Scott Trench’s $1,000,000 Bet on Real Estate (Update)

January 21, 2026

34 min episode · 2 min read

Scott Trench

Episode

34 min

Read time

2 min

AI-Generated Summary

Published Jan 21, 2026

Key Takeaways

✓Million Dollar Reallocation Results: Trench sold $1,000,000 from S&P 500 in February 2025 to purchase Denver multifamily properties. His quadplex delivered the projected 6.42% cap rate with property management, generating $5,500-6,000 monthly cash flow that funds his lifestyle. However, he missed approximately $100,000 in stock market gains as S&P rose 12% plus dividends during the same period.
✓Rental Market Absorption Forecast: Multifamily deliveries dropped significantly in 2025-2026 after historic supply peaks in 2024. Trench predicts vacancy rates will decline 200-300 basis points, driving rent growth to 3-4% in 2026, accelerating in 2027-2028. Immigration policy changes reducing arrivals by several hundred thousand monthly will moderate demand and temper previously forecasted double-digit rent growth for 2027.
✓Portfolio Allocation Framework: Trench maintains 45% real estate equity in Denver multifamily and 55% in stocks across retirement accounts, HSAs, and taxable brokerage. He holds a 2.5-year cash reserve due to real estate concentration, lack of W-2 income, and reputational risk as author of Set for Life. New investments flow into low-fee actively managed value funds from Avantis across domestic, international, and emerging markets.
✓Negative Leverage Challenge: Buying properties with 6% cap rates using 6.5% fixed-rate debt creates negative leverage, requiring investors to bet entirely on appreciation and rent growth. Current conditions demand exceptional deals, creative financing like assumable mortgages, value-add strategies, or alternative cash flow methods including room rentals and short-term rentals to achieve positive returns without significant equity investment.
✓Stock Market Valuation Concerns: S&P 500 trades at 40x CAPE ratio, highest-ever price-to-sales, and elevated price-to-forward-earnings. AI capital expenditure reaching $400-430 billion in 2025 and $600 billion in 2026 gets capitalized rather than expensed, masking true costs in earnings reports. Models become obsolete every three months while services remain free or low-cost, raising questions about sustainable corporate profit translation.

What It Covers

Scott Trench returns one year after selling $1,000,000 in stocks to buy Denver real estate. He reports earning 6.42% cap rates but missing 12% stock market gains, costing roughly $100,000 on paper. The discussion covers 2026 market predictions, portfolio allocation strategies, rental market absorption rates, and navigating negative leverage in current conditions.

Key Questions Answered

•Million Dollar Reallocation Results: Trench sold $1,000,000 from S&P 500 in February 2025 to purchase Denver multifamily properties. His quadplex delivered the projected 6.42% cap rate with property management, generating $5,500-6,000 monthly cash flow that funds his lifestyle. However, he missed approximately $100,000 in stock market gains as S&P rose 12% plus dividends during the same period.
•Rental Market Absorption Forecast: Multifamily deliveries dropped significantly in 2025-2026 after historic supply peaks in 2024. Trench predicts vacancy rates will decline 200-300 basis points, driving rent growth to 3-4% in 2026, accelerating in 2027-2028. Immigration policy changes reducing arrivals by several hundred thousand monthly will moderate demand and temper previously forecasted double-digit rent growth for 2027.
•Portfolio Allocation Framework: Trench maintains 45% real estate equity in Denver multifamily and 55% in stocks across retirement accounts, HSAs, and taxable brokerage. He holds a 2.5-year cash reserve due to real estate concentration, lack of W-2 income, and reputational risk as author of Set for Life. New investments flow into low-fee actively managed value funds from Avantis across domestic, international, and emerging markets.
•Negative Leverage Challenge: Buying properties with 6% cap rates using 6.5% fixed-rate debt creates negative leverage, requiring investors to bet entirely on appreciation and rent growth. Current conditions demand exceptional deals, creative financing like assumable mortgages, value-add strategies, or alternative cash flow methods including room rentals and short-term rentals to achieve positive returns without significant equity investment.
•Stock Market Valuation Concerns: S&P 500 trades at 40x CAPE ratio, highest-ever price-to-sales, and elevated price-to-forward-earnings. AI capital expenditure reaching $400-430 billion in 2025 and $600 billion in 2026 gets capitalized rather than expensed, masking true costs in earnings reports. Models become obsolete every three months while services remain free or low-cost, raising questions about sustainable corporate profit translation.

Notable Moment

Trench reveals he expected to find better deals in Denver's small multifamily market by early 2026 but instead finds fewer opportunities than a year ago. Properties neither sell nor decline in price; sellers list then withdraw. Despite predicting either rent growth driving values up or continued price declines creating opportunities, the market remains frozen with minimal transaction activity.

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