell at parties?

Chad: Oh man, that is tough. Gosh. Sometimes it’s just like physical jokes. I’ll just dance or something and then people will laugh. Look at this tall—I’m in Ecuador, in Latin America now, so there’s just something about a tall gringo dancing and kind of just getting out there that just makes everybody laugh anyway. Maybe that’s it. I go to an Ecuadorian party and I just—they play some good music and look at the big, tall gringo dancing. That’s funny. I don’t think I’m very witty otherwise but I can go break it down on the dance floor. That works.

Scott: Fair enough. Well in that case, I’m going to read off a joke that Danny sent us here. It’s very complex so let me see if you can get this. Two men are on opposite sides of a river. The first man shouts to the second, “How do I get to the other side of the river?” And the second one says back, “You are on the other side of the river”.

Chad: Oh, man.

Scott: Sorry, I love that joke. Thank you, Danny.

Mindy: Somebody posted in the Choose FI group that listening to Scott’s jokes must be the most difficult part of Mindy’s job. And I said, it is.

Chad: That’s why I laughed for you. Then you didn’t have to do it.

Mindy: Thank you. Yes. Thank you. Chad, where can people find out more about you?

Chad: I’ve got a couple homes online. One, I write at BiggerPockets so you can find me on the BiggerPockets blog. ClemsonInvestor is my name at BiggerPockets. So reach out to me, say hello. And then CoachCarson.com is my personal website and I write every week. I have articles on this kind of stuff, early retirement using real estate. Retire early. I wrote on stoicism last week. I get into all sorts of kind of stuff, anything I can roughly relate to financial independence and real estate and how they cross over, that’s my little niche. So you’re welcome to come over and check me out there as well.

Mindy: Awesome. We will link to all of that in the Show Notes at BiggerPockets.com/MoneyShow19. Chad, do you have anything else you’d like to add before we say goodbye and let you get back onto your very busy day of doing nothing in Ecuador?

Chad: Thank ya’ll for having me on the show. It’s been a pleasure. This community and what you guys are doing and the people listening to this, you’re doing the right thing. You’re climbing. You’re looking to achieve and you’ll probably have people in your life telling you this is not the kind of right stuff to focus on but I think my overarching message that I want to take away today is just that money—it’s okay to focus on money.

If you kind of associate that with the rest of your—what’s your goal in life? What are you trying to accomplish and that’s an awesome ambition. You’re taking care of one thing that’s taking time away from everybody else and that’s an awesome ambition to have. So keep going for it.

Scott: Awesome. And then everyone should know that Chad has finished his latest book for BiggerPockets. We teased it out a little bit today but we’re going to be interviewing you again in I think a month or two for the BiggerPockets real estate podcast. We’ll go into that in-depth, I believe. Is that right?

Chad: That’s right. Yeah, can’t wait. It was a process that I think you had both told me this, that it was going to be—I think you didn’t tell me the details on purpose but like the last two weeks of finishing that manuscript was like, oh my God, I’ve had my wisdom teeth out, and I’ve had other things but—it was awesome but it was painful.

Scott: I think I have in writing evidence that I told you exactly how difficult it was going to be, particularly the last few weeks.

Chad: I think my response was, oh it’s doing great. I’ve got plenty of words. They’re already written. This is awesome. And then I got feedback from other people saying, wait a minute, that chapter, that chapter, and that chapter are no good. You need to like throw those out and rewrite them. And I was like, oh God. All right, let’s do it.

Mindy: I can’t imagine anything you wrote would be not good.

Chad: Yeah, high standards. We’ve got the BiggerPockets mark on there so I’ve got to live up to all these other ones that have come before me.

Mindy: So when does your book come out? Do you have an approximate—

Chad: Yeah, we’re tentatively August 23rd. So that’s the rough date. About a month before FinCon so that will be fun. And then the topic roughly is financial independence, early retirement, and real estate. How those two intersect and how to use real estate as a tool both to grow your wealth and then also once you get there, how do you turn it into income, how do you sustain it? A lot of the stuff, some of the stuff we touched on today. That’s what I really dug into and tried to show some best practices around. So I can’t wait to share it with everybody.

Mindy: Perfect. Yeah, this is going to be an awesome book. Very excited for it to come out. All right well, Chad, thank you so much for your time today. We really appreciate you coming on and sharing your story and your experience with real estate, the ultimate retirement plan.

