Most Investors Are Doing THIS Wrong...

He's like, "Hey, man. I don't know how to tell you this, but I'm standing outside your property and um it's it's burned down." He's like, "There's like five or six fire trucks out here. There's flames coming out the roof." And I'm like, "Yeah, exactly. What is gone?" I am fascinated and always trust you with investors because you invest yourself. Sure. Where's the uh where where do those paths intersect? Welcome back to the Roots Podcast. I am Tyler Ingle and I'm with my co-host Max Moore and today we have on Seth Wilcox. Seth is an experienced mortgage advisor with over 10 years in the game helping first-time home buyers break in uh a VA loan specialist. Uh Veterans Day was yesterday. Shout out to all the veterans out there. Use Seth if you want to buy a house. Uh investors, families, anybody wanting to achieve real estate goals that they've set, Seth is your guy to get the loan and and to get into the door. He's ranked among the top 1% of US originators uh with Resolute Lending powered by the Indiana or not Indiana, powered by the independent mortgage brokers. Um he's passionate about helping people build financial freedom and legacy and wealth and plant roots wherever they're at. His values align pretty similar to Roots. So Seth, welcome to the show. Yeah, thank you guys so much for having me on. It's a pleasure to be here for sure. Great. We're going to jump right into it. And the question I have for you, well, we do a planting roots section of the podcast, which is just like three questions straight off the dome. So, first question for you is, if you had 50K and you're just fresh off the block, haven't made an investment in anything, what would you do with it? So, I have a couple ideas, I think, of what I would do with that. Um, one of the Can I Can I say two ideas? Is that okay? Absolutely. Yeah. Well, all right. So, the first idea, um, I would take some of that money and I would probably invest that in educating myself to learn skills like framing, um, electrical work, plumbing. Um, and I say that because I don't feel like there's a lot of skilled trades trades people out there. Um, and I've found that learning that stuff over the years, um, has been very valuable to me in terms of like fixing up some of the properties that I've that I've had, talking to contractors. So, use some of that money to invest in yourself, build up your skill set, and then also maybe buy some tools. You can get get by with, let's say, that cost like 5 to 10 grand to go to trade school and figure out some of those skills. The rest of it used to go buy a property and fix it up, flip it, trade up, and just keep going. So, that would be the first thing I would do. The second thing, um, this is something I've just been looking at a little bit lately. Have you guys seen some of those Amazon houses that they're selling for like 10 grand? They're like little houses and they're just, you know, these prepackaged pod. Yeah, exactly. A legit house. Yeah, like a house. Like 10, 15 grand. And it's probably not going to have all the plumbing and everything, but it's just like a a prefab house, right? Ship it out. Maybe you could use some of that cash to go buy a lot somewhere, build a house on it, get it connected, and rent it out. I don't know. Or live in it. Whatever you want to do with it. But I don't know. That's something I've been buy some cheap land. I feel like in uh in Dallas the prefab homes are in Texas when we were out in Texas in Austin, not Dallas in Austin. The prefab home was like a thing. Huh. They were just taking like it would be a three-level home. I see it on YouTube. They stack them and they just build these houses now. Those are worth a million dollars when they're done, but it's outrageous how like cheap cost effective is going to be a huge thing. Yeah. I mean, it's the affordable way to to do it anymore. And I don't know. I've just been blown away looking at some of these houses cuz they're awesome. Like they're like two bed, threebedroom houses, right? For super cheap and they just ship it out on a truck. All you got to do is assemble them. That's wild. Oh, that's wild to even imagine. It's like a playhouse when I was a kid in the backyard. Exactly. But it's it's a real home. I I like the sweaty startup. I That isn't an answer that we've gotten yet. It's been like take 50k, go through it in the stock market, and wait has been one of the answers and a couple different in that same lane or house hacking or or similar. But I like the idea of uh you really could go to YouTube and learn a lot of DI DIY stuff. Like the people who are making it with low uh money to get in are the ones that are trading up and they're doing a lot of the work themselves. I say like if you want to bur in 2025, well, you got to get a hammer and go knock down the walls yourself. You can't hire a contractor. You immediately just lost all profitability or or runway there. So yeah, that's I just I admire like do you know I'm sure you know who Britney Arnison is. Yeah. I mean just her journey. I mean, she learned how to do all this stuff from the ground up and I think there's a ton of value in that. I mean, you look at high schools, they took out they took out shop, you know, there's look at the quality of houses being built. I think that's a direct correlation to like nobody being passionate about trades anymore, right? So, I think there's a lot of demand for trades people. I think you can make a lot of money in that field. You can learn a lot of skills and obviously that can help you flip houses and and acquire a real estate empire with a huge competitive advantage. Yeah. If you can if you combine the the sweat equity with the knowledge, it's huge. If you had a billboard in Indie for a week, what would it say? Uh, I would say the Fed rate cuts do not correlate to mortgage rate cuts because I can't tell you how many calls I get all the time. Hey, I