Rich Habits Podcast: Q&A — Young & In Debt, Maximizing Cash Flow, & Buying Real Estate w/ Friends

Hosts: Austin Hankwitz & Robert Croak
Date: December 11, 2025

Episode Overview

This Q&A edition dives into real, listener-submitted financial questions covering everything from buying property with friends, emergency funds, managing large windfalls, leveraging debt for real estate cash flow, tackling student loans, to practical side hustle ideas. Austin (an energetic 20-something entrepreneur) and Robert (a battle-tested decamillionaire business veteran) dissect each scenario with their trademark blend of practical advice and good humor, always emphasizing habit-building, risk management, and smart investing.

Topics & Key Insights

1. Buying Real Estate with Friends: Risk, Structure, and Tax Considerations

Timestamps: 03:20 - 10:53

Listener Q: How to buy a property as a group (four friends), maximize profit, limit risk, and keep tax time simple.

• LLC Structure is Essential:

  • Form an LLC with all partners. Each friend brings $15,000 ($60,000 total).
  • “Get that LLC up and running… Figure out what they are going to do. Are they bringing in just capital? Are they going to have a day to day operational role?” (Robert, 04:26)
  • Use an Operating Agreement to define ownership splits (default: equal, 25% each) and roles.
  • Consider “sweat equity” if someone is providing labor not cash.

• Legal Documentation:

  • Use a lawyer for the first deals, but “do the prework yourself... I would spell it all out in ChatGPT or Grok or Perplexity, whatever you use. Get all the language in order so it works for you.” (Robert, 07:22)
  • This prework helps control costs and builds templates for future deals.

• Capital Calls & Protection:

  • Clearly lay out what happens if someone doesn’t contribute to unexpected costs (“capital calls”) to prevent resentment and chaos.

• Tax Implications:

  • LLC distributes profits, and each member pays taxes on their share.
  • Distribution payouts (for a rental) usually quarterly, biannually, or annually—not monthly.
  • Always maintain an LLC bank account cushion to avoid scrambling for cash.

2. Emergency Funds: What’s Included & Where to Keep It

Timestamps: 10:53 - 17:36

Listener Q: Should my emergency fund cover my mortgage? Where should I keep it until needed?

• Include Everything:

  • “Expenses” = every recurring cost: mortgage/rent, food, utilities, subscriptions.
  • “The goal is for my monthly spending to stay pretty much the same [in a job loss].” (Austin, 11:29)

• Calculating Amount:

  • 3-4 months’ total expenses is “the sweet spot.” Maybe up to 6 months if your income is volatile.
  • Use tools like their “honest budget doc” for a detailed, realistic budget.

• Not for Investing:

  • “The emergency fund is not part of your investments… It’s insurance against your investments.” (Austin, 15:56)

• Where to Keep It:

  • Use a high-yield cash account (like public.com), not a regular checking or savings, to at least match (or beat) inflation.
  • “You’re still making money on it… you’re not going to make as much as you would in the S&P 500. But don’t just leave these emergency funds sit in a savings or checking account.” (Robert, 17:02–17:36)

3. Managing a Real Estate Windfall: Where to Park Money for a Future Home

Timestamps: 17:36 - 21:03

Listener Q: After selling a long-term rental, should I park $83k in high-yield savings or invest it until I buy a retirement home (in 1–7 years)?

• Short Timeline (1-3 Years):

  • Keep it in high-yield savings for safety, even if the return is low.
  • “You might leave a little bit of money on the table… but you’re going to be safe because it’s not going to go down in a volatile market.” (Robert, 19:57)

• Longer Timeline (>3 Years):

  • Consider investing in index funds (S&P 500, Nasdaq, international, etc.) for higher growth.
  • Be mindful of potential capital gains taxes—paying taxes means you made a profit!
  • “If your timeline is 3, 4, 5, 6, 7 years… park it in the S&P 500… growing for you at 6, 7, 8, 9, 10, 12% per year on average.” (Austin, 21:03)

4. Leveraging Debt for Real Estate: Cash Flow vs. Risk

Timestamps: 21:03 - 29:17

Listener Q: On buying a $3.75M assisted living facility—should I use cash, borrow against my brokerage, or fully leverage to maximize my cash flow and liquidity?

