ITF 75 Scott Trench | Financial Independence

 

Everyone wants to achieve financial independence. The question is how to achieve it. Join Craig Curelop and Zeona McIntyre as they interview Scott Trench, the CEO and President of BiggerPockets, on how to reach this goal. Scott reminisces his path to financial freedom and the steps he took to start realizing that dream. So tune in and learn great financial insights on your path to freedom

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The Path To Financial Independence With Scott Trench

Invest2FI has now partnered with RentRedi because that is the software system that both me and Zeona use to do property management for our rental properties. It makes it super easy. We can send applications and get background and credit checks. When tenants come in, they can pay rent automatically through there. They can submit maintenance requests to everything you need to do for property management, all in one place.

That is why RentRedi is the thing that we have done. I have been using them for years now. That is why we reached out to them for a relationship on the show. I’m super excited to have them on board. If you go to RentRedi.com and use the code INVEST2FI, you will get 50% off your first six months. Sign up and use the coupon code. I can’t wait to see you there. Hit us up on Instagram or wherever and let us know what you think of RentRedi. It is an amazing software. I use it all the time. You can access it from your phone. Thanks so much. Let’s get back to the episode.

I’m here with Zeona McIntyre, AKA Z Money. How are you doing, Z?

I’m doing great. I’m going to pet sit in Dillon, where I’m spending this winter trying to learn to snowboard. By we, I mean me. We have been in Steamboat and Dillon. When we were in Estes Park, there was no skiing there. We do all kinds of pets. That is all over the Ikon Pass. That is what we were up to.

Do you have the Ikon Pass this 2022?

We have the Ikon Pass. We were going to do another set in Dillon and then one in Nederland, which is by Eldora.

Speaking of Ikon, we have got an icon of BiggerPockets coming on the show. Let’s bring Scott on.

Scott Trench, welcome to the show. How are you doing?

I’m doing great. Thanks for having me.

It has been a long time coming. We should have asked you sooner, but the longer we wait, the bigger the audience grows, and the more people are going to benefit from your information. Why don’t we kick it off with how did you first know about financial dependence and when?

I graduated college in 2013 and moved out to Denver, Colorado, to work at a Fortune 500 company out here. In the first three months, I was looking at how to build wealth generally, advance in my career, and those types of things in Google, because my job was not very demanding. I wanted to work more, so I stumbled across these things. I credit the Mad Fientist as part of that initial search for me and a couple of other sources, like Radical Personal Finance and a couple of things like that.

The biggest one was Mr. Money Mustache and his blog. That blog is for those who do not know about this concept of fairly extreme financial independence through baddassity, as he calls it. It is a pretty aggressive approach to cutting your expenses. By having lower expenses, you can save more and need less passive cashflow to fund your independence, which made a lot of sense to me because I’m a math nerd.

House hacking is a powerful way to live essentially for free and begin building your wealth with. Click To Tweet

Applying and getting your expenses very low to the extreme is good math for a lot of tax and investment cashflow and savings reasons. I also coupled that with a company called BiggerPockets, which I became a fan of and started listening to the podcast. I wanted a couple of these where I’m going to spend very little and invest those proceeds in real estate to become financially free. Specifically, I got excited about this concept called a house hack.

What were the big changes for you when you first were listening to Mr. Money Mustache, the Mad Fientist, and all that? The way that I think of you is being super frugal. You do not need any fluff. Maybe you were not like that before. What was the switch over to the FI mindset like?

I do not like any fluff. Craig is more an embodiment of that mentality than I ever was or will be, with that in your early days. I was not anywhere close to the degree that you embodied Craig when you were getting started in your journey. I broke down my expenses and said, “The biggest ones are housing, transportation, and food, so I’m going to control those three expenses and spend more in these other areas that were more meaningful to me,” which at the time was my Thursday, Friday, Saturday, Saturday night partying routine on each week. That was important to me.

I certainly was not frugal in a real sense there. I would not say that much changed for me at first, other than making that food and being intentional about moving towards the end result of the house hack. I also was like, “If I’m going to go home on Thursday or Tuesday night during the week and have no plans, I’m going to use that productively. I’m going to be reading, learning, and earning money by Ubering, tutoring, or doing something with my time to earn, enjoy, and use it. I’m not wasting it.” That is more of my mentality at that point.

