Retiring in 2 years Through “Aggressive” Rental Property Investing with Rachel Richards

Brandon:
This is the BiggerPockets Podcast, show 454.

Rachel:
And I just remember one time when she made me cry. I went to the bathroom and I was looking at myself in the bathroom and I just decided right then, I am never going to let an employer treat me that way again. I’m never going to be trapped because of financial constraints. So that’s what really got me going and being like, enough with excuses, enough of me saying I don’t have enough money, I don’t know enough. I’m going to make this happen. And I got invested by age 24.

Speaker 3:
You’re listening to BiggerPockets Radio. Simplifying real estate for investors large and small. If you’re here looking to lean about real estate investing without all the hype, you’re in the right place. Stay tuned and be sure to join the millions of others who have benefited from biggerpockets.com, your home for real estate investing online.

Brandon:
What’s going on everyone? It’s Brandon Turner, host of the BiggerPockets Podcast here with my cohost Mr. David Greene. What’s up David Greene? How are you doing?

David:
I’m doing great. I’m back in Northern California. Just got back from Tahoe yesterday. We had our GoBundance event. Unfortunately you couldn’t make it but I held it down for the two of us and had a great time.

Brandon:
Thank you. Were you like the cool kid in the back just smoking and leaning back in his chair and everyone was like, “Oh, it’s David Greene.”? Is that how that was?

David:
What actually happens if everyone wants to know the reality is that when Brandon shows up no one pays any attention to me at all.

Brandon:
That’s not even true at all.

David:
I get completely discarded and thrown to the back. So I sabotaged Brandon so that he couldn’t come. I put his name as a terrorist on the flight records so that he wouldn’t be able to leave Hawaii using my law enforcement connections and he wasn’t able to come. So I was the belle of the ball the whole time. I got all the attention. I was the pretty girl so I had a great time.

Brandon:
Way to be the pretty girl. That said, let’s get into today’s show with a phenomenal guest, Rachel Richards. Rachel, along with her husband, were able to build a portfolio of dozens of units. And when I say units, you’re going to find an interesting strategy they used that’ll make more sense later than what I’m saying right now. That they buy these properties and were able to retire in not 10, not seven years, not five years but two years after getting started they were able to retire and live off their cashflow. You’re going to learn about the aggressive model that Rachel follows to be able to do that. She’s got a lot of good tips in there. But things to make sure you listen for, how she decides whether or not to do a task or now. Like whether or not she should outsource or do it herself. That was really, really gold. And then just the $6,000 getting stolen from here. That’s a crazy story. You’re going to hear about that and a whole lot more. So all that and more to come, but first let’s get to today’s quick tip.

David:
Quick tip.

Brandon:
This quick tip is very simple. If you want to be a guest on the BiggerPockets podcast and you’ve done at least a dozen deals, go to biggerpockets.com/guest. G-U-E-S-T. You can upload your information, even attach a video. Let us know why you are an amazing guest and maybe we’ll bring you on the show. Now I think it’s time to get into the show. Anything you want to add David before we bring in Rachel?

David:
Rachel’s strategy, as you guys are going to hear today, is one of the most simple to replicate of any that I’ve heard. There’s several other people that I’ve actually put on the path when they tell me what their goals are to using this strategy. Brandon hasn’t coined a term for it but stay tuned because I guarantee you he will. If you decide this is something you want to do, go ahead and send me an email or reach out to me on social media and I’ll connect you with the people that I know in that market that can help you guys get started because I think for a lot of people, this is the best place to start their journey towards financial freedom.

Brandon:
I do have a name for it. It’s call the yard foot strategy or the yard inch. Yard inch. The yard inch strategy, that’s what the new name is going to be. You heard it here first folks. That not really that catch is it?

David:
I don’t even see how it applies. You’re going to have to break that one down.

Brandon:
You buy by the yard and sell by the foot or buy by the yard and sale by the inch, that’s the strategy. No?

David:
When you take some time to qualify it, it makes sense but I think you could do better.

Brandon:
That said, let’s get to the interview with Rachel Richards.
Rachel, welcome to the BiggerPockets Podcast. It is awesome to have you here.

Rachel:
Yes. Thank you Brandon and David for having me.

Brandon:
Yeah. So let’s get into your story a little bit. How did you discover and get into the wide world of real estate investing?

Rachel:
Like a lot of other people, I read the book, Rich Dad Poor Dad in high school and that’s what kind of sparked my passion for getting into-

Brandon:
High school?

Rachel:
Yes.

Brandon:
High school is not usually heard. That’s unique.

David:
This is an overachiever folks.

Rachel:
Yes. I very much am and actually even at a younger age I was reading personal finance books because I grew up in a really wealthy county. It was a very unrealistic bubble to grow up in and I remember feeling like I didn’t fit in. And that’s not the way you want to feel in middle school and in high school. My parents were always on a strict budget. Money was always a stressor in my family. And actually in sixth grade is when I read my first finance book, Motley Fool’s Guide for Teens, How to have more money than Your Parents Every Dreamed Of. I was like, that sounds cool. Started reading and I just couldn’t stop learning ever since then. That’s kind of what sparked me wanting to become financially independent at a young age.

Brandon:
That makes a lot of sense. All right, so you read Rich Dad Poor Dad and then you’re like all right the prescribed pattern for life that 90% of people follow is not for me. So what did you do?

Rachel:
I tried to figure out how I could invest in real estate as early as possible. In hindsight, I could have done this a lot sooner. I had a lot of limiting beliefs around I don’t have enough experience, I don’t know enough, I’m too young, I didn’t have enough money. But I first went into college … I paid my way through school selling Cutco Cutlery. Have you guys heard of Cutco knives?

Brandon:
Oh yeah.

David:
Oh yes. I’ll tell you, there’s a lot of great sales minds that came out of Cutco. I have a lot of respect for their training program.

Rachel:
Yeah, yeah. They’re great. So I was able to pay my way through school and graduate without debt. I became a financial advisor because I had this passion for helping people learn about finance and I had the sales background. The only problem was I wasn’t interested in cold calling people for the next 10 years of my life. So I was like-

Brandon:
Oh come on. Why not? That’s fun.

Rachel:
Yeah. Why not? I was like there has to be another way to teach financial literacy and impact people. So in the meantime I was looking into real estate investing and finally at age 24, combined with my husband’s efforts and knowledge as well, we were able to purchase our first duplex.

Brandon:
Was that a house hack? Did you live in one of it or was it a straight rental?

Rachel:
It was a straight rental. And so a lot of people, they see that we have 38 doors, we’re young, they’re like, “You must be a trust fund baby.” And I’m sure a lot of guests get that on this show but no, we are not trust fund babies. I actually never made six figures from a job or a salary ever in my life. And when I graduated I was only making $36,000. So it’s not like I had any distinct financial advantage working for me. I was just really frugal. I was aggressively saving 50% of my income. So starting out I was living off $1,500 per month. And by the time I was 24 my husband and I had saved money. So we each put $10,000 in to get to a $20,000 down payment on that first rental and that’s how we got started.

Brandon:
That’s awesome. Where was that rental at?

