In this episode we unlock the secrets of leveraging real estate to up-level your lifestyle. Join host Rachael Van Pelt and financial expert Brady Mullin as they dive into the world of lifestyle investing. Discover innovative strategies like upsizing your home not just for space but for profit, turning your first home into a cash-generating rental, or owning a vacation hideaway that pays for itself. Brady demystifies how real estate rapidly grows wealth through appreciation, cash flow, debt pay-down, and tax savings. Plus, he reveals savvy techniques for using your existing equity to expand your property portfolio. Tune in as Rachael and Brady discuss not only growing your wealth but also enriching your life with unforgettable experiences with family and friends. Don't miss out on mastering the art of smart, strategic real estate investments that do more than just support your retirement — they make life richer.
Chapters
00:00 Introduction and Background
03:41 Why Traditional Financial Plans Don’t Include Real Estate
06:06 Using Real Estate to Build Wealthspan
10:26 Investing in Your Lifestyle
13:47 Using a Reverse Mortgage to Invest in Lifestyle
20:43 Building Wealth Despite Negative Cash Flow
26:08 Upsizing and Keeping Your Existing Home as an Investment
Brady Mullen’s Educational Videos:
Lifestyle Investing: The Surprising Value of a Vacation Home https://ltrea.com/lsi1-109-155/
Upsizing and Keeping your Home as an Investment https://ltrea.com/upinv1-109-155/
Reverse Mortgage Introduction: https://ltrea.com/rmi1-101-155/
Welcome to Next Act Ninjas, the number one podcast for becoming a master of your lifestyle longevity. I'm your host, Rachael Van Pelt, retired healthspan scientist turned Realtor and coach. And today we're talking about upsizing as an investment, whether that be buying your dream vacation home or upsizing your home and keeping the first one as a rental. I've invited Brady Mullin here to join us because he's one of my favorite numbers guys. I love how clearly he breaks down the value of investing in real estate. And I just know you're going to love him as much as I do.
Brady, before we geek out on real estate investing, how about we tell people a bit about your unique background? One of the things I love about you is that you, much like me, retired early from a successful career to embark on an encore career that you're passionate about. Would you mind sharing a little bit about that with us?
Brady Mullen (00:58.081)
Thank you. I would love to, of course. So I was a financial advisor and accountant for 19 years. And I didn't really intend to give that up and go looking for a new career. But what happened was, is I became very acutely aware of the financial impact that our real estate choices have in our lives. This happened mostly because my oldest children were becoming adults. And I was thinking to myself, how do I give them the things that I've built 20 years getting kind of good at, how do I give them a little head start in their journey in adulthood? And I thought, you know, when it comes to finances, finances are a game that you can't opt out of everybody has to play that game to one degree or another. And so I thought I could help by instilling some wisdom about finances with them. And it just kept becoming more and more clear to me that the most important financial decisions that I ever made, and that most people ever make is about the real estate in their lives.
And that goes, and I think of it in chronological terms, although it's not always this way for everybody. I think the first real estate decision most people make is whether to rent or to own. Sometimes people think that renting is waiting on the sidelines, but it's no such thing, of course. How is giving a landlord $20 or $30,000 a year a sideline? There's no such thing as sidelines. You're in the game. If you're not buried and in the ground, you're in the game. You have to manage finances.
So anywhere from that to, you know, up-sizing, investing, downsizing, you know, all those decisions are real estate related decisions that need to be made. And they all have massive financial consequences. So you might ask, well, why does that you didn't have to leave finance to do that. But oddly enough, I did. Because as a financial advisor, I couldn't talk much about real estate, I say much because there's a couple things that you could you could touch lightly on. But in general, the compliance in that industry doesn't let you talk about real estate in any great detail with clients, which I found kind of frustrating because here I am calling myself people's financial advisor. And I couldn't talk about what I what I felt certain is their biggest financial decisions of their lives. And I was very much restricted on how I could talk about that. So I tried to integrate those things for a while. And ultimately, I got I got frustrated by that. And there was enough friction from the compliance, where I thought, you know, it's just going to be easier if I sell my practice and I work in a different industry where I don't have the compliance requirements of the financial industry telling me that I can't help people with their real estate decisions. It's weird.
