The Financial Freedom "Stack": Start with No Rentals, Retire Decades Early

17:09Andrew Giancola:So after that, we get to the six months of emergency funds expenses in place. So the reason for this, and a lot of real estate investors are going to say, well, I want to get that capital working. But let me talk about just like why this is so important for a lot of folks out there is six months is going to do a number of different things. One, if you lose your job, you're nine to five, you have the cash on hand to take care of this. And a lot of people will say, well, why don't I just have three months? Well, if you lose your job, let's go through this sequence for a second. First, you're going to have to get your resume back together, start sending people your resume from LinkedIn, you're going to go through a couple of rounds of interviews.

17:39Andrew Giancola:Maybe if you don't get those first rounds of jobs, you got to go through more interviews. And you don't just take the first job that comes up front. Instead, you are trying to find a job and find the job that fits perfectly for you. And so if you're doing this during that timeframe, that takes about six months, sometimes five, sometimes four. But if you are someone who is in an industry that may take a little longer to find a job, that is going to take six months. Number two is you can also take advantage of opportunity. So a lot of times, big opportunities happen where people who don't take advantage of opportunity, meaning moving across the country for a job that pays more or being able to take advantage of opportunities that pop up, maybe a property pops up.

18:14Andrew Giancola:You cannot take advantage of that opportunity without cash on hand. And so you have to have this cash on hand in order to help protect you moving forward. Now, this isn't really the money that you're going to be investing. This is going to be helping you stay protected. But it also just allows you to use your emergency fund if opportunities pop up that are, you know, once in a lifetime situations.

18:33BiggerPockets Real Estate Podcast Hosts:I like that a lot. Yeah, I think this this number really varies. I personally would never recommend under six months. I just think that makes sense in an uncertain economy. For some people, if you're single, you know, you're living cheap like three months. I'm not going to argue with you. But if you have kids, if you have responsibilities outside of just taking care of yourself, like most of us do, six months makes sense, right? Like it's just it's not I think everything you said is true, Andrew, taking advantage of opportunity, finding a job. The other thing I'll say is like I think the one thing that hurts real estate investors, the one situation you never want to get yourself in is a place where you're forced to sell, where you have to sell a property at an inopportune time.

19:15BiggerPockets Real Estate Podcast Hosts:If you can hold on and you get to pick one to sell, you almost always make money in real estate. That's just how it works. And if you don't have a big enough emergency fund, you are putting yourself at risk to have to sell a property. Maybe even you have a great deal that's doing well. Something comes up in your life and the only equity, the only capital you have is tied up in this property. Now you got to go sell a good deal to cover your expenses. I'd rather you wait and get those emergency expenses covered so that when you go out and find that great deal and do all that hard work, you know that you get to hold on to it.

19:48Andrew Giancola:I could not agree more. And that is the biggest reason is to protect you against life. It protects your family. It protects your investments. It protects everything. And so this is basically just de-risking your situation. For example, in my story, I would not have been able to take that leap of faith without having that emergency fund in place. The opportunity came up very quickly, and I would not have been able to take advantage of that opportunity if I didn't have this in place. So it's very, very important to have this up front. And we call it the SWAN number. So six months is always our minimum.

20:14Andrew Giancola:But if you want more, what is your sleep well at night number? That is going to be the number that you come up with. And it's just the amount of cash that you have on hand that maybe makes you slightly uncomfortable, but it is what you really, really need. That is the big number there.

20:26BiggerPockets Real Estate Podcast Hosts:Yeah, I keep more cash than most people say. I keep a year of expenses, personally. I just, I don't know if I'm paranoid, but I just think it's just, it makes me sleep at night. I'm okay keeping that in a money market fund and earning 4 % instead of what I earn on a real estate property. It's fine for me.

20:41Andrew Giancola:Same here. And that's the big thing for me as I keep more cash than most people and they think I'm crazy, but it's just what I feel comfortable with.

20:46BiggerPockets Real Estate Podcast Hosts:A hundred percent. So much of economics is just psychology. It's just what you're comfortable with. And that's more important in the long run than getting a maximized return in this next year. I promise you, like that is more important. Making it sustainable for yourself and being in the game a long time and figuring out what you gotta do to stay in the game for 20 or 30 years. That's the most important thing. So what comes next, Andrew? What's step five after you've really built out that emergency fund? Is it time to start putting some money to work?

