Scott Trench’s $1,000,000 Bet on Real Estate (Update)

0:00Should you invest in real estate or pour your money into the stock market? It's a question you're probably asking yourself right now as you create your financial plans for the year and work on building wealth. So today we're digging into it. Should you put a down payment on that local property or buy more into the S &P 500?

0:22Hey, everyone, I'm Dave Meyer. Welcome to the BiggerPockets podcast. Today's episode is a follow-up to one of our most popular shows from a year ago. We've got former BiggerPockets CEO, Scott Trench. A year ago on this show, he proclaimed himself a big bear on the stock market, and he announced he was selling$1 million from his stock portfolio to reposition that capital into real estate in Denver. Now, a year later, S &P is up. It's up 15 % from that conversation, and Scott is back. and I'll get an update on his life since stepping away as CEO of BiggerPockets, his recent work hosting the BiggerPockets Money Podcast, and then I'll ask him if he has any regrets about that big financial decision he made last year.

1:08But more importantly, I'm also going to get his take on the markets, stock and real estate and more, for the rest of 2026. I want to find out, is Scott doubling down on real estate and continuing to sell off equities? Or maybe he's changed his outlook and he's back to stockpiling ETFs for the next 12 months. And I'm curious what he recommends for other investors striving towards the same level of financial freedom that he's achieved himself. So let's find out. Scott Trench, welcome back to the BiggerPockets podcast. It's so good to see you. Thanks for being here. Good to see you as well, Dave.

1:41It's been a while, and I'm sure the audience is eager to hear. For those of you who don't know, Scott graduated successfully, financially free now, and stepped away as BiggerPockets CEO a couple months ago. So tell us what you've been up to. Yeah, I've been doing a lot of lifting weights, a lot of hiking. I got a ski pass for the first time since 2017. Dude, that is way too long living in Colorado. Yeah. But this year, the goal is to go 10 times. So I got a ski trip planned for two or three weeks from now. And, yeah, just been hanging out, enjoying life and been doing the BiggerPockets Money podcast and having a blast doing that.

2:23It's been really fun. Nice. What's been going on over at Money? What are you guys focusing on these days? Yeah, we're basically, the goal is to build a DIY financial planning toolkit. So I think it's very frustrating that you can't even find like a basic spreadsheet to put in your financial position. If you are a somewhat sophisticated investor with some kind of complexity. So just like creating, here's a basic personal financial statement. Here's a goal setting template. Here's some calculators that can help you make very basic decisions around there. And eventually what I'd like to do is I'd like to put out about 25 different financial plans for fake people that others might find familiar.

3:04Oh, I'm a real estate investor with a complex portfolio. I'm a broke at 50 trying to catch up to retirement and just kind of like, oh, you should do something different in this situation than over here and provide those kind of templates so people can make their own plans and maybe bring them to an advisor. I'd love to see them. I absolutely understand this pain point. It is very difficult to find these things. I am pretty good at this stuff and I've struggled even to make my own like financial planning stuff in Excel because it really, it's especially when you're in real estate, it is difficult to build that into, you know, a traditional retirement plan, figure out where you want to allocate resources.

3:40So please send them my way once they are done. And we will share them with the audience, of course. But we are here today, because I want to understand, I always enjoy sort of just talking to you and about the market and what you're doing and strategy. I think that's something you're always been great at. And it's fun to talk to you about. So we're going to get to that. We're going to hear about Scott's 2026 predictions approach to investing. But we got to hold you accountable to your 2025 goals, because you were here a year ago doing this. So let's go through your 2025 predictions. Well, just to kind of start the conversation here, one of the reasons I've gotten into vibe coding is because I'm awful at the prediction.

4:23So this was a disaster, right? From a prediction standpoint, right? So last year, I put together a deck call, I get irrational exuberance 3.0. And I'm like, the stock market, you know, the S &P 500 in particular is at all time highs or close to all time highs from a Cape or Shiller PE ratio. That's crazy. I don't understand that. I'm not taking a part in that. You know, I was like, gold has surged recently. I don't understand Bitcoin. I'm not taking a part of that. Bonds are too low. Where do you go for all this stuff? And so my move at that time was to sell portions of my stock portfolio and move it into paid off real estate.