heard the Fed dropped rates. And it's like, well, they did, but you know, it's been priced into the market. Are they meeting today? Educated on that. No, you'd be surprised. I mean, even bad. Yeah, it's that's my big glaring message I want to get out is like the Fed rate cuts aren't mortgage rates. My favorite is when uh the Fed does cut rates and I see mortgage workers start posting. If your realtor is calling you saying that rates that rates dropped last night, fire them and hire a new one. Doesn't work that way. Oh, it's bad. They've actually gone up the three last cuts that mortgage rates have gone up. Right. That's exactly right. you cut rates and then there's always a press conference that follows those rate cuts and as soon as Jerome Powell starts talking he has a hawkish tone man that's that's what does it it's the markets is all the expectation that's right yeah it's fun stuff if you could describe indie in one word what would it be uh indie in one word I would say opportunity um yeah I feel like there is a ton of growth potential here I mean to To me, it's kind of exciting, you know, being from Denver, um, looking just driving through the city and seeing all the cranes and all the new construction going on. To me, that's like reminiscent of what Denver used to be, um, before it got, you know, super crowded and overpop populated. So, I don't know. It's exciting. It's exciting to see all the growth that's happening here. It's exciting to see all the companies that are moving here. Um, it's a very diverse job economy. So, uh, yeah, I don't know. I would say opportunity. There's wherever you look, I think there's something something for everybody. When you jumped in to lending, y was it uh the economics of it that excited you? Was it the people getting home loans? Talk to me about the early days on why being a lender is the path that you chose. I don't know if I would say that lending or if I chose lending, but lending definitely chose me, you know. Um, I mean, I was a finance major in college and I knew I always wanted to do something with my degree. Um, I had so many friends that would go to school, get a degree and it was basically worthless or they weren't, you know, use using their degree and like what they they graduated in. Um, so I knew I wanted to go into finance. I was always passionate about finance. Um, you know, read a lot of David Bach, Dave Ramsey, Susie Orman, you know, just personal finance experts. Um, so finance was just always a passion of mine. Um, and honestly at that point I was just looking for a career change and I responded to an ad on Craigslist and I went and interviewed with a company in Denver and um interviewed with the president of the company which was a very intimidating interview to say the least. Um, but I got the job and uh kind of learned it from the ground up. I mean I knew nothing about mortgage other than you know I'd bought a house a year before. obviously knew a mortgage was a way to to finance a house, but I didn't really know all the ins and outs or like what went into it. Um, started out as a transaction coordinator, assisting processors, then it went into being like a loan officer assistant and uh, yeah, I mean, kind of the rest is history, but it's it's definitely something that I learned is a very powerful wealth buildinging tool when you use it the right way. I am fascinated and always trust you with investors because you invest yourself. Sure. Where's the uh where where do those paths intersect? Yeah, I mean I would say just after my first my first home purchase, which was a condo, you know, I bought um the condo in 2009, which was like kind of the bottom of the market. Um it was like right after the crash. I mean, you good time to buy. Yeah. You couldn't sell a house to save your life, you know. Um and actually the house that I offered on was originally listed at like 115,000. So, we got a huge price reduction when when we bought I think the uh government had um like an $8,000 tax credit incentive in play. All you had to do was live in the house for 5 years and all of that money was forgiven. So, wow. Basically got into that first place with no money down. And um shortly thereafter, you know, bills are a little bit tight cuz I had a mortgage all of a sudden and uh I was like, "Okay, I can get a roommate." Um, so called up my buddy and he was looking for a place to live and I think he was renting a bedroom for $450 a month and it was great. I mean that was before house hacking was coined, you know, or any of that. I was just like, "Hey, this is great." You know, he just pays me rent every month. So yeah, basic economics, right? Yep. Yep. Whatever lowers my bills and the pressure, right? And I just remember driving home from work every day and I was like, "This is pretty cool. I just I don't have to do anything and I get a check that helps out with the bills every month." So it's pretty cool. I uh I saw a post yesterday. It was like paying rent is hard, paying mortgages is hard, choose your hard. That's right. And you know, being if you would have rented that same condo, you likely still would have had a roommate. So getting into it, right? Like no matter what, you're going to end up in the situation you're in, except for uh the equity position, I imagine, is is much greater. So living in there and then it uh did you just see the equity start to build and that opened the door to, oh, I want to invest and start to own? Absolutely. I mean that was just like that little seed that you know you planted and sprouted and it's like okay I can actually make some money doing this and I don't know kind of the rest is history. I mean there is a story there but yeah. Yeah. What is your uh what's kind of the favorite investment property that you own? The my most favorite That's a good question. You've answered this before. Have I? I've heard your answer and I'm curious which one because you have like 16 now I