April 22, 2025 • 23 mins
Join us for a deep dive into the financial side of homeownership with special guest Brian Lindberg, licensed fiduciary and financial planner at Fitzwilliams Financial. In this episode, we unpack how real estate can build generational wealth, the pros and cons of turning your first home into a rental, and why your financial plan needs more than just a 401(k). Whether you're dreaming of retiring early or wondering how to make smart investment decisions in your 30s, this episode is packed with real-world advice on money management, mindset, and long-term strategy. Don’t miss it—your future self will thank you.
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(00:00):
welcome to Your Favorite Mortgage Guy
(00:02):
podcast The show that brings you timely
insights on essential tips and
everything you need to know about
mortgages It's time to get informed get
inspired and get moving with your host
Steve Rockefeller Because here your
favorite mortgage guy has your
back Hey guys it's your favorite
mortgage guy Steve Rockefeller here with
another edition of our podcast Your
(00:25):
Favorite Mortgage Guy You want to know
something we're going to demystify
another aspect of what it takes to
potentially become a homeowner and
that's the financial aspect And today
we're going to talk with Brian Lindberg
with Fitz Williams Financial Brian is a
fiduciary which means he's a licensed
financial planner And guys you want to
know something the difference between
him and me is that we're both licensed
(00:47):
and we got all this compliance crap we
got to deal with So if you're looking
for like top secret information
but we'll give you the basics on that So
welcome Thanks for having me Sure Sure
So couple of quick questions here Let's
go You know
home ownership Yeah It's the backbone of
America In my opinion there's two
backbones of America Okay Home ownership
(01:09):
and the small business Because so many
people came from these foreign countries
and started their they've fed their
families off of one product bread Mhm Or
something You you think potatoes You got
it Potatoes right you think about the
day back in the 30s and 40s people came
off the boat in New York and they had
one product and they supported their
(01:30):
family They put kids through school Well
now here we are 80 years later 70 years
later wherever we are and now home
ownership remains the staple of the
country So do me a favor Tell me this
What is the importance of home ownership
to the overall financial plan well it's
incredibly important for uh
(01:51):
approximately 80% of the country It's
going to be the largest financial asset
to the family It's also one of the
largest um wealth transfer vehicles to
the next generation at the end of life
as well too Um so it's it's pro Did you
hear how deep he went he said end of
life Yeah Well I mean home ownership
goes through end of life These are real
assets These are assets that are going
(02:13):
to be there forever you have the ability
to pass them as a legacy You have the
ability to turn them into a business I
think a lot of people forget about the
fact that home ownership um once you can
get a mortgage uh you know from Steve
here that uh now you have the ability to
actually you know live in that house for
a little bit build a little bit of
equity you can move from that house and
(02:34):
you can rent that house back out qualify
for the new house Um and you can
continue to do that Real estate is
technically considered an alternative
investment And for this simple reason of
just having a primary residence and
moving to another primary residence but
not selling it it actually is the most
accessible alternative investment to
America And I don't think most people
know that alternative investments
(02:56):
usually are reserved for people with
over a million dollars in assets They're
called accredited investors You don't
have to be an accredited investor to be
a landlord but a bunch of people make a
lot of money using real estate you know
The way he said
that 30 40 years
ago when I was in my
(03:17):
20s I had started investing in real
estate Now houses were only 50,000
60,000 you know town houses 40,000 So I
was able to do that but I was collecting
rents of 250 280 then they go up to I
mean hell some of the same town houses
that I owned back then are getting 16
$1,700 in rent for the same exact house
And yes I've had to renovate it two and
(03:38):
three and four times over time but that
general generational wealth that I've
created for my kids is is part of my
overall financial plan And it sounds
like you just mirrored it because when
you said you buy the house and you don't
sell it you rent it out So as far as
that that incentive for clients that are
buying their first home I mean from the
(04:00):
mortgage side they can come in they can
buy a house with as little as no money
down depending on the loan type No doubt
Or 5% down live in it for 12 months turn
around move out rent it out Yep And buy
another one Talk about that part I don't
think people know that part well enough
And now I'm turning to interview you
here
How does one have a primary residence
(04:22):
and maybe not necessarily be able to
qualify for two properties at once how
can you how can you make that transition
and still get approved for that second
mortgage that is an excellent question
because if you Well you would be
surprised at how many times a day I get
a phone call from a person that I want
to be a real estate investor Translation
(04:44):
I've met a few of those people too
translation I stayed up till 2:00 this
morning watching Tik Tok right watching
Tik Tok Yeah Bigger Pockets podcast We
love those guys but I mean it all they
all make it sound so easy right and
accessible And even I said it was
accessible too but it's not always that
easy right opm other people's money So
so listen let's simplify this guys
(05:05):
Here's the question that he just asked
How do you do that so here's what you do
You go find that house right listen you
got to be realistic If you're not going
to be realistic with the house you're
buying then don't do it cuz you're going
