E53 | Why Your Biggest Wealth Win Comes After Your Hardest Challenge

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We own $7 million in real estate — and just got turned down to rent a modest home. If you've ever felt like you're building something real but can't prove it on paper, this episode is for you. We're sharing the raw truth about selling two properties, pivoting a 10-year business, moving with no destination, and what it actually takes to push through when the breakthrough feels invisible.

What You'll Learn:

• Why asset-rich investors often can't qualify for rentals — and how to handle it
• The tax strategy behind selling appreciated properties (cost segregation + bonus depreciation)
• How to know when to pivot a business vs. keep grinding
• Why hard work alone doesn't build wealth — and what does
• The mindset framework for surviving the "dark before the dawn" season
• How to redeploy equity strategically without a massive tax bill
• Why April is the best time to list real estate in most markets
• How the co-hosting model fits into a real estate professional tax strategy
• The importance of a support system that's honest, not just encouraging
• Why sometimes selling is the smartest build move you can make

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This podcast is for informational purposes only and does not constitute financial, legal, or tax advice. Consult a licensed professional before making any investment decisions.

Transcript

SPEAKER_00 0:00

How things get harder before the breakthrough comes. And we don't know if our breakthrough's coming, if we're being completely honest. We hope that this is the end of the cycle.

SPEAKER_01 0:09

I think we have around $7 million in in real estate now. But we were talking about if we applied for one of our properties through a property manager, we probably wouldn't be able to rent one of our properties. We don't fit in that box.

SPEAKER_00 0:20

Not one bit.

SPEAKER_01 0:20

And it's always that balance building wealth and yet this side of it. We can see the light, we just can't touch it. The equity's there. We know that's there, but you can't utilize it.

SPEAKER_00 0:29

I'd be curious to know like how many of our listeners have just worked so hard and just feel like they're just continuously hitting this wall.

SPEAKER_01 0:35

We're selling both of them now, so we're gonna have double what we thought we were gonna have. But we want to redeploy the capital and scale up.

SPEAKER_00 0:40

You all get to come along on this ride with us and see how it's gonna land. Welcome back to the Broke Billionaires, where we document our daily struggles and building wealth while raising a young family. Join us as we talk creative wealth building for everyday people and couples that are struggling in a down economy. I'm Lauren.

SPEAKER_01 0:56

And I'm Joshua Massari, and we'll be your host.

SPEAKER_00 1:00

Welcome back to The Broke Millionaires.

SPEAKER_01 1:03

Welcome.

SPEAKER_00 1:04

We took a week off last week.

SPEAKER_01 1:06

Not intentionally.

SPEAKER_00 1:07

We had a sick kid. Shocking.

SPEAKER_01 1:10

Life.

SPEAKER_00 1:11

For young kids, someone's always found to be sick, that's for sure.

SPEAKER_01 1:15

Yeah.

SPEAKER_00 1:16

Next time I'm just gonna sh share the water bottle on purpose so they all get sick at the same time.

SPEAKER_01 1:21

Stop resisting, just stop resisting.

SPEAKER_00 1:24

Stop dragging it out. Just get it done with, you know, quick, quick, quick. All right, we've got a couple big updates today.

SPEAKER_01 1:31

Yeah, we do.

SPEAKER_00 1:33

We're moving.

SPEAKER_01 1:34

Again. We um how many times is this in the last two years?

SPEAKER_00 1:40

I was trying to add it up. I just keep thinking like maybe one year our kids will start the school year and end the school year in the same house, but I don't know when that's gonna happen if that's puts things into perspective.

SPEAKER_01 1:50

Well, we're not moving to our forever home, so we No.

SPEAKER_00 1:53

But like it hasn't even been a year.

SPEAKER_01 1:58

Yeah.

SPEAKER_00 1:58

I think it's I think we were at six times before this. So I think this will be seven times since mid like spring of twenty twenty four.

SPEAKER_01 2:08

Jeez.

SPEAKER_00 2:09

Seven times since we've added a child.

SPEAKER_01 2:12

We've got a lot going on. Yeah. A lot of kids, a lot of moving.

SPEAKER_00 2:16

A lot of kids, a lot of moving.

SPEAKER_01 2:18

I will say that every time we move, we get rid of stuff and we haven't really accumulated as much stuff.

SPEAKER_00 2:22

So you know, I'm really not this that stressed about this move because A, we never fully unpacked. I was just gonna say that we don't fully settle. Like poor Isla, her dresser has been a box still. So I just need to close that up and that one's ready to go.

SPEAKER_01 2:38

Um We knew it was temporary, we just didn't know.

SPEAKER_00 2:40

Yeah, we knew. But it it does make moving a lot easier when you don't accumulate a lot of stuff, and it has definitely changed our mindset on things and their importance, like what is important and what is not. Um, when you move so often, and it's nice to not have a lot of clutter because we can do it pretty quick.

SPEAKER_01 2:58

Yeah, it's true. So we are moving. We actually wait, best part.

SPEAKER_00 3:03

We talked about we don't know where we're moving to also. So we don't have one working.