Rachael Van Pelt (03:31.034)
Wow, that's so interesting. Why is that? Why do financial plans, why do they stop at just the basic, you know, index fund or life insurance policy? What is the compliance issue there that stops you from being able to talk about real estate?
Brady Mullen (03:45.905)
So I try to be pretty level headed about this because I know, you know, the first knee jerk reaction that you might feel when you, when you hear that is like, Oh, it's cause they don't make any money when you do that. And there's, there's some truth to that, right? They're, they're just, there's isn't, that's not their business. That's not what they're in the business of doing. But the way it was explained to me, because my, my interaction with the compliance department wasn't adversarial. These were people that I've known for a long time. And it was like, Hey, my approach wasn't can I, or can't I, my approach was how can I?
I want to help my clients they need help in this way I want to help them project that the outcome of this decision versus that decision. And their response was our E&O doesn't cover that we don't we don't talk about that with clients, mostly because every real estate decision is so unique to the family or the individual that's making it. Because real estate isn't what's called fungible, right? If you own an Apple stock, and I own an Apple stock, and we switch nothing's happened because Apple stocks are fungible. A $10 bill is also fungible. If we trade $10 bills, nothing really has meaningfully happened. But if you have real estate, and I have real estate, and we swap, there's no way that nothing's happened. Something just happened, right? Somebody got a better deal than like, they're just it's not fungible. Every every single piece is unique. And because of that, they can't build a compliance system around advising clients, you know, millions of clients all over the country, in these massive financial decisions, all of which are unique, all of which are going to require very specific looking into details and helping these clients in the financial industry was just like, we can't have any part of that. So it was the attorneys that shut that down saying, we just, we can't. Protect you or us if that doesn't go right for the client. So we don't want any part of that, which I found very frustrating, but it kind of makes sense in a litigious society.
Rachael Van Pelt (05:27.31)
Gotcha, wow, yeah, that's really interesting. But I'm so glad you do what you do because my husband and I, we love having real estate as a part of our diversified investment portfolio. I just love working with clients who want to do the same, and I know you do. So why don't we dive into the benefits of real estate as a means to building wealthspan?
Often, I think we tend to think about it just in terms of cash flow or the income we might get from renting a property out, but there are other benefits to real estate as an investment vehicle, aren't there? Would you talk about those a little bit?
Brady Mullen (06:08.933)
Sure. Oh, I like to break it down into two categories. And within those two categories, there's two subcategories each. And the two categories are cash and equity, right? I think most people, as soon as you say that, they're like, okay, I get it. There's hopefully some appreciation over time. That's probably likely given enough time. It's fairly predictable. And then there's some cashflow, which most people think right away when they think of real estate investing. But those two categories, break down into two further subcategories.
So on the equity side, you get equity in real estate by appreciation, of course, that's the obvious one, but you also get equity with debt pay down. So if you have a mortgage on a property, clearly every payment is some principle, some interest. And the way that amortization schedules are built on those kinds of loans, every payment that's made becomes more principle and less interest. That does a funny thing with investing.
And this is also true about the cost of owning versus renting. Home ownership is like foundational to financial success, by the way, I know we're not talking about that today. But I like to say that almost every chance I get, because there's people all over social media saying, you know, renting is cheaper, and that there's just no way that's that that's even remotely true, because, you know, no business in their right mind would ever call a principal payment on a debt an expense. But because people don't run their households, like an accountant would run a business, not that an accountant would run a business, an accountant would run the books in a business, right? They would never call a principal payment on a debt service an expense, it's not an expense, it's you're transforming wealth from money in the bank into equity into a lower liability. It's only the interest that's the expense.
Now on a property, you also have tax and insurance that are other expenses. But when you subtract out the principal payments of expenses on a home. Now this is true about renting versus owning, but it's also true about investing. Every payment you make is it gets actually less expensive to own that property because more and more of that payment is going to principle, which isn't an expense. You're buying more equity with every payment and you're getting the appreciation.
So back to those two categories, there's the equity that's broken down into two subcategories of debt pay down and appreciation. And the cash is broken down into net income from the property and tax savings, which is another thing that's a little bit harder to calculate because everybody's tax situation is a little different, but it's very real. And so when you combine all four of those sources where people make, I should say build wealth in real estate, you want to add those four to really get the full sense of what's happening, not just the cash flow.
