Melissa Fredette: Financial Independence via Real Estate

Welcome to new Retirement Podcast. Today we're going to be talking with Melissa Fredette, former president of postgraduate programs at Hult International Business School, about what she learned during her journey to financial independence and as she transitions into retirement before 50 using a portfolio of rental properties. So Melissa just retired this past month and we're also going to dive into some of the lessons she's learned from other women based on her experience both mentoring and being mentored by successful peers on her journey. So with that, Melissa, welcome to our show. It's great to have you join us.

Great to be here. Thanks for having me.

Yeah. So it's cool how this kind of came together. I saw your post on Choose Fi and I just was looking at it again. I saw you got 1.3 or 1300 likes for your post and hundreds of comments. Pretty amazing. That's an amazing community and it was intriguing and I thought it would be really good for our audience to kind of hear from someone directly how they did it. And so I was wondering if you give us kind of a quick recap of your post about what you built and how you're paying for your retirement.

Yeah, I was kind of blown away by the response. Really exciting. I think it's great to be part of a community and I've gotten a lot of help and insights from the community over the years. So it was just kind of important for me, I think, to put out there. I think we all struggle over the years just trying to slog away, and I think it's great to read about success stories. So I wanted to kind of put it out there. So my post basically was just putting out there that here I am, I'm a woman before 50. I have, you know, reached financial independence and retiring before the age of 50 on my own without a spouse. I am in a high cost of living area and I've been a high earner, so that's been lucky. And I'm doing it a little bit differently. It's mostly through rental income, as you've said. I haven't kind of gone that traditional path of a lot of investments or stocks or anything like that. That's just not been my path. So it's been a little different and certainly made mistakes along the way. And I think that's really important to talk about too. Not just the yay of of hit this great milestone, but you can make mistakes and take a few steps back but still make it. So it was kind of a little bit to just say, hey, you can do that. And you know, we have down days, but you can, you know, you can make it and sort of forge your own path. And you sort of mentioned, you know. Yes, I kind of have this passion for. I think women. We struggle a lot sometimes, so just to kind of get out there, that even being on your own, being a partner and being female, you know, you can kind of get out there and do it as well.

Yeah, no, I think it's. It's definitely a good story to get out there and show people that, hey, it is possible. And also, I think, like you mentioned, most of our audience is focused on kind of traditional equity investing versus real estate. And, you know, you're highlighting that, hey, you can do this with real estate. And I also think it's interesting that you're, you know, call out. You. You've kind of built this to 11 doors. So. Yeah. And you have properties in a couple different places, and then you're purposely kind of slowing down. It's not like you're trying to keep building this thing to 50 or whatever doors. Like, you read about some of these things. So just love to hear kind of like how you chose this path of real estate. And, you know, we'll. I'll ask you some questions about kind of what you've learned along the way, but just really like, kind of how you got started on this. On this path.

Yeah. And that's a great question. So it was a bit by mistake. Never thought about owning properties or rentals at all. I have worked for pretty much the same company. It's sort of an umbrella company with different divisions, and we can talk about that later. But for the last 24 years, and at one point I got the opportunity to work abroad in Switzerland, and I owned a condo. And so I had just bought it and I wasn't ready to sell it, so I kind of became an accidental landlady. And that sort of, you know, I was scared and terrified. And it ended up being a friend that moved in. So that kind of eased the that for me a little bit. So I think that's really how it started, that it was like, oh, this isn't so bad and it isn't so scary. Right. And when I moved back, I ended up just buying a different house and keeping that as a rental. So that kind of started there. And then over time, I came back. I had Switzerland. When you leave, they kind of give you your pension. Like, get out. Take your pension with you. And so I had a chunk of money. And so. So I just bought a property with that, and it just inspired Me, I really like real estate. I like properties. I love design. I love interior design. So it spoke to me, and so that's how it really started. Don't know how far you want me to go down, that I could keep going forever. But I think the 11 doors, as we call them, real estate folks say, is unusual. A lot of real estate investors, they're looking for scale. They want a lot. You know, you hear, you know, different sites. There's one called Bigger Pockets, which is the main one. And, you know, a lot of their podcasts, you see, you know, how this person scaled to a hundred units and. Or a hundred doors in two years. And that's not been my journey. I want enough to live on. I want enough rental income to live on. And I'm not trying to amass an empire. That's not my goal. So I really was trying to figure out what kind of cash flow do I need to live on? So that's been my focus over the past couple of years, is to really carve out what do I need to live on and then what kind of rental income do I need? So my 11 doors are in one triplex near me in the Boston area and two fourplexes in New Hampshire. So that's the makeup. And then I live between two little condos in the Boston area and the coastal New England area, and then one in Florida that I bought after the market crash in 2009.

Basically got it and does, you know, do you feel like. So you clearly feel like that's enough and you have the right hedging in terms of, like, you know, the right leverage on these things and to pay for, you know, to build, I guess, weather, ups and downs. Is it all 100% rented out right now?

Yeah. So the two condos I own are paid. They're fully paid for. And I actually, both of them are in sort of touristy areas. So what my plan is, I move between. So I'm in the New England area in the winter, and I rent it out in the summer. And I get out of here and I rent Florida out. So I have a renter in Florida right now. So it's not ideal for me to sort of. I'm not in Marblehead, Massachusetts in the summer. I have renters here, so that's part of it. But they're fully paid off. And then my three houses that each have apartments within them, I do have mortgages on those, but I put a hefty down payment on. So my entire portfolio, I have about 60% equity. So I'm not highly leveraged at all. I'm a very sort of, I think, moderate to low risk type person. All 11 of them are rented. All 11 in this pandemic, thank goodness. Knock on wood. Are paying rent. One tends to pay a little bit later. But we're working with her. You know, I'm not someone who, you know, we're not pushing our luck with anything. We're trying to work with people. But I've been very lucky up until now. So they're all rented. I just had a turnover in December. It rented right away. So again, knock on wood, been very lucky.

