← BiggerPockets Money Podcast
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- [00:00]
A
What if you could reach financial independence without ever earning a six figure salary? Today's guest did exactly that. Never making more than $40,000 a year, yet still achieving financial independence in his 30s. History challenges everything we think we know about income saving and what it really takes to build wealth. Let's get into it. Hello, hello, hello and welcome to the BiggerPockets Money Podcast. My name is Mindy Jensen and with me, as always, is my always loves a smoking hot deal co host, Scott Trench.
- [00:35]
B
Thanks, Mindy. Love netting great deals and today we're going to talk about how Kyle served up a bunch of them across his career. Today we're going to talk with Kyle, who really never earned a significantly large income, but still achieved fi in his 30s through a combination of really smart decisions here. And I'm excited to hear about that story because I know that's a big knock on the fire community in a lot of cases is it's hard to find folks who consistently earn relatively low income and still achieve fire in their 30s or even their 40s without doing something crazy. And Kyle fits that mold. So, Kyle, thank you so much for coming on the show today to share your journey.
- [01:10]
C
Absolutely. Scott Minney, thanks for having me here.
- [01:12]
B
So could you give us a little bit of a background and, you know, how did things set up for your journey to financial independence and where does it begin?
- [01:18]
C
Sure. Yeah. I would say it's like growing up my parents ended up what I did not know were your typical millionaires next door. They worked hard, paid off all their debt, drove paid off cars. So my mindset was always kind around that and then kind of feeding into what we'll talk about later as far as like my occupation. My parents instilled a passion for tennis in my life at an early age. That's how they met. And then so I started playing and then my first job in high school was actually teaching tennis and then stringing tennis rackets. Kind of did that all the way through College. Graduated in 2012. And when I took my first big boy job, I found that I still missed teaching tennis. So I went right back to teaching tennis three months later.
- [01:56]
A
And what was your first big boy job?
- [01:58]
C
Well, it was supposed to be sales. Very, very small company. Ended up being more of construction. I was led to believe it was sales, ended up doing construction and all I wanted to do is be back on the tennis court. So it didn't take me long after three months of pouring concrete to be like, you know what, I can just go teach tennis again.
- [02:15]
A
And what does Tennis teacher pay, I
- [02:18]
C
guess for the audience, depending on where they live, it can be significantly different. I live in Columbus, Ohio, and teaching tennis indoors, where we're doing that usually seven or eight months a year, is not very lucrative compared to what you might be able to do if you're teaching outdoors somewhere. So I started out making $25 an hour, and eight years later I had a huge raise all the way up to $27 an hour in the winter. So it was always bare minimum. I actually made more when I was teaching in high school and just being able to pocket that as opposed to working at a big club in the summers, I could make a little bit more for sure, but it was, it was not a substantial difference overall.
- [02:55]
B
Walk us through what this job entails. Is there, is there some flexibility in this or are you at these courts all day from dawn to dusk?
- [03:02]
C
That's a great question. And that's actually something that ties into how I was able to reach FI as well. So I started teaching again part time while I was working that construction job, realizing I didn't enjoy it, and went full time in the summer of 2013. And just like any service industry, it's like you're working when other people are not. And so often what it was is I would be up early on the tennis courts, teach three or four hours, and then I'd have like a two to three hour gap in the middle of the day and then I'd be back on the court anywhere from three or four o' clock until there was one night. I remember I'd teach till 10 o', clock, but normally it was like eight or nine o' clock every night. Yeah, on the tennis court. Had my middle of the day open by the end of the day. All I wanted to do is like pound some food, go to bed. And so I didn't really have a lot of opportunity to spend money, which ended up working out to my advantage as well.
- [03:50]
B
Give us some framing for the journey. Was this entire period in Ohio or did you move around a little bit?
- [03:54]
C
College, Majority of it was in Ohio. Smaller D2 School, northwest Ohio. A blessing. With that I was able to get a full ride just through tennis. And so all I was doing, anytime I was making a little bit of money, it was going straight into my bank account. Came out of school with no debt, which obviously helped. And then I mentioned briefly my parents just with the mindset they always owned five or six rentals. They had a five unit and a duplex near us growing up. And then I remember they bought one more duplex. And so I just grew up, like seen my parents work on it. I would go over there with them. And so I just had this mindset early on. It's like, oh, like this is what you do. And so coming out of college, I actually put an offer on my first house. This was in October of 2012. It was accepted, but it was a short sale. And for those that haven't done a short sale before, it is not short. This was actually abnormally long. So this one took 11 months for us to close on.
- [04:47]
B
Who's us in the deal?
- [04:48]
C
Oh, I'm sorry. Yeah, that's a good question. It was actually just me. I don't know why I said us.
- [04:52]
B
So you, you graduated in 2012 and you bough this property in 2013 on a short sale. How did you finance it and have liquidity to make this purchase?
- [05:01]
C
This is how it ended up working out. We offered a cash purchase. My parents said since I was able to get the full ride, if I could come up with a 20% down payment, they would help me with the first loan. And so purchase price was155,500. We put the offer in and the seller ended up accepting it. He actually lived in California. During the time we were waiting for bank approval for the short sale, someone actually broke in and stole copper piping. And so at the time I was living in a small apartment maybe about 20 minutes away from the house and basically told the seller, hey, this is what happened. I was checking on the property like daily. I was just ready to get in there and able to work out an agreement with him to where he allowed me to move into the property early. And he did not charge me rent. He asked me to put utilities in my name. And just growing up around doing handy stuff with my dad, we ended up building an extra bedroom and bathroom. I moved in, two roommates, wasn't paying rent, and all of a sudden I had a little cash flow coming in. And so for 11 months I was able to cash flow without paying rent, without owning the property. And I mean, huge blessing that someone broke in to steal the copper piping. I don't recommend it, but I mean it definitely worked out this time.
- [06:09]
B
It kind of worked out for this seller too because they would have had to pay utilities and basically maintain the property and they would have lost even more value while they were waiting to
- [06:16]
A
do that, they would have had to re pipe it too. Did they repipe it or did you repay?