You mentioned the top three things, housing, food, transportation. I agree with you that those are three things people spend on. Housing seems to be the outlier. Food and transportation, you could almost switch tomorrow. How did you cut back on food and transportation starting immediately that got you to your next house? That is what it sounds like.

I did not buy myself into this expensive lifestyle. I rented an apartment with the same roommate I was in college and the same person I’m a business partner with on real estate nowadays. He is one of my best friends. We went to the place for $1,100 and split it 50/50. We rented a cheap place, and I bought a brand new Corolla within the first couple of months of starting my job. It is not like I had any leverage there when I discovered Mr. Money Mustache and BiggerPockets. I was already on track to save $1,000 or $1,500 a month and up that to $2,000 by taking control of those expenses and moonlighting with a secondary thing.

I was able to save up $17,000 over the course of that first year. Plus, I had $3,000 in my checking account when I started my job. I was able to find another $1,000 or $2,000 somewhere from savings bonds my grandparents gave me when I was a kid. That was how I was able to mass the first amount. The big levers were the house hack, job switch, being able to live for free, and bike to work with the transition that I made. That was when I was able to accelerate my savings rate. It was that next leap forward a year later.

I want to dive into the house hack because you mentioned it a few times. Craig gets a lot of credit for this house hacking strategy but it sounds like you might have started doing it before Craig came around.

I do not get any credit either. I got to pass the buck up to Brandon Turner, who wrote an article in 2013 called How to “Hack” Your Housing and Get Paid to Live for Free. I was like, “That is it. Either I can retire and house hack because I only need another $1,000 a month to be done, or I can buy that and turn it into a couple of rental properties downstream.” That was clearly obvious to me. I could not understand why other people were not doing this to a large degree. I certainly did not invent it. I just did what the article said. This has been something that many people had done over the years before it was cooly coined house hacking by Brandon. That was the approach there.

I bought a $240,000 duplex and rented one side. My roommate came in and lived on the other side. He later bought house hacks, and we combined our portfolios in later years for that. That was a powerful way to live essentially for free and begin building my wealth with that. Craig took it to the next level and began to make money in a serious way while living in the property. People nowadays are taking that steps further than Craig and getting even more creative strategies with it. It is fun to see the evolution. I can’t claim credit for inventing it. I just took what was there and iterated on it a bit, and then Craig took what was there and iterated on it again, and so the story goes.

Back when I did my first house back in 2017, the only way to do it was to buy a duplex, triplex, or quad. We then discovered like, “If you are okay with living with roommates, you can get this even further and further.” Now, people are Airbnbing and living in their campers and whatnot. Everything has gotten evolution, and that is a testament to that.

Scott, you are a huge mentor to me throughout that time, especially in the first few years. Let’s kick it back. Your first year, you are scrappy. You are saving $1,000, $1,500, maybe $2,000 a month, and then you get that first house hack. This is the deal that makes Scott a real investor, his first house hack deal. Scott, tell us a little bit about that. You said it was a duplex and bought it for $240,000. Where was it? What did you like about it?

ITF 75 Scott Trench | Financial Independence
Financial Independence: The three biggest expenses: housing, transportation, and food. If you can control those, then you can spend more.

 

I have joined a mastermind group in the Denver area of local real estate investors. I had no business being a part of this mastermind group. They all had properties, and I did not. They let me tag along as a young kid. We met at 7:00 in the morning on Thursdays, which killed my Wednesday outing schedule. I took each of the individuals in that group out to lunch that time with Joshua Dorkin. I got increasingly confident about investing in real estate by listening to podcasts and meeting with these individuals.

One of them sat me down and drew out a map of Denver on a napkin or a paper towel. He was like, “These are the areas to go in. On this side of town, you want to go over here because this is where the path of progress is. On this side of town, you want to go over here because that is where the path of progress is over there. These are the blocks that I would look at within your price range.” It was perfect. I was like, “Here it is.” I took that and googled on it for a couple of months and then posted my intentions to the BiggerPockets forums. It was my first post back there. You can still look it up with that. An agent responded and said, “Welcome to the site.”

