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When Nate Carter returned to the U.S. after four years abroad with the Peace Corps, he reconnected with friends who had well paying jobs, houses, and cars. He felt left behind financially. Starting with just $1500 in savings, Nate vowed to do everything he could to learn about personal finance and investing and set himself a goal of being financially independent within 12 years!

In this episode Nathan discusses:

  • How to look at your spending differently to help you save.
  • How to stay focused on your investment goals in the long run.
  • How important the right agent, lender and property manager are in real estate. 
  • How to stay calm even when the market turns.

Listen and be inspired by Nathan’s focus on his investment goals while maintaining a healthy work-life balance and enjoying life overseas!

Music: “Higher Up” by Shane Ivers

Read the interview:

Nate: I really appreciate being on the podcast. so it all started, when I was in the Peace Corps. You know, you’re kind of really disconnected from a lot of things in America and a lot of friends. And so when I came back, it was a little bit of a culture shock. And it was reconnecting with a lot of friends and kind of seeing where they work and I’d gone to graduate school before Peace Corps.

 So I felt like over kind of a four year period, I wasn’t working and I wasn’t building a career. And so, and, and in a traditional sense. And so when I came back, I saw friends that had apartments and cars. And jobs where they were making a pretty good salary. And, I thought to myself, wow, I feel a little bit like I’m behind.

 I was almost four years behind, I wasn’t, but it was that sense of just uncertainty. And so I thought to myself, look, I need to catch up. And I’m a believer that fear is a great motivator. And so I thought to myself, look, I’ll do everything I can to start learning about personal finance, and I’ll start learning about investing.

 And this will give me this great opportunity. And so that was kind of the origin story for learning about personal finance.

 I think that’s actually a very common sentiment that people have when they start out, they look around and they see what others are doing and they feel this fear of. Maybe I am behind. Cause there are all these milestones in life that we go through and sometimes it’s hard not to compare yourself to other people kind of in the same situation or the same current think, well, they have all this stuff.

 Like what have I been doing? Right. I think it’s pretty common to have lots of stages in life. But you know, a lot of people have that sentiment and then they don’t do anything about it. But you did what’d you do now.

Nate: So I started, you know, I read basically anything I could find at the library. And I started looking at some of the stuff online that was related to stocks and looking for stuff that was related to real estate. And one of the things I found was the company Medtronic writes a hundred year plan. And I thought that’s really, you know, just a bold idea that you would think I’m going to go a hundred years ahead of where my, you know, where my company needs to be and start to develop a plan around that.

 So I thought, all right, if a company has a hundred years, and then maybe myself as a person, I need a 30 year plan. And maybe that’s how I can get to where I want to be. And so I kinda thought, you know, did a little bit more reading and I thought, you know what? What’s really important for me as I look into the future in regard to personal finance, but also how do I want to live my life?

 And so in this process, I wrote down five broad goals. And that was with my girlfriend. Who’s now my wife at the time. And you know, we were talking about this. And so the idea was we wanted to create a portfolio of income. That was enough to provide passive income so that we wouldn’t have to work anymore.

And so we thought, okay, we can do that. I’m 27, I’ll be 57 at the time. And that will provide the income that we need. But the other things that we looked at were that we wanted to be able to retire, but still maintain that current lifestyle. We didn’t want to, you know, retire into poverty. We wanted to keep doing what we were doing and the things that we enjoy.

The other thing was, you know, when I was a kid growing up, there were, you know, recessions in the eighties and I had a newspaper route. And during that time I saw, you know, how this recession really had an impact on people’s lives. You know, people who lost their homes or lost their cars. And it was one of those things where I thought, look, a lot of these people worked hard and yet when a recession came.

You know, they lost things. And I thought to myself, we’re kind of setback financially. So I thought about that when I was building this plan where I wanted it to be a really durable plan and that could withstand recessions or setbacks. And so I put factors in there to be able to kind of hedge against risk.

And the fourth thing that we had talked about was this idea that we wanted to spend a decade or more living overseas. So we would focus on saving, we’d focus on investing, but at the same time, we would also look for opportunities to find jobs that would take us overseas. And the last thing. You know, we saw some of our friends who were working, you know, and they were doing pretty well financially, but they’re also pretty stressed out.