Rachel:
Louisville, Kentucky. That’s where all six buildings are located for us.

Brandon:
All right. Louisville, Kentucky. So yeah, definitely a cheaper market. Is that where you live I’m assuming then?

Rachel:
It is where I used to live. Just last year we moved out to Colorado.

Brandon:
We’ll get to that part of the story I guess.

Rachel:
Yeah.

Brandon:
Tell me about that first duplex. What went right, what when wrong?

Rachel:
A lot of both. So what went right is that the way that I found the property, it just worked really well for me. This is probably the greatest deal we’ve ever done was our first property, which is pretty unusual. I had my real estate license at the time because I had had it from a previous stent in real estate. I didn’t ever work with clients but I had it for my own purposes. Part of what I was doing in those early years was looking at the expired and canceled listings on the MLS and reaching out to those agents. But I think where other people might reach out once and learn oh, can I make an offer, what’s going on, I was following up with people once a month, once every other month. And there was this duplex that I saw in a great part of Louisville at a really, really cheap price. I followed up with the list agent over six months just to be like, “Hey, I just want you to know I’m still interested. Just want to stay top of mind. When you’re ready, I’m here.” Super friendly. And before that seller relisted the property on the MLS, the list agent came back to me and said, “Hey, we’re about to relist. Do you want to go ahead and make an offer?” And we did and that was such a huge advantage for us.
So we got our first rental. Ended up being something like a 20% to 25% cash on cash ROI. It’s just one of the best properties we own.

Brandon:
That’s awesome. So that’s what went right. That’s how you got it. What went wrong on that one? Anything that you learned?

Rachel:
We’ve learned so much with every single property that we’ve done. But one thing going in is I kind of structured the deal in the wrong way at first. So this was a duplex where one unit was rented. It was under rented but it was still rented. The other unit needed a total rehab. I mean it was an absolute disaster. So at first I was like okay, well maybe we can squeeze together a few thousand dollars to do this renovation. Then when we got into inspections, I was realizing that this was like a $15,000 to $17,000 job. We were going to already be depleting our savings just to be able to close on the property. So I was like okay, how can I make this work? How can I make this a win-win? And I went back to the list agent and I said, “Hey, what if we increase our price by this amount and we can negotiate a seller’s concession?” That’s what we did. Now seller’s concessions, there’s a lot more rules around those than there were a few years ago. But we were able to essentially have the seller pay for all of the renovations and we just got a bigger loan. Which for us was crucial in order to get the deal done. So it started off as a bad thing but it turned into a good thing.

Brandon:
For the people who don’t know what that means, to raise the price and seller concession, give us an example of number wise what that’s like.

Rachel:
So I think initially we made an offer for $85,000. But then when we realized we didn’t have the 15K to do the work, we said, “Hey, let’s offer 100 grand but then you give us a check at closing for 15 grand in cash.” So the seller is netting the same amount, it’s just that we’re taking a larger loan and then getting that cash up front. So it’s a really great way for buyers that don’t have a lot of money to still make a deal happen.

David:
Was that give to you by covering your closing costs in the deal?

Rachel:
No. It was actually negotiated outside of the transaction. Which, again, I think is not a thing you can do anymore.

David:
Okay. That’s why I was asking. I just don’t want … I don’t know that in every circumstance you can’t do it. I would definitely ask a lawyer because that is a good idea, like you’re saying. We typically use that strategy when we’re trying to cover the buyer’s closing cost and net them more money. So that was definitely smart of you guys but make sure that that’s something that’s still legal when people go to do that. But I like how you think. You’re thinking outside the box.

Brandon:
The reason why I wanted to have people look at this in more dept is because this strategy of being able to get money back from the seller when you buy a property is something I’ve used numerous times. I bought a mobile home park once. It was like $1.1 million. And we bought it … Now granted, this was a seller financed deal but we paid 1.1 but we asked for $100,000 in a credit at closing that could be used for whatever we need it for to fix up the property. And the guy was okay with it and so we did it. And so we really only paid like a million for it but got $100,000 put into the thing, which was amazing. And I’ve done it in other ways. I’ve had them pay closing costs, I’ve had them fix up the property. And it goes back to one of my favorite strategies which is when I make an offer I usually offer two different options. I’ll be like, “I can pay you 80 as is or I can pay you …” Or, “I pay you 100 but I need 15 back in a credit or I need you to put a new roof on it or whatever.”
It gives people that kind of multiple option thing. It’s underutilized in the real estate space but I love that you brought it up because there are ways to do it even if the way you did it has changed or the rules have changed or a lender doesn’t allow one thing over another. If you just keep asking that question you’ll find a way to get that through. It’s just a good tool in your tool belt.

Rachel:
The other way that I think about how can I get more cash at closing … Because that’s such a problem for buyers starting out. Buyers have more time than they have money. So it’s like, how can I put enough money together to even close a deal in the first place? So we talked about the seller’s concession but another real strength that I had was the fact that I had my real estate license. There’s so many benefits. So when we were depleting our savings accounts to purchase a property I was representing us as the buyer’s agent. So that meant at closing I would immediately get a commission check back for thousands and thousands of dollars. Sometimes it’d be 10 grand. That’s money we didn’t have before and that would go towards the down payment for the next property and really is the primary reason I was able to scale so quickly. We went from zero to 38 doors in two years because of that.

Brandon:
Yeah. That’s one of the really good reasons to have … There’s not a lot good reasons in my opinion to have a real estate license if you’re getting into just investing but that is definitely one of them is that money you get back as being your own agent. David, I’m curious of your thoughts because you are an agent. You also just wrote the book, Sold. You’re teaching agents all the time how to do this better. What are your thoughts on becoming a real estate agent for that reason? For getting all that money back? Because I know I-

David:
Go ahead Brandon.

Brandon:
I was going to say, every time see my agent make all that money I’m like, I could have totally done that. I could have been an agent and got that money.

David:
People like Brandon think that agents shouldn’t get paid because they [inaudible 00:12:55] nothing. I know. That does come up a lot. So here’s what you’re not seeing is how much those agents are paying to hold their license and how much time they’re spending they’re not getting compensated for. What I would say if you’re someone like Rachel who’s doing a good number of deals, like there’s enough volume, you can actually write down your expenses with being an agent and determine if you’re going to get a positive ROI on that. And maybe the bigger component of why what Rachel’s doing is so smart is I haven’t heard Rachel say, “Well, I negotiated and fought to get the price down.” Though I’m sure that that happens. Rachel, you recognize that I only have so much capital available to me. I need to structure a deal in which case I can save as much of my capital as possible to buy the next deal and if I have to pay a little bit more and borrow money at 4% interest or whatever, that’s fine. So being able to get a commission as an agent really just reduces how much money you’re putting in of your own. And the same is true of you getting that $15,000 back. I think that’s incredibly smart and I want to highlight it to the listeners.
That if you don’t have a lot of cash, the way you put the deal together actually makes sense. It’s not just the overall price that matters.

Rachel:
Exactly. Exactly. Yes. Thank you David.

Brandon:
Let’s talk about management then. From the beginning were you managing your properties yourself or did you hire someone to do that?