4:58Because I'm like, I can get a six, 7 % cap rate deal here in Denver, all cash right now and go with that. And so that's what I did. I ended up selling a million dollars of S &P 500 and putting that into a quadplex. I actually sold a little bit more than that, and I bought another duplex a few months later. And so that quadplex, I underwrote to a 6.5 % cap rate, and I just did my taxes and annualized. It was almost exactly that, like 6.42 % with property management. So I got what I was looking for with that quadplex. The duplex has some work, so I'm finishing up stabilizing that. There's a tenant in place, and so I began to work three or four months post-close.

5:43So we'll have to come back next year to see what that cap rate ends up being, but it should be higher. That was what I did with those funds. And so I got my cap rate, depending on what you want to assume for appreciation on an illiquid asset, some appreciation there. And then I missed out on like the 12 % growth from February when I sold to the end of the year. Yeah. We're recording this in the early January of the S &P 500 plus whatever yield came from it. So that was like$100 ,000 loss on those moves compared to what I would have gotten if I just stayed in the S &P 500. Right. Over the course of the year.

6:21Now, who knows what the S &P 500 will do this year. Maybe it goes up even more and that move looks even worse. Maybe it immediately crashes. Yeah. you know, or doesn't go anywhere for a while. And that ends up so, you know, time will tell how that ends up looking. But from year one perspective doesn't look so good on that front. Well, I love the honesty, but it's like, you know, you're still up. You're just perhaps up on paper as of today, less than it would be. We'll see. No one knows. But I'm curious, just like from a philosophical perspective, is that something you regret or beat yourself up?

6:56Or Like, how do you think about that kind of decision? No, the first property every single month, every single month, I'm able to transfer five and a half, 6 ,000 bucks. You know, some months is a little less when I have like property taxes or insurance and there's a reserve in there for CapEx, you know, but I'm able to just transfer that and I spend it. Yeah, it's great. Pays for my life, right? Second one, you know, again, like for the first three or four months it did. And I knew I had this project in there that was all factored into my underwriting. So once I get that stabilized, that should do the same, a little bit lower, like$4 ,500 to$5 ,000 on that.

7:30And that just feels great between those two properties alone, not to mention the rest of my rental portfolio, and that's still half of my net worth that is in the stock market in investments that are either the S &P 500 directly or in other stock market ownership. Yeah, I think that's the right way to look at it because it's obviously it can be easy and somewhat tempting to say, oh, I should have done this. I should have done that. But I made a similar decision. I did not sell nearly as much stock, but I sold some stock at the beginning of last year, too, just because I felt like there was risk.

8:04And I don't necessarily think the stock market was going to crash, but I think the probability of the crash is going up. And I'd rather just take risk off the board. And the way I think about that is like, I'm willing to give up some potential gains to take risk off the board. And sometimes that works out where, yeah, you don't realize as many gains as you would have in the stock market. But like a year ago, who knew which way the wind was going to blow? And I think it's a totally rational decision to try and hedge your risk. And real estate, I think, just more of a sure thing, at least in the last year or so.

8:38And I would argue going into this year as well. Yeah, I felt and feel way better about it in terms of like, I'm spending that money, right? That's the difference. If I was saying, oh, I'm going to wait 30 years and just accumulate, then maybe that's different. But I'm actually spending the cash flows generated by this rental property to fund my lifestyle. That's a major improvement for me in this particular situation, although it clearly has cost me somewhere approaching six figures-ish. But again, we'll see. I guess that's a good transition to what we're looking forward to in 2026. How are you feeling about the stock market this year?