think uh properties or something. I don't know something like that. I have to count them. 20 units or something. Yeah, there's I'd say we're up 20 units right now. Um I'd have to count how many properties, but um I've definitely done some amazing real estate deals. Um there's been a little bit of luck involved with some of these. Um there's been a little bit of planning. I would say one of the best deals I ever did was a house that I bought um from a wholesaler. um my realtor at the time, um God rest his soul, he died earlier this year, um unfortunately, but uh you know, he uh found this great deal. It was a $23,000 house. Um and it was rented for $650 a month. And at the time, I was like, "Shoot, 2% rule? Like, why wouldn't I do that?" Yeah. Right. I get two. It was a no-brainer. Exactly. I was like, "Let's go." Um so we closed on it. And uh throughout the process, you know, the tenants have been living in the house for like five plus years, maybe even longer. I'm not really sure. Um the seller, owner, whatever, he hadn't done anything with the property and it was pretty dilapidated, whatever. Tenants are living there. They're perfectly fine living there. Um he had spent like the security deposit. He didn't have a lease executed. I mean, nothing. It was just a poorly property and he just wanted the cash. So I was trying throughout the process, I'm trying to get the le uh the tenants to sign a lease. And for one reason or another, there was always an excuse. They couldn't do it. Couldn't do it. And uh one day I get a call from my realtor. like 40 some odd days after I closed on the property, I get a call and he's like, "Hey, I'm going to uh reach out to you here soon. You're you're going to want to answer the phone." So, I pick up and he's like, "Hey, man. I don't know how to tell you this, but I'm standing outside your property and um it's it's burned down." He's like, "There's like five or six fire trucks out here. There's flames coming out the roof." And I'm like, "Yeah, exactly. What? It's gone." Um so, yeah. Uh that was I didn't really know what to say. I mean, I was super This is like 2020 that this happened. And I had loans coming out of my ears. I didn't have time to sleep really. And uh yeah, the busiest time in your professional career. And you the one of your rentals is literally on fire. Literally fire. Like we we reference to uh everything's burning and going down to And you're like, "No, my house is actually on fire." It it was a total loss. Yeah. And like so I'm still talking to my realtor on the phone. He's like, "Oh, hold on a second, man. There's a body bag coming out. I'm going to call you back." And he like hangs up and I'm like, "What?" So he calls me back like 20 30 minutes later. He's like, "Hey, it's nothing to worry about, but unfortunately the tenants's dog was in the property and the dog died." I know. And I felt so bad because it was the dog. But poor Benji. So throughout all of this, like we had the fire department out there. We had I mean eventually, you know, an insurance adjuster go out. That was actually one of the first things I did too was like look at my insurance policy, you know, do I have good enough insurance on this? And um we couldn't figure out what happened. Like the the fireman couldn't figure it out. But the insurance adjuster couldn't figure it out. Nobody knows what happened to start the fire like to this day. Um, and I have a hard time thinking because my first thought was the tenants did it because they were pissed about signing the lease, but for their dog to be in the property when it happened. Both of them were at work when it happened. It's just weird. I don't make a lot of sense. Yeah. So, anyway, dog was playing with matches or something. Something maybe a candle got knocked. I mean, who knows, right? Who knows? Um, anyway, the insurance ended up paying like $85,000 roughly on on that. So 30 45 days later, $23,000 purchase, $85,000 insurance check. That was probably one of the best deals I ever did. Wow. Instant ROI. I'm not saying commit arson, but yeah, absolutely not. You did that incidentally. You were not trying to do insurance fraud, right? Right. Oh man, that's 4x again right there. Boom. You've done uh a wide variety of types of investments from buying wholesale deals and quadplexes. Uh I would assume maybe a little lower income to Yep. short-term rentals in the mountains. Yep. Uh how do you manage such a diverse real estate portfolio and are you transitioning to one specific asset? Talk to me about that. Um I think curiosity is kind of what propels me a little bit. Um I want to know I mean I talk to lots of different people. I mean, with my job, you know, I have I have clients of all different kinds of, you know, they're they're looking for different things, too. And I see that, you know, what some of my clients are doing, and sometimes I have to be able to speak eloquently about certain types of investments that they're looking to make. So, part of it is curiosity. Part of it is seeing what other people are doing to be successful. Um, and I just I read a lot. I study a lot. I watch a lot of YouTube videos. Read a lot of books. Talk to a lot of great people like yourselves. And um, you know, I just try to do it, right? Same for me. I think mine was like multif family, single family, short-term rental, medium-term rental, flip in that order. Yeah. And everyone's like, "Dude, you're not going to make money." It's always specialize, specialize, specialize. Beat you over the head with it. Niche down. But it's like, hey, how do I know what to specialize in if I haven't done the homework, right? And I think the best way to learn is to do it. Yeah. So, kudos to you. Yeah. No, I I was reading through your portfolio and I was like, I think this is where I I look back and I'm like, this is where I'm at in 5 years because it's just like trial by fire. You think that you know what you like and yeah, you