21:16Andrew Giancola:Exactly, it is. So this is the next step, especially if your number one goal is to invest in real estate. It's to build your, we call it the investor war chest. But all this is, is just the cash that you are building up to start investing into real estate. So there's a number of different things that you can do here. One is as you start to build up enough cash, maybe for a down payment, or you can look at strategies out there that are gonna help you get into real estate with low to no money down. You can do things like house hacking. You could do things like what I did, like find sweat equity partners while you're starting to build up this cash.

21:44Andrew Giancola:You can do a bunch of different strategies that are going to help you get started investing, even while you're building up cash to buy some of your additional deals. And so this is a timeframe that I think is very, very powerful for a lot of people, because you know that now this money is going to get to work for you. And so you can start to build generational wealth for you and your family.

22:01BiggerPockets Real Estate Podcast Hosts:You know, this part is so variable, right? Like this could take you a year. This could take you five years. Like, do you have any advice for people who might feel that this is going to take a really long time?

22:14Andrew Giancola:I think this is the big piece for most people overall, is I think over time, your strategy can change. And Dave and I just recently talked about this, where your strategy can shift based on what market conditions are, but also what situation you are in. So folks who don't have a lot of cash on hand yet, but you have your emergency fund in place and you have your financial foundation in place, you're in a prime position to start to look for deals with low to no money down strategies. And this is going to be one of those areas that I think for most people out there, if you can get into a house hack with an FHA loan at three and a half percent down, that's a really powerful strategy if you can find that deal.

22:49Andrew Giancola:If you can find this sweat equity partner during that timeframe where they give you the cash and you do all the work, even if you only get 10 % in the deal, your experience that you were going to get investing in real estate is better than anything else out there that you can do. If you sit on the sidelines and just continue to read books and not do anything, your education is not only going to get you so far. You have to get out there and do something. I remember my first deal was the easiest deal ever. So I bought it actually from a hedge fund. I developed this relationship with the hedge fund that already had a tenant inside of this property.

23:19Andrew Giancola:And I was like, man, this real estate stuff is so incredibly easy. This is the best thing ever. My second property, I bought the property, had a duplex in there. I had to first evict both tenants. One side of the property had exploding toilets where all the pipes were bursting. The other side had... When I evicted the tenants, they left 15 different animals inside the property. And so it's just one of those things. Is that real? 15 animals? 15 animals. I had to call the SPCA to come. They had fish tanks. They had illegal turtles. They They had legal fish. They had dogs and cats. I felt terrible for all the animals.

23:49Andrew Giancola:Yeah, that's terrible. And it was the craziest experience I've ever had. So I had the easiest first experience. My second property was probably the worst possible experience that you could have. And between those two things, you don't know how this is going to work. And you don't know how to handle these situations unless you do. And so I highly encourage every investor out there who has not bought their first property yet to, while you're building up this cash reserve, find a way that can help you get this education right now to get this education out there. Maybe you only do one or two deals with these folks, but at the same time, when you do those deals, you're going to learn so much more than you ever would just sitting on the sidelines.

24:22BiggerPockets Real Estate Podcast Hosts:If you were sitting at home, you're willing to house hack, you're doing low money down strategy, what's like a number that you think a threshold people need to get to in saved up money in order to pull off a deal that they are at least a part owner in?

24:35Andrew Giancola:Well, if you're looking at the strategy, for example, if you're looking at a house hack and you're doing three and a half percent down, all you really need to do is get to that three and a half percent number. As long as you run the numbers and you can get too close to break even or cash flow, that is going to be a really, really powerful way for you to kind of get started. And so first, which is kind of partially what the next step is also talking about, step six, which is matching your capital to your real estate strategy, where this is looking at and making sure that whatever strategy you're going to do first, you're also matching how much capital you are saving with that.

25:04Andrew Giancola:And so these kind of go hand in hand. And so if you're looking at this, I mean, house hacking is the number one thing I want to do. I was already married when I started to invest in real estate and my wife wouldn't go for it. I was looking for duplexes and she just would not go for it at that timeframe. But if you can house hack, I think it is the number one strategy to get started. And I think that is the big thing for most beginner investors out there is if you can find ways to just get deals, even when you don't have a lot of cash on hand and BiggerPockets has great books on low and no money down in terms of how to find deals that way.