SPEAKER_01 3:07

We have no idea where we're moving. So here's the situation. Um we have decided to we talked a little bit last time or a couple episodes about uh selling our most recent project we just finished. And then the idea was we were gonna take the funds from that and then start this project on the house that we originally bought back in 2011. Um, and that one is a smaller house. It's you know, we rented it for the last 10 years, it's been a great rental, and we'd like to basically redevelop the property. But looking at the numbers, it like what we'd have to spend to create what we want there, it's going to take a lot. And we have a lot of equity tied up in this house. I bought this house before I even met you in 2011. Yeah. And I paid $400,000 for it.

SPEAKER_00 3:58

I can't even believe you could get a house for $400,000. I know. That's insane.

SPEAKER_01 4:02

So this property without doing a bunch of renovations. I mean, we I did some renovations over the years, and it's it's it's not in dire need of updating.

SPEAKER_00 4:11

It was updated. I mean, you did a full kitchen remote.

SPEAKER_01 4:13

I definitely like it was all original when I bought it. So I did like a full kitchen renovation about 10 years ago. Um, this a refresh on the bathrooms, but didn't like fully redo them. Um and and like did the out the the outside, the exterior looks good. Uh, but it's small and we were gonna take it from 1300 square feet to like 3,000 square feet with a couple ADUs. But uh what we've decided, because we have a lot of equity that's trapped in this property. And so we've decided to go ahead and just list it. And and I started thinking like the more I run the numbers, the more it just makes sense to sell it and then redeploy the capital and start over because our cost basis on this property uh for depreciation is so small. We actually started renting this out or we had this listed. So the plan was until we redevelop it, we're gonna do our midterm rental model and it was gonna be a midterm rental. And we had it listed for about $10,000 a month, uh, which and as somebody tried to book it the other day too. We had to turn it down because we had already made this decision. Um, but that was the plan is we were gonna do it, do it furnished until we had all the plans approved and everything, and then we were gonna start redeveloping it. Um but with the extra income that it'd be producing, the uh the assessed value that we have for our tax basis on the depreciation is very small. We bought it for $400,000. So the tax basis was like almost nothing compared to the income we're bringing in now. So it's not gonna offset it very much. And so I think it just makes sense to reset, pull this equity out, redeploy it in down payments on other properties. And we're the the plan is to buy other properties like we talked about with the other property. And again, we're selling both of them now. So we're gonna have double what we thought we were gonna have. But we want to redeploy the capital and then take bonus depreciation on the new properties to offset the tax gain. So that way we don't have any taxable income from these two events because it's going to create a tax problem, a very large tax problem on both properties. But if we can offset that with the new purchases, then we're getting kind of resetting our tax basis for our depreciation. We're also doing a cost segregation study. So we'll be able to take bonus depreciation up front to offset the gains, and then we'll have depreciation moving for a higher depreciation basis moving forward to offset rental income in future years. So because we are coming into the hottest time to sell a property, we kind of decide let's just do this and do this now. And uh we're we're targeting at a mid-April. It'll probably be listed by the time this even comes out, but we're targeting a mid-April listing date, which is like the hottest time, at least in our market, and I think most markets, to list something. Cause I think like end of April is when the majority of closings happen, meaning they were listed in sometime in April. And it's because the school year is coming to an end. Uh kids, you know, kids are in their final stretch of school, parents are trying to figure out where they're gonna be for next year, and so they can get in the school district or wherever they're gonna be. So there's a lot of activity, like April through June. Usually they start hitting the market in April, but you have the majority of buyers in that time. So there are more, there's more inventory that hits the the market, but there's also a lot more buyers in that that pool for that time as well. Um it's kind of a volatile time right now with all the Iran stuff going on and interest rates bouncing back up and everything. Uh, but I think that in our market, I don't think that's going to affect it all that way.

SPEAKER_00 7:44

I don't think so. And I think because it's it's kind of nice that we're coming to market with two different properties and two different price points. Like they are two different avatars that they're gonna attract, essentially two different families. Um, so I think that's good as well. It, you know, I think this is a Yeah.

SPEAKER_01 8:03

And the other one is gonna be coming right after this. So that we have some renters in there that uh they were displaced family from a flood that they had in their home. And I don't know, we don't know when they're gonna be out. It sounds like we're waiting for a renewal for for May. Uh right now they're there through end of April. They'll probably be there through end of May, it sounds like. Um, but we've already got that. We're pushing that off market as a kind of a coming soon, just letting people know that it's going to be coming and kind of creating the buzz around that one. And this other property that we're gonna be listing mid-April, uh, I I expect it to go under contract pretty fast because there's not a lot of inventory. There's a lot more demand in that price range. And there were, you know, the the properties are are going like less than two weeks are getting under contract. So they're going pretty quick in that price range and in those neighborhoods. So we expect that one. And I think ours, like we have it shows really well. It's got really good curb appeal. So I think it'll be we were talking about this.

SPEAKER_00 8:59

Curb appeal matters more than people give it credit for. What do you think?