got to try it out. And on top of that, I one thing you said, I've had clients call and want to do Airbnb and I'm like, I know Tyler does Airbnb and I know clients that do Airbnb, so I can speak about it, but I can't speak on how it feels to own it. And that always bothers me. Like I want that expertise to be able to every two weeks he comes to me saying he's going to buy me and I say, "No, don't do it." Because you're getting into hospitality business, right? And I think it's a big uh jump into that, which it's great. Don't get me wrong, I like it. I have people to help me manage it as I'm sure you do. Yep. But, uh, sometimes it's like, should I have opened that cow out of that bag or not? Yeah. He also knows what my calendar looks like. So, the short-term rental game is interesting because I think one of my fears that I had is that people were going to destroy the property cuz they're there for a couple nights. They don't really care. Yeah, that was always like my biggest concern. And I've actually found it to be quite the opposite. Um, I've had better luck with maintenance issues on short-term rentals than I have on the long term. Yeah. So I I would say my long-term tenants, they beat the out of those places. Whereas the short term, they know, you know, it's not theirs, right? I've never thought of it that way. Yeah. Like I'm putting myself in shoes of when I've been a long-term tenant and I have actually had the furniture thrown through the front door. So I I I did have a bad experience on a short-term rental. You at least you could post on YouTube and make your returns. Yeah. I know air cover is they they protect their owners very well now up to million or something maybe more at this point. That's perfect. Airbnb is pretty good with protection and liability. Oh, interesting. And I' I've experienced that. I mean, I've had people have dogs and you know, the dog chewed up like an ottoman one time and I just bought a new ottoman, submitted the receipt and they covered the full thing. Like it was no issue, right? Yeah. They don't f around. They they will help you. They don't lose them. You guys are talking so casually. My brain's exploding. I didn't know that that was a thing. Oh, air cover. You got to look it up. It's the insurance basically. Okay. I host everything through Evolve and they advertise on Airbnb and VBO and Booking. com and hotel, all these different sites, right? And they like sync up the calendars and they have a great insurance coverage policy. Like I've had zero issues whatsoever, something goes wrong, um, they take care of it. So, I think my favorite thing right now is using Airbnb for medium-term. Yeah. I do 30-day minimum. I'm doing this on one property. 30-day minimum. I'm getting lots of inquiries. I My first tenant on this new group, Duplex, is staying until March. Nace started in November or October. Wow. My first tenant is staying half the year at short-term rental rates. But then you get the coverage. But isn't Airbnb like waxing them on fees? They're getting waxed for sure, but it's their choosing. What I've noticed, cuz I've had people do like the 30 plus day bookings, too. What I've noticed is like some of these people travel for work and their company is paying for their housing or their lodging, whatever. Honestly, like one of the best tenants I had was like a 30-day plus guest and he was he was great. I mean, he took great care of the property. He communicated well. Um, and they might be working all day, not actually being at the the property. I have a tenant in a penthouse uh suite right now in this 5un building. He's only been there two times. He's a long-term tenant, 12-month lease, company pays the lease. He's only been there for two nights since I've taken uh over the property for six months. Two nights in the last six months he's been there. Perfect. It's a dream tenant. Like we pay we pay the utilities and I keep like is this right? Been like 20 bucks for electric for the month cuz nothing's happening in the unit. Everything's shut off. Wow. It's I don't I don't get it. I don't get how people live like that. But I guess your guys's point maybe. All right. I'm furnishing. You convince me. I will say the person that we looked up this person because we did a background check because they were staying so long. We found out they were being evicted from their apartment. We get scared. My property manager says, "Hey, we shouldn't do this." Said, "Hey, let me call her, talk to her." She gives me this sob story about how like the main water line was like breaking and she stopped paying rent. Was she staying at your other property? No. And I believed her, but she's paid rent. It's her and her husband and like a kid and they've been great so far paying and Airbnb doesn't let them like not pay like they have to pay to book it. So you're kind of protected payment issues a little bit with Airbnb. I mean I don't know. I think there's a little bit more skin on the game for some of the short-term rental tenants as well because you can leave them a review and if they get too many bad reviews I mean eventually platform right. So you still are in the hospitality business. You're protected by the the insurance. I it's it's the leg work that scares me. Maybe it's the midterm rental strategy that uh might be where it's at. MTR loving MTR. I just at what point do we make like maybe this is a good topic. What what point are there too many MTRs? Feel like everybody's doing that right now. They're so easy to turn into short-term rentals is the thing. Okay. What point is there too many short-term rentals? Like 2022 and they've been going down since Yeah. the number. M so they we hit that point and then investors were like these sucky investors that didn't operate well that bought all their furniture from Wayfair like we're out of here like they didn't know how to do it. So are you seeing like the amount of inventory for short-term rentals