Great. And are you doing the property management yourself and. Or do you outsource that?

Yeah. So I think, you know, this is interesting because a lot of people, when they think about, you know, renting. Oh, do everything yourself and don't pay, you know, don't, you know, do you, you know, go in and fix toilets? I don't do any of that myself. So I've learned over time and I think there's a lot of great books on these topics. You know, do what you do well and pay for the rest. So I self manage the triplex near me just because it is very close. And by self manage, that means I collect the rent, I take the calls from the tenants. I don't fix toilets, I don't fix just about anything. I did put light bulbs in, so I'm very proud of myself there. But that's about the extent of my DIY capability. So I have a great team. I have handymen, I have contractors and I just field the calls. The two fourplexes in New Hampshire, I have a property manager. They take all the calls, they collect the rent, they deal with the turnovers. But I have a team, quote unquote team down here in Massachusetts that handles all of that.

I can see once you've built the team, though, it would be tempting to leverage the team because that seems like the big friction cost and buy more properties and kind of crank up the cash flow further.

Absolutely. And there's a lot of people that do properties where they have almost none of their own money in the house. Right. They put some money in, they get a fixer, they fix it up, they refinance it, they pull that money out and they go on to the next. And I think that's a great strategy. I'm super. I think it's super impressive, but I'm not. That's just not. I think you really. If someone were to go into real estate, I think it's really Important that you're thoughtful and you think about what is your goal. And there's an accumulation phase. I'm not in the accumulation phase anymore. I'm in the sort of maintenance phase. And my last properties were in this last year when I knew I needed to get my final properties because I was ready to hit the retire button. So I wasn't really in that mode. Now having said that, those last two, four plexes both have the, you know, there is both room to grow, so to speak. So both of those are properties that the units are, they're under market. So both of them, I can fix up those force appreciate, so to speak. So I can fix them up and definitely command more rent over time. Again, I'm not rushing anybody out the door during a pandemic, but I think over time they will command more rent. So I think that there's great upside.

Nice. When you, when you were buying these, how did you decide what was a good investment? And like, what are the, some, some of the, I guess, characteristics and metrics that you're looking for in a property?

Yeah, yeah. So you can tell I like multifamily. Some people ask why some. A lot of people do single families. What I like about multifamily is a couple of things. The first one is I have one roof I need to worry about. So some of the big ticket items are shared. I like that. I sort of like that. You know, it's kind of all in one, you know, you kind of go have property you need to go to and everybody's, you know, sort of there, you know. So there's a couple things I just like about the multifamily mindset. And that's what I focus on is multifamily. So I primarily look at that. I look at, you know, can the utilities are they split out, so the tenants pay their own utilities to keep the costs low. The first thing that I do to analyze in real estate investing, we call it the 1% rule. It's very quick back of the envelope math. So basically I look at the property cost or what I think it'll sell for, and then I look on things like Zillow or hot pads. And what is a unit rent for? What is the rent? So say for every $100,000 of house, you should be able to command 1,000amonth in rent. So the rent should, monthly rent should be 1% of the purchase price. If it doesn't meet that rule, at least then you move on. If it does meet it, then that just means you need to dive deeper and do some more looking at the operating costs and things like cap rate and there's more things you can look at, but that's a great quick sort of finger in the wind. Is this even worth going into? There are some places where you can't find the 1% rule. California, Boston area at this point. So people say, well, I can't possibly find the 1% rule here, so I can't get into real estate investing. Well, that's why I ended up in New Hampshire. You go further afield, you go to other parts of the country, there's places where you can find it. So that's kind of what I look at.

Yeah, I know. I was talking to a friend of mine who bought a condo here in a neighboring town. And, you know, we were talking through them. I actually took him, I asked was. I was asking him how the economics worked. And essentially it comes down to a capital appreciation play. He's kind of. Yeah, paying for the mortgage, you know, paying for the house and. And taxes and stuff. But it spins. You know, this is on a few hundred thousand dollars condo, probably four or five hundred thousand dollars condo. I think it was spending, you know, a couple thousand bucks a year in free cash flow. Not. Not a lot. So at best, you know, what does. Just really quick back to the property management. Like, what does that cost? You know, compared one is yourself and one is, you know, you've outsourced it.

Yeah. So the property management. So it depends on the region. Typically it's 8 to 10%. So I pay them 8% a month. This particular property management, what that covers is they basically handle rent collection, processing. They actually collect all the utility bills and pay those out. For me, obviously, I pay them actual money for the utilities, but they process all that. They take all the calls from the tenants that have issues. They send the handyman out there. I pay for the repairs separately, obviously. But they'll do things like I did completely gut, renovate one unit. They oversee that, then I'll pay them like 15% of the work to oversee it. But then I don't even have to worry about finding the contractors overseeing the job. They'll do all that for me, but it's 8%. If, you know, maintenance mode, it's basically 8%. And then when you have a turnover of a unit, they'll take something like one month's rent to market it, screen the tenant, do all the paperwork, the lease, collect the security deposit, all that kind of stuff to do a turnover.

Wow. So it's not super cheap then. I mean, 8 to 10% is like a pretty significant chunk of change. Just as an aside, it feels like. Is there a national business that does this? It feels like this. I know it feels like it's a local business today, but this is the kind of thing that could be, you.

Know, franchise doubt or something.

Yeah. Where you could have a national call center and, you know, I mean, you need to have local teams and maybe some local reps, but you could. All the payment processing and taking phone calls and like, firing off maintenance could probably be coordinated in a centralized way at scale.

