29. 2008 Housing Crash: Mistakes That Nearly Cost Her Everything with Michelle Meyer

What if the biggest financial mistake of your life could become the foundation for your freedom?

In this episode, Michelle shares her raw and unfiltered journey through the highs and devastating lows of real estate investing—from buying her first home with just 3% down to nearly losing everything during the 2008 Financial Crisis. What started as a dream fueled by refinancing and easy access to equity quickly spiraled into overwhelming debt, risky loans, and hard lessons about trusting the wrong advice.

She opens up about using her home like a “checkbook,” navigating an interest-only loan, and the moment she realized she was $100,000+ underwater with no clear way out. But instead of giving up, Michelle fought to rebuild—renting rooms, negotiating with banks, repairing her credit, and slowly regaining control of her finances.

You’ll hear how she turned survival into strategy—leveraging tools like the 1031 Exchange, embracing house hacking, and building a portfolio of duplexes that now generate consistent income. Today, she’s on the verge of early retirement, proving that even the toughest setbacks can lead to long-term success.

Michelle gets real about what she wishes she knew back then, the importance of financial education, and why discipline and sacrifice are non-negotiable if you want to build wealth.

This episode is a must-listen for anyone who’s made financial mistakes, feels behind, or is afraid to start—because Michelle’s story proves it’s never too late to turn things around.

Ready to rebuild smarter and create real financial freedom? This is the perspective shift you didn’t know you needed.

Connect with Michelle:
Facebook: cachetona13@hotmail.com

Transcript

SPEAKER_02 0:04

So I started to realize the mess I had made. And I called the bank and I'm like, what is my option? Like, you know, it's gonna be three years and no time. Two had already gone by. And what is gonna happen? So I started seeing all the people losing their houses, and I'm like, oh my god, I made a mistake. Like, this is really, really bad. I can't afford this.

SPEAKER_01 0:30

Imagine it is 2008 and you did everything the gurus told you to do. You pulled out all your equity, bought a second property with an interest-only loan. You felt like you were on top of the world on your way to becoming a big-time investor. But then two years later, you're $100,000 underwater and the bank was ready to take everything. This is the story of how Michelle didn't just survive the crash, but how she rebuilt a portfolio that actually pays for her life. Michelle's journey is a powerful testament to resilience and a house hacking mindset. She arrived in the US from Colombia at age 18 with only a suitcase, eventually purchasing her first home in 1999 with FHA mom. Good morning, Michelle. How are you?

SPEAKER_02 1:16

Good morning, ladies. I'm doing very well. Appreciate your invitation.

SPEAKER_01 1:20

Yes. On this website, we wanted to feature you because we have not been able to find somebody that's gone through the 2008 cycle of real estate, the big crash that everybody still has to be casey about. I know that your story started pretty much before that. So can you tell us a little bit about how you came to the realization that you wanted to invest in real estate?

SPEAKER_02 1:43

So it's just recently that I realized it's in my blood. It's what I saw since I was little. My grandma, my mom's mother, had a house, if you could call it that. She's very poor. They had to abandon their country home that her husband had left to her after he got murdered. We lived in a very violent area. And back when that happened, it was even worse for especially people in the countryside. So she built a little shack, really. It just had the foundation, brick, and a roof. And by the time I started to be aware of the world, I guess, she had put windows on it and a door. There was a couple of rooms I remember going into that had floors. The rest was all like dirt floors. And she rented by room. So we went to see her, and it was one room that she lived in. It was the bedroom of the house. And she had tenants, like families living in each room. So again, I'm this is like I'm, I don't know, early teen, probably even younger than that. Fast forward to 18, moved here, and all I could think of is my father strived for us to have a home. Somewhere where we could say, this is our home. It was his home. But he always said, you know, build a family, but you have to have a home first. So I did it backwards. I had my kid in 97, and it started to be like, come on, you have a kid now, you gotta have a home. So I started finding out like how do you do it? I had a stable job, but it didn't pay a lot. I mean, it was probably a lot for the time, but I also had an underage brother and a two-year-old. So it was a little harder, but that also opened up the possibility. I don't even remember what my credit was like, but it opened up the possibility to get an FHA loan, 3.5% down. I had to pay my credit cards off. I didn't know anything about finance. I just knew I'd gotta check. I paid rent, I left enough for food and the different things I needed, you know, and that's all I knew. So I bought a little fixer offer. This is where I live now, in '99 for $180,000 with 3% down. And the stories about I walked out of there with money in my pocket. Same story. I put down, I don't remember like closing costs and the 3%. It was somewhere around like $10,000, $11,000. But then I had a credit card that they wanted me to pay. So part of the closing statement, there was money coming back to me to pay off the credit card because I was a condition from a bank. So yeah, so that was my start in the world of real estate. My agent said in 10 years, your house most likely will double in price. And back then, I don't even remember what interest rate I had back then. I didn't have that loan for that long because you start getting calls. Hey, you can refinance better interest rate, you can blow money. And that's where my stories started to get different about finances.