• Math-First Approach:

  • Using more debt increases risk and may only marginally boost cash flow after factoring in interest expenses.
  • “You’d basically be trading this borrowed money for new money without any additional real gains.” (Robert, 26:16)
  • Use cash on hand for the down payment to modestly boost cash flow, but avoid over-leveraging through margin loans.

• When Does Margin Make Sense?

  • Only if the spread between borrowing and returns is meaningfully large (e.g., borrowing at 5% for an opportunity yielding 12%+).
  • “90% of the time people do it in an irresponsible manner. But that other 10%. Right. They definitely exist.” (Austin, 27:10)
  • Always factor in risk: real estate can be less stable than a diversified securities portfolio.

5. Student Loan Payoff vs. Investing: Prioritize Wealth Building

Timestamps: 31:45 - 36:38

Listener Q: As a new-law graduate with $100k in loans at 3.5%, no investments yet, and low living costs, should I pay down debt or build investments?

• Invest First, Pay Loans Later (If Low Rate):

  • “Debt can only go to zero. But your investments theoretically could go to infinity.” (Austin, 34:23)
  • Build up at least the same amount as your loans in investments (Roth, 401k, bridge) before accelerating loan payoff.
  • Federal Loan Forgiveness Possible: Stick to the minimum as “we always have that ace up our sleeve that maybe the government cuts these debts down for people like yourself.” (Robert, 35:28)

• Lifestyle Timing:

  • “I just don’t want you living at home forever… but a eagle that never leaves the nest turns into a turkey.” (Austin, 36:38)
  • Aggressively invest while living cheaply, but make a clear transition plan to adult independence.

6. Precious Metals & Diversification Order of Operations

Timestamps: 36:38 - 40:22

Listener Q: Should a 22-year-old with $42k in ETFs/crypto/single stocks/cash start buying gold or silver now?

• Build Your “Base” First:
  • “A hundred thousand dollars invested into index funds and ETFs before you start diversifying into other asset classes like single stocks, crypto, precious metals.” (Austin, 38:23)
  • If compelled, take only small positions and use diversified funds (e.g., GLD, SLV).

7. Side Hustles as a Dental Hygienist (or Anyone)

Timestamps: 40:22 - 43:13

Listener Q: What side hustle can a dental hygienist pursue?

• Universal Opportunities:

  • “Doesn’t matter if you’re a dental hygienist, you could be a dog walker, you could be a doctor… It’s what works for you.” (Robert, 40:35)
  • Focus on ROI: “How do I make the most amount of money in the least amount of time?”

• Practical Examples:

  • Seasonal UPS delivery (as shared by “Money with Drew”): $23–$25/hr, flexible, listen to podcasts while driving.
  • Online side hustles: e-commerce, content creation, or any remote gig that fits your lifestyle.
  • “Test a bunch… then narrow down to the one you want to do more full time.” (Robert, 42:44)

Notable Quotes & Memorable Moments

• On Group Real Estate:

  • “Make sure you dot your I's and cross your T's… so you can enjoy the tax benefits and the income benefits from owning real estate.” —Robert (05:52)

• On Emergency Funds:

  • “The definition… of an emergency fund is it’s insurance against your investments. It is not an investment.” —Austin (15:56)
  • “The emergency fund is for emergencies. So when something happens, you don’t have to go to the credit card.” —Robert (14:32)

• On Leveraging Debt:

  • “You’d basically be trading this borrowed money for new money without any additional real gains.” —Robert (26:16)
  • “I could see instances where [margin] would [make sense]… but in this instance the numbers just don’t come together perfectly.” —Austin (29:17)

• On Student Loans vs. Investing:

  • “Debt can only go to zero. But your investments theoretically could go to infinity.” —Austin (34:23)
  • “An eagle that never leaves the nest turns into a turkey… and we don’t want turkeys. We want eagles.” —Austin (36:38)

• On Side Hustles:

  • “It doesn’t have to be your passion. Pick something that you get the most movement of the needle from an ROI perspective.” —Robert (41:11)

Additional Resources & Community

• Rich Habits Network: For deeper dives—webinars, live Q&As, and networking with likeminded listeners.
• Download their budget tool: For building your “honest” budget (referenced in the emergency fund segment).
• Public.com generated assets: For creative, AI-built portfolios tested against the market.

Engagement Call to Action:
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