- [06:20]
C
So I told them I'd handle it, Went in threw my pecs in there and just went to work. Got a couple roommates. I also don't recommend this, but my first two were actually off Craigslist. It somehow worked out I'm still alive, but I've never used Craigslist since.
- [06:32]
A
That was my first thought. And you didn't even get murdered.
- [06:34]
C
Didn't get murdered.
- [06:35]
A
Here we are, knock on wood. Don't ever get Craigslist.
- [06:38]
B
I believe the term house hacking came out like a year or two after you completed this purchase. Is that. Is that right?
- [06:45]
C
Yeah, it was. I was actually relatively a BiggerPockets OG as well. Like I remember I started reading some books. Obviously the little purple book was a big difference. And then millionaire real estate investor. Something I don't remember.
- [06:57]
B
That's a Gary Keller book.
- [06:58]
C
Yeah, it was Gary Keller. So it's probably a millionaire real estate investor. That's a great book. It was actually when I was working that sales job that was construction, when we had downtime, I was sitting in the office just reading that instead of making calls because I was already tapped out and so just started learning, started searching. I think at the time, like Josh and Brandon were like solely posting on biggerpockets, who started diving into some of those articles. And then shortly thereafter, yeah, house hacking came out as a term. I was like, yeah, I think that that's what I just did.
- [07:23]
B
So we're making 25 bucks an hour, maybe six to seven hours a day for, you know, seven, eight months of the year. And then we're also house hacking. Tell us what happens next and how. How the. The journey progresses from 2013.
- [07:36]
C
Another blessing of the time that I got in and put in the sweat equity. It was basically just grind on the tennis court for about two years. Still reading a ton. I was constantly looking at properties, but didn't really have the financing. I was 1099, like not making a lot of money. Luckily still had technically no debt besides the mortgage. And so I ended up just like talking to realtor after realtor after realtor trying to see if I could just make connections. 2015, I find this beat her up. $29,000 property just across the highway from where I was currently living. So I was on the slightly better side and this one was a little bit rougher area. At this time I just started dating my now wife. She pulled the old bait and switch, convinced me that she would come work on these properties with me. She did up until she had a ring on her finger. But she was in there ripping out carp walls with me. First actual rental property, and I had to do an eviction, which was no fun. So that was 2015, $29,000. I've probably put maybe $15,000 into that. And in 2021, it appraised for like 180,000, and we were able to cash out refi. And so just the benefit of, like, putting in the work and then holding in the market definitely played out to my advantage on that one.
- [08:46]
B
That's a huge gain. That's awesome.
- [08:48]
A
Yeah. I believe that's called a burr. So you did the house hack, you did the brrrr. Have you done the live in flip?
- [08:53]
C
Technically, I will say no, because we're not. We're not as far as you are. I did. In 2016, my wife and I moved into another house, and I should actually backtrack here for a second. I fell in love with house hacking after I did it. My wife did not. And so when we purchased our first place together, we moved out of that first house that I was renting. I kept it as a rental, and we moved in together into a townhome. And I was like, hey, this has a second bedroom. Let's finish this. We can make this an Airbnb and full stop. So she's like, yeah, that's not happening. Love her for it, because that would have been a terrible decision probably for our marriage, but I always had that itch. And so for two years, I just kind of kept my eye on the market and finally found an area we wanted to live in. And I was just looking for hidden value, and so found a property with high ceilings but an unfinished basement and able to finish it out, went in, did the sweat equity again, put in a separate entrance, separate laundry room, separate kitchen, and we ended up making that actually a furnished rental for the first time.
- [09:51]
B
It seems like it's a theme in your career that you start out with an intent to do something and then it turns out to be a construction job.
- [09:59]
C
This is actually the first anyone's mentioned that, but yeah, it's like, maybe it was a blessing that I went into construction for a little bit, so found a way to do a little bit of the sweat equity.
- [10:08]
B
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- [13:06]
C
So at that time it had been two years of living in this property. My mortgage was completely covered. My total payments on there are a little bit under 13 with principal, interest, taxes and insurance. So I was just. Every dime I made, I basically saved. All of my fun that I like to do was essentially free anyways. I like to play basketball, I like to play tennis. I wasn't going out and spending money and so I was able to do a cash purchase on that Next one in 2015, did that. And then at that point in time I had lived in the property for two years, had put the sweat equity in, I was able to get a HELOC on it and I used that money to buy my next one in early 2016. And that was $59,500 and it was actually a Section 8 tenant. She lived there for 10 years prior to me purchasing. The owner was just older, ready to be done from there. End of 2016 actually found my first property on bigger pockets. So I went through the marketplace, started connecting with people, found one in a secondary market still in Ohio, but about an hour and a half away from Columbus, called Dayton and got my first four unit there. And around that exact same time is when my wife and I got married and moved into the new townhome together.
- [14:12]
B
Awesome. And what does your wife do?
- [14:14]
C
So at the time she was still in graduate school and now she's a mental health counselor. She was working at a university. University. She's now however many years later, it's been almost, it's nine and a half years. She's a stay at home mom currently. But yeah, she started out as a mental health counselor. But from that point forward once we got married and I was just not bankable, still not making a lot of income, her salary wasn't much. And so I went from reaching out to realtor after realtor trying to get pocket listings, get on their lists and ended up doing the same thing to lenders. So went to bank after bank after bank, found a good local lender, showed them my experience and they were able to help us quite a bit with a lot of our next purchases between portfolio purchases or doing cross collateralization. And so I never really had to worry about my W2 or 1099 income providing for us in that way.
- [15:02]
B
You got married, you have three properties or four in 2016 when this happens.
- [15:07]
C
So we just had purchased our fourth, which was a four unit, and that
- [15:11]
B
was the Dayton Quadplex.
- [15:11]
C
That was the Dayton Quadplex. So three single families in Columbus, Ohio, one quadplex in Dayton.