to lose money Now by today's standards
because the cost of homes you're going
to probably lose a little bit of money
but there is some tax benefits to that
(05:26):
as well Oh yeah But you go in and you
buy a house with 3% 5% 3 12% or no money
down The technical guideline is you got
to live there for 12 months right so you
move out and now you've got a run rental
property Now here's the other question I
think you were alluding to it because
you talked about other
(05:47):
properties People always want to buy a
multifamily Oh I'm going to buy a three
room three Yeah me buy a quad here and
move into one of the units right and it
doesn't house hack It doesn't work It
doesn't work because let me tell you
what that house hack the investors have
already thought about it Now there are
three available in Hampton Roads right
(06:08):
now that I'm aware of One is in a severe
flood zone So you're talking $600 7,000
a year in flood insurance Well that's
going to move your needle on how much
money you can make on the house The
other two need significant repair work
So if you don't have the money you're
not going to be able to buy the house
Yeah Back to your point about creating
this generational wealth Sure That's
just part of the minor part of the
(06:30):
financial plan Now if people want to
come in and they want to say "Hey I want
to buy a house but I've got a couple
hundred,000 in my investments whether
it's because my grandmother died and she
passed it down to me." Should they
withdraw let's just say a 30-year-old
comes into $300,000 Should they take
that cash and take the tax hit on it
(06:52):
just to invest in real estate
that's tricky
Um the compliance in me is uh a little
struggling with this one because I want
to know a little bit more about the
person relative to do they have a a good
rainy day fund Do they have a 401k
assets that they're putting away for
retirement already i'll answer this and
(07:15):
I'm going to tie in our first point here
though I actually think the especially
the rental home ownership is a little
bit more important to the retirement
plan than people give it credit And so
this is where I think a portion of that
money could reasonably be spent towards
a rental property is what I find and
it's kind of sad in retirement people
don't actually spend their assets They
(07:37):
live on the income produced by their
assets And most of them might spend a
little bit of their assets maybe for
their kids' wedding I'm buying a Porsche
You say that Everybody says that But a
Porsche is a payment right most people
buy them on payments Not too many people
go buy $150,000 cars cash I'm kidding
I'm not buying a Porsche That can't that
can't get a decent tax write off And
(07:58):
there's some different podcast episode
we can talk about section 179 and some
awesome tax uh benefits there But here
income of that property is really
important So what I would say is it's
really hard for me to recommend
interrupting the compounding interest
but if you were to take a portion of it
and maybe get a loan for a greater
portion of it you work your math Work
(08:19):
with work with Steve work with a guy
like me that we can look at the business
model of it What are what are comparable
rents in the neighborhood what do I
think I can get and how far down do I
have to buy my mortgage so I can have
enough wiggle room where I can have a
little profit today but have it paid off
by the time I retire when I actually
need the income cuz I have to assume
that this 30-year-old who got this
(08:40):
windfall doesn't necessarily need more
income from it that they can really
invest it But investing into real estate
produces future income very little
current income um but future income and
capital appreciation of the asset and
that's how it all works And again I tell
you the people who retire well in
retirement have high degrees of income
I've got multi multi-millionaires who
(09:02):
don't spend their money that have very
little income and they live very poorly
Um but they've got an asset But they've
got they've got a lot of assets but I'm
telling you because of the the everybody
lives in this we're taking a little bit
of a side step here but everybody I
found lives in this just in case
retirement I need to keep my million
dollars just in case I need it And then
I challenge that person I challenge the
(09:24):
listener here Name me an expense that's
greater than say 30,000 bucks that you
cannot finance and you have to come up
with the money in two weeks for
And the only answer anybody's given me
is a ransom or vacation Sure But you can
typically finance that vacation you know
and so therefore somebody who has you
know income you know should be able to
(09:45):
spread that out a little bit And a
vacation isn't a need at a $30,000
vacation need either Nice vacation And
so we we go to this So if you've agreed
with this so far well why do you hang on
so tightly to the $1 million then and so
again it's only been my experience that
people spend their income freely They
will they will buy luxury goods and
(10:08):
items with rental portfolio income but
they won't sell money out of their 401ks
or IAS They won't sell stock to go buy a
designer handbag or a Porsche It's got
to be done out of their income because
they see that income as the steady thing
that's always going to be there for them
The assets it's hard to accumulate a
million bucks I got I got a lot of
respect for people that do it So it's
going to be even harder to spend a
(10:29):
million bucks as well too So I would I
would encourage the 30-year-old to seek
a fiduciary a good mortgage banker to
work a business Think about this like a
business A real estate investment is a
business You said it yourself that you
had to uh recapitalize is a different
way to say it but you had to do
improvements to your homes over time to
keep them current If you keep them
current if you keep them in good shape
(10:50):
real estate is a real asset which means
that it should appreciate at least with
inflation if not a little bit better
than over the long term So you can
believe that you're going to be able to
have a present- day you know good value
of the asset and ideally some decent