Rachel:
We were, yes. We were self managing from the beginning because we had the time. And I always talk about rental income is passive income, but it’s only passive if you have a property manager so you have to keep that in mind. But for us it was more important for us to learn all the ins and outs of managing our own properties and to continue to save money at that time. Because money was, at the time, our biggest resource that could get us ahead and then it turned into time later. So we did start off self managing but once we got to 26 units … So keep in mind, my husband and I were working full-time, we were acquiring properties and managing our rentals on the weekends, and I was writing my books in the evenings. So once we got to 26 units there was no way we could do it on our own anymore. We made a pretty big mistake here. This is I would say the biggest mistake we made as investors. And my flaw is that I tend to be too cheap. Too frugal. And when you take frugality to an extreme it really can hurt you. It can bite you in the long run and that’s exactly what happened.
So my thought was well, instead of hiring a traditional property management company we had a couple of people that had been working for us. It was a husband and wife. They did things like cleaning the common areas, maintenance, lawn care. They were the hardest working people to this day I’ve ever interacted with. They always went above and beyond. So my thought was, why don’t we give these two a chance? We’ll make them employees of our company. We can save a little bit of money and we can be more direct and hands on with the way they’re doing things. So that’s what we did. It started out great.

Brandon:
Sounds like a great idea.

Rachel:
Yeah. Well, thank you. In hindsight to me it sounds naïve but this is why I like to share this mistake so other people don’t make it. But it started off great and then six months in things just started slipping. And I was just like, what’s going on? They’re not doing as good of a job. My husband went to collect the rent from our onsite lockbox one Saturday and he noticed that a lot of rent was missing. This wasn’t just the typical tenent paying late, it was a significant amount. So we’re calling them. Of course they’re MIA. We never heard from them again. They stole $6,000 in rental income just that weekend and we found out that they had been squatting in vacant units and rooms in our properties for almost a year which is just such a violation. It’s just so gross. The moral of the story is this isn’t the place to be cheap and cut corners. If we had hired a licensed, bonded, qualified, insured property management company and their employees had done that to us, they would have been liable for the damages, not us. So sometimes when you’re that cheap you think, oh, I’m going to save money, but it costs you a lot more money in the long run.
So that’s my rookie mistake. That’s the worst thing that’s ever happened so far. Knock on wood. But there you have it.

Brandon:
I love that you shared that. That’s a vulnerable story but we’ve all been there. David, you had a terrible first experience getting ripped off from your property manager didn’t you or a tenant or something like that?

David:
It was my tenant, yeah. So I bought this house and it had been worth about 600,000 and then it went down to … I bought it for 195. So the taxes being collecting on it were about three times more than what they should be so they collect that in escrow then the title company will kick you back a check for your refund once it’s been reassessed. Well, they sent it to the property, not to me. They assumed that I bought it as like a primary residence but it was an investment property. So my tenant cashed the check, forged my signature and then paid me rent for the first two months with my own money.

Rachel:
Oh my gosh.

David:
And then completely stopped paying. That was how I learned real estate investing.

Rachel:
Wow.

David:
And Rachel, you’re bringing up a great point because what you and I both did wrong when I managed my own properties was we failed to take into account that there’s a financial component of risk that needs to be taken into this. That you took risk when you hired these people. That you took that upon your shoulders. And when we don’t understand the property management company having to take that risk, meaning needing to be licensed and bonded or like Brandon said, why’s my agent getting all this money. He’s not seeing all the stuff that that person’s having to do or the risk the broker’s taking on having errors and omissions insurance and everything else. We tend to think oh, I can just do it myself. And then you get in there and you realize, oh, this was a terrible idea because you just didn’t realize it. So we’ll never know every right move or wrong move to make but it is smart to … When you’re having those thoughts like I should do this myself, I’m cheap, because Rachel, I promise you, I’m just like you. It was a long time before I stopped stepping over dollars to pinch pennies.
And what I had to force myself to acknowledge was, I don’t see what goes on behind the scenes so let other people carry the risk and I’ll focus on more dollar producing activities.

Brandon:
Just so you know, this is something I struggle with still to this day is hiring the right people at the right price to do the right work. I still want to try to find a cheaper way to do it. I was young and scrappy just like you guys were. And it’s like, let’s just hire that guy. He can do the work. It sounds like a good idea. So six months ago I hired an electrician guy to come over to my house. I have a pool here. And he was doing some electrical work. But it wasn’t like I hired an electrician. It was a guy who was friend of a friend of some guy who knew somebody who came over to wire something down by my pool. And then we just found out the other day that he disconnected one or two of the wires that were supposed to go to the pool lights to make it safe. So in other words what we found was that if at any point water would have leaked into any of the underwater lights in the pool, the circuit breaker would not have tripped and it would have just killed who was ever in the pool. For like the last six months. And we swim in there every day. My kids are in there every day.

Rachel:
Oh my gosh.

Brandon:
And it would have just killed whoever was in that pool if we were swimming with the lights on and something happened. And it’s like, that’s what you get for hiring some random person. Not the right person. Yeah. Crazy. My stomach just twists when I hear that still. I’m like, I cannot believe-

David:
Twisting because we’re acknowledging how scary that was but the reality is, how many other things are going on in our life where it’s that way and we don’t know because we’re not talking about it? Yeah. Like Brandon, you’re just acknowledging this one story but how many of us that are listening have this same thing that we’re doing and we don’t know that we’re swimming in a pool without a circuit breaker.?

Brandon:
Yeah. It’s crazy. Hire the right people, do the right thing. I’ve done it with property managers. I’ve done it with contractors. I’ve done it with everybody. Find the cheaper way to get things done and it’s seldom the right move. So I’m glad you brought that up Rachel because-

Rachel:
I still struggle with it too.

Brandon:
Yeah. Yeah. It’s tough. There’s this guy, we called him felon Tim because … Felon Tim-

David:
How’d he get that name?

Brandon:
Yeah. Exactly. And my mentor, the guy who I learned real estate from, that was his painter. It was like you hire felon Tim but felon Tim didn’t have a car or any equipment or anything but he would paint any house for 300 bucks. The entire house would be done. And so I’m pretty sure my buddy still uses felon Tim to this day. But there were times where he would paint and I’d come over and he just didn’t tape off the floor and would just paint the floor with his paint sprayer. And just paint the carpet because that’s what you get for $300 from felon Tim. So anyway.

David:
Well, I like that we’re diving into the mindset of this because what it comes from, and I’m sure you realize this too Rachel, is we got ahead in the beginning by being frugal. We didn’t have any options. We had limited resources. So we had to stretch it. We had to top ramen our way right through those first five years or so of investing. And now that we’re in the point where we can hire the right people and we can make sure we don’t get electrocuted, our brain still tells us, no, this is what you have to do to be safe. And it involves a mindset shift into a different way of thinking which is what we’re all more or less struggling with when we talk about this.

