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Real Estate Rookie
The Exact Investment “Stack” We’re Using to Retire Early (Not Just Rentals)
00:30:18
Don’t want to wait until 65 to retire? With a combination of rental properties and some of the other investments we’re covering on today’s show, you may not have to. Whether you’re starting from zero or diligently building your nest egg, use these eight steps to build a diversified portfolio and reach financial freedom much faster! Welcome back to the Real Estate Rookie podcast! Today Ashley and Tony are pulling back the curtain on their actual retirement plans—what they're doing, why they're doing it, and what they wish they'd known sooner. They share how they first got into real estate investing and how they’ve adjusted their portfolios over time. They also break down the investment “order of operations,” a sequence of financial moves that will help you build long-term wealth! Along the way, we’ll get into things like the 401(k) employer match, the triple-tax-advantaged HSA account, and the often-misunderstood 529 college savings plan. Whether you want to gradually s...
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- [00:00]
A
When you buy your first rental property, there's usually a moment right before you pull the trigger where your brain starts spiraling a little. What if I'm making a mistake? What if I can't figure this out? What if this whole thing becomes way more complicated than I expected? Honestly, building any business feels like that at first. And for a lot of investors, that next step is creating a brand, a website, or even a business around what they're building. And I've learned this myself. Whether it's real estate, building a brand, launching a side business, or creating something online, the hardest part is usually just getting started before you feel fully ready. As a consumer, I use Shopify powered stores all the time. Chances are you do too. Some of the brands I buy from regularly run on Shopify, and you probably wouldn't even know it because everything just works. The checkout is smooth, the experience is easy, and that's exactly what you want if you're building a business and trying to earn customers trust. That's why Shopify makes so much sense. Check Shopify is the commerce platform behind millions of businesses around the world and 10% of all e commerce in the US from brands just getting started to household names, you can build a professional online store with ready to use templates that actually look good even if you're not tech savvy. Shopify also has AI tools that help write product descriptions, page headlines, and even improve product photography. And instead of juggling five different platforms, Shopify puts everything in one place, from payments to inventory to analytics. Plus, Shopify helps you market your business with easy email and social media campaigns so you can actually reach customers. It's time to turn those what ifs into with Shopify today. Sign up for your $1 per month trial today at shopify.com Rookie go to shopify.com Rookie that shopify.com Rookie
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most deals don't fall apart because of the numbers. They fall apart because of the financing. You find a property that cash flows, the deal makes sense. But then the lender looks at your personal income, your tax returns, your debt to income ratio and suddenly the deal doesn't qualify. That's the disconnect, because as investors, we're not buying based on our W2, we're buying based on the asset. That's why Host Financial offers DSCR loans designed for real estate investors where qualification is based primarily on the property's income, not your personal finances. So no W2s, no tax returns and no DTI requirements. And with loan to value options up to 80 or even 85% on eligible deals. You can keep more capital available as you grow. If you're buying rentals, refinancing, or scaling your portfolio, go to host financial.com that's h o s t financial.com and see what you qualify for. Vacation is expensive. Your empty place doesn't have to be. If you're heading out of town and your home is sitting empty, you could list your space on Airbnb while you're away and turn those unused nights into extra income. And with Airbnb's co host network, getting started is more straightforward than most people think. You can hire a vetted local co host with hosting experience who could create your listing, manage reservations, handle guest communications, even provide on site support for guests during their stay. So while you're away spending money, your space could be working in the background, bringing in extra cash. Find a co host@airbnb.com host.
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A
Most people spend 40 years working so they can stop working. But what if you could build a life where work is optional way before 65?
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C
Ashley and I are pulling back the curtain today on our actual retirement plans. What we're doing, why we're doing it, and what we wish we would have known sooner because no one handed us a roadmap. And if you're a real estate investor trying to figure this out on your own, well, then this episode is for you.
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A
This is the Real Estate Rookie Podcast. I'm Ashley Kerr.
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C
And I'm Tony J. Robinson.