income off of it as well in retirement
too Guys you want to know something this
has gone a different direction than I
was expecting it to go But I need you to
(11:13):
know something Everything Brian's
telling you today he's speaking my
language because when I was your age
that's the reason why I bought the
houses was because I knew that I wanted
to have generational wealth Mhm Two I
wanted to have income Yep That I didn't
have to worry about because getting a
(11:34):
pension nobody gets a pension anymore
Not unless you're a public servant and
they're m making big changes to those
Yeah So that million dollars or two
million or whatever the number you're
talking about unless you've won the
lottery had a windfall from a passing
relative or maybe you just did well in
life and you saved your money Well he
you know Brian's got a good point You're
not going to ever spend that money but
(11:57):
if you don't start at some point you're
not going to have it And you're going to
try to catch up when you're 50 years old
You know Brian still be working at 75
too Yeah Yeah Well people are living
till 90 which is crazy During the during
postco uh uh correction that we the
economy that were just leaving if you
will one of the highest growing
demographics in the workforce was the 70
(12:18):
plus Mhm people going back to work cuz
they didn't save enough So interestingly
enough just yesterday yeah swear to God
I had to go to Newburn North Carolina
Okay
My stepmother of 40 years lives down
there and we're making decisions for her
because she's just not able to take care
of herself So we're in a house and of
course
(12:39):
somebody had to take her cat Okay So I
had to go down there and get Lacy this
cat And uh you know I come back I'm
starving I stop at a subway that was
attached to a sheets Yeah And it was in
Williamston North Carolina small town I
walk in the door I was blown away
(13:01):
because the five people at the subway
all were over 65
All of them were over 65 Small town And
I didn't ask any questions but I thought
to myself "Wow is this because they have
to work or it's because they're bored?"
Your my version might be I'd rather be
on a golf course Well I think it comes
(13:24):
down to what you said earlier If you're
not preparing for retirement you're
probably going to prepare to do odd jobs
here and there to fill in the gaps It's
really tough to live on only a social
security check these days And there's
challenges with the long-term nature of
social security that are being talked
about in politics right now So uh it's
been my experience that many of the
(13:47):
people are working because they have to
which is why that demographic you know
is back at work right now trying to pair
down some of this higher cost of
inflation We uh I don't want to go off
on too much of a tangent but we talk
we've talked a lot about inflation the
last several years and they talk about
it in this two and this three this four
and this 5% number but that's not that's
a composite which is what people don't
(14:09):
understand And uh owner's equivalent
rents have gone through the roof by by
huge numbers And groceries people pay
rent and people buy groceries That's
where we felt the inflation and 10 15
20% inflation from 5 years ago on some
of these items is really hurting these
5% cost of living adjustments that
people get with social security So yeah
(14:31):
I I would love to be optimistic and say
that they're there because they want to
be there Um I would I'd say more likely
they're there because they have to be
there That's right That's I'm going to
agree with that You know I'll share this
with you So I lost my mother month ago
and we when we went started going
through her stuff I was blown away how
(14:53):
much she lived on cuz I never asked any
questions She was 82 She was Hey listen
I've heard this story before She went
out on her own terms Trust me that's
good Yeah She went out on her own terms
But at 82 I'm of course the oldest so
I'm managing everything Yeah And I was
sitting here going she's living off
social security a pension you know my
father's social security cuz he's gone
(15:15):
And I'm just shocked at how the aging
population have learned that they don't
need all the fluff that the younger
people need and they she didn't go to
Amazon 17 times a week Mhm And um and
and or whatever else that you know you
shop There there's a there's a there's a
money maturity process that happens I'm
(15:36):
I'm hitting middle ages about to go over
the hill myself so I'm I'm feeling it in
my own way Um it it brings up a broader
point that I like to talk about called
optimal stopping And it's so you Yeah So
you want to make some money and and
Steve you're actually a good example of
this as well too cuz you're a business
owner of sorts that can change their
income by how hard you work right and so
(15:58):
everybody's got their own idea of a
little bit more money would help me out
in my family and they're probably right
But at a certain point you've heard
wealthy people say "Money doesn't make
me happy." Right so where is the optimal
stopping point in between there because
life is about living We don't get to
take this money with us And the p the
grandma your mother at 82 not buying on
Amazon but just sitting on her front
(16:19):
porch drinking coffee you know in God's
creation seeing the sun the birds in the
sky like that could be it Feeding the
squirrels That could be it for her you
know But here people in their 20s 30s
and 40s were like "Man I need that nice
new car I need to I need to level up
this And you know it begets debt is
really what it does because we live
outside our lifestyle for the most part
(16:40):
And the money maturity process happens
in generally the 40s and the 50s We're
like "Wow I'm finally out of debt or I
can see the light at the end of the
tunnel to being out of debt I should
probably start saving you know for that
generational wealth." Interestingly
enough um I've had money and I haven't
had money Yeah it's better to have it Um
no question about that But but what I
(17:01):
will tell you is people ask me all the
time "Well I want to do a 15-year loan."
