Why paying off your mortgage is the most underrated rental strategy (Ft. ‪@CoachChadCarson‬)

It's about recognizing that life is first, and then this business we're building is just serving our life. You want to turn that little bitty $20,000 down payment you made into half a million bucks. That's where the magic happens. You do that five times, times 500,000, now you got two and a half million bucks. Tire a million. If you're in the world of real estate investing, you've probably heard real estate investors say leverage, leverage, leverage, which is the basic concept of going to the bank, putting as little money down as possible, borrow as much money from the bank so you don't have to use your own money to acquire property so that you can scale faster and faster and faster. This is somewhat the standard philosophy in real estate investing. What you don't often hear the real estate community say is pay off your mortgages. And the reason why it's pretty simple, because the school of thought is instead of taking that money and using it to pay off a mortgage, you can take that money, put it as a down payment on more property so that you can scale, scale, scale. But on today's episode of Rob Built, I think you're gonna learn the beautiful simplicity of paying off debt, paying off your mortgages, and you'll begin to understand how this simple strategy massively unlocks wealth and can and will get you one step closer to financial independence. On today's episode of Rob Built. A couple of weeks ago, I had you on the podcast to talk about a crazy simple strategy on how to retire with five properties. That video kind of blew up and I wanted to have you back on the podcast today to talk about a bit of a controversial take and I want you to make the case for why someone should pay off their real estate debt early. You ready to talk about that? Let's do this. Let's bring the haters on. That's right. So let's just set the stage here. Why is this a controversial take? Yeah, I mean, real estate investing, one of the reasons it's such a good vehicle, as you know, too, is that you can use leverage. You can use debt. You don't have to have a million bucks to make a million bucks. You could have a small amount of money and use debt to get there. So that's a plus. That's built into the DNA of real estate. We all know that. I think the thing with me is when you take this small and mighty journey, though, it's not the same for wherever you are in your journey. So as a new investor, when you're first starting, you only have a little bit of money. You gotta use whatever leverage you can get, whatever mortgage you can get. When you move into the building phase, building wealth, you need to use leverage because you want return on investment. You gotta grow, grow, grow. But then there's this third stage that I don't think a lot of people talk about when you actually harvest your equity and get to financial freedom. That's the point where Warren Buffett says, once you have enough wealth, you've built this big mountain of wealth, the number one prerogative at that point is don't lose it. Don't go backwards. And so then I think debt has a little different decision-making criteria to it because then it's like, yes, you can still use it to get bigger, but there's also this risk you kind of had built into your portfolio. And so you start thinking about it a little bit differently, saying, all right, what if I paid some of it off? Maybe I kept some debt, but I paid the rest of it off. It would increase my income. It would reduce my risk. It would just bring less hassle to my life. You could use leverage and get five more properties, but then you would miss out. You wouldn't have the time to go do the things you invested in the first place. So that's kind of the general idea is debt's great, but it's not like a cure-all for everything in the entire career of your real estate investor. Sometimes I've been paying off some of the debt, not all of it, but I've paid off a lot of debt in my portfolio, and I feel, I had a hard time doing it at first, but I feel good about it in the big picture. It's very anti-real estate investor to pay off debt. I'd say before we really start getting into nuances of what that means and how it can compound your wealth, why don't you just explain what leverage is to the layman in case they don't really understand the concept? Yeah, so just a basic property. Let's say you buy a $200,000 property, and I don't have 200,000 bucks. So maybe I move into it like a house hack. I have a duplex. Upstairs is one unit. Downstairs, there's an ADU in the backyard, an accessory dwelling unit. I could put 20,000 bucks down or maybe 10,000 bucks down, like a five or a 10% down payment because I'm living in the property. It's a house hack. And then I have a mortgage for the rest of it, and I could use the rent from that extra unit. Maybe do your thing, and you have an Airbnb. You have a short-term rental. You get a ton of income from that to use that to pay your mortgage payment. So now it's a pretty safe bet. I've got in for like 20,000 bucks into this $200,000 property, or bigger numbers. You live in California. That's a million-dollar property. It's a million-and-a-half property. But the point is you had a little bit of money, used leverage, used a mortgage that has a mortgage payment on it, but then you can use income from the rental to pay for that mortgage, and that's a cool concept. If you can