YFP REI 01: Intersection Between Financial Planning and Real Estate

Intersection Between Financial Planning and Real Estate

On this episode of the YFP Real Estate Investing Podcast, hosts Nate Hedrick and David Bright welcome Your Financial Pharmacist co-founders Tim Ulbrich and Tim Baker to the podcast to discuss what Your Financial Pharmacist is and does, how the financial plan and real estate can work together, at what point a pharmacist might consider getting into real estate investing, and ways to make real estate investing work for busy pharmacists who are dedicated to their careers.

Your Hosts

Nate Hedrick, PharmD

Nate Hedrick is a full-time pharmacist by day, husband and father by evening and weekend, and real estate agent, investor, and blogger by late night and early morning. He has a passion for staying uncomfortable and is always on the lookout for a new challenge or a project. He found real estate investing in 2016 after his $300,000+ student loan debt led him to read Rich Dad Poor Dad. This book opened his mind to the possibilities of financial freedom and he has been obsessed ever since. After earning his real estate license in 2017, Nate founded Real Estate RPH as a source for real estate education designed with pharmacists in mind. Since then, he has helped dozens of pharmacists around the country realize their dream of owning a home or starting their investing journey. Nate resides in Cleveland, Ohio with his wife, Kristen, his two daughters Molly and Lucy, and his rescue dog Lexi.

David Bright, PharmD

David Bright is a pharmacist with a heart for teaching. He’s been a full-time professor since 2009 with a passion for implementing and improving pharmacy services. Themes of “implementing and improving” in the pharmacy space are quite similar to themes of “building and fixing” in real estate, which has been a growing hobby for David and his wife, Heather, who bought their first house more than ten years ago. That fixer-upper house became a live-in house flip, which they sold a few years later, only to repeat the process with their next house. When David and Heather got sick of perpetually living in a construction zone, they pivoted to fixing up rental properties in West Michigan, where they now live. David invests in real estate as a way to bring greater diversity to financial planning and to fund memorable life experiences with family and friends.

Summary

Tim Ulbrich and Tim Baker, co-founders of Your Financial Pharmacist, join Nate Hedrick and David Bright on this episode of the YFP Real Estate Investing Podcast. In this episode, we learn about Your Financial Pharmacist, how it began, the numerous services and resources that fall under its umbrella, and how pharmacists can work real estate into their financial plan through the one-on-one financial planning services through YFP planning.

Tim and Tim point out that there are many ways for interested investors or real estate investors who are just starting out to avoid the ‘tenants and toilets’ issues, by working with systems, property managers, and many more options to streamline real estate investment property ownership. David Bright shares his own experience working with a property manager and how that changed the experience of real estate investing for him. Tim Ulbrich and Nate Hedrick touch on house hacking as an investment strategy including the benefits for investors. Tim Baker discusses the individualized strategy that is necessary to get started in real estate investing, considering the whole picture of the financial plan and how real estate investment can be a benefit to that plan, as well as the many factors that should be assessed including, but not limited to, debt load, student loans, and level of willingness or reluctance to invest in real estate.

Mentioned on the Show

Episode Transcript

Nate Hedrick: Hello and welcome to the Your Financial Pharmacist Real Estate Investing podcast, a show all about empowering pharmacists to achieve financial freedom through real estate investing. I’m Nate Hedrick, and each week, my co-host David Bright and I explore stories from pharmacists all over the country who are achieving their real estate goals while maintaining a meaningful career in pharmacy. Whether you are a first-time investor or a seasoned pro, we’re here to provide education and inspiration about the world of real estate. Please note, this podcast is intended for educational purposes only and should not be considered financial or investment advice.

Nate Hedrick: Hey, David, how’s it going, sir?

David Bright: Hey, good. Thanks, man. How are you doing?

Nate Hedrick: Excellent, excellent. I’m really excited about our very first podcast here. We were lucky enough to bring back the co-founders of YFP, Tim and Tim, for our very first episode. It felt very befitting.

David Bright: I love what they put in here because for a first episode, I think there’s a lot of people that are trying to figure out like what does real estate have to do with my financial plan? And I love right in the middle of the episode, Tim and Tim talk about how to know when you’re ready, how this might fit into a financial plan, and how that plan needs to come together to see if real estate is a fit.

Nate Hedrick: And I think it’s interesting that Tim Baker really talks about how his approach is pretty unique in the financial planning space where your actually recommending real estate in some cases whereas many financial planners won’t do that. And so it’s really nice to get a perspective from somebody that looks at a lot of these across a multitude of clients and says, ‘Here’s how you can fit financial planning and real estate together,’ whereas a lot would maybe not try to marry those two together. So I think it’s a great look from his perspective. And again, just really excited to be launching this podcast here with this first episode and bringing them back onto the show. Well, I guess with that, David, let’s take them right to the interview.

Nate Hedrick: Welcome, Tim and Tim. I’m welcoming you to your own podcast. But wonderful to have you guys here.

Tim Ulbrich: Excited to be here. Thanks, Nate.

Tim Baker: Yeah, thanks, Nate. Really excited by this endeavor and looking forward to participating.