No you don't No you don't Uh you're
60some years old You're not going to do
a 15-year loan If you haven't paid off
your house by now you're not going to
pay it off at 80 You're just not But but
here's what I would tell you If you
think about it from this perspective
you're a young guy You have children
Yeah Okay Two boys Two boys How old
(17:24):
eight and four Perfect Perfect So So
here's the thing In my world we look at
people and we go "Okay so he's got a
eight and a four-y old." So now wife
couple of kids eight and four just get
one of them's just getting into sports
Probably the other one is too I got
little league tonight Yep We're go to
practice right and then travel ball
Let's not forget about that's not here
(17:46):
yet Oh we talking about my expenses We
talk about private school you know
Exactly Exactly Now kids are expensive
They're they're the reason why I don't
have more money right now Exactly And
And I was the same way with my son I
mean it was $1,500 a month between
travel hotels doing all these things
just so he could play ball And how old
is he now 24 There's been some inflation
(18:08):
since then too Oh is it okay i'm sure of
it I'm sure So speaking of my 24y old
what do you recommend for people like
Evan To do to start saving money do you
do you suggest he put money in a 401k
should he set up a a private Roth IRA i
love this question I really really do Um
there's a lot of different pay attention
(18:30):
Yeah Here you go Evan There's a lot of
different things that you can do brother
Um let me start by saying I think you
first have to think of the end in mind
which is weird for a 24 year old to
think about but you want to think about
the day that you don't want to work
anymore Um and the first decision you
need to make for yourself is do I want
that day to be before or after age 59
and a half um and it's an important time
(18:52):
because if you're going to put money
into a 401k or even a Roth IRA
technically you're not supposed to be
able to touch that money without a
penalty until you're 59 and a half Now
conversationally I talked to Genzers um
and young millennials and none of them
want to work after 60 So if you don't
want to work after 60 your retirement
plan is not your 401k It needs to be
(19:14):
maybe your 401k but something else
augmented with some other things Yeah
Because if you're going to retire at 45
what are you going to do for 14 1/2
years you know you want to retire at 52
how are you going to get money for 7
years so you have to have those years
worth of money outside of your 401k and
IRA I know there's some nerds out there
who want to get into the minutiae of how
you can access your money in advance
(19:35):
without a penalty Those are for
financial planning sessions on a
one-on-one basis but the general rule is
59 and a half So Evan if you don't want
to work past 60 you're going to have to
think outside that box So um there's
other things that you can do The most
important thing and what we're failing
at right now especially in the 20s 30s
and 40s is everybody's living 105 to
(19:58):
110% of their paychecks right now You
got to get it down to at least 90 to 80%
of your paycheck Big number dropping it
from 105 to 90 I I get it but what are
we what are we doing we're we're we're
putting money in credit card debt that
that debt it's reversed compounding
against us right cuz it's costing us
money to hold this debt Right now
(20:19):
interest rates are high I don't know if
anybody's checked their credit cards but
they're well over 30% Back for like 08
till 2020 or so we had 29.99 AMX cards
which is 30% is egregious in itself
They're higher now People don't really
realize that but they're still swiping
their MX card or their Discover or
whatever Maybe you got a bank card and
(20:41):
it's 12 to 15% It's still counting
against you It's 25 to 30 guys It's debt
And everybody debt isn't evil I'm not
that guy I'm I I support healthy uses of
debt and I understand stuff happens in
life and you have to use debt But if you
really want to build long-term wealth
you got to find a way to live inside
your means If we keep pushing our
(21:02):
financial goalpost back I got a pay
raise I'm going to get the BMW My wife
got a pay raise she's going to get a BMW
you know or Tesla or a Tesla or or
whatever Or you know I'm going to get
the newest iPhone every single year We
have to eventually slow the slow the
movement of the financial goalpost and
our budget down We have to figure out
how to live inside of a budget because
(21:23):
most of us in the country don't make a
hundred or 200 or $300,000 a year to
where or and another factor is you're
not necessarily in a career where you're
going to get anything more than 2 3 4 5%
cost of living adjustments and maybe
once every 5 years get a promotion right
those those people can't stretch that
far If you're in a fixed salary you
(21:44):
really shouldn't stretch that far 110%
outside your budget because it's really
hard to make more money unless you're
willing to go get a second job And I
mean at some point in time you can only
work with so much So
so to young folks like Evan it's like
being disciplined to say a,000 bucks
came in I can spend 800 and I'm going to
put 200 here I'm not going to make a
(22:05):
recommendation today where this 200 goes
I just want you guys to think about the
over or under 60 concept and living
underneath your paychecks That is the
first place to start Playing in the
sandbox within your means That's it
Brian thanks again No pleasure is mine
Let's do it again Guys I'm going to tell
you right now you know every day people
(22:27):
call me up nobody wants the highest rate
Nobody wants the highest payment People
want the cheapest payment They want the
cheapest rate because you know you get a
new house you got to get a new BMW No
you don't Right No you don't You got to
play in your own sandbox If you're
serious about creating financial wealth
generational wealth it starts with a
couple different aspects Financial
planning and real estate Guys I'm your
(22:50):
favorite mortgage guy Steve Until the
next edition Bye
now Thanks for tuning in Make sure to
follow your favorite mortgage guy on
Facebook LinkedIn and Instagram Have
questions or ready to take the next step
reach out at
steveloans.com or call
757301-9776 We'll catch you next time
welcome to Your Favorite Mortgage Guy
(00:02):
podcast The show that brings you timely
insights on essential tips and
everything you need to know about
mortgages It's time to get informed get
inspired and get moving with your host
Steve Rockefeller Because here your
favorite mortgage guy has your
back Hey guys it's your favorite
mortgage guy Steve Rockefeller here with