like people are selling those like there's just not as many available. So many people are contacting us selling furnished rentals. Interesting. Yeah. I don't know. I guess like at least in Colorado depending on where you're going um that's where my two well a couple of my short-term rentals are. I feel like it's been too saturated. I've been watching like the nightly rates dip a little bit more competing next door. Yep. Um I've just been watching like costs go up, you know, some of the laws, proposed laws that are coming into play about um gosh, what is it like the hotel transient tax or trying to tax, you know, small mom and pop land u landlords at the same rate as like these large hotel chains. And it's like makes me a little nervous, but that's a Colorado thing. It might be I mean Indiana is a totally different market. this probably a good time to get in short term. Well, I think with Colorado, you have the natural thing to travel to, which is the mountains to for ski and and for you're not coming to Indie for that. You're coming to Indie for a purpose. Sure. It's not like uh just travel for vacation. Well, there's like so many hospitals and healthcare. I mean, that's a major part of Indy's infrastructure. So, you guys get a ton of traveling nurses. I mean, this is a great MTR market. Yeah. And I think that that's why a lot of those have switched over towards MTR. the SDR demo seems to be more of the corporate coming in for a weekend going to Lily or whatever. Um, and those ones you do have to be on. So, you have to have I will say that our investors that did it in struggling areas are not doing well with MTR. M so you you do need to get the right asset and the right location to do well because there's a lot of people who are like, "Oh yeah, I'm going to buy $150,000 piece of crap and then they sell it in two years cuz they it was not Yeah. didn't perform as well as they thought it was going to, right? And that's the thing like you always have I don't know have to have a little bit of an exit plan. I mean, one of the uh short-term rentals we bought, we got kind of scrappy with with furnishing it cuz So I've I mean we're on our third short-term rental at this point. The first one we bought came fully furnished, which was easy. I mean, and he had like the scripts that he sent me. He gave me his cleaner, who I still use to this day. Like just handed over the keys to the man. Dude, it was it sucks. Had to learn through the school of hard knocks, you know. Um, the second one was different. The second one, they moved out. It was not furnished. I realized very quickly how expensive furnishing a short-term rental is going to be. But we just went on Facebook Marketplace and Craigslist and we were trying to find like free stuff cuz people throw out like mattresses, beds, dressers, whatever. So, we were able to get that done on the cheap just by picking up a ton of free stuff, honestly. There were a couple things that we did like the artwork and the decor and the pillows and whatever, you know, obviously like plates and silverware. We went and bought those things, but um yeah, anything you can do to furnish your short-term rental on the cheap is the way to go. Yeah, I have a curiosity around the five profit centers. When you're thinking about your portfolio or investors that you're helping get mortgages, what do you think um is the best and where should you put the most priority on being, you know, principal payown, equity, cash flow, tax? We just talked about it with the 50-year mortgage, which we don't need to get into necessarily, but answer his question first. You know, I think just a common mistake, I guess, or just something that a lot of people don't know about or really think enough about is um the capital gains tax exemption. I get so many clients that want to buy, you know, their next house, a third house, whatever, and they want to convert, you know, their their first house into a rental property. Yeah. A lot of times I don't think that makes the most amount of sense. I don't know if it ever makes any sense. Very rare cases. You have to live there for a long time for rental rates to catch up to actually be cash flow positive. But right, the biggest thing that I don't see people thinking about and all of this comes from my my tax planner. I've had a great CPA for like 10 plus years and I've learned a lot through him. Um is that capital gains tax exemption. So let's say you know the rule is if you lived in the property for two out of the past 5 years you can sell it and take pretty much all of that gain taxree you know up to 250,000 for a single filer up to 500,000 for a married couple filing jointly. Um well once you've converted it to a rental right let's say it's been a rental for one out of the past five and it's been your primary for four out of the past five. 20% of the time it has been a long-term rental property or an investment property. So there by therefore 20% of that gain is now exposed to capital gains tax. Two years a rental 40% of that gain is now exposed to capital gains tax. Right? And eventually like you it just starts eating away at this return that you've built up for years. Once you get to three it's like it doesn't matter. You have to be there for two out of the last five. So you start to get more than the appreciation on average. A lot of times it is. And you know you're also paying any depreciation recapture that you took while that property was an investment. So can actually like you think you're going to be able to just sell it and get out of it and be able to take all of that gain tax rate. It's not exactly how it works. You could still be faced with a very large tax. What should you do alternatively? So what I would do, what I've been recommending to people is I mean there's other issues with that, but the big thing sell it. It's almost like you're getting a stepped up basis because you can take all of that gain taxfree, go