She pinged me and said, “I hear you are looking for duplexes. Here is a deal.” That is how I found my deal. It was because I posted my intentions and then an agent brought me this duplex. What was cool about it was that this was a property offered through HomePath. It was a duplex and an investment property.

I’m not even sure if that program is still around because I have not been looking for it and would not be interested now and doing that same approach. Essentially, it was a foreclosed property that was only being offered to people who were going to owner occupy and not to investors. At that time, there was not very much interest in house hack owner-occupied duplexes. Investors could not compete with me to offer on the property.

I had 30 days, which is a super rare window for a good deal like this at that time. Everyone says how hot and crazy the market is. It has been crazy for the entirety of my investing experience. That same guy came through, and we walked through the property, and he said, “This is a great deal that I would not worry about the inspection report. That one is going to be an issue, but this is still a great deal.” I went ahead and that gave me the confidence I needed to purchase the deal between my agent and that particular individual. It was a $240,000 duplex, mortgage was $1,550, and each side rented for $1,100.

I moved into one side, my roommate paid $550, and the other side paid $1,150. They had $1,100 plus 2 cats, which is $25 per cat is my growing rate at least on that property at that time. That was $1,700 in total rent, which you are clearing $150 a month. No way am I clearing $150 a month because I’m doing so much work on the property. It is much cheaper than the $550, $600, or whatever I was paying in rent per month for the apartment I was renting previously.

I love that this was like a very authentic plug for BiggerPockets because you found your deal in the forums. A lot of magic happens in the forums. If you guys are reading and you are not on BiggerPockets, get active in there, get some keyword searches, and start talking to people because you can find a lot of good stuff.

I also want to highlight the mastermind because that is super-duper smart. You can learn a lot on your own through books and podcasts but it is great that you found a community right away and took everybody to lunch. You made that initiative move to build these relationships that I do not think a lot of people will go and do.

It was so powerful for me because two things happened. I might have posted the forums in May or something in that time period in 2014. I also joined BiggerPockets as an employee in July 2014 and closed on the property in November 2014. I met the guy who gave me all the advice about the Denver market, that mastermind group.

I met Joshua Dorkin, the Founder of BiggerPockets, while taking out another guy in that group to lunch. He showed me his coworking space. All of that was a huge influence on my life. It was a great thing to join the mastermind, and that spurred some of that. I’m lucky to have those great outcomes happen from that same group.

Did you pay for that mastermind?

No, but I bought bagels and a bunch of lunches.

The fact that you have got to go to a free mastermind, which is effectively just a meetup, goes to show why you need to be attending events, telling them in person, and making impressions on everybody there because I guarantee you that you are the only person at that meetup that went into everyone for coffee. That was a piece of advice that you gave me when I moved to Denver, go on BiggerPockets, meet a bunch of investors, and then take them out to coffee at 7:15 AM for 6 months.

It's all about financial independence and living life on your terms and doing what you want to do. Click To Tweet

You then end up knowing everybody in the community and getting opportunities that no one else would have had. Even if you had to pay for that, I highly recommend paying for masterminds because when you do this, you are going to accelerate your timeline. If you had never joined that group, I have no doubt that you would have a house hack. It would probably be until 2015, 2016, or 2017. You would have lost out a lot of appreciation.

It is a very reasonable statement.

You got that first house hack. You are living there effectively for free. Let’s go back to those three things. What are you doing for transportation at that point?

The house hack was close to work. I’m biking to work 70% of the time. I’m at that point. I do have my Corolla. I played rugby as well, so there is a nice triangle between biking to work, biking to rugby practice, and biking back to my place, which was intentional. That was part of the decision about where I lived, where I worked, and which team I played for at the time. It is all that kind of influence. What I do for food is do reasonable home-cooked meals from grocery stores. I had three dishes that I knew how to make, and I had them quite a bit. There is one set of vegetables, and then swap in the chicken, beef, or pork chops.

Can you try to go to find stuff on sale?

I do not think I got as good as all that. Over the course of that next year, I had more and more income potential because BiggerPockets was a fast-growing startup. I had more opportunities to sell ads, increase my base salary, and do more around the company.

You said that Scott mentored too, and I know you guys have this full bromance. I wanted to know a little bit about that relationship. How does it come about, and what influence did Scott have on you, baby Craig?