SPEAKER_01 9:04

Yeah, I think it attracts more buyers, it attracts more people that want to come look at it just because it's got a good curb appeal. It's a great street. Um, it's it's got you don't have to do anything to the front yard. It's got, it's got, it doesn't a lot of these homes that come, they get renovated in the inside and they don't do anything to the front. It's like original color, original paint, you know, landscaping doesn't look that great. Like grass, like it's just they don't do anything. And and this one, it it was kind of a drought resistant or drought tolerant landscaping. It takes very little water and it's got like uh synthetic grass in the front. And we did this out 10 years ago, and it looks great, it looks the same as it did 10 years ago. So it's a really that is really impressive. It's really held up and has that that good curb appeal. So, you know, in the next few weeks, well, we're trying to move as soon as possible. So we're trying to to get out of where we're at just so we can get out, get the the contractors to come in and we're gonna do fresh paint and just kind of spruce it up and do a few repairs. Uh we've been doing repairs the last several months. Um that's kind of why we've been there just doing repairs and and getting it ready to go. What was the well it was gonna be for a rental, but now it's changed our mind.

SPEAKER_00 10:09

What was the note that the realtor had on the interior?

SPEAKER_01 10:12

He didn't like the brown trim. I get it. I get it.

SPEAKER_00 10:15

Say it a little louder one, just to have that on the record for future. Um I didn't I didn't like that when he did it, but we weren't engaged yet, so I didn't push too hard.

SPEAKER_01 10:24

She didn't have the ring and she didn't want to screw it up.

SPEAKER_00 10:26

It was really nice to hear though. I'm not gonna lie. But so all that to say, we decided to list it and we do not know where we're going yet. We've looked at a couple rentals. Um, this is kind of an opportunity though. We've had a couple neighborhoods on our radar that we have not lived in that we want to try out. So I think this will be a good time to get in there for a short time and kind of test out the water, see, get a better idea of where we would want to maybe settle at some point for longer. Like we always say, like we're never gonna have a forever home, but I can't say never, but most likely we will never have a forever home. Um, so yeah, we'll hopefully in the next couple days here we'll figure out where we're going and move in a week or so.

SPEAKER_01 11:13

Yeah. Yeah, we really want to just we made this decision. We want to just do it now so that we can capture the most buyers in the market, catch that hot time, and try to get as most the most we can for it. So, you know, it's kind of a strategic move, but if we're gonna sell it, we wanna get it the most we possibly can. So that is why we're moving again.

SPEAKER_00 11:36

Absolutely.

SPEAKER_01 11:37

Yeah.

SPEAKER_00 11:38

I'll see.

SPEAKER_01 11:38

In other news, our roof that we keep talking about on the other rental property that had the whole insurance situation where insurance wouldn't renew our our policy because we had a cedar shake roof. We had to get out of state insurance and it shot up from $2,400 a year to $15,000. Uh, that roof is actively getting installed right now. It's supposed to actually be finishing up uh today or tomorrow. They've got some more work. There's a there's a secondary um structure there that they they got some more work they got to do on, but um that'll we've got hopefully it'll be finished it up and we'll be able to get final permits signed off in the next week or so. Uh and then they start putting the solar on. Um, but very exciting. Looks great. New roof, new we'll be able to get our insurance lowered to a reasonable amount. Can't believe we were paying $15,000 a year for that. It's crazy. So anyway, that's uh updates on our situation, situational life. Just a quick disclaimer the information shared on this podcast is for informational purposes only and should not be considered as financial, tax, or legal advice. Always consult with a qualified professional before making any financial decisions. Your individual circumstances may differ and require specific strategies not discussed here. Now let's get back to the show. That's how we call it. Um I think that kind of takes us into what we're gonna talk about today. Um one of the things that we run to being the broke millionaires.

SPEAKER_00 13:10

Um Well, our our topic today that we're talking about is how things get harder before the breakthrough comes, right? That's kind of our our overarching seam. And we don't know if our breakthrough's coming, if we're being completely honest. We we hope that this is the end of the cycle and that we have a breakthrough coming, but um we don't know for sure. So you all get to come along on this ride with us and and see how it's gonna land. But yes, like you were saying.

SPEAKER_01 13:39

Yeah, so one of the things I want to talk about is just how, you know, we have I don't even know I think we have around seven million dollars in in real estate now. So we've got multimillion dollar properties, several multimillion dollar properties, uh, you know, apartment, we got multifamily, out of state properties, uh an apartment complex. Um But we were talking about how if we applied for one of our properties with a property manager, we probably wouldn't be able to rent one of our properties.

SPEAKER_00 14:10

Not probably. We wouldn't.

SPEAKER_01 14:11

No. They would just they wouldn't even like consider our application. They're just like, no. Like they just we don't fit in that that box.

SPEAKER_00 14:20

Not one bit.

SPEAKER_01 14:21

So we are having a hard time finding somewhere to rent because of that. We are um trying to like navigate that and find land.

SPEAKER_00 14:31

It's really finding someone, finding either a unique situation or finding someone who is a business owner and understands kind of the situation that we're in and is not just looking to fit that mold, but can really kind of pull back a little bit and see what we have and um kind of understand our situation a little bit better, I think is is the type of person we need to find to rent from.

SPEAKER_01 14:58

Yeah. So we're having to like offer additional security deposits and things like this to try to give them a little more security. And even though we have these even though like two months, three months from now, we will have a a lot of money in our bank account. Um it's just, you know, on paper, we're not gonna be able to do that.

SPEAKER_00 15:18

It's funny because in one way on paper we look good, and then in another way on paper we don't look so good at all.