SPEAKER_00 5:24

Wow, that's crazy. I do want to say, because when you were mentioning about how you realize that it's been in your blood, you just didn't realize it. I had a similar thing too that I didn't realize, like, yeah, my family in Mexico, I my aunt, like that's what she did. She rented out the rooms, she rented out downstairs to like another business. I remember, like, yeah, what I would go visit, and I remember there would be like a some type of doctor. I don't remember what type of doctor, one time. And then another time was to like somebody that cut hair or whatever. And so now reflecting back, is like, oh yeah, I mean, it's no wonder that I went down this path. It's it's been there. So yeah, it's interesting how we just didn't realize it when we were young. And then now that we're in it, we're like, oh, that's what they were doing. So but yeah, but yeah, I'm glad that you were able to use the FHA loan. And dang, they they were already calling you for that. So what like I guess what led to you going to refinance, doing a cash, I'm assuming you did a cash out refinance to pull out equity, and what motivated you to go down that route and actually go to buy a property?

SPEAKER_02 6:37

Well, because since I didn't know anything about finances, and the real estate agent wants to sell you a house, right? They want their commission, they have to eat, right? It's their job. The loan officer wants to sell you a loan, and it's your responsibility to find out like what really are you signing? So the way I looked at it was kind of like, I don't know if everybody does it, but I assume that everybody does it. I pay a thousand dollars in rent. Why could I not pay in an apartment? Why couldn't I pay a thousand dollars in mortgage for my own house? But then you don't realize it's not just the mortgage, it the maintenance is the utilities, things go up. So when I realized that I was in debt because I couldn't afford some things that I was able to afford before, like daycare. Like my kid was two and I got a divorce. Well, not right then, but you know, eventually within that year, I got a divorce. And now I didn't have the partner that I could share daycare with. So, you know, all the expense, but utilities were higher too. So, like in the apartment, I was paying $45 per month for electrical, I believe. And then I moved here, and the first bill that I got for my electricity is $600. It was two months because I don't even, I probably pay the $45 every month, but then when I got the one for the house, it was $600. Of course, I didn't have neighbors on the side and the back. And so now my electricity costs more because my heat costs more. You know, it's a house that's got five bedrooms, no insulation, old windows, old doors. But I guess I was already watching home improvement shows by then, so I thought I was Bob the Builder and I could do this. So I didn't stretch myself too much because I was paid under what I was paying in rent, but my utilities went up, so I was spending more no matter what. And then the daycares would kind of put a nail on the coffin because I relied on my ex-husband to watch our son most of the time. I also had two brothers, they lived with us, and they would help, but it was not you know enough. So I had to start thinking, okay, now I gotta pay daycare. So I think I was paying daycare with my credit card and eventually using all the wrong things. Again, I should say young and numb, but I guess somewhat. Um, and I just I needed to make it happen. So I was renting rooms. That's another thing, like what helped me. I was renting the rooms. My brothers lived in two, one each, my son and I in the other. And there's two other rooms. I didn't charge too much because it was a pizza wrapper. When we moved in, we didn't have well, I pulled the carpet because I thought it was nasty. So I pulled the carpet. We just lived on the top floor. I think I before I got a divorce, I was able to replace a door. My husband helped, replace the front door because it was like the wind would come in through the door. So anyway, the refinance happened because at some point I get a letter saying, hey, you could be paying less because probably the interest was lower. And basically they say your house has appreciated and you can pull money out. So I did it several times before 2006. Just literally, I was using it as a checkbook. Any, you know, I would rack up my credit cards, sometimes being irresponsible too. Like, oh, you know, going on vacation to Disney World when my credit cards were about to explode. But my kid was about five, six years old. I wanted to show him, you know, it was time, right? I didn't have the money to do that. But yeah, now I know that. But back then I felt like I have the money, there's the credit cards, you know. So that's how that's how my refinance checkbook came about.