Rachael Van Pelt (08:40.434)
Yeah, I agree. I love how you break that down because it's easy to forget about that debt pay down. Easy to think of the value of the property increases over time and of course it can be a tax shelter, but the fact that you're paying down that debt over time, I think it's overlooked. I know I overlooked it for many years and didn't fully appreciate it until we had done more real estate investing.
Brady Mullen (09:07.661)
Yeah, it's sort of like, it gets overlooked often because it just isn't salient anywhere. I mean, it will show you that on your mortgage statement, but how often do you actually look at your mortgage statements, right? But, but what happens is people look at their equity sometime in the future and they're like, wow, I got a lot of equity on that. I must have appreciated a lot. Oh, and the debt was paid down. That's nice. But, but what you really should be not, but, but in addition, you should be thinking if I, let's say I'm cash flowing on an investment property, let's say it's $1,500 a month
net. But every loan payment I make at this point in the amortization schedule is $1,000 is going to principal. That's not cash flow. So you don't call that cash flow. But cash and income aren't the same thing, right on an accounting basis. So if I'm getting $1,000 of equity on that payment, plus $1,500 of cash flow, I'm getting wealthier by just by owning that property in that month, before I include any appreciation and before I include any tax benefits, by $2,500 a month. I get the net cashflow of 1,500 plus the new equity of $1,000 by paying down that liability. That's very, very real wealth.
Rachael Van Pelt (10:16.606)
Yeah, that's really impactful. I love that. Thank you for breaking that down. And if that property also doubles as a vacation property, that adds value to your lifestyle even better, right? But some people will say, well, that's far-fetched. It seems like having your cake and eating it too. Can you break that down for us? can we really make money on a vacation property
Brady Mullen (10:38.521)
You know what I, what I think is you said the words that I love to say about that particular investment strategy, having your cake and eating it too. And when somebody, when somebody says that to me, that that's, that sounds too good to be true, or that's like having your cake and eating it too. My response is, well, isn't, don't you want to have your cake and eat it too? Like if there was a way to do that, wouldn't you want that? That doesn't mean it's impossible. It's like amazing. So now it's true. I will say just, just to, just to be, uh, I don't want to say transparent cause it's not like I would be otherwise.
But just to give the full picture here, if you buy a property, I always use the example of North Carolina when I talk about this, because that's where I have family memories and I like to go there. But if I want to buy a beach house, say in North Carolina, because I want to spend time there with my family, but I'm going to rent it out when I'm not there, there's a lot of reasons to do that, not just the investment, but also if you're renting it out when you're not there and you have a property manager making sure that it's cleaned every time somebody moves out, that's good for the property. It's sort of like a car. You don't want a car sitting in a garage for 20 years and doing nothing. That's not good for the machine and houses work the same way. So it's a good way to keep the property maintained, but also it generates income, of course.
And you can very easily run calculations to show, hey, based on the, my expectation of cash, which we can very simply underwrite, there's tools all over that give us the data that we need based on my investment of cash and what I'm expecting in, you know, modest expectations for appreciation, some debt pay down, some, some tax benefits and some income from the property, what could I expect that to be worth to me in the future? And if we count all four of those sources that we talked about earlier, the debt pay down, the appreciation, the cashflow and the tax benefits, you can calculate an annualized rate of return. And it's very, very common, we do it all the time to see rates of return with conservative expectations being in the 13, 14, 15, 16% range.
Rachael Van Pelt (12:30.53)
Wow.
Brady Mullen (12:31.193)
And that might be money that you might have considered putting in a retirement account somewhere. And I'm not recommending that you don't do that. I think it's smart to diversify. But the thing about the property is you're having your cake and eating it too. If you can get a rate of return on that investment property that you would love to get in your retirement account as well, but you can also build the family memories in that vacation property, why don't you do that? That seems like a fantastic way to live the one life that you got.
Rachael Van Pelt (12:55.254)
That's right. And greatly increases our healthspan, doesn't it? I mean, at my age, I've started to value that time with loved ones, I think way more than when I was younger. I mean, there's only so many family vacations that I'm going to get to enjoy over X number of years. And so, and we all have competing priorities, right? We get busy, but we certainly crave opportunities to get together and create those memories.