SPEAKER_01 15:23

And it's always that balance. We always have that. It's like building wealth and and you got this side of it. Um, but then you try to like do your taxes so that you, you know, on on paper, you you don't look good to the IRS because you don't have the income, because you have all this depreciation, all this stuff that offsets it. So it doesn't look like you're making any money, so you don't get taxed. So that's nice, that's good. Uh, and we've got wealth, that's good. But then when you try to get a bank loan and it's like pulling pulling teeth because they we don't fit that box. They're like, we don't care that you have all this wealth and you could literally pay this loan, like move some assets around, whatever, and pay off this loan. We don't care about that because that's not our box.

SPEAKER_00 16:02

Like how they work.

SPEAKER_01 16:02

They want to see the income and they want you to pay taxes on it. You have income and you have all this depreciation and all these write-offs, and they don't care. They they're like, well, we're not gonna consider it unless you pay taxes. There are some stuff you can get added back in, and some banks are more willing to work with you on that than others. But the box that they like to see is your W-2 income or just your your PL with profit and no depreciation.

SPEAKER_00 16:25

They like it clean. Which is not probably less than 10 pages, not the hundred-page documents you send them.

SPEAKER_01 16:30

Yeah. So trying to explain it all. It's a balancing act, constant balancing act.

SPEAKER_00 16:36

Yeah.

SPEAKER_01 16:37

But I feel like we are at a point where we are pushing through like the end of everything that we've been sewing for the last five years and all these properties that we've been renovating and and building up and our business that we've been building, building around this. And now it's kind of coming full circle where we're going to sell two properties and get a large amount of cash, and we'll be able to buy more and scale up with even more properties, but also be able to have tax-free money that we get out of this. Yeah. On top of that, to uh invest elsewhere and create. We're really focusing on creating more income streams now that we've got a family of six. They're very expensive. They are constantly eating and pooping, diapers. Diapers are expensive, like just everything school, tuition, all this stuff. So we're gonna be focusing on um still building and scaling the real estate, because that's been really good for us, but it's more of a long-term play, more of an equity play. So we're gonna start focusing more on on income streams to help pay for our life. And the I think that's gonna be a a big part of our focus moving forward this year.

SPEAKER_00 17:54

Yeah. I think it's interesting too. Like we said, I mean, obviously, hope and pray everything works out and these houses sell. And I think it's I'd be curious to know like how many of our listeners have just worked so hard and just feel like they're just continuously hitting this wall, like again and again. Cause I feel like that's kind of where we've been at of like we're just getting nowhere. Like we know that there's light at the end of the tunnel, but we can't see that light and we have no idea when it's coming. And I do feel like now we're starting to like we can see the light, we just can't touch it. Now we can see it.

SPEAKER_01 18:25

It's like equity. Well, the equity's there. We know that's there, but you can't utilize it. That's true. And we've like tapped into as much equity as we can with you know, HELOCs in second position and some third, sometimes third position leans, but there's so much equity there that because it just keeps going up and and and we just we can't tap into it anymore.

SPEAKER_00 18:44

There were rocks at the end of the tunnel where the light was speaking.

SPEAKER_01 18:47

Yeah. So we're just removing the rocks and then like resetting. So so that that'll yeah, that'll be good. But yeah, curious to know like what what struggles other people are going through. And just like in with our business too, like that that's another thing is it takes up so much of my time and is not going anywhere because I spend a lot of time on the business, the printing business, that doesn't make any money. It doesn't, you know, it's I it's not, it's no longer the best use of my time. I think that business model too is just it's an older business model. And even though I had built it with current, more like current, more mod like more updated and more efficient, it's just an older business model that still takes a lot of time, whether it's me or having to hire somebody to do it. And it's just, it's been a struggle. So I haven't been paying myself for a couple of years now, and it's still taking up a lot of my time.

SPEAKER_00 19:38

So I was gonna say, like, that kind of brings us to another piece that we're going through right now. I would be curious, what would you say if someone is going through this where it's like they're just doing the same thing? They're like grinding head down, like day after day after day, and it's not working. Like at what point do you think no, you just need to work harder and keep going and pushing through? Or at what point do you need to look at this and reevaluate and say, now it's time to pivot?

SPEAKER_01 20:02

I think it depends on what you're working on. Because, you know, and Ryan Paneda actually said this the other day, which I thought was really good. Um, he was saying that you need to recognize when a business idea or business model is dead. And I think that's kind of the realization that I'm coming to. Not that it's dead, but it'd be really hard to revive the business to what it was before because things are changing so rapidly. With AI right now, it's like the world is changing extremely fast. And I think that that that type of business model is gonna start to go away. Um, not overnight. There's still like a lot of the clients are are are kind of in the past too. So you still have a runway there. But I I think it really depends on what you're doing. If you're starting a new business, a new idea you know has potential and is gonna work. Yeah, like working hard and and getting it off the ground and getting it to go is one thing. But if you have a business that's been slowly dying and that business model doesn't work, you need to know when it's time to kill it or walk away or just sell it and and put your focus on something that's gonna make more money. That's kind of the crossroads that we're at right now. Um just if this takes up all my time, it isn't really making that much money. Like why keep it?

SPEAKER_00 21:14

You're working for free right now.