SPEAKER_01 10:58

Thank you for being so candid with us because it is, you know, what you recollecting basically is what you didn't know at the time what you were doing with the equity on the home, right? At one point. And like you said, you're getting calls and messages of like, oh, we're gonna give you money, just the only secure system would be your house. And then to somebody that doesn't uh understand exactly how equity works, then you're gonna be like, Well, this is like an additional perk to owning a home. But all of that racking up to 2008, what exactly happened at that age?

SPEAKER_02 11:34

I got divorced, I started dating someone else, fast forward a couple of years, and this person lived in Seattle. So I'm about 30 minutes north of Seattle. My work was in Seattle, he lived in Seattle, so I would spend a lot of time there when my son was with his father. Eventually we decided, okay, we're gonna move in together, but he doesn't want to be in Linwood, which is where I live, 30 minutes. He wants to be closer to downtown Seattle. We were in tech, not really engineers, we just like tech support. We made good money, but it wasn't, you know, like engineer money. And so I like the area, right? So I wanted to be closer to work too. So he says, But I didn't ever want to get married. I'm like, okay, that's fine. You know, buying a house will probably suffice again. My 20s were like I don't want a diamond, I want a house. Wild. Yeah, again, yeah. I don't need a ring, I don't need a uh a marriage, you know, party or anything like that. A house would be nice, and he made he made more money than I did. We didn't have combined bills or anything like that, accounts, it was separated because we really didn't live together. I I had my house, I just spent so much time over there. So I started looking at houses, and of course he made more money than I did, but he didn't have any savings, so he could pay a lot more. Rent in Seattle was a lot more than my mortgage, but he just didn't have the he he'd rather go on vacation, he'd rather live his life, so which again I I enjoyed. Obviously, I was with him because we were always traveling, we were always going places, and I wasn't increasing my debt. So I was you know, it was a good time. So I said, Well, how are we gonna buy a house? We need a down payment. So who has money? No, not me or him saved. So comes my next refinance. So I started finding out, like, you know, how do we make this happen? And so he comes home one night and he's like, Hey, you know, my friend, so and so, that was also my friend. We were just talking about this idea. A bunch of people are doing it, and he said he's basically refinanced his house, and he's gonna buy a bunch of houses with the money he pulled out and put as little as down as possible. And so basically, he was gonna turn, I don't know, a hundred thousand dollars into four houses, let's say. And I was like, huh, okay, that sounds like interesting. I don't know how to be a landlord, I don't know how to do anything, but that sounded interesting. So because we had talked about potentially buying a house, I was like, okay, well, I'm gonna refinance, buy this house with him. Now we're a team, and then whatever's left will put it into down payments for other places. And I started finding out about the refinance, and back then I went to different people because I wanted like, you know, who charges less for points. By then I knew like they charge you close costs or like points so you can pay less and pay less interest and all this stuff. And you know, I was very savvy by then. And what I didn't know is that I could afford a hundred percent loan on my house, and I could afford it because they were not going to basically they were just gonna charge me the interest. I was so excited, I was like, oh my gosh, I can't believe I can afford it. And then, you know, and of course, I'm not, I could say young and dumb, but I know what I was doing. I knew what I was doing, wasn't paying my loan down, so I'm asking questions like, but when do I pay my loan down? And in 20 years, because I think back then it was only 20 years. In 20 years, how do I what happens? Oh no, no, no, no. Well, you see how you refinance so many times? Well, same thing is gonna happen. Interests are gonna go down, you're gonna make more money from your job. So every question I had that made my mind doubt that I was doing the right thing, it just knew. But every question I had was answered, and I felt like, well, I'm not alone. You know, my boyfriend has enough. Like, if I get in trouble, that's what I thought, right? He was gonna pay that one and I'll pay my, you know, the one that I already that I already had that was gonna have a hundred percent loan. Well, an 80 and a 20. So I did it, I got the money, and I'm going and I finally found the house that I wanted. It was like the best school district for my son to go to. It was already comfortable, like it had been remodeled somewhat, but there were still things that needed to be done. So I was like, okay, I'm gonna I go again. I I still thought I was Bob the Builder right then. I'm gonna do that and fix it, and then by the time my son graduates high school, he was what nine by then. I'm gonna be selling this house, and then I have a bunch of money. So my boyfriend had cold feet, so he came up with it's too much commitment, like that's it's too much commitment. So I can't do it while I can, yeah. I was like, Oh, honey, sit down, and there's only payments, they were so low, and it was gonna be like that for five years. What can go wrong? I think back the moral of the story is I didn't know everything that could go wrong. The people that were advising me didn't have my best interest in mind, they basically had their job in mind, and knowing I knew what I was doing, but I just knew like I had to do it. Like once I commit to it, like I just have to do it. So my brothers were living in this house, and