Rachel:
Exactly. It’s a time versus money trade off. And in the beginning, all investors I see and that I work with, they have a lot more time than money. So we’re doing things like self managing, trying to fix toilets on our own. We’re hustling and we’re scrapping. That’s because we have to be. But then when you start building wealth and you have cashflow coming in, it’s like, you can’t have that mindset anymore because you’ll hold yourself back in other ways. Because then time is your most precious resource and you can’t keep growing and scaling if you’re going down to your property three times a week doing some maintenance issue. So it’s hard making that mindset but once you do that’s going to allow you to keep growing and scaling.

Brandon:
So now coming out the other side, let me ask you a question and I’ll fire this at both of you but Rachel specifically. Now that you’ve done that do you feel … I almost feel like the idea of we had to do that in the beginning, is that a limiting belief? Did we actually have to do that or could we have started with where we’re at right now? The level that we’re all thinking mentally right now, could we have started there or do you really think that we had to get there because we didn’t have the money?

Rachel:
Yeah, that’s a really good question. I think there were decisions I made that were poor decisions because I hardly had any money. It was operating out of a scarcity mindset. But I probably would have been better off if I could make those decisions differently even if it meant giving up more money at the time. In the long run operating out of an abundance mindset will serve you better. So I don’t know. That’s a tough question.

Brandon:
Yeah. It is tough. Because I don’t know if you can get the mindset. My coach, his name is Jason Drees. He talks about this all the time. He says there’s these levels that we’re at mindset wise. Level two, level five, level 20, level 30. And if you can operate at a level 30 mindset … Let’s just say that’s where we’re at today in terms of hiring the right people at the prices and managing people and teams and all that, can you get to level 30 without having going through level one, two, three, four, five, 10, 20? I don’t know. I suppose you can if you adapt from somebody else. David, what do you think on that?

David:
I think the short answer is it’s a matter of faith. That when we’re on this side of it we realize we could have but when we were there we didn’t think we could. If we had more faith when we were in that point that hey, this is going to work, I do need to think … That’s a better way to think. We all recognize that. It’s the difference between eating more expensive healthy food versus eating junk food that’s cheaper. We know that the cost will be more to eat the cheaper food even though it appears cheaper in the moment. But it’s hard to have enough faith to believe I need to invest in myself when I don’t have as much money. So the reason this question is relevant is because now we’re all in a mindset that isn’t where we’re going to be in 10 or 20 years or more levels of success. So can we go back and learn from those lessons we had and say okay, well right now, where am I doing that still? And can I have enough faith that if I pay the right person, do the right thing, make the decision that feels scarier then it will be better for me? I’m really glad Brandon that you brought that up and Rachel that you brought us into this point. This is a really good interview.

Brandon:
Yeah. I’m going to have to do some more thinking on this. Maybe we’ll do a whole solo show on this David sometime. Just about the mindset needed to get into. Because I’m even thinking now like, okay, what mindset am I going to be in 10 years from now? Do I have to go through the drama and the pain of the next 10 years?

David:
Or could you skip to that point and just start living that way now?

Brandon:
Think of Matt Onofrio. We had him on the podcast. 27 year old anesthesiologist.

David:
I was just hanging out with him in Tahoe yesterday and I know exactly where you’re going.

Brandon:
The guy starts from like oh I don’t do any real estate to I’m making millions of dollars in real estate within like a year period right? Why? Because he already had a level 20 or 30 mindset that he had from his previous careers or because he listened to a lot of the podcast or hung out with people who are at the level. And so I think you can adapt that level quicker if you surround yourself with the right people and recognize that you are not at the level you are going to be.

David:
Glad you shared that though. That’s very helpful for all of us that are listening right now and everybody who’s listening to the podcast is that the mindset is the number one X factor with how quickly you get where you’re trying to go. So Rachel, let’s bring this back to where you’re at. Do you remember a point in your journey where your mindset did shift? Where either you felt more confidence or you recognized, this is the path I’m going to walk?

Rachel:
Everything happened so quickly for us that there wasn’t even time to think for those two years. So it wasn’t about oh, I feel much better about this now, it was just like get the next thing, get the next property, get the next property. I do think though … 2018 is when we stopped acquiring properties. So we’re not actively acquiring properties anymore. A lot of investors will ask us, “Well, why aren’t you building an empire? You could be growing a real estate empire.” And that’s exactly right, I could be. It’s just that that’s not my goal. That’s not what I’m passionate about and what ultimately fulfills me. Real estate investing for us has always been a means to an end. Once we got to a point where we were generating 10K a month in profit from our rentals, for us there was no point in continuing to grow because that was enough money to cover our living expenses so at that point we were retired. We were financially independent.
So then it became about how do we become more efficient with our time, with what we already have invested, with our real estate? And now we’re at the other end of the spectrum where time is truly the most valuable resource for us. So we’re even starting to think about selling some of our properties to invest in something even more passive like real estate syndications. So I’m totally nerding out about syndications right now. That’s my favorite thing.

Brandon:
Well come on in. I’ll take your money. It’s okay.

David:
Yeah. Open Door Capitals. Crushing returns.

Rachel:
I’ve been looking into it.

David:
So if I hear you correctly you’re not giving up on real estate investing, you’re giving up on the asset class or the way you’ve been doing it thus far.

Rachel:
Exactly. And part of it too is … I mentioned it earlier but last year we moved from Kentucky to Colorado. We’d always wanted to move out west, we love the mountains, we love hiking. And once we physically were removed from our properties it just … It’s like out of sight, out of mind type thing. And even though we could hire a property manager at this point, we just feel this is the right next move for us. Because we’re not doing a good job. We’re not doing them justice. So it’s like let’s get out of these and let’s get into something bigger and that makes sense for our lifestyle and our values.

Brandon:
I want to go back real quick to the mindset stuff and then I want to go into how you built the units. How you built that portfolio and the way financed it and all that. But I don’t want to leave the mindset thing quite yet. What mindset do you feel like … What mindset or plural mindsets have served you well over the past decade or half of decade while you’ve been building this? And which mindsets have you out had to outgrow?

Rachel:
My mindsets have grown from limiting beliefs. They have come from limiting beliefs. So I already talked about how I was little, my family didn’t have a lot of money and it was just kind of a comparison game. And I had a lot of fears coming from that situation. I was always scared there wasn’t ever going to be enough money. Money was always a stressor. And I had this fear that I wasn’t going to be able to support myself financially or worse, be able to support a loved one financially if they needed it. So my initial instinct to become financially independent was truly because of the way that money was handled and viewed in our household as a child. Later on in my careers there were so many different situations of the way employers were treating me where I was like, I have had enough. So I can remember distinctly working for a female boss. And this was in one of these real estate stints that I had. I was maybe 22 at the time. She came into the office and she said, “Hey, where’s the letterhead?” And I looked at her and I said, “What letterhead?” Because in nine months working there we’d never used a letterhead.
And she looks at me and she goes … Like I’m stupid she goes, “The letterhead.” Like okay, thanks for the explanation. So I’m frantically searching on the computer, trying to print out letterhead for her. She’s literally standing next to me tapping her foot with her arms crossed. Like this is not an exaggeration. And then after 10 seconds I guess she got fed up so she marched to this dusty shelf behind me and took out letterhead from a place I’d never seen it before. She holds it in front of my face and she says, “What do I even pay you for?” And it was just vicious. I was 22 and I was being bullied by this woman at work who hadn’t even taught me anything. She had made her employees cry before. She made me cry a couple of times unfortunately. And I just remember one time when she made me cry I went to the bathroom and I was looking at myself in the bathroom and I just decided right then, I am never going to let an employer treat me that way again. I’m never going to be trapped because of financial constraints. So that’s what really got me going and begin like, enough with excuses, enough of me saying I don’t have enough money, I don’t know enough. I’m going to make this happen. And I got invested by age 24.