Possibly. I mean, it's interesting. I mean, the only reason I didn't have one up here when I was working full time is I couldn't find a good one. They weren't returning my calls. And I'm like, if they're not returning my calls as a potential customer, they're certainly not going to return tenant calls. So it's hard to find good property managers in some areas. It's interesting.

Yeah, it feels like it's one of those local. I mean, when I talk to folks that do this kind of stuff, it's like, yeah, I've got this local property manager. They're on site and they do this kind of stuff, but it probably isn't as efficient as it could be. So when you're doing things like, you know, leasing and setting up all legal agreements, do you do that yourself or do you. Do you get outside help?

Yep. So for the triplex that I self manage, what I did at the beginning was I got a template lease for the state. Every state has its own laws. And it's super important if people get into being a landlord, that you are very careful about your own law. So you can look online, there's template leases for your state. And what I did was I kind of doctored up my own lease. And then I have a lawyer for the state and I had him look at it. And the reason I did that was I didn't want to pay him all the money to kind of do a lease from scratch because that would have cost more. But I could give him something of what I wanted him to look at and then he could eyeball it, give me a couple tweaks, and then it was cheaper. But then I knew I had a good solid legal lease. And so that was kind of the perfect way. But I would definitely recommend a lawyer look at it because you don't want to get. You don't want to run afoul of the laws in your state.

Got it. So it sounds like between yourself kind of being the local property manager and then your remote team and your lawyer, you're able to kind of manage this portfolio of 11 properties and that's what you need. Any other tools that you use when you're managing this stuff and assessing things?

Yeah, so I use. There's this online system called Cozy Co. So there's a few online tools. Cozy has a few functionalities. The main one I use it for is the tenants can do online rent payments. They set up automatic debit basically for their monthly rent. It sends them reminders, which is great. They can set it up for it to come straight out of their checking account. Doesn't cost them anything, which is great for a landlord, that it reminds them. And then the rent comes on time, which is perfect. It can do screening, applicants can apply, you can do kind of credit checks through it. I can keep track of my expenses as a landlord. So when I send everything to my accountant, I can just download all my expenses. So Cozy is a great sort of landlord tool that I use. So I think that's the biggest one that I would use. So I can check, I can do payments, expenses, stuff like through there. And it has more functionality that I don't really use it for, but that's a big one.

Awesome. And then just in terms of like your monthly time going into managing this, you know, what's that look like?

So if I were to average it out, I would say I'm. I'm spending probably 30 minutes a week on average of my like active time. So there might be one week where I'm hearing more from my tenants. And it's usually but. Or communicating back and forth with the property manager on if, say we're doing a renovation of one of the units, then they'll have questions. But in general it's very little time. I would say to. Yeah, two, two to three hours a month is probably what I'm spending on hand on time. So yeah, if I was self managing all these units, but I also, you know, then, then it would be more. If I was running over and I was fixing the toilets, it would be a lot more than that.

Sure.

But yeah.

Wow. Well, I could, I could see actually. And what do you budget? So 8 to 10% for the property management and then like what do you think the blended percentages for maintenance, for everything else. So when you do, you know, aggregate all your plumbing and electrical or whatever support you need to provide to people, maintenance stuff does that like another 8 to 10% a year or something. Like that?

Yeah. So it depends on the property. So I kind of have it like a bottom up, but it's like, I would say it's like 5 to 7% a month for maintenance, I would say is what it is. Like, you know, again, it just depends. So what I'm trying to do is before I hit the button on retirement, one of the things I did was I came up with a big chunk of a change for Capex we call it, which is the big stuff, electrical roof, H vac and I'm actually getting a lot of this done over this next couple of years. So all like the heaters, the furnaces that are old, I'm just getting redone both for efficiency sake. So I'm spending, spending less on heat but also just, you know, get it, get it done, get it done earlier. And then they always seem to go in the coldest day of the winter anyway and you get angry tenants. So I wanted to have all of that done, but also what that did for me as well as it frees up more monthly cash flow. So I kind of put that money aside. So what you need to think about is you've got your mortgage, taxes and insurance and stuff, you know, like your PITI they call it. So you've got your rent, your gross rent, minus the piti, minus your maintenance, property management if you have it, and then this thing called capex that big, like the roof goes, the heater goes, or if you need to renovate. So that capex, I just basically saved a ton of money, put it aside, keep it in a high yield savings and I've got that for the next 10 years. And then I basically don't have to worry about that for the monthly cash flow then I can kind of keep that money coming in.

I got to say it's, it's got to, I imagine for someone like yourself, has been pretty, you know, very successful over your career that it would be very tempting to just keep doing this. You've built the structure, you know, the business, you know, you've built the infrastructure. You've got the teams, you know, could you see doubling it or more kind of like gradually cranking it up over time and generating more free cash flow.

I look at Redfin every day. I mean I look at properties every day, every day. I go to open houses all the time. It's super tempting, but I can't because now I've left work so I don't have a W2 income anymore. So no one's going to give me a mortgage. So I'VE actually created a way to keep myself honest.

Yeah. What's that way? Which is the W2 being not.

I can't get a mortgage at this point unless I did sort of like you know, seller financing or you know, hard money or something. So no, no, this is it for me. But I did think about it. But that would have meant I would have had to stay working for another year or two and you know, it's all those trade offs in life that you have to make the decision on what's. Yeah, I mean I was tempted, but it's like do I want to work another year or two and build more properties? And then it's just like how much do you really need? You know.

Well, yeah, here's a question for you. What, what's the effective interest rate that you get off of your portfolio net to? I don't know if you're. Only if you're comfortable sharing that. I'd just be curious.

What do you mean? So you mean like so if you.

If you put a hundred thousand dollars into fixed income, like a bond portfolio. Right. That interest rates are terrible. So you might, you know, maybe you're getting 1 to 2% or something like that. It's pretty, pretty low versus you have your. The value of your portfolio. You know, what does that generate from a. I guess a percent of the. I guess you could say just a cash on cash. Well, you lever it right. So well.

