Should I Raid My Retirement Plan to Buy Real Estate? 

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30:55Our next question comes from Julie. Hi, Paula and Joe. I am calling to you from the Denver area. I'm 42. My husband's 45. We have three kids, ages 15, 14, and 10, and we are curious your perspective on mountain house vacation rentals or even beach rentals as potential sources of income. We have been trying to justify this purchase and make it a wise financial investment for us for about 10 years now, and every time we run the math, the figures just don't come out right. The part that's holding us back the most is the HOA fees in these places. So the HOA fees are in the Denver area, I'm going to say range anywhere from$500 upwards to probably$1 ,500.

31:46Who knows, maybe even they're higher for some of these condos per month. Obviously, that includes trash and probably cable, heating, things like that. This also does not include special assessments that might be done on the condos and other things like that. However, we know a lot of families our age and about 10 years older who own these kinds of places. And obviously, we imagine somebody has to be making money. So we're wondering if you can help us understand how that would look. Are these people paying cash potentially for these properties? and so they're able to pay the HOA fees just using their rental income.

32:27I mean, we've ran all the figures and I do think you could probably break even, but I don't know if there is a special assessment or if there's repairs or HOA fees go up. Anyhow, we're trying to decide if it would be a good investment for us. Obviously, we would love to be able to use the place a couple weekends out of the year or a couple weeks in the summer. and just curious if you can offer any guidance into something like this. Oh, one additional piece of information is that at this point in our lives, we don't have$500 ,000 to put in cash towards a property like this, nor do we think that that's a sound financial decision for us.

33:09So we would have to take out a mortgage on an investment property as of now. If for some reason we run into money in the future, would that, you know, just taking out a mortgage on a place like this make a difference, obviously, in your calculation or whether or not it's a good investment? I guess we're mostly concerned about the HOAs and the special assessments, which I think applies to a lot of people in rental property. Have a great day and thank you guys for everything you've posted. We really appreciate it. Bye. Julie, thank you so much for that question. I'm so glad that you're a part of this community.

33:45All right. There are a few red flags that I heard when I heard your question. First of all, when you say that you're trying to justify this purchase, what I hear is that you've presupposed the outcome and now you're trying to work backwards to make the facts fit a predetermined conclusion. And that's not a good decision-making process for any type of investment. And now, before I elaborate on that further, I want to take a step back and really define the distinction between an investment versus something that you're buying for personal consumption that you're also monetizing. Because it sounds to me like this is the latter.

34:27An investment is something that you buy because the present value of future dollars makes it attractive to do so. You buy an investment because it is an asset that provides a better alternative as a use of your money in a risk-adjusted manner than any other competing asset. So in the case of buying a home, a property as an investment, you buy that property because you expect that its rate of appreciation and its cap rate, which is its unleveraged dividend stream, you expect that the two of those will perform better than anything else that you're considering in its risk-adjusted context. So in the context of the age and condition of the property, the location, et cetera, right?

35:26Even if you never set foot in that property, this is the optimal use of your capital. And as a capital allocator, you buy that investment. You're comparing it to any other investment. Like if I were buying a stock, a bond, if I were buying crypto or I buy rental property. Exactly. It's just another thing. Exactly. And optimal for my goal. Precisely. Precisely. That's the decision-making process when you're purchasing something that is an investment. Now, by contrast, you might buy something for personal consumption that you want to monetize. that's fine, but it's not an investment. It's something that you enjoy.

36:10And when you're not using it, you'll make some money off of it. So for example, let's say that you bought a car and, but you only drive your car on the weekends. You don't need it during the week. So during the week, you put your car on Turo, T-U-R-O, and rent it out so that other people can use it during the week. Great. You're monetizing a thing that you purchased for personal consumption, but that doesn't make it an investment. But that does. I mean, it doesn't mean it doesn't have monetary value. It just isn't the same decision-making structure because now what you've done, what you're essentially trying to do is just decrease the carrying cost.