Scott told me what to do, and I just did it. It all started when I was working in California at that time. I applied for the job at BiggerPockets as a financial analyst. I wrote a cover letter that Scott was impressed with. He interviewed me, and I somehow got the position of financial analyst. While we were there, Scott was coming out with Set For Life.

I told him, “I want to write a book.” He’s like, “Write a bunch of blog posts, and maybe someday you’ll get to write a book.” Every week or so, I would come out with a new blog post. After two years of that, I had the opportunity to write the book. Through that time working at BiggerPockets, Scott and I had a lot of one-on-ones and had some good times. Scott has given me a lot of great advice.

There are good parallels between our stories to a certain extent. You would have done the same things regardless of whether we had the relationship, or a lot of them may be at a different timeline, perhaps like I said with that. Craig drank the Kool-Aid of BiggerPockets and was like, “It is all about financial independence, living life on your terms, and doing what you want to do.”

He was not afraid, despite us making fun of him sometimes, to iterate on the best practices and take them to the next level, like that house hack where he rented out one of the rooms and slept behind a curtain in the living room, and that bike to work every day. You went a year without drinking a drop of alcohol while attacking your goals.

That is what it takes at the age of 27 to have complete separation from the world’s dependence on wage income. The level of passive income that you can do, whatever you want, go on trips to remote islands for months at a time, start businesses, buy houses for your family, and all the other crazy things that Craig has done.

Scott, you finished your first house hack. How quickly did you move into your second one?

ITF 75 Scott Trench | Financial Independence
Financial Independence: If you want to get the other side of this economy and this world, at some point you have to make that choice.

 

March 2016 was the second one.

My roommate bought that one, and we decided to pool the portfolios together and began balancing it out. That one was on the other side of town, forming a similar type of triangle as I described. That one was more of an appreciation play. It was on the West side of Denver, closer to the mountains, South of a place called Sloan’s Lake. What is cool was it was right next door to a nice duplex that was side by side.

Those were selling for $550,000 or $600,000. They were able to get this duplex for $360,000. We thought, “There is a great chance of appreciation in this area.” The first deal I mentioned is less cashflow or a home run, but the appreciation prospects and lifestyle are a little bit better than the little box that we were living in previously in the first duplex. I put 5% down and paid him $550 or $600 in rent with that, and we planned to begin pooling the portfolio within the next couple of years.

You bought the house for $360,000. Do you recall what your mortgage payment was on that?

It was $1,700 on that one.

If you were effectively both paying $550, let’s say it is $1,100 coming from your unit. What did you rent that other unit out for?

It was up and down. The top unit was rented for $1,500.

You are still cashflowing a decent bit. It is not like it was a negative cashflow play in an appreciating area. In year two here, how much are these houses appreciating?

I can’t give you a good feel for what it was in year two. I can give you a good look at what they are worth now in year 7 or 8 for the first one and year 6 for the second one. It was hard to tell because that was not the goal. We were not valuing them that way. In 2020 or 2021, we have multiple more properties by that point and we cash-out refinance many of them to buy more. At that point, we knew what they were worth. The asset value is not something I track closely in real-time for the properties.

Needless to say, after a few years, you were able to cash-out refi, which means they have appreciated a decent bit.

That is with 5% down. There is a lot of appreciation going on if you are able to cash-out refinance hundreds of thousands of dollars on a 5% down payment.

I do not think there is any secret that the market has been appreciating like crazy all around the country. The biggest thing that I want to bring up real quick is that I remember when I bought my first duplex in 2017. I was comparing it to Scott’s duplex that he bought in 2014 for $240,000. That was side-by-side versus mine being up-down. It was a few blocks away. I was like, “I am getting hosed. This is not a good deal, but whatever. I’m getting it.”

You probably got a better ROI per year than I got.

BiggerPockets isn't about anybody in particular. It's about the collective wisdom of the crowd and moving towards financial freedom. Click To Tweet

Who is to say? Now, a few years after my first one, that thing has almost doubled. Yours has probably tripled at this point. There is still so much meat on the bone to be had with these appreciate any markets.

If people do not know, when you do a cash-out refi, you usually have to leave 25% in the deal so you can take out 75%. It shows how much it would be appreciated if you had only put 5% down and then you were able to take out money still. I’m highlighting that for folks.