SPEAKER_01 21:15

Yeah, but in even if it if I do build it back up, like it's a lot, it takes a lot of work to manage it and it I can't scale it that much.

SPEAKER_00 21:23

You also the the one of the biggest issues we've always run into with this is there still is the the physical aspect of it where you physically have to be here and it's not something that you I mean, you can to a point do it when we're out of town and on vacation and things like that, but there's but only if I have somebody else hired.

SPEAKER_01 21:40

Right. There's still a the physical aspect of fulfillment that has to be done that is hard for you to step away from the and I think the business, I think the business model, I think it can work, but what I'm looking at doing is is selling my book of business now. And while it's still viable, because it still spins off profit. It, but selling that and then re continuing with what I'm doing with building out AI automations and use that in the other part of business that I'm keeping because I have a separate book of business within within the same company and doing the automations there, getting a good proof of concept that you can automate this stuff, and then taking that software and then repackaging it and selling that to other distributors. I think that's I'm gonna I think I'm gonna make a pivot more into software than actually selling print so much. So I can help other entrepreneurs that are doing this be able to free up their time, buy back their time by putting a system in place that that operates for them. And this other part of the business I have is it doesn't require as much face-to-face time and the projects are smaller. It's repeat business. And so it works a lot better on automations. And then I think eventually, you know, I've talked about doing the the premium gifting and for like online coaches and stuff. I still want to do that, but I want to start over in in terms of how I build it and operate it to where it is automated. It's more AI and it doesn't require so much hands-on. Yeah. You know, maybe wait until the Tesla robots are released so that I don't have to have some because it's like that would that requires a lot of manual people putting stuff together. But if I can get all that automated with robotics and AI running everything, then that still may be a viable business model. Um, but I want to build it more automated. So that's what I'm gonna definitely focus on moving forward.

SPEAKER_00 23:28

How do you feel about that?

SPEAKER_01 23:29

It it was a it took me a while to kind of come to the realization that that's what needed to be done. Just I I just don't have the time to be able to do that, plus all the real estate stuff that we have. We're gonna be buying more properties and that's gonna take a lot of time. I don't have the capacity. And for kids now, I just don't have the mental capacity, I don't have the physical capacity, I don't have the time the day to be able to do all that. So I really need to hone in and focus where is my time gonna be best spent. And I think that that's this that's the decision that is the right move.

SPEAKER_00 24:04

I think it's interesting too, because we are has it been 10 years this year?

SPEAKER_01 24:07

Yeah, 10 years.

SPEAKER_00 24:08

And that was your your original plan was 10 year exit.

SPEAKER_01 24:12

So it's not the exit I was hoping.

SPEAKER_00 24:16

But I think that's an important lesson too, is just knowing that like we've said, like being open to pivoting and knowing that it doesn't have to be a little bit more than that.

SPEAKER_01 24:24

Well, that's the thing, is I'm like I can I can keep doing this and yeah, I can probably build it back up, but it's not gonna get probably I can probably get get there faster doing something else. Right. And so it just doesn't make sense to keep to keep doing that.

SPEAKER_00 24:40

Proud of you either way.

SPEAKER_01 24:41

Thanks. It's a little sad. I like my cut my customers, I like the business, but like I'm just at a point where like, okay, that's not the best use of my time. Yeah. So I I just need to make that pivot. And I think it'll be a little bit of a step back and want to figure out everything. But, you know, in combination with selling these houses, we're gonna have some money to be able to fall back on and to get us through and create some passive income streams. And so I wasn't pay myself anyway. So I guess it's not that big of a stepback.

SPEAKER_00 25:11

Mentally, I don't know. I really don't know how you did it as long as you did without being able to pay yourself because that's like I was frustrated for you, and I can only imagine how that must have felt.

SPEAKER_01 25:22

Yeah, I think I got kind of you you get stuck in like the, you know, just work hard and it'll, it'll work out, but that's not always the case. Like you gotta you gotta see the bigger picture and be like, okay, like maybe, yeah, I can get back up there, but I could also be doing this and make a lot more money a lot quicker. And so I just need to like cut it off and start over with something else.

SPEAKER_00 25:46

I think that that's something that society always tells us too. It's like if you work harder, you'll get those results. And like I've said that too, I've said that to you. I've said, like, I just don't understand why we're in this situation. Like you work so hard and you've had to remind me that of the hard work means nothing.

SPEAKER_01 26:01

Yeah, it doesn't matter. And I think we we have this like culture thing that like hard work is is, you know, gonna reward you. And it's that's not how it works. It's you know, you hear, you know, work smarter, not harder. And and I think that is is true, but you have to actually put that into practice. And if you're just working in your business and not working on your business, you're not really able to get there and you're not able to scale and build. And then I think just stepping back, I think also having somebody that was running the business or helping run the business for me allowed me to be able to step back and work on the business and then just realize that this just doesn't make sense as a whole. Like I I can I can be much better off doing something else. Yeah. That is where we're at. So then meeting with uh potential acquisition partners this week and hopefully we get something figured out pretty quickly because I have way too much on my plate right now. Yeah. So we'll see while where that goes.

SPEAKER_00 26:59

We will up.

SPEAKER_01 27:00

We have a lot going on right now. Moving, selling these houses, selling the business. Like there's just a lot going on.

