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033: Achieving Financial Freedom with Scott Trench

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Scott is the Vice President of Operations at BiggerPockets. He is passionate about personal finance, financial freedom, and real estate investing. Scott is the author of Set for Life.

Scott started building his real estate portfolio by house hacking his first duplex in Denver, Colorado. He has since expanded his real estate through small multifamily properties.

Outside of real estate investing, Scott enjoys biking, rugby, and exploring Colorado. Scott prides himself on his Hawaiian shirt collection and has one rule when wearing a Hawaiian shirt. That is, you get only one button, it doesn’t matter wear, but you can only button one button.

Key Points

Saving your way to financial freedom
House hacking your first property
The first $25,000 is the hardest
Pursuing the path of financial freedom rather than the traditional path of retirement accounts

Lightning Round

What was your biggest hurdle getting started in real estate investing, and how did you overcome it? Saving up the down payment. Scott was able to save by optimizing his savings and living frugally.
Do you have a personal habit that contributes to your success? Scott sets our his goals every year, quarter, and week, and day. This keeps Scott accountable.
Do you have a favorite online resource? BiggerPockets and Mr. Money Mustache
What book would you recommend to the listeners and why?
The One Thing, by Gary Keller and Jay Papasan
The Compound Effect by Darren Hardy
If you were to give advice to your 20 year old self, what would it be? Do a house hack while in college.
Resources

Set for Life: Dominate Life, Money, and the American Dream by Scott Trench

The One Thing, by Gary Keller and Jay Papasan

The Compound Effect by Darren Hardy

Visit Audible for a free trail, and a free audio book download.

Contact Scott

https://www.biggerpockets.com/users/ScottTrench

Real Estate Investing, apartment investing, financial freedom, passive income, financial security, investing, Jacob Ayers, apartments, appreciation, cash flow, commercial real estate, investing in real estate, multifamily, podcast, real estate investor, buy and hold, rental income, entrepreneur, retirement, equity, syndication, raising money, duplexes, triplexes, fourplexes

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032: Estimating Expenses – Friday Fundamentals

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Estimating Expenses

It’s important to be able to determine expenses of a property, since they directly impact the property’s cash flow. Some expenses are obvious and easy to calculate, whereas other expenses can be less intuitive and harder to accurately estimate.

Let’s look at what typical expenses are for almost every property.

1. The Principal and Interest. The principal and interest combined are known as your mortgage payment, or P&I. The P&I can vary greatly depending on the interest rate, loan amortization (or duration), and loan amount. It’s best to find an online amortization schedule which allows you to input each of these variables, like this one here by BankRate: Mortgage Calculator

2. Taxes. Property taxes can make up a significant portion of your expenses, and vary by state, county, and even city. Property taxes typically range from 1%-3% of the property value. You can check past property taxes on your local county tax assessor’s office. Most tax assessor’s offices will have a website or database you can search by name or address. Keep in mind that past tax assessments aren’t indicative of future tax assessments. A property will often be re-appraised by the county tax appraiser upon a sell. The new tax assessment is then based on the new appraisal. So if the property has been appraised under a current owner at $50,000, and then is sold for $100,000, expect the property taxes to increase. This is an important evaluation when looking at expense projections!

3. Maintenance. There are two types of maintenance costs: operating expenses and capital expenses. Operating expenses are every day repairs and maintenance, such as fixtures, locks, garbage disposals, cleaning, etc. Capital expenses are big ticket items which you repair less frequently, like a new roof, HVAV, kitchen remodel, flooring, etc. It’s recommended to set aside approximately 5% of rents for each expense, for a total of 10%.

4. Insurance. Insurance is one of those expenses that can vary, based on property type, location, the deductible, etc. It’s best to get an insurance quote from an insurance agent/broker.

5. Management. This is often an overlooked expense. Even if you plan to self manage, its still wise to build in property management in your projected expenses. You could change your mind after you have self-managed the property and will want to be able to afford to hire the property management out to a professional. Also when you sell the property, the buyer will likely price in property management in their analysis. Property management for single family properties and small multifamily properties typically ranges from 8%-10% of the rents.

6. Vacancy. When a property is vacant, you don’t receive rent on that unit. Even in strong markets with high demand, you will have turnover, leaving the property vacant for days or weeks with no income. You’ll also be turning that unit for the next tenant, during that time. Depending on your market and property type, vacancy can vary. For single family and small multifamily, 6-10% of rents is a fair estimate.

So typical expenses for a property are: P&I, Taxes, Insurance, Management, Maintenance, and Vacancy.
If you can quickly and accurately estimate these expenses, you can more easily analyze deals and make offers on properties, which will lead to you buying more deals and good deals!

For a great online calculator, I recommend starting with the rental property calculator on BiggerPockets.

So get out there and start analyzing deals. The more deals you look at, the more comfortable you’ll be estimating these expenses, and the more offers you can confidently make, which will lead to more properties for you!

Estimating Expenses, Real Estate Investing, apartment investing, financial freedom, passive income, financial security, investing, Jacob Ayers, apartments, appreciation, cash flow, commercial real estate, investing in real estate, multifamily, podcast, real estate investor, buy and hold, rental income, entrepreneur, retirement, equity, syndication, raising money, duplexes, triplexes, fourplexes

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031: Luxury House Hacking with Ben Leybovich

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Ben Leybovich was born in Russia and is a career classical violinist. After being diagnosed with Multiple Sclerosis at an early, Ben had to go back to the drawing board and consider his other options. This led Ben to search for options to make a living, other than music.
Ben researched the world of money extensively, and came to realize that there are 3 types of income: Earned Income, Passive Income, and Portfolio Income. Ben didn’t need passive income. He HAD to have it.

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030: Goal Settings – Friday Fundamentals

Buisness Solution Process Planning Strategy Concept

Setting written goals is the single most powerful action one can take towards self-improvement, business, or anything which requires you to grow.
Many well-known and successful people attribute much of their success to having clearly defined goals.
As a human, you are shaped by your surroundings, your environment, the people who you surround yourself with. It’s a culmination of these things that make you who your are. Before all those, your life is a blank canvas, and through time, you are gradually shaped into who you are now.

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029: Abundance Mentality with Keith Weinhold

Keith Weinhold

Keith Weinhold is a Contributing Writer to Robert Kiyosaki’s Rich Dad Advisors blog.
He is the author of “7 Money Myths That Are Killing Your Wealth Potential”, an Amazon bestseller.
A real estate investor for 15 years, today he runs GetRichEducation.com and is the host of the very popular podcast called Get Rich Education.

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