25:32Andrew Giancola:I think that is just one of the best things that you could do. But you could also get into some active income things as well. If you want to wholesale, if you want to do other deals that are just ways for you to get involved in real estate, I think it is one of the most powerful things up front. But make sure you set your goals first and understand what you're going to do. And then from there, you can start to really allocate as many dollars as possible towards that specific real estate strategy. You know,

25:55BiggerPockets Real Estate Podcast Hosts:we talk a lot on the show about systematizing things and scale, which is important. But it can also be daunting at first if you're coming from a position with low capital to say, I want to buy 10 rental properties. I have this long-term goal. I don't even know where I'm going to get the money for that first deal. So how do you mentally or psychologically recommend people navigate those sort of competing interests?

26:19Andrew Giancola:So what I would do is I would kind of reverse engineer how long it would take you to get there. So let's say, for example, you have 500 bucks extra every single month. Well, you have to figure out, okay, well, let's do easy math for Andrew here. If we had a$100 ,000 property and we're just using our nice round, easy number, if you wanted to house hack that property and you wanted to find that$100 ,000 property, well, you need 3 ,500 bucks to go out and buy that property. Obviously, there's not many deals like that out there anymore, but that is like a situation where you could figure out, okay, this is my common goal.

26:45Andrew Giancola:Now, I need to reverse engineer how long it's gonna take me to get there. And when you do the math, then you can see, okay, it's gonna take me one year, two year, three years, four years to get there. Well, during this timeframe, then that is the timeframe where I can figure out how can I get into another property with no money down, because you have time available. And so you know my second property or my third property is gonna come this way and some other opportunities might open up if you start to kind of do the work. So I recommend a, during that timeframe, also networking, just kind of how we have talked about a number of different times here.

27:15Andrew Giancola:But I think that is gonna be one of the best things that you can do because then you can find deals. And maybe another big thing is finding deals, seller financed. You could find things like assuming mortgages. There's a lot of cool things that you can do there that are gonna help you. But I would reverse engineer it. I would do the math backwards. And that way you know exactly how long it is gonna take based on your savings. rate. Now, if you get to a point in time where you realize this is going to take way longer than I think to accomplish my goal, again, you have those two levers to pull. You can either decrease your expenses or increase your income.

27:44Andrew Giancola:Those are the two levers that you have available to you. And if you focus your time and energy on increasing your income, and if you are really focused on real estate investing, then maybe it is some of those active income things where you're the sweat equity partner in a flip, or you're a sweat equity partner in something else that can help you get through this process and understand how this works. Maybe you take a part-time job with a property management company so you can understand how to manage properties. But there's a lot of different things that you can do to really get yourself in the game so you have an understanding and you are that much better off when you get started.

28:11BiggerPockets Real Estate Podcast Hosts:Totally. And I just want to reiterate that if you want to try and increase your income, it doesn't need to be through real estate. That is an option. If you think you're good at that and it will be something that you enjoy and you like and you can make money, go for it. Absolutely. But if you could make more money driving Uber or doing something else that's just another way to increase income. I personally sort of had a crossroads in my investing career in 2015. I was like, should I go into real estate full-time, be an agent, whatever? And I was like, actually, I think I can increase my income more if I went back to grad school.

28:47BiggerPockets Real Estate Podcast Hosts:So I went to grad school, increased my salary, and then used the excess income from that to invest in real estate. Not everyone can do that, but I just wanted to point out that I was fully committed to real estate, but chose to do something outside of real estate because I thought it would build my portfolio long term at a faster rate.

29:05Andrew Giancola:Exactly. And that is the biggest key is finding those biggest levers that you can pull. I highly recommend if you have a nine to five, learning how to negotiate your salary, putting together a system that helps you negotiate your salary, that is going to be one of the fastest ways that you can increase your income. Or we do this series called side businesses that can turn into a full time income. There are different things that you can do that really are going to make you a lot more money. And again, it does not have to be in real estate. It could be something else. And especially if you know that you can make a lot more based on your current skill set doing something else, and then you take that extra cash and put it into real estate, that is just going to compound so much more than you can ever imagine.

29:38BiggerPockets Real Estate Podcast Hosts:We've gone through the first six steps. As a reminder, step six was to match your capital to your real estate strategy. Where do you recommend people go from there?