buy your another primary residence, and then the rest of it you can take and go buy an investment property in Indie or wherever else, right? When you do it that way, now you actually have time to analyze the investment property deal as opposed to, hey, I'm just going to move out and rent it out. Mhm. Because another big issue I see is, you know, if people think that they're going to, let's say their mortgage payment is 1,500 and they're going to rent it out for 2,000, they're like, I'm going to make $500 a month. Exactly. Right. Like if you thought about operating expenses, it's like, well, what's that, right? Well, you're probably people that are landlords that don't know how to calculate their own cash flow. Well, I had this is a scenario with my first property. I was sitting there going back and forth. Should I sell? Should I rent? Should I sell? $900 mortgage payment. I knew I could get 2,000 a month. Sure. And I was trying to when I pulled out the spreadsheet and looked at the capital gains, I was like, I have to rent this place out for 15 years to beat the exposure that I'm about to put myself at. When I could simply just move, I put three and a half% down on the next house. I could pay the the monthly. I It's like whatever interest, it's going to be okay. I got a 4% commission on it. So $0 into my new primary. It's a liability. Um that's on trading. You give yourself a 4% commission? No. on my new house. Buy side, buy side, buy side, buy side. I was like, dude, buy side. Got 4% commission. So, give the brokerage that money. Zero. Yeah. No, no, that was on the buy side. You're not going to And it was FHA, so I couldn't bake it into the settlement. You had to actually take the commission. Um on the But on the other side of things, that property became three houses, right? That one became my primary and three rentals, right? And now those three rentals, okay, yeah, they're exposed to uh gain and but that's a cheat code. I just completely there's so many advantages to using your primary as the actual investment. What about for a house hacker? Advantages like a house hacker that's getting a duplex that that's the whole purpose, right? Is to buy a investment. I think the whole idea is the two units, right, would help you cash flow surpass it. I don't know. I mean, I think that's a huge cheat code, too, because you're essentially buying like two units, right? Two doors. Mhm. You almost have your primary and an investment property growing tax-free from a capital gains perspective. The way I'm starting to think about all my residential investments is in fiveyear spurts. I'm not thinking invest five years. Oh, I'm going to buy this and pay off the 30-year mortgage and then cash flow it. Maybe when I'm 40, I'll switch into that game plan. But I'm thinking in 5ear spurts uh because the appreciation the the return on equity becomes so low once you've owned it for 5 years that I could buy two to three right at a higher cash on cash clip that it makes no sense for me to continue to own this unless I just wanted to be hands off. I'm done. I don't really care which we may get there. Right. Right. I don't know if you think about it that way at all, but I I like to turn over the cash a little quicker than I think a lot of people want to do for sure. I mean, that's been my strategy for a long time. And honestly, like I think buying investment properties is one of the fastest ways to be able to pay off your primary residence mortgage because that property is going to appreciate often a lot faster than you just, you know, shelling away cash into your mortgage and trying to pay it off faster. Yeah. Right. So, I led that strategy of like five to seven years. Um, because eventually that that equity that's sitting there is going to be super lazy and you can do so much more with it that you've got to reinvest, you've got to redeploy, you got to do something else with it. Yeah. Tyler hates it, but on my asset, when I look at my spreadsheet of what I own, my primary is on my liabilities and all my rentals are assets. And he's always like that you can build through owning home. You're supposed to own homes to build equity. I'm like, "Yeah, but my wife wants nice things in home. Home no longer makes sense." Well, maybe once you pay off the mortgage, would you consider it on the other side or no? Maybe if I was using it as like a bank account as a heliloc, but then it's a liability. It depends. The answer to that question on if your primary residence is an asset or not. I think it's it depends to me like what is there strategy to it or is it big expensive? No, I think it's a liability through and through. It's an emotional purchase. If you're more of like the Kiasaki, like it's a liability because it's taking money out of your pocket. Flipped 18 of their own homes and retired off that. That's an asset. That's a full job from It was a job. It's a full-time job. They got their job. They literally moved 18 times. Yeah. That's my version of hell on earth. Yeah. So, they just love flipping their own home. They just bought low, sold high, bought low, sold high through the 80s and 90s and 2000s. I don't know. Fixing them up along the way. liability or asset two years, you know, capital gains exclusion, then move. Okay, that kind of makes sense. I tend to think it's more of a liability if I'm being honest. Um, that being said, um, if you can find ways to make money with your property, like place where it now has a carriage house on it. Um, maybe you could build an accessory dwelling unit on your primary residence, convert a a detached garage into a, you know, something you can rent out. Then it's you're it's kind of a hybrid of an asset liability, right? though. I guess that starts to make sense. I agree. I do think you guys make sense. Yeah. The the scarcity behind it is that somebody listening that is a renter, not owning a home goes, "Well, I'm just trading a liability to a