- [15:16]
B
And these are not, you know, relative to other parts of the country. These are not expensive properties, right? These are. This is probably a portfolio in the $750,000 asset value range at that point in time.
- [15:26]
C
Yeah, at that point it might have even been less. I would say my first single family was about 250,000. The other two single families in Columbus at that time would still been about $100,000 each. And then the Dayton quadplex was about 175,000 when I bought it.
- [15:43]
B
And then how much are you making with your 10? Did you get your raise to $27 an hour at this point?
- [15:47]
C
I was probably at the 26 range at that point. So it was still a substantial raise from the 25.
- [15:51]
B
Okay, great. So we had about, you know, COLA adjustment there on the, not quite on the. On the tennis instruction. Is the day to day enjoyable throughout this period. It sounds, it sounds pretty good as an outsider that you're coaching tennis, playing basketball and doing the things you love for the most part.
- [16:05]
C
I would say that's the reason I probably never left and got a different job. It's like I wanted to find a way to make enough money to still work the job and live the sort of day to day that I wanted to live. And so I was not getting any benefits and I was never making more than 40,000 a year, but just able to live frugally and just make sure that each time we got a property that it was always cash flow positive was kind of the way that we did it. My wife ended up. When we got married, that was super helpful. We did get benefits for two and a half years when she was working at a university, so that saved us on there. But then after that she went private practice and we were back to getting our own insurance there. But yeah, the day to day was great.
- [16:42]
B
So it's 2016 and we've got our four properties. We have the next inflection point in our journey, which is the unlock to more financing with this bank. Tell us what that looked like and how you got that.
- [16:53]
C
Yeah, and so this was actually a lot of connecting with other investors and just like, who are you guys banking with? And then Just going to meet him in person. So I actually, I think it might have been a podcast from eight years ago, whatever it was talking about like, just like actually having a paper binder, taking it in. I remember using the bigger pockets rental calculator, printing off the PDFs, get my three ring binder and just showing them what my portfolio was and then showing them what we were trying to do. And finally I found one. It was actually in a small town in between Columbus and Dayton, Ohio. And they're like, yeah, we're in. And so the next one that we were able to finance was in the middle of 2017, still reaching out to different realtors. Found one, he was a property manager and he's like, hey, I've got a tired landlord, any interest? And I was like, yeah, no idea how to make it work. It ended up being 12 properties at the time. I brought them for about $33,000 each. I did not have enough money to cover the down payment. And so the one other benefit of being in the tennis world is was just able to brush shoulders with some wealthier individuals. There's a lot of your doctors, your attorneys, that they have the money. They don't have the desire to go and own a property. And so I just would always talk about what I was doing outside of tennis and just got good rapport with several of them and was able to make it to where they were comfortable being in second position covering my down payment of 25%. And then the local lender was fine having someone else in second position and so they covered my first position of 75%. And we went from those four properties to 16 properties in the course of a couple months just from that big acquisition there. So 2017 I realized, hey, I can make this a thing.
- [18:32]
B
If I had to guess, I would love you to correct me. I'm usually wrong on these. But if I had to guess, I would guess that your portfolio before that point was generating a little bit of cash flow, but not really anything you could count on. You were still living basically on your tenants income and maybe your wife's income. And then after this purchase, things begin to change and the portfolio becomes a more meaningful part of your position. Is that, is that pretty close?
- [18:52]
C
Yeah, very accurate. And I always had the mindset though that every penny I was getting from real estate, I wanted to put back into real estate until a point that we felt like we needed to draw from it. F forward, I'll backtrack. We, we still rarely draw on ours just because we have the passion to keep growing it, we will draw a little bit, but that's always been the play. And so yeah, but all of a sudden it's like we went from cash flowing maybe a thousand to eleven hundred a month after all expenses to where we were. We were close to maybe 3,000. Like it was definitely a mismanaged portfolio, which is why we were able to acquire it at what we did. And then once again it's like I no longer was swinging the hammer because now it's an hour and a half away from me. But we were able to go throw some money into these properties and just get their value up. And since then it's like that exact portfolio. I sold about half of them. We still own half and have since refinanced that. And we've done a number of brrrrs along the way with the exact same properties over and over and over.
- [19:46]
B
Tell me about this deal. So you bought 12 properties for 33k each. How much did you sell the six for?
- [19:51]
C
I think my total purchase was in the 400s when we bought it. Since then, sold six of them for about 500,000. We essentially got paid $100,000 to own six properties at the course of that, continued to buy in the Dayton market. Still, most of those acquisitions were before COVID It wasn't anything smart that I did. It was similar what you guys say with timing the stock market. It's time in the market, not timing the market. And so we bought, we held. There are areas now that I probably wouldn't buy again. We've, we've changed to buying in nicer areas where I feel comfortable having my wife and son walk around at night. But it worked out. We fix them up, we try and make them very nice. Our biggest thing is tenant screening. We get amazing tenants in there. We get very sticky tenants that want to stay a long time try and be responsive. And so it's like the rents have continued to go up, the values have continued to go up. We've been able to refi and use that money to purchase more. A quick screenshot into where we are now. We have just about 25 long term rentals. And then during COVID we actually transition into doing some more short term rental stuff as well. During COVID Crazy, right? Yeah. Not what most people would recommend, but there's a nice area about an hour outside of Columbus that's good hiking. And we've just. My wife and I found we were going down all the time hiking and we're like, oh man, be fun to have a little cabin here so we could just kind of stay on the weekend. The main thing is I just always talk about what we're trying to do. And so I was talking to some friends of friends. We had like a little bonfire one night and they're like, hey, we have some friends at work that they own a cabin that I think they might be interested in selling. Connected with them, went down solid and we purchased that in December of 2020. And during that time where my mind went, I was like, hey, maybe we could just rent this out a couple times and at least break even. Lo and behold, my wife hates this. But we've probably stayed in the cabin four times total in the last six years because I see what we can make on a weekend versus staying there. It's like, ah, we'll just do something different. But we bought that. I connected with another guy that at the time he and a partner owned, I think about 12 short term rentals down there. Maybe not quite that many, but he and I now are best friends. I brought him in house. He still manages all of our Airbnbs and we acquired two more off market in that same area. And then we actually did two new builds in 2024 down there. And then we also transitioned into doing some short term rentals here in Columbus, Ohio as well.