- [04:03]
A
So I have actually put together a list of questions for Tony and I to actually go through to share our own journey saving for retirement. And hopefully this will help a lot of you be able to plan for your own retirement. So, Tony, the first thing I kind of want to go over is the beginning. When were we first introduced to retirement? And I think for me, it was when I graduated college and I started my first job and I got a 401k with that first job.
- [04:40]
C
Yeah, I think same for me. And I'll just, you know, I'll add context for the entire audience that between me and Ashley, Ashley's definitely the resident retirement expert between the two of us. And she, she educates me on a lot of these things. But yeah, I think it was for me too, when I graduated college. Actually, my first job after college did not offer a 401k and that, you know, that job did not last very long. But like, my first real big boy job after college I think was a few months afterwards and I got a 401k and I had to, like, sit there with my other co workers who were recent college grads. And we're trying to figure out like okay, how do we put these percentages there and what does this mean? But yeah, it was first job after college with the 401k.
- [05:18]
A
Yeah, my first job only lasted six months, my accounting job before I quit and went into property management. But I from that first job I had very little vested. So a lot of times a 401k, you have to work there for so many years before they'll actually give you like the employer contribution of it. So it was very little. And I ended up, when I left there, I ended up rolling it over into a Roth ira. Still really didn't know a lot about retirement at all. Was actually a friend that told me and helped me go through that. I didn't really know a lot about it. And I actually had a financial advisor then. So after I had left that job, the new investor I started working for with Property Management Co. Had a financial planner. I was like, this is probably a good idea for me. And I went to him and you know, all I had was my little money. Like honestly it was probably like 500, I don't remember. But it rolled over into that. And then we just did like some financial planning of what to do for the future. And I probably had the financial advisor for maybe five years. One thing he did do for us was set up 529 plans for the kids, which we'll talk about that more later. But other than that I really didn't use the financial planner at all. I think it was like $700 to $1,000 just to like meet with him and go over stuff and definitely was not worth the money. And then my second job, I didn't even get any benefits at first. I worked there for several years. I was part time, I worked whenever I wanted. And it actually came to a point where I asked for benefits and I got health insurance and then I got 401k and it was a, I believe it was a 3% match and I had to contribute 3% for them to, to give me that match, which is pretty common. So to Tony, do you remember at Tesla at all when you would. Did they have a match at all?
- [07:24]
C
Yeah, so Tesla was slightly different. But like, I'll go back to that first job was I actually worked for Target before working at Tesla and, and Target did have a match. I don't remember what it was. It was so, you know, so many years ago at this point. But I remember I just invested up to that Match, like whatever the match was, that's what I invested up to. So I max it out there and I can't remember what it was, but that's what I did at Target.
- [07:47]
A
So kind of our next investment for retirement, which we really probably didn't think of it at the time, but was purchasing our rental properties, my long term properties and your short term rentals. So, so Tony, at the time that you, we're going to ignore your long term rentals because you sold them, but your short term rentals, when you were purchasing those, did you have anything in your mind thinking about this, I will use these properties for retirement in any sense. Were you thinking about that down the road?
- [08:17]
C
I mean that was really the, the main reason that I got into real estate was because my, my dad growing up always said unless you want to get up and go to a job every single day until you're, you know, much, much older, you've got to have some assets that, that pay you on a regular basis. And he's like, real estate's one of the best ways to do that. So that was just like drilled into me very, very early on. So like, I don't know if I thought about it as retirement, but for me it was just always having that financial freedom, I guess more so. And that's what pulled me into real estate to begin with.
