Q&A: Passive Investing "Bubble," Overlapping ETFs, & Diversifying $200K

22:13Austin Hankwitz:We call it a lipstick remodel. Buy it for$70 ,000,$80 ,000. Put$20 ,000 or$25 ,000 into it. You're all in for$100 ,000, maybe$105 ,000,$110 ,000 with closing costs. Then flip it and sell it for$145 ,000,$155 ,000,$160 ,000 if the comps support that. or make it a long-term rental like they alluded to, make that$200,$300,$400 a month because in Ohio, especially Northwest Ohio, some parts of Indiana and other parts of the country, the 1 % rule still works. So what does that mean? If I own a house that I'm in all in for$100 ,000, I can probably rent it for$1 ,000 to$1 ,200 a month, which means it's a good deal and the numbers work out.

22:59Austin Hankwitz:So I love this situation. I don't think there's any real pitfalls here, especially with him being handy, because you just want to be careful when you're doing this first property. You want to get opinions of contractors and other people and make sure you do it right. But you also don't want to sign away your life and pay retail for a bunch of contractors. If you can go in and do the painting, do the flooring. Maybe you want to upgrade the vanities. Super easy stuff. And Home Depot is your goldmine here. set up a pro account. You get really good discounts at Home Depot and you're up and running and rock and rolling with your first property.

23:36Austin Hankwitz:You're going to learn a lot on this first property, but it's going to set you up for future deals and allow you to take whichever direction you want. I do flips and long-term rentals, but you can also just do flips or just do long-term rentals. It depends on what works for you and what you want the outcome to be.

23:55Robert Croak:Back to the question of financing. How would you normally go about financing, purchasing, let's call it a$70 ,000,$80 ,000,$100 ,000 home?

24:02Austin Hankwitz:I mean, I've self-funded, but I've also done mortgages. You can go get a mortgage or you could get like a 203K loan, which is an all-in loan that gives you the money for the house and the renovations. Then the only cash you would have to come up with would be like your closing costs and your down payment stuff that you need to get the house purchased. but you could look at that. You could look at a DSCR loan. There's a lot of different things out there you can do. In this instance, you might be able to find owner financing as well, where they're gonna sell it to you as is and you pay them a payment with an interest rate of six or 7%.

24:36Austin Hankwitz:You go in, if you decide to flip it, you're only financing it for four or five, six months and you're up and running. There's a lot of ways, especially in this$100 ,000 range project to get the funding to be able to get you up and running. And I think$25 ,000 in cash available to work with is enough in this situation.

24:56Robert Croak:And what big mistakes did you make when you were flipping these, I mean, let's be real, two bedroom, one bathroom homes, right? These very small$70 ,000,$80 ,000,$90 ,000 homes. What big mistakes did you make in the beginning that you kind of learned from that you could tell Joe here?

25:12Austin Hankwitz:Yeah, I would say the biggest mistake I see people, I haven't really suffered from it because I've been doing it for so long. And even in the beginning, I was pretty good at it. But the biggest mistakes I see people make is not understanding the carry costs of a project because almost every project costs more and takes longer than you expect. And people don't factor that in with their numbers of what that carry cost is a month. So let's say you borrowed money and it's a hard money loan at 8 % and it starts 30 days after you borrow it. You take too long on the project. let's say it takes three months longer than you expected to do it.

25:50Austin Hankwitz:So you've got the carry cost of the loan for those three months. And let's say it takes you three months to either sell it or rent it. You have those fees as well. So I would say that would be number one. And number two would be trusting someone they don't know their experience or their work ethic when doing a project, because a lot of people just buy a project. They go out and hire a contractor and think they're all good to go. They give the big deposit and the contractor's up and running. So just be careful there. But I think in this situation with James, he's going to be really hands-on. And I like that for them because they're going to know exactly where every dollar comes from.