36:49Exactly. You're trying to make it so it's not as big a negative on the balance sheet. Exactly. Exactly. And that's the distinction between you're looking for a return versus your decrease in carrying costs. It's, is this an investment or is this personal consumption that you're trying to make cheaper for yourself? Yes, which a lot of people in the vacation rental space, that's exactly what they're trying to do. And frankly, you know what, Paula, I told you on a past episode, I've been looking at the other mountains, the mountains out east and the mountains of North Carolina. And I am specifically looking for a vacation property in a place that I want to go and I want the carrying cost to be zero.

37:29Right. But it's not an investment. It's lifestyle. Exactly. Exactly. And that's the distinction here. So the red flag that I hear in Julie's question is she's using the word investment in a context where I don't think she's actually talking about an investment. because if she were talking about an investment, then she wouldn't have started with the conclusion and then tried to work backwards. If you're approaching something as an investment, you start with a question and work forwards, not with the conclusion and work backwards. As an example, earlier when we were talking about Kimiko's situation and I brought up the efficient frontier, which means a diversified collection of assets.

38:12You're going to begin with a goal. It's going to tell you what collection of asset classes will get you there. Then maybe real estate is one. And then inside of real estate, then you decide to make your best purchasing decision. Correct. She's beginning with vacation rental property in Denver. Right. Exactly. And then working the opposite way. Exactly. Julie, the other thing that I heard in your question is, I heard some assumptions there. Other people own this. They must be making money. on it, right? Not necessarily. People own properties for a wide variety of reasons, and the majority of people who own properties do so for personal consumption.

38:53They're just hoping, like we just said, to decrease their carrying costs. Exactly. So they're not necessarily making any money on it. People own properties because they enjoy the lifestyle that it provides. Well, and there is a bigger piece, I think, that Julie, I think that's a huge piece of the market, Paula. I think there's another huge piece of the market that a lot of especially new real estate investors discount, which is the size of some of the companies that are investing in these properties. And they're able to take a razor thin margin. They make it work on a razor thin margin level. And they're able to get, because they're going to finance a lot of these properties at once, they're able to get from a bank who has experience with this company, with this corporation that's going in and gobbling up a ton of them, they're giving them a preferred rate and a preferred deal structure that you and I wouldn't be able to get anyway, that creates this hairline fracture of a gain that doesn't make sense to you and I, but because they can do it at a scale that you and I can't do it at, they're playing a completely different game than we are.

40:00So saying somebody else is making money, yes, but it's not the dude or the woman down the street. It is this company that owns thousands and thousands and thousands and thousands of these. Right, exactly. And to paraphrase Morgan Housel, people often are misled when you take cues from someone playing a different game. An individual investor, a mom and pop investor or a mom and pop buyer is playing a different game than BlackRock. So don't take your cues from BlackRock because their deal structure is necessarily different. The other piece that I think a lot of beginners can often discount are foreign investors and the motivations that foreign investors would have.

40:45Many times foreign investors want to park their money in tangible U.S. assets because it provides relative safety and security. So if you are based in Islamabad or Karachi, and you are a Pakistani multimillionaire, but you're looking at the inflation rate of the Pakistani rupee, you want to protect your assets. So it would make sense to pay cash for some real estate in the United States, where we have a relatively stable currency, and where that cash is being held in a tangible asset like real estate, which is an inflation hedge, even if you never rented it out, even if you just parked your money into that property and let it sit empty, that would still provide relative security for that money when your home currency is subject to massive, massive amounts of inflation.

41:52As of February of this year, the inflation rate in Pakistan, as measured by the Consumer Price Index, the CPI, was 23.1%. Yeah. Yeah. And in May of 2023, three, inflation there hit an all time high of 37.9%. So when your home currency has an inflation rate of between 23 % to 37 % over the span of the last year, convert it to US dollars and put it in a piece of property. Who cares if it's rented out or not, right? We're playing the same game we talked to Kimiko about earlier. We're playing the Forex. We're playing the currency game. Yeah, exactly. Exactly. I'm making money just by parking it in dollars.