use income to pay off your debt, how many, and you could keep going from there. You could keep growing. So that's the plus side. So the idea with leverage is you don't have to actually buy a property cash. You can take out a ton of debt on it and use what's called really other people's money, the other people in this instance, or the bank. You can use the bank's money to go buy a property. And so I think for a long time, the standard for buying a property, when you hear about it growing up, it's always like you need 20% down. And so in most instances on a $200,000 house, you need 40K to close on it if it's an investment property. Now we fast forward to kind of owner-occupied or house hacking type loans, FHA. You can put three, 3.5% down, which is really great because it means, hey, I don't have to put that much money down. I can borrow way more from the bank, but it can present an issue where you don't have that much equity in your property, right? Right, exactly. And in the beginning, again, that's the game. That's great because you didn't have enough down payment. But over the long run, I guess, let's just fast forward that big picture-wise. The name of the game is to have a bunch of wealth, is to have a bunch of equity. So like that little $200,000 property, if you hold it for 10 years and it's in a good market, maybe that goes up to half a million bucks. So now you have $500,000 property. You've paid the loan down to 150,000 bucks or something. You have this big chunk of equity in the property. And the debt becomes a smaller and smaller piece of the overall value. That's the goal. That's what we're trying to do. And we can get into maybe the mechanics of why I would even want to still pay that debt off. But I just want to emphasize the name of the game that I think we're all on the same page about is you want to turn that little bitty $20,000 down payment you made into half a million bucks. That's where the magic happens. If you can just do that, and you can do it through Airbnb, short-term rental, long-term rental, whatever the game is, if you can just get there, holy cow, you do that five times, times 500,000, now you got two and a half million bucks. Entire millionaire. Yeah, you got a lot of money with a very simple little portfolio. And that's what we talked about in the last video is that you don't need a lot. If you combine short-term rentals and the cash flow that produces with quality properties and a good market, five properties can build you a lot of wealth. I think the question I'm asking now is, once you get there, you have all that equity, it's not automatic that you then are set for life. There's some shuffling of your equity you might need to do in order to kind of ride off into the sunset. So that's where the debt comes in. So let's talk about the trajectory, because I want to get to this point where we really dive into what it means to pay off debt and the consequences, both good and bad, for doing so. But before you get to that point, what is the trajectory of a small and mighty investor? And I guess maybe even define what that kind of philosophy is. Yeah, the small and mighty investor, I kind of experienced this because I got really big in my first four years of real estate investing back in 2007, and I ran right into the Great Recession where we bought like 33 properties in one year, kind of held on for dear life during the Great Recession, survived. But it sort of made me question the fact that I was kind of copying other people's model, which is what we all do as little kids. We copy other people, we talk like other people, but I was copying other real estate investors, and I just assumed that getting bigger was better. And what the realization was, though, is I made a list of things I wanted to do with my life. I wanted to pick up basketball in the middle of the day, I wanted to travel, I wanted to learn Spanish, my wife teaches Spanish, so I wanted to go travel abroad and live there. So I had all these things I wanted to do, and money was part of the equation, but what I really needed was time and flexibility. And so it made me realize that I want a business model, and turn it into the small and mighty business model, of that I want the minimum number of properties, basically the minimum amount of hassle that I need, the minimum amount of tenants, the minimum amount of Airbnb properties that accomplishes my goal. So if I can get my goal with five properties, 10 properties, whatever that number is, two properties, that's better than having 100 properties because my goal is to play the basketball, to travel, to be with my kids, do those things. So that's the goal. And then the finances are, I wanna get there in the most simple, elegant way possible that has the least hassle, the least risk. And so that's where the small and mighty idea came in, of like, hey, let's figure out a way to do that and have the least number of properties. So like less is more, is sort of that idea boiled down. And so take us through the trajectory, like how should a small and mighty investor really approach kind of their journey? Is it like you buy your first house and you pay down the debt now, or is it about accruing a certain amount of properties before you ever hit that? Yeah, that's the key. So let's break, like, let's simplify it and say you have three stages of your journey. Number one, you're a starter. You're buying that first property or two. You just gotta get