29:45Andrew Giancola:So step seven, and this is something that I believe in, especially if you work a nine to five or something else. And Dave, you may have a differing opinion on this because I'd love to hear this, but it is to build market exposure next to real estate. So if you're a real estate investor and you are someone who is investing over time, there's a couple of different things that I like when it comes to investing in the market. So I am a guy who does both. I invest in market and I invest in real estate. And these are ways that I just diversify the way I'm investing. But I like to just look at things like getting your 401k match.

30:13Andrew Giancola:Why? Because that's 100 % rate of return and that is free money. And if you work a nine to five, that is a fantastic option for people out there because you can't get a rate of return like that. Another one is looking at something like a Roth IRA where you put money in, it grows tax-free and you can pull the money out tax-free. But for real estate investors, if you decide, hey, I am really crushing it in real estate, you can do a self-directed IRA through your Roth IRA and be able to invest in real estate with a Roth IRA. You could do things like if you invested in your 401k, you have your 401k available and building wealth over time.

30:41Andrew Giancola:That is one of the most powerful accounts, I believe, in building wealth over time. And if you look at some of the studies of millionaires, for example, Ramsey Solutions did a study of millionaires and found that 80 % of them built their first million inside of their 401k. It's just an automatic way to kind of invest your dollars. And so it is one of those areas that you could do some really, really cool stuff. I think that can help you real estate. But even if your money's in your 401k, a lot of people are like, well, it's locked in there. Well, you could do things even creative. Like if you want to invest in real estate, in reality, you want to do that.

31:10Andrew Giancola:You could do things like a 401k loan. And that's not something I would do. But you could do a 401k loan and the interest actually goes back into your 401k when you do this. So market exposure, I think just helps diversify your investment strategy, especially when it comes to finances. And so that is the next step if it is something that you're interested in. I love liquidity. I love having the ability to have that. And so it just gives you some cool stuff there.

31:32BiggerPockets Real Estate Podcast Hosts:I'm so glad you brought this up. It's something I feel on an island over sometimes with other real estate investors. I mean, no offense, like Henry, co-host of the show, invests only in real estate, nothing else. We have other people come on, James Dayner, Kathy Fecky, they're all in real estate. They don't invest in the stock market. For me, I'm not comfortable with that. I mean, I believe in real estate. I have two thirds of my wealth roughly in real estate. So I clearly believe in it. But I also like the stock market offers different cycles. It offers different opportunities. And I just think it makes a lot of sense for people to have some balance.

32:13BiggerPockets Real Estate Podcast Hosts:The question, though, Andrew, I get all the time. Top 10 question I get is how do you decide how much to put in real estate, how much to put in the stock market. What do you do? Or do you have any like rules of thumb that could be useful?

32:25Andrew Giancola:The way that I think about this is for a lot of folks who are new to this. And if you know, you want to do both, if you know, you want to invest in real estate and you know, you want to invest in the market, then I would look at a first, make it sure you get that match. That match is always the number one thing that you should go out and get. In fact, we've done studies in the past where we've looked at getting your match over the course of 30 to 40 years. And over the course of 40 years, you'd have over a million dollars in your portfolio just by getting a 4 % match. So please, if you have that match available, it is very, very powerful what you can do there.

32:52Andrew Giancola:But secondarily is then you can decide, okay, well, first, if I split this off 50-50, I always tell people when it comes to their money, split it off 50-50 and kind of see how you feel. So if you start investing dollars into the market, for example, let's say you start with a Roth IRA because you could do a self-directed IRA later on. For real estate investors, I always want them to think of the backup if they want to take some of this money and put it towards real estate. So if you put it in a Roth IRA, for example, and take the other 50 % and put it aside for real estate investing, see how you feel, see how that money's growing, see over time when you have that financial plan in place, is this something you want to continue to do?

33:25Andrew Giancola:Because then as you start to build up that portfolio, then all of a sudden, maybe you buy your first property. And when you buy your first property, you're looking at this and saying, man, this first property is absolutely killing it. I love this stuff. I am so passionate about this stuff. Well, maybe then you're going to shift it over to 20 % in the market and 80 % in real estate. And that is a situation where you kind of have to make that shift. But I always tell people to start with 50-50 and then start to shift it over based on how their plan looks, which is why I want you to review your financial freedom number every single year.