another edition of our podcast Your
(00:25):
Favorite Mortgage Guy You want to know
something we're going to demystify
another aspect of what it takes to
potentially become a homeowner and
that's the financial aspect And today
we're going to talk with Brian Lindberg
with Fitz Williams Financial Brian is a
fiduciary which means he's a licensed
financial planner And guys you want to
know something the difference between
him and me is that we're both licensed
(00:47):
and we got all this compliance crap we
got to deal with So if you're looking
for like top secret information
but we'll give you the basics on that So
welcome Thanks for having me Sure Sure
So couple of quick questions here Let's
go You know
home ownership Yeah It's the backbone of
America In my opinion there's two
backbones of America Okay Home ownership
(01:09):
and the small business Because so many
people came from these foreign countries
and started their they've fed their
families off of one product bread Mhm Or
something You you think potatoes You got
it Potatoes right you think about the
day back in the 30s and 40s people came
off the boat in New York and they had
one product and they supported their
(01:30):
family They put kids through school Well
now here we are 80 years later 70 years
later wherever we are and now home
ownership remains the staple of the
country So do me a favor Tell me this
What is the importance of home ownership
to the overall financial plan well it's
incredibly important for uh
(01:51):
approximately 80% of the country It's
going to be the largest financial asset
to the family It's also one of the
largest um wealth transfer vehicles to
the next generation at the end of life
as well too Um so it's it's pro Did you
hear how deep he went he said end of
life Yeah Well I mean home ownership
goes through end of life These are real
assets These are assets that are going
(02:13):
to be there forever you have the ability
to pass them as a legacy You have the
ability to turn them into a business I
think a lot of people forget about the
fact that home ownership um once you can
get a mortgage uh you know from Steve
here that uh now you have the ability to
actually you know live in that house for
a little bit build a little bit of
equity you can move from that house and
(02:34):
you can rent that house back out qualify
for the new house Um and you can
continue to do that Real estate is
technically considered an alternative
investment And for this simple reason of
just having a primary residence and
moving to another primary residence but
not selling it it actually is the most
accessible alternative investment to
America And I don't think most people
know that alternative investments
(02:56):
usually are reserved for people with
over a million dollars in assets They're
called accredited investors You don't
have to be an accredited investor to be
a landlord but a bunch of people make a
lot of money using real estate you know
The way he said
that 30 40 years
ago when I was in my
(03:17):
20s I had started investing in real
estate Now houses were only 50,000
60,000 you know town houses 40,000 So I
was able to do that but I was collecting
rents of 250 280 then they go up to I
mean hell some of the same town houses
that I owned back then are getting 16
$1,700 in rent for the same exact house
And yes I've had to renovate it two and
(03:38):
three and four times over time but that
general generational wealth that I've
created for my kids is is part of my
overall financial plan And it sounds
like you just mirrored it because when
you said you buy the house and you don't
sell it you rent it out So as far as
that that incentive for clients that are
buying their first home I mean from the
(04:00):
mortgage side they can come in they can
buy a house with as little as no money
down depending on the loan type No doubt
Or 5% down live in it for 12 months turn
around move out rent it out Yep And buy
another one Talk about that part I don't
think people know that part well enough
And now I'm turning to interview you
here
How does one have a primary residence
(04:22):
and maybe not necessarily be able to
qualify for two properties at once how
can you how can you make that transition
and still get approved for that second
mortgage that is an excellent question
because if you Well you would be
surprised at how many times a day I get
a phone call from a person that I want
to be a real estate investor Translation
(04:44):
I've met a few of those people too
translation I stayed up till 2:00 this
morning watching Tik Tok right watching
Tik Tok Yeah Bigger Pockets podcast We
love those guys but I mean it all they
all make it sound so easy right and
accessible And even I said it was
accessible too but it's not always that
easy right opm other people's money So
so listen let's simplify this guys
(05:05):
Here's the question that he just asked
How do you do that so here's what you do
You go find that house right listen you
got to be realistic If you're not going
to be realistic with the house you're
buying then don't do it cuz you're going
to lose money Now by today's standards
because the cost of homes you're going
to probably lose a little bit of money
but there is some tax benefits to that
(05:26):
as well Oh yeah But you go in and you
buy a house with 3% 5% 3 12% or no money
down The technical guideline is you got
to live there for 12 months right so you
move out and now you've got a run rental
property Now here's the other question I
think you were alluding to it because
you talked about other
(05:47):
properties People always want to buy a
multifamily Oh I'm going to buy a three
room three Yeah me buy a quad here and
move into one of the units right and it
doesn't house hack It doesn't work It
doesn't work because let me tell you
what that house hack the investors have
already thought about it Now there are
three available in Hampton Roads right
(06:08):
now that I'm aware of One is in a severe
flood zone So you're talking $600 7,000
a year in flood insurance Well that's
going to move your needle on how much
money you can make on the house The
other two need significant repair work
So if you don't have the money you're
not going to be able to buy the house
Yeah Back to your point about creating
this generational wealth Sure That's
just part of the minor part of the
(06:30):
financial plan Now if people want to
come in and they want to say "Hey I want
to buy a house but I've got a couple
hundred,000 in my investments whether
it's because my grandmother died and she
passed it down to me." Should they
withdraw let's just say a 30-year-old
comes into $300,000 Should they take
that cash and take the tax hit on it
(06:52):