they could basically with the roommates, it could basically cover the payment as it was, but once I put the other 20% on it, then I was covering that payment. And then what saved me on this is that we were gonna put only so like 100% in financing on the first house, the other one, I think they were gonna do an FHA loan that was only three again, 3.5% down and interest only, or you know, maybe it was just anyway. I was gonna put as little as possible down and keep most of the money in my pocket. When the money hit my account, because I have an angel or several angels that watch over me, the bank said, We're not gonna give you a I don't know, let's say 90%, 95% loan. You have money to put down, so we're gonna ask for 20% down, and we can't close. And that saved me because this is 2006, right? So 2008 comes, the houses didn't go up the price, because they were like, you know, within five years, the houses are gonna go appreciate in price, and the interest are gonna go lower, you're gonna make more money, that's the story, right? And you're gonna be able to refinance, but interests didn't change, I think they even went up at some point, and then the houses were less, they cost less. So the house that I'm in right now that thankfully I was able to save, I had a loan for $360,000. And when all of this comes and like the economy is going to the tank, my brother loses his job. So he's like, Oh, I'm you know, for as long as I can, I'm gonna continue to help, right? But things were changing. I broke up with my, you know, again, I broke up with my boyfriend, so I wasn't getting that other mortgage paid for. So I started to realize the mess I had made. And I called the bank and I'm like, what is my option? Like, the you know, it's gonna be three years and no time. Two had already gone by. And what is gonna happen? So I started seeing all the people losing their houses, and I'm like, oh my god, I made a mistake. Like, this is really, really bad. I can't afford this. Painfully, I didn't lose my job, so I was I was in good good terms, at least I could survive. So, anyway, somehow I was able to rent all the rooms and be able to make the payments, but couldn't really do much. And those were interest-only payments. So the lady that was on the phone with said, This is not an official, like the bank is not telling you this, but if I was you, I would pick one that you don't want to lose and try to save the other one. So I started trying to save the one that I was living in because I was I had a 20% down. But so now the bank says you're gonna be able to do a short sale on your first house, but we're gonna list it for $250,000. And I owed them $360. That was that was uh pretty stressful. I was like, okay, what happens to the money that I owe you? That the rest of the money. Well, there's a program back then at that time that the money gets forgiven. So like the loan, the whatever I still owe them, they'll just write it off. But the IRS is gonna count it as income. They didn't tell me that, but I you know, again, at this point, I'm like, I'm calling everywhere I can, like I talk about my story, and then someone else says, Oh, this, do this, do that. And they said, Yeah, you're you're not gonna have to repay the loan, but the IRS is gonna take that as income. So the year that they write off the loan, instead of you making whatever you make in your um your job, you're gonna make 100 to 110,000 more that year, and you're gonna pay that tax. I could I was like, oh my gosh, that's like I can't pay that. Anyway, so eventually the house that I bought, the second house, interest went down a little bit. I don't even know how I was able to refinance into a fixed loan. So, like I'm skipping a bunch of a bunch of months because this is being forever, but I was able to somehow refinance that one, even though my credit had gone to the garbage. They gave me a lower rate, but it was a little bit of a lower rate, and then it was fixed, and I could at least afford the loan, right? Being principal and everything, I could afford that loan. So I rented it by room. At some point, I was even doing Airbnb on that in that house because it's about it's really like the the place, the area is really good. And then I moved back because I was renting it by room, I left it rent it by room and did like by the room Airbnb. And then moved back and talked to the bank and said, okay, I messed up. I know I messed up, but like my situations have changed. I am renting the other house, but I wasn't showing that in my taxes, so I couldn't even do that. So it was a mess. Like I didn't even know how to hire a tax pro or anything. I would just whatever 1099 I got from different vendors, I would put it in there, and whatever forms I would put it in there. So I moved back, and I think it was like 2010, 2011, that the bank said, we'll give you a trial. So now you don't you owe us. I had two loans, right? So I had one primary loan for $290 and a second loan for $60. So like maybe it was 70, 70. And that was with Washington Mutual. So Washington Mutual was going under. And they kept calling, like, you gotta pay this loan, you gotta pay this loan. I wasn't paying, I was wasn't making payments, so I owe them like a ton of money. So I said, This is my situation, and they said, Well, we need you to pay some. And I did get a settlement for that one, and basically I settled that debt, paying them partially. So I had been saving. So because I wasn't making payments on this house, the money that I would have paid to the to them, because I was renting my room, so I could pay, let's say my mortgage mortgage was $2,700. I was getting from rents, let's say $1,500 from the rooms that I was renting. So I would save that money instead of spending it, because I had by now kind of gotten a little bit savvy. So I'm like, okay, I'm I I spent too much. Part of it was for fixing the house, but a part of it was just me spending without education, I guess.