SPEAKER_00 27:05

One of those things is a lot. And add four kids to the mix. Yeah I know our our sitter when she showed up today. I didn't even go into any of that. I just was like, oh, by the way, we're moving if you see boxes. Um, we'll probably be in a new house next week when you come. But um, she's like, Wow, that's that's a lot going on. And I'm like, Oh, girlfriend, you don't even know the half of it. Yeah, but it's uh persevere through, right?

SPEAKER_01 27:32

Yeah. And and I think also just like we you know, we're this is kind of an unknown for us because we don't know we're gonna start. I mean, this may be I maybe just start doing full-time real estate, and that becomes what I do. I don't know. I it's kind of unknown. We don't really know what we're what our And by real estate you mean investing, not like selling real estate and no, not selling, but still like buying properties, fixing them up, renting them out. No, but that we have the co-hosting business that we'd like to scale up, but I just don't have time to be able to do that. So this will allow to allow us to focus more on that, get the systems in place to to properly scale that. Um and I think that that's gonna be kind of the more the direction that we want to go. And we also are gonna have to do more real estate to be able to qualify as real estate professional status to be able to get the bonus depreciation. So that's kind of part of this, too, is like I can't be spending too much time on a business that's not related to real estate because then we won't qualify for the bonus depreciation.

SPEAKER_00 28:25

Which we talked a lot about that in our last episode, too, of how we were taking the bonus depreciation. And yeah.

SPEAKER_01 28:33

So we want to make sure that we qualify. And we are gonna be bringing on a like a tax strategist to make sure that we're going into these, these, uh, you know, selling these properties and then the new ones we buy, making sure that we're getting everything lined up and doing it proper and and not getting ourselves into a trap where like all end of the year, all of a sudden we don't qualify for that bonus depreciation or what or something that we missed. And we want to make sure that we're able to fully offset that income and and do it properly in case there ever is an audit.

SPEAKER_00 28:59

So I think too, it all just comes down. I mean, we talk so much about this, but it comes down to mindset, right? And it's really embracing the unknown without romanticizing it. And I think that's just so important in at least for us, getting us through kind of this season, this long season that we've been in is the mindset piece of it is just so crucial.

SPEAKER_01 29:26

Yeah. And I think just moving forward, like we have been holding on to these properties, building the equity, and just trying to hang on without an income. And it's gotten it's been very, very difficult. And as we kind of move forward and just try to try to improve our situation cash flow-wise and and business wise and everything, I think the important thing to remember is like not to get from point A to point B overnight, like it's gonna take time, but just incremental increases on improving what you can. Um, you know, one of our coaches always says, like, do what you can to get 1% better every time. And you always hear like just get one, just focus on a little thing, get 1% better every day. 1%, 1%, 1%. And before you know it, it gets you to where you want to be. So I think if we just focus on that moving forward, that's a a good measurement or a good goal and a good way to track it is just making sure that we're constantly.

SPEAKER_00 30:25

I was gonna say it's it's important to track your progress. Those little wins along the way, I think, are important. And and just knowing like what's working and what's not working. I think that that's so true in no matter what your business model is, but just being able to track that progress is so important.

unknown 30:42

Yeah.

SPEAKER_01 30:42

And I think also prioritizing like actions that you can you can control and not outcomes. I know you struggle with this at times. Like you you stress over situational things or outcomes that aren't what you want or what you expect, but or that haven't even happened yet. Or that haven't even happened yet, or that could happen, you don't want them to happen. But I'm always like, don't focus on the things that you can't control, focus on what you can control. So the actions that you can take, uh, focus on on what you have control and stress about those things. Don't stress about the things you have no control. So then out you have no control over an outcome, but you can do things to try to influence that outcome. But there's certain things that are just out of your control. So I think just focusing on the things that we know we need to focus on to get to where we want to go.

SPEAKER_00 31:27

This is where having a strong partner that balances you out and communication is key because I need that reassurance and I need that reminder. Like you said, like if it's not affecting you and do what you can to control it. But if it's um it's something you can't control, then let it go.

SPEAKER_01 31:48

Yeah. And I think like you have to protect your mental bandwidth because you know, thinking like the small ones, the little actions that you can control, you know, selling a house here, buying a house there, shutting down the little things that we're that we're doing and all the levers that we can pull uh rather than focusing on the big vision, like, oh, we want to live in this neighborhood and you know, be financially free and have to worry about anything. But to get from here to there seems like a big jump. But just focusing on the little things that we can do to get us there and that those focusing on those small wins and celebrating those small wins, I think helps the journey, helps you on the journey rather than just hitting a wall and be like, oh, we'll never get there type of thing.

SPEAKER_00 32:25

I think it's also really important to make sure that you're building a support system that does truly support you and encourage you when you're going through something like this, but at the same time doesn't sugarcoat it. They're not gonna sugarcoat the struggles. They're gonna acknowledge that, but they can, you know, instead of telling you you're crazy or questioning why you're doing everything you're doing, that gets really hard when you have those types of relationships versus someone who's encouraging you, even though it's gonna be hard.