- [08:46]
A
Yeah, that was definitely my framing and thinking too. But it was more like now, like, how can these assets give me the financial freedom now as in retired? But we all know landlording short term rental operations, a lot of that isn't, you know, quiet retirement, sailing off into the sunset. There's still a lot of work to do, but I never thought about what. I knew I wanted to hold properties long term, but I never actually saw what mortgage pay down appreciation and an increase in, you know, rental income every year can actually do to just be this, you know, a ton of equity by the time I'm, you know, 65, you know, hopefully a ton of equity before that. I have to say that it probably took me about eight years before I actually really started strategizing what properties I was keeping and which ones I was selling to think about later on in life. So I wanted to think about which properties would have a lot of appreciation, where I would have options with them, where before. When I first started investing, it was a cash flow play. I didn't care if they appreciated, I just wanted cash flow. Well, some of those properties were like $20,000 duplexes, but they cash flowed a lot, but they were Headache properties. They were in areas that saw no appreciation. I was super, super lucky where I bought them at the right time and I sold them like just after Covid when prices went crazy. And so I was able to sell them and get rid of them at a good time. But even if I would have held on to them for a long time, the appreciation just wouldn't be what it was for other areas where I went for higher dollar amount properties in better areas, better school districts and things like that. So, so as I've started to like weed out my portfolio, I put a lot of thought into down the road in the future. Like, I want fallible assets that I have a easy exit strategy. They'll have a lot of equity built up into them and I can tap into that at any time that I need to. Tony, what about you? Have you kind of changed or pivoted your strategy at all, thinking more about the future when you're ready to just retire?
- [11:17]
C
Not necessarily. I mean, I think we've been fortunate enough that, you know, I think the long term prospects of all the markets we've invested into, like, we'll, we'll probably continue to see pretty good appreciation, like, you know, a good chunk of our portfolios in California. Right. Which typically does pretty well. So I, I don't know if we have anything that we, that we purchase where I question its long term viability in the portfolio. There are some properties that are just like headaches for other reasons. But I, I truly think like, you know, if I hold all these properties for 30 years, we'll probably be in a pretty good position in terms of low loan pay down and appreciation.
- [11:50]
A
We're going to take a short break, but when we come back, we're actually going to go through the retirement stack. And this is from Scott Trench from biggerpockets Money. This is going to tell you multiple options of what you can do for retirement and his recommended order of how to invest in these things. So we'll be right back. Okay, welcome back. So we got into a little bit about Tony and I's real estate for retirement, but we also want to talk on other investment vehicles that you can do for retirement because it is important to diversify and there are a lot of advantages to using some of these other retirement vehicles. I was listening to a podcast the other day with Scott Trench and Mindy Jensen on Bigger Pockets Money and Scott went through and put together his retirement contribution order of operations. So this was for specifically a high income W2 household, but really I think this would work for any W2 income household. And if you are self employed, you, you know, you're not going to get an employer 401k match. But you could still go through these orders of operations in some sense. But obviously you're not going to be able to have access to all of them. But also there will be other options for you too because you are self employed and don't have a 401k, you know, employer option available to you. Okay, so the first one is take your employer 401k match because this is in a sense free money. But I mean technically it's worked into your compensation package, but you should take it, don't leave it on the table because that's money loss. So you know, sometimes you don't have to contribute to, you just automatically get the match from your employer. So that's even better. But that is step number one is
- [13:41]
C
to take that step number two. And this is the one that like literally changed my life. But it's the employee stock purchase program or espp, where companies allow you to buy stock at a discounted rate. So again, I, I spent the majority of my W2 career working at Tesla and I was very fortunate that during that time the company did incredibly well in the stock market and we were able to purchase from every paycheck. They would take out however much you wanted to allocate. But you could buy Tesla shares at a 15% discount. So just imagine the amount of wealth you're able to build of every single paycheck. I think we were paid bi weekly, so it was at 26 times a year. I was able to go out and buy Tesla stock at a 15% discount while the stock was also increasing, you know, at this pretty rapid pace. And gosh, I, I want to say, I might be confusing the bonuses with the, with the employee stock purchase, but I want to say that there was like a, like a fixed price that, that you would be able to buy it for like the quarter. So even if it like went up a little bit, you still got a, you even got maybe like a bigger discount. But either way, like for me that, that's where I put the majority. Like I think I was just putting into, to match a Tesla as well for the 401k. Actually I don't even know if Tesla offered a match. I really can't remember because I know most of my money was going into ESPP because that's where I saw the biggest opportunity. But guys, like when I, when I lost that job, it was all of that stock that I've been piling into for you know, years and years at that point that allowed us to have the foundation to build our portfolio and go, go full time into real estate. So truly one of the best returns that I've, I've ever had on any investment.