42:43Exactly. Park it in dollars, put it into a tangible asset. If you're looking for an inflation hedge, real estate or any tangible assets like art, those are inflation hedges. So I think a lot of investors would discount the impact of foreign investors who are simply looking for inflation protection. I think that, though, doesn't mean, Julie, that if your true goal is, like mine is, in the mountains of North Carolina, yours in the Rockies, to buy a vacation home that largely pays for itself, that you can't do it. I do think, though, there's some other things, Paula, we can talk about, which is if the math doesn't work, I think you need to look at the fundamental reasons why.

43:32And frankly, people look at Denver, lots of attention to a big city like Denver. It doesn't surprise me that vacation rentals around Denver, the math is incredibly difficult. If there are phenomenal deals, there are people with pockets deeper than yours with information advantages more than yours that are probably going to win that battle. It's the same for Breckenridge, for Telluride, for Vail. Think of all the big resort areas. I think that's difficult. I think you have to be more of an emerging markets investor. like we were talking about, like, where are some of the areas that you love specifically you and not a ton of other people yet.

44:19And in fact, it's funny. I did just a very quick Google search. I know nothing about these towns, but I just looked up some information on different up and coming towns in Colorado. Once again, I haven't even begun to work this down my funnel of are these phenomenal opportunities. These are still towns I would put in at the top of the funnel. Divide and Florissant, these cities, Paula? Divide and Florissant? 45 minutes northwest of Colorado Springs. I've never heard of it. Well, think about 45 minutes northwest. That's got to be beautiful. But tiny. Wheat Ridge, Conifer, Bailey, Fair Play, Cripple Creek.

45:03I think I've heard of Cripple Creek because I know the song, but just some of these places that still could be beautiful places. And there are people, not just you that want to go to a little bit more off the beaten path. And again, if this is for your consumption, it has to fit what you really want, which is, is this a place I really want to go? Is this where I want my place? Joe, here's where I'm going to disagree with you. I think that if what you want is personal consumption, put your money in a place that's going to provide an amazing return. Use those returns to just rent a place for your own personal consumption.

45:38It depends on what they want. I mean, there's two different types of people. There are people that really want their own spot. I'm with you. I'm not generally a buy it person. This one area I really like in North Carolina that I could see myself doing that. But generally, I'm an explorer. I prefer to go someplace different all the time. So I'm going to do, I'm going to do that. And if I go back to the same place, I'll rent a place each time. But I think because this is more of an emotional decision, Paula, anyway, and we're working from a place of, of, of what I want, I think purchasing a house in one of these communities.

46:16I look at the guy who's engineering this podcast for us, Steve Stewart. How small is that town Steve lives in? And Steve didn't start there. Steve started with a whole different set of criteria and ended up in this place where he's looking at the mountains while he's editing this podcast. I think it's a lot like Rick Steves taking people to Europe. He talks about when he first took people to Europe and there were these towns that were not yet discovered. And now, of course, they've been discovered. And going to some of these cities he took people to in the 1970s are now big time places where a lot of people go.

46:54that weren't before. I think we're going to see things continue to evolve, but you don't feel the same. No, not at all. I completely disagree. I think that - Well, there we go. We finally hit it, people. It's about time. Julie, I got your back. Come on, Paula. I think if you're calling a financial podcast, you want to make a sound financial decision. And the sound financial decision is invest your money where it's going to provide a return. Use those returns to pay for the consumption that you want. If you try to make something a hybrid, if you try to make it a hybrid between personal consumption and an investment, you end up doing neither well.