So that's where it gets complicated. Right. So real estate has. It's interesting. It's a little different. Your dividends. Right. So like my dividends are my monthly. Like I get rents every month and then it's appreciating. You hope to. So what I say when people are interested in real estate, they get greedy on both ends. Right. Like and I've been lucky because I've gotten lucky on the appreciation. Like I've happened to be able to. Yes. Get the rent. So. So for instance, I've got a property that I bought for 350,000 and it. The gross rents, you know, are 4,200amonth. Right. So that's great. And I get a check every month for over 3,000, 3,200amonth. It's awesome. Right. So that's great. And I have, you know, I put 30% down on that. So great. Cash on cash return in a way. Plus it's appreciating. It's already in the than a year that I've owned it Supposedly it's worth like, you know, the 380 supposedly you know, and so. And I've been lucky. I've. I've bought and sold duplexes. The last duplex I sold, it appreciated 35% in two years. But what I say to people is, don't expect that. Right. Like, I buy for cash flow. That's what I buy for. And then I assume that that property is going to appreciate something like, you know, 3 to 5% a year over the years. So those are, those are two ways that properties can sort of help over time. You get the dividends and then the appreciation. But I think you have to make a decision. So I've gotten lucky on the appreciation side. And yes, over time you have that asset. That is your tenants, by the way, are paying down your mortgage. Keep in mind. And it's appreciating.

Yeah. So, like, let me run these numbers back by you, make sure I understand this right. So buy a property for 350,000 bucks. It's roughly paying 36,000, called 35,000 a year. Right. 10% over 10% unlevered. And then you. You put a hundred thousand bucks into it. So a little bit more. So you have a mortgage, but you're from a. Is your mortgage coming out of that 3,000 you're getting or. It's already come off the top.

So the mortgage is so, so of the. Right. So of the 4,000.

Then.

So of the 4,000, then you've got the. The. Yeah, the 4,200. Then we've got the mortgages coming out of that, and then the real. The PM is coming out of that as well.

Wow. So that's. I mean, that's amazing because. So basically you're getting 10% without any leverage, and then you put the mortgage on it. So the cash on cash is like 36%. That's amazing.

Yeah, no, it's.

I mean, think about that compared to, like, what you're getting in the fixed income. It's like our audience is like they'd be killing themselves. Probably find like 5 or 6%, you know, rate of return out there. That's, that's reliable.

So, yeah, so the money, the cash I've had to put in with real estate, and I'd have to go back and I didn't get these numbers for you. Like, and I could have. But what I've. What I've had to put in to real estate, I'd never have been able to do that to, like, kind of. I'd have to have saved so much more and put so much more into, say, index funds to get the 4% return to be able to retire. I've been able to do it much quickly in real estate because of that. Now you know, that's just because I'm comfortable with real estate. So as people are like oh I could do it quicker, I'll do real estate. Like well, you need to think about do you like real estate? Don't do it if you don't like real estate. You know, do you like real estate enough to deal with the tenant questions and the hey, this light bulb is out. Will you come over and deal with it? And like you've got to like it enough. Right. So there's trade offs. So that's what I say to people is like yes, you could do it with less of your own dollars in but there's trade offs to it too. So. And you may not get it appreciate. You may hit a. You know, it didn't people that bought stuff in 2006 that thought they were doing a great job and you know, the market crashed and some people, their properties never come back from that.

Well, great. Well it's great to have not a given. Yeah. Have that objective point of view. And you know, also if things go against you and you're all in one asset class. Correct. You know, you can get, get hurt. Okay, last question on this exit strategy. So you know, you're are approaching 50, got the nice portfolio. It's great financially independent. Fast forward 25 years, you know.

Yeah. And I don't want to deal with the tenants anymore.

What happens?

Yeah, it's a great question because so my portfolio is about 60% real estate and then I've got you know, I would say 25, 27% and you know, 401k and other sort of retirement vehicles. So my thought was, you know, 10 years, 15 years, maybe I might want out. So the thought is if I want out, what I did was I. The other thing with multifamily is that I like and these particular multifamily I bought specifically so that I had two options. Either I sell them as multi families, assuming the market is decent, I can sell them as multi families, as rentals the way that they are and then just take whatever equity I have and I plow those into index funds or whatever I want to do. The other thing I can do with the configuration the way that they are is I bought ones that I could potentially condo wise, so to speak so I could make them into condos, pretty them up, sell them as individual units in some places. In some cases the one that I have particularly in the Boston area would be great as condos and that might even pay out better. So if I decide that's a better avenue for me, then I could do that. So that gives me a few different options. What I wanted was options or I just stick with it and turn over the triplex I have to a property manager as well. And then I don't manage any of them myself and I just keep going. So I wanted, I wanted something that gave me options.

Basically makes sense. Can you share some of the kind of the you mentioned kind of big quote unquote dumb choices that you've made along that and lessons you've learned? Can you kind of share some of those?