SPEAKER_01 32:53

Yeah. And I think we've found that in in the the masterminds that we've joined and you know, the calls and the people that we're surrounding ourselves with, like just the whole podcast and building up this is it's it's hard. It's really hard. And we don't make any money. This costs us thousands of dollars a month to operate. It's like there's no payoff in sight, but it's like we're just trying to focus on the things we can, trying to get 1% better every day, trying to make sure we're recording consistently, you know, getting guests, doing the editing through social media and all this stuff, like just focusing on the little things that we can can do to get 1% better and to to help, you know, get these ideas and strategies to other people to help them. And that's rewarding when people we hear that, like, hey, you guys, I had listened to this podcast episode and we did this and it's helped like that's rewarding to hear that other people are actually putting the things that we're talking about into to practice and like it's improving their lives. Like that's that's an awesome reward for us.

SPEAKER_00 33:53

How has it been on the school community being able to actually talk to people now that are and being able to kind of help them implement these strategies into their real life situation?

SPEAKER_01 34:03

I mean, we haven't been doing that for very long, but uh uh just being able to open that rather than us just talking to a mic and not getting feedback and like now, you know, there's a weekly call that that we're hosting and different subjects each week. People are able to ask questions, be able to get ideas from other people in the in the community, uh deals that people are working on, just kind of creating this support system, like you're talking about, other people that are kind of doing the same thing, like-minded people doing the investing, making the sacrifices, building their portfolios in in real estate or whatever their business may be. Um, I think that's really important and really helpful to have that. So hopefully we can continue to grow that and and really build up that that community as a support system for everybody. Cause that's I think that's huge, just being surrounded by like-minded people.

SPEAKER_00 34:46

It's so huge. It's because I think this is not the norm of what people like you said, right? The a W-2 job kind of clocking in and clocking out is the norm. And so if you don't have that, it is it's hard to kind of find your group of people that can understand this the struggles because there are very different struggles that you go through when you're building something like this.

SPEAKER_01 35:09

Yeah, I definitely agree. And again, we're going into the unknown. Like this is kind of new for us, gonna be going to a new area of business. Um we've never actually sold properties before.

SPEAKER_00 35:20

I know. I was just thinking about that. Like we had to get a realtor and doing like going through, I think we talked about on one of the past episodes that we were interviewing realtors, just going through that process and kind of weighing like pros and cons and kind of understanding everyone's style and what was important to us and choosing an agent.

SPEAKER_01 35:39

Yeah, we actually dove pretty deep into this and we interviewed um like four of the top brokers in our area in the neighborhoods that we're selling in. Uh, we we interviewed the brokers that had the record-breaking sales for each of the name each neighborhood.

SPEAKER_00 35:52

Yeah, so we were strategic about it for sure and wanted to know what their strategies were and how they accomplished those sales.

SPEAKER_01 35:58

And um, I don't think most people put that much into when they listed. They just list a friend of a friend or referral or just who like I don't think people maybe I don't know, but we definitely like interviewed and were very intentional with our questions and and this strategy that we wanted to come to market with. Um so I don't, you know, and we've talked about we don't use realtors to buy houses, and I still stand by that for us anyway. I think it I don't think they're as necessary when you're buying, unless you're like a first-time buyer or you just don't, you're not familiar with the process, then you probably should have somebody there. But for us, we know what we're looking for. You know, I I you know, we go to the city, we pull permits to find out everything that was permitted on the house and find out what's supposed to be there, what's it? Yeah, and and we do, you know, we we tear these houses down to the studs a lot of times. So we really know what we're looking for and we've kind of been through that. Um, but on the selling side, that's a different story, especially in a in a high dollar market like this. I think a realtor makes a big difference because they have connections and contacts and they can kind of you know get the the buzz building about a property that's coming. And I think it becomes a lot more crucial at that point to have somebody that's aligned in your goals and the strategy works for what you're trying to accomplish.

SPEAKER_00 37:14

Yeah, I agree. I feel confident with who we chose.

SPEAKER_01 37:18

Yeah. We'll see how that goes in the coming weeks as we get ready to list the first one and then the second one after. Yeah. It is it's exciting, but it feels like so.

SPEAKER_00 37:30

I'll I'll be honest, I I had reservations with selling just because that was never the plan, right? This is where it goes back to me personally having to be able to pivot and kind of change my mindset on it. And so I had a little bit of that like emotional, like we put so much work into these, like that wasn't the plan, and kind of but I do feel really, really good about it now. And we're gonna start over what we've done.

SPEAKER_01 37:56

We're gonna have to buy more properties and we're gonna do like that's the fun part anyway. I mean, I know that we did it and like, oh, we did such a good job. We put so much into that, but like the fun part for us is the building and and like taking it down and building something out, something new out of it. And so now we'll get to do that.

SPEAKER_00 38:11

I was gonna say, because I don't know when we were gonna do that again. I mean, the plan was to do that on the house for or in, but that was gonna be Yeah.

SPEAKER_01 38:17

And it was gonna, I think the cost, it just didn't I I still like the plan that what we were gonna do. I think we're kind of selling it with the vision. So if somebody else wants to do it. I really hope someone does it. But it's just like the cost of what it was gonna take. And with all of our equity trapped in the home, it was just gonna be it would have been an expensive construction loan to come up with. And it would have taken, you know, a year or two before we started generating income on it. And it just didn't didn't pencil. We will be way further ahead by selling and then expanding because we'll probably end up with more property than what we're selling. So we're able to scale up that way, and I think in the long run, it'll benefit us a lot more.