Brandon:
I don’t want anyone’s ability to affect my happiness. Like in my enjoyment and my fulfillment in life. I know it still plays. Any argument I had with anybody ever. Like any kind of disagreement I have is always because of that. Because somebody’s trying to somehow tell me what to do in some way, shape or form or making me feel a way that I don’t want to feel. And so yeah, that’s a powerful motivator. Like yeah.

David:
I’d say that’s your most powerful motivator Brandon. If I want you to do anything, just tell you you’re not allowed to do it.

Brandon:
Yeah.

Rachel:
Reverse psychology.

David:
Yeah. Exactly.

Brandon:
That’s funny. All right, so how did you build that portfolio? You bought all the units. What type were they? Are they multifamily, single family? Let’s get into the financing side. Did you just save up down payments?

Rachel:
Yeah. For sure. So we started off with two single families that we’d had because they were both of our previous primary residences. So we didn’t buy them intentionally as an investment property but they turned into one. Then we bought the duplex. And then after that we bought three buildings that were 10 to 12 units each. So we scaled very quickly. We did finance them all with 20% down payments.

Brandon:
Saved up money.

Rachel:
Yeah. But it still was a lot. But at the time my income had grown. I was making between 75 and 85 grand by then and then combined with my husband’s income we were earning six figures. So we were saving half of that, I was earning the commissions and we were saving 100% of the cash flow from all of the previous rentals. That’s how we came up with massive down payments over and over again. If we couldn’t do that we would have done the Brrr strategy. Thanks to David Greene.

Brandon:
It’s like the income snowball. I think somebody mentioned on our show before.

Rachel:
And it’s funny because when I look back to my initial strategy that I had, my initial strategy was to buy a single family home every year for 15 years all on 15 year mortgages. You guys have heard this before. And then I was like okay, by my mid 30s I’ll be retired. So that was my initial strategy. But once my husband and I kind of put our heads together and our money together, this happened so much more quickly than I ever would have imagined. So it is. It’s the snowball effect of income.

David:
You said something that I really liked and it had to do with the smattering of different ways you put your portfolio together. You had a couple properties that you just kind of fell into. You bought it as a primary residence and then you rented it out. So as a side note, every time I buy a primary residence I always make sure it’s a property that could be house hacked or could function as a rental property. A lot of people in expensive markets will say, “Well, they don’t cash flow so you can’t make it work.” But they’re just buying a three bedroom, two bathroom house that has no unique features that would make it a rental. Then you got into the 20% down method. Then you moved into something else. What I love is that you didn’t wait to get started until you knew exactly how this was going to work. You jumped in there and you sort of evolved with what you were doing. And that even means getting out of the asset class that you were in and into a different form of real estate investing. And that’s so important to highlight to people because this is how people that build portfolios do it.
They don’t wait until they have every single domino lined up perfectly and push over one. They all just close really cleanly. Would you agree Brandon?

Brandon:
Everybody obviously has a little bit different approach there. But mostly yeah. I think that you line them up and knock them down. You don’t always know the answer at the end of the day. Rachel, what do you think?

Rachel:
I mean, yeah. If I had waited until I felt ready … I almost want to laugh right now. Like if I had waited until I felt ready to get started I’d be dead before I owned real estate. And that’s another mindset thing Brandon is that we focus so much on consumption. We want to learn everything there is to learn. We want to listen to podcasts, we want to read books, all this stuff. But if you can’t move from consumption to execution and acting on that knowledge, you will never get to where you want to go. And so something that was hard for me is … So I’m a perfectionist. I’m a control freak. And I was really scared to get started investing in real estate. Because I was like, what if I lose money? What if I do something and I waste my time? What if? What if? What if? The thing is, I had to accept the fact that I was going to lose money, I was going to waste my time. And not once, but throughout my entire real estate investing journey I had to accept that fact. Once I did I was finally able to get over that mindset, that limiting belief, and I was able to just start taking action. And that’s the only way you’re going to become successful as a real estate investor.

David:
That’s awesome. So Rachel, from the first property you bought until the point you could retire, how many years was that?

Rachel:
Two years.

David:
Two years. You were able to buy enough properties that you were able to just say, I’m dropping the mic and I’m retiring.

Rachel:
Yes. Yes. Part of that is the … We bought properties that were really unique. I haven’t ever talked about this on a podcast before but I want to deliver the goods here. Our second property after the duplex that we bought was an 11 unit multi family. I’ve never seen a property structured this way. It was basically a quad. It was a fourplex. But the owners at the time were renting out the bedrooms individually. It was something that’s now called more of a boarding style house. But the cashflow on this … When I saw these numbers, I was like, there’s no way. There’s no way that this $430,000 property is generating $86,000 in rent revenue. And then they showed me what they were doing and I was like, “This is the most brilliant, genius thing I’ve ever seen.” So that’s what three of our buildings are. They’re these properties that are rented out by the bedroom. The tenants share the kitchens and bathroom areas. And we’re able to squeeze way more rent out of it than we would have otherwise.

Brandon:
So how do you manage that? We’ve talked to people on the show before that have done student housing or somewhat similar things but it’s always a hassle to manage it sounds like.

Rachel:
It is. It’s a lot more work. And that’s part of the reason that we’re thinking about selling those. Because at the time, the cashflow was incredible. We were making $2,500, $3,000 in profit per building. But it was a lot more work. Because you have tenants that they’re like kids. “This guy stole my food from the fridge. This guy won’t clean up his dishes.” Whatever. So you constantly have to not just be a property manager but be a therapist for these people and being like, “Okay kids, let’s figure out how we can handle this situation as an adult.” And the turnover’s a little bit higher because we’re not doing traditional one year leases. It’s just a different and unique way to run them. And then again, they still cashflow amazingly well but it’s just not worth it to us anymore.

Brandon:
Yeah. Are you still managing yourself in that regard or do you have a property manager or another couple that you got to handle this stuff?

Rachel:
Somewhat. Once we moved out to Colorado … We have a family member in town that we’re paying to help us be there. Just do things that we would only trust that person to do. And we have different people in place now. One great thing about being a long distance landlord … It used to intimidate me. I used to think, “No. There’s no way I can do that.” What we’ve realized though, it’s actually easier to manage these properties from a distance. Because when we lived in Louisville, we were running down to our properties twice a week whenever something happened. Now though, we’re forced to outsource that and to have reliable people in place. Which if we had just done that from the beginning, it would have been a lot easier. But it forced us to do that when we moved away.