your foot in the door. That's number one. Use debt. Use as much as you can safely. Stage number two, you're the builder. You've got, you know, you've got a property or two, but now you're trying to turn that two properties into five or 10 properties. And your goal is just, you know, you're not gonna pay off debt yet because you make a good return on investment buying that next property. So every cash flow, like, if you're reinvesting your cash flow, save up and down payment. Like, don't use that to buy the next property because your return on your investment is huge when you can use leverage and grow more properties. So stage one, starter. Stage two, builder. Use debt. That's the name of the game. What I think is the key is when you get to this third stage, which I call like the harvester phase, and I had a mentor of mine back in the day. John Schaub was one guy from Sarasota, Florida who wrote a book called Building Wealth One House at a Time, and another guy named Pete Fortunato. Pete used to talk about, he used to talk about these three stages, and he called the third stage the ender stage. And I was like, God, that's kind of gruesome, you know? Like, I'm getting to the end, the end of my life. You know, what is this? And John Schaub called it the spender phase. This is where you spend money. Like, this is, imagine you have a fruit tree and your portfolio is fruit. You're harvesting the fruit. Like, you're finally like eating the fruit that you've been spending all this time building. And a lot of investors and entrepreneurs, we never get off the treadmill. Like, we always keep getting bigger, keep getting bigger, keep getting better. So the idea of the harvester phase is, on one part, it's to live, like, live. Like, enjoy it. Like, go take some trips. Do the thing that you set out to do. But then from a financial portfolio stage, it's about redeploying your equities. Like, if you have a million bucks now, like, I know people who've been in Austin, Texas, California, they have a million dollars in equity, but they make like 1,000 bucks in cash flow. So, like, that's not good. Like, you should be making like 60,000 a year or 100,000 a year. Is the reason that they're only making 1,000 dollars because their mortgage is so high? Yeah, it might be. Let's give an example. You have a million dollar, a simple example. You have a million dollar, 1.5 million dollar property that rents for 5,000 bucks a month. And your mortgage is like 2,500 or 3,000 bucks. So, like, it's just, there's some properties out there where a lot of equity, your property's grown a lot. That's an extreme example. But that equity's kind of dead. It's like, it's not doing much. So what this harvesting phase is about is taking that equity, like evaluating your whole portfolio and saying, like, where is there equity that I can redeploy to another, to a better use that makes more cash flow? Because the harvester phase is all about making cash flow. In the beginning, it wasn't always about cash flow. It was about growing your wealth. It's about making cash flow so you can live off of it. That's the fruit, eating the fruit. It's also about reducing your risk. So, like, I've built this a million and a half in equity. Like, I don't want to lose it. So it's about, like, making sure I'm building like a fortress around my portfolio. And then it's also about hassle. Like, this is where, like, I've had to get my head around this one. Like, I own more properties even now than I want to. Like, I want to reduce the number of properties I own. Because- How many properties do you own? It's 33 properties, about 100 units. Wow, that's a few steps above small and mighty. Yeah, and I have a business partner. I have a 50-50 partner. So it's medium and mighty. I'm medium and mighty. Yeah, exactly. And I've been doing it 21 years and you kind of accumulate. But the thing is, like, even so, I'm a little too big. Like, I think I could be smaller and get the same amount of cash flow, have less hassle. Because to pay attention to every one of those properties or have a prop- You could say, oh, a property manager will take care of it. Not really. Like, they are your employee, essentially, and you have to delegate tasks to them. And so it's just the more you have on your mind, the less quality you can do. And the more I've done this business, I really like this idea of being a crafts person, like a craftsman, a craftswoman, where your job as a real estate investor or an Airbnb investor is to, like, provide this high-quality property to your customers, to your guests, to your tenants. And, like, the value we add is having a great property that they want to live in. And if we do that, then they'll pay us money and we'll have that money for the rest of our lives. Like, that's the exchange. And I think the bigger you get, we take it for granted that getting big is easier, but I think you lose quality. I think it's hard to be a big, it's hard to be Amazon. It's hard to be these companies. I think it's much easier to be a high-quality crafts person, small, mighty investor. So for me, it's those three things. Cash flow, hassle, and then quality. Like, just having a good portfolio that you can really pay attention to. And so, going back to our example of the million-dollar equity, that's an example where that's a bad cash flow situation. So you could sell your property, do a 1031 exchange, which just means, for those who haven't heard of that, that's