We should highlight, too, that I’m much more conservative than Craig was in his journey. Most of the dollars that I’m saving up are going into the stock market with that. The house hack was aggressive at that point in time. The partnership makes it a lot more conservative with this. I have bought two properties since that second house hack with my partner and invested in syndications and a lot of investments in stocks. Most of my other net worth is in BiggerPockets from various opportunities I had to invest in the private business of BiggerPockets itself, which is an aggressive investment.

You are doing this investment on the side, but we can’t neglect your career path, which is super fascinating. You start off at a job that you do not love. You move over and take what seems to be a massive risk. When you joined BiggerPockets in 2014, how many people were there?

Three people. I will tell you my mindset at the time was not that it was a risk because I was like, “The best-case scenario at the company I’m working at is climbing this corporate ladder piece by piece.” I had a choice at that time, the same deal as that mastermind, but I got two job outcome opportunities, one at BiggerPockets and one at a real estate brokerage.

I have a peer who went into real estate brokerage and did very well, which makes hundreds of thousands of dollars a year as a broker through that opportunity. I like to think that either path would have been a good outcome. I chose option B for BiggerPockets on that and had a good experience here. That was the big thing.

When you met Josh, how did you start off at BiggerPockets? What were you doing?

At the time, it was just Josh and Brandon Turner. Brandon was living in Washington State, so it was just Josh and this empty office. I worked side-by-side with Josh and did all the things, refunding or handling customer support issues or finances and updating the metrics, and taking on bit-by-bit all of these pieces of the company, from ad sales to managing our subscription business to interacting with the technology team, all of these different aspects.

From 2014 to 2016 and 2017, I was progressing from Director to Vice President, whatever that means from a 4, 5, or 8-person company. By the end of 2017, we were getting closer to a traditional org structure. We have head of our product division and head of HR. I’m the Head of Operations. There is Brandon, who is the Head of Marketing and Growth and we have an analytics team. Those pieces are starting to come more into play. Josh needs to step away from the business for personal reasons. That is when I became the president of the business and formally assumed the leadership role that I have now.

How did you get from the director of operations? You must have shown some promise to Josh as a company grew to have him take you along with him versus leaving you somewhere.

Maybe it was an unhealthy or healthy complete obsession with the business, its mission, and all that stuff. I’m not a founder of this business by any stretch but I’m all in on what we stand for and what we were about. I was a fan of the business and got value from it prior to joining. I like to think I would have been a much more ironically aggressive investor if I had never worked here and been a user of the site. I would have bought a lot more real estate doing some other job that I was less all-out engaged with. I love the business and tried to loyally serve Josh Dorkin as the owner’s personal interest at every turn throughout that entire thing.

It is how trying to keep those two things in balance, and I just said yes to every opportunity. Every day, I would go to work and did not have a thing afterward. I would stay until 8:00 PM or 9:00 PM writing blog posts or interacting on the forums because I like doing it. Josh would not let me write blog posts during my day job because it was not in my job description. I loved it and took on more and more, and because I knew every aspect of the business, all the people were trying so hard, and also building a presence in the community as an author and a voice in the podcast, all those things might have made me a good candidate.

I’m curious how it is now because you are going from a three-person company to hundreds. Is it lonely without Josh and Brandon now? How has it felt being the leader of the pack?

ITF 75 Scott Trench | Financial Independence
Financial Independence: If you help people become financially independent, they are likely to realize their potential.

 

Being the CEO is a lonely job. I like everyone I work with and enjoy spending time with my colleagues. There is the board of directors, which Josh is on. There is the talent, as we would refer to Craig, Brandon, David Green, and folks that represent the brand on the podcasts, authors and blog authors, and then our employees. I’m in the middle.

There are friends, and you are going to be friends with folks, but there is a distance to that because I have to make decisions at some point that impact folks’ lives and have to do it for the best interest of the company. It is a lovely role, but it is also a good role, and I would not trade it for the world because we have a pretty awesome company.

It was so obvious to me from the first moment I joined BiggerPockets that this was a company that was going somewhere because I got it. I was a fan of the business. It changed my life and perspective before I ever bought the property. I knew what was going to happen for my career. I knew it was an inevitable outcome, even though there could be ups, downs, sideways. I’m like, “If I continue investing like this, it might happen in 3, 7, or 15 years. I’m going to become financially independent.” It is right there.