Nate Hedrick: Awesome. So this is Episode 01. We are kicking everything off kind of where things started. And it’d be weird if you got here if you didn’t know who Your Financial Pharmacist was, but just in case you did, walk us through what is YFP? What is it all about? And why are we talking today?

Tim Ulbrich: Yeah, and this is an exciting moment I feel like in history of the YFP journey and thrilled to have you and David sharing your experiences, expertise, and your passion for teaching other pharmacists on this topic and really living the journey alongside of them, right, and learning with one another. So thank you to both of you for the dedication to doing that. YFP, I think most folks know our mission is to empower and help as many pharmacists as we possibly can on their path towards achieving financial freedom, however they would define financial freedom and what that means for their personal situation. We do this through our weekly podcast, now podcasts, which is exciting. We do this through our blog and our resources on our website and active Facebook group of more than 7,000 pharmacy professionals across the country, through speaking with colleges of pharmacy and through some of the work with the American Pharmacists Association, and of course, through fee-only comprehensive financial planning services that we offer specifically customized to the pharmacy professional. So where pharmacy and finance intersect, we really want to be at the middle of that conversation. And 2015 was the beginning of that journey. My wife Jess and I finished paying off a couple hundred thousand dollars of student loan debt, as I share on the main show often, way too much, way too normal in the pharmacy profession, the pharmacy community, and really finished that journey feeling like that was harder than it needed to be. And I wish I would have had more community. I wish I would have had more support. I wish I would have had more resources. And so that was the beginning of the YFP blog and fast forward shortly thereafter, crossed paths with Tim Church and Tim Baker, co-founders of YFP, and Tim Baker really bringing that expertise on the financial planning side of things and the work that he was doing at the time in starting Script Financial. So we’re fired up about the mission. And that mission we feel like is having a transformative effect, and we feel like this show is hopefully one example of that, of wanting to equip and empower pharmacists with education, resources and community that can help support them in their own personal journey.

Nate Hedrick: Yeah, I remember that when that site launched back in 2015, Tim, and I think it was not long after that that I reached out and I said, “Can we make real estate a part of this?” And the conversation’s been slow to start ever since then, but it’s really cool to kind of come to this moment here, and I don’t know — it’s just been a fun journey to get to this point.

Tim Ulbrich: Well, and it’s moments that you remember, Nate. You and I met in Starbucks in Kent, Ohio.

Nate Hedrick: I love that.

Tim Ulbrich: Second floor, I remember where we sat. And sometimes you just leave meetings like that, I remember some of the early meetings that Dave and I had about talking about real estate investment at APhA, at the convention, and you leave those meetings and you find really good folks that are doing some incredible things that have a similar passion and desire to help pharmacists in this area, and you’re off and running. So yeah. Excited about the collaborations happening here.

Tim Baker: Yeah, and I think for me, the way that I look at this — and it’s funny because like when you say the Starbucks in Kent, the thing that flashes into my mind is the Bob Evans on I71 when we met, Tim. And you know, our first endeavor being this podcast that now has half a million downloads, however many episodes later, it’s really amazing. And I still get — you know, I met with a prospective client this morning, and she said, “I paid off $250,000 in debt over the last five or six years, and YFP was a big driver in that.” And I look at real estate as really being the next evolution or wrinkle. I think the way that my colleagues, so many of my colleagues look at a financial plan can be somewhat restrictive at times because real estate is often something that’s left out in terms of your ability to build wealth over time. And I see the interest — I mean, I have the interest myself — I see it in clients, and I’m like, there has to be a better way to kind of deliver resources, education, whatever that looks like, and I think that this is a big next step into that. And I’m excited. I’m excited listening to you guys and providing that education and seeing really where this goes because I think people are going to be better off for it. I kind of think of real estate, in a sense — and I’m probably going to offend somebody out there — but it’s kind of like Crossfit. Like if you’re a Crossfitter, you talk about Crossfit all the time. If you’re in real estate, a lot of people talk about their real estate portfolio all the time. It’s like, ‘This is how many units I have,’ and things like that. But like if we can be that — and we I mean on the individuals on this podcast, YFP brand, can be that catalyst for you to think of something that hey, I never really thought of my finances or I never really thought of real estate this way, and it’s transformative in terms of how you view your life situation, your wealth, sign me up. I’m all about that. And I think that passion that you guys exhibit towards this topic and how you’re practicing in your own lives, I think if we could put that at the forefront and just highlight others that are doing this, like that’s what this is all about.

Nate Hedrick: You make me want to do burpees. I’m going to get down and do some burpees now, Tim.

Tim Baker: Yeah, exactly. I’ll probably get some hate email about that Crossfitter out there.

Nate Hedrick: Don’t @ me, come on.

Tim Baker: It’s all good. Yeah.