just to invest in real estate
that's tricky
Um the compliance in me is uh a little
struggling with this one because I want
to know a little bit more about the
person relative to do they have a a good
rainy day fund Do they have a 401k
assets that they're putting away for
retirement already i'll answer this and
(07:15):
I'm going to tie in our first point here
though I actually think the especially
the rental home ownership is a little
bit more important to the retirement
plan than people give it credit And so
this is where I think a portion of that
money could reasonably be spent towards
a rental property is what I find and
it's kind of sad in retirement people
don't actually spend their assets They
(07:37):
live on the income produced by their
assets And most of them might spend a
little bit of their assets maybe for
their kids' wedding I'm buying a Porsche
You say that Everybody says that But a
Porsche is a payment right most people
buy them on payments Not too many people
go buy $150,000 cars cash I'm kidding
I'm not buying a Porsche That can't that
can't get a decent tax write off And
(07:58):
there's some different podcast episode
we can talk about section 179 and some
awesome tax uh benefits there But here
income of that property is really
important So what I would say is it's
really hard for me to recommend
interrupting the compounding interest
but if you were to take a portion of it
and maybe get a loan for a greater
portion of it you work your math Work
(08:19):
with work with Steve work with a guy
like me that we can look at the business
model of it What are what are comparable
rents in the neighborhood what do I
think I can get and how far down do I
have to buy my mortgage so I can have
enough wiggle room where I can have a
little profit today but have it paid off
by the time I retire when I actually
need the income cuz I have to assume
that this 30-year-old who got this
(08:40):
windfall doesn't necessarily need more
income from it that they can really
invest it But investing into real estate
produces future income very little
current income um but future income and
capital appreciation of the asset and
that's how it all works And again I tell
you the people who retire well in
retirement have high degrees of income
I've got multi multi-millionaires who
(09:02):
don't spend their money that have very
little income and they live very poorly
Um but they've got an asset But they've
got they've got a lot of assets but I'm
telling you because of the the everybody
lives in this we're taking a little bit
of a side step here but everybody I
found lives in this just in case
retirement I need to keep my million
dollars just in case I need it And then
I challenge that person I challenge the
(09:24):
listener here Name me an expense that's
greater than say 30,000 bucks that you
cannot finance and you have to come up
with the money in two weeks for
And the only answer anybody's given me
is a ransom or vacation Sure But you can
typically finance that vacation you know
and so therefore somebody who has you
know income you know should be able to
(09:45):
spread that out a little bit And a
vacation isn't a need at a $30,000
vacation need either Nice vacation And
so we we go to this So if you've agreed
with this so far well why do you hang on
so tightly to the $1 million then and so
again it's only been my experience that
people spend their income freely They
will they will buy luxury goods and
(10:08):
items with rental portfolio income but
they won't sell money out of their 401ks
or IAS They won't sell stock to go buy a
designer handbag or a Porsche It's got
to be done out of their income because
they see that income as the steady thing
that's always going to be there for them
The assets it's hard to accumulate a
million bucks I got I got a lot of
respect for people that do it So it's
going to be even harder to spend a
(10:29):
million bucks as well too So I would I
would encourage the 30-year-old to seek
a fiduciary a good mortgage banker to
work a business Think about this like a
business A real estate investment is a
business You said it yourself that you
had to uh recapitalize is a different
way to say it but you had to do
improvements to your homes over time to
keep them current If you keep them
current if you keep them in good shape
(10:50):
real estate is a real asset which means
that it should appreciate at least with
inflation if not a little bit better
than over the long term So you can
believe that you're going to be able to
have a present- day you know good value
of the asset and ideally some decent
income off of it as well in retirement
too Guys you want to know something this
has gone a different direction than I
was expecting it to go But I need you to
(11:13):
know something Everything Brian's
telling you today he's speaking my
language because when I was your age
that's the reason why I bought the
houses was because I knew that I wanted
to have generational wealth Mhm Two I
wanted to have income Yep That I didn't
have to worry about because getting a
(11:34):
pension nobody gets a pension anymore
Not unless you're a public servant and
they're m making big changes to those
Yeah So that million dollars or two
million or whatever the number you're
talking about unless you've won the
lottery had a windfall from a passing
relative or maybe you just did well in
life and you saved your money Well he
you know Brian's got a good point You're
not going to ever spend that money but
(11:57):
if you don't start at some point you're
not going to have it And you're going to
try to catch up when you're 50 years old
You know Brian still be working at 75
too Yeah Yeah Well people are living
till 90 which is crazy During the during
postco uh uh correction that we the
economy that were just leaving if you
will one of the highest growing
demographics in the workforce was the 70
(12:18):
plus Mhm people going back to work cuz
they didn't save enough So interestingly
enough just yesterday yeah swear to God
I had to go to Newburn North Carolina
Okay
My stepmother of 40 years lives down
there and we're making decisions for her
because she's just not able to take care
of herself So we're in a house and of
course
(12:39):
somebody had to take her cat Okay So I
had to go down there and get Lacy this
cat And uh you know I come back I'm
starving I stop at a subway that was
attached to a sheets Yeah And it was in
Williamston North Carolina small town I
walk in the door I was blown away
(13:01):
because the five people at the subway
all were over 65
All of them were over 65 Small town And
I didn't ask any questions but I thought
to myself "Wow is this because they have
to work or it's because they're bored?"