liability." No, you're leveling up your basis, which is what you said, a couple, and you're getting to level one. And then whenever you go to level two, you're selling that one, getting the tax sheltering, which you uh you're saying that's the best profit center. And then you continue to level up through that um using your your primary as the basis. So it's like you go from 1 to three to six to 12 to 24 which I think is the whole census of how to do it. I I mean you have to have a place to live, right? Like if I have to choose between renting, owning a house, or living on the street, like I'm going to own a house all day long because it Yeah, I'm getting a roof over my head, but I'm getting that principal pay down. I'm getting that future long-term growth. So, I mean, the statistics are all over the place. Like, homeowners are 44 times wealthier than a renter, right? Like, and and my liability is just different is what what I'm saying is because you have that home ownership. Where is the curve though right now on uh rent to mortgage payment ratio? Because that's the other thing. That's the other side of the coin. For me, my monthly living expense got cut not only in half, but like it was 30%. I was paying almost two grand for a two-bedroom apartment nearby and then I fixed up a three-bedroom, two bath home I was paying 900 bucks a month for. Right now, what would happen? You go from that two grand apartment that still is about the two grand number mortgage, same house might be two grand unless you get a roommate, unless you get a tenant or you get a any kind of multif family, right? I mean, if I was to start all over again, I wouldn't have bought a condo for my first place. I would have bought a duplex, a triplex, quad, any of those, right? Cuz even if the mortgage payment is, let's say it's like, I don't know, five grand a month for a quad. I'll just throw that out there. If I can rent out three different units for two grand a piece, well, now at that point, you know, my expenses are very low. I'm not getting into, you know, operating expenses and whatever else. But if you have a one-unit place, you can rent out a bedroom. You can do short-term rentals or or whatever to help offset some of that some of that expense, right? So, I think it's just, you know, affordability is a huge concern today for a lot of folks, but I think is if you can get creative and talk to people like yourselves to figure out a game plan, like you can make home ownership more affordable, but you've got to be willing to do things differently. I think it's going to take some creative problem solving in the years ahead. Does a 50-year mortgage solve that? Gosh, I don't know. I mean, right now, would I take out a 50-year mortgage at 6%. Maybe I mean, who keeps a mortgage for 30 years? No. You know, I mean, can you can prepay that mortgage in 30 years if you wanted to? Yeah. If I could borrow, let's go back to 2020 and 2021. Could I take out a 50-year mortgage at two and a half% 3%. All day I would take that deal. Are you kidding me? I want to borrow that money for as long as I possibly cash flow. That's what people are missing when they say, "Oh, you're going to pay a million dollar in interest." You're not going to pay a million dollar in interest cuz you're not going to own it long enough. Yeah. You're not going to keep the mortgage that long. I don't know any single person that has kept a mortgage for 30 years, let alone kept a house for 30 years. Right. I mean, that's so we talked about using it as a bridge and then when rates drop, refinancing to a shorter term. Right. Right. Which is so I'm not scared of them. I I hate all these doomsayers. They're your mortgage. you know, you're gonna ruin your finances if you get 30 like geez, bro. So, I you had a bad day. And and this is coming from the mortgage guy, but I've I've written articles on this. I hate the 15-year mortgage. I think it is one of the worst mortgage products that exist. And I say that because if you take a 30-year mortgage, this is how I I explain to clients. Okay, so let's say your your interest rate on a 30-year mortgage right now is 6% and then your interest rate on a 15-year mortgage is 5 a half%. What's the interest rate difference? Uh, I'm sorry. 6% on a 30 6% on a 30-year fix and five and a half on a 15ear. 5 for 15 years. Yeah. Okay. If I'm a financial adviser and I come to you and I say, "Hey, Tyler, I want you to invest, you know, what what do you think the payment difference might be on a 15-year fix versus a 30?" $300 cheaper, $200 cheaper. Yeah. Depending on the loan size, too, right? Sometimes it can be $1,000 a month for a 15 versus a 30. So, if I come to you and I say, "Tyler, I want you to invest $1,000 with me for 15 years." And the best rate of return you can hope to gain is a half percent. Do you want to invest your money with me? $1,000 a month. And you can't I think the rationale is not that though, right? It's to pay it off quicker. But that's not what I've considered because the rates usually are better on 15, right, than 30. I don't think it a better interest rate. But how bad? Why do they do it? to to pay more principle quicker, right? But you could pay more principle on a on a 30, but how bad does the 50 get? How much higher is the 50 gonna be? I think that's a question that maybe Yeah. Why are we not then arguing the 50 is better then by the same logic, right? Well, you could because cash flow is really important. I don't think that's something that a lot of people consider. Every time that I've analyzed a 30 versus a 15. The reason that the 15-year mortgage gets paid off faster and saves people tens of hund hundreds of thousands of dollars of interest is not because the rate is lower. It's because the payment is higher. Right? You can just like he's saying, you can prepay a 30-year mortgage in 15 years and that payment is about the same. Like I've done it many times. One time I just took like