Tim Ulbrich: I’m excited too, Tim, about the focus of this show, you know, one of the things I feel like with my very limited real estate investing experience is that it can be a topic that can feel overwhelming or you might hear from folks that are decades into this and they’ve built these giant portfolios of real estate. And really wanting to make this understandable, digestable, wanting to really feature other pharmacists that are early on in their journeys or perhaps or just getting ready to get started or maybe even not I’m ready to get started, but I just want to learn more. Right? That is the focus of this, of really trying to figure this out, whether it’s a ‘I’ve got a property or two and I want to look at a couple more,’ or ‘You know what, I’ve heard about real estate investing, maybe it’s for me. Maybe it’s not for me. But I want to learn more.’ And my hope is that fits in with the mission of what we’ve been trying to do at YFP, which is really educate and empower. And we know that everyone’s financial plan should be unique, right? It’s inherently. That’s why we call it personal finance. And developing that plan is individualized, it should be customized, and our hope is to bring stories, examples, lessons learned along the way that David and Nate will share to really help to understand a little bit more and perhaps even grow from that in the future.

Nate Hedrick: So I love what you say there about that personal and unique financial plan and how that goes together. And that’s one of the things that I love about YFP is just focusing on that balanced financial plan. It’s not getting too focused on any one area, yet at the same time, we’re all students of real estate here. So Tim Baker, can you talk for a minute about how that balance works with that how could real estate fit into that balanced financial plan for pharmacists?

Tim Baker: Yeah, it’s a great question. I think it’s one of those things where I think that’s one of the beautiful things about real estate is that there potentially is a place for everyone, meaning it could be as boring or vanilla as owning a REIT in your IRA. Like that’s real estate investing. Or it could be like where you are maybe doing more speculation with raw land or commercial properties. And when I go through real estate investing as one of the topics or one of the modules of the financial plan, it’s really to kind of whet their whistle. So there’s some people that are like, I’m not about that life, but I’ll listen to kind of what you have to say. Or there’s some people that are all in, like, hey, I want to learn more. And we kind of talk about the spectrum. And it’s not a perfect spectrum in terms of like you could go from something like a REIT to even looking at things like crowdfunded real estate, all the way down to fix-and-flip, maybe a house hack, maybe it’s single family homes to more the commercial, raw land type of things. It could be where you’re just the bank and you’re more of passive but even though there’s some risk there. I think I kind of go back to what Tim Church calls Baker’s Buckets. So in a traditional sense, there’s this thought process or at least this priority of how you should fill your buckets. So for a lot of us, it’s like hey, does your employer offer a match? Yeah. OK, let’s get that. So that’s Bucket No. 1. Then it might be you need to go out into the IRA or the HSA world where you can set these up on your own and get that to the max. And then maybe you go back to the 401k, the TSP, to max that out. And then from there, it’s kind of like, well, maybe there’s something else. Maybe it is a taxable account. Maybe it’s real estate. Now, some people, especially that are very focused on real estate, maybe they get the match and they’re looking at real estate right after that. And I think that’s OK. There’s nothing wrong with that. I think, though, it’s going to really come down to like what is your priority and like where do you see yourself in that real estate journey? So again, like my view is that a lot of financial planners will say, ‘Eh, do you really want to unclog toilets at 2 o’clock in the morning?’ And the answer is no, none of us do. Like you know, that’s why you develop systems and people that you can rely on to answer those calls. But then I think it is partly a compensation piece because most models of financial planners, the more that you put money into an IRA, a brokerage account, or some of these other things, the more the advisor gets paid. So they’re not incentivized to say, “Hey, maybe you should dump $50,000 into this property,” because again, it takes away from that traditional investment vehicle. So I view it, we view it, as a viable way to build wealth. And I think it, for a lot of people, it kind of wets the entrepreneurial whistle a bit. And again, some people might get like, this is not for me and maybe they find a different path. But there’s so many — even like if you think about like wholesaling. We’ve had — you know, Tim, you’re better at the episodes and remembering what episode — but we’ve had pharmacists come on that have done wholesaling. And there’s a flavor for everyone. So I think if there is an alternative way to build wealth, I view real estate as the forefront of that. And I think that plugs nicely into the rest of the financial plan because it has both long-term and near-term benefits that sometimes a 401k does not have because once it gets past that wall outside of some conditions, you’re not getting that without a haircut until you’re 59.5 years old. So again, I look at this as there’s a lot of reasons, you can tie in the tax reasons, why this is a great thing for a lot of people.

Tim Ulbrich: And this is probably going to be maybe the first of 100 or so mentions of “Rich Dad Poor Dad” on the show, but I just want to be the first to say it maybe. But you know, I know for me and I think maybe for many pharmacists, like that book was just so eye-opening from a mindset standpoint, right? And you know, growing up in somewhat of a traditional model, although somewhat nontraditional with my family-owned business —

Tim Baker: There it is.

Tim Ulbrich: — with our traditional accounts. But you know, having that perspective was like, oh man, you just don’t know what you don’t know. And I think we’re seeing some of that trend with pharmacists and Tim Baker, my question here for you as you were talking is I sense from the outside that we’re seeing a growing interest among pharmacists in real estate investing. From your perspective working with clients and the planning teams with clients, No. 1, is that true? And No. 2, thoughts on why that may be the case, why we’re seeing a growing interest among pharmacists in this. Is this a function of entities out there like Bigger Pockets and others where people are hearing more of it? Or what is the background you think?