26:28Austin Hankwitz:And another thing to consider, if you do hire a contractor, do not get ahead of your pay schedule. A lot of these contractors are going to ask you for more and more money, even though the work that they have performed thus far, isn't up to where it was in the schedule. And also what I like to do, if you can, is compare the difference between you buying all the materials and letting them buy the materials because they generally will get a discount. But if they're not passing it along to you and they're actually marking the materials up, you might save more money on the project by buying the materials yourself through a Home Depot or a localized company that has the materials you need.

27:05Austin Hankwitz:I prefer Home Depot, but there are others out there.

27:08Robert Croak:I think that's a great breakdown, Robert. James, we're wishing you the best with your 2026 rental property home flip excursions. It's exciting. It's exciting. Now, before we answer our next question, just want to give a shout out again to public.com, specifically their generated assets strategy. I'm telling y 'all, if you've not yet tried using generated assets for yourself, you are missing out. It is literally chat GPT meets investing. You type in, hey, I want to invest in companies that are going to profit from oil because I just saw that we invaded Venezuela and there's oil in Venezuela. And I want to make sure that I can type in anything you want and it will find it for you.

27:53Robert Croak:Then it will backtest that specific strategy against the S &P 500 over the last 10 years to tell you if it's a historically speaking winning strategy. The Rich Habits Network, we've actually inside there published 13 winning strategies, and I've invested so far into four of them on my own public account, which is really exciting. Another reason to join the Rich Habits Network, Robert, we just always are coming up with some cool stuff.

28:17Austin Hankwitz:Obviously, we love Public, but I think the Generated Assets tool is like the goat move by them because it's just so incredible for us and all of our listeners and anyone that follows along that goes into public.com, checks it out and plays around with it. Write the prompt, see what happens. You might come up with a genius strategy and it'll build you the index around that. So I love this tool. I'm excited to play with it more in 2026 and invest more in some of the strategies that we've come up with inside the Rich Habits Network.

28:49Robert Croak:So our next question via email, again, richhabitspodcast at gmail.com, comes from an anonymous listener. Our anonymous listener says, please keep me anonymous. Hello, I listen to your podcast every week and I really appreciate it. I'm 24 years old and this past year I worked as a high commission solar panel sales job making about$160 ,000. However, starting in 2026, I've accepted a project specialist role at a semiconductor company with a$100 ,000 salary, which is way more aligned with my long-term career goals. My current net worth is about$110 ,000. My question is, am I making the right decision by taking a pay cut to move into my career even though the income is lower?

29:32Robert Croak:And with the goal of house hacking, a duplex, or a three-family soon, what income or net worth number should be realistically targeted? It feels like$100 ,000 doesn't go as far as it used to. Thanks again. The podcast has been a big impact on how I think about money and my long-term decisions. Awesome situation to be in, Samuel. 24 years old. He just made$160 ,000. Are you kidding me, dude? That is unreal money at 24 years old. And you have$110 ,000 net worth to show for it. In this, you talked about having about$40 ,000 of stocks, a little bit of Bitcoin, a high-yield savings, like all that rock and roll stuff.

30:09Robert Croak:That's so cool. And it really comes out like, hey, guys, I took this new role at 100 ,000 and it's in my career. Am I making a mistake? I vote no. I vote you're not making a mistake. If you want to work in the semiconductor industry, which newsflash, that's going to be around for a while, right? If you want to work in a budding industry like the semiconductor industry, making six figures at 24 years old, dude, yes, that's a great move. Because you now, I'm sure, have some sort of visibility or path to climbing some sort of corporate ladder at this new company or a startup, whatever you're doing here.

30:42Robert Croak:Where that$100 ,000, chances are in 10 years from now, it's going to be a quarter million versus the same$160 ,000 you would have been making before. Because again, it was a high commission solar panel sales job. The only way you made$160 ,000 was door knocking 90 homes a day out there in the hot Arizona sun, maybe. Who knows where you live? But that's how you made your money is you got really good at sales. You put in the brute effort and all that. You got it done, which is great. But now you're like, okay, you're kind of capped, right? Unless you maybe do it again, but even harder this year.