47:39You end up compromising so much on both that the property doesn't do, it neither provides a good return, nor is it what you want for personal consumption. The only case in which I think it makes sense to do a hybrid approach is when you're house hacking, because when you're house hacking, you get access to a primary residence mortgage. And so because you can access a debt instrument that has much more attractive terms than any other investor can access, that debt instrument, that primary residence mortgage does justify the Venn diagram intersection of personal consumption and investment in a house hacking context.

48:20Outside of a house hacking context, however, if you're using an investor loan, you're using the same debt instrument as any other investor, then use that instrument to buy the asset that will provide the best return in a risk-adjusted context. We agree on one piece of this, which is if this is a property that is meant to be used to reach your financial goal, which is a third-party goal, it's a different goal, then this is just a bad idea altogether. However, if the goal is to have this property and then you want to rent it out, I'm all for that. But then, Paula, I'm not as worried about optimal rate of return.

49:05I'm worried about optimal life, lifestyle. And if my goal is to visit a place two or three times a year, I have the money to do that and reach my financial goals in another way. I don't care what you do with your money. I'm not going to disagree with Julie there. I think the base question, I think where our disagreement is coming from is I'm coming from the position of this is an investment. And Joe, I think you're coming from the position of this is personal consumption. So I think the base question for Julie is, Julie, which one is this for you? Yeah. I think if you start with the goal and you work backward when this is, you can afford anything, just not everything.

49:42Right. And, and taking the guy that I like to quote all the time, Stephen Covey, when you pick up one end of the stick, the other end of the stick comes with it. So if I devote a bunch of money to this goal, what's the other end of the stick. To your point, this is a dead asset, underperforming asset. My end of that stick is if all your other bases are covered, who the hell cares? It doesn't matter. So we got to know what the other end of that stick is, Julie, because if you're going to put money in an ill-performing asset, which is also where Paul and I agree, and you don't have enough money for a retirement goal, let's say that is super important to you, then this could affect the status of a goal that might be more important than this, which we never want to do.

50:30Well, Julie, there's your, there's your answer in the form of a question. It is. It is. The question is what is the purpose of this purchase? Do you want to buy it for your own personal consumption and decrease the carrying costs? Or do you want an investment or do you, Maybe Julie actually lives in Islamabad and is trying to protect her. Maybe Julie works for Goldman Sachs. And she's buying up all the property in the Denver area. Can't figure out why the HOA fees are so high. And she called a Ford anything. That would make sense. Totally makes sense to me. She lives in Islamabad, but she works for BlackRock.

51:15And she's looking to actually get her bonus by nailing this. The single condo unit.

51:26All right. Well, thank you, Julie, for the question. We are about to tackle the big question that comes up a lot, which is should you raid your retirement account in order to buy property or in order to buy anything else like a car or whatever. But specifically in this question, It's should you rate your retirement account in order to buy a rental property? Ooh, what will we say, Paula? We're going to answer that in just a moment. But first. We recently hired two full-time positions through Indeed.com, but they needed very different skill sets. So one of the positions was an executive assistant.

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55:06Our final question today comes from Casey.

55:12Hi, Paula and Joe. My name is Casey. I'm a longtime listener of Afford Anything, and I want to thank you all so much for giving me and everyone such great advice over the last few years. First of all, I also want to thank you for answering a question for me a few months ago about public service loan forgiveness. If you remember, your advice was that if I liked the work I was doing and found it meaningful, I should continue to use the opportunity to apply for PSLF in a few years. To follow that up, I am very happy with the work that I do and the community that I serve and have decided to commit to 10 years of service.

55:44Anyways, I have another question. I am currently full-time employed at my 501c3 company, which I will use to apply for public service loan forgiveness in a few years. Like I said, I really love the work I do, but I do not see myself doing it for the next 20 to 25 years. I have been getting my foot into real estate over the past five years or so. I currently house hack my condo and essentially have a roommate who pays my mortgage each month. About a year ago, I purchased my first single family rental property. It's a long-term rental with a solid tenant so far. The rent on the property easily pays the mortgage and then so.

