My Rich Nerd,
A recent guest on our live show bought an Airbnb and is now having regrets. Let’s jump right into it.
The Stats 🔢
James is 23, living in California, pulling in about $13,000 per month after taxes through solar sales — which is FANFREAKINGTASTIC. His monthly expenses are $3,000, which means on paper, he has an INSANE savings rate. He’s built up $160,000 in assets across home equity, stocks, and crypto. Sounds solid so far, right?
The Problem 🚨
He has $600,000 in debt.
He owns a short-term Airbnb in Utah that he bought two years ago through a family connection (shoutout UNCLE), and he recently purchased a Tesla Model X. When we laid everything out on the screen, he looked at the total and said:
“The 600K in debt is NUTS.”
Mortgage: $547,000 at 6.7%
Auto Loan: $51,000 at 7%
That’s a heavy load, especially at 23. His main concern is that the Airbnb has slowed down. Whether it’s seasonality or broader market softness, the cash flow isn’t as exciting as it once looked on Zillow projections. Month after month, that residual mortgage payment is starting to feel heavier. And for the first time, James is wondering if the “go big” move at 21 might have been a bit premature.
The Patch ✅
Version 2.0 of James’ finances is as follows:
Auto Loan 🚗
His $50K Tesla Model X will actually cost him over $800,000 after 30 years. This is the power of compound interest, investing early, and being frugal in your 20s.
The Rich Nerd way = stack appreciating assets in your 20s, not depreciating ones.
Stop all investing (beyond employer match) and pay off the car ASAP, or my recommendation: Sell and get something cheaper (sorry not sorry Elon).
Airbnb 🏡
I can't stand these "short-term rental" gurus on social media selling unrealistic "passive income" nonsense. Real estate—whether short-term or long-term rentals—is not passive or risk-free. James, I, and many others can attest to this.
It’s tough to say, but this could be a temporary slow down in the market. Regardless, he needs at least 6 months of operating expenses (mortgage, interest, insurance, etc) for this Airbnb. This will help reduce this “vacancy anxiety“ he’s feeling.
He could explore a 1031 exchange into a long-term rental for more consistent cash flow. His job title will, however, change to “landlord”, not the most glamorous job.
Repeat after me: “You do NOT need real estate to build wealth.” There is no shame in selling and investing in the stock market. This is how my wife and I (and many others) have become millionaires.
He pushed back with: “But having a ski chalet for the homies and me is sick.” This is the same logic as someone buying a pickup truck “just in case” they move out of their one-bedroom apartment and might need the truck bed… or to go off-roading that one time to impress a date (not speaking from personal experience, obviously). You don’t need to own the truck. Just rent a damn truck for the day.
$60,000 Mistake 📉
Watch the full video to hear how James also lost $60,000 in one day (using a method you may have used before):
Talk soon,
-Your money senpai