- [15:17]
A
Yeah, I've never worked anywhere that had that as an option. So the next one, step three is to max out your hsa. Okay so I believe not everyone can actually get an hsa. You usually have to be in a high deductible plan. But with the HSA your you put in pre tax money and it grows tax free. And if you use it for medical, it's tax free when you pull that money out too. So it's like a triple tax advantage. So this is great to save as you get older. You may have more medical expenses in your elderly age and this you'll have all this money to pull out tax free to be able to use also even now as you, you know, have medical things that come up. But to pay your deductible for your high deductible plan and other medical bills that you may have that you can use that money for. But that's a huge advantage because it's like a triple savings on taxes is right there.
- [16:23]
C
And seven before is to max out your dependent care fsa. I've actually never used this before and I've had kids, you know, almost my entire life now at this point and I've, I've never used this. Are, are you using a dependent care FSA at all Ash? Have you used one in the past?
- [16:36]
A
No, I'm not. So it's like a pre tax employer sponsored. So again you know, if you have a W2 job and your employer has to offer this but it's used to pay for like child care expenses.
- [16:49]
C
My, my brother in law works like a, a global tire distribution company and they offer an FSA and that's how he pays for his babysitters through that account or through for his nanny through that account. So you know, just a good, good way to save on taxes on something you're going to spend money on anyway.
- [17:05]
A
Okay so step five is to max your 401k contributions. So as of you know, 2025 or you know, if anyone's still filing those tax returns for 2025, the max contributions you could do is up to 2023, 500. So this is pre tax contributions and I mean that's a lot of money for a lot of people to be able to put $23,500 after you've already contributed to a lot of these other things too. So that was. This would be just maxing out your 401k.
- [17:42]
C
Ash, I'll let you take maybe six and seven just because I feel like I can't speak confidently to the IRAs.
- [17:48]
A
Okay, then the next thing is the Roth IRA. But this is if you are high netcom earner, you're not eligible for an ira. So for single head of household, you have to be $153,000 or under. You can't make more than that. If you're married, filing jointly, it has to be under $242,000 to be able to contribute into the Roth IRA. The Roth IRA is where you contribute after tax income and then your money grows tax free. One thing I really like about the Roth IRA is that really at any time, unless you're using like an employer sponsored plan, they may not allow this. But if you just go to like Vanguard Fidelity, open your own account, you can, what you contribute, you can pull out at any time tax free and penalty free because you already paid taxes on that money when you put it in there. So you want a down payment for a property and you have the money that you've contributed over the years in a Roth IRA. So you've contributed $50,000. Maybe it's grown to 70,000. You could pull out 50,000 of that and use it for a down payment on a rental property. So that's what I like about the Roth IRA is like you can still access that money without having to pay any penalties or fees. If you do make over that amount of money and aren't eligible for a Roth ira, there is something called a backdoor Roth ira. And I'm. First of all, I'm going to urge you to go over and listen to this episode of Bigger Pockets Money. It was with Amanda Hahn, who's a CPA who talks about the benefits of how you could actually do a Roth ira. But basically what you do is you'd contribute to a traditional IRA and then convert it immediately into a Roth IRA. And the limitation for 20, 26 for a Roth IRA is $7500 that you're able to contribute to it. Okay. Then you can even take it a step further and do a MEGA to our Roth ira. And once again, you know, you have to check that your plan administrator allows this. But if you can make after tax contributions to your 401k, so it's like a Roth 401k, then you can contribute up to 72,000. But then remember, this is a combined limit with what you've already put in. But then you can go ahead and convert that into a Roth ira. And Amanda Hahn had said on this episode as to, like, you know, this is all legal, but it's like the irs. They always just make you, you know, jump through a hoop to get something done. Like, it's not like you can just easily go ahead and, you know, go into a Roth ira. You have to do these hoops to be able to access this tax benefit. But talk to your cpa, talk to your financial advisor if these are, you know, options for you.