9:16One of the things that this year I'm going to, with my humble pie in, and I'm not going to be using words like irrational exuberance or anything like that. And I'm not even going to pretend or like have any input at all on any asset class outside of real estate. I feel like my real estate, my real estate takes over the years have been generally fairly close. I've never been like wildly, like crazy in the wrong direction on those in my time at BiggerPockets. Yeah. So I feel comfortable talking about that. But I have no idea what the hell is going to happen with Bitcoin. I don't know. I don't understand gold and all this stuff.

9:51De-dollarization, like if that's going to continue or just revert wildly. Like I think I could flip a coin and come up with something on those items there. You know, the S &P 500, the same stuff I was talking about last year continues to scare me. You know, in there, it's like, hey, it's trading. It's like a 40 times CAPE ratio. Some people don't like CAPE. It's at the highest ever price to sales ratio in history. It's trading at a highly elevated price to forward earnings in there, very high trailing earnings. One thing that I've been noodling on is AI spend. AI CapEx alone is like 400 to 430 billion is where I think they're going to, it's going to shake out in 2025.

10:35And it's going to be 600 billion next year. And what's interesting about that is I'm sure you noticed this, but I use AI all the time now. Like whatever I vibe, I'm switching between these vibe coding apps all the time. It's free or very low cost each time I use it. And every three months, the model I'm using is made obsolete by the next one developed by some competitor. And so I'm like, what's interesting about that is as I believe that the bulk of that is capitalized by these companies. So it's not showing up in your price to earnings report when you look at global S &P 500 price to earnings for a trailing basis, but it's spend, it's not capital expenditure.

11:13It's spend because of how rapidly it becomes obsolete in my view. So I think that's like even like another thing on there that I'm like, okay, I'm interested in. But at the same time, it truly is making things more productive. It's truly making life easier and faster and making everything easier for me as an individual. So surely that's going to show up on the scoreboard somewhere in profits or earnings or revenue or individual incomes somewhere in the world that's going to show up on the scoreboard, making the world a better place or people more productive at least. Yeah. But it's just like, is that all going to translate to corporate profits for these, you know, the mag seven or the fangs.

11:53I don't know how that'll play out. So, so I only have questions this year and I'm like, I'm sitting very comfortable with my diversified, safe, boring portfolio, you know, large cash position of like two, two and a half years of spending and my paid off rentals. And I'll probably miss out on something, but I just have no idea where it's going to be, where that next piece is going to come from. And I think that there's still plenty of risk on the table. So that's my take this year. And next year, we can count the next, you know, 200 ,000 that I miss out on on this particular move. I'm sort of in a similar headspace as you that's like, I'm at a point in my career, luckily, where I don't need to maximize profits.

12:32And like, part of me just wants to just kind of like protect what I got and close, keep going slow and steady. So I'd love to actually talk to you more about portfolio allocation, Scott, because this is a super important and tricky question for our audience, but we got to take a quick break. We'll get to that right after this. Running your real estate business doesn't have to feel like juggling five different tools. With Resimply, you can pull motivated seller lists, skip chase them instantly for free, and reach out with calls or texts all from one streamlined platform. But the real magic is AI agents that answer inbound calls, follow up with prospects, and they even grade your conversations so you know where you stand.

13:13And that means less time in busy work and more time closing deals. Start your free trial and lock in 50 % off your first month at resimply.com slash biggerpockets. That's R-E-S-I-M-P-L-I.com slash biggerpockets. What if I told you you could forget everything you know about investment property loans? Because Host Financial is rewriting the rulebook, tossing out those pesky DTI restrictions. They focus on your property's income potential. No tax returns or personal income statements needed. Simple, efficient, and tailored for investors like you. Imagine a lender that sees the gold mine in your property, not just the numbers on your paycheck.

13:53That's the host financial difference. And they're approved in 47 different states, so your next big deal could be just around the corner. Ready to unlock your property's true potential? Visit hostfinancial.com. Don't let old school lending hold you back another day. That's hostfinancial.com. Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate most of the cost against your income, legally 100 % IRS compliant. That's instant cash flow improvement. Cost Segregation Guys is the number one firm nationwide, specializing in identifying these faster depreciating assets in your property.