SPEAKER_00 25:06

Just hearing the story is so crazy. And the even crazier part is that you were asking questions like to these bank people, like, oh, okay, so yeah, so it's interest only now, but what about this at this time? And they just kept pushing it away, be like, uh, that's future Michelle's problem, and things like that. And then even when you were trying to like figure out how to keep the houses and everything, like they weren't even telling you about the taxes so you could properly plan for them or everything. It's just kind of like because you hear about like the 2008 and how these lenders and banks and whatever were just kind of like shady, and to hear it like it happening in your story, I was like, dang, they already works. I was like, they really didn't have like you said, they didn't really care about you and making sure that you were set up correctly. They just wanted their commission or whatever they were getting.

SPEAKER_02 25:56

Yeah. So I mean, the way I thought of it later, I was like, well, it's my responsibility, really. I just saw a way and without I shouldn't say without carry, but with just looking at what would do for me if everything worked out the way that it was being painted, I was just like, this is an incredible opportunity. And so I went for it. But I think everything would have been easier. And thankfully, I mean, by now I survived, right? But what I want to be clear in this is I knew I was making choices or I was making decisions based purely on what it does for me and not really educating. Like I had questions, but like I don't even remember what my credit score was back then. You know, maybe it was in maybe it was something that I knew at that point, but I had not taken the time to educate myself, truly educate myself. You know, back when this started, then we started getting these letters, and we do sign them now, right? Of like, go to this place to learn about house ownership, responsible house ownership. Go to this other place if you think you're gonna get in trouble because you're making an investment that you can't afford. You know, there's all these documents now that we can go and learn, but potentially I was all there, but I didn't go through. So the motto is check everything, be sure that everything people are telling you is achievable.

SPEAKER_00 27:39

So now you went through that whole situation of like over-leveraging yourself, and then now you kind of like scrambled to try to like stabilize everything. So now how did you go from going through that situation to then wanting? Because I'm a lot of people like you know, that went through something like that in 2008, they just like gave up. They were just, you know, that fear just stayed with them. So I want to know how, after going through all that, did you come back to real estate and was like, you know what, I'm gonna go ahead and try it again.