- [22:02]
B
Can you give us a picture of the, the size of this portfolio in dollars? We have the, the units here, but what are the numbers looking, looking like for this portfolio value?
- [22:10]
C
We're, we're somewhere north of 4 million, maybe close to 5 million. I'm now at a stage where it's like I used to just leverage to the hilt as you guys heard. We've slowly just kind of stopped doing that. We refinanced a lot in 21 with good interest rates. We're probably about 55% levered right now. And then our total cash flow in theory would be about $140,000 a year. I say in theory because I just like to put the money back into the properties or buy more. We just closed on one on Friday and we're under contract on another one. So it's, the money flows out very quickly, but in theory it's right about 140000 a year.
- [22:45]
B
Awesome. And then do you still coach tennis?
- [22:47]
C
I still coach tennis. So yeah, this is a whole crazy story. It was always on my wife's heart to just kind of help others. And we ended up moving overseas for about a year. We ended up getting kicked out because my at the time 2 year old could not get a visa for some reason. So we, we moved back to Columbus, Ohio.
- [23:05]
B
Where did you go? Where did you go?
- [23:06]
C
For this year it was Eastern Europe. It was actually Budapest, Hungary. The laws were changing a little bit. We went in on volunteer visas and they had gotten rid of family reunification visas at the time. And so our he was 21 months old, he needed to get a student visa and sadly his ability to read was not very good when he was under two years old. And so we tried three times. We stayed there 10 months. We actually came back to the States in July of last year to reapply for visas at the consulate in Chicago. And during that time we're very faith led people. We just felt like God had opened up some doors here in Columbus for both of us and so we opted to stay. One of those things was there's a university position that opened up at a smaller D3 school here. And so I'm an assistant college coach and I still do private lessons as well.
- [23:51]
B
That's fantastic. So you spent your days, your entire adulthood mostly playing tennis and built a 4 to 5 million dollars portfolio that generates well into the six figures in cash flow across that time. And you continue to scale that through Pretty tough environment in the last couple years here to the point where you do exactly what you want to do and your, your wife is a stay at home mom and you guys are easily able to cover all your expenses and live the life that you want. Is that, is that the right way to understand this?
- [24:17]
C
That's fairly accurate. I don't know. For better or for worse. It's like I've always been driven by, by purpose and I just felt like I could make a connection with so many different people when I was on the tennis court. You have an hour at least of one on one time very often with these people and just kind of being in their life. It just felt like I was making a difference in a way and as well. It's like I'm in the sun when it's in the summer, when it's nice out, I'm getting exercise, doing the things I like to do. There's been a couple times in my life that I've picked up random part time jobs. They never stuck and I just come right back to tennis. And so I've always taught tennis full time or part time since then. But yeah, still to this day I love the college job, love the students that I get to work with and then still get to go out and mess with the rental portfolio as well.
- [25:00]
B
So aside from the, the freedom and flexibility that you have. It sounds like at an early age, right out in 20s, that was mostly a function of just very low spending. And your, your desires being basketball and tennis, which were very cheap and that allowed you to do this, along with willingness to live with Craigslist roommates.
- [25:18]
C
Yeah, I recommend it, guys. Get in there.
- [25:20]
B
Yeah. Your wealth has considerably increased now. Have you upped your spending in any meaningful way? Do you live a little bit nicer of a lifestyle now with the family and the portfolio?
- [25:29]
C
We do get appetizers every other time that we go out to eat. My wife and I are. We're just not big spenders. Like, the things we like to do are be with people, be go on bike rides, go hiking, play sports together. We're not actively pinching pennies. Like, I'm sure our Amazon spend on getting stuff for our son and we've got another one on the way is higher than it should be. But it's to the point where it's like, it has not drastically increased because we're living the life that we enjoy living.
- [25:55]
A
Yeah. So when you say it's higher than it should be, is it something that you can't afford?
- [26:00]
C
Yeah, good question. That's definitely the wrong term. We can afford it.
- [26:03]
A
I've been struggling to, to figure out a way to articulate the difference between keeping up with the Joneses and spending the money that you have that enhances your life. That isn't going to hurt. And if you're spending an extra couple of dollars on Amazon, but it's like a rounding error in your net worth, then it's not a big deal. It's the people who are having a real problem making ends meet that are like, oh, Amazon, Amazon, Amazon. All the time. That I have a harsher tone with that spending. But this is like, yeah, you know what? Amazon is easy. It is so much easier to type it into Amazon and then it shows up at my front door as opposed to, oh, I got to figure out which store sell this, or even if a store sells it. So don't beat yourself up over that.
- [26:45]
B
Let me ask you another question here. You know, a lot of, there's a lot of ways to achieve financial independence and the outcome that, that you have here. I find it very hard to believe that somebody who started out making $40,000 a year, $25 an hour coaching tennis, could have had anywhere remotely close to the same outcome investing in stocks. The stocks may have returned better on average than the, the, the Dayton and Columbus markets over the same Time period. Do you agree with that? Have you ever thought about the counterfactual of if I had mostly and primarily focused on my retirement tax advantage retirement accounts, where would I be? And have you applied any thought?
- [27:21]
C
Actually good question. I was actually traveling with our guys team this weekend and what's nice is they all know what I do and a lot of them are just very intrigued. They're trying to set themselves up well. And so I actually had that exact conversation. I told them I was like I have nothing against stocks and we still max out our Roth IRAs and I have a brokerage account I'm not actively putting towards it but the leverage piece and the sweat equity piece, I needed that with my income. There is no way that I could have achieved what we have just by putting that straight into the stock market. And so I've told them, I was like if you guys have a higher income paying job, I was like still do all these tax advantaged accounts. If you guys want to accelerate it and do other things like there's other options besides just going straight into stocks.