Tim Baker: It’s a great question. And I don’t know. I have an unscientific, you know, like when we speak with prospective clients, we have them check off things that they’re interested in with the financial plan, a big one is like, “Hey, Tim, what do I do with my loans, investments?” A lot of people are checking off things like real estate investing. To me, I think it is a lot more — there is a lot more resources out there. And hopefully this kind of adds to that library of resources, the podcast. You know, to me, to go back to the “Rich Dad Poor Dad,” that was very transformative in my life, not just as like thinking about real estate but just from an entrepreneur sense. I grew up in a household where it was like, go to the best college, get the best job, meaning the one that pays you the most money, and call it a day. Do that for the next 40 years. And the idea of doing anything that you are kind of your own boss or even smelled of that was like, don’t do that. It’s too risky. So that, for me, was eye-opening not just from the real estate perspective but just from a business mindset. So it could be a symptom of that. It could also be that — it could be — not to kind of tread on the Happy PharmD — it could just be the nature of the pharmacy profession that people are looking for other ways to supplement income. We know that incomes are flat, if not decreasing in some areas. There is kind of saturation in some markets, so how do I go about doing this on my own and building either a side hustle or there’s some pharmacists that want to replace — I had a conversation with a pharmacist recently was like, ‘In the next seven years, I want to replace my pharmacy income with real estate. Is that possible? Can I do that?’ So I think it’s a combination of — and I think for a lot of it too is when we were growing up, at least for me being that I’m probably — I think I am the oldest on here, I’m 38, like the internet was not a thing. Like now there’s a lot of things that you can do that makes this. So I know it will probably get into things like, how do you scale? Like what are the systems? Like what are the things that you can do, even if you’re not in that market that makes this a little bit easier, that allows you to, again, build wealth in a way that maybe was not possible 30 years ago? So it is definitely something I would say unscientifically, not looking at the data closely, that it comes up over and over again. You know, it’s, hey, student loans, I’m buying a house, to which I say, “Go talk to Nate. Do the concierge service.” And then like, I don’t really know much about real estate investing. It sounds like something I would be interested in, like what should I do? And again, the thing that I’m going to point to now is going to be this podcast to say like, educate. Educate yourself. See what flavor of ice cream. It could be that you’re the greatest wholesaler in the world. It could be that you really have a great partnership that could do a fix-and-flip or a BRRRR. And again, if these are things that don’t ring a bell for you, then stay tuned. Because I think these are all things that we’re going to do a deep dive. And to me, it’s just about, again, it goes back to empowering the pharmacist to achieve financial freedom. Empowerment could be listening to those podcasts, it could be working with our team one-on-one, it could be that financial freedom is you’re debt-free or you never have to work again. And these are the things that excite me because it is going to be different for everybody.

Nate Hedrick: And it’s so funny because you mentioned that book — because again, like you said, Tim, it’s going to come up a thousand more times. But it is absolutely the thing that unlocked the concept of financial freedom for me. Right? It just — I assumed the path in life was you go to college, you get a job, you love that job for 45 years, and then hopefully you’ve got enough in the bank that you get to retire. But there’s this whole new idea of I can do things right now to make that different and achieve financial freedom earlier. And for me, again, when I looked at it — and there’s other ways to do this, of course — but when I looked at it, thinking, OK, real estate is that key that fits that lock. And now it’s time to go see where that leads. So yeah, I think that concept really changed my life. And so Tim, I guess the other thing that I’ll bring up — I’ll throw this back to Baker — you know, do you run into a lot of clients that have concerns — I mean, you mentioned the toilets, the 2 a.m. toilet clog that apparently occurs with every landlord ever but I have yet to meet that person, but it happens to everyone. Do you have a lot of clients that throw that back and say, “No, no. Real estate investing, that sounds terrible. I don’t want to be a landlord. I don’t want to do this. It’s a burden.”