56:18I have recently had the itch to buy a third property. I'm considering buying a vacation home instead of a full rental on the coast in Florida. I could use the property for myself, but be able to use it as a short-term rental when I do not occupy it. I've looked online at a few condos, and they are in the range of$150 ,000 to$200 ,000, the ones I'm interested in buying. Here's my question. I have access to$50 ,000 in a line of credit on my primary residency and about$50 ,000 in a 457 plan through my current employer. My parents have also been great entrepreneurial role models for me, and they told me they would be willing to lend me anywhere from$50 ,000 to$100 ,000, which would give me about$150 ,000 to$200 ,000 to purchase a property in cash.

57:02I would then get a mortgage on the property afterwards to pay off my HELOC and pay back my parents. The dilemma I have is should I use the$50 ,000 in my 457 plan to accomplish this goal? 457 plans are not common, but it's essentially a 401k offered by some employers that I can put up to$23 ,000 per year in pre-tax, in addition to a 401k. The difference in a 457 versus a 401k is that there are no penalties for withdrawing from the 457 plan before 59 and a half years of age. I had made pre-tax contributions to this account and would have to pay taxes on it if I do withdraw. My marginal tax bracket is about 35%, which would take a large chunk of the contributions away.

57:43I will have to pay taxes on it whenever it is used, whether that's today or in the next 10 to 20 years. Should I withdraw the money and pay the taxes now to buy the third property? I have not really been saving the 457 money for retirement. I didn't have a clear purpose for it aside from general investment opportunities. What do you all think about this idea? Casey, first of all, I just have to say this, Paula. Casey, I love the fact that you define 457s for us so we didn't have to. So nice job there. Thank you. I will make one correction. 401k plans, if you're retiring, you may be able to get the money out before 59 and a half there as well.

58:24So if you have a 401k plan, look at your plan document. But it is very possible that you can take that money out without penalty as long as you're retiring pre-59.5. It's IRAs that have the 59.5 rule, not 401ks. But 457 is still a little more flexible, Paula. Right. And we will, in the show notes, we'll put in the IRS.gov page that describes a 457 plan. But Casey, thank you for defining it. As you said, it's a tax-deferred plan for people who work for 501c3 organizations, which actually leads me to the other thing I was going to say, which is I'm so happy to hear that you called in on a previous episode and that we talked through public service loan forgiveness and your career options and that you've taken what we've said and used it to have a career and a financial structure that you're happy with.

59:21That's wonderful to hear. Joe and I answer so many of these questions and we often don't know the follow-up. We don't know what happened in the future. So I love when people call and tell us, hey, you answered my question and here's what's happened since. But it's super. I love that decision. And I remember that question. Our answer was make a decision about where you're going first and then the public service loan forgiveness program will follow. Exactly. Your decision there will follow. Exactly. But start off with what your heart wants to do. Right. Excellent. Let the heart lead and the mind execute.

59:54Yes. I don't like this plan, Paula. Let's talk about this. I don't like it one bit. Joe, why did I suspect you would say that? I also don't like it, but I'm wondering if it's for the same reasons. Joe, what are your reasons? Well, if you look just over long periods of time at asset classes, and this has a little bit of the relationship of what we talked to Julie about, which was beginning with the question, not with the asset class. Now, he is purchasing it for investment purposes. He wants the real estate as an investment. However, beginning with this is what I want to do versus what's the optimal path to the end goal of if it is more money, then I become wary of this move for a couple of reasons.

1:00:44The first one is if we look at investments, we always have to know what the Achilles heel is of that investment. But even before we do that, I'm taking money out of the stock market and I'm placing it into the real estate market. And what's the difference in return that I'm going to get over broad pieces of real estate, broad stock market. Individual properties are going to vary, individual communities are going to vary. So I understand that if I pick the right stock versus the wrong stock, or if I pick one property versus the North American real estate index, it's going to change. However, given the big broad picture, Paula, over long periods of time, the North American real estate index and the U.S.