SPEAKER_02 28:17

So I ended up being able to save both houses. So they gave me like a trial period of the modification loan, and I was able to prove to them that I was gonna be responsible and pay my debts. So, fast forward to 2013, and I'm sitting looking at my credit. It was probably under 600 at that point. My debt to income was not even, I don't even think there was any ratio there. There it was, I owe more than than I could afford in three lifetimes. But I by by now I had someone helping me show all the income, whether it was from renting my room, Airbnb, I I would get a 1099, so I was golden there. But like helping me learn, like, this is how you report all your rent. This is how you know, so I'm reporting everything in my taxes, I'm learning little by little. YouTube becomes more relevant, other than for because I used to do YouTube for everything I did, install the window, install a door. A lot of the work I did in both of the houses, I did it. Like, unless it was, I think I paid a plumber to replumb some of the stuff, electrician, got stuff, but like everything else, I was like, there's YouTube. So I started also looking information up about finance. And yeah, so I started doing the taxes right, showing that I could pay, my credit started to go up. I got married again and to someone else, not not to the boyfriend that I had before. And then, you know, at that point things get a little less heavy, right? Because now we're sharing the expenses of the mortgage at least and the utilities. And so I started paying my debt, like paying debt, paying debt, paying debt. And in 2020, is it 20 or 21? 2021, I think, I get a call from my tenant. Because I had, you know, I started instead of renting my room, I rented it to a family, the second house. And they now had a contract. It was more, it was more uh like a business at this point. They called me and they said that someone had asked for my number because they wanted to buy the house and they felt uncomfortable, but they wanted to tell me that they gave the number to the person. And I was like, okay, well, I wasn't, I'm not gonna sell, but I think they in the moment they asked for like your rent and they said yes. Can I get the number for the landlord? They gave the number and they were like, Oh, we're gonna lose our home because there she's gonna sell. So I'm like, oh no worries, I'm not gonna sell. It's there's no way I was not making any money, but I was paying my bills, right? So I'm why why sell? Like, I don't need to sell until they tell me how much they're gonna buy for. I was floored because our area had gone through a and I knew that, I knew it, but it's almost like I don't realize the value of things until someone else comes and tells me. And the house had basically tripled in pride in the 18 years that I had it. So if I was gonna get a house in that area at this point, I couldn't afford it by like five to six thousand dollar payment compared to what I was getting in rent that was basically covering mortgage, lawn maintenance that was very kind of cheap, just so that the tenants wouldn't forget about the lawn in the front garden. And that was it. Like, I basically didn't pocket more than like two, three hundred dollars after all of that. So seeing how much money I was gonna get, I'm like, I don't think there was any question whether I want to sell or not. Uh that's a lot of money. So that's when I started thinking about real estate. Like up until the point, even though I had a second house that was renting, I was getting rents, and I had learned to do the schedule E and you know all the different whatever my tax software program does, and the account, the uh CPA does to confirm that everything is good, but I wasn't saving for repairs. Like I could, if I repaired, I had been living with only the mortgage debt since that happened back in like 2011, 2012, that I was able to save everything. I basically owned every debt that wasn't mortgage, and I was proud. I was like, this is like the best I'm gonna do. Like, I have no debt, I'm only going to spend every month what I can pay from you know 100%. So I could record miles to travel, but not getting debt, you know. So I was just proud of myself for being a responsible financial person. So I thought, you know, I learned my lesson, but I wasn't thinking like I could just like become HGTV worthy. I'm in real estate. So uh I started looking on YouTube, found the usual channels that we kind of end up finding when you're like, I'm gonna sell this house and I'm gonna have a ton of gain. So what do I do? So I'm like Googling, what do I do with this? Eventually find Dion, and he was having a live that day, and I just took off and drove two hours because that day he had it was a Tuesday, so he had his live Tuesday, and then at 6:30 or something, whenever the live ended, he had a meetup in Tacoma, which is about an hour usually, but at the time it's five five to seven, it's usually like a two-hour drive. And I started learning. I had by then learned what a 1031 exchange was, but I wanted to like has anyone done it? Like, how does it work? Like a real experience. What am I not seeing? This again, I I felt like from what I learned from 2006, 2008, you know, that that time is if it feels too good to be true, you need to like really, really research it because it's you know, follow your gut feeling, something may not be all that, you know, good. Thankfully, this was like this was, you know, time did its job, 18 years of appreciation and me working on my credit, paying down debt, all of that did the trick. And so even though I didn't think I was already like educated financially, I had picked up a lot of stuff out of the fear that I had gone through and the stress I gone through. The house was under contract for like six months. I had the tenants vacate, I give them back their deposit, even though the house they've been living there for three years, but the inscrow money was good. So I was like, even if it doesn't go through, I should be able to afford a remodel. No problem. Because again, remember, I didn't have savings for turnovers, I didn't have savings for vacancies, nothing. So somehow, again, I feel like there's a bit of block in my I know a lot of people don't like that idea, the you know, idea of being lucky, but I call it lucky because of what you've been learning. So it takes work, but then you're able to find those opportunities that maybe you didn't see before because you were not learning. Yeah.

SPEAKER_00 36:22

So what did you end up? Your strategy, you did a 1031. What strategy did you end up going for?