31:16Robert Croak:You're probably not going to make more than that if that was like you're all in. That's how much time and energy and everything you spent there. where in a semiconductor job as a project specialist role, maybe the project specialist turns into a project manager, then a project director, then a VP of projects, then the president of the company, right? There's like a lot of ways to think about this. I think you're making the right decision. And I'll let Robert chime in as it relates to how to think about the goal of house hacking or a three family or whatever's going on there from a net worth perspective and maybe an income perspective as well.

31:49Austin Hankwitz:Yeah, I love this situation. for our anonymous listener, and you covered it really well. I think you have to sometimes go backwards to go forwards. And when I think of high commission solar sales, I think of high stress. I think of high volatility of what could happen with your paycheck. Whereas getting into this other field, this new field and having a real job in the semiconductor industry, to me, that speaks safety, it speaks growth, and it speaks stability, and that's what you want at 24 years old. So I wouldn't worry about the pay cut in a short-term reference, and I would look at it more as a long-term pivot to have a better career for yourself and have probably benefits with this company.

32:35Austin Hankwitz:And like Austin said, not be out there knocking on doors, dealing with the high stress of all of that. I love this for you. And when it comes to house hacking at 24 years old, I think you're spot on. I would look at a duplex, a triplex, or a quadplex. I would live in one of the units. I'd get that Fannie Mae 5 % down mortgage so you don't have to come out of pocket with a lot of money. That's a great way to do this. Live in one of the units for at least a year and then do it again if you want and just keep rocking and rolling so you can start to build up some diversity and a real estate portfolio.

33:08Austin Hankwitz:And house hacking is always the way to go. I don't care how much money you make. I would not start with a single family home or a dream home because you're 24 years old. You're trying to build your wealth and set yourself up for a good future.

33:21Robert Croak:And when it comes to your situation, right, when it comes to like house hacking and how you know when you're ready, we always like to say, go get your base built. $100 ,000 invested into the index funds and ETFs we talk about. You say that you've got about$40 ,000. So that's your goal. Give yourself the next three or four years. Let's call it by 30 years old, right? Our anonymous listener is going to be house hacking. Because by 30, they'll have$100 ,000 invested into these index funds and ETFs. They'll have enough to put down with this Fannie Mae 5 % to go buy a$400 ,000 or a$500 ,000 duplex or triplex.

33:54Robert Croak:They've got it all figured out. Maybe in that, call it five-year period of time, their salary is now closer to$180 ,000 a year versus$100 ,000. So I wouldn't give yourself such a short shot clock. I feel like you've seen a lot of money at such a young age. You feel like you should be doing more with it, right? You saw$160 ,000 at 24 with your job and you're like, listen, I got to go do this. I got to invest this. I got to get fancy. I got to go figure out how to do these things. You don't. You got to keep it super simple. Index funds, ETFs, get that base built, grow in your career, work toward that promotion, work toward that higher paid salary.

34:29Robert Croak:Don't forget match beats Roth beats taxable. You've got a 401k now, I'm assuming, compared to just a sales job. You probably didn't have one of those. So a lot of ways to think about building wealth between now and 30 years old. And that's the type of time horizon you should give yourself. Now, our next question comes from Daryl. Daryl says, Hey, Austin and Robert, huge fan of the show. I listen to every single episode during my commute. You're doing the Lord's work. I have$200 ,000 sitting in a high yield savings account, and I don't know what to do with it. I'm 27. I work full time in tech making$300 ,000 a year.

35:02Robert Croak:I built my base like Robert always says. I have$235 ,000 in ETFs and index funds. $35 ,000 of that$235 ,000 is in Bitcoin. This does not include my 401k, my backdoor Roth IRA, and all the other cool things I do because of your show. I keep my expenses pretty low. I save and invest over 50 % of my after-tax income. Jeez Louise, Daryl, you are definitely an anomaly, my friend. Daryl says, I sold a lot of single stocks that performed really well in 2025, which is how I ended up with$200 ,000 in my savings. I've got it now sitting in a high-yield savings account. I don't want to put it back in the stock market.