Yeah, I mean, so you know we all have them, right? So I would say it's related. There's a, there's a few. Some relate to real estate and some don't. I would say the ones that relate to real estate. I mean, the first thing I did was, I mean I got all excited about this like, you know, rental property idea. Before I knew anything, I did no research. I found my first duplex and I was like, wow, you know, the rents are this and my mortgage is this. Then that's money that I'm making. And I didn't know about maintenance and I didn't know about capex and just didn't know any of these like, you know, cap rates or 1% rule. And I just jumped in and. It wasn't the best deal. I ended up messing it up upwards, so to speak, because it happened to be in this town that was hitting hot. And that was one that, yeah, it was like I think 40%. I ended up selling it for like 40% profit in like two and a half years. So. But still, like I think what it was, shame on me. I mean, I never should start any kind of investment without knowing enough about the market. That was not a good move. I should. Shouldn't be a landlord without doing enough research that I'm a little embarrassed that I just jumped in that way. I also made a couple of emotional decisions about tenants. They weren't meeting the criteria that I have. You have criteria when you have tenants about their credit ratings and their ratio of income to the rent. And I allowed myself to get swayed by some stories that they had. And you want to be. I think it's important as a landlord to be a human being as well and work with people. But I also think you have to use, you know, your common sense. And I think the times that I didn't sort of think of this, you know, you have to have kind of a human being, but you also have to be a business person. The times that I wasn't making smart decisions, it bit me and, you know, just ended up being, you know, stupid. Not tragic, but just not smart. Situations that I got myself into. And then I guess the third one that I can think of is I have bought and sold a lot of properties, and not only the rentals, but my own private residences that I have fixed up, which is partly where I've gotten some of the down payments. I've done some renovations and lived in them for two years. And I work with a contractor, and he's amazing, so I don't tend to do inspections. He comes along and he's taught me a ton, and he's great. And this one duplex I was getting ready to buy, and he happened to be away, and I got a little too big for my britches, and I was like, no, I got this. It's a. It's a renovated property, and it's a great deal. And I bought it, and it was. It was a little bit of a shoddy. Shoddy duplex. And when he came back, he didn't. Didn't say much, but his face said it all. Yeah, I didn't make a good decision. So don't get too big for your britches and know your place, I think, a little bit there. So, yeah, so those are some of the lessons. But otherwise, outside of real estate, I didn't start investing in a 401k until way too late. You know, stuff like that. I think, you know, just if I could have gone back, when I see people on some of these communities saying, oh, what would you give advice to? I'm in my 20s, and I'm like, put money on your 401k as much as you can possibly do. You know, stuff like that I think. I wish I would have done earlier.

Well, and I think be educated, right. And be curious, like, you were right. And kind of looking around and being open to these different ideas.

Yeah. And hearing stories and every mistake we make, you know, it teaches us for next time. So I guess, you know, that mistake I made, that first property I bought, but I definitely learned, like, I just smacked myself in the head. But it taught me to, you know, everything teaches you for the next time. So I guess, you know, you learn the hard way.

But yeah. Yeah, I can see. I could totally see on the emotional side and being a landlord, it's tough, right. You want to help people out and. But also, you Know, I was so actually back to my friend, he was like, yeah, when we have his tenants and. But then he kind of got into some of the drama. He's like, yeah, but it actually turns out that there was this couple and then there's a baby, and then one person has a substance abuse problem and suddenly she's out and this other guy's on the lease. And it's like. It's like, wow, that's. He was kind of rolling with it. I was like, that sounds like a lot. And that's one property, you know, and you could see how that could go sideways also, I think in certain states and also with the pandemic, you know. You know, how do you. If. If someone's not performing right, they're not delivering the rent, you know, at what point do you like say, okay, we have to evict somebody? And what is that? You know, what does that look like? Do they trash the place? The way out, you know, you gotta be careful.

Well, it's interesting. That's another reason why I like multifamily. Right. If I've got four units and one under one mortgage and one somehow isn't paying their rent, I've got three others paying that rent under that roof. So it's another reason why I like the multifamily is I'm not reliant single family. You've got one person paying the rent for that property and you're pretty reliant in that situation. So it's another reason why I like the multifamily.

Yeah, makes sense. Okay, well, this is awesome. So I'd like to move on to kind of, you know, your own background and kind of, you know, lessons you've learned from people, you know, as you've gone through your own life. Can you just give us a little bit about kind of how you came up and, you know, how you ended up with halt and what, you know. You know, any kind of highlights from your career and takeaways from your career there and how that may have shaped kind of like where you are today.

Sure, yeah. So I'm a bit of an anomaly. So this company that I worked for, so Holt. So Holt International Business School was founded by this guy who. Swedish entrepreneur. He sort of took over this failing business school. He founded a very big private travel company called EF Education. So I started with EF Education back in 97. So I worked for different parts of. Of that organization. It's kind of an umbrella company with different divisions, different businesses within. So I worked for different businesses within that for many, many years, the founder sort of, sort of rescued this business school. Eventually ended up working for that business school. Over those years I sort of. So I started entry level and worked my way up over time. It's the founder Swedish and I think there's a lot. It's a very international organization. All of the divisions and companies I worked within under umbrella organization, very international, lot of women, very young. And so, you know, I was very lucky to have, you know, a lot of exposure to different people. I worked in Switzerland, I mentioned for four years. I moved to London twice. I got, you know, a lot of exposure to different people, different ways of thinking. Very, very lucky and. And just kind of was able to sort of understand a little bit about. I think as a woman you sort of like, you know, you come in a little later to sort of what you bring to the table and sort of who you are. And I had some great mentors, both male and female. And I think, you know, just really was very lucky to also be entrusted, you know, with more and more responsibility. So I started entry level. I ended up being the head of the postgraduate programs there at Hult. So we had business schools. Four. Four campuses in three different countries. We had schools in San Francisco, Boston, London, Dubai. So super fun, crazy, lots of responsibility. It was very interesting this last year with the pandemic. I was supposed to retire in the summer and stayed a little longer to help them kind of get over the hump there and just. Yeah, worked with amazing people. The best people you could ever imagine. Staff and then students. You know, we had international at the school. You know, we had this. It's all international students. So basically in a campus, Boston campus would have a thousand students and of that it's 100 different nationalities. So it's just a really cool, vibrant group that we worked with. So I was very, very fortunate for my career. Loved every second of it. And yeah.

Was it hard to step away?