And so we thought to ourselves, look, we want to do this plan to kind of create wealth. But at the same time, we want to do it in a way where we have a work-life balance. That’s reasonable. And we didn’t want to be working 80, 90 hour weeks just to get to this goal of financial freedom. We wanted to enjoy the journey along the way.

So, those were kind of our big five goals when we developed this plan,

It’s funny because I think for us, you know, we are just a couple years into it. This plan. And then my wife and I found an opportunity to work overseas with foreign service. And, you know, she had passed this exam and had this opportunity. And then I thought, you know, that sounds like a great idea.

I’ll do the same thing. And so I took the exam. Uh, I was able to get into the foreign service too. And so it was only a couple years afterwards. We were able to kind of come into the foreign service and both of us took a pay cut to do that. But again, we had decided that it wasn’t about the money. It was about the idea of making sure that we are checking off every aspect of these five goals.

We weren’t going to sacrifice, working in jobs that paid more if we weren’t able to go overseas. And so that was one of the things. We looked at it. And I think, you know, the idea of a healthy, you know, work-life balance. That’s something that you have to do every day and you really have to figure out where you want to be in your career.

What opportunities you want to take advantage of, but you know, which choices that if you make a choice that takes on a job, that’s going to be a high stress. Is that going to be good for your long-term wellbeing? And is it going to be good for you? Um, you know, stress with your life, with your kids, with your marriage, things like that.

And so I think it’s, looking at these things, you know, the plan is written, but you implement it , on a daily basis, you’re, you’re adjusting things or you’re making decisions and deciding what makes sense for your future.

Tanya: So you have these five goals, right? So you want to hit a certain net worth. You want to have passive income. You want to weather recessions, you want to live overseas and maintain a healthy work-life balance. Right? I mean, I love the intentionality of how at 27, you had the foresight and the future vision to be like, This is what I want.

 This is what I want my life to look like. And I want to plan out 30 years. I don’t know too many people at 27 that are doing that. So hats off to you. I’m sort of curious. So, you know, sometimes you have these conversations internally with other people that you love, but then you want it to share what you were doing right.

 At what point did it occur to you? Well, I’m going to write a book about this. I mean, did you, did you start immediately afterwards? Was it part of your research plan? Like how did the book come out?

Nate: That’s a great question. So what’s interesting. You know, my wife and I, in part of this career, we’ve had to do periods where we’re separated. And so she was doing a tour in the middle east, uh, when I was in New Zealand, um, for a year and I was sitting there, you know, spending something, we have two boys and I was spending some time with our sons and I was thinking to myself, look, I need to start writing some notes.

 For them, you know, God forbid something happens. I got hit by a bus. Like I want to impart some of the things that I’ve learned about money to them. And so I started writing and it was 10 pages, 20 pages then 30 pages. And I sent it out to my nephews and I sent it to a couple of other friends and they said, look, you kind of have something here that you should share with other people.

 Um, And it’s funny, cause it really just kind of poured out, um, just over about a two month, three month period. I had everything down that I really wanted to kind of share in a book format, , about what I thought about not just, building wealth and investing in real estate and investing in stocks and bonds, but also, um, how to look at income at different stages of your life, how to look at low risk and how to hedge risk, how to do business, with other people.

 Some of that that I’ve learned in business, growing up and family businesses. And so , with that, it kind of all came out as a book. But what was interesting was the more I shared it with people. You know, just get some feedback and some thoughts on the book or get some advice.

 One of the things that people said to me is like, this is great. It’s great, you know, to have this information, but how do I start? How do we get started on the first day? And move forward. And so that led to writing a workbook and I broke down. Kind of what we did, um, over the years into 70 actionable steps, broken up into 10 different stages.

 So you start with the easiest stage and then things get a little bit harder. And that’s where the workbook, um, came from. And so it was this idea of saying, you know, you, you can read the book and then as you’re reading the book, you would go to the workbook and you start to check off things and it’s an opportunity to see you’re making progress.

 And it tells you like, you know, this is the next step, you can take, and it’s something that’s measurable and it’s for all of us, if we’re trying to , achieve a goal or achieve success. You have to be holding yourself accountable and you have to be measuring your results. And this is a way to do that.