Brady Mullen (13:26.057)
Have I told you that story about the estate planning attorney friend of mine that I know that talked about the vacation property for his clients? Yeah, I find I've told this story, at least 100 times. That's a conservative estimate. And I still get goosebumps when I say it. I just got him because it's such a powerful image. And one of the things I like about this particular friend, he's one of these guys that works in his field for all the right reasons. He's very compassionate. He's really trying to help people have the life that they're wanting to have, right? It's a quality of life question. So he tells this story and he says, this is a bit of an avatar, but I have a conversation like this very often with clients. So imagine somebody who's 65, who's built a business and sold a business and they're doing okay cash wise. They're not super wealthy, but they're going to be okay in retirement by most conservative estimations.
And I'll say to them, Hey, look, I've known you for the last 15 years. I knew you when you were in the business, you sold it. Congratulations. That's awesome. Um, you've talked from the moment I met, you've talked to me about owning a vacation house in North Carolina where you could spend time with your family. Why don't you do that? What's, what's, what's keeping you from doing that?
And they'll usually say something like, well, what would I do that with? I don't feel like I'm comfortable enough or wealthy enough to do that. You know, I've got this money that's been set aside for, um, you know, my income that I need, I've got this money set aside for for, you know, the kids for education or whatever, I've got these, my plan all set out, I don't feel like I have an extra couple hundred thousand to go buy an investment property somewhere or a vacation property.
And he'll say, now in his example, he was talking about reverse mortgages, but you don't have to use a reverse mortgage. But I think it's a decent idea. Reverse mortgages are so poorly understood that they're actually way more flexible than people think. But he'll say, have you do you know how reverse mortgages work?
And they'll say, Ooh, reverse mortgages. I heard from, you know, somebody made fun of those on some movie that I saw. So I don't really want to do that. And he's like, I don't know. You need to understand from a licensed individual, actually how those work. But here's how this works. He says, before we talk about this, think about this.
So here's the story that he tells that gives me goosebumps. He says, you're 65 years old. There's going to be a time in your life where instead of bustling in the kitchen on Thanksgiving, you're on the couch and your, your son or daughter stops by to see if you're warm enough. And they make sure your blanket situated. And they tell the kids, hey, don't hop up on grandma or grandpa's lap anymore. Like that's, that's a little rough for them. You're not reading stories anymore. That's going to happen eventually to all of us, unless we die suddenly, right? We're going to decline. That's just, that's the human condition.
So he says, now let's say just for the sake of argument that happens at age 80. You're 65 today. If that happens at age 80, you've got 15 Christmases left with your family in that where you're making those kinds of memorie. 15 Thanksgivings, 15 anniversaries, or whatever it is that, like when you can count that, and when you can see that number in your head, it gets really visceral and real for people. And they'll say something like, wow, that sounds, yeah, what did you mention about the reverse mortgage? And he doesn't sell reverse mortgages, by the way. He doesn't have any financial interest in helping them other than just helping them because he's trying to be an advocate for them and be a part of their lives.
And he'll say, if you take a reverse mortgage out on your current home, so you can't do a reverse mortgage on an investment home, it has to be on your primary residence, that's the way they work. But if you use a reverse mortgage on your home, let's say your home is worth $800,000. If you take out 250 or $300,000 on your home in a reverse mortgage, and you use that as a down payment on that vacation home in North Carolina, has your equity position changed in real estate? No, you have the same amount of equity total but now you have it you might even argue that you've got a better position because you're now diversified in two markets instead of one but your the total amount of dollars has barely changed.
The only difference I guess there's the cost of getting the reverse mortgage in the first place so there's that slight difference it might be you know like $10 or $20,000 reverse mortgages have an extra expense that other mortgages don't it's an insurance policy we can we don't need to talk about that today but the nice thing about a reverse mortgage is it's very flexible it's a mortgage that you can make any payment you want on it including zero
So you can pay interest only if you want, you could pay interest and principal, you can amortize it and get it paid off over time if you want to. And if you don't want to make payments, the interest will just accrue. It's super flexible. But his position is, okay, if you take this reverse mortgage out, you've got the same amount of equity in real estate. And all you have to do on that property in North Carolina is earn seven, seven and a half percent rate of return on your investment, which is actually very simple to do on real estate. That's one thing that I'm good at showing or I'm good at helping people underwrite that.