- [28:00]
B
The argument for stocks would be if you had decided hey I'm going to actually like pursue an income producing career, I'm going to start my own tennis coaching program or something like that. Then all of a sudden that switches, right? And the real estate becomes much less relatively attractive than that same energy focused on your, your business or some other career objective. But in this case your situation was I want this flexibility the entire way through and I'm willing to swing a hammer in the times that I'm not actually coaching tennis. That is really what drove millions of dollars in wealth for you.
- [28:30]
C
100%. And it's like, and I think I've heard you're doing the same as well. But it's like my goals have kind of shifted as I've gotten a little bit older to where it's like I'm only buying in nicer areas. We're not leveraging as much and as well some of our active assets I have sold and we've gotten into passive investing. In fact, one of my, one of my really good buddies and mentors, he was one of the original guys that started left field investors that's now passive pockets and so just kind of started going that route as well. Just trying to diversify in a different way into different asset classes that I would never touch on my own.
- [28:59]
B
Now if you're going to do the nicer assets and you're going to use less leverage and you're going to be More passive now. Does that ever weigh on you? Hey, maybe I should start building my allocation in the, in the stocks for diversification or in other alternatives or how is that, that thought process impacting you today?
- [29:15]
C
Yes, I just love the tangible assets as well. And so I think that's where a lot of my, my passive investing has gone into these multifamily or industrial. In any of these, just ones like I've got some, like I'm in one coffee one right now that's like who knows if it hits. But it's like it's such a negligible part of my portfolio that it's like I'm willing to. That being said, one of my good buddies that we flipped a property with and he still is my realtor, he's almost exclusively doing stocks now and he's doing a great job. He's not day trading but he'll swing trade and he'll just find like a good asset and he's like, I just feel like this has margin and so yeah, I still like my entire Roth IRA is exclusively either a VO or VTI or any of those. But it's like that being said, I could put money there but I, I just like to allocate it back into something that I can actually like feel and touch.
- [30:03]
B
How do you structure your business and have you started thinking about now at this point things like putting some, like some portions of this business into an S corp. I don't know if that's appropriate for any flips or any of the more active projects there and beginning to use some of the self employment benefits.
- [30:20]
C
See I, I need to dive in more. That's something I had looked at because I was even looking at just some of those solo 401ks if I wanted to like have a higher threshold per year. I have not done as much due diligence as I should. We do have a handful of properties in trust now, but otherwise as far as like structuring, I'm sure there's more efficient ways to do it but I was having a conversation with another friend the other day to where it's like I used to be that guy that I would spend hours and hours and hours to just find the most efficient way to do things. And I've gotten to the point to where I would rather spend my time in other ways than maximizing the efficiency of what I could be doing.
- [30:53]
B
Love it. That's clearly across your entire portfolio and you still got really, really awesome results here over the last 15 years doing exactly what you love all day. I think that's a much healthier way to go about it. So I think it's a fantastic journey here. And what was your tennis income at your peak year?
- [31:10]
C
I mean, $38,000. And then I would have to pay insurance off of that and taxes off of that, so has not been much. My assistant coaching job is a whopping $3,000 per year, so I'm not exactly making a lot off of that either. It's more volunteer and I like spending time, so it's. It's always been pretty negligible.
- [31:26]
B
You never thought about, like a hybrid lesson where you give financial advice while you serve?
- [31:31]
C
You know what, we might have to talk off mic here, but there's some options for sure.
- [31:34]
A
Kyle, I'm hearing your story of an overnight success in just 14 short years by asking people questions, telling literally everybody what it is you're doing, making connections, even like not consciously making connections. You're talking with your tennis guys over the course of an hour, telling them what you're doing, and then all of a sudden you need a loan. And they have money because they're the lawyers and the doctors, like you said, and they are willing to lend it to you because you have this personal relationship with them already. You're reaching out to lenders, reaching out to other real estate agents, forming more personal connections. Hey, this is what I'm looking for. Finally, somebody answers. The first person that you call is never going to say, oh, my goodness, I've got a 12 property portfolio for you to buy. They're always going to say no. And then all of a sudden, some guy says yes. And you're like, oh, let me, let me have some more information about that. $400,000 for 12 properties in my market, you might get one property for $400,000. You're not going to get 12, but you did. What is that Dave Ramsey quote? Live like no one else now so you can live like no one else later. I can hear people saying, well, of course he made money in real estate. He started in 2012. He's still buying real estate today. He's buying it in a lower price market than you probably live in. If you're yelling that there's no way to make money in real in 2026, but your properties are still cash flowing, right? The ones that you're buying now.
- [33:00]
C
Yeah, I mean, prime example, it's like we're always looking for, for just hidden value. My most recent one that we just did a burr on, it was actually on Zillow. And I Got it. I found it myself. My realtor didn't send it to me in a very popular area and I think people just overlooked it. It was a Cape Cod. If they don't have those like around the country, it's like we usually have a bedroom on the second floor and everything else is on the first floor. And it was listed as a 2:1 and they had not counted the Cape Cod because they never finished it up out. And so there was unlisted bedroom space and unlisted square footage went in. It was a seller that he needed to sell. They asked for 250. I offered 200k cash. They didn't even counter. So we got it. We added a bedroom. We also added a bathroom. We made this one a short term rental. Furnished it and everything with all furnishings purchase everything. I was 277,000 all in and it appraised for 386. And so we were able to get 107% of our capital out. So I basically the bank gave me a short term rental and they're like hey, just make sure you pay it off over 30 years. And so we're cash flowing on it. Like we came live in March. April has already been good. We're recording this in April right now and we will probably net at least $500 on that one just for the month of April.