Tanya: Can you talk to us a little bit about some of the steps ?

 you go through the workbook? I find this very interesting because. finance books are out there. I don’t see a lot of personal finance workbooks. Right. Because a lot of people are saying, well, personal finance is personal. Right. I mean, how do you, you know, distill all of that knowledge down to something that is actionable, like sort of, could you walk us through a little bit about the types of tips that you give to people in the different stages.

 And, I was also very interested in income at different stages of your life, right? Like I’m curious to hear a little bit more about.

Nate: Sure. So some of the things that I looked at was the idea of starting off where, you know, people run a credit report. To understand where your credit is because as you progress further on, you want to try and improve your credit rating, because that means you can access, uh, mortgages at the best rate.

 So that’s the precursor. So I started off by looking at a credit check. I tell people to go through their spending and to see. Where are you spending money each month and work? Could you possibly say if you, do you have subscription services that you don’t use? Is there some other type of expenditure, are you spending a lot of money eating out and don’t quite realize how much it is.

 What’s essentially like taking stock of where your money is going each day, um, and each month, and looking at your credit card statements and seeing, are there things that you could cut out that you wouldn’t necessarily mess? And then as you go through the book, I start to look at some of the bigger expenses that people have in their life, such as housing.

 And if you rent, uh, an apartment, you know, and you are with a roommate, you’re able to reduce your expenses. And I talk about how to invest in real estate. But I talk about this idea, like, look, if you were to buy a property and to have roommates, you could most likely end up living for free, and you want to look at where your job is.

 When you choose a place to live. You want to think about your transportation costs. So if you buy a property that’s closer to where you live and you’re able to walk or ride a bike, you could eliminate the need to have a car. And so it’s essentially kind of stacking these expenses and looking at them and seeing where the larger expenses are and how you can cut back on that.

 Because each time you’re able to cut back a little bit on some of your expenditures, that’s money that can go into kind of financing your plans for, for financial reasons.

 It hit me the first time after the Peace Corps. And I had a friend that was making a hundred thousand dollars a year and I thought, wow, that is a tremendous amount of money. But then I realized this person was working about 80 hours a week. And so I said, he doesn’t, he doesn’t have a hundred thousand dollar a year job.

 He has two $50,000 a year. Jobs is essentially what he’s working. And so I started kind of looking at that and saying, You know, what other aspects of an hourly rate should be considered. And so like, if you have a hundred thousand dollar a year job, you’re roughly making $48 per hour. If you’re working 40 hours a week, but if you’re working 60 hours a week, you’re only making $32 per hour.

 And if you’re working 80 hours a week, you’re making $24. And the more income that you make, you’re going to be in a higher tax bracket. So that extra income is actually going to be a tax tire. And so when I look at things like this, I say, you know, you start off with what is the actual hourly rate that you’re making, and then you subtract a certain percentage for taxes.

 So let’s say for example, someone has a $60,000 a year salary, and that’s about roughly $30 per hour, but after we take it away. Federal taxes and state taxes. That might be $24 an hour, but if you have to work a couple extra hours, each week you might drop down to $20 an hour. If you have a long commute, add in that time of your day.

 And if you were to factor that in, you might be down to about $16 per hour. And so when you factor in the, okay, I’m going to be making $16 an hour. Are there other jobs that might actually pay a higher rate that are closer to where I live? I wouldn’t have a long commute or is there an opportunity to be in a state that has lower state income taxes, um, or is there a job that I would just enjoy more?

 If I was going to make this lower rate, I would rather do something that I’m really passionate about. And so there’s a lot of answers to these questions, but it’s just the idea of changing your mindset to start thinking about. How you value your time. And then when you’re working with an employer, what is the return on your hourly rate?

Tanya: I love this concept and it was pretty revolutionary for me back when I discovered it, mostly because I thought about it, not even just in terms of the hourly rate that I was making, but really for me, it came down to spending, right? So like if I wanted to go out to a really fancy restaurant, say how many hours of my life do I have to work to afford them?

 And is it worth it? And when I started to frame things in that perspective, I was like, I don’t really want that. I don’t want to trade hours of my life for this. It’s not worth it to me. And of course for everybody, right. There’s different things. Some people enjoy their Starbucks. I like Starbucks.

 I will go buy Starbucks occasionally, but you know, there are things that aren’t worth it to me. And I think thinking about it through that lens, Is actually really eye opening to people because otherwise we just look at the number at the end of the year and say, well, we make a hundred thousand dollars or $60,000 or whatever it is.