It is an inescapable long-term reality unless the entire economy begins taking in the wrong direction. There was nothing like this business out there that was doing this. All of the other resources out there that help people invest or become financially independent are all about one person, Joe Schmoe’s plan to get to financial independence.

What is special about BiggerPockets is the fact that it is not about me or anybody in particular. It is about the collective wisdom of the crowd and moving towards financial freedom. To me, it was never in doubt that the business would grow to what it is now. It never occurred to me that would not be an inevitable outcome of what Josh had started.

You did mention this, and I’m curious about what you are thinking about the market coming up. BiggerPockets released a market watch talking about some yellow flags towards a recession. As somebody who is done cash-out refi, I always wonder about that. At a certain point, if the market drops, you are underwater in your house or just tight. How do you feel and how are you balancing your properties going forward?

I told you that I have that consistent conservative approach to investing in real estate. My partner and I bought another property in 2021, a big duplex, for $720,000 here in the Denver area. It is a high-end property. Each side runs for $3,000, so we get a pretty good cashflow on that. We were going to buy another one this 2022, another one in 2023, and the year after that.

One day, the market will crash or downturn because that is the natural cycle of any market. At that point, we will continue buying more property on this. The idea is to continue marching along there. This is dollar-cost averaging from a real estate investing perspective. This is what I have planned and mapped out from my blog posts in the 2014 and 2015 days of real estate investing. I’m continuing to trot along that path. It is a bad time to go all-in on real estate, as it always is. It is also a bad time to wait and time the market. My mantra is, “Build a strong financial position, invest repeatedly and consistently, but not aggressively.”

I was going to say you are dollar-cost averaging. I love that you mentioned that, which means that if you are putting money into the market consistently, you are going to buy sometimes at the bottom, sometimes at the top, sometimes at the middle, but over time, you are generally going up. It is the same with real estate. Buy consistently and do not be too aggressive.

The thesis behind that is, at the end of the day, inflation is going to carry the prices of real estate up over the long run. In Denver, in particular, that is going to be even more pronounced than the nation has on an average basis. It is very freeing. If you accept those two arguments, then it is like, “As long as I’m not buying and do not have a disaster happen, I can buy consistently. It doesn’t matter if I pay 5% under or over the asking price now.” I try to get a great deal because that will de-risk the situation in the short run, but it doesn’t matter over a 30-year period. It will change your return from a 12% CAGR to 11.5%, depending on the purchase price you got now, maybe 11.8%. That is the philosophy. It is very freeing to me.

I love that you are saying this because I do a lot of consultations with investors, and people are so scared and act like they are only buying one house ever, but most investors are going to collect the portfolio over time. It is nice to have that idea of going, “You are not always going to buy the best deal ever.” You might get lucky a couple of times with a lot of us do, but that takes preparation, networking, and all these things that we talked about. Know that some deals are going to get better than others, but if you hold them for a long time, they might all seem like great deals one day.

That is the big problem I want to call out. Craig, your first deal was about $385,000. My first deal was $240,000. At that time, I’m making $48,000 a year, so that is five times my annual income. I’m in the same ballpark with Craig on that. That is all-in. It is always a bad time to go all-in in real estate. At some point, you have to be willing to say, “I have no choice. I have to slide the chips on the table and get this process started.” That is the risk that terrifies every new investor and why it is so hard to get into this game.

It is so easy from this side to say, “Do dollar-cost average, buy one every year, and it is great.” They will say my entire net worth is $20,000 and I’m buying a $240,000 asset. That is twelve times the net worth that I’m putting into the table. I’m not going all-in times twelve. That is the fear. That is a reasonable place to come from. If you want to get to the other side of this economy and this world, at some point, you have to make that choice.

There's an entry point price to getting started in real estate that's got nothing to do with dollars or down payments, but the amount of time you've spent figuring this stuff out. Click To Tweet

That is the beauty in the house hack. Nothing is without risk, but you de-risk yourself quite a bit when you are living at the property and seeing it almost every hour of the day like, “What is going on? What is happening?” You are there to see the tenants and what they are doing. Not to mention you are still putting such a small amount down. You are not risking all that much. I want to go back a little bit.