Tim Baker: Yeah, and to be honest, it’s really only happened one time that I can think of where it was like, “Hey, we ran that race. It didn’t work out. I’m still interested in if there’s someone that potentially would need some cash to close the deal,” almost like a hard money relationship. But other than that, I think most of the clients that we are working with is they’re open for business in terms of learning and what works for them and what doesn’t. And for the most part, there is I think a thirst out there, and that’s why I think a lot of our episodes within the last year have been — I don’t know what percentage have been around real estate, but there’s been quite a few. And you know, a lot of people are reaching out to us because of this. And you know, for the most part, it’s kind of like the lowest common denominator. It’s like OK, don’t do this because this is something that could be really terrible to happen. And I think like what I typically try to preach is we could probably do a whole podcast of what I’ve done, what Tim’s done wrong in terms of our finances. Like it’s just, it’s one of those things that until you actually experience it and have the pain or you give yourself some knowledge, whether that’s reading a book or whatever, knowledge and pain is kind of how we grow. And I think with your financial plan, I think with your real estate portfolio, it’s giving yourself some grace to fail, right? So obviously one of the things that we’re trying to do on the planning side is to limit those painful moments and fill that in with more knowledge. I think even with the real estate stuff, some of this is like you’re not going to know until you actually go through it and do it. And I was definitely the person — I don’t know if I’ve talked about this on the podcast at all, but I was definitely the person before I started my own business, Script Financial before it became YFP Planning, where I measured every decision. You know, you cross the t, you dot the i, you go back and check your work. More as an entrepreneur, I’m more of a cannonball approach. I just cannonball into the deep end and even if I fail, I learn, right? So I think the same can be said with real estate in a lot of ways. And I’m sure you and David can kind of go through many scenarios where you’re like, OK, maybe I’m not going to do it that way, maybe we buy units that don’t have a washer and dryer in it because of a flooding issue or something like that. So to me, I think that is part of it is we don’t want to strive for perfection, we want intentionality. And for some people, opening their eyes to real estate as an intentional way to build wealth and achieve whatever your life plan, that’s what this is about. And to me, I hear that more and more is like, hey, my parents said never to touch this. We never had a real estate portfolio, but I’m interested in it because I’m reading “Rich Dad Poor Dad” or you guys are talking about it. And that’s what fires me up because I think it’s a mind shift change that we’re seeing evolve over time. And I think it’s beautiful.

David Bright: Yeah, I love that, what you said about that grace to fail because I think that there’s a lot of learning that goes into real estate. And that grace to fail to me implies that there’s a little bit of cushion and buffer to afford a failure without it totally sinking you. So can you talk a little bit about how far along in a financial journey someone should be? Like is this something like in pharmacy school, go ahead and dive in, or wait until all your student loans are paid off and everything? Or like at what point is someone at a place where they can afford some of that grace?

Tim Baker: Yeah, I’m going to say what I always say. It depends, right? Tim, what episode did you have Montrell on where he was talking about wholesaling during his P3 year?

Tim Ulbrich: Yeah.

Tim Baker: That to me is amazing. Like I think about that, and I’m like, tip of the cap, sir. Like I think that’s great. And he’s hustling. He’s trying to find ways to make additional money. I think when I look at a financial plan — and this goes back to like baby stepping, which I think is Episode 026, the two things that I look at, David, when I’m looking at a financial plan is what does the debt picture look like, specifically the consumer debt, so like credit cards and things like that? For pharmacists, I think you have to throw in what does the student loan debt picture look like because that’s typically for a lot of people, they’re in their 20s, 30s and even 40s, that’s going to be the tail that wags the dog in a lot of ways. And then what’s the cash reserves look like? So when the pandemic happened, this was where it was like, alright, this is why we have that emergency fund. I hate the fact that I have to set it in this account for this time, and it’s making $0, it’s making very little interest. But this is a good, stark reminder of why we have that. So if those things are in place — and I guess the other thing too is like, you talk about pharmacy school, is an income stream. And you know, I know there’s a lot of books like Bigger Pockets is like investing with $0 down or little down or whatever it is. But from a financial standpoint, those would be the things I would want checked off. And then I think, again, if you go to the proverbial buckets of like, hey, do you have a match? If you’re not doing that, you probably should do that at a minimum and then start introducing this conversation of real estate investing. But again, like the beautiful thing about that is that there are lots of flavors. Like you could be — you might not be the bank in terms of you’re lending out hard money loans to other people because if you don’t have an emergency fund, you shouldn’t do that. But it could be where you’re hustling like Montrell in his episode with Tim and you’re finding ways to maybe learn about the market, lining up buyers and sellers, and getting that commission. That could be more of an outlier. But for the most part, you want that strong, solid foundation of what’s the debt picture look like — and it’s not necessarily, David, about paying off the loans. It’s about having a plan to pay off the loans and executing to that. We’ve had so many conversations — I had a client say to me, I tell this story, she held up her 4-month-old daughter and she’s like, “Tim, this is your fault.” And I’m like, I’ve never met you guys in person, I don’t know what you’re talking about. But what she was saying was essentially like, we didn’t feel comfortable moving our family, like moving forward with our family until we had a plan for the student loans. So I think the same thing can be true with the real estate piece is that if you have a plan, you can then execute to the plan and start introducing some of these other things that you might have thought impossible with hey, can I have a family? Can I get into real estate? Can I do this career change? Whatever it is. And I think it all goes — and obviously I’m biased. I’m a financial planner. But I think it all goes back to that in some way.

Nate Hedrick: And Tim, I think that’s spot on because I remember vividly the conversation that you and me and Kristin had talking about — we thought we were ready to buy a rental property, our first one, and we were like, look, we’ve got all these things, we’ve still got — I think we at the time had over $150,000 in student loans still, but we had a plan for it and we had all this stuff put in place. And we kind of went to you guys and said, “Can we do this? Like as our financial planner, is this OK?” And you walked us on every step of that path to say, “You’ve got all this step in lockstep. Yeah, I think if you want to pull the trigger, you’ve got that cushion built in. Let’s go for it.”