 And if you break it down to the micro level like that, it’s really fascinating. Um, And, you look at everything like that, then all of a sudden it’s like you have glasses on and you’re like, wait a minute. I like your example too, about the friend that, really, he had two $50,000 jobs.

 I had never thought about it that way, but it’s true. You know, all the long hours that people work, especially in our line of work, um, after a while, you’re, you know, if you feel like you’re making $12 an hour, maybe it’s not as great as you thought it was. Right?

Nate: And you’re right about this idea of the things that you purchase and what they cost in time. And that was part of that equation too, that I started to look at things and say, okay, let’s say if I make $20 an hour, if you bought a shirt, that’s a hundred dollars. Okay. That’s five hours of my time.

 To spend that five hours doing it. I think that people, if you start to think about every purchase that you’re making, in terms of how much time and how much work I’m going to do to get this, it just has a natural way of slowing down your spending. And that’s one of the things I talk about in the book. It’s like taking a conscious moment to think about a purchase before you make it.

 And just that process of pausing. A lot of times people find that. Don’t want that purchase or wait another day and think, you know, do I really want this? And that process really starts to slow down your spending. and it’s just that ability to take a pause, before you make a purchase.

 And it’s one of those things, as you start to get into that habit, you don’t miss these things. Um, and you’re looking at what’s the best use for my money as well. So if I don’t buy this thing, it costs a hundred dollars, but I invest it and it starts to generate a return of 10%. Then all of a sudden, , a year from now, I have, I have $10 more and that’s that bigger mindset of getting into where every dollar that I earn from a job, I want to invest it in such a way that it generates a return that now I no longer need a dollar from my job.

 And so as you build up this passive income, every dollar that you earn that’s going to be earned year after year is another dollar that you don’t need. And so I joke, like if you had a $50,000 a year job, you just worked dollar for dollar each time, I’d take a pass. You know, if I make a thousand dollars in passive income, now I need to only earn $49,000 a year, you know?

 And now I have $2,000 in passive income. I only need to earn 48,000. And so it’s that process of essentially replacing your job income with passive income.

 I talk about this in the book, but my wife and I decided to bring our lunch into work and we drank coffee at work instead of going out for coffee. And it was fine. You know, what? You made stuff that we enjoyed at home and brought it in. But after just a couple of that, we use the savings as a deposit to buy a car.

 And so I think, man, just bringing my lunch from home for two years, you know, both of us was enough for us to make a deposit and buy a condo, as an investment property. And I’m thinking, man, I would definitely trade a condo for lunches, uh, eating out over two years. And so it’s a, you know, an exact example of what was possible, you know, real estate has gone up a lot now, since then, but you get to see yeah.

 Pretty quickly that when you start to, to save in this way, or you start to kind of cut back on some of these expenses, it can snowball, um, real quick and you can end up being able to kind of , purchase the things that you want that are income generators. As you start to layer those assets that are generating this income, you get to the point where it’s enough to replace your job, or it’s enough to buy you a car, or it’s enough to fund that next real estate purchase.

Tanya: Nate. I’m curious. So when you started at 27 and you had $1,500 to your name, right. And you wrote out this plan, you had a plan for financial independence in 12 years. I think sometimes when I talk to people, they get a little tripped up. They don’t really know how long it’s going to take or how they’re going to get there or what that’s all going to look like.

 How did you come down to those numbers? What was your thinking? Did you base it on your current salary? What your future earnings were, um, your rate of saving? How did you come up with that number? I’m very curious.

Nate: Sure. So what I did was I looked at what we spent, cause we were always living below our means. And so as we got promotions or we got raises, and generated more income. Increase our living standard just a little bit, but not near to the level of where we were. And so to get to that number. So I started off with a 30 year plan.

 And as you mentioned, it only took us 12 years to hit that first big goal. And essentially I looked at a portfolio of assets that would generate enough passive income that would be able to cover our expenses. With also the ability to navigate, you know, recessions and things like that. Along the way.

 And so I thought it would take 30 years, but it took 12. And so that number that I was looking at was a portfolio of assets that was generating passive income.

Tanya: Talk to us a little bit. Portfolio: did you do stock investing in real estate? And then I’m curious too, when you were doing the plan, did you, I like the fact that you started with expenses, right? Like you really got very, very clear on what we are actually spending per month.