Brandon:
Yeah. That’s one of the reasons I love long distance investing like David Greene’s book. Because David, you make that point in there like, long distance investing, you are forced to have good systems. It’s like put up or shut up. You just can’t survive without it. You can survive. If you have a local rental, you can survive with terrible systems and processes and awful people. You can do it just by limping along for decades. So many landlords do. But the minute you go long distance, it reveal … I mean, I had that property in Ohio, in Cincinnati. And the property was fine, but like I’ve told this story before, I just did not have the systems or the people or the core four, as David says, to be able to manage it. And I wasn’t taking the time needed to manage the people that I did have. So it revealed it very quickly. Like yeah, this is not something you should do. So I got out of it. The guy who bought it is doing super, super well with it because he’s there and he can do all those systems. But yeah, I don’t know. It’s a fascinating thing when you move out of an area.

David:
I think, Rachel, you’re hitting on a deeper truth about how business works in general. And this is something I’ve learned through being an agent. When you love what you do, or at least you can tolerate it, it’s not in your own best interest. When you like fixing toilets or you like to be the person that shows up and fixes the light bulb, the temptation to do that every single time is massive. And you’ll trick your brain into thinking I worked hard today. Because you went to your property and you put in a light bulb or you fixed a leak or something. But you did nothing to get your next deal. You did nothing to move the needle along the goal, which for most people it’s going to be financial freedom. It’s this sweet, tempting siren that pulls you in. And I see this with real estate agents because they love the job so much that they never leverage off parts of it. They never grow. Part of why I spent the last two to three months traveling, hanging out with Brandon in Hawaii and my team’s doing good was that, to be frank, I didn’t love being a real estate agent. I didn’t like it, which motivated me to find people that were better than me and say, “You do this part. You’ll be better for here. You’ll do a better job for our clients.”
And I operated it like a business. And that’s just something to be aware of. If you’re like, “Oh my god, I love analyzing deals.”, you can spend all day long analyzing deals and never offer on any of them or pursue them because you already got your dopamine hit just by analyzing it. We’re always afraid of the things we don’t want to do but we should maybe be afraid of some of the stuff that we like to do because that’s the thing that will sabotage you that you don’t see coming.

Rachel:
You are so right. And to your point David, there’s a question I now ask myself to decide whether I should be doing the thing or somebody else should be doing the thing. And that question is, is this a revenue generating activity? Is it going to generate revenue to go fix a toilet or to manage my tenants? No, it’s not. Those things need to be outsourced. Is it a revenue generating activity to go make offers and drive around and look for your next deal? Yes. That’s what you should be doing.

Brandon:
Yeah. That’s so good. So here’s the point I think we’re getting at here. We can just sum up. I think everybody listening to this show should take a month or two, just come to Hawaii and hang out, so that we could all see where their systems are breaking down and what they should be doing and not. Do we all agree? Everyone should just come to Hawaii?

Rachel:
I’ll be there.

Brandon:
All right. We’re just going to get a quarter million people here right now. It’s going to be great.
No. But on that point, a couple of buddies of ours, Alex Camacho, who’s been on the podcast before, Alex was in southern California and has been here now for a couple months. Investor Girl Britt, Brittany Arnason, has been on the show. She did the same thing. Tarl Yarber, who’s a big Bigger Pockets contributor, same thing. Just left for a while during this COVID mess, as both one, a way to enjoy this time more, but two, it’s to put their systems to the test and to force themselves to start thinking like an owner rather than an operator. And for all three of them, they’re just crushing it right now in their businesses and making a lot of positive changes because it forced their hand. So I joke about it, but maybe it is time. For some people listening to this show right now, maybe it’s time to say, “You know what, I’m going to pack my family up and go to Costa Rica for a couple months. Or I’m going to go to Nebraska for a few months.” Maybe it’s time to force yourself to get out of your bubble where you’re managing everything and go see what you actually have built.
So there’s some encouragement for people. Or maybe some people right now, their stomach as got twisted because they’re like, “Oh man, I know he’s talking to me right now.” So use it.
All right. Tell me, Rachel, about your books real quick. I’m just curious because you mentioned you wrote some books. What are you writing?

Rachel:
Yes. In 2017, which the same year I started investing, I started writing books. I wrote my first best selling book, Money Honey. The reason I wrote it is because I was a financial advisor before and all my family and friends came to me for financial advice. Which was great. That’s what I love to do. I also had this aha moment where I realized, oh yeah, personal finance is boring. Right?

Brandon:
Yeah.

Rachel:
For most people, it’s intimidating, it’s dry, it’s complex. No wonder they don’t like to learn about it on their own. So I thought to myself, how can I make this topic sassy and fun and simple? And that’s when Money Honey was born. So that’s why I wrote the first book, Money Honey. And it has almost 1,000 reviews on Amazon now.

Brandon:
Oh wow.

Rachel:
Yes.

Brandon:
Before you go on the next one, what’s the gist of the book? What’s the idea? Who should be reading it?

Rachel:
It’s about money management. So it’s the basics. It’s saving, debt, investing. And I really wrote it for female millennials, although, all different types of people read it. But that’s who I’m speaking to.

Brandon:
Okay. Very cool.

David:
I can’t think of a better person to write that book for millennials than the one who was reading Rich Dad, Poor Dad while friends were reading Twilight. You were born for this role.

Rachel:
Well, I might have read Twilight too. Yes. Thank you.
And then my second book is called Passive Income, Aggressive Retirement. And I just got so obsessed with this concept of passive income. Money that is learned with little to no ongoing work. It’s definitely not a get rich quick scheme. It sounds that way but it’s not. I mean, it takes time or money to create passive income. But the epiphany I had here was once your passive income exceeds your living expenses, you’re retired. You’re financially independent. And to me, it felt so much easier to generate five or six or eight grand a month in passive income than it does to try to save a million or two million dollars by age 65 in order to retire. So that’s what that book’s about. I basically outline 28 different passive income models. So trust me when I say that anyone at any age can absolutely create passive income.

Brandon:
Yeah. That’s cool. That’s awesome. Well, congrats on the books.

Rachel:
Thank you.

David:
Brandon, don’t you have a theory or a definition of the three levels of financial freedom like Rachel was saying.

Brandon:
My jet one?

David:
Yeah.

Brandon:
Yeah. I always say there’s three levels of financial independence. There’s like, you can fly in a jet, meaning you can go and do your thing because you don’t have to have a job. You can be a jet setter. Level two is you can buy a jet. So those are like the David Osborne’s that I know. Super wealthy people who just go buy a jet. And there’s the I can buy the New York Jets. Like that level of financial independence and wealth. And for everybody it’s different. Some people want to be the guy that owns a private jet, some people want to be the person that owns the New York Jets, and some people just want to be able to travel and be able to hang out with their family more often. So having that self awareness to know which level you want is super, super important. I’m reading that book right now by Patrick Bet-David. It’s called Your Next Five Moves. And the first section’s all about that self awareness. Knowing what you want and what you’re willing to work for and what pain you’re willing to put up with to get there.
But that level one financial freedom, that just be able to quit your job, pay your bills, it’s not unattainable if you want it bad enough, if you have a plan in place, if you work hard to get there, and if you’re aggressive like you said. I like the word aggressive. That’s a good one. Aggressive retirement.