you're trading your equity. So you take one property here, let's turn that million dollars in equity into a down payment on a multifamily property over here that's gonna produce more cash flow. And then I have a property manager who manages that for me. That's an example. I could probably make a lot more cash flow off of that than just leaving it in a property there in California. So it's basically like, I mean, if I'm hearing you correctly, that is the concept of return on equity, right? Like, where you have this equity in your property. A really great example of this is I have a property in LA. I bought it for 624, it's worth 1.1. And the cash flow is the same. I mean, break even, maybe make 1,000, 2,000 here and there, because it's listed on Airbnb. It's my primary residence from when I lived there. It's not an investment property, so I'm not highly motivated to do much with it. But the interesting thing is, yeah, I mean, I could sell it, maybe take half a million dollars of equity and put it somewhere else where I'm gonna make more money. But I think what stops most people from this, I don't know if you hear this much, but for my students and my audience, I feel like a lot of people are scared to give up that juicy interest rate. Like, the interest rate on that property for me is 3.25%, whereas if I went and got a new property right now, it would be looking at like 6.5%. What are your thoughts on that? Is it worth giving up the interest rate? Yeah, there's always a trade-off. So the negative is you're losing the interest rate, but here's where the harvester kind of stage comes in. I think you make different decisions when you're ready to harvest your equity than you do when you're building. So like, if I'm Rob and I'm like, all right, well, I'd like to grow a little bit more. I think this is, it makes sense to keep a 3% loan. Like, that's one of the best growth strategies in all of the business is to have a 3% loan with a rent that can go up over time. Like, that's beautiful. That's a great thing to do. But if you said, like, I wanna make, today, in the next year, I wanna optimize my equity, I wanna harvest it so that I can make 10,000 bucks a month and never have to work again, that's a different decision. And so you might say, then, let's sell that property, even though I'm paying a 6.5% loan over here, because I might find another property over here that has a better return on equity, a better cash return on equity. And even though you lose the cash flow, the good loan, you're making up for it, because now I have more cash flow. The higher cash flow. Yeah, so that one example, that harvesting of equity is optimizing for cash flow. There are other examples. Let me give you another example in another situation. There's a couple, I tell a story about this couple who lives in St. Louis, Missouri. They own 10 properties. They have been buying properties, these single-family houses over the years. Actually, they don't own 10. They own, like, 15 properties. But they've been buying them over the years. But now they're like, you know, we're making some good cash flow, but we're not making enough yet. Like, they have it spread out over 15 properties. They're still not making enough cash flow to really be comfortable to leave their jobs. So what about, this is another example of harvesting equity. What if they sold five of their properties? So these five might be the ones that are not the best rentals. They're kind of like, eh, this one's like a 3,000-square-foot house. It's not a perfect rental. This one's too far away from me. So they kind of, they call it pruning your portfolio. It's like if you have a fruit bush, you wanna prune your fruit bush a little bit to make it grow even better. I have blueberries in my backyard. I'm kind of a nut about that. You're a nickname back in high school. It's fruit bush, right? Fruit bush. Yeah? Something like that, yeah. So anyway, I go back and I prune these blueberry bushes. And it's kind of counterintuitive, that you think you prune it, you're cutting it back. You're gonna get less. But with a real estate portfolio and with a fruit tree, by pruning it, you make it grow even more. And so your real estate portfolio, you can prune off some of your properties that are less than optimal. And your choice at that point is, you can do what we talked about before. You could sell those five and 1031 them into something else. That's legitimate, right? But in this case, this couple, they chose to sell those five properties, pay taxes on the properties they sold, and then use that money that's left over. Like the capital gains. Capital gains. They pay capital gains tax. Let's say they have a $300,000 or $400,000 chunk of money or $500,000 chunk of money. They then use that to pay off a lot of debt on the remaining 10 properties. Now why would they do that? Why does that make sense? That makes sense because their goal was to have like 10 properties free and clear. And those 10 properties, when they're paid off, these are long-term rentals, for example, they make 10,000 bucks a month when they're paid off. All free and clear. So that was their number. Like they're like- Six figure salary. If I had 120,000 bucks a year, I'm good. Like that's their decision. And so for them, pruning the portfolio freed up some extra capital. And then that capital was used to pay off debt. Even if it was like, you know, it might've been 4% debt or 5% debt, but now they