- [34:12]
B
Going back a minute here to the 12 property one this now you're a professional real estate investor. I see the only way to describe you, right. You also coach tennis on the side as your passion. You have more and more free time to do. But you're a professional real estate investor. When you bought the 12 properties that was not true. But you bought a problem. This was nobody sells 12 properties for $33,000 each because they're in great shape and life is good. I can only imagine the trash, the debris, the overgrown, the skeletons or bones you found on those properties and the problems you fixed over some period of time. The skeletons and like the cracks of the foundation. Not, not actual.
- [34:47]
C
Hopefully we didn't find them. If they were there.
- [34:49]
B
Surely that reasonably reflects the reality of those properties. And there was a real project in your hands hands to fix those.
- [34:54]
C
Absolutely. And as, and like to that point, like that's why we started liquidating some of them as well. It's like we, we put as much value into them as we could and there were just areas that we knew we didn't want to hold long term. I was that original real estate investor that was like I'm never going to sell anything, we're going to hold everything. You just come to a different conclusion, just at different phases of life. Like focus on the ones that are cash flowing better, causing less headaches. And then on paper, certain ones pencil very well and then you hold them for 12 or 24 months. You're like that did not pan out the way I pencil it. And so just kind of start making that decision as you're going. And there's no wrong decision. It's like what each person wants to do.
- [35:27]
B
Yep.
- [35:27]
A
Okay, so your 12 properties that you bought for 400,000 and sold six of for 500,000. So now you have six free properties. Do you have any money in any of your properties or is it just all free?
- [35:40]
C
Yeah, so I mean there was more acquisitions since then. We continued growing. At one point in time we were up to 40 some units in Dayton specifically, not counting our Columbus properties. I have since we actually refinanced my entire Dayton portfolio on one big portfolio loan last year. At the time I was probably out of pocket about $900,000 and the entire portfolio appraised at 1.6. And so we cashed out. We had still some mortgages on the properties. We paid off all of those mortgages and then I think we pocketed about $300,000 cash. And so we're sitting at, I mean, I don't know what that leverage is. Maybe 60ish percent leverage on that, that portfolio. And we were able to walk away with 300,000. We actually used that to purchase our new primary when we came back from Europe and then we just put a line of credit on the primary instead. So we use that for our investing now.
- [36:31]
A
Okay, so you borrow against your house and then do you pay it back frequently?
- [36:36]
C
Yeah, so we, we put it as a first lien side note, I mean there's so many different stories here. I'm actually a lender now as well. And so I kind of got all that knowledge, decided to kind of use that as our bankroll and so bought it. We were able to get, it was a 500000 purchase or something. We have a $420,000 line of credit. We will use that. We went out, purchased the property, when we refied, immediately pay that off and then just kind of recycle it from there.
- [37:01]
A
Okay, so for all of you people who are listening and thinking, oh, that sounds like infinite banking. No, this is better because this is doesn't take up any headspace.
- [37:10]
C
You're already doing real estate. I'm just doing it with a line of credit instead of have like a 30 year mortgage on it.
- [37:15]
B
So I asked about the stocks versus real estate piece because stocks are arguably better than real estate on an unlevered basis, right? We've established that the leverage is what, what drives the returns in the sweat equity in your situation. But the interesting thing is you now are wealthy and there's a case to be made for moving to stocks. But in your case it doesn't apply because you've spent all this time building up this engine of experience and connections in the space space that surely continuing to invest in these properties, branching out and lending these types of things are going to provide better risk adjusted returns basically for life, unless something pretty interesting changes about the world economy or your situation. And I think that's what's so fascinating to me about real estate is I can appreciate now after all these years on biggerpockets money, the case against real estate investing. But you can't deny it when it stares you in the face right here and it has produced the life outcome that you have here and the return profile that you have here here and the options that you have here. There are clearly paths where it's just superior to the alternatives here. And yours is so wonderfully illustrating that I'm having trouble moving past that because it's just a perfect counter argument to the stocks versus real estate argument that pops up in these circles all the time.
- [38:24]
C
I will fully admit I love stocks, but it's like leverage with real estate is so much more than just like the bank financing. It's like knowing your market, having the connections, getting off market deals. It's like there's just so many more ways that you can force it. And if you want to put in the time and you have the ability to, it's like you can definitely achieve that much faster. As we said here, it's like doing without any sort of high income at any point in time in your career.
- [38:49]
B
Tell me what a day in the life looks like right now. What are some of the highlights of the last six months or things you're looking forward to and how do you spend your week?
- [38:56]
C
My wife and I both enjoy staying busy to an extent, but it's like this. I've been in the mainstay of Tennessee season and so we actually have our conference tournament this weekend. I've been working with the guys and the girls. We'll be traveling out of town doing that. But then I have the flexibility even as a mortgage lender now I can work from home. I'll spend a Lot of time. Our son is now three, a little bit over three, and he's getting into biking and tennis and basketball and soccer, so hanging out with them and at the same time it's like we, we like to serve and give back. So kind of just finding opportunities to spend our time, if that's in our church or a lot of my stuff. I like to be very focused on like a certain area, if you guys haven't noticed, with like real Estate State. And so now that I'm coaching at the university, trying to spend a lot of time with those university kids as well. The house we bought, the tennis courts to the university are actually our backyard. And so it is a 20 second walk from my back door to my office over there. And so we just will want the university kids to come over to hang out. We're putting in like a back patio space that we can just kind of have people around. I think there was a book, I think actually Brandon Turner had recommended it years and years ago, but it was Life and Air and that was like a pivot point for me to where it's like, like, oh, it's like this is more than just the accumulation. It's like I don't, I don't want to have, just to have. We have a passion for people that are serving others. And so a goal of ours is to hopefully be able to have a few just paid off houses that we can host, transition people that are coming in off like a global field like we were doing, or people that are coming out of different ways that they're serving, just have a spot that they can stay for whatever period of time until they can get back on their feet or find a spot of their own. So, so we continue to work so that we have like a purpose in mind. It's not just to accumulate.
- [40:32]
B
Love it. I think serving others is a theme that we can apply across many dimensions of your life here.
- [40:37]
C
Nice pun.