Tim Baker: Yeah, and sometimes it’s that validation. It’s having that conversation and talking it through with maybe that someone other than yourself.

Nate Hedrick: Right.

Tim Baker: Other than your spouse to say like, “Are we crazy?” And sometimes the question is like — or sometimes the answer is like, “Yeah, you are kind of crazy. Let’s take care of the $25,000 in credit card debt before we start buying GameStop or whatever, we start doing something like that.” So yeah, I think to me, that is the beauty of the financial plan is having someone objective looking at your situation, knowing your goals and what you’re trying to achieve. I think for — if I remember the conversation, it’s like I was excited for that because I think that provided some energy and some like hey, this is a passion that we really want to get into. Tim and I always talk about like financial planning can’t just be about the math, right? It can’t just be about the 1s and 0s. It has to be about like the emotion about it too. So like for some people, we always kind of equate this back to the loans is if you’re like ‘meh’ on the loans versus like, ‘Hey, Tim, I can’t sleep at night. I need to get these loans,’ like that’s going to affect our recommendation. And the same thing could be true with the maybe it didn’t make the most financial sense financially for you to do the real estate investing versus paying off the debt. I think it did. I think we’ve demonstrated that in terms of like what you did. But to me, it goes more back to the like what are you passionate about? And what are the things that you’re passionate about? And how do we execute to that? How do we build a life plan that is supported by the financial plan? And I think for a lot of people, yourself included, real estate is part of that. And I think it provides you, again, some freedom to maneuver in terms of like cash flow today but then also one day that portfolio is going to be worth hundreds of thousands of dollars, millions of dollars, that you can say, “OK, I’m 50. Maybe we liquidate part of this portfolio and we don’t retire 60 or 55, we retire now.” And I think that’s a beautiful conversation to have. So yeah, I mean, obviously I’m biased going back to the plan, but to me, the answer to the question, David, is like it depends. I think to me, you know, it’s going to be different for everyone. And it’s really kind of introducing those concepts and those ideas when the time is right for you. And a lot of it is going to be a comfort level, a lot of it is going to be like, hey are we crazy? And I think having those conversations to get started on that journey are important. But again, that’s not going to be the case for everyone. Some people cannonball in and it works out. And I think that’s fine too.

Nate Hedrick: TU, I’ll float it back to you for a second. I think some of the other things we’ve seen from — and we haven’t touched on a lot here yet — is the idea of like a house hack. So you get a lot of people that come in and they say, “I want to buy a house, I want to invest in real estate, I want to save,” like they have all these competing priorities. And we’ve found a couple cool ways to combine those opportunities together. And so we’ve interviewed people on the show before, I know you have, about house hacking. I think that’s a perfect example of what that can look like when you do combine those aspects together.

Tim Ulbrich: Yeah, and I’m guessing that’s something you all will get into further as one example, one model among many. And I think that’s one of the great things about real estate is the creativity. Tim Baker described many of the different options. And I think it comes back to where are you at in life, what are the goals, where are we trying to go, what’s the risk tolerance? All of these things might inform which direction you go. Nate, you and I have mentioned several times I think on the main show that hey, if we had to do it all over again and we could, maybe we’d do a house hack situation, you know.

Nate Hedrick: Absolutely. If only I knew about it at the time.

Tim Ulbrich: Yeah, I don’t think I’m going to talk Jess into it right now with four boys probably on like a house hack.

Tim Baker: We’ve got the office hack going, though. The office hack.

Tim Ulbrich: But I think it’s a good example. And even within house hacking, you know, I had the opportunity to interview Craig Curelop from Bigger Pockets on the YFP show, and in his book and on that show, he does a great job, there are multiple variations of the house hack. And house hack is one option among other options, right? So I hope the group listening just today where we’re sparking some interest of, you know, before you make any conclusions about where you might go, are you interested or not, learn about the options. You know, really take a step back and evaluate where do I want real estate to fit in my financial plan? Or maybe not, you know, depending on what you determine. And within there, what are the options, what’s my risk tolerance, what’s the goal, where am I trying to go? And I think Tim nailed it too, you know, the word that stood out to me as he was talking is have a foundation in place. And the visual I always have when I’m talking with specifically pharmacists that are making the transition within the first 10 years or so of graduation is build the foundation upon which the rest of your financial plan can thrive. And so if we think about this in terms of building a house, right, we don’t want to have a fancy remodeled kitchen before we have issues with the foundation that we’ve got to go back and repair at a later point in time, right? So he talked about baby stepping into a financial plan, you know, high interest rate consumer debt, emergency fund types of things, having a student loan repayment plan in place, making sure we’re protecting the financial plan. So where from there you invest in real estate as an option, obviously helpful ways to go there, but making sure we’ve got a good financial foundation to build upon. And I think in one way, house hacking is a way that you might be able to do that, depending on your situation, the market, your willingness to pursue something like that that can allow your home buying aspirations or goals potentially to move forward while you’re also moving forward your investment goals. And I think sometimes we may think in a more traditional sense of like, I’m going to buy my first home and then I’m going to think about investment property later. And obviously one of the opportunities with a house hack is you begin to merge that together.