1:01:25stock market end up in about the same place. So I'm taking money out of my right hand and I'm putting it into my left hand. I do like leading between those two with the asset class that you're more comfortable with and you're more likely to track. Behavior is going to be a huge part of your win. And if you're going to track this and you're going to stay on top of it and you're going to, this is going to be more sticky toward your goals. I do like that better. But the Achilles heel of real estate is the fact that it's an illiquid investment. And especially when you're not in a REIT, which is like a mutual fund of real estate and you own a bunch of them and you can get out of it right away, but you're in one property.

1:02:07I can't sell off the bathroom if I have a liquidity event where I need money. So you're taking money. There's got to be a pun there about bathroom and liquidity events. You can watch the situation go down the toilet. I don't know. I don't know. I don't know. But I do think that taking money that is liquid and moving it to illiquid inside of a tax shelter now, and you're removing it from the tax shelter to do that. Paula, there's too many things that could go wrong, and we're making our portfolio too illiquid for me. So Casey, I would at the very least leave that money in the 457 alone, even if it's just as a diversifier.

1:02:54I would leave it alone. Yeah. Okay. So we have similar reasons for disliking this because - Mine's probably better. I like to start with what percentage of your overall portfolio do you want to put towards real estate and what percentage of your overall portfolio do you want to put towards market based investments such as stocks, bonds, equity index bonds, et cetera. And it seems to me, and it's not my place to tell you what that asset allocation should be. I will tell you that mine is around 50-50. So about 50 % of my assets, my total net worth excluding the value of private businesses, about 50 % of that total net worth is in real estate, about 50 % ballpark is in market-based investments.

1:03:40I haven't calculated the numbers in a long time, but that's just my rough sense of where that ballpark is. That doesn't mean that should be your split. Some people are going to choose a 70-30 split. Some people are going to choose a 60-40. Your mileage may vary, but start with figuring out what you want that split to be. I would hesitate to have that split go 90-10 or even 80-20 in either direction. You want to put some guardrails in place so that it doesn't get too tilted. Casey, while I don't know how this move would impact that split, my sense is that it might tilt your portfolio a little too heavily towards the property side such that you wouldn't be adequately diversified across the whole span.

1:04:30So that would be my first concern. Yeah, absolutely agree. There's another issue, Paula, which is if things change in the future, sure, you're allowed to put$23 ,000 this year into the 457, but all that money coming out, if you decide that you want it back in, that's a gatekeeper. I'm putting it back. You know what I don't like, and don't get me wrong, there are tax shelters that become tax traps, right? Where we're like, I don't want to take that out because I'm in this tax shelter and it's nice. And if I take the money out, then I have less money in the tax shelter. But in this case, where he's potentially taking all the money out of this tax shelter and he decides that he wants flexibility later on, And this is where the stock market gives him an advantage is freedom of flexibility.

1:05:25I can sell my stuff. I can have the money in a short amount of time. Can't do that with a real estate investment. If I've invested in a single property or even two or three single properties, I can take a loan against it. And if I have like a home equity line of credit that's already established, I can then borrow against it. But you can already see the negatives there. Borrowing against my home versus just taking my money. What I don't want to do, though, Casey, is dissuade you from this property. I want to be clear that my objection is not around the property. My objection is around using the 457 money for the property.

1:06:03I agree. Ding, ding, ding, ding, ding. Yes. Yeah. Though I am curious. So it's a condo in Florida that he would use as a short-term rental. Florida obviously is a massive state. So I'm curious to know where and if there are any particular ones that you've identified. There are a lot of condos in Florida that have restrictions around short-term rentals. Of course, that's going to depend on what municipality you're in. But there are a lot of places that do have short-term rental restrictions defined as anything that is less than 30 days. So in your search for that, that's something you're going to want to be very aware of.