Say if we can earn just 7%, you're probably more likely to earn 13 or 14-ish, you know, when you consider all those four factors. If you just earn what this is accruing at on your reverse mortgage, if you never make a payment, then your equity on that property is growing while the value of your reverse mortgage is growing. Those two things offset each other on a balance sheet and nothing has changed. Your balance sheet doesn't change as you do that. And you have that property where you're building these memories with your family and your spouse or yourself, like all the good things that you're imagining happening in that property, that's now available to you. And you've been sitting on that wealth the whole time. It's in the home that you live in. And if you earn 12% on that investment in the property, now remember when I say 12%, I'm talking about the income that it could generate, the appreciation, the debt pay down and the tax benefits. So all those earning 12% is very viable. If you earn 12% on that, you're actually making more money on that than the reverse mortgage is costing you that's improving your balance sheet when that happens.
Now if you make less than seven or whatever this reverse mortgage is growing out, then that would cost you something. But that still might be a viable option for somebody who's like, I really want that in my life. I want those last 15 Christmases with my family in the condition that I'm in now and not at age 80 or whatever it means just going to decline. I want to have that and if I end up making a little less over there than I would in paying on the reverse mortgage.
I'd be okay with that because what I bought with that expense is something I value very greatly. And so he encourages people to consider that again, not because he has any kind of financial interest in doing so. But I think that's a brilliant way to think about it. Like, what's the point of saving all this money and making all these sacrifices throughout our lives? If we don't do something about it to enjoy and to and to improve the lives of ourselves and those we love there's that's the whole reason you did it in the first place.
Rachael Van Pelt (20:01.226)
That's so true. And sometimes people think, well, you know, I want to leave money to my kids or my grandkids. But what if you're leaving these memories, these wonderful memories, and you can have your cake and eat it, too? You have both. You you have this property potentially that you can leave them down the road. And in the meantime, you've gotten to enjoy you've got that connection with family over those 15 years.
That's a wonderful story. Thank you for that. But what I hear from a lot of people is, well, if I buy a second property and I'm only renting it out for part of the year, I'm going to have negative cashflow. I'm not really making money. It sounds like from what you're saying we've got other checks and balances. We've got other ways that we're making money.
Can you talk about that? Is there a situation where a negative cash flow would still be a good investment?
Brady Mullen (21:01.545)
Yeah, so here's what I'll say about that. I don't want to trivialize negative cash flow. Obviously, positive cash flow is better than negative cash flow. So there's a couple ways to think about it. First of all, if I'm negatively cash flowing on a property on average, say $300 a month or whatever, but my mortgage payment is paying $430 a month toward principal, I might be negatively cash flowing, but it's still positive wealth creation.
So when you look at, again, cashflow is only one of those four elements. So when you add that all together, if that part is negative, but the other parts are positive, you can still have a positive rate of return. But again, I don't want to trivialize negative cashflow because you still need to be able to make that work. But if you're in a comfortable situation where you can afford a couple hundred dollars a month of negative cashflow in order to live that dream, then that doesn't mean your investment is losing money. It just means you're investing more into it.
So another way of thinking of this is if you buy a property in a resort area, so you and I are both in the on the Front Range in Colorado, so Denver , Boulder area. And if I wanted to buy something up in Winter Park, which is one of the ski resorts up the mountain, I'm probably not going to cash flow on that property if I only put 20% down because they're very expensive. They're really high demand. There's controls in there that I mean, it's just those just don't cash flow really well with 20% down. But you might look at that and say, well, if I'm going to buy something for 20% down, and it's not cash flowing, but my overall rate of return might still be positive. It doesn't feel like that if I'm negatively cash flowing. But you have to think of negative cash flow for what it is. I'm still buying something because I didn't buy it cash. I didn't buy 100% of it. I bought 20% of it if I put 20% down. So I have to think of it in terms of the tenants are helping me buy that asset that is that's really nice. And if instead of leaving it empty, except when I'm not there, I'm collecting some money, they're helping me buy that asset.
So maybe another way to think about that too would be like, by the way, Rachael, you and I, everything we pay for is negative cash flow. Right? If I go to a restaurant and I buy a steak, and it costs dinner with my wife and me on a date night costs 150 bucks or something like that. Is that negative cash flow? Absolutely. Now you might say, well, that's a luxury. You don't always have to do that. Well, that's true. But also if I buy fruit and vegetables at the grocery store, that's negative cash flow. If I put money into my 401k or into other investments every month to save for the future, that's negative cash flow, but I'm buying something with that. And the same is true if I'm negatively cash flowing on a property where I'm getting equity, I'm getting some of that paid for, I'm still buying that property because some of that payment every month is principal. So that isn't to say that negative cash flow is always fine, you still have to be able to afford that and you want to calculate that. But it doesn't mean you're getting a negative rate of return. And it doesn't mean you're not buying something valuable.