 And then what are we earning?

 And that Delta between the two numbers, that’s what we have to invest. Right. And then once you have that number, how do you go about allocating it? What was your thought process and what did you choose and why?

Nate: I really liked real estate a lot because I found that there was this opportunity. When you buy real estate, you’re generating this rental income that’s coming in. You also have a number of deductions from taxes, and then you also have this appreciation that’s building up.

 So as this asset increases in value. You have ways to be able to, um, pull out that equity by doing a cash out refinancing. So for our portfolio, a large portion of it was real estate and the balance was stocks and bonds. And then a few other investments that were on the side, , we focused a lot on the real estate, just because of that ability to kind of take one property, buy it, get a renter in.

 Generate some rental income. And then as it would be appreciated, we’d do a cash out finance and we’d pull our deposit or down payment from that first property and then use it to buy the second property. So it was a way to kind of recycle money without having to save everything again, a second time for a down payment.

 And we got, you know, some of this is you, sometimes you’re lucky. Sometimes you’re unlucky. Sometimes you do the research and due diligence and investments work. One thing that was a real benefit for us was when we were going into the global financial crisis in 2007, the numbers for real estate as an investment just didn’t make sense to us.

 And so we sold a couple of properties because we just couldn’t find anything. Um, that if we were to purchase it, it would be cash flow. And there’s somebody who said, look, if you would never buy at these prices, you might want to sell. I think that’s such great advice. So we sold a couple of properties and we were sitting on this cash.

 And so when the financial crisis hit and real estate went down dramatically, we were in a position to be able to go back in and buy. Um, and I think that was a huge benefit. Two, because we are in a position when banks are tightening up lending. Um, and there’s a lot of conservative approach to, um, lending in real estate.

 And most of the people were leaving the real estate market. You know, we have this mindset of sometimes you want to be going against the herd. And so when everyone was excited about real estate, we were not because we thought it was overvalued. And then when everyone was fleeing from real estate, we thought, no, there’s a lot of real opportunities here to buy.

 And so we went back in, you know, in 2009, 2010, and started buying real estate. Um, again, some of them were short sales, um, that were organic pre pre foreclosure. Um, and so it was just this opportunity to get back in and buy it at a price where the numbers made sense

 My approach is if you’re going to do long distance investing, you have to have a really good real estate agent who can be there and kind of scout deals for you.

 You need a really good lender, somebody who can close quickly, who can make sure that they’re really watching out for you and do a good job. And you also need a very good property manager. And so if you can get those three people on your team, that is the way to do this. So when we would, in the market that we were buying in, our real estate agent was constantly sending us sheets on properties.

 So we were able to kind of track what was happening in the market, um, because she was providing these to us. And then when we’d see, a property that looked like it might be a good deal or it’s something that would kind of fit with what our parameters were. Um, sometimes we buy it sight unseen.

 Other times we, you know, we weren’t that far from the states. I would fly back, and take a look and just over a couple of days, see as many properties. Uh, as we can, but again, a really good realtor who knows you and knows what your interests are. I would meet, um, our realtor at a cafe and she would have a stack of sheets.

 And it was, these are the, these are the properties that I want you to take a look at first. These are the ones that I think are in a second stack that you might be interested in. And she had the third stack where houses that she just liked that weren’t really in our parameter, but she’s like, you just have to see it.

 Uh, and so she really had a great time for me. Um, for this. And so that was one of the reasons why we were able to do it as soon as we had the right people that were, um, working with us. And I say to anybody who’s interested in personal finance or kind of wealth generation or financial freedom, you’re never going to do it alone.

 You really have to do it by building out a team of other people who are like-minded. Um, you know, and, and can help you out and then you do the best that you can to help them out. And, I think it’s just a process of if you’re working collectively on this year, you’re going to reach your goals so much faster.

Tanya: I couldn’t agree more. Right? Agent lender and property manager. You heard it here, folks like the holy Trinity of real estate. There you go.

Nate: That’s it. I like that you should coin that the holy Trinity, um, and you get into it too. Like in the global financial crisis, the banks were very conservative, . Um, so we found a credit union in the city that we were buying in and the lender was just fantastic.

 Well, we find with the short sale that sometimes you put in an offer. And so you’re waiting for a

Tanya: Yeah, long time.