1:06:42Florida, of course, is very seasonal when it comes to short-term rentals. So make sure that you project out vacancy and occupancy across all 12 months and you have a plan for seasonal variation. Of course, in Florida, the big topic that everyone is talking about is insurance costs. Those have gone up substantially. But where there's fear, there's opportunity. A lot of people hesitate to invest in Florida or think about selling their holdings in Florida because of the fact that they can't predict rising insurance costs. But that could also be your edge, right? Someone else's Achilles heel could be your edge.

1:07:27I think also, Paula, you have to be aware of some of the very, very current news going on. You may think you're getting a great deal and you might be stepping in it. I'll give you an example, some recent news in just the last few weeks in Miami, because of that condominium that collapsed, Miami is really upping the game on their inspections. Right. Not a shock, right? Yeah. And so because of that, yes, because of that, though, what we're seeing are these sometimes huge special assessments that the HOAs are doing to cover the increased cost of problems that have happened in the building or just the fact that the inspector cost is being pushed onto them.

1:08:13In fact, one recent story talked about a condominium that had a$100 ,000 special assessment. Because of that, we've seen in some buildings mass people saying, forget it, I'm selling it. And one story in the news just a couple of weeks ago, a guy sold his house for$150 ,000 less than he bought it for just a few years ago. Right. Because what happens is when everybody decides to sell all at once, that, of course, negatively impacts the prices of those condos because all of a sudden the market gets flooded with inventory. Absolutely. And if you don't know that special assessment is coming, you may have$100 ,000.

1:08:54Now, the special assessment has to be listed on the document, right? It has to be, hey, I know this is coming there. It has to be disclosed on your purchase, your purchase document. But I think you also have to be aware of that that's happening all over the Miami area right now. But there could be similar things in other communities going on. Yeah. Yeah. Yeah. I know that there are special assessments happening in the Tampa St. Pete Clearwater area. Yeah. But to your point, Paula, if everybody's selling and you factor that in. Right. It could be a phenomenal opportunity. Exactly. Zig when others zag.

1:09:32Where there's fear. Right. There's opportunity. Yes. So yeah, I'm with you, Joe. I don't want to discourage you from buying this property. I just don't like tapping the 457 to do it. I do, by the way, Casey, love the fact that you house hacked your first one. I'm a massive, massive proponent of house hacking. And as I said in the answer to Julie's question, house hacking is the one time where that Venn diagram intersection of personal consumption and investment, it works. Because now you've got, as you know, a primary residence mortgage that is funding something that really functions as an investment.

1:10:17If you are someone who's new to the area of real estate investing, this is a fantastic way to, quote, dip your foot in the pool, as they say. I think it is a great starting point. The risk is incredibly low. The gains are huge. Right. Which are the type of investments that I love, right? Yeah. It isn't rocket science, although I did see one influencer say that recently, but she put it all technically. You know, the types of things that I like are things where there's a huge upside and almost no downside. Well, yes. And I'll tell you offline, Paula, who this was. Okay. No need to disparage people here, but still you're like, come on, really?

1:11:00We're all looking for that. But house hacking, Paula, is that thing. Now it doesn't mean it doesn't come with downsides. You now have a roommate. You now have a renter where you're collecting the check, but you can learn a lot of those lessons, those valuable real estate lessons about how to deal with a tenant while still really having the security of your own house. Yeah. So Casey, I love that you've done that. And I love that you're continuing to expand because house hacking is a wonderful first step, but a lot of people never move past that first step. So the fact that you have the second, you're looking for the third, you're directionally doing all the right things.

1:11:36So Casey, keep the tax shelter of the 457. You You get a tax shelter, you get increased diversification. I know you don't plan on using this money for retirement, but remember, these quote unquote retirement accounts, 457, 401k, 403b, these are not retirement accounts in the sense of retirement as an occupational status. These are simply deals that you make with the government in which you get a tax advantage in exchange for putting your money there. So don't think of it as a retirement account. Just think of it as a tax-advantaged account and keep the market-based portion of your portfolio in tax-advantaged accounts.