Tim Baker: When I talk to clients about the real estate investing and we kind of talk about that strategy, if I had to go back — that’s probably like one of my biggest regrets. Like I wish I knew about that because 30-year-old Tim moved to a new city, no kids, no wife, like and I rented. And I think if I had to go back in time, that I think would have supercharged my financial plan even more. And you know, we have clients that now have house hacks because they’re like, what is — like what? Like I didn’t know that was a thing. And then they’ve done it. And again, they can choose to liquidate that asset if they want. Or they can then slide someone in, be the tenant and then just manage it more as landlord versus like a player-coach type of relationship. And to me, like I’m a little bit jealous because I’m like, ah, I wish I would have known that. Like I wish I would have done something like that and what could have been. And again, there’s nothing productive about that. But that’s one of the things where I talk about like if we’re the idea behind someone’s passion in real estate, then that to me gives me the warm and fuzzies, and I think that’s really, again, one of the reasons that I think there’s a lot of interest here because there is kind of that unknown of like, OK, what is out there? What can we be doing? And there are other people that are like me that are pharmacists that have done this. Like show me more. And I think that’s great.

David Bright: Yeah, I love that. Tim, going back to what you were saying about how part of that solid financial plan is making sure that you’re learning about all those options in real estate, you talk about learning about things. Pharmacists, we all spend half of forever in school, right? So we’re good at doing that. And from a personality standpoint, we’re all super detail-oriented and risk-averse. So we can learn about that. I love that YFP helps with that need by podcasts like this and other ways of doing that. At the same time, how do you balance that learning versus analysis paralysis and never getting past the starting line?

Tim Ulbrich: Yeah, I think you nailed it, David, right? I think there’s a line of you want to be prepared, but you don’t want to be paralyzed. And you know, I think about my own journey, again, limited investing experience, learning from the two of you as well as I go along for Jess and I in our journey. And I felt this constant pull between ah, I want to learn more, I want to listen to more podcasts, I want to read more books, and then I felt the pull of like, just jump in and like what I think is super risky probably is not as risky or control the risk and then learn through it with realistic expectations for that first one, right? And you know, that’s different for everyone, obviously where they’re comfortable and the decisions that they make in that. But I think there is a line that we’ve got to say, OK, I’m prepared, I’m educated, I’m not being reckless, but I’m also not going to paralyze myself so that I’m talking about real estate investing for the next seven years and I haven’t made a move in that direction. Finding that place to make a move where you’re comfortable, perhaps pushing a little bit outside of the comfort zone, I think is the place you want to be. Now, with that being said, the things that I found really helpful were in addition to learning and finding resources, obviously shows like this, Bigger Pockets has incredible resources and other things, is finding and talking with other individuals that you can relate with and you can learn from and are willing to help guide and mentor and teach along the way. And I think this is a little bit of getting out of your own head, of finding that community, finding that support, finding that person that may say, you know, “Based on what I’m hearing, it might be a good opportunity or have you thought about this? Have you thought about that?” You know, sometimes we may not be as objective as we would like to be when we’re thinking about our own investing decisions. So whether that’s a planner that’s helping as a coach, accountability, another investor, and that’s something we’re hoping to do through this show and other opportunities is connect other pharmacist investors or connect other pharmacists who want to learn alongside other pharmacists that maybe haven’t even invested yet but are looking to make that first move. So I think learning, making a commitment to learn, reading books, listening to podcasts, but also surrounding yourself with community that can help you be at that place of being prepared but not being paralyzed in making that first move.

Tim Baker: Yeah, and I would just piggyback on that, you know, when we go through real estate investing, I kind of say, you know, determine if real estate investing is for you. And that’s not a — it’s not necessarily a binary question because it could be a no right now, but it could be a yes sometime in the future. But I think the idea is like if you’re sitting through and we’re talking about building your core four and understanding different financing methods and different strategies and you’re like, nope, just not interested, then I would say stick with REITs. You know, we build them into our YFP models that we invest our client investments in. That’s completely fine. But if it’s a yes, like hey, I’m interested in it, then it goes back to like hey, ensure the consumer debt, there’s a student loan plan, you have an emergency fund in place, kind of review your investment strategy, your traditional investment strategy, and just see where the real estate potentially fits in. It’s educating yourself, so it’s books, podcasts, mentor, you know, I think the more that you can expose yourself to other people that are thinking about this and doing this, I think the better. If the goal is to go to Paris, I’m a big believer in like, let me see the Paris fund. If your goal is to do real estate investment, let me see the real estate investment fund. And it could be $0 right now. That’s cool. It’s a placeholder. But like if the idea is to have $50,000 to put towards your first investment, then let’s create an account that we can draw clear lines of delineation that say, this is what that money is for. And then really look at what’s your niche, what’s your strategy, and again, that could be a new target, whether it’s a fix-and-flip, a BRRRR method, whatever that is, that doesn’t have to be figured out, but understanding maybe what you’re interested in. And then to Tim’s point, develop your network, understand there’s lots of meetups and things — if those things are actually a thing anymore with the pandemic — but lots of people to network with and hopefully this, again, would be a conduit for that with pharmacists investing in real estate. And then really the last thing is jump in because you can overanalyze until the cows come home. But really jump in. And I feel like you go through those items that I mentioned with intention, it’s almost like what they say about like pro sports is like you can practice all you want, but until you get into a game and it’s game speed, you’re not going to be conditioned or you’re not really going to be prepared, and it’s going to really cause you to kind of up your game and kind of in real time. So I’m a big believer in that it’s kind of just jump in and learn. And you know, ask yourself, what’s the worst possible thing that could go wrong? Nate, I listened to your podcast a bit about the termites and things like that.