Nate: Right. But once the bank decides that they want to close, they want to close immediately.

Tanya: like yesterday.

Nate: Right. Exactly. And so if you have cash, you can do that. And that’s not a problem, but if you’re going to be securing financing, you need a very diligent lender.

 Who’s going to make sure that this will go through underwriting and that it will get, um, you know, resolved very quickly. So we were able to close in 21 days, on one property and about 26 days on another, which was fantastic, to be able to close that quickly. But you know, this lender was, uh, it was.

 And just to add the one last thing too, you have to have a good property manager. And so a property manager is going to be someone who is looking out for your interests. They’re looking at the property and seeing if there’s no deferred maintenance that needs to be taken care of, or if a tenant is not treating the property well, and it needs to , maybe you shouldn’t be renewing the lease.

 And what I find is sometimes you need, you have to, you have to interview property managers to find one that’s good. Um, there’s a lot of questions online, um, for DIA sample questions to ask a property manager before you hire them. But the one thing I have learned is that a bad property manager does not improve with age.

 So if you find that someone is not doing the job that they need to be doing, you need to let them go right away, and find somebody who will look out for your interest.

Tanya: Excellent advice. I think the Trinity of real estate is usually the person that’s the hardest to find. Cause you know, there’s lots of great agents out there. There’s very good lenders as well. Uh, I think, you know, agents and lenders, they work in a very competitive environment and so.

 You know, you have to be great because there’s lots of agents and lots of lenders, property managers, and, you know, uh, I, my hat is off to them because it’s a very difficult job. They’re sandwiched constantly in between grumpy owners and grumpy tenants. And no one’s ever happy. it’s a really thankless job that doesn’t pay all that well, they’re hard to find, right?

 When I find one that I like. I treat them like gold. I’m like, I love you so much. I’m so appreciative because they’re the stewards of your investment, right when you’re overseas and you’re not there to check on it.

Nate: Exactly. you’re absolutely right. I mean, you have to treat these people like gold , because they’re watching out for your long-term investments. And so you have to take care of them , and treat them well.

Tanya: And I hate to say it, but I think that’s a rarity in the property management space, because usually they’re getting an email, like, why did this happen? Or why, why is it cost like this? You know? And I would always call and I would call. And you wouldn’t always get the property manager cause they’re busy too.

 Right. But, and you ask about them and you, you tell them, you appreciate them. And you’re like, Hey, thank you so much for handling this thing. And I find that you get such better service and, and all of a sudden, they’re, they’re happy to talk to you. They see your email and you get better, communication .

 So it’s a win-win relationship for both.

Nate: I agree. And part of it is also being a good property owner. And if something needs to be fixed in a property, fix it, you want to take care of your tenants too. And so what I find is that, you know, some people are really reluctant to do things on a property that needs to be done. And so if my property manager calls me and says, look, we need to remove this tree, or we need to replace this carpet, or we need to re you know, paint the interior.

 I don’t. She’s an expert. I trust her and I trust her opinion. And so when these things happen this is a cost of doing business with owning real estate. And so you’re looking for the long term return. You’re not worried about being nickeled and dimed on these small expenses along the way.

 And so I think it’s a lot easier for a property manager to have a property owner that is willing to fix the property and keep it in good shape. Because it keeps the tenants happy as well, and it makes the job easier for the property.

 You know, there’s a balance between, some people are really looking to expand their portfolio and have a huge portfolio. I’m a little bit averse to debt. And so, um, and again, this is part of my whole strategy of being able to weather any recession. So we didn’t buy as many properties as other investors might have.

 But we had this idea that, you know, we’ll buy less properties. But you know, properties that are in great locations that are near schools and near parks, um, we’ll generally have a tenant that wants to live in them for a long time. Maintain them. But then look to have most of them paid off, by the time we want to quit working.

 And so it’s kind of like a get rich, slow approach in some ways, but it’s that idea that if there’s ever a recession or there’s ever a big downturn, we’re not concerned about not being able to make payments. If we were to lose. Um, and a few tenants, uh, we’d be able to weather that, um, that downturn.

 And I saw that with COVID, the CDC put a moratorium on evictions and there are some tenants who stopped paying their landlords. And if you had a number of properties and you were just barely making payments, and relying heavily on those rents, you could be in some serious trouble, um, quickly.