Your my version might be I'd rather be
on a golf course Well I think it comes
(13:24):
down to what you said earlier If you're
not preparing for retirement you're
probably going to prepare to do odd jobs
here and there to fill in the gaps It's
really tough to live on only a social
security check these days And there's
challenges with the long-term nature of
social security that are being talked
about in politics right now So uh it's
been my experience that many of the
(13:47):
people are working because they have to
which is why that demographic you know
is back at work right now trying to pair
down some of this higher cost of
inflation We uh I don't want to go off
on too much of a tangent but we talk
we've talked a lot about inflation the
last several years and they talk about
it in this two and this three this four
and this 5% number but that's not that's
a composite which is what people don't
(14:09):
understand And uh owner's equivalent
rents have gone through the roof by by
huge numbers And groceries people pay
rent and people buy groceries That's
where we felt the inflation and 10 15
20% inflation from 5 years ago on some
of these items is really hurting these
5% cost of living adjustments that
people get with social security So yeah
(14:31):
I I would love to be optimistic and say
that they're there because they want to
be there Um I would I'd say more likely
they're there because they have to be
there That's right That's I'm going to
agree with that You know I'll share this
with you So I lost my mother month ago
and we when we went started going
through her stuff I was blown away how
(14:53):
much she lived on cuz I never asked any
questions She was 82 She was Hey listen
I've heard this story before She went
out on her own terms Trust me that's
good Yeah She went out on her own terms
But at 82 I'm of course the oldest so
I'm managing everything Yeah And I was
sitting here going she's living off
social security a pension you know my
father's social security cuz he's gone
(15:15):
And I'm just shocked at how the aging
population have learned that they don't
need all the fluff that the younger
people need and they she didn't go to
Amazon 17 times a week Mhm And um and
and or whatever else that you know you
shop There there's a there's a there's a
money maturity process that happens I'm
(15:36):
I'm hitting middle ages about to go over
the hill myself so I'm I'm feeling it in
my own way Um it it brings up a broader
point that I like to talk about called
optimal stopping And it's so you Yeah So
you want to make some money and and
Steve you're actually a good example of
this as well too cuz you're a business
owner of sorts that can change their
income by how hard you work right and so
(15:58):
everybody's got their own idea of a
little bit more money would help me out
in my family and they're probably right
But at a certain point you've heard
wealthy people say "Money doesn't make
me happy." Right so where is the optimal
stopping point in between there because
life is about living We don't get to
take this money with us And the p the
grandma your mother at 82 not buying on
Amazon but just sitting on her front
(16:19):
porch drinking coffee you know in God's
creation seeing the sun the birds in the
sky like that could be it Feeding the
squirrels That could be it for her you
know But here people in their 20s 30s
and 40s were like "Man I need that nice
new car I need to I need to level up
this And you know it begets debt is
really what it does because we live
outside our lifestyle for the most part
(16:40):
And the money maturity process happens
in generally the 40s and the 50s We're
like "Wow I'm finally out of debt or I
can see the light at the end of the
tunnel to being out of debt I should
probably start saving you know for that
generational wealth." Interestingly
enough um I've had money and I haven't
had money Yeah it's better to have it Um
no question about that But but what I
(17:01):
will tell you is people ask me all the
time "Well I want to do a 15-year loan."