SPEAKER_02 36:29

So the house didn't sell. Oh. So this is this is the time when a bunch of houses, I think it was 22. I'm like, I had to go back to my closing statements, I guess. 22. The house was under contract. I got the earnest money, but the interest rates started to go up. And the builder, because it was a builder that was buying it to tear it down and put and put a new house on it on the lot, decided to just break the contract. Oh, again, and so because I had met Dion and learned what from him, and he was okay with yeah, hey, copy from my strategy. So I did it again, but again, now I'm like I am very adverse to having too much debt that it's not mortgage. So I did it and I refinanced my house again because I was thinking learning the 1031, I want to know debt on my investment. This is like as I'm learning, right? So I owed like 290, 280 somewhere around there, that was left on the house. So when you're buying, when you're doing a 1031, you have to buy a place that's at least the amount that you sell. And so what I wanted to do was basically buy the replacement property or properties, but then not have, like maybe have a hundred to two hundred thousand dollars in debt.

SPEAKER_01 38:01

That's it. For people that don't know, when you sell at investment property, you're gonna have to pay what it's called capital gains on that property. So for her to sell three times the price that she purchased for, that is a lot of gain. And that is a lot of capital gains that she may have to pay, for example, to the government that year that she files taxes. But there's a this is an exception on that tax code, then 31 exchange that says if she exchanges, like uses this money that she gained from this rental, and she puts it in a particular escrow process where she identifies in 90 days another property that she wants to purchase of the like same asset with the say about the same amount of debt that she had for the initial asset, that she can defer the capital gains from this purchase. So seemingly not losing any money to Accosam, deferring taxes to the next asset that she purchases. Yeah.

SPEAKER_00 39:08

I have a two-year-old, so then she'll you'll hear it. So I want to make sure that we get to your so what you're doing now, like what you're investing in now in your portfolio. What does your portfolio look like? What's your strategy, types of properties that you go with?

SPEAKER_02 39:23

Yeah, so right now I have three duplexes. The first one I bought when the house didn't sell because I had the money from the refinance and I knew I wasn't gonna just keep it in the bank. So I put down 30% on that duplex, and then the money that I had left from the refinance kept it. The next year in 23, the house did end up selling. It was rented for a year after the sale fell through. And so I sold it finally and then did do the 1031 exchange and bought two additional duplexes from you know the first one. I did the qualification, so like I sold as a for a hundred thousand. The two duplexes I bought for like one twenty. And so my debt did increase, but I covered so like I didn't have to pay any capital gain, like Lynn said. So now I have those three duplexes. One is going on three years, the other two going on two, and right now I just like I wish I had done it before. But uh right now, because I learned, right? So now I paid all the debts, I set aside the 15% for future, and then I have enough, like I'm still working, I'm still working my job, but what I bring home every month from my job, it's the same. Students say it's it's the same. It's how do you say I say I'm trying to think of like how do you do percentage? So it's about 50% more than what I bring. But obviously, I do make a lot more, right? But you know, they take taxes and they take my 401k and all of that. So that's kind of why I haven't pulled a trigger and retired, because even though like right now I rent rooms in my house, so my mortgage in my house, I still rent rooms, I'm sorry, but I don't like this is like me. I I love having people around, and so my mortgage is basically covered for even for my own house. So I save, save, save. My retirement plan is basically buy a house, move in, do a bird, basically is what I'm trying to do. Live there for two or three years and then sell. And so now that's another strategy, right? Of the real estate investing, where if you are selling your primary home and you live there for, I don't know if it's two or three years, I always get it messed up of the last five years, or if you just live there at least the two years, then you get to keep the gain up to 250 if you're single or 500,000 if you're married without paying for taxes on that amount. Anything above that, you'll pay taxes. So if you live in a house for two or three years, you're gonna have gain, but probably not $500,000 gain when you're married. So I figure basically that would replace my salary to make me feel a little more comfortable because I'm that's what's less left in me from back then. It's like I just gotta know I have more than enough before I take the step. Yeah, do you have like a timeline of when you want to retire? I'm thinking about pulling the trigger by the end of this year. I was thinking about like July, August time frame. Yeah, but uh the reason why is because I want to be a snowbird. Yeah, my boss says, you're too young to be a snowbird, and stop, like you're not retirement age yet. But I'm not that's okay. You can be a snow bunny, they're young. So yeah, I want to because all my family is either in Florida or in Colombia. So after 32 years of being here, all my aunts are aging, and I really want to spend time with them because I've missed them for 32 years. I I see them on vacation, or like if they come here, but they don't even want to come here anymore. They're in their 70s, so now they're like, Yeah, you come here. And so come like October, November. I wanna go to Florida, be there. My middle brother is there, spend time with him there. And then it's only a less than three-hour flight to my town. So from Miami. So that's what I want to do. So this year, you know, I I said I don't want to turn 51 and be a W-2 employee.