33:56Andrew Giancola:Because as these strategies shift over time, you may have to review that number

34:01BiggerPockets Real Estate Podcast Hosts:and shift the strategy based on that number. It makes a lot of sense to me. I think it's, there's no science to it. You kind of just have to feel it out for yourself and what you like. You had mentioned something before, though, that is one of the top things I think beginner investors of all type overlook, especially in real estate, is liquidity. Liquidity, if you're not familiar with this term, it's just basically a measurement of how easily you can convert an asset to cash. So cash is the highest liquidity thing out there because it's already cash. Things like bonds and stocks in terms of the spectrum of liquidity, pretty high up there.

34:40BiggerPockets Real Estate Podcast Hosts:There's a very sophisticated high volume market where you can go sell that. If you want to sell your stocks, your bonds and get cash, it takes a couple of days, right? Maybe. Real estate, even in the best times, takes weeks or months. In a market like we're in today, probably takes multiple months or half a year. I know it's a little bit more advanced, but something to think about as you progress in your investing career is like, do you want access to your money? How quickly do you need access to your money? Not just for emergencies, but for opportunities. Sometimes you see an amazing deal. Can you sell your one property in time to get to that other one?

35:13BiggerPockets Real Estate Podcast Hosts:Probably not. Can you sell some stock to get to it? Maybe, you know, so it's just something to think about. There's no right answer, but I would really recommend one, diversification lowers overall risk and two, liquidity allows you to get more opportunity and mitigate risk. So two things to think about there.

35:29Andrew Giancola:A hundred percent. And for real estate investors out there who don't have any liquidity now, like if you have all of your money tied up into properties and you have that in place, here's just an example of this. It's like recently a really good deal to buy a business came up for me a couple of years ago. And when that deal came up, I had to close within less than a month. And the only way I had the cash on hand was because I had it in a taxable brokerage account. I had the cash there and I was able to liquidate that money super quickly and go and take advantage of that opportunity. If I had to liquidate a property, I wouldn't have been able to take advantage of that opportunity and I would have completely missed out.

36:00Andrew Giancola:Exactly, perfect example.

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39:49BiggerPockets Real Estate Podcast Hosts:Welcome back to the BiggerPockets podcast. I'm here with Andrew Ginkola talking about 11 steps that real estate investors should follow to build their financial freedom stack. All right, so once you've done this, you know, you recommend getting this exposure to the market. What's step eight?

40:05Andrew Giancola:So the next thing is basically what we're gonna do is we are going to allocate based on our progress. So what we want to do is basically take a second, take a breather and decide, you know, we're looking at our freedom number. We're going to decide, do we want to really push and accelerate? Meaning that do we want to start to buy more properties? Two, are we okay kind of where we are? And we want to continue to, if we're investing for cashflow, do we want to stay here? Or three, do we want to divest or figure out if we want to allocate some of the stock money to real estate and or vice versa? And why I say this is because I think a lot of people get to this point in time where they push, push, push, push, push, and never stop to think about the overall grand plan of, hey, am I okay where I am now?

40:44Andrew Giancola:Is this the point in time where I can then decide to make some other moves? And or how do I need to think about my portfolio? Because at a certain point in time, we reach our goals. And if we continue pushing on and on and on, if that's not our goal, then we need to decide, well, what is the life that we want to live? How do we design this? How do we have a lifestyle design that makes a lot of sense? And so this is kind of reallocating capital based on what our overall goals are. So maybe you got your first five, 10, 15 property set up. Now we need to decide, do we want to continue doing this and just kind of letting this compound over time?

41:13Andrew Giancola:Or are we okay slowing down and reallocating capital somewhere else?

41:17BiggerPockets Real Estate Podcast Hosts:This is, this is so important. I feel like it's one of the things that people really miss and is kind of lost in the broader social media conversation about real estate where people talk about door count, which I hate. I talk about that a lot, or this idea that like you need to get to a certain number of properties or that you always need to be pushing. I just personally believe what I said earlier, that the goal is to stay in the game, right? And sometimes you have capacity. Sometimes you have capital. Sometimes you have time and you could go and you could get out there and acquire a bunch of assets and turn them around and do some renos.