Rachel:
Thank you.

Brandon:
Nicely done.

Rachel:
Thank you.

Brandon:
All right. Well, let’s move this thing along toward the next segment of the show. It’s time for our deal deep dive.
This is the part of the show where we dive deep into one of your deals. And I know you’ve explained all of them but I thought maybe we’d pick one to dive in a little deeper. So let’s go there now. Number one. By the way, do you have one in mind that we can dig into the numbers?

Rachel:
Yeah. I’ve already talked about a couple so I’m thinking let’s do-

Brandon:
Okay.

Rachel:
Yes. I have one in mind.

Brandon:
All right. First question. What kind of property is it and where’s it located? That’s really two questions.

Rachel:
All right. This is in Louisville, Kentucky. It’s one of the now 10 to 12 unit buildings that we have. But when we bought it, it was a duplex. So we converted it into this boarding style.

Brandon:
Wow.

Rachel:
Yeah. It was a huge … I mean, it’s over, I think, 3,000 square feet. So we converted it.

David:
I like big houses and I cannot lie.

Brandon:
How’d you find it?

Rachel:
This was the one where I found it on the MLS and it came up and it 125 grand. The top floor was a duplex that was being rented out. The bottom floor was an office space. And when I saw the potential … How cheap it was, first of all. I don’t know why it was listed for so low. But then when I did the math and I realized I could convert those spaces into five or six bedroom units, I was like, “Oh my gosh. This is going to be the moneymaker.” And it has a whole third floor that’s unfinished that we haven’t even gotten there yet. So that’s what it came in at was 125. I was down there at the property literally within 30 minutes making an offer on the phone for full price.

Brandon:
Nice. That’s awesome. All right. So how’d you find it? Just MLS?

Rachel:
Yes.

Brandon:
Real estate agent or something?

Rachel:
Yeah. It just happened to come up. I had a search saved or whatever I just happened to be looking at at the right time.

Brandon:
All right. And the negotiation. Was there any other negotiation other than just offering full price? Did you have to go back and forth at all?

Rachel:
Not really. I don’t remember there being any intense negotiations. I mean, I made a strong offer because I recognized if I didn’t, they would be getting other offers that day. I just knew. The other thing that complicated the situation a little bit is that because it was an office space, it was actually zoned commercial. So we did have to get a commercial loan on that, which I didn’t realize at the time but I learned later on going in.

Brandon:
Okay.

David:
All right. So how did you fund this deal?

Rachel:
This was just from savings. We came up with the 20% down payment and then we got a commercial loan. Or it might have been a 25% down payment because it was a commercial loan.

Brandon:
Okay. And what did you do with it? You then divide up the bedrooms so I’m curious, how did that all work? How many total units did you get out of it? And then what’s the average rent on a bedroom?

Rachel:
Okay. It’s now 11 bedrooms and the renovation process was an absolute nightmare. This was the worst renovation I had ever done. And it sucked because that duplex that we bought, that first one, we had this guy do the whole renovation. He was amazing. The thing I did then though was I was at the property every single day. I was bringing them Gatorade and bagels and they loved me and they knew that I was going to come and they knew they better be working. At this property, by the time we bought this, we were so overwhelmed we absolutely could not take time to come to this property every day. So maybe we got there once a month, which is horrible. I mean, that’s a really bad thing to do. And what was supposed to be, I think, a four to six week renovation was a four to six month renovation. And we went way over budget. Not to mention the holding costs. But we went way over budget on the renovation itself. Luckily though, the way that I run my numbers, I estimate things so conservatively that it still ended up being pretty close to what I initially projected. So it still ended up being an amazing, amazing deal.
What was the initial question. Did I answer it?

Brandon:
Yeah. Just what’d you do with it? Oh, and what the rent gets for each unit.

Rachel:
Okay. Yeah. We renovated it into 11 bedrooms. And on average I would say they’re $130 per week. We do weekly rental. So it adds up to something like … It’s almost 80 grand a year in revenue.

Brandon:
Wow. Do they pay weekly or do they still pay monthly? I mean, every week they drop off a check?

Rachel:
They pay weekly. It’s all online now. It used to be our onsite lockbox, but now everything’s done through online.

Brandon:
That’s cool. Now we’re going a little bit deeper maybe than we usually do but how often do people stay at a thing like this? How bad’s the turnover on-

Rachel:
It depends. I thought the turnover would be horrific but most of our tenants stay for years. I mean, we even bought some of these properties that still have tenants in them from the previous sellers and they’ve been there for three, five years. So I would say half of them end up being really longterm tenants. The other half, maybe they end lasting there for six months or so.

Brandon:
I want to be careful with this question but what type of people are these? Are these really, really dirt poor, just out of rehab kind of people or are these like, “Hey, I just work at a job and I want to live as cheap as possible.”?

Rachel:
Yeah. It’s definitely a mix. We don’t have students. We’ve had one student. But it’s mostly blue collar workers. And we’ve had travel nurses before. Travel doctors. Because they’re looking for a short term lease and we can offer that to them. Furnished bedroom, all that stuff. It’s easy for someone to move into. But it’s normally somebody that they’re not making a ton of money and they just want a simple solution. They want a place that they can live where it’s furnished, they have a TV, they have a nice kitchen and bathroom, and they don’t have to worry about any of the other costs except for paying the rent.

David:
Okay. So what was the outcome?

Rachel:
The outcome is that this building-

David:
You make a ton of money.

Rachel:
We made a ton of money. This building is probably worth 300 grand now because of how much income it’s generating. The cash on cash return, I think, was literally 30% for us. And it’s been an enormous moneymaker for us. So all in all, great investment. Even with the horrible renovation.

Brandon:
Yeah. All right. So what lessons did you learn from this deal overall? What can you pull out and say this lesson just demonstrates this or I learned this?

Rachel:
I think be creative. Don’t take something at face value. So when you see a property and the way it’s being run now, that doesn’t mean you have to keep running it that way. It’s like how can you either increase the rent revenue of what they’re already doing and how can you decrease expenses? So I think if you can approach it that way and just be creative and imagine a way that you can run it where you can generate even more revenue, that’s when you can start finding good deals. Because you’re thinking outside the box and you’re going to do something with that property that another investor wouldn’t so you can pay a little bit more for it.

Brandon:
That makes a lot of sense. Really what I like about the strategy is it’s like … What’s the whole thing? Buy by the yard, sell by the foot. You’re taking a property that you’re just taking the whole thing, dividing up. It’s cool. It’s obviously a lot of work to renovate and to be able to get the system to manage it. Especially like you mentioned earlier, at your level, where you were at at the time, it was perfect for it. And now you’re thinking, “Okay, now we’re at a different level, different spot in life, maybe we’ll unload this and get into something different.” And that’s just the life of an investor, right? I was actually just talking with my property manager, Jesse, who … We sold our mobile home park that was in Bangor, Maine. The one that Mindy Jensen and her husband, me, and Ryan Murdoch bought together. We sold that. We made a really good return. It was amazing. It was one of the best deals I’ve ever done. And we’re talking to Jesse, the property manager, about it and he goes, “Yeah. The guy who bought is so excited about this thing because it’s perfect for where he’s at right now in his investing. Even though you guys, it was perfect before and you got it to a point where it’s stabilized.”
It was fully occupied. We took it from 30 to 50 units or whatever. That was our thing. And then it became the next guy, that his thing was a different level. So in other words, what’s great about real estate is it’s all … Different phases of an investor’s career work for different types of investments at different points in that investment thing. In other words, there’s so much bloody opportunity out there for people. Because even a hot market like today, there’s things to do because you’re at a different stage than somebody else is. So anyway, I think that’s encouraging.