- [40:39]
B
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- [43:12]
A
You live in Ohio, which is not a super high cost of living area. If you decided that you were just tired of all of this this, you could probably comfortably live off of $140,000 a year, which is the cash flow that you're estimating comes off of your portfolio, right? Do you think you could squeeze out a living on that?
- [43:31]
C
We could squeeze out a living on It I'm still a numbers junkie, just live in the spreadsheets and I've even looked. It's like what if we liquidated like there are certain properties that we just have tons of equity in and it's like what if we liquidate that and just put that into a debt fund paying 12% or something along those lines. But the tax advantage of what we're doing, I, I do not handle anything with our day to day of our Airbnbs. My buddy is a mastermind at it. He has all of my information. Like if he wanted to steal anything from us, he has my social, he's got credit cards. But it's just, I don't know. We're very aligned and we're big on like a rising tide raises all ships. So I like to bring as many people along as we can. And yeah, if we wanted our goal when we went overseas was to be fully self supported by our real estate just because we were putting so much back into it, we weren't quite there but we were able to self support, support a good portion of what we were doing. And so it's always in the back of our minds we feel it's like okay, if God called us to go somewhere else, we want to have that ability without any hurdles essentially on that
- [44:26]
B
real estate Debt fund versus paid off rentals. That's a really interesting problem that I've been grappling with for a while and I think that the paid off rental is a way better alternative for many people than the debt fund if it's not in your retirement account because you get the several points of appreciation, the inflation adjusted income strength stream across that time period. It's not all ordinary income which even for you will be something to consider there. I imagine you are able to keep your ordinary income low with the depreciation from your rentals and the relatively light income from other sources there. But I still think the debt fund is not quite as. It's also a little scary handing your money over to other people as your base cash flow is so true.
- [45:04]
C
We started dabbling in debt funds last year and the returns have been great. But it's like at the same time I'm not controlling it and I do have a little bit of a control issue and over 30 years it's just
- [45:12]
B
like the rent on the property should pace inflation and income stream should be there and I don't know how that's going to go in the debt fund over that very long stretches of time.
- [45:20]
C
It's so true. And we still, we're still acquiring and like any time we're, we're doing heavy construction or rehabs, we're doing cost segregations every year and so we try to keep our taxes as close to zero as possible. So that's a good call. Out.
- [45:32]
A
Do you hire out your taxes?
- [45:33]
C
Yes. I used to be doing everything myself and now I'm trying to do I want to spend my time the way that I want to spend it. And I know people are going to do these things better than I can do them. So I would rather find a reason to pay someone else to do things that I know that they're going to do better than me and just make up the difference elsewhere.
- [45:50]
A
If your tax preparer cannot save you more money than they are costing you, they aren't the right tax preparer for you.
- [45:57]
B
I have observed a problem in investors that fit your profile where I have a lot of equity in my, I've built a, bought a bunch of properties, I've accelerated depreciation, I've got 50, 50 debt equity somewhere in that ballpark, plus or minus 10 points in any direction. But if I were to sell the entire portfolio today day I would recapture depreciation at ordinary income tax gains. I would have a long term capital gain that'd be pretty substantial. I'd have my state taxes and then I'd have to sell them with, with a couple points to, you know, the 6, 7% transaction costs depending on whether I'm on the broker or not. Does that problem describe your situation? To a degree and have you thought about it like that in your portfolio?
- [46:33]
C
To a degree for sure. Like we, we're not actively looking to sell but when we have sold or had any big taxable events then I'm usually trying to find a way to solve that prior to the end of the tax year. So last year we put a lot of money into like mobile home park funds and that they were, they were giving us about 92 cents on the dollar of tax write offs at the end of the year. So it's like, I think, I think the other guys term it like the lazy 1031 exchange, just other ways to deploy your cash to where I'm like not having that issue. So yeah to that point like if we sell it's just because the problem's causing more headaches than it's worth for us. Otherwise we'll hang on to it.
- [47:08]
B
It sounds like a really wonderful outcome here and congratulations on what you've built and the, and thank you for sharing it in such Specificity here on the podcast. So congratulations and. And what a wonderful life and. And portfolio you've constructed for yourself, Kyle. That's fantastic.
- [47:21]
C
Well, thanks so much for having me and thanks for letting me share. Always happy to talk with anyone that wants any input or education or just to share a coffee or a phone call. So happy to help.
- [47:30]
B
Awesome. Where can people find you best would probably just.
- [47:33]
C
I'll give my email if that's fine. My personal email is kd c o l l4gmail.com. I'm also a lender, so KyleUrstOhioHome.com will get me. I'm not super active on social medias. I keep trying to be and then I'll post and then nothing happens. But I'm on socials too. Just Kyle Colette.
- [47:51]
B
Well, please connect with Kyle if you're in the Ohio area or just interested in replicating pieces of that story. And last question I'll ask is, what is the one tidbit you have for your students or your. Your. Your players that you coach, coach when they're talking about this stuff?
- [48:04]
C
I was like, get in and hold on. That's always my biggest thing. I will preach house hacking till the day I die. I think coming out of college, not being married, I don't care if it's a single family or a four unit. It's like, find a way that you guys can offset your rental income. I will say not, not to just like stroke your ego, but I've given away set for life so many times. And so, yeah, so it's like you guys probably actually owe me for coming on here, just how much I'm in Scott's lifestyle right now. But. But yeah, I will preach that forever. I think it's the best thing to do starting out. And I mean, I would still do it if my wife would let me, but she made the right decision.
- [48:36]
B
Well, fantastic. Thank you so much for giving that book out and for coming on today. I will also shout out that my wife and I have been playing tennis every, maybe every other week or so. We get out there and hit some balls. We hired a coach maybe for two lessons, two or three lessons in the last year. It's so fun and it's not this expensive activity that I had built it up in my mind to be. Unless you, of course, you hire a coach for huge portions of the year.