Yes and yes and no. Like yes in the sense that especially the people. I think the people, the pa. I mean, you can't. It's just hard to describe. I mean the people are, you know, again, I worked there for 24 years. Like you cannot imagine a more like hardworking, funny, well traveled, I mean, really kind of twisted sense of humor. Just killer group of people. Just every single person works hard. Every single person is committed. Every single person's all in. And that's just exciting. It was exciting from day one. Gave me, you know, your entry level. They give you total ownership and that's Addictive. And it was right up till the end. And I think for me, it's just also the realization, you know, I'm turning 50, I love travel. That's how I ended up at the company. Right. And I moved overseas and it's just like it also kind of the last several years, I started thinking about, you know, I don't have kids and I. It's like, what's next for me? I want to see more of the world. I want to experience more. And it was a little scary to think about, like, what's next? And I knew that the fact that it was that scary kind of meant that it was right, you know, like, I could work at this pace till, you know, the end of my life. But I don't, I don't think that's what I'm supposed to do. I feel like there's something next. And it scared the hell out of me. And I kind of felt like I was an explorer, like trying to figure out if the earth was actually flat and I'm going to fall off the edge. But I think that's good for me. So, yeah, I decided to figure out what's at the edge of the earth.

How do you, how do you go about thinking about this? So you, you've had this career, you know, you've met all these interesting people, you know, you've accomplished a lot there. Then you've built this portfolio that lets you be financially independent so you're completely free. It doesn't take a lot of time. Two to three hours a month.

Yeah.

That's amazing.

Yeah.

So what resources are you using and how are you approaching thinking about this next phase and budgeting your time?

Well, I love that question because I think there's so much in the financial independence space and the retirement space that focuses on the money piece. Right. And actually a lot of what I've been thinking about the last two years is the rest of it. Right. Especially because I don't have a partner. Right. Like, it's like, you know, you get a cat and then you need another cat because they can play with each other. Like, what am I doing with my time? So, you know, I read this really great book. It was, it's very outdated, but it was called something like retire, like wild, happy and free. Right. And it's like thinking about the rest of retirement. Okay. You're thinking about the financial piece of it, but what about your social life and what about, you know, your feeling of self worth and your, you know, so I've got a ton of Hobbies that I love that I just. My work has been so all consuming that I just haven't had time. My last two years, I basically was traveling 50, 50 between the US and London. I mean, it was just insane. So I've done photography, I've done interior design. I've done like, you know, I want to do like upholstery. I want to like. I've loved this real estate and not flipping, but like renovation and you know, I've done painting and art and there's a whole creative side to me that I haven't explored. And there's all of these interests, plus travel. So my plan has been spend. My plan before COVID was a third of the year near my family in Boston, a third of the year in Florida, and then a third of the year pick a place in the world and explore it. So there's that. And then I've got four nephews and a niece that I'm addicted to. So there's them as well that I want to spend more time with that I'm excited to do that. So I've got notebooks. Maybe you can tell I'm like a very, you know, I love lists. I love spreadsheets. I've got all kinds of stuff I want to explore. So. But I also realize, you know, right now I can tell I'm swinging to these pendulums of, you know, I'll spend a day that I'm like watching Netflix and then I'm like repainting my cabinets and I've got like seven other orders of like, upholstery stuff. And I can tell that I'm going to need time to recalibrate. Right. I've gone from this very intense career and I'm okay with that. I think it's going to take me months to kind of find the new normal. I want to figure out what fitness is and figure out my health. And so there's a long list. And I think it's OK that that's going to be a journey and I think that's healthy. So.

Yeah, well, it's good to have that perspective. I. I'll tell you, from our community, we definitely get that question a lot, like, how should I use my time? What's next? I think many people don't think about it that much until they're out. And I've seen people in the FI world, they get depressed, they're very focused on, like, I'm marching towards this FI number and they got it all figured out. But once they get there, like, okay, I'VE been engineering my life to do this. And then. And then they're like, okay, now. Now I don't have enough direction and purpose. I talked to JD Roth a lot about that single.

It forced me to. Right. I don't have a partner to distract me. Right. So I had to really think about it. And my friends all work. Like, I don't have anybody to play with, so I had to kind of. I had to really think about that. But I think it's really important to think about that, you know? And, yeah, I've got a whole list. And that book was helpful. It gave some frameworks to sort of think about, almost like interest trees. And also, how do you keep your brain engaged? Because my job, it was very intellectually demanding. So how do I make sure I'm keeping my brain engaged and learning? So I think those are important things to think about.

Yeah, I feel like more people are going to be running into this. You know, we're getting more and more efficient at doing things. More and more stuff's getting automated. There are people like you that are on leading edge. Okay. I'm financially independent. And then there's, you know, more and more talk of, like, universal basic income and kind of like, okay, you know, we don't need so many factory workers. We've got robots. You know, we not need the many delivery drivers or people in call centers. You know, if those things get highly automated, we're going to have millions of people that are like, okay, I've got more time. How do I spend my time? Is it throwing it in? You know, there's lots of distractions, but can you be more intentional about, you know, where you're. Where you're applying that scarce resource.

Yeah. And then volunteering. Right. Like, you know, how can I mentor? You know, I think about the budgeting and the fi. Space. Like, budgeting for, like, you know, I've got a couple of tenants who are single moms who are struggling, and I've. I've been, you know, I'm talking to them about, like, do you want some help, like, putting a budget together? I'm happy to help you. And like, you know, then interviewing for some of the. I'm going to be helping some of the. There's a couple of programs for teenagers, like, who are trying to get jobs, like, and, like, some of the towns nearby where these kids, like, they're really struggling and they're, like, trying to find jobs and, you know, they need some interviewing skills. I'm like, I work for business school. Like, I'll help you do mock interviews. And so how can I be of service? I think that's exciting as well.

Well, that is the key to happiness. It's having, you know, I mean, you want to have control, I think, be fit, you know, get the right. Taking care of yourself and your body and fitness and sleep and all that stuff. But then having. Working on something that's bigger than yourself is like, essentially the key to it. It's not having lots of money. You get bored of having lots of money if you have lots of money pretty quickly.