35:39Robert Croak:I'm frankly a bit scared of having all my money in the stock market. I want to diversify outside of the stock market in 2026. So I'm thinking about putting$100 ,000 in oil and gas through a private investment firm founded by someone I trust. I'll get some tax write-offs and maybe some returns if the wells produce as expected. I'm also considering some real estate, buying maybe an apartment complex, but I don't know anyone in the real estate world, so I don't know where to start with that either. I also started reading a book about buying small cash flowing businesses. Maybe that's something I do.

36:10Robert Croak:I'm open to everything right now. I'm so excited to get this money deployed. What would you do in my situation and why? Robert, take us off.

36:19Austin Hankwitz:This is a very, very loaded question and situation. I would say do not do the oil and gas. I have not seen too many people except for very, very wealthy people that are looking for the tax benefits. But when it comes to the returns and the liquidity of oil and gas investments, very, very difficult. I'm going through it right now myself. So I would shy away from that. I would start small in real estate. And if you want to do multifamily, if you don't know anyone locally, I would go to some meetups. There's got to be meetups around you. Check out Facebook Marketplace. Check out Instagram. See what's in your area.

36:54Austin Hankwitz:Get to know some people that are in the industry, but also read some books. Get some audio books like The Multifamily Millionaire is a pretty good place for people to start that are looking for a simple short read of how to learn how to have multiple doors. because you have to understand if you go too many doors, you're going commercial. If you go four doors or less, then it's still considered residential, which is a lot easier. I always talk about that as a starting point. But I would really consider first and foremost real estate over buying a business or doing the oil and gas. Just because I think real estate is much easier to handle, there's less risk, and it's going to get your foot in the door, get you making some money, and learning along the way without taking the risk of buying a small business or having the illiquid nature of the oil and gas investment.

37:48Robert Croak:I think that's really, really, really good advice there. I do not like oil and gas either for the same reasons you just shared. Cool. You get to save money on taxes at the expense of not getting your money back. Like, no thanks. So here's what I would do if I were in your situation. You said, hey, I've got 200 grand, includes my emergency fund. Let's keep maybe, I don't know, 30K for your emergency fund. Now you've got 170 to play with. I would start to look around at ways to diversify, not in the stock market, but also not getting too fancy. Think Fundrise, F-U-N-D-R-I-S-E.com. On Fundrise, they've got a venture portfolio, they've got a private credit portfolio, and they've got a real estate portfolio.

38:32Robert Croak:I'm invested into all three. The venture portfolio makes up about 10 % of my total investments here. And it is up since 2023, 62 % in the last two years. That's pretty cool. But again, these are high risk, high reward, late stage venture opportunities. But maybe you want to join the Rich Habits Network and invest into some things that we're invested into. We just did a big investment in SpaceX, right? They're supposed to IPO here in 2026. We got in at a$800 billion valuation. There's still a little tender offering. And so if they IPO at one and a half billion, that's a 40, 50, 60 % return for investors.

39:07Robert Croak:That's the rumor at least. So we'll see how that goes. But maybe you should do more of that late stage venture investing in a more methodical way. Maybe you do some private credit, right? I know Fundrise has got a private credit portfolio. I'm going to pull up my private credit stuff here. Looks like over the last year or so, I'm up like seven or 8%. When it comes to private credit, their real estate portfolio, same deal. So I click on this here. Over the last year, I'm up about 6.5%, 7 % in real estate. So it's a way to still earn mid-single digits in the markets without being in the stock market.

