How to Scale Commercial Real Estate Podcast with Sam Wilson On the New York City Podcast Network

Retiring In