Yeah.

Wow. So this is great, you know, can you share maybe some. A couple of the big either lessons you got from people that are mentoring you that helped you think about this stuff, or also people that you mentioned, you know, you're starting to maybe help some of your tenants. You're thinking about volunteering with, you know, younger people and folks where you're kind of passing, you know, paying it forward.

Yeah. Yeah. So I think probably one of the best things that I ever was told. It's funny, I don't know, like, I guess career advice or life advice. So my. One of my bosses, he's funny. He's a Swedish guy as well. He's lovely. He was giving me a job that I was supremely unqualified for. I thought I'd started. I'd been doing something for three months, and he wanted me to then give me the boss's job. And I said, you do know I don't know what I'm doing. And he's like, yes, I know. And he said, but, you know, he said, you fix things, you're organized, you're a good manager, you're a good leader. You'll learn the knowledge of this particular area of the business. What I'm hiring you for is your core skills. And it was such a great moment for me. He was able. It was like he saw and articulated about me what my core skills were, which I didn't really understand before. And I think from that point, I was able to really understand what it is that I'm kind of fundamentally good at. I see a lot of people kind of go through life like, what do I want to do when I grow up and what do I want to do at my next job? And I think we're so focused at, like, what do I do with myself? And what he gave me was a fundamental understanding of, like, I'm good at efficiency, I'm good at organizing, I'm good at kind of what are the kind of key components. And those tend to Be, of course, the things we love. Right. And I can apply that to a lot of different things and I've been able to do that successfully at work, but I think I can also do that successfully in my after work life as well. And I think that was a real gift that he gave me and I think that that helps us once we understand what we're sort of fundamentally good at. I think that's a real key moment to unlock our confidence as well. Not just our career or, you know, our success, but also our confidence. So I think that's really important. Yeah. No, what were you going to say?

I think there's this Japanese term. I think it's ikage. I don't know if I'm getting it right, but like, you know, you're trying to find that Venn diagram of like, what am I good at? You know, what am I interested in and what does the world need? And then if you can operate in the. That area.

Yeah. Where the Zen.

Right.

Yeah.

And for so many people, I think are also, you know, as an, since you've been in education, it's like, you know, what the world needs is changing quickly, what people are good at it. We're getting a lot more visibility and what, you know, we've, I think historical education's about like, okay, we have these raw humans. We're going to educate them all the same way and we're going to try and make them good at math, science, reading, writing or whatever. And some people are good at art and some people are good at math and some people are good, you know, it's like, but we're, we're like, well, we're going to be good at everything. And you know, the reality is Only the top 2% that go to the top schools are good at either good at everything or they got the work ethic to kind of get there. But there's a lot of other people that are kind of like, they're maybe left feeling like it's, you know, I'm not good enough. Right. And then that sticks with you.

And it's very rarely the job description or the job title that is what we're good at. It's usually a fundamental thing. Like I, you're usually, you know, I'm really talented with, with like, you know, I'm like really compelling with people. And so you can translate that to sales or you can translate that to customer service. You can translate that to different things, but it's just like, what is that thing? So I think that was the thing that helped Me, in terms of my mentoring, I think where I find I gravitate towards, especially with other women, but I think with people in general is I find that I. Over and over and over talking to people about this sense of. I just find that people stop themselves up all the time and this sort of confidence or imposter syndrome or difficulty in having difficult conversations. And I just find that we as humans get in our way about a million things. And I just think, like, if we could all just have the lives that we are meant to have without the hurdles we put in our own way, we'd all have these amazing lives. So I find. And that confidence that we need to have is what I tried to. I see all these people who are amazing people who have amazing skills who just stop themselves up all the time, and I find, especially women do that. I think women in particular are held back by. Worry about hurting someone's feelings or worry about not being enough or what have you. And so I think a lot of my conversations are just around, you know, why do you. You know, why is that? You know, your fear and kind of helping them over that and helping them find the language to maybe have a conversation that they need to have. So I think just, yeah, helping. Helping people battle those demons that they're feeling on the inside and just kind of get over it a little bit. And even just this whole. I just had a doctor's appointment this morning, and the woman that gave me my flu shot was like, what do you mean you're retired? How old are you? And I said, I'm turning 50 in three months. And she's like, what? She's like, I could never do that. I'm like, I didn't think I could either. I'm like, listen. And we had a conversation, and she wrote down some notes, and she's about to look up the fire movement, and off she goes. She left with a smile on her face. I'm like, why can't you. You know, why do we think we can't we put all this limiting beliefs, you know, these limiting beliefs in front of ourselves and. Yeah, so I think it's a lot about that. That.

Yeah, it's. It's very true. I mean, there's a lot of folks that they don't know where to start. And, yeah, you know, you know, our lead designer, whose female lives in Brooklyn, she was telling me a story about how she. I think, anyway, you know, was talking to, like, her hairdresser or something like that and was like, you know, what do you think about this, what do you think about this retirement idea? And the person was like, retirement? That's, that's just not for me. You know, that's where she stopped. And she's like, I don't have a 401k, forget it. You know, and, and then why even try? Yeah, don't even think about it. Like. And so, yeah, how do you help people, you know, realize what's possible? And so was there anything for you that was like, hey, here's this catalyst that made me think discover fire and you know, kind of dive into it. Or you, I mean, you told me the story about how you started buying houses and everything else.