You told it to me years ago. I’m putting a small amount down. $12,000 is almost all the money I have ever accumulated in my entire life. It is a small amount for you but it was not a small amount for me. I get your point completely. I’m empathizing with the people who are trying to get started because the same terror you and I experienced has to be going on in the minds of people nowadays.

Making that first investment is scary, but that is what we say. What I want to talk about real quick is if you buy and hold and can hold the asset, it is so hard to lose because, over time, real estate will go up. It might go down in 2023, in 2, 3, and 5 years. In 10, 15, or 20 years, it is going to be higher, most likely. The people who get caught with their pants down and that should worry about that 5% are flippers, people trying to BRRRR those people that need some short-term cash-out or short-term sale. That is where people get hurt.

I say this all the time. There is an entry point price to getting started in real estate. There is nothing to do with dollars or down payments. It is the amount of time you have spent figuring this stuff out. I paid that price to the tune of 500 hours cumulatively before closing on my first duplex between podcasts, networking books, online interaction, whatever. If you are willing to pay that price, going all in feels a little bit less scary. I would encourage anybody to do that before buying that first property.

The last thing I want to say on this subject is that it always feels expensive. I do not know if I have talked to somebody who said, “When I got this place, it was so cheap.” Your first deal is usually a big stretch. My first condo was $162,000, and now it is worth $300,000 something. At that time, it was so scary because it was such a big leap. I want people to know that is normal. Most of us go through this little bit of a stretch and a leap of faith.

Let’s have a quick recap. You started off in a career you did not love, found BiggerPockets through a mastermind, got your first house hack, and accelerated very quickly through BiggerPockets. Your strategy is super simple, “Do not grow your real estate portfolio as fast as humanly possible, but dollar-cost average it at one per year.” What is next for you and BiggerPockets?

I personally feel that my financial position is well past the finish line from a financial independence perspective. I’m ruminating on this the other day to think about like, “What am I doing?” I wrote this book, Set For Life. It is about financial dependency you can binge-watch. I live a wonderful, normal upper-middle-class life. I have a nice apartment and a wonderful wife. We have a normal kitten. I get up most days, come to work from 8:30 until 6:00, go home, and enjoy my day. That is the last thing I would have expected my life to look like years ago when I started this journey, and I love it.

What is next is we have a cool platform here. We are helping hundreds of thousands of people achieve financial independence. We were one supporting plank in that journey for them. We want to create a million accredited investors to move through our platform. A million millionaires is another way to put it. We want to continue growing this. We want to build a world where you have got the BiggerPockets Real Estate Podcast. We got the BiggerPockets Real Estate Rookie Podcast. We have got BiggerPockets Money for Personal Finance.

We want to explore worlds where there is a flipping ecosystem with podcasts and YouTube, a wholesaling one where there is one for people who are putting the other syndications or bigger deals, and one for the passive investor where they can go in and analyze these different types of investments because I do not think there is a lot of good information on that out there. There is a big opportunity to help people make good decisions about private investments.

There are lots of cool things that we want to build and create over the next couple of years. I’m happy doing that. That work also will happen to continue to allow me to add large amounts of money to the pile to continue to fortify that. My long-term vision of financial freedom may be able to expand far beyond what I thought I wanted even a few years ago. For now, I’m pretty happy in that situation. All the cash that I generate, I’m going to dump into index fund investments and real estate on a consistent basis.

You are living your next type of thing. I love it.

I’m going to continue this for as long as our shareholders will allow me to.

We are going to head into our final four. Do you have any last words of wisdom before we do?

ITF 75 Scott Trench | Financial Independence
Who: The A Method for Hiring

I like what you said about the networking and self-education piece. A parallel between both of our stories is this relentless coffee with everybody. You never know who is going to be a valuable connection or who you can help. These people you met with for coffee three years ago are now taking over the world on TikTok or whatever it is.

It is fun and exciting to see, and it is the explosive growth of your career and all these opportunities that come downstream from it, along with being very fun. The biggest piece is you get this formula in place, but you also set yourself up for these opportunities that you can’t predict, that luck element by meeting all these people.