Rachel:
Yeah. I agree 100%. And another lesson from that, Brandon, is don’t invest based on what other people are doing. Don’t see this amazing, successful real estate investor with this huge empire and think, “I’m going to do exactly what he does.” Because he has different values than you. He has a different time versus money trade off than you. So it’s about, okay, what are these different ways I can invest and which one works best for me?

Brandon:
With that, it’s time to get to the last segment of our show. It’s time for our …
(singing)
The famous four is a part of the show where we ask the same four questions every week to every guest and we’re going to throw them at you right now Rachel. So book … Or question number one. Not book number one. I just gave a hint of what the question is. Question number one.

Rachel:
I already know.

Brandon:
Yeah. I think most people do at this point. Number one. What is your all-time favorite or current favorite real estate related book?

Rachel:
Well, everyone says Rich Dad Poor Dad so I’ll go with something different. Because I’m so obsessed with syndications right now, it’s the Brian Burke, Hands-Off Investor. Oh my gosh. That book should be $50. There is so much value. I’m not even finished with it but I just can’t get enough so big fan.

Brandon:
Yeah. It is phenomenal. Brian Burke’s the man.

David:
He’s a good friend of both Brandon and I. Very trustworthy guy. I like Brian quite a bit.

Brandon:
You know what’s funny about that book? I don’t know if I ever told this story. Maybe Brian wouldn’t want me to. I’m going to anyway. We’re sitting outside this restaurant, the Hula Grill out in Lahaina. And this is like three years ago. And we’re talking about him raising money for his syndication, Praxis Capital. And I’m like, “You know what you should do Brian, you should write a book on how to evaluate syndications. Because then everyone who reads the book is going to be like, ‘Who do I trust now?’ How about the guy who wrote the book on how to evaluate syndications and raise money.” And I don’t know if it’s worked for him, but that was the idea behind it originally and he just carried away and actually made an incredible book. It wasn’t a teaser like, “Hey, here’s a few things to know. You should invest with me.” He just legitimately wrote the best book ever written on the topic. Which also speaks to-

Rachel:
Exactly. Yeah.

Brandon:
Yeah. That’s just Brian’s personality. It’s like, “I can do something or I can do it the best anybody has ever done it ever.” That’s Brian Burke for you. He’s a good dude. That said, question number two. David Greene?

David:
Your favorite business book?

Rachel:
My favorite business book is The Millionaire Fastlane by MJ DeMarco.

Brandon:
Oh my gosh, that book is so good.

Rachel:
Such a classic. Oh, it’s so good. It really helped me transition my mindset from a consumer to producer mindset and understand why running a business and being an entrepreneur can help you build wealth so much faster than doing a nine to five job. So it just opened my eyes totally.

Brandon:
Have you read his followup to that? It’s called Unscripted.

Rachel:
Yes.

Brandon:
Yeah. I love that one too.

Rachel:
Yes. That one was really interesting as well.

Brandon:
We’re going to get MJ on the podcast at some point. Just scheduling around but it’s going to happen.

Rachel:
Oh, that’s awesome. I can’t wait.

Brandon:
It’s going to get here. Yeah, that guy is legit.

David:
Well, now I want to read these books.

Brandon:
They’re so good. Yeah. That Millionaire Fastlane I think … Yeah. It was one of the books that changed my life.

David:
All right Rachel, what are some of your hobbies?

Rachel:
Hiking and traveling. We moved to Colorado essentially to hike. I went on a nine mile hike yesterday. I’m icing my foot now. And I’m trying to climb my first 14,000 foot mountain in the next couple months. So that’s what I love to do.

Brandon:
Josh Storkin and I went and hiked a 14er. I’m not a hiker at all. I hate hiking with a passion. But he forced me to get up at 3:00 a.m. and hike a 14er in Colorado back a year and a half ago and it was as miserable as it sounds. It was horrible.

Rachel:
Yeah. I don’t know if I’m excited or dreading it. Probably dreading it. But I still want to do it

David:
Brandon can do that in 12 steps.

Brandon:
It was hard to breathe. That’s what the crazy thing was. It was so weird to breathe. That said, Josh went and told me … He told me that he’s now climbed several of them and he started doing the Wim Hof breathing exercises, which if you guys know Wim Hof at all, he said it made night and day difference for him climbing. He said he was never out of breath.

Rachel:
Wow. Okay.

Brandon:
Yeah. Do a little Wim Hof YouTube searching.

Rachel:
Yeah. I’ll do that on my next hike. That’s cool.

Brandon:
Random story. We were on top of this 14er. I might have told this on the podcast before but I love this story. Josh and I were at the top just being Josh and I, which if people remember the podcast before David was here, it was Josh and I just basically making fun of each other for an hour and a half every week straight. Anyway, so we’re sitting out there just being ourselves, just whatever, and some guy turns around because he recognized our banter and was like, “Josh and Brandon.”, and knew us from the podcast.

Rachel:
Oh my gosh, that’s so cool.

Brandon:
Yeah. Apparently the way we are on the podcast is the way we are in life. Random.
Yeah. All right. Moving on. Last question.

David:
So Josh had enough breath to just rip on you the whole time and you couldn’t breathe so you couldn’t really say any back.

Brandon:
Pretty much. I just had to sit there and take it. Story of my life. All right, last question from me Rachel. What do you think separates successful real estate investors from those who give up, fail, or never get started?

Rachel:
I think it just comes back to that knowledge versus execution. Knowledge is nothing without acting on that knowledge. So it’s really the ability to implement and to take action. There’s this quote by Zig Ziglar that I love and he said, “You don’t have to be great to start, but you have to start to be great.”

David:
Thank you very much Rachel. For people that are fascinated with your story, as it’s very cool, where can they find out more about you?

Rachel:
Well, thank you. My Instagram is MoneyHoneyRachel and my books are Money Honey and Passive Income, Aggressive Retirement so you can find those on Amazon. And what I’d love to do with your listeners, just to add some value, is give them my passive income starter kit for free. So without reading my book you can see all the 28 different passive income streams I talk about, deadly mistakes to avoid, and a bunch of resources and tools. So if you want to download that, you can go to moneyhoneyrachel.com/bonus.

Brandon:
Very cool. Thank you. We’ll put that link also in the show notes of course at biggerpockets.com/show454. It’ll be there as well. But this has been awesome. Thank you so much Rachel. Really, really good stuff today.

Rachel:
Thank you both so much. I appreciate it.

David:
Great job. This is David Greene for Brandon Mountain Trekker Turner, signing off.

Speaker 3:
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