And then the last thing that I'll say about that is in the example that I used about maybe using a reverse mortgage for people whose wealth is sitting in their home, and they would like that to be in two properties instead of one. If that property is slightly negatively cash flowing, then just put more down. Right. And if you're not comfortable with that, you don't have to do 20% down. You could do 35 or 40. You can back into that number. So in that example, if I took $300,000 out with a reverse mortgage, and if I buy a $1.2 million home with that, I might not be cash flowing positive. So I might say, well, I'm going to look in the $800,000 range so that I'm putting a higher percentage down so that cash flow is neutral or positive. And also remember that cash flow increases over time. So rent and the market rates will go up. So even if your cash flow neutral today, or even slightly negative, that will swap over time.
Again, this isn't me making a broad recommendation of saying, hey, a negative cashflow is okay. It may not be for a particular individual. You still have to manage the cash, but that doesn't mean your return is negative. So it just makes sense to get professional underwriting and opinions about it, because you want to run all the numbers, not just positive or negative cashflow, that's not enough.
Rachael Van Pelt (25:10.482)
Yeah, well, you're so good at that, running those numbers. And that's great because a lot of people that I talk to, they love the idea. They love the idea of having maybe having a sunbird or snowbird lifestyle where they split their time between a couple of properties. We talked about having a property where you could have family get together for Christmases or whatever. But a lot of people just want to split their time over a couple of properties, enjoying their favorite climate year round, that sort of thing. We definitely get a lot of that in Colorado. What are some other ways we might easily build our real estate portfolio if we aren't necessarily wanting to go the vacation property route? I've heard you talk a bit about keeping your first home when you upsize. Can you talk a little bit about that?
Brady Mullen (25:58.849)
Oh, I love that for two reasons. One of them is an evergreen reason. And one of them is we're in a situation now where this makes a ton of sense. And we will be for the next handful of years. So the first idea is that if I'm in a house that's okay, but I've kind of, this is really common right now because people don't want to get rid of their, you know, two and three quarter percent interest rate, right? I'm in a home, it isn't my dream home. Maybe I've, maybe it doesn't have the amenities that I want or I bought it when I had a big family and certain things were important, but they've moved out and that's not my main concern anymore. Whatever reason I want to move, but I don't like getting rid of that 2.75% mortgage. That's a real valid concern because a 2.75% mortgage, as far as I'm concerned, that's an asset. You're not going to replace that anytime soon. That's an amazing financial thing that you've got in your tool belt. But if you keep that property as an investment and then move into another property, you can keep that 2.75% mortgage working for you.
Now what I'm hearing, I mean, I'm, obviously we're recording this and people will listen to it later, but I can hear thoughts of people saying, yeah, but I need my equity in my current home to buy the next one. Well, what's really interesting is you can access that equity without selling the property. You use a second mortgage or a HELOC. So if I, let's say I own a property worth, let's call it $800K again for simple math and let's say, I owe $500K on it. And I've got a 2.75% mortgage. So I've got about $300,000 of equity. I can access that 300 by selling it and then taking that equity and buying a new home. But I don't get to take all that equity with me because there are costs in selling a home. There's Realtor expenses, there's title expenses, there might be some things to upgrade before you sell it or might be concessions on the inspection and stuff like that. So I'm not going to take 100% of that with me. I might take, I might give up about 7% of the value of that home in cost to get rid of the property between all those different things.
But instead of giving up 7%, if I if I don't access 10% instead, because most second mortgages or HELOCs will only give you up to 90% of your equity. So you're not taking as quite as much off the table by financing that difference as you would be by selling it. But you're not getting rid of the asset. You just don't put it in the bank. It's still there. It's still your asset, but it's in that home because you never sold it. And you don't have the fees for selling it because you never sold it. So you access almost the same amount of money through financing like a second mortgage or a HELOC. Now that's going to be a higher rate than your 2.75%. But you don't want to refinance out of that. Leave that alone. Like don't touch that. That's an awesome thing.