SPEAKER_00 38:58

I think so too. So it's exciting for sure.

SPEAKER_01 39:02

Yeah. So that's uh we'll keep everybody posted on how that goes because we're gonna have it's gonna be a whole episode on just how we mitigate our tax liability on this, because there's gonna be a lot of tax liability that we're gonna have to strategically eliminate because I don't want to pay large tax bills. You know, I love paying taxes.

SPEAKER_00 39:26

Do you have any words of wisdom or advice on someone that's going through a really hard time right now that just feels like they're continuously hitting that wall, like again and again?

SPEAKER_01 39:36

I think somebody that's working towards something, if you have that goal and you know and you know it's gonna work out like these houses, we've been the last five years has been a struggle, just it's been tough. But what I keep saying, like it's going to pay off, it's going to pay off, it's going to pay off. And we're at a point now where the property values are worth more than what we thought they were. Which it's like, okay, maybe we take advantage because we don't know what's going to happen. Like it could keep going up or it could go down. But right now, like the values are up, we've got a lot of equity, and so being able to capitalize on on that um is rewarding. But I think this whole time it's been kind of like without with the unknown, like we didn't know what we're working towards necessarily, or you couldn't see it. It wasn't tangible. Um, but I think just like you don't have to always like see the light at the end of the tunnel. You just have to to keep showing up, grinding it day after day, and knowing that what you're doing is going to pay off. Uh again, going back to the business, that's a little different because stepping back and looking at it, it's like keep grinding, but it's not gonna get to where I want it to go. Maybe, maybe not. But it's like you really got to focus your energy. And if you have something that you know is gonna pay off, like with these houses, like we knew that this was going to pay off, and now we're kind of coming to that point.

SPEAKER_00 41:00

So true. Just keep going.

SPEAKER_01 41:02

Just keep going. We've got some some interviews coming up. Uh we've got some exciting things that we haven't talked about before. Uh, self-storage uh is one that's coming up. That's that's uh something that we have not done. So that's a new strategy for us. Um we've got some MTR co-hosts that are our large operators that we're gonna be bringing on. So that's that'll be fun to get their perspective. Um I believe we have a short-term um uh rental operator coming on as well. So more like the vacation home Airbnb type stuff that we don't necessarily do. So we'll get that perspective. Um, and then and yeah, so that and then the school community. So if you want to join, it's free to join the school community. You can post questions in there and we'll answer it. Other people will jump in and answer. And then we are hosting right now a weekly um Zoom call on Thursdays at 4 p.m. Pacific time. So different topic each week gives everybody a chance to ask questions and bounce ideas off back and forth. And I was getting a little more comfortable with that at first. It was a little nerve-wracking trying to set everything up and just being on a live call. I've never done that before, but I feel like I'm getting a little more comfortable with it.

SPEAKER_00 42:15

You did great. I think it was really good. And I love that aspect of being able to come and see how this can apply directly to your situation in your life. And so I think this is gonna be a fun community to have and have it be applicable to other people.

SPEAKER_01 42:32

Yes. Anything else?

SPEAKER_00 42:36

No, we gotta get packing, that's for sure.

SPEAKER_01 42:38

Yeah, we got first we gotta find out where we're going. That's true.

SPEAKER_00 42:41

We already started packing regardless. It's weird. I mean, we could be going like somewhere for a couple months and I furnish rental, or we could be going a longer term. So you have to pack differently depending on It's funny because we do this.

SPEAKER_01 42:56

We have properties for people in this situation. This is what we do, but we can't go to our own houses. Our houses are all booked, and so they're not available, and all the ones that we manage are not in our budget. So we got that problem. And it's like, it's just funny that this is what we do. Like we provide temporary housing for people that's furnishing just go while you're selling your house or whatever it is.

SPEAKER_00 43:23

And like now that we're in this situation, but thankfully we have such a demand for our houses that they're not vacant for us. I mean, that would be a bigger problem.

SPEAKER_01 43:31

But no, no, I'm glad they're all like booked because our our properties are all booked like months in advance. Yeah, I mean, the one that we're that we're not selling is booked all the way through the end of summer, and so it's just not available. And the other ones that could be available, we're selling.

SPEAKER_00 43:44

So that booking that came in though for our house two days ago, I was real tempted to be like, let's just get out this weekend and do it.

SPEAKER_01 43:50

But yeah, we actually thought about that, but it then it we I think we would miss because we wouldn't be able to do the construction until afterwards, and we wouldn't probably come to market until closer June. And then I think we're gonna miss the opportunity to be able to get the higher price. I'd rather get the higher price, like $10,000 now versus another $50,000 or $100,000 on your sale price. You you just gotta like, you gotta look at the big picture. Step back, look at the big picture, what's gonna benefit you the most. So I think that that makes sense. Hopefully it works out.

SPEAKER_00 44:19

Hopefully. We'll see. Keep you all posted.

SPEAKER_01 44:22

Yeah. All right, get out there and make it happen.

SPEAKER_00 44:26

Thanks for listening. This has been a production of Rebuilding the Dream Studios.