14:32They've completed tens of thousands of studies across all 50 states, from remote cabins to apartment complexes. So if you own investment property, this is a no brainer. So visit costsegregationguys.com slash BP for your free proposal and find out how much you could save this tax season. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast, easy? Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed's sponsored job posts help you stand out and hire the right people quickly.

15:09Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45 % more applications than non-sponsored posts. The best part, no monthly subscriptions or long-term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed Worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of the show will get a$75 sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast.

15:51That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. Do you ever notice how every passive investment somehow turns into a very active lifestyle. Active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10 % below market value, in the best markets across the country without making real estate your second job? That's exactly what Rent to Retirement does. They're a full service turnkey investment company handling everything for you. In some cases, investors get 50 to 75 % of their down payment back at closing, plus interest rates as low as 3.75%.

16:30They've partnered with BiggerPockets for over a decade, helping thousands invest smarter. If you want to do the same, visit BiggerPockets.com slash retirement to learn more.

16:43Welcome back to the BiggerPockets podcast. I'm here with Scott Trench talking about his takes on 2026. We talked a little bit about 2025. Scott, you sort of hit on, you know, we've sort of been circling around this idea of like, portfolio allocation, how much money you put where. And this is a tough question for people. You alluded to this when you're talking about sort of financial planning. How do you think about allocating capital? And maybe you're willing to share some of how your portfolio is allocated, at least in percentage points right now. Sure. I mean, my portfolio is very straightforward.

17:17About 40 to 45 % is in real estate equity here in Denver, Colorado, in multifamily properties that I own and I have a property manager, but could operate here. And that's what I know. I'm kind of like digging my heels in for a slog on that front for a little bit, but it's, you know, with the low leverage, I'm generating pretty good cashflow from that. Almost entirely alone funds my lifestyle. And then the other 55 % of my wealth is spread across various retirement accounts, free tax retirement accounts, like my 401ks or equivalents, post-tax like the Roth, my HSAs, my after-tax brokerage accounts.

17:59And that position includes a two and a half year cash reserve and then is allocated into fairly aggressive stock investments. Generally speaking, my new investments, the new cash that I put into it when I do have cash inflows is tend to go into value stocks right now. Particularly, I like these relatively low-fee, actively managed value funds from Advantis, both domestic, international, and emerging market. Why such a big cash position? There's several reasons. One is I'm a real estate investor. Two is I'm no longer the CEO of a big company, so I don't have this large income coming in. And then third, I wrote a book called Set for Life.

18:42And I think it would be particularly embarrassing to go bankrupt after having author touch a bit. So I keep a particularly large cash position, even if it is a drag in my overall portfolio returns. See, people don't talk about the unexpected, the hidden consequences of being an author or a public personality. You have to hedge against going bankrupt. Everyone needs to, but you need to do it a little bit more. It's pretty funny. All right. Well, cool. Thank you for sharing that. Because I think, you know, sometimes I talk to real estate investors on this show, like, you know, Henry, James Dater, people you know, as well, like they're a hundred percent in real estate and you clearly believe in real estate.

19:18So why so much in the stock market then? Well, I'm, I'm, I'm 35, but I won, right? I like, I'm, I'm very lucky. I got what I wanted, um, out of my, my financial portfolio. I do what I want with my day at this point. And so, you know, I, I just want to maintain that, that position on an indefinite basis and be able to, to harvest my portfolio. I'm a little bit even more conservative probably than this like three and a half, like three and a half, 3.75 % safe withdrawal rate for my portfolio. So it's that diversification across these different stock portfolios to make sure that the growth is there long-term to sustain that position.