 Uh, if you had tennis we weren’t paying. And so there’s a lot of, you know, smaller mom and pop, real estate investors, who’ve gotten hit pretty hard during COVID because of that moratorium. And so I think that’s one of the things that I’ve always looked at downside risk. When investing. And so my desire was to have most of these properties paid off when I retire and I’ve looked for other investments later.

 But it’s, if you have the rental income coming from a number of paid off properties, that’s a really good cushion to be able to weather any downturn, um, or other expenses.

Tanya: Interesting approach. I’m a little different than, um, what you’re explaining here because you know, you’ve paid off your properties and I’m in expansion mode. So I like to save my cash to buy more things. So, when the pandemic hit last year, there was a moment. went into panic mode, right.

 I was like, what if none of my tenants pay, which is a little bit of a ridiculous thought, but it’s actually a good exercise in plotting out. What is the worst case scenario? Can I stress test my investment portfolio, real estate portfolio, you know, fill in the blank. In the worst case scenario, what’s going to happen.

 And so I immediately got panicky, right? And I said, oh my goodness, maybe I need to sell a property because I need to have massive cash reserves to weather this. And I actually sat down and did all the math for all of my properties, with all the mortgages. And I came to the conclusion that I could hold the entire portfolio with not a single tenant paying for about a year.

 And I thought I’m okay with that. I’m good. You know, I think there’s different ways to do it. I completely understand the debt piece. Right? Some people are not comfortable with it. I’m much more comfortable, I think, than most people. So I didn’t have too much trouble with it, but I wanted to go back a little bit about this fear aspect, right?

 Because during the pandemic, uh, right when it hit and everybody went into their house and you could hear pin drops like outside and there was literally nobody down constitution avenue. I remember driving one day and it was like a ghost town. DC was a ghost town. There was not a single soul in the street.

 It was the most eerie thing I had ever seen. And at that point I had a small handful of real estate clients that were like, we still want a house. We’re going to go out and see it. I said, Okay.

 And in hindsight, those kinds did so well, because like you said, they went against the herd, everybody. Fearful everyone was like, I’m not making any moves immediately. There was this freeze and people just felt like I shouldn’t do anything. And even myself knowing this logically, we know this right. I had started a major, massive renovation on a building, you know, $200,000 plus renovation. And I was like, are people going to go to work?

 Is this the dumbest thing I have ever done or like, trying to do this thing? What if the whole bottom drops out of the real estate market? I mean, nobody knew what was going to happen. Right. Can you talk to us a little bit about, you know, when you were on sort of the precipice, you know, your timing was impeccable selling properties in 2007 and then the bottom fell out and then you, you were there to pick up the pieces.

 Talk to us a little bit about the mindset about when everybody else is like, oh, the real estate market is terrible. Like I’m not going to do anything. And you were there just scooping up the deals. Tell us a little bit about your thought process in your mindset.

Nate: Sure. And it’s funny because I learned the lesson from the tech bubble in 99, that was, you know, riding the Metro in DC. And everyone was talking about tech stocks. You know, every party you went to, people were talking about tech stocks and then, you know, tech stocks crashed. And I had that same feeling when it came to real estate, you know, going in 2005, 2006, everyone was talking about real estate and saying, looking at real estate can never go down.

 And it just felt very similar to the 99, you know, pre-crash of, of tech stocks. And so I just thought if everyone’s talking about this, it just, maybe it doesn’t make sense and I would run the numbers. And so when I was looking at properties to buy, it might cost, when we first started investing, it was, you could buy this property for a thousand dollars, all costs.

 Yeah. Or you could rent it for, you know, close to a thousand. So you’re you, you, you’re making a return on this money. Um, and it was a pretty good, you know, investment, but then all of a sudden prices started going up and it started to be about $2,000 to buy this property, but it was still only renting for about a thousand.

 And then when that ratio hit three to one, and it was about $3,000 to buy a property, it was still only renting for about 1100, 1200. I just thought there’s no way there’s going to be that much more appreciation going forward. Um, and again, it just didn’t seem to make sense to me. And so we saw it. And so you have to, you have to trust your gut.

 Um, even if other people are saying, look, this is a great investment. You need to move forward. You have to be able to sleep at night and you have to trust your own numbers. And the inverse was the same when the real estate market crashed. You know, I was looking at real estate and a friend of mine is a builder.