No you don't No you don't Uh you're
60some years old You're not going to do
a 15-year loan If you haven't paid off
your house by now you're not going to
pay it off at 80 You're just not But but
here's what I would tell you If you
think about it from this perspective
you're a young guy You have children
Yeah Okay Two boys Two boys How old
(17:24):
eight and four Perfect Perfect So So
here's the thing In my world we look at
people and we go "Okay so he's got a
eight and a four-y old." So now wife
couple of kids eight and four just get
one of them's just getting into sports
Probably the other one is too I got
little league tonight Yep We're go to
practice right and then travel ball
Let's not forget about that's not here
(17:46):
yet Oh we talking about my expenses We
talk about private school you know
Exactly Exactly Now kids are expensive
They're they're the reason why I don't
have more money right now Exactly And
And I was the same way with my son I
mean it was $1,500 a month between
travel hotels doing all these things
just so he could play ball And how old
is he now 24 There's been some inflation
(18:08):
since then too Oh is it okay i'm sure of
it I'm sure So speaking of my 24y old
what do you recommend for people like
Evan To do to start saving money do you
do you suggest he put money in a 401k
should he set up a a private Roth IRA i
love this question I really really do Um
there's a lot of different pay attention
(18:30):
Yeah Here you go Evan There's a lot of
different things that you can do brother
Um let me start by saying I think you
first have to think of the end in mind
which is weird for a 24 year old to
think about but you want to think about
the day that you don't want to work
anymore Um and the first decision you
need to make for yourself is do I want
that day to be before or after age 59
and a half um and it's an important time
(18:52):
because if you're going to put money
into a 401k or even a Roth IRA
technically you're not supposed to be
able to touch that money without a
penalty until you're 59 and a half Now
conversationally I talked to Genzers um
and young millennials and none of them
want to work after 60 So if you don't
want to work after 60 your retirement
plan is not your 401k It needs to be
(19:14):
maybe your 401k but something else
augmented with some other things Yeah
Because if you're going to retire at 45
what are you going to do for 14 1/2
years you know you want to retire at 52
how are you going to get money for 7
years so you have to have those years
worth of money outside of your 401k and
IRA I know there's some nerds out there
who want to get into the minutiae of how
you can access your money in advance
(19:35):
without a penalty Those are for
financial planning sessions on a
one-on-one basis but the general rule is
59 and a half So Evan if you don't want
to work past 60 you're going to have to
think outside that box So um there's
other things that you can do The most
important thing and what we're failing
at right now especially in the 20s 30s
and 40s is everybody's living 105 to
(19:58):
110% of their paychecks right now You
got to get it down to at least 90 to 80%
of your paycheck Big number dropping it
from 105 to 90 I I get it but what are
we what are we doing we're we're we're
putting money in credit card debt that
that debt it's reversed compounding
against us right cuz it's costing us
money to hold this debt Right now
(20:19):
interest rates are high I don't know if
anybody's checked their credit cards but
they're well over 30% Back for like 08
till 2020 or so we had 29.99 AMX cards
which is 30% is egregious in itself
They're higher now People don't really
realize that but they're still swiping
their MX card or their Discover or
whatever Maybe you got a bank card and
(20:41):
it's 12 to 15% It's still counting
against you It's 25 to 30 guys It's debt
And everybody debt isn't evil I'm not
that guy I'm I I support healthy uses of
debt and I understand stuff happens in
life and you have to use debt But if you
really want to build long-term wealth
you got to find a way to live inside
your means If we keep pushing our
(21:02):
financial goalpost back I got a pay
raise I'm going to get the BMW My wife
got a pay raise she's going to get a BMW
you know or Tesla or a Tesla or or
whatever Or you know I'm going to get
the newest iPhone every single year We
have to eventually slow the slow the
movement of the financial goalpost and
our budget down We have to figure out
how to live inside of a budget because
(21:23):
most of us in the country don't make a
hundred or 200 or $300,000 a year to
where or and another factor is you're
not necessarily in a career where you're
going to get anything more than 2 3 4 5%
cost of living adjustments and maybe
once every 5 years get a promotion right
those those people can't stretch that
far If you're in a fixed salary you
(21:44):
really shouldn't stretch that far 110%
outside your budget because it's really
hard to make more money unless you're
willing to go get a second job And I
mean at some point in time you can only
work with so much So
so to young folks like Evan it's like
being disciplined to say a,000 bucks
came in I can spend 800 and I'm going to
put 200 here I'm not going to make a
(22:05):
recommendation today where this 200 goes
I just want you guys to think about the
over or under 60 concept and living
underneath your paychecks That is the
first place to start Playing in the
sandbox within your means That's it
Brian thanks again No pleasure is mine
Let's do it again Guys I'm going to tell
you right now you know every day people
(22:27):
call me up nobody wants the highest rate
Nobody wants the highest payment People
want the cheapest payment They want the
cheapest rate because you know you get a
new house you got to get a new BMW No
you don't Right No you don't You got to
play in your own sandbox If you're
serious about creating financial wealth
generational wealth it starts with a
couple different aspects Financial
planning and real estate Guys I'm your
(22:50):
favorite mortgage guy Steve Until the
next edition Bye
now Thanks for tuning in Make sure to
follow your favorite mortgage guy on
Facebook LinkedIn and Instagram Have
questions or ready to take the next step
reach out at
steveloans.com or call
757301-9776 We'll catch you next time
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