One takeaway, get a coffee with someone each week in your real estate market, go through BiggerPockets, and find somebody in the forums. Let’s head into the final four. Z, kick us off.

Scott, what are you reading now? I imagine you read all the BiggerPockets books.

I’m reading a book called Who: The A Method for Hiring. It is probably not very exciting to you if you do not run a business and hire a lot of people, but I found it to be very powerful in terms of a process for making sure I know here is what good looks like, and here is how to go through a process to find good in the hiring market.

What is the best piece of advice you have ever received?

The best piece of advice I have ever received is to spend less than you earn. Mr. Money Mustache, what is the shockingly simple math behind early retirement? The less you spend, the more you accumulate, and the less cashflow you need to sustain financial independence.

Question number three. What is your why?

My why for BiggerPockets and my career is if you help people become financially independent, they are likely to realize their potential. If you can help a million people become financially independent, each one of them may have some interesting contribution downstream to society in the form of starting a business, running for office, starting a nonprofit, producing thought leadership on their blog, or whatever that is. We have a lot of great examples of that from the BiggerPockets community.

What would the world be like if it was filled with male and female copies of you?

There would be no art and terrible music because I cannot produce anything like that. There would be a lot of arguments, debates and a lot of house hackers.

Will there be any tenants?

Spend less than you earn. The less you spend, the more you accumulate, and the less cashflow you need to sustain financial independence. Click To Tweet

I’m a tenant, so there will be a lot of tenants who are financially independent and renting out places for six months or a year at a time around various sections of town in the world.

Scott, where can people find out more about you?

You can find me at BiggerPockets. You can search me in the search function there or you can find me on Instagram at @Scott_Trench. Look out for the fake Instagram spammers that are spoofing my name and have various misspellings of it.

Check them out. If you do not know Scott, you should. Scott, thanks so much for coming on. It has been an honor having you here. I will be talking to you soon. We were grabbing lunch in a couple of weeks.

That is great. Thanks so much for having me.

That was Scott Trench. Z, what do you think of Scott?

Scott is so likable. I would like a world of Scotts. I’m okay with that. It was enjoyable to know his story.

Scott is one of my favorite people. He has done a lot of different things to me throughout my life, a mentor, boss, coworker, and friend. There are so many different things. He is such a great person in all those things. He embodies BiggerPockets’ mission, financial independence, and real estate investing, and he is a selfless human being.

He shows that in this episode. His trajectory was growing a corporate job climbing the corporate ladder. He made a very quick switch, and his life has completely changed forever. Everyone has got the opportunity to do something along those lines. Maybe it is not finding BiggerPockets, but at least it can be investing in real estate, starting your own real estate company, or something along those lines.

I also appreciate knowing that he has such a reasonable investing path because when you listen to people like Brandon, you go, “There is no way I’m going to have 100 doors or have $50 million in real estate that I’m managing.” Scott is a very repeatable, easy plan, which is to buy one house a year. It sounds hard if it is your first house, but after that, it gets so much easier. It is cool that he is modeling that.

The dollar-cost averaging thing is genius. You are essentially doing that when you house hack anyway. That is great. It does not matter what the market does. You buy at the top, at the bottom, and eventually, the rising tide lifts all ships. Before we get out of here, we have to ask you guys. If you could please leave a rating or review on iTunes, it would mean the world to us. Hit us up on Instagram. Let us know how we are doing and how we improve on the show. We were here for you. We would love to know your feedback. With that being said, we will see you all next episode.

 

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About Scott Trench

Scott Trench is the CEO and President of BiggerPockets.com. Scott has dedicated his career to helping ordinary Americans build wealth in part through real estate investing. Since joining BiggerPockets in 2014, Scott has authored wealth building book Set for Life and joined Mindy Jenson as a host of the BiggerPockets Money Podcast . He stays active in the BiggerPockets forums and contributed hundreds of articles, market analyses, and files to BiggerPockets. He has also contributed to other personal finance blogs, along with traditional news outlets including Time, CNBC, and NBC.

An active real estate investor in the Denver market, Scott currently manages a private real estate portfolio and holds his real estate license as a CO broker. Scott graduated from Vanderbilt University with degrees in Economics and History, Corporate Strategy, and Finance.