 And so I would call him up and I said, look, I’m, I’m standing in the front yard of this single family home. This is square footage. These are the finishings. You know, how much would this cost? And he’d say, look, you know, as a, as a pile of materials, that’s a, you know, an $80,000 house. And you’re like, okay, I can buy it for 80.

 So what you’re telling me here is no, you know, the cost of labor to build this house. The land costs, all of that are basically free because what I’m paying for this house is the equivalent of what materials would be for this house. And so that’s when I said, look, this is a time to start buying and try and buy as much as we could.

 And the thing is, looking back, I really wish I had even bought more. But it’s that opportunity to start looking at the real numbers, you know, do your due diligence. And then just trust your gut and move forward. And the thing is with real estate, I love real estate and it’s, there’s so many things you can do with real estate.

 Um, you know, you can buy single family homes. You know, Joe Birkhead was on the show and he was talking about doing duplexes, you know, Aquantia was on the show and she was talking about investing in a hotel. And that’s the thing that I like about real estate is there are so many different, niche markets in real estate that you can invest in.

 And so you just find the one that you like. That you can sleep at night as an investor and that’s what you pursue. I like doing single family homes, uh, in good areas. I would have done better. I would have made more money probably if I switched to multifamily, uh, earlier.

 But I found that, you know, I had a system that was working and I was going to stick with it. As long as I was living overseas. If we had moved back to the states earlier, I definitely would have gone into multifamily. You know, I did one commercial deal. Um, it was harder to do from abroad. Um, and so that was one of the other things that I learned was, you know, you find a niche that works.

 Another aspect of it too, is I looked at, um, lending other people. For, for their deals. I have this theory that when you’re investing, you’re diversifying for risk, but you’re also diversifying for time and certain investments. If you’re going to flip a house, directly, there’s a certain amount of time.

 It’s a bit time intensive to flip a house. But if you’re loaning someone money to invest in their project, it’s pretty passive. And so, you know, you’re doing your due diligence on the front end, and you’re going with somebody that you would trust, but you’re putting that money out and you’re expecting a return on it, but you’re not having to do a lot of the day-to-day work to get that return.

 So that’s one of the other things I look at in investing is I want to put some of my money in an area where it’s going to be more time intensive and I’m going to spend that time on it. And then I want to put some, some money in areas that are going to be less time and sense of.

 It’s structuring your money to be there at certain phases. So a lot of people who are looking at, you know, maybe you’re retiring early, if you’re putting all of your money in that 401k. Um, or if you’re with the government, with the thrift savings program. You know, you really can’t access that until you’re 59 and a half.

 You know, there’s a few exceptions, um, that are available for the most part. It’s 59 and a half. And so, you know, and also you have this social security that will be coming later on in your life. So the way I look at this, as I tell people to think about money in these three tronches, which is what you mentioned, it’s immediate income.

 And that’s income that if you were to buy a stock and it starts to pay a dividend or you buy a bond and it pays a yield or you buy a rental property and it, and it generates some rents. So anything that you’re purchasing, that income is coming to you right away is immediate income. You don’t have to be a certain age to be able to have access to that money.

 And then the next tranche of money is going to be your middle-age income. And so that’s going to be all the stuff that you have put into a Roth IRA or. Um, 401k or thrift savings plan. And you’re going to anticipate being able to access that, you know, at 59 and a half. Um, and so if you’re really intending to retire very early, like in your forties, you want to make sure that you’re not putting everything into these tax deferred retirement accounts.

 Cause you’re gonna have to wait awhile to have access to. And then the third trench is this, um, senior income. And this is essentially, you know, social security that will, um, for many of us will kind of start at the full retirement age, um, at 67, you know, you can access it earlier at 62, but you’re going to get a permanently lower benefit or you can wait until you’re 70 and each year that you wait, you’ll get a percent.

 Uh, of a monthly payment. And so you want to be structuring the income. That’s going to come at certain stages of your life, you know, certain ages, uh, along the way. Um, it’s just so that, you know, the reason why you want to focus on that middle income is you get so many tax advantages early on. But again, if you’re going to retire really early, you want to make sure that not everything is in those accounts.

 Thanks so much. Appreciate it, thanks, Tanya. Really enjoyed it.