have fewer properties, less hassle. They have less things to worry about. They have more cashflow. And that's, to me, is a good example of when it makes sense to pay off some debt. Is when you're a harvester, you have an existing portfolio that's a little too big and you kind of prune it down and then pay off some debt. Let me ask you this, because now I'm feeling dumb. Did you say that when you prune plants, it's so that the plants can grow more? Right, yeah. Is that how that works? I just always thought pruning is just so that it looks nice and clean. Yeah, so it kind of, it gives more air so the branches you have on the blueberry bush have more space and more air to grow. So they kind of thicken up a little bit. So you'll actually have more of a harvest. You'll get more blueberries or more apples by pruning it than you would letting it have like a ton of branches. Wow, okay. It's really cool. So then that's a really great analogy, I think, for the real estate thing. I think, honestly, the thing that comes to mind for me a lot of the times is like, you're talking about, you've got this fruit tree, right? And you want to pick the fruit off every so often. And I have always been, in my real estate journey, I do not spend my real estate money. Like all of my accounts are stacked with way past capital expenditures. Like I saved for that a long time ago, but a lot of my Airbnb accounts typically hold like 20, 30, $40,000 in them. And I just, whenever I have a lot, I take a lot out and then I move it into a new property. But I think the moral of the story here is, if I'm hearing what you're saying right, is that you can't eat fruit when you're dead. That's it. You got to enjoy it. You got to spend it. You got to, and this is a different set of problems. I know a lot of people are brand new listening to this or like, well, that's a nice problem to have. When I get a million bucks or two million bucks, I'll deal with that. Cool, that's fair enough, right? So this isn't like, what I think what we're trying to talk about here is like, there's not a one size fits all strategy for any strategy, including debt. Like borrowing money is great early on. But I think if you want to eat that fruit, like you can't, you got to play a different game. You got to think about things a little differently. And so sometimes we get so automated into thinking, don't spend my real estate money. Don't pay taxes. When like, there's no rule that says that's only the right way to do it. Especially if you subscribe to this idea. And I think Airbnb, like short-term rental people are the perfect example of how making short, of small money makes sense. Because you can get like, each one of those fruit bushes you have, those properties, produce a ton of cashflow. And every time you add another Airbnb, yes, you can systematize it. You can go listen to all your details on how you do this. You can systematize it, but there's always a mental load to doing one more. There's always a little bit more hassle that you have. So if you can do everything you need with five short-term rentals, instead of eight short-term rentals, then just try it. You could always add another three later on, but try it with five, because then you have all this space and time in your life to do all those other things that I realized I wanted to do. Playing the pickup basketball, traveling. And so my story has been, let's build that portfolio, the minimum number we have. For us, it's a little bit bigger number, right? But then, I'm not gonna stop growing. I'm 44 years old myself. I think people, no matter what your age, you can keep growing and buying properties and building businesses and doing whatever you wanna do the rest of your life. But you also might realize that, hey, my kids are 10 years old right now, and I just wanna take a little sabbatical for the next two years and not work as hard, which is what I've done. I've traveled to Spain with them. I've lived in South America and Ecuador with them for a while. So I've kind of taken these little breaks. And by having a small, mighty model, which is simpler, which has fewer moving parts, which you can turn off and on, it allows you to have that flexibility in your life. Whereas I feel like, I've been on the other side too. I've had these big, I call them like Frankenstein businesses that get really huge with big overhead and lots of things moving. It's hard to get off that train. Like that's, that Frankenstein runs the show, and you, the owner of the business, think that you're in control, and then the business controls you. And I think that's what I'm trying to push back against, is like real estate is cool, but like scaling real estate, your beautiful scaling real estate might turn into a Frankenstein that takes over your whole life. And that's a shame. And you might hate it. You might hate it, might be miserable. I think that's the, the happiest I ever was in my Airbnb journey was the first year I ever hosted, because that first property I ever had, I was making one to $2,000 every single month in profit. And that was the first time in my life where I had what's called expendable income. And my wife and I took trips across the world. We went to 10 different countries, and it was something that afforded us the opportunity to travel. We could make money on Airbnb for the first time ever. And really since that first year where we kind of were dipping into the cookie jar a little bit, we've