- [20:47]
C
And then the final step, step number eight, here is the 529 college savings plan. And again, I'm 35, my son is 18, so it's like more than half my life I've been a parent, but I didn't even know about this when he was born. And now that we've got younger kids, again, this might be something we end up using. But. But effectively, this allows you to take money after tax money, right? So if I can pay taxes on it, you can put this into this 529 plan and it grows. And all of that growth is tax free as long as it's used for educational purposes. Right. So sending your kid to college, to trade school, to apprenticeship program, something to that effect. And actually, I don't know. Ash, do you know if there's like, contribution limits on the 529?
- [21:26]
A
Um, but it's basically like a gift tax. So it's a four. So it's 19,000, but 38,000 for married couples without having to report a gift tax.
- [21:37]
C
I mean, that's a meaningful amount, right? If you're doing that, you know, you can send your kid to a very, very expensive school if you continue to do that, you know, over the course of their lifetime. So if you've got young kids, it is a great tool, right, to allow you to set money aside and let it grow that you can then use for college.
- [21:52]
A
So New York State, you can deduct, if you're individual, up to 5,000, and if you're married, you can deduct up to $10,000. So that, you know, if that makes a big difference on your income tax return. But that's another benefit. Depending on what state you're in, it could reduce some of your, you know, your reported income on your taxes for the state tax return. Another benefit of the 529 plan is I believe it's 36,000 of that can actually convert into a retirement plan so it actually convert into an ira. So if the kids don't use it for school, then you can actually save that money for their retirement and then they can pull it out when they're at retirement age and they don't have to use it for school. But there is like a limitation, a cap on how much money can be used for that. But also like the 529 plan and like it's, it can be used for like private school, for high school, even, I believe elementary too. So like even if you have a kid going to private school right now, like you could contribute to it just to get the New York state tax write off, then pay the school out of it. You know, have that deduction, but, but you can pay for books. I had seen this post before where it was an accountant that posted it on social media where they had said you can, what you should do is put all this money into the 529 plan. And then when your kids go to college, you buy a house there and have your kids use the money out of the 529 plan to pay you rent. So it's guaranteed rental payments. The money that you contributed is coming back to you. You. One thing that people like totally missed in the comments and I actually made it like started kind of arguing with someone which I never ever engage. But. And you know, the person who posted it like finally responded like, yes, you're absolutely correct, is that just remember that's not like tax free money like that is still rental income coming back to you. So you're still paying, you know, taxes on that, but not as much as you would have, you know, when you first earned that money from your W2 job. But.
- [24:16]
C
And then you do something like a, you know, a cost segregation setting, get some bonus depreciation and you know, you qualify for rep status and material participation and you can still write off all those, all those earnings hopefully.
- [24:26]
A
Okay, we're gonna take a short break and we'll be right back after this to tell you what our plans are for the future for our retirement. Okay, welcome back. Thank you guys so much for watching or listening. If you haven't already, make sure you are subscribed to our YouTube channel at realestate rookie. Okay, so we went over some retirement options that you may have a recommended order of operations from Scott Trench. But let's get into what Tony and I are actually doing now with these retirement options that are available and, and what we kind of see for ourselves down the road. So Tony, what is currently happening right now Are you contributing to any kind of retirement plan that's available out there?
- [25:13]
C
I do have a retirement plan, yeah. Not a lot is in there because I just started it recently. I'm very overly concentrated in real estate right now. I still do have Tesla stock for my time working there, but obviously that's just one, one, one entity. Right. So there's still, still some risk there. So, you know, I think that's part of the reason actually, I love when we talk about this is because you, you remind me there's a lot of other options out there. But you know, I think I get so focused on what's in front of me, you know, and like, hey, real estate is the thing that I know so well, but there, there's a benefit to having a diversified portfolio. So I think for me it's looking into some of these other options and seeing how I can, I can expand those things.
- [25:51]
A
I think too, like, real estate is so addicting. It's like, okay, like over the course of the year I could contribute this money to, you know, a retirement account or even a brokerage account or whatever, or I could go and buy another property, you know, or I can add an upgrade to my short term rental to increase the revenue there. You know, like, think about how many pools you put in. Those could have been, you know, money funneled into a retirement account for you. But you know that, that is your retirement. These properties too, you know.