39:44Robert Croak:Because when the Trump tariff tantrum happened in April of 2025, and the NASDAQ fell by 18, 20%, the S &P fell by 15, 18%, right? All that stuff happened. And when stocks got demolished, that didn't happen with real estate. That didn't happen in the Fundrise, you know, credit fund or their flagship fund or, you know, things like that. So I would, I'd consider some Fundrise stuff. I'd also consider different types of commodities. I think copper is really interesting right now. I think palladium remains interesting. I think fertilizer is pretty interesting right now. Like maybe there's a world where you could invest into some ETFs that track some of the largest commodities.

40:23Robert Croak:And I'm not talking about putting 20 % of your portfolio in that stuff, maybe mid-single digits, right? But you're saying, hey guys, I've got all this money and I don't want to put it in the stock market, which again, why? You probably should. I understand you're a little skittish when it comes to having all your money in the stock market, but if it's well diversified, like we'll be just fine over a long period of time. But at the end of the day, if it's Fundrise, if it's some commodities, things that Robert talked about when it comes to some real estate stuff, when it comes to cash flowing businesses, I leaned no on that one because nine times out of 10, they're not as turnkey as you think.

40:53Robert Croak:You know, you see people do the, oh, I'm going to go buy a laundromat. Cool. Turns out that didn't work, right? Or it doesn't make as much money as you thought it would, or you couldn't buy the building. So now you're leasing. It's just, there's a lot of different kind of sexy headlines and videos we see about passive income, this or whatever going that when it comes to buying these cash flowing businesses, that is a little bit trickier, especially if you're working full time, making$300 ,000 a year working in tech. And at 27 years old, my friend, you are absolutely crushing it. Congratulations.

41:23Robert Croak:You are an anomaly. It's so cool that so many smart people listen to our show, Robert. It's unbelievable.

41:28Austin Hankwitz:Yeah, it really is cool. And I like that coverage because at the end of the day, people start making a lot of money and they get it in their hands and it's in their bank accounts. And then all of a sudden they feel like they have to all of a sudden get fancy with it. You don't have to get fancy with it. I promise you the richest people that we know, I have billionaire friends and guys that are worth and women that are worth a hundred million plus. They have VOO, QQQ, VGT, AIQ, and maybe a bond fund. And they call it a day. They have some real estate, some precious metals, and maybe a few other types of investments.

42:03Austin Hankwitz:That's it. You don't have to get super fancy because at the end of the day, you also don't want to take away from your current situation to where all of a sudden you have this high earning job and you're not paying attention to your job and your career as well. So just keep that in mind. And I hope that helps.

42:21Robert Croak:100%. Yeah, actually, I'm just looking at this stuff here on Fundrise, private credit. It's cool. In 2025 alone, my venture investing was up 43%. The private credit increased by 8%. The real estate increased by about 4%. So it's like, if you want to get diversified. Fundrise is a really cool way to do that. Everybody, thank you so much for tuning in to this week's episode of the Rich Habits Podcast question and answer edition brought to you by public.com. We could not be more excited to be here in 2026 with each and every one of you. We've got an awesome new show called the Rich Habits Radar coming at you tomorrow.

42:57Robert Croak:We took the last two weeks off because of Christmas travels and New Year's and all that fun stuff, but that's coming back tomorrow. So be sure to come back right here tomorrow to learn all about the biggest headlines impacting you and your money as we head into 2026. Do not forget, please check out the Rich Habits newsletter. We give you guys weekly updates on the markets, the biggest headlines that we think are interesting, little ideas on what we are doing with our own money, as well as the Rich Habits Network, our community for our biggest fans where we host those weekly live streams, offer investment opportunities and things of that nature.

43:31Austin Hankwitz:I am so excited for the Rich Habits podcast and our entire ecosystem for 2026. We said this earlier. I feel like I could run through a brick wall right now. I'm so excited of everything we're working on to provide you all more value, more insights, and just really crush it with all of you in 2026. So we thank you for stopping by each and every week.

43:53Robert Croak:Thanks everyone. And we'll see you tomorrow with the Rich Habits Radar.

44:20We'll see you next time.