440: Why ROE Beats ROI, and How to Earn Truly “Passive” Income from Real Estate

BiggerPockets Money Podcast

BiggerPockets

Investing, Education, Business

4.6 • 2.9K Ratings

🗓️ 11 August 2023

⏱️ 52 minutes

🔗️ Recording | iTunes | RSS

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Summary

As an investor, it’s easy to become fixated on cash flow, much like today’s guest at the start of his real estate journey. After realizing he was “house poor” with a mortgage payment larger than he could afford, Eric Garber stumbled upon house hacking. He rented out his basement and used the extra money to pay off his house early. With proof of concept for his newfound house hacking strategy and income from a stable W2 job, everything was going great. Then Eric’s world came crashing down when his marriage ended and his employer froze his pension plan. Without a prenuptial agreement, his financial fate was left to the state court system. Losing more than half of the assets he had worked tirelessly to grow, Eric found himself back at square one. This time, he was going to do things differently. Rather than pouring his time, energy, and money into paying off his real estate and living off the cash flow, Eric realized the opportunity that could be had by accessing his equity and putting it to work—a revelation that will allow him to retire early, despite the curveballs life has thrown his way. If you think getting a prenup is “planning for divorce,” you’ll want to hear what Eric has to share in this episode of the BiggerPockets Money podcast. Beyond offering practical financial tips you can put into practice before getting married, he talks about the paradigm shift that allowed him to unlock wealth. He also discusses the investing strategythat allows him to earn truly “passive” income—syndication deals! In This Episode We Cover Why you NEED a prenuptial agreement to protect your financial future One of the most “passive” ways to invest in real estate Weathering economic downturns by diversifying your investment portfolio How to do your homework when analyzing a syndication deal Key financial tips to consider before you get married And So Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Join BiggerPockets for FREE Scott's Instagram Mindy on BiggerPockets Grab Scott’s Book, “Set for Life” Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Listen to The Real Estate InvestHER Show Join The Real Estate InvestHER Community on Facebook Register for an Upcoming InvestHER Event Money Moment Why You’re (Probably) Wrong About Prenups ROE over ROI and Why Your “Cash Flow” Number Is Deceiving Syndications: Everything You Need to Know BEFORE You Invest Click here to check the full show notes: https://www.biggerpockets.com/blog/money-440 Interested in learning more about today's sponsors or becoming a BiggerPockets partner yourself? Email us: [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Welcome to the Bigger Pockets Money Podcast, where we interview Eric and talk about how your net worth changes through a divorce,
0:07.1	return on equity versus return on investment, and the power of house hacking.
0:12.2	Hello, hello, hello, my name is Mindy Jensen, and with me, as always, is my house hacking cohost, Scott Trench.
0:18.1	Thanks Mindy, great to be here with my pity-paying cohost, Mindy Jensen.
0:22.2	Scott and I are here to make financial independence less scary, less just for somebody else,
0:26.8	to introduce you to every money story, because we truly believe financial freedom is attainable for everyone,
0:32.3	no matter when or where you're starting.
0:34.4	That's right, but do you want to retire early and travel the world, go on to make big-time investments
0:37.9	and assets like real estate, start your own business, or understand the intricacies and consequences
0:43.3	of marital law in a marriage and finances. We'll help you reach your financial goals and get money
0:49.8	out of the way, so you can launch yourself towards those dreams.
0:52.7	Scott, today we're talking about the financial consequences of a divorce, and the fact that
1:00.4	everybody has a prenup, whether they know it or not. Like Aaron Lowry likes to say, if you don't
1:06.5	have a prenup, yes, you do. It's the divorce laws in the state in which you are divorcing,
1:12.8	so if you don't want somebody else to dictate what happens, you should get yourself a prenup.
1:18.1	And we are talking with Eric today who did not, unfortunately, have a prenup.
1:22.9	Ooh, spoiler alert. But if we were talking to somebody who had a prenup, it would be a pretty
1:26.6	short episode. Hey, do you have a prenup? Yep, everything went great. Bye. That would be a terrible
1:31.6	episode. So before we bring in Eric to talk about the consequences of not having a prenup,
1:38.1	let's go to our money moment. This is a new segment of the show where we share a money hack,
1:42.9	tip or trick to help you on your financial journey. Today's money moment is, do you like Starbucks?
1:48.9	You want some for free? According to the company's terms and conditions,
	...

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