SPEAKER_01 44:13

Michelle, I want to ask you now in 2026, thinking about retiring this year alone, what I would just say to Michelle in 2013 that was struggling with all of this debt, trying to just catch up and pay their credit card, and barely learning about becoming debt free. Because I feel like there's a lot of people in that boat right now. A lot of people that may be watching that are Hispanic, that Latina they did think they can't. You know, I just went through some struggle. I just went through a divorce. I don't really have the money. I'm barely learning about being debt free. And real estate just even feels like so overwhelming. Look at the 2008 crash. What would you say to that person that's considering, oh, maybe I should learn about real estate or maybe real estate is for me? That's the answer, honestly.

SPEAKER_02 45:04

I don't know that none of us, unless we have like an engineer degree. And I think at the beginning I was saying, you know, I was in tech, but I'm not an engineer. I was just tech support. So while the engineers make huge checks, you know, huge salaries, when you don't make as much, you don't think it's possible. But just buying your first house and by now being responsible, I could not have imagined a better choice than to become debt-free, you know. And when I say debt free, I keep also saying, you know, I only have debt on my mortgages. More debt than I will ever probably pay off. But it's not debt that is depreciating, it's debt that is actually providing my way of living. So what I would say to them, keep doing, look around you, see, minimize everything that you don't think is necessary, try it for a period of time, two, three, four years. I think we try it for a couple of months and we feel too restricted. But in 2013, I never thought I could buy myself a vacation for 20 days, forget about my job. You know, I was thinking if I asked for a 20-day vacation, they're gonna let me go. I've been in my job for over 20 years, but still like I just like felt like no one takes more than two weeks. Well, because I felt like I I've done enough sacrifice, it's a sacrifice for sure, that if they said 20 days is so long, you we're not, you know, we can't allow it, that I could walk away from my job. It is worth it. It is hard when you when your friends want to go out and you know that when you go, you're not gonna drink alcohol. And so I got used to that. So I go out and don't drink alcohol because I know my bill is gonna be high. I'll get an appetizer because I want to spend time with my friends, I don't want them to think I can't afford it. They say that I'm a cheap person, but hey, I'm here laughing with you guys, and I'm still you know able to go out. So it's sacrifice, it's not buying the stuff that you want right now, but knowing that you will be able to not sacrifice in the future, so it is completely worth it for sure.

SPEAKER_00 47:36

That's so awesome. I really enjoyed your story, and one of the things that I kind of want to give you like props on because a lot of Latinas, Latinos, they're scared to take that step, and you just went for it. And yeah, even though like you you struggled and went through the whole 2008, and you took a little detour, I want to say, getting here, but you're still going to be able to retire earlier than the retirement age. So that's still an achievement, even though again you took a detour. And but all those skills you learned during the whole 2008 and before, like that's still, you know, skills that are useful and have been helping you to reach retirement earlier than what the normal American does. So I do want to give you props on that. And and I just want to thank you for coming on here and sharing your story. It's it's very inspiring. But I also want to give you a chance. I'm not sure if you're all on social media or you or do anything like that, and for people that want to connect with you, where can they find you?

SPEAKER_02 48:42

So I am on Facebook and also have Instagram, but I don't really post anything about real estate. I think mainly because where I'm from, it is I don't want to be too public, but I do have a I do have a channel. I wanted to, I don't have it public either. So no, I I don't think so. Like Facebook would be the best, a message through Facebook if anybody has questions. Uh if anybody is in the Seattle area and want to reach out as well, and you know, we do have meetups that I can give you to join and different things that would start to, you know, YouTube is a start, but then you start going to meetups and meeting different people that have different strategies that maybe make it easier for you to break into real estate. Yeah. So in in uh Facebook, I think I show up as Cachetona13. It's my obviously Michelle Meyer, but like my actual email is catchetona13 at hatmail.com that I signed up for in Facebook. Um, and I think that's how people can find me on there.

SPEAKER_01 49:56

So thank you again, Michelle, for coming on our episode. We really enjoyed talking to you today. Thank you, ladies.

SPEAKER_00 50:03

Yeah, again, all her information will be in the show notes in the description if you're watching on YouTube. And yeah, don't forget all the resources are available down there as well. But other than that, we will see you in the next one. Bye. Bye.