- [26:23]
C
But I think diversification is good, you know, and I, I talk with a lot of folks who are coming from the opposite end where all of their retirement is in the stock market. They're like, hey, I just want to diversify and have something that's a little bit more tangible. And I've got so much that's tangible that I, I probably need a little bit more that's, you know, in the market. So got to balance it out a little bit.
- [26:39]
A
Yeah, I'm contributing right now to retirement plans and I, I maxed out my contributions last year, but this year I've been not as much. I've definitely slowed down my contributions just because like you said, there's other things I want to do in real estate right now. So definitely not contributing to the max. And I don't think I'll max out this year at all. But another thing is the 529 plans. I did that financial planner, I guess maybe he was worth the thousand dollars because I did contribute to my kids, you know, 529 plans when they were very little. And I think my oldest was like two or three. And then the other ones basically got. Have them since they were born. And I'm pretty sure, like I've put, I think it's like $50 a month I put in each one of them. And at, you know, when I started them, I probably put in like a thousand to fund them or something like that each maybe, but they each have like 12 to $14,000 in them right now at the age of 8, 9 and 12. So like, that makes a big difference, being able to start. And then, you know, they can, if they decide not to go to college, you can actually change the beneficiary on them too. So like, I am the owner of the 529 plans, but at any time I could change the beneficiary. So actually my sister, she's going to school right now to be a PA and my aunt had like money left in a 529 plan and she changed the beneficiary to my sister so she could use the money to, you know, finish out school. So that was, that was really awesome.
- [28:25]
C
I didn't know that that was one of the features. Ash of the. Of the 529. Yeah. Are you, are you able to use it for like, say that you have a kid that wants to go to, you know, they want to become a surgeon, so they've got to go to like, you know, regular undergrad, you know, medical school, residency, all those other things. Like, can you use it across all those different stages or does it stop at like a certain stage? Do you know?
- [28:46]
A
I don't think it does. I don't know for sure, but I'm pretty sure you can use it for any education. And that makes me wonder too, like, if you were a real estate agent, could you use it for like your CE classes, you know, things like that? I. I'm not sure on the specifics of that, but one thing I like about it too is like, you can go into your 529 plan and you can print off little vouchers and you give these out to grandparents and say, hey, they don't need another toy to clutter their house. Here's a voucher you can mail in a check and this will go into their 529 plan.
- [29:19]
C
That'll get all the kids excited on. On Christmas morning.
- [29:22]
A
I mean, not that it's worked for me. I haven't noticed any increase any of their accounts. It wasn't Ruby, but that is an option out there. And I, I've read too, a lot of articles about like grandparents starting them also for kids, and then they be they're being the owners of it and then the kids being the beneficiary, the grandkids. So, yeah, Tony and I are really interested as to how you are diversifying your retirement, what options you have available. One thing that's been really important to me this year is for financial opportunity, and that is having many different ways to access capital. So if I have a medical emergency, I have, you know, a Roth IRA I can withdraw from. I have an investment property I can sell. I have a store full of liquor that I can liquidate going on a business sale, you know. So I think that's like the biggest thing for me is I want to have financial options not only in retirement, but now in life, too. So it's been intriguing to me to talk about all these different ways to build financial freedom alongside real estate, because I do think it is really important to diversify. Well, thank you guys so much for joining us. I'm Ashley and he's Tony. And we'll see you guys on the next episode of Real Estate Rookie.
- [30:50]
C
Hey, Rickies, if you're watching this, we want you to apply to be a guest on the Real Estate Rookie podcast. That's right. Ashley and I are looking for amazing stories just like yours to be a part of our Real estate rookie podcast. Now, look, you don't need to be an expert. You don't need to have done thousands of deals. Even if you've done one deal, your story could help inspire the next listener
- [31:09]
A
as a rookie investor. Especially if you just got your first deal. It is all fresh in your minds and you are the best person to tell your story, give your experience on how you got it done to help someone else get their first deal.
- [31:21]
C
So head over to biggerpockets.com guest if you want to be a part of our show. Again, that's biggerpockets.com guest and we'd love to have you on.