But yeah, I mean, so, I mean my story, it's interesting because I grew up. Like, I grew up. I mean, I think for me we grew up. My mom was a single mom. I was the oldest of four kids. I grew up in a situation of like, we were lower middle class. Like I grew up very worried about money. So for me it came from first a place of scarcity mindset of like, I don't want to worry about money. So for me it was always living below my means because I wanted to make sure I had enough, right? So that's where it started. So I just always wanted to kind of protect and make sure I had enough and so live below my means, be careful, be frugal and then learn how to budget. And then I'm very self competitive, so it's like, how much can I save? And all this kind of stuff. And then I started working with, back in, let's see, 2012, I started working with a fee based financial planner. And I kind of put my hands over my head and said, okay, tell me the bad news, I'm going to have to work till I die, right? He's like, well no, I mean you're not going to work till you die. So I was like, he's like, well, what are your goals? I'm like, I don't know, I mean, could I stop at 70? And so we ran all the numbers and he's like, well, you know, I don't know, I'm seeing like 62, 63. How does that feel? I'm like, wow, that's awesome. And I'm like, okay. Well then of course self competitive kicks in and I'm like, well maybe I could do below 60. And so what was great was we set up a yearly meeting and again it was just fee based. So I just paid him a yearly fee. And every year I'd come in and I'd Refine the plan. And I kept knocking time off. Right. And so he was like an accountability partner. Right. Every year I'd come in and here's what I did, and he'd be like, holy crap. Yeah. Oh, great. Oh, great. You sold that house and you made what? Okay, good. Yeah. And so this year, we just said our goodbyes. I'm like, I did it, Sebastian. And he's like, that's amazing. You're the youngest person I've had. Like, good for you. And so I think that was helpful just to also have some context. I had no context for it. And then what really kicked it also into higher gear was I heard about the fire movement in 2018, and that also helped with just tangible tips and tricks as well. So then I incorporated that into my tactics that I would bring to my financial advisor every year. And like, okay, here are some little tactics to help accelerate it and things like ynab. I actually found YNAB to be incredibly helpful in terms of, like, accelerating a lot of my savings and budgeting. And then what I did as well was I built up my retirement budget, and I lived in that for a year before I actually pulled the trigger to know I could live within it.

That's great. That's awesome.

Yeah.

Yeah. I've. I had Jesse, the YNAB founder, on the podcast, and he was pretty interesting. We talk about that. We talk about the company a lot, what they're doing.

It's. I mean, we're all. We're a cult. I mean, everyone rolls their eyes. We're a cult. But it's amazing, once you. Once it latches onto you, it's like, no going back. It's amazing.

Yeah. I also think Juzevi, like, well, these communities of the fi. Communities are great because you see people being successful and you see them, you know, there are people like, hey, I'm a hundred thousand in debt. I just paid that off. Or I saved my first 50,000 bucks. I got my first hundred thousand. And kind of how they get there. And I think those. Hearing those stories is very, you know, reinforcement. Yeah, yeah, for sure. It's so interesting to hear about the planner, too. And it's good that you did a fee based one. We talk a lot about the cost of fees. I mean, 1%, not that bad. Well, you save up 2 million bucks, you're paying 20 grand a year.

Yeah, right.

And then if you're drawing down 4%, you're giving a top 25% of your yearly income to the advisor. It's a lot.

Y.

Cool. Well, look, and also one other thought for you would be you could raise a fund. I mean, you could ra. Instead of like, you don't have your income to do this, but like, like I'm sure people will be like, hey, I'll give you some money to help buy more properties. You manage them. And then spit me off a lower. You take a rake off the, you know, become a central bank.

There you go.

You could clearly do that.

I've got a whole. I'll put it in my notebook as another idea, you know, keep myself busy and out of trouble.

Right. Awesome. Okay, well, I think this is really good. Any, you know, resources. I mean, so we've talked about bigger pockets. You know, I think in Choose Fi, I think you mentioned Paula Pant. You liked her a lot as a resource.

Yeah, I like Paula Pant a lot. So she has a podcast and a blog called Afford Anything. So if anyone's interested in just sort of beginner and intermediate, I would say like my level real estate investing or just any of this Fi, you know, Fi stuff. I think she's a great resource. She's kind of my level. She's kind of more the conservative side, real estate. She does both. You know, she, she has invest other investments as well. But I found her, her resources very accessible and down to earth. So those were, were helpful for me. So I liked those. And I mentioned that, that there's a book called Landlording on Autopilot, which I thought was good just for a lot of systems, you know, and just I think a good mindset for landlording. So I liked that as well. So that's. You can find that on Amazon. So that's another one that's helpful. Yeah, bigger pockets. You can cherry pick some good stuff there. I mean, obviously it's all good stuff. Right. And actually they've got an amazing resource. Their website is fantastic, their podcast. But there's a lot of stuff of like 200 units and storage units and all this kind of stuff. So there's also a lot of stuff in there that's a bit overwhelming. But you can definitely dive in there and find some good stuff and good stories in there for sure.

Awesome. We'll have to do a, we'll have to do a follow up in another like year or so and see how you've. You're like a month into your retirement, right?

Yeah, I'm like, I still think I'm on like Christmas or like New Year's vacation from work. So it's like, it's still very new. It still hasn't quite sunk in. So, yeah, at some point, after a year, we'll see where I'm at.

Okay. Well, Melissa, anything else you want to share with our listeners?

No, no, this has been great. Thank you so much for having me. It's been super fun.

Thanks, Melissa, for being on our show. And thanks, Dotto Robison for being our sound engineer. Everyone else who's listening to this, you know, appreciate your time and hopefully found this useful. Our goal at New Retirement is to help anyone plan and manage their retirements. They can make the most of their money and time, like we discussed here. And if you made it this far, you know, please check out our private Facebook group and you can find us on Twitter at newretirement as well. We actually are having pretty, pretty active dialogues with people, you know in this and learning a lot with our community on, on those platforms, specifically Facebook. And then finally, any reviews are welcome and appreciated. We are reading them and getting feedback and trying to tune how we do this based on that. So thanks again and have a great day.