- [48:59]
C
No, that is true. And I will say it's like the other thing we talk about with tennis is like if you want to go get exercise, you only need one Other person where it's like most other sports, you can't do that. Obviously you can go running or biking, but just get your wife or another buddy and just, you can just go out and hit.
- [49:11]
A
Awesome. Kyle, thank you so much for your time today and thank you for sharing numbers and sharing your experience. I think this was a really fun story to hear and we will talk to you soon.
- [49:20]
C
Sounds good. Thanks guys.
- [49:21]
A
All right, Scott, that was Kyle and that was a really awesome story of not having a huge income, wanting to maintain a really awesome lifestyle and starting to invest in real estate in order to make that happen. I do think he had a couple of unfair advantages growing up. He left college with no debt. That's a huge unfair advantage that is also available to everybody if they really work hard and either like work through the summers to pay for college or work and get scholarships. You have to work out through high school in order to be able to get those scholarships. But you know, you can leave college with no debt. He grew up with parents who invested in real estate, so this wasn't foreign to him. And he reached out to people. People are so shy to reach out to people. Oh, I, I don't want to look stupid. I don't want to, you know, I don't want them to think I don't know what I'm talking about. Eventually you will know what you're talking about about. So reach out to people. So those are his unfair advantages that got him to be an overnight success in just 14 short years.
- [50:21]
B
I think every story is unique and I think that's what makes what we do so fun and interesting to me. Right. I mean if you want like a purity, invest in index funds for long term growth. Bogleheads is correct, right? Go, go to Bogleheads and invest in stocks. However, what I find much more interesting and much more realistic is the unique and specific advantages that many people have in specific circumstances. And when real estate applies and when, when starting a business applies and when an alternative investment applies and when this job hop makes sense or company stock begins to have a big portion of your portfolio and it's all context dependent and it all changes the strategy, yet it all funnels towards the same outcome that we're all going for collectively. I think here at Biggerpockets Money, which is the lifestyle that Kyle leads today, the ability to be flexible and do exactly what you want. And I think he won the game so thoroughly at every point along this journey in a relative sense to his counterfactual who go get goes and gets A very higher paying W2 job, I believe for him. And I think that that's a fantastic and wonderful outcome.
- [51:24]
A
Yes, the Bogleheads approach is great, but you're not going to reach financial independence in your 30s making under $40,000 a year following the Bogleheads method.
- [51:36]
B
That's right. There has to be an income. Boglehead's method is better for a career that is going to, to ramp from an income perspective over those 10 to 15 years graduating from college. And for many people it does. And that's. I can, I just, I find this endlessly fascinating about when and where the rule, the rules of thumb break down and apply or don't apply.
- [51:54]
A
And this is what works for Kyle. If you found a lot of similarities or this is interesting to you, then maybe real estate is for you. But if you listen to this and thought, oh, that just sounds like such a hassle, then maybe real estate isn't the right choice for, for you. Maybe you should find a job that makes more money so you can invest in the completely passive Bogleheads method of index investing. And it doesn't have to be either or you can do real estate and index fund investing. You can mix and match however you want.
- [52:22]
B
What do you think the odds are that Kyle's kids get a full ride to college for tennis?
- [52:28]
A
I think that's a very good possibility. If his kids start playing tennis, I mean, I'm sure that 3 year old is already swinging, racing.
- [52:36]
B
I think that's just another interesting component of all this. Right. Is in that situation, do you save for colleges aggressively? A question for another time. I think there's a very real chance that, that living next to the university campus and playing tennis from three years old with a dad who's been a tennis coach and devoted and done a significant amount of engineering to make sure that that continued throughout his adult life. That's an interesting additional nugget in there. And that's where personal finance gets so personal.
- [53:01]
A
Yeah, that, that is an interesting question. I don't know. I would from a position of I didn't save anything for my kids and now I have to pay for college out of cash. Maybe you save a little bit.
- [53:11]
C
Yeah.
- [53:12]
B
You don't do nothing, but you do.
- [53:13]
C
I don't know.
- [53:13]
B
I, I think that's again where I find all this so fascinating. When the rules break and when they apply.
- [53:18]
A
Yeah. You know what? It's always a rule of thumb except for spend less than you earn. That's a hard and fast rule. All right, Scott, should we get out of here.
- [53:25]
B
Let's do it.
- [53:26]
A
That wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trapped Bench I am Mindy Jensen saying See you later alligator.
- [53:33]
B
When I evaluate debt funds, I look for things like first position loans, personal guarantees, deep experience by the fund operator, low fund leverage, fast liquidity and consistent returns. These are some of the reasons why I'm excited to partner with Pine Financial Group. Their Fund 6 offers investors exposure to real estate credit largely for construction and rehab, with loans originated by an experienced originator with over $1 billion in origination volume. They offer investors investors an 8% preferred return paid monthly and a 7030 LP GP split of everything over 10% paid annually. The lockup period is nine months with liquidity available within 90 days. After that nine month commitment, the fund is open to accredited investors only. The fund's minimum investment is typically $100,000, but Pine Financial is able to reduce that minimum for Biggerpockets money listeners to a minimum of $25,000. Full disclosure I am personally invested in this fund through my self directed ira. Pine Financial is sponsoring this message and our podcast. Go to biggerpocketsmoney.com Pine P I N E Please note that returns are not guaranteed and may vary based on fund performance. There's a certain set of challenges that come after the financial ones are mostly solved. Questions about what comes next. How to think about the life you're building around your wealth, not just the wealth itself. Most people find that they don't have anyone to talk to about that part. James Keefe spent 20 years in pharmaceuticals building toward that stage when he found Long Angle's community. Something specific resonated, resonated. Here's what he said. It's a community of primarily first generation wealth builders. We all feel like we've gone through some sort of rite of passage. You lend trust a little sooner with that. It's clearly a group of people that also care about you as a person. Long Angle is a vetted community of 8,000 plus entrepreneurs, executives and investors, mostly self made, all navigating the same complexity on both sides of the financial equation. Membership is free for those who qualify. Apply@longangle.com money that's longangle.com money.