1:12:19So thank you, Casey, for the question. Best of luck with this purchase because I know you're going to find another way to make it happen. All right, Joe, we have done it again. We did. We had a through line again, unexpected, asset allocation. Yeah. And even adding to the asset allocation, what represents an investment and what doesn't? Yes. Double through line. Look at that. Yeah. It's really, really interesting how these groupings happen and we don't plan them. Not at all. It's like there's something like everybody's eating the same food on one day and goes, you know, I should go polo about this.

1:12:58Or we find a pattern in the noise, perhaps. We are able to see commonalities in disparate questions. I think there is truth to that, but I also think it is pretty weird how there seem to be themes that emerge in most of these episodes. Well, all right. So today's two through lines. One is asset allocation. It's how are you going to slice the pie? And the other is what's an investment and what's personal consumption? What's an investment and what's not? All right. Joe, where can people find you if they'd like to hear more of your through lines? Wow. Oh, that's a nice transition. Thank you. Thank you.

1:13:36The Stacking Benjamin Show is your confidence builder three days a week. And if you're really looking for just the lighter, lighter, lighter side, and Paula, you know, our show can be very, very light and fun and lots of laughter. We have one of the funnest, funniest shows that happened last Friday. You want to hear Paula and my co-host OG and our good friend Doc G from Earn and Invest as they mix it up on one of our game show episodes. Our game shows are always fun. So what happens is we take a list that some blogger made somewhere on the internet. I don't tell Paula or OG or Doc G what is on the list.

1:14:20And then we ask them. And what's cool about these game shows is, Paula, you know, the things you guys come up with that aren't on the list are often some great things, some fantastic things. So we get the benefit of the bloggers list and we get the benefit of your expertise. And so we're talking about those things in your budget that are a surprise that don't make your budget. And then all of a sudden it blindsides you. What are those? One blogger put together a list of 15 items that blindside people's budget. And we have Paula go head to head with OG and Doc. And as Paula knows, we get into some fun conversation, maybe about cats wearing masks.

1:15:03Yeah, that was the episode where OG was saluting the cat. And we won't tell people why or how, because it is disturbing. all nearly as disturbing no maybe a little more disturbing than the story paula tells on friday about some of the veterinary treatments she's had with her feline friend oh it's i don't think that's disturbing at all i think it's uh inspiring it is it is a it's a wild episode it's really really funny and i think you'll learn a lot about budget so that's uh last Friday on the Stucky Benjamin show. And that was a fun one to record. Well, thank you so much for tuning in. If you enjoyed today's episode, please do three things.

1:15:51First and foremost, share it with a friend, a family member, a colleague, a neighbor. Share this with the people in your life. That is how you spread the message of financial health, financial literacy, financial knowledge. Number two, subscribe to our newsletter, affordanything.com slash newsletter, which we are in the process of revamping. There's going to be a lot of great stuff that you'll find there. Affordanything.com slash newsletter. Number three, please follow this show on both Apple Podcasts and Spotify, as well as on YouTube, where you can watch what we're talking about. You can see stuff come up on screen.

1:16:27Our YouTube channel is a big area of our focus right now, so I would love it if you went to YouTube. Follow us there. Hit the little bell so you get notifications when we publish. leave a comment, say hello. We love hearing from you. So thank you again for tuning in. My name is Paula Pant. I'm Joe Salcihai. And I'll meet you in the next episode.

1:16:55Why are only large caps doing well? And what should I be doing in my investment portfolio given the way that the markets are performing? Ooh, sounds salacious.

1:17:17No, is that too far? I'm not sure salacious is the right descriptor. Well, maybe not. Just trying to keep the ratings high.