Nate Hedrick: Right?

Tim Baker: Some of those things can be catastrophic, but at the end of the day, there is still an underlying asset that I don’t want to say is insurative, but that you can still sell it. If it’s something where you’re investing in a product and there’s like no return policy, then maybe, but you still have that underlying asset that you can do something with. Is real estate investing risky? Yeah, of course it can be risky. Is it passive? Not all the time. Like a lot of people think about this as like it’s very a passive thing, like you can make this as active of an investment as you want it. But to me, I think if you understand that and kind of go back to like give yourself some grace to fail and fail hard, it’s not going to be the end of the world, I think we’ll be OK. And I think that’s how you grow.

Nate Hedrick: And Baker, you just said something really good that I want to make sure we touch on before we close this out. And that is not letting this sap all of your time, right? You said how do we make this passive? And I think a lot of pharmacists look at this and they say, ‘Well, real estate investing takes time. I can’t do that.’ But I’ll flip this back to everybody on this call, what is one thing that you guys have done to make this not — to make this more passive? Because really, what we want to bring forward with these stories and with this podcast going forward is that we are first and foremost pharmacists. And a lot of the guests we’re going to be bringing on are first and foremost pharmacists. And so how do you maintain that professional vocation while also considering this kind of side hustle or what have you in real estate investing?

Tim Ulbrich: Yeah, Nate, the first thing that came to mind as you were saying that, it’s like for me, my incompetence in like fixing things and limited time forces things like how do I make sure either there’s a system in place? Or how do I make sure I factor in property management when I’m thinking about what an investment opportunity might look like? So I think for some folks that may find themselves as handy or have opportunities to do it, that might be a little bit harder if they’re looking at saving money in certain areas. But you know, one example that comes to mind here, we had Ryan Shaw on Episode 173 of the podcast who has four different properties, 18 tenants, and talks a lot about systems he’s built, whether it’s maintenance issues or screening tenants, one example — I’m sure you’ll feature many others on this show as well. But I think thinking about those systems, which to me goes back to if you’re just getting started in this journey, I hear that word a lot, what does that mean? Like so for David and Nate, like what systems have you guys implemented or what are other systems that you could implement? And finding that community of folks that I’m guessing whether you’ve never invested, invested in one property or 10, like there’s always something that we can learn along this journey. So yeah, for me, it’s partly incompetence, partly time is something that there’s not a whole lot of. But I think really trying to think about what are the systems and who are the people that you can surround yourself with?

Tim Baker: I think one of the things that’s stuck with me with like listening to David’s journey is like, I think David, you and your wife, you have the same color, the same appliances, the same system. Like I love that. Like I love that. And I’m like, you know, rinse and repeat. Sign me up for that. And there are so many things like that that you don’t have to reinvent the wheel, right? You can rely on this community that we’re building out to really pick people’s brains and seeing what works and what doesn’t work. And I think there’s comfort in knowing that there are other people, other pharmacists out there that are trying to solve the Rubik’s cube here. And I think that’s a great thing.

David Bright: Yeah, and I love that you said that systems — like systems aren’t for when you have 100 units in an apartment complex or something. Systems are for when you have one. Like I think the thing that we found is I am just not cut out to be a property manager. And I tried to get our very first place rented, and I was horrible at it because I only had like a little bit of time to try to make that happen. And so hiring a property manager was huge for us. And it took a lot of that weight off. And then like to the earlier point, I’ve not dealt with 2 a.m. toilets because I don’t get those phone calls. And that’s part of how I get to do this in a very, very part-time way. So yeah, I think there’s a lot of value in ways like that to make this — to help get past that point of if you’re going to help get this to a thing that can be done so that it’s not a distraction from your pharmacy career.

Nate Hedrick: Yeah, we’re going to make it a point I think on these shows, David, to really emphasize that, you know, bringing people on that are successful in real estate but also showing how they’re successful in pharmacy too while they’re building that real estate portfolio because it’s not leave your job to go do this, it’s how do we do both? And how do we be successful at both? Well Tim, Tim, I really appreciate you guys coming on for the very first episode of this podcast. I’m really excited to see where David and I get to take this. And again, just appreciate the opportunity and really looking forward to the future.

Tim Ulbrich: Thank you guys.

Tim Baker: Yeah, thank you guys. Appreciate it.

Nate Hedrick: Thank you.

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YFP REI 01: Intersection Between Financial Planning and Real Estate

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