never spent the money ever again. And it's been scale, scale, scale, grow, grow, grow. And now I've got 40, 45 doors myself. And I'm in that phase myself, where I'm like, man, how do I go from like 45 units to like five? Like these five that just absolutely print cash for me. I think there's definitely a compelling reason to lower your debt. I mean, it is very counterintuitive to the real estate world because it is like leverage, leverage, leverage. But it does feel weird paying taxes. I think that's sort of the thing. It's like, no one wants to pay taxes, and I get it. But it's like, I guess the point is, the way I think about it, and maybe I think about this a little too cavalier, but like, I don't take you as a gambling man, but do you ever play blackjack? Blackjack, yeah, just for fun, yeah. Cool, so let's say you have like 200 bucks at the table, and you grow that to 400 bucks or 500 bucks or $1,000, you now have what's called house money. And it means you have money that, hey, you know what? I made this, and like, if I lost it, it doesn't actually matter because I kind of built it up just messing around. That's how Airbnb has been for me too. And I'm like, then I find myself, I don't want to get into my gambling habit. I'm really not that much of a degenerate, I promise. But like, I'll find myself making these bigger bets, and if I lose, then I'm like, oh, whatever. Like, I still have that $200 that I came in with. I almost feel like real estate is very similar where when you really are consistent and you grow this like real estate portfolio, and it's appreciating, you do have house money. And I do think it's okay to just take that cash sometimes. Take some chips off the table. Maybe you're going to pay taxes on it, but it's like, it's fine because that's the point of appreciation is, like, if you're not going to spend it, you really want to, I honestly just don't get why die with it, you know? Like, I'm trying to understand it, but I don't get it. I don't, it's a blind spot. I think it's really, and I've been there, so I'm not pointing fingers at anybody. I'm pointing fingers at me. Like, it's a blind spot that we get into this growth mindset. And it's like, it's a good thing. There's a yin and yang to everything. You know, there's like a good and a bad to everything. And these are wonderful growth tools. Debt's awesome. You know, not paying taxes is awesome. These are, you use the tax code, but what's the point? Like, why did we get into this in the first place? What we got in this to have a better life. And so this is where it gets personal. Like, why did I do it? Why did you do it? Like, what's, and some people, they're like, I just like having fun. Like, business is fun for me. And I was, you know, we both watched Alex Ramosi on YouTube. Like, it's a cool guy. He just like, I don't think he wants to be a billionaire because he's gonna spend the money. He just likes the game. He loves the game. I like the game too. Like, I like real estate. At the same time, I think if we're all honest with ourselves, we have a life financial component that we got into this game for. And so when you take chips off the table, whatever that amount is, like, I'm not saying pay off all your debt, but like, take a big chunk off that you are never gonna lose that money. Or, you know, you're reducing the risk, and then spend it for a little bit. Like, enjoy your life for a little bit. Take six months off. That's what I've done. I've taken these little mini-retirements where I just press pause, and I literally, like, go through withdrawal symptoms sometimes on this, like, grow, grow, grow, grow. Like, first time I took a mini-retirement in 2009 with my wife before we had kids, it took me six weeks in Spain of traveling around, doing this, like, kind of, taking Spanish lessons. We were sitting in this little city, this little town called Cadaqués on the Mediterranean coast of Spain. I was sitting on a bench, and we had this, like, shooting star. We were, like, sitting there reading books, and all of a sudden, this shooting star, like, went across the sky, and I'm, like, whatever it was, that moment, I had this, like, knot in my chest just, like, kind of released. And it was, like, stress. It was just, like, ha, like, took me that long just to relax. And I think a lot of us who are, like, go-getters, we don't realize it. Like, what a stress in our lives, in our health, in our relationships that is really there while we grow. And so, even if you intend to grow your whole life, I think it makes sense to take a break. Like, you're a mountain climber. Like, don't just go straight to the mountain peak. Like, take a break. Take a plateau. Take a six-month time off, and then you can go back in the game, and you'll be even stronger than you were before. But I think that's what this model is about. It's about recognizing that life is first, and then this business we're building is just serving our life. And sometimes we let this business kind of crush the rest of our life instead of us being in control. It's like, we were walking the dog. Don't let the dog walk you. The business is the dog. We need it to, like, sit when we say sit. We need it to walk when we say walk. And I think when you let businesses get out of control with growth, and you let the good thing become this dominant Frankenstein monster, then the dog's walking you. And taxes, not paying taxes, is like, that should never be the thing