And I like having the debt separated anyway, because then you can attack them in the order of priority. Right. If I refinance the whole thing into a 7% mortgage, my blended rate might be OK. It might be similar to a blended rate between a 2.75 on some and a 9% on others with a HELOC or something. But then I can't attack the 9% first if I have it all in one loan. So I do it through a second mortgage or a HELOC, I can attack that higher debt loan or the higher rate loan if I want to. But the cool thing about this is what you've done is you you've turned a residence into an investment and the very valuable thing in that strategy is that you get to use residence financing on an investment property. So as lenders, we're always looking at if somebody's buying an investment property, there's just different underwriting requirements. They gotta put a lot more down. It's a higher rate if you're not living there. But you already have that 2.75% mortgage in there because that's where you were living. That's residence financing. It's better financing. It's also better because it's 2.75 and you're not going to replace that anytime soon.
Rachael Van Pelt (29:39.478)
Wow, yeah, those less than 3% mortgages, they truly are an asset, aren't they? As is having any equity that you can access through a HELOC or something, it's a major asset. We definitely want to be leveraging those as we up-level in retirement and build that nest egg. Yeah, so that's a great idea for buying that next property and keeping the old one as a rental, I love that.
Brady Mullen (30:08.749)
Yeah, and you compare the you compare the situation five or 10 years from now. If you just sell the property, take the equity and buy the next one. Yeah, you've got to say you've got that property that you wanted. Great. Nothing wrong with that, by the way. But if you've kept the property that you're living in, you've accessed almost as much equity and use that to get your house five or 10 years from now. The difference is like hundreds and hundreds of thousands, like multiple hundreds of thousands of dollars difference by keeping that versus selling it to move up.
Rachael Van Pelt (30:38.678)
That's such a great strategy. Yeah, I wish my husband and I did that when we upleveled to our current home and we wish we'd have kept that last home.
Brady Mullen (30:48.079)
We could do a really, really long show if we talk about the choices that we regret that could have been better.
Rachael Van Pelt (30:51.526)
... the things we wish we did. But that's why you're here. That's why we're talking about this because I love how dedicated you are to empowering people to make great financial decisions and everything we've talked about today. I know you've created some great videos on the topic that take people through these numbers. In fact, I'm going to make sure that I share those links in the show notes below so people can check those out. But if someone is thinking about loves one of these ideas, loves the idea of of keeping their current home when they upsize as a rental property or buying that second vacation home to create memories with their loved ones. How can people best find you, Brady?
Brady Mullen (31:35.541)
You can email me at Brady.Mullen@almortgageinc.com. Or we can put some contact info in the show notes that people can call me or, you know, we're online, all that stuff. My passion isn't so much to convince people to make certain choices one way or the other. I just want people to make informed choices because there's so many there's a lot of there's a lot of moving parts. But you know, somebody who's been traditionally trained in finance and who can understand and project those things and then play with different variables.
So we can answer questions like, what if it doesn't appreciate what we're expecting? Or what if it's better? What if it's worse? What if this is different? What if that's different, then we can stress test that and if that way when somebody makes a decision. So if we put that in front of somebody and they look at it, and they're like, okay, I understand this completely now, that's great. But I've decided not to keep my home as an investment for one reason or another, then my position on that is they've made the right decision. Because as long as it's an informed decision, they're the only one qualified to make it. I don't want to make the decision, I just want to help them see the financial impact of those choices.
Rachael Van Pelt (32:35.91)
Absolutely, yeah, giving people the tools that they need, empowering them to make the right decision, because there isn't a one-size-fits-all approach for sure, but definitely we're all about making sure that people are mastering their healthspan, their wealthspan. What good is staying healthy if we, you know, can't support the lifestyle we want and create memories with those family members or friends or whoever we want to create memories with?
Brady Mullen (33:00.729)
Yep. It's a lot more exciting to stick around if there's stuff we're sticking around for.
Rachael Van Pelt (33:05.53)
Absolutely! Well, Brady, thank you so much for being on the show today.
Thank you all for joining us on Next Act Ninjas. Be sure to share if you have stories about rental properties. We'd love to see your comments below in the show notes. And don't forget to subscribe and share this podcast. It really helps us grow our tribe. We want to keep empowering more people every single day.
Until next time, Live Well, Love More, Age Less, my friends.