41:52BiggerPockets Real Estate Podcast Hosts:And sometimes you don't. Sometimes life happens. Sometimes you need capital for something else. And that's totally OK. I don't know how you feel, Andrew, but for me, designing a portfolio that is sustainable is the most important. And if that means you don't buy a deal one year, that's okay. You know, it's like, yes, you want to keep that goal in mind. But there are inevitably times where your progress is going to ebb and flow. And you just need to know that that's normal. And like reallocating and rethinking these things is just part of the journey. It is not expected that you're just going to be a regimented robot that's going to be able to buy properties at the exact time that you want to and grow on the exact scale.

42:31BiggerPockets Real Estate Podcast Hosts:It just doesn't happen that way.

42:32Andrew Giancola:Exactly. And the person that opened my eyes to this was Chad Carson, where he kind of talked about his portfolio and how he had this small and mighty portfolio in place where he would just kind of stop and reallocate and make sure he knew exactly what his plan was. And is he okay with the amount of doors that he currently has? And I think that's just a powerful, powerful way to look at this.

42:49BiggerPockets Real Estate Podcast Hosts:All right.

42:49Andrew Giancola:So once you've done this, Andrew, what's step number nine? So step number nine is to save for any known future expenses. So we're getting back into the personal finance realm here. What do I mean by this? Well, let's say you start to have kids. Let's say you get married or let's say you have some big future expenses that you want to save for. Well, after you get some of your real estate investing done and you start having this working for you and you have a certain amount of allocation and capital that you have there, maybe your income starts to increase. Well, as that income increases and you have more of a gap to play with, that's when you start to save for future expenses.

43:20Andrew Giancola:So things like maybe your kid's college or your kid's future brokerage accounts or whatever else you want to save for. or maybe it's a wedding fund, whatever else. This is the timeframe where I look at this, where I want to get as many dollars as possible working as early as possible. And then I will start to save for some of that other stuff. One of the big things that we talk about with this, especially for folks out there who do have kids, is a lot of people want to save for their kids first. They want to do it up front. But we talk about this thing called the oxygen mask method, where if a plane is going down...

43:49Andrew Giancola:I already like this analogy. Yeah. If a plane is going down, what do you do? Well, first, you take care of your own oxygen first, then you help others. And we want you to do the same exact thing. But guess what? There are no student loans for retirement. So there's no loans out there for retirement. You got to take care of yourself first, then you can take care of your kids. Otherwise, if you do not take care of yourself and make sure your investments are going to be funding your retirement and your financial freedom, then your kids are going to have to fund that and it's going to be more of a burden on them.

44:14Andrew Giancola:And so overall, future expenses are just a big piece of the pie. I know a lot of people want to save for their kids college, they want to help their kids in their future. But we got to make sure that we have this in place first?

44:23BiggerPockets Real Estate Podcast Hosts:This is a hard one. I struggled with this personally on two fronts. One, I don't have kids yet, but hope to and think about this. But secondly, I think the other part is like, once you get to this stage, accepting that you can use some of your capital for personal things, I think was a really hard thing for me where you get into this mindset where you're like, okay, I know the law of 72, right? I know that if I can invest this capital at 10 % in 7.2 years, it's going to double. And I'm like, oh, I don't want to buy a new car. I don't want to plan for having an expensive wedding. So I just think it's difficult to get out of that investor mindset.

45:06BiggerPockets Real Estate Podcast Hosts:Was this hard for you too?

45:07Andrew Giancola:It was very hard for me. And so I kind of developed a plan and a system to make this work well for me where I just automated all of it. So now, for example, I have a 529 open for my kids. I have a taxable brokerage open for my kids. And I just literally set that up and automate the funds to those different accounts. So I don't have to think about it, they automatically invest. And that helped me tremendously. And we're a big proponent of automating your entire financial system. So you don't have to think about it. The reason why that Ramsey study shows all those millionaires in a 401k is because really, all they did was automate their money into that 401k.

45:38Andrew Giancola:So they didn't have to really think about it anymore. They didn't see those dollars, you know, in their checking accounts, they go out and spend it. And instead, they automated their funds there. And I'm a huge proponent of automation. So that's how I kind of got past this, was just automating my finances as much as possible, because it is very hard psychologically to get over that.

45:51BiggerPockets Real Estate Podcast Hosts:Yeah, because then you're not thinking, okay, I have this 10 grand, I could put it towards 529, or I can invest it in the stock market or real estate. You're like, okay, I have eight grand, right? Because you already took the, whatever, I'm just making up the numbers, but you took some number out and allocated elsewhere. So it's not even going into your equation as an investor that this is investable capital.