that's the most important priority. Like, that's just a tool. Life is first. So sometimes you pay taxes. Sometimes you pay it off. And you and I, I mean, I think everybody listening to this, you're learning tools. You know how to buy properties. You know how to get more. You can always build more wealth, but you can't get that time back that you could've spent with your family. You could've spent on your health. You could've spent traveling. Like, you'll never get that back. You can always make more money. So, like, to me, that's the trade-off. Time, money, life, money. Like, I'll always take the life first. Because you have the skill. I mean, if you got the skill to get this far. You'll do it again. You can always do it again, yeah. I think trying to not pay taxes stops people from ever enjoying the thing that they, the whole reason for getting into this. And I'm kind of at a weird place, even, like, personal. Like, take out real estate portfolio. This is the weirdest kind of thing, the weirdest guilty pleasure that I have that, like, will get me canceled in the real estate community. But I do want to pay off, like, my primary residence. There's actual no, like, nothing that that helps me with. No rational reason. Other than exactly what you said. I'm taking chips off the table. And I know, hey, if I lost it all, if I lost all the house money, I know that I got my house. And my wife and my kids can live in this house. And if I gotta go get a job, you know, I'll go get one. I probably won't. I'll probably figure out how to make money. But it's in the back of your mind. It's back of your mind. And it's that stress of, like, man, I'm out of it. Like, if I had to just cut, you know, pull the ripcord, I've got my house, I can sell everything, liquidate, and actually probably be okay. I did the same thing. My wife had to talk me into it. We had a 3% loan on our house. And it was like, I fought it for a couple years. I'm like, no, no, no, we can just invest this at minimum 6% to pay for the 3% loan. Like, I could do this. Yeah, the 3% arbitrage. Yeah, but the math, eventually, she was like, no, it would feel good. It would just feel good to do it. It would be like, I know it's not rational, but worst case scenario. So we paid it off in fall of 2019. Your whole mortgage? The whole mortgage on the house. Paid it off. We had some extra cash. We could have bought a rental property free and clear with it. We were like, no, let's just pay the house off. It was painful. We did, for me, it was not painful for her. Fall of 2019 is when we did it. February 2020, COVID. And I was in this state where I was, like, super stressed about our properties because I had a lot of college student rentals. And in March of 2020, COVID is uncertainty of COVID. I thought, like, college student rentals, I was like, okay, remote class. People are gonna stay at home. I was like, oh, crap. Like, I think everybody's just gonna stay at home in Atlanta, wherever they live. And nobody's gonna come to Clemson to go to school. Why would they rent an apartment from me? They're just gonna, like, back out of their lease. Like, I know it seems weird now to think that, but I was like, you know, remote school. Like, we're gonna have 50% vacancy. We're gonna have 70% vacancy for a year, maybe, or longer. So I started piling up cash. I got worried about it. But, you know, the thing that was kind of cool was our personal expenses were like 1,000 bucks a month. I had no mortgage payment. We still had taxes on our home. We had insurance. But we were, like, super cheap. Can I make 1,000 bucks a month somewhere? Even if everything hit the fan? Like, yeah. So it gave me peace of mind knowing, all right, I'm good. Like, this house is good. My family's good. It allowed me to be more aggressive with solutions to solve the problems. And we ended up not having a problem. Like, we had no people. It seems like you've done all right. It turns out that all the parents back at home were like, get out of my house and go rent the apartment. And the students in college were like, I'm getting out of my house because I can't be with you, mom and dad, for like a whole year. So it was worth it for them to go pay the extra money. But the point is, like, there's weird things that happen in your life. There's black swan events that happen in the economy. Like, none of us are smart enough to predict that. And so paying off debt is just a signal that you are recognizing there's uncertainty in the future. You're taking chips off the table. And this isn't, like, smart people do this too. Warren Buffett doesn't have a ton of debt in Berkshire Hathaway. He has like 15% debt on his whole portfolio. Lots of smart people pay off their debt. It's not a, this isn't a dumb person thing to do. This is a smart thing to do when you mature as an investor, as a person. Good. Well, the dumb thing to do is you and me go to Vegas and I think we need to plan a trip and go hit the tables. But this is what I really love about the small and mighty kind of philosophy. And if you want to learn more about this philosophy, Chad and I actually break this down in excruciating detail. It's the blueprint for how to get started and how to retire with five properties. We got so many comments and so many nice things that people said about it. So please go check out that video right here. After you, of course. Subscribe right here. Just pet the, pet the like button. All right. Thanks. Bye.