you know the payment made it the same as the 15-year and it paid off in 15 years and 9 months. Like it's a nominal difference. That's actually hilarious. Yeah, it is hilarious. So then it's like screw the 50 year. I mean that's what I'm saying. So I think because I I look at it's like okay if I had an extra thousand a month could I invest that over here and earn 8% or 10%. So you do the same 50 you could just put more principal and you'll pay it off in about 30 years. Correct. So it's oh my it's taking that excess cash flow and figuring out can I generate a higher rate of return by putting that money over here as opposed to putting it into the mortgage. That's fascinating. See I don't take my own capital to pay more towards mortgages. I just save it because you just spend it. No, I just save it like to buy more properties. I thought you were going to say my wife spends it. That's usually my I do have to say takes so many hits. Oh, the podcast. I I do have to say this with a grain of salt. Like I think there's an there's a risk component that we have to manage, too. Do I want to be in debt for 50 years? Absolutely not. I don't think anybody does, right? But can we achieve that that financial freedom faster by with a different strategy? You can't forget about the risk component. The risk component is always going to be there. Yep. Yeah. I just looked in like if you actually did take the 15, 30, and 50 on a 500k loan, 5% down, 6% interest rate, it the interest doubles throughout each one. So, it's 250 to 500 to a million on how much interest you'd pay to the totality of the loan. But the monthly payments also uh one from the 15 to 30 almost cut in half and then again to the the 30 to the 50 it only cuts by like 200 bucks. I mean, that's not much then, right? So maybe the 50 year the 30 you are barely paying towards the principal already, right? And you just add you know it's 360 months for the 30. I don't know how long that would be for the 50 600 months, right? Yeah. Wow. That's not like I don't know. It's an extra 12 bucks saved in the principal. I don't know. Yeah. Um well before we let you out of here we have a segment that we like to call taking root. Uh hit him with the first question. Yes. Absolutely. I'm changing up the first question. Hope you don't hope you don't mind it. Let's do it. Uh because I have a bigger curiosity that I want you to answer, which is why what do you like more about Indiana versus Colorado? Cuz you've lived in Colorado about half your life or so. Like or did you what did you make that change? Um Indiana is definitely becoming more landlord friendly than especially like Denver, Colorado. um becoming very strict on some of the laws um for landlords in in specifically Denver, but I think Colorado as a whole um is starting to transition that way. We're more anti-landlord friendly. Um so that's one reason. Uh two is just better rent to price ratios out here. Um Colorado is insanely expensive. Um especially in the Denver metro market. Um incomes are higher out there, no doubt, too. But um yeah, I don't know. There's better rent to price ratios in Indiana. We also have a very diverse job market here. I mean, there are so many different um companies that are fairly recession proof. So, great market to invest in is Indie. And your favorite place to grab a bite to eat in Indiana? Change that. Okay. What's a favorite place to grab a bite to eat in Nashville? Thank you. Thank you. Because I definitely know Nashville a little better. Um if I was going to Nashville, I would definitely stop off at Bird's Nest Cafe. Hands down my favorite. Um, the food is great, the atmosphere is great, their menu is is incredible. They change it up every so often. Um, but yeah, go to Nashville, get the uh, what is it? The French toast from from Burgeon's Cafe. You will not be disappointed. If you haven't ventured out and come to Indie and gone to Nashville, Indiana uh, and kind of traveled outwards, it's like you enter a different uh, a different land, per se. Like it's not it's not a bunch of corn fields and what people imagine. It's these beautiful like landscapes of what feel like mountains when you're there. I don't know evise. I don't think they actually are. They're not Colorado by any means, but it's just this this beautiful landscape. And in the fall, oh my gosh, it's like should be the wedding capital of the world. Wedding pictures are phenomenal through there. Um, what's one habit that's changed your life? Uh, being grateful. I would say something I like to do especially like with my wife and my kids every day is we just share our gratitudes. Um can be simple things. Simple stuff like I'm thankful that we have heat in the winter, you know, but I a lot of times will try to add a little bit of reflection on where I am today versus where I was 10 years ago. And it's just it's amazing like you have this vision in your mind of who you want to be when you grow up. and the the where I'm at now is who I wanted to be 10 years ago, right? And I'm so grateful and appreciative for the people that have come into my life and um I try to take stock of that whenever I can cuz you know hard work and a plan and just being persistent will get you there in time. So yeah, um I would encourage everybody to just today if you're listening to this, what's one thing that you're grateful for? I love that. I love that Seth is a sponsor of our masterclass event. If you guys don't come out to any of our events, please do and and try to connect with Seth while you're there. He's been a huge support of Roots um on the financial side for sponsorship, but also on just being an awesome lender and taking care of clients on that side as well. So, if you need a loan, call Seth. He's going to get you taken care of. And uh yeah, it's been another episode of the Roots Podcast. Thanks for coming on, Seth. Thank you guys for having me on. It's great to be here. Yeah, it's been awesome.