46:12Andrew Giancola:Exactly. That is the big key. And I think that helps overall for most people. Well, it removes willpower out of the equation. And our willpower is the worst thing of anything. And so it removes that from the equation. Then we can just send the money over. And it is a very, very easy way to build wealth. I have had people do this. And they're like, I don't know what to do with my hands when I automate my money. But my accounts just keep growing. And it's the best thing ever. And I literally don't have to do anything. So it's very cool to watch people do this. Okay, step 10. What do you got? So step 10, this is going to be one that not everyone's going to want to do.

46:41Andrew Giancola:And you don't have to do it in this order. But I want to give people the option of this. because it's strategically to pay down any other debt that you have, any consumer debt that you have on hand. If you want true financial freedom, let's say, for example, you have car loans and they're at a 5 % interest rate or anything else like that. If you want to become completely debt free at some point in time, you've got your investing rolling, you've got everything going in place. Then now you have some extra cash on hand. And as you're starting to build wealth, you can start to pay down some of that debt.

47:05Andrew Giancola:Whereas for most retirees out there, for folks who are getting their 50s or closer to their 60s and they want to be retired, or if you're retiring in your 40s, I love the idea of having debt freedom, meaning you don't have to worry about any other debt out there outside of maybe, you know, properties and things like that. But you really just want to get this paid down. And so over time, strategically getting this paid down is very, very powerful.

47:27BiggerPockets Real Estate Podcast Hosts:Yeah, I totally agree. I'm sort of at this point in my career where I'm thinking like, I have a mortgage, but I'm still thinking about paying it off. I know it's not the best financial decision, but it's that I love your swan analysis. It's like, how do I sleep well at night? I'm in a point in my career. And I think that's why this is step 10, not step five, right? Where you're like, okay, just reduce risk, reduce complexity, make your life easier. And it's a blessing to be at this point of your career, but it is also another big change in mentality. But I totally agree with this. I'm like, I don't know when I'm going to do it.

48:01BiggerPockets Real Estate Podcast Hosts:I'm not going to do it this year, but like one of my short-term goals, two, three, four, five years, something like that is to pay off my mortgage and just be completely debt-free on a personal level. I'll still have debt on my rental properties, but personally, completely debt-free.

48:15Andrew Giancola:And that's kind of the goal, I think, is a lot of times I'll look at the same thing. I bought my house in 2020 and my mortgage is like 2.7%, so I'll probably never pay it down. But sometimes I look at it like, well, what if I did? What if I did that? How would I feel about this? And it's one of those things where I feel like I would feel a lot of just relief and no worries and those types of things. And I know a lot of people who have done this with really low interest rates. And they're like, it's the best thing I ever did. Not because it was a good financial decision. In fact, it was probably a bad financial decision overall, but it was just one of those things that I de-risked my life.

48:44Andrew Giancola:I don't have to think about it. I don't have to worry. And it's a really, really powerful way to just take control and de-risk everything.

48:50BiggerPockets Real Estate Podcast Hosts:This framework is great. It's just tracking my own personal life for the last 15 years. Okay. Well, I think 11 is the last one, right? So what is it?

48:58Andrew Giancola:So 11 is going to be investing in advanced strategies. So this is going to be a number of different things. We call them wealth accelerators, but what they are is basically, A, you could do real estate syndications, you could do advanced note lending, you could do a lot of different things here. But also, if you're interested in things like buying businesses, or if you want to try different strategies, this is a great place to do that, where you have this extra capital on hand that you can then put in riskier things or things that are riskier in quotations here, that are just one of those areas where I love wealth accelerators.

49:29Andrew Giancola:Why? Because a lot of people, once they start to invest in wealth accelerators, then they really see their money start to grow. But it is one of those things that if you do this too early before you kind of have your foundation and your rentals in place and your investments in place, if you do it too early, you could be taking on way too much risk. And so I like to have it later on down the line because it's very, very powerful.