Chad: Thank you. I appreciate it. Great being here with you guys.

Scott: Thanks, Chad.

Mindy: We’ll talk to you later.

Chad: Talk to you later.

Mindy: Bye.

Scott: All right, that was Chad Carson from CoachCarson.com. Great interview. What did you think, Mindy?

Mindy: I can’t even. He just gives such great information all the time and you know, the thing that I really, really, really want to point out just one more time is that investing from a position of large reserves to cover anything that life brings up for you and setting a goal—having an end result. Once you get there, figure out is this really where I want to be? Sometimes, that is exactly where you want to be and then look to where else you want to go. Look to the things that you want to do in your personal life, if it’s not always about just how much I can acquire.

Scott: Yeah, I thought it was fantastic that he overextended in 2007. He did. He overextended. He bought too many properties. The fundamentals were down but he was able to make it through and rebuild from a position of strength because of his lifestyle choices and the fact that he ran a lean operation both personally and professionally from an expenses standpoint. And that was able to tie him through even a couple of weak decisions in that.

I mean, it all comes back to the foundation of this all, the first pillar of FI, whatever we want to call it, is style expense category. And if you keep that low relative to your earned income, it sounds like you can weather a lot of these different storms even if you make a couple of bad decisions on the other areas of personal finance.

Mindy: Yeah, it sounds like he’s really figured out, like Louie, he needs to live on less. Make more and live on less and just be happy with that. And he really is. It’s a great, great story. So many lessons to be learned from this episode.

Scott: Yeah, and really looking forward to reading his book. I know he just finished it and is going through the editing process so you and I will probably have the exclusive privilege of getting a pre-read on it before it goes live. We will put a link to where that book is going to be launched in the Show Notes but we do not have it as of the time of this recording because it’s still several months out. It hasn’t even gone through editing yet. But we will have all of that information for you in the Show Notes by the time it goes live, so check it out at BiggerPockets.com/MoneyShow19.

Mindy: Yes. So at the end of this show, we would like to ask you to help us out. We need more bad jokes so that Scott doesn’t hog all of the bad jokes here. We need yours. You can send your jokes to [email protected] or [email protected] .

Scott: And when you send those along, make sure you give me permission to use your name when you do them. Otherwise, like Danny today, I would have had to just give you the first name shout-out today because I can’t identify you without your permission. So if you do want your name read on the show, just give me a quick little hey, you have my permission to use my name on the show if you use this joke or whatever.

Mindy: Perfect. Okay, Scott, shall we get out of here and let our listeners get back to whatever it was they were doing? I’m sure they’re getting to work right now.

Scott: Yeah, let’s do it.

Mindy: Okay. For the BiggerPockets Money Show Number 19, this is Mindy Jensen, over and out.

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In This Episode We Cover:

  • The start of Chad’s financial freedom
  • How he bought his first rental property
  • Labor partnership
  • Where his properties are located
  • Househacking
  • Buying flip properties
  • The mistakes they made
  • The importance of having cash reserves
  • Positive and negative cash-flow properties
  • His take on education
  • Where and how he learned about financial education
  • His biggest “Aha” moment
  • His advice to people building their goals and businesses
  • Practical early retirement tips
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “Having reserve is a way of insuring that you keep your promises.” (Tweet This!)
  • “Instead of trying to predict what’s gonna happen, try to be resilient and flexible.” (Tweet This!)
  • “Learn to live on $30K a year.” (Tweet This!)
  • “The concept of enough needs to be more understood.” (Tweet This!)

Connect with the Chad

About Author

The BiggerPockets Money Podcast is for anyone who has money… or want to have more! Join BiggerPockets Community Manager Mindy Jensen and Director of Operations Scott Trench weekly for the BiggerPockets Money Podcast!
Each week, financial experts Mindy and Scott interview unique and powerful thought leaders about how to earn more, keep more, spend smarter, and grow your wealth.
You’ll get tips for getting your financial house in order and actionable advice from guests who have been in your shoes – and found their way out.

2 Comments

  1. Chris M.

    Excellent! Chad has such an insightful viewpoint on what it takes to plan, chart and become financially independent. His vantage point allows him to impart wisdom to everyone trying to become financially independent. I especially loved the story about advice given to Louie to get rich.

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