19:57Well, good for you. And congratulations. It's an incredible place to be. Being able to say that you've won at 35, I think is the dream for pretty much everyone. So let's turn our attention to real estate because obviously we all want to hear your take on real estate right now. You alluded to a slog. So what are you seeing in the market right now? For real estate, I'm going to just dive in there. And I think that the word I'm going to use to describe what's going to take place over the next three years is absorption. That's it. That's the theme I've got here. And I think that that is really going to be the main driver of what happens in the real estate market across the nation.

20:33Now, every region is different, But I think in most regions around the country, on average, you saw rents not go up very much, maybe decline a little bit. And that's really a problem for real estate investors who are really betting on inflation implicitly on housing costs as part of the core thesis behind the investment. And the reason you didn't see that, we've talked about this for years, is the onslaught of multifamily supply. We're specifically talking about the residential market right now and the historic deliveries in 2024 and in the first half of 2025. So we've been talking about that for years and those abated, right?

21:07In the second half of 2025 and now heading into 2026, we're going to see relatively low net new deliveries of multifamily across the nation. And what is going to happen, I think, in 2026 is that vacancy rate is just going to come creeping down, right? It's going to come down maybe 200, 300 basis points in some of these markets, like at Denver, right? And what that's going to do is that's going to drive rent growth. Two years ago, what would ascend rent growth was going to be very high. in Denver in 2026. And the reason I'm going to say it's going to be more muted absorption this year is because the demand side of the equation has changed in a lot of these places with a lot less movement.

21:45And I think a big part of that is the huge change in immigration policy in this country. For sure. And for the record, I think it's a good thing to have the border under control in there. We won't get into more politics than that. But just that alone is stopping several hundred thousand net new illegal immigrant arrivals on a monthly basis, right? On top of that, you have deportations. I really don't know what source to believe on deportation data at this point. I think it's actually wild how hard it is to get believable data on that point. And these are either voluntary or involuntary. But no matter how you slice it, you're getting close to about half a percent or maybe even a little bit more than that in terms of population differences nationally versus what you would have forecast two years ago if you just expected those numbers to continue.

22:32So there's other forces at play with that, but I think that alone is actually going to have a fairly reasonable impact on and slowing absorption rates over what you might have otherwise thought was going to happen at this point, zero-all vacancy, and it's going to compound each year. So I think you're going to see that rent growth that I thought was going to be really high in 2026, 2027, and 2028, two years ago, I think you're going to see it much more muted. I think you're going to see something in the 3 % to 4 % range for rent growth in 2026. And then you're going to see something a little bit higher than that in 2027 and higher yet again in 2028.

23:06So it's still going to be strong rent growth, but it's not going to be, I was putting up some big, big forecast numbers. I thought we were going to be bumping double digits in 2027 for rent growth, at least in some markets. And I think that that number needs to be tempered now because the demand side is just a little lower. Rent growth is common, but it's not going to be the party in rent growth that I think landlords were thinking was going to happen two or three years ago based on this delivery curve on the supply side. I'm a little more pessimistic than you are, to be honest. On a national basis, I think it's going to stay close to flat, maybe one to 2%.

23:40No way. No, you're going to see net absorption. I'm just worried about household formation. I just think the demand side, maybe I'm too pessimistic, but I worry about how stretched people are. The rent burden numbers are really high. The wage growth numbers are starting to come down. The unemployment rate for young people is really high. Obviously, it will be market to market, but on a national basis, I think if I had to bet, I'd say it's between zero and two, not up to four. But we'll come back next year. Hold us to this. I'll go a little bit more optimistic than that. I'd say it's going to be in the three to four range.

24:20Okay. 3.0 % to 4.5%, somewhere in that range. Well, I started around BPCon last year calling this like era that we're in like the great stall. It just feels like everything is stuck, right? And like prices are kind of flat, rent's kind of flat. Like what do you think this means, one, for prices? And then perhaps more importantly, strategically for our audience, like what do you do about this? I don't know. So from the pricing, pricing is so difficult for me because I look at the Denver total pricing. And I would have said, there's no way I'm not coming on this podcast here in January 2025, not under contract on my next rental property.