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Michael Quan retired at 36. With a full family that includes several children.

How did he do it?

Brian chats up Michael about his combination of real estate investing, entrepreneurship, stock investing, and avoiding lifestyle creep to keep his living expenses low. Because anyone can retire young, if they keep a high savings rate and invest the rest.

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live off rents podcast transcript

Brian Davis: Hey, guys, happy Tuesday afternoon, Brian Davis here from Spark Rental and I am joined by Michael Qaun from Financially Alert. Michael, thank you so much for joining us today.

 

Michael Quan: Thanks so much. It’s a it’s an honor to join you, Brian.

 

Brian Davis: Well, we are super excited to have you, Michael retired at thirty six, which is just an incredible feat. And compounding that is the fact that he is married with two children, which a lot of people in the FIRE community are skeptical about people retiring early when they have a family. But you managed to do it. And not only did Michael retire young, but he’s also heavily involved in real estate investing, which, of course, we love around here is Spark Rental. He is the founder of the website FinanciallyAlert.com To reach financial independence and retire early. And he just published a new book, Fire Planner. So, Michael, let’s rewind all the way to the very beginning to talk about where you started out. You started your own business in your early to mid twenties. Talk us through the early days how that came about and what that looked like.

 

Michael Quan: Absolutely, Brian. So really quickly, just to give you a little backstory, I grew up in a family. My parents got divorced when I was about 12 or so. And during that time, my world kind of just got shattered a little bit. And it really felt like I was going from kind of lower middle class to just like poverty. I was not in poverty, but it felt like it was, like all of a sudden the house got shrunk down in half and like it really felt like I was scrimping and having to do things that other people weren’t. And I noticed that a couple of uncles didn’t have to go to work. I’m like, why do my parents have to go to work respectively to each of their jobs and have to work so hard, so long? And so I was curious. I looked at these two uncles and it’s like, what are they doing? Because they never have to go to work? I realized at some point that they were financially independent. So just way even back then when I was like 10 or 12, I kind of noticed that there’s something different about them. So fast forward into college, I was like, you know what? I really want to choose a major that’s going to allow me to create a business and then be able to create financial independence myself. And so that was kind of like the beginning thoughts at least, of creating this sort of a business that can fuel that lifestyle. When I got to college, I didn’t know what I wanted to do.

 

Michael Quan: I was like a lot of college students. It’s like, well, I’ve got this degree. But now what? So what happened was I was lucky enough to graduate right at the end of the dotcom boom. So this is when all the dotcom companies were getting money left and right from all these different financing companies. And like Amazon and Webvan and all these crazy names are just popping up out of the Yahoo! Excite and Google at the time. I caught the tail end of this and I ended up getting the job and it was only because I was a gamer. Because I was taking apart computers and whatnot, there’s a natural transition to being able to help infrastructure and support PCs and servers and networks. That’s how I ended up in the IT business. And then unfortunately, 9/11 occurred shortly thereafter and it essentially imploded the entire economy. My company that was a startup in that space, unfortunately, was hit really hard as well. And so there was a series of layoffs, probably about six or so that I experienced. And it was just an awful time because I was in IT. I had to actually disable my friend’s accounts when they were getting laid off, they’d come back and that actually locked them out of the computers and make sure they couldn’t get access to anything they had and just to see that look on their face on the defeat. But just so heart shattering. And it’s like, you know, this is terrible.

 

Michael Quan: I need to do something. I need to do something different. And do I want to stay around for the seventh round of layoffs? Because guess what, I’m potentially on the chopping block at some point. What happened was I grabbed a couple of friends and I brought them into my office and said, you know what? We’re the only profitable division in our company because we’re going out there supporting infrastructure for other companies. And you know what? If we did this on our own and not just sit around and hope that things are going to work out. And so that’s exactly what we did, Brian. I was about twenty five at the time. We ended up leaving. There was four of us at the time. We just started up our own infrastructure support company and we just got down in our hands and knees and literally were plugging in cables, setting up computers, setting up servers and really putting a ton of sweat equity into this startup. We literally only put up two thousand dollars of cash each.

 

Brian Davis: Oh, wow.

 

Michael Quan: Just really grounded out for ten years. And during that time, you know, things fortunately picked up slowly over time. We were able to grow that. And by the time we were done at the end of the ten years we had grown to a couple different sites. We had a site in San Diego and then one in Chicago, and we had a decent client base. And then at that point we decided to take an exit only because the way that the computer industry was going, everything was going to the cloud.