49:49BiggerPockets Real Estate Podcast Hosts:This is, I think, the fun part of investing now. It's like being a capital, you know, like a capital allocator to me is a good time. You know, you're like, all right, I got X money to work with. I can put some of it in passive. I can put some of it in active. I can put some in the stock market. And just as an analyst, I think that's like, it's really fun. And it also, I like the steps that you've done. I didn't do it in this order, but I can imagine you pay down your mortgage, right? You're probably more willing to take a couple of big swings on a syndication or, uh, you know, something that is big upside, but has lower liquidity because you're, your living expenses are just so much lower on a personal risk level.

50:26BiggerPockets Real Estate Podcast Hosts:You don't have that much. And so yeah, go take some swings.

50:29Andrew Giancola:Exactly. And I think for most people out there, if they're saying to themselves, listen, I'm not going to pay down my low interest debt. It's at 4 % across the board. And I have this car loan and I have this mortgage, but I'm not going to pay that down. You can flip the two. I think that's the point in time where you can kind of flip and do this before that low interest debt. If you just want to pay off that low interest debt last, if ever, that is completely fine in my book. And in terms of for most people out there, it's just getting this capital to work and kind of like you said, doing some of the fun stuff and being able to kind of get that point in time.

50:56Andrew Giancola:Because once you establish this foundation, you have enough cash flow coming in, or you have enough equity in your properties, being able to get towards financial freedom, and you know you're on track, and you're investing your money in the market and doing all these other things, you are in such a powerful position that you can really take advantage of some of this stuff and take on a little more risk.

51:13BiggerPockets Real Estate Podcast Hosts:What kinds of advanced strategies do you like or do you invest in?

51:17Andrew Giancola:So my favorite strategies right now, and I think one of the biggest opportunities right now is small business acquisition. And so this is one where I see, you know, people have talked about it ad nauseum, but the baby boomer generation is retiring. And a lot of them don't even know that they could sell their businesses. And they have systems and operations that are completely outdated. And with the age of AI now, there are a lot of just AI implementation things that you can do in some of these businesses to dramatically increase profit. And so this is my favorite opportunity overall for most people.

51:45Andrew Giancola:That's one of my favorite wealth accelerators. But another one is finding real estate syndications with really good operators, like having really good operators in place where it is completely passive, sure, you're going to be tying your money up for a long time. I don't like that part. But at the same time, as long as the cash flow is there and you see that rate of return, that I think can be very, very powerful. Totally. Doing nothing is great. I love it.

52:05BiggerPockets Real Estate Podcast Hosts:Yeah. I mean, I agree. I do syndications. I love private lending, by the way. Great way to get 10%, 12 % cash on cash returns every single year. Great way later in your career to build wealth. And then, yeah, I'm just starting my buying a small business journey. but the numbers are compelling. But Andrew, this is awesome. Thank you so much for joining us today. I love the framework. I think this is so powerful for real estate investors to just see that you don't need to do it all at once. I think people think, oh, how do I get into syndications or how do I get into the market? How do I balance it?

52:39BiggerPockets Real Estate Podcast Hosts:Think about it systematically. Everyone has to do it slowly. No one does this all at once. And I think this is an awesome framework for all of our listeners to apply to their own investing career. Hopefully it will help you see that if you do this for 8, 10, 12 years, like you can get to step 11. It just takes discipline and knowing yourself. Exactly.

52:59Andrew Giancola:I think that is the most important thing is if you go through these steps, I did these steps myself personally, and it helped me set myself up where I was protected. But then in addition, helped me accelerate my path to wealth, which is my ultimate goal. I just wanted to buy more freedom every single year. I love it. So thank you again, Andrew. If people want to connect with you, where should they find you? Thank you so much for having me. So they can where you listen to podcasts, you can find us there on YouTube. In addition, we have a PDF guide to this exact framework. If anybody is interested, if you go to mastermoney.co slash resources, we have that there available for you.

53:30Andrew Giancola:And then we have Master Money Academy. If you ever want help with your personal finances, that's where we help you there is in Master Money Academy.

53:36BiggerPockets Real Estate Podcast Hosts:Awesome. Thanks again, Andrew. We appreciate you. And thank you all so much for listening to this episode of the BiggerPockets podcast. We'll see you next time. Thank you all for listening to the BiggerPockets real estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian Kay, copywriting is by Calico Content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com.

54:12BiggerPockets Real Estate Podcast Hosts:The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. BiggerPockets LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast. Thought Sweetgreen was just salads? Think again. There's a new way to do Sweetgreen.

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