 

Michael Quan: So we had to decide, do we want to it again, or do we want to potentially merge with someone else and maybe take some equity off the table? So that’s what was the ultimate stimulus for exiting the company. Then I took some of that equity and put that into real estate.

 

Michael Quan: So that’s kind of like the whole engine, right? I created the business, spent a lot of time focusing on that. And I’ll just tell you really quickly, I mean, you hear like a tech startup. I wasn’t like this software genius or anything that got this crazy unicorn exit. Right. So I was getting a salary from my business, but it was not like huge salary. So some years I might have been 70 grand, 80, 90 at the end, maybe just finally hitting six figures, but not even that much. And then I say because you could do the same thing in a corporate position. I really want to share with people that I’ve been able to see early retirement and financial independence is not necessarily a function. Sure it could help. There was definitely some equity upside to that. But it’s not a requirement. So, you know, that’s what I really like to share with people in terms of being able to go out there and achieve fire. It’s possible for anyone in any situation.

 

Brian Davis: Well, so there’s so much that you said there. First of all. I love the way that you open a story talking about your your uncles who didn’t work when you were growing up, and you’re sitting there scratching your head as a little kid. Why don’t they work? You know, it’s kind of a step toward that kind of origin story, right? Yeah. It really helps when you have role models in your life that show you that you don’t have to follow the straight and narrow path that so many people follow. And I also love that you said that you never had a massive income. You weren’t one of those guys with like a two-hundred and fifty thousand salary for year after year after year that you can just plug all that into investments and then retire young.

 

Brian Davis: You had a middle class salary for your entire career and and still manage to reach financial independence and retire at thirty six. You had a payday at the end when you sold your business, but it sounds like you bootstrapped the company. It sounds like no venture capital or anything like that. It sounds like you and your buddies just kind of ran with it and made it happen all with your own sweat equity and your own cash savings.

 

Michael Quan: Yeah, it was absolutely that. And knock on wood. We were very fortunate to be able to be successful from the get go because a lot of times when you start a business in a certain multiple business after that, you don’t always get a success right out of the gate. Right.

 

Brian Davis: Yeah, there’s some success bias in the media when you read about entrepreneur entrepreneurship, all you read about the success stories, right? You don’t read about the failures for every one unicorn that was out there. Let’s rewind for a second. So while you were growing your business, you were you had a high savings rate, I assume a high personal savings rate. You were investing a lot of your money. What were you investing in during those times? And how did you manage your money in a way that enabled you to keep that high savings rate and invest presumably a high percentage of your income?

 

Michael Quan: Yeah, you know, what was really interesting was right out of college, I realized that all of a sudden I was getting a salary at this company that I started working for. And I realized that I’m already pretty comfortable at a college level. Right. Like I wasn’t, like, scrimping eating ramen noodles every single day. But at the same time, like, all of a sudden I get this big influx of income. And so I’m like, you know, why don’t I spend some of that, have some fun with it, and then I’ll just save the rest. I really got very conscious, intentional about saving a big chunk of that. And then after that, every subsequent raise, I did the same exact thing and I literally made it a pattern. And so I share that kind of methodology with people is like almost like a raise ladder that you’re stepping on. Every single raise that you get in future and it becomes like a ladder that you can climb on and all of a sudden you can really start saving a big chunk of your income. And the nice thing is that because you’ve already thought about it, it doesn’t really take away anything. It’s not like you’re taking away anything because you haven’t really felt it yet. It hasn’t really hit your bank account. So if you’re automatically putting it aside into investments or some sort of a savings account and just sweeping it to the side, then you can just enjoy your current level of living and then even have lifestyle creep. And at the same time, increase your savings and investing.

 

Michael Quan: So that’s exactly what I did. But I will tell you this, Brian, was fascinating was I literally was doing that for 10 years. And during the time from 2001 for the next 10 years, literally my money did nothing. It was literally just sitting there essentially with like a I don’t know, one to two percent return over the span of like probably like 10 years.

 

Brian Davis: Really?

 

Michael Quan: After that was the next 10 years exploded and then all of a sudden it made up for the last time. I say let’s say that being able to be very incrementally disciplined, you don’t know when the market’s going to go up. You don’t know when it is going to go down. But if you’re disciplined, you can catch the upswings and downswings and be very find profit along the way.

 

Brian Davis: Absolutely. We don’t talk much about stock investing on and we focus more on real estate. But when we do talk about stock investing, we typically talk about automating your investments, using robo advisors, setting up automated weekly or semi monthly contributions. You can take advantage of dollar cost averaging and like you said, not trying to time the market, just continually putting money into the market and letting it rise on its own. So you’re not even really thinking about it and you’re not lying awake at night nibbling on your fingernails when the market goes down either.

 

Brian Davis: Well, you said that when you sold your business, you got heavily into real estate investing. And since that is an area of passion for us. Tell us a little bit about what types of real estate investments you got into what your strategy was. Tell us all about it.

 

Michael Quan: Yeah. So the interesting thing, Brian, was going back to my uncle’s, what I finally did realize eventually was that the uncles that weren’t working had a ton of real estate. And so I was like, you know, I definitely want to do real estate because obviously they’ve done very well with it. So I’m going to try to model and emulate what they did. One of them was heavily into residential, another one was heavily into commercial. So being that I was just starting out, started with residential, and I literally took probably a good four or five years just studying real estate and trying to understand cash flow. What does a good deal even look like for the longest time? Like, I didn’t even know if it’s a good deal. And so I really took time to really dig and understand the finances. And then probably a little bit too long, I could have probably pulled the trigger and learned some things before that. However, I waited up and I was watching actually the bubble pre-2008 and I just watched everything and people were buying things left and right. It was going nuts. People were like, oh, you should buy this. And I was like, Yeah, but it’s not cash flowing. And they’re like, what’s cash flow? It doesn’t matter. It’s just going to go up like 50-grand in the next five month and like, Ok..

 

Brian Davis: It always goes up, but it never goes down.

 

Michael Quan: It never goes down. I was almost like, oh, maybe I should get into this. But, you know, I looked at the numbers. They didn’t make sense. So I waited and waited and waited, waited. And then when 2010 came around, I tried to snap up properties. There are a lot of investors that were still trying to go get properties. But I eventually got my first couple, still have them for the day. I mean, they performed fantastically. And most recently I just purchased my first short term rental a couple of months ago. And that thing is doing well. Yeah. So definitely want to do more of that, but I think with real estate now, there was a time where I was more of a kind of active stock investor. I was trying to choose individual companies, but then it went more of the path and I just put in an index. And what I tell people now is like, if you really take the time to just be a passive stock investor, you can get that side of the upside, but then spend the rest of the time really studying real estate, because I think that what really create quick, you know, awesome passive income, but also some really quick equity increases in your net worth as well.

 

Brian Davis: Yeah, and that’s a great point, you can automate your stock investments entirely and not spend any time on it whatsoever. Whereas real estate investments, if you’re buying properties directly, if you’re going to be on the deed, it takes time both to learn the knowledge and skills you need to invest. It also takes time to find good deals and it takes time to manage rental properties. So it is much more time intensive to invest in real estate. But you can also earn those outsized returns. You can earn those market beating returns. So it’s one more way that real estate and stocks complement each other. You can automate your stock investments, don’t have to spend any time on it whatsoever and then and get market returns on it. The market index funds. And then with your real estate, you can be a little more proactive with it and create that income. But it does take some time investment on your part. So let me ask you this? You launched a website post-retirement, I believe, called FinanciallyAlert.com. Tell us about what Financially Alert is, what it does, how it helps people, the mission. What’s the lowdown area?

 

Michael Quan: Yeah, so with Financially Alert, I started about five or six years ago. And essentially what it was, is once I finally retire from the traditional career and I wasn’t doing the nine to five and wasn’t going into the office, I found myself home with my kids and that was really fulfilling. And at the same time, I wanted something more, right? I wanted some connection back to the adult world. I wanted to be able to grow something new. And so basically Financially Alert was a hobby of mine to basically go out there, share the information that I had learned over the years. I could just share my stories so that it can help other people on their path to financial independence. And so that’s what Financially Alert is really all that is about, helping to serve other people. Having two uncles that were financially independent is pretty unique. Right? I like to say that that was my unfair advantage. And so by putting out into the public and public domain, stories and strategies and methodologies of how to reach financial independence. I want to give you an unfair advantage that you may not have had because most people don’t have that. So that’s what the mission is all about, is really helping to bring financial independence, financial freedom to people that may have not otherwise had it unless they were very fortunate like I was.

 

Brian Davis: Now, that’s great, and I’m sure it’s a fun postretirement gig to0. Do some writing, maybe bring in a little extra income on the side. And you actually you just published a book, right? FIREplanner? Yeah, was that just published or did it just come out?

 

Speaker3: It literally just came out last month in May. And so it’s been it’s actually exceeded my wildest expectations and has been selling very well. And I think what it is, is it’s really hitting a nerve with people. Because people are really interested on getting that freedom for themselves so that you can really live life on your own terms. That’s what it’s all about. And my whole idea with this, the FIRE planner with make FIRE accessible to anyone. I take you through the mindset that you really need to have. Because mindset really is all about what our beliefs are that trigger our actions. And then, of course, our actions are what give us our results. I really walk you through that, first and foremost, that mindset. And then we talk about very nitty gritty details. We talk about different pacifier, whether it may be the extreme savings and investing. That’s one pathway. Real estate investing, of course, is another fantastic way. And then entrepreneurship is another way. And so doing all three potentially or maybe just a couple or maybe just one and really letting it be a choice because everyone’s a little bit different.

 

Brian Davis: Yeah. And that’s a great point that it’s not either or. When you’re pursuing financial independence, you can combine a lot of these pathways. I am obviously a real estate investor, of course, and an entrepreneur with Spark Rental. And I am a stock investor, have side gigs. I do freelance writing on the side. And you have taken a similar path where you’ve combined a lot of these different forms of income and investments. And not only is there nothing wrong with that, but it’s you get some advantages when you combine these different streams of revenue, both on the active income side and on the passive income side. So I want to be sensitive to your time here. But before before we let you go, I just wanted to ask, what are your your favorite, most important tips for anyone out there who’s pursuing FIRE, perhaps with real estate? Perhaps not. What are the core lessons that you think everyone needs to know and really internalize as they pursue FIRE?

 

Michael Quan: I think the core thing that I just want to share with people is that if you’re interested in financial independence, financial freedom, it’s really out there for the taking. We live in a world now that is really set up to capitalize on opportunities. I really want to share with people that it’s possible. And you don’t have to compare yourself to other people. Do it your own way. Do it in a way that aligns with your own values. Do it in a way that is potentially balanced so that you’re not really putting yourself in a state of need.

 

Michael Quan: I see some sometimes in the media, you see, like some of these FIRE personalities right there living on like twenty-five thousand dollars a year or something. And it’s like, well, yes. Does that work? Absolutely. But is that for everyone? Probably not. And I just want to say that there’s other ways to do it where you can essentially have your cake and eat it, too. But essentially there’s a way that you can do it that really aligns with your own values. And it is possible. So really take that time to really understand your own money story. What’s that mindset? What are some of those limiting beliefs that are maybe stopping you from investing in real estate and find those resources? Go to Spark Rental, learn, go through your video course, that you have that walks people through the path of understanding real estate investing and how to actually participate and take some action. At the end of the day, if you don’t take action, you can study till you’re blue in the face, but nothing’s going to happen. Take some of that time to take action, fall on your face, fail forward. And as soon as you get the result that you’re looking for, you just do more of it and more of it. All of a sudden you’re kind of looking back and you’re like, oh, my goodness, I can’t believe how fortunate I am. But it does stem from action. It does come from belief. And so take some time to culture that and have some fun at the same time.

 

Brian Davis: Yeah, that’s a great answer. You can you can have your cake and eat it too to some extent. I mean, you can do things like house asking to live for free and put all of that extra money that you will be spent on housing towards investments. I mean, my wife and I have no housing payment. We live abroad and living abroad. Not only we get free housing, but it’s also a much lower cost of living and that aligns with our values. We love international travel. We want our daughter to grow up as a citizen of the world. So, yeah, I mean, to your point, you can have it all, but it does take some some thoughtfulness on your part and does take the right mindset. And you can’t necessarily have the stereotypical white picket fence house and the dog named Fido. If you are going to do they’re going to pursue these different kinds of goals like financial independence. You do have to think a little bit differently about money. So, Michael, thank you so much for joining us today. We did put a we’ve got a link here in the comments to Financially Alert. Please check it out. And of course, we’ll put that in the show notes when we release this as a podcast tomorrow. Michael, thank you so much for joining us and sharing your story. We really appreciate it.

 

Michael Quan: Thanks so much, Brian. It’s been a pleasure. It’s been fun.

 

Brian Davis: Well, we’ll have to have you back on sometime soon. All right. In the meantime, we will see you guys next Tuesday at two o’clock Eastern. Send us your comments and let us know what you want to hear about next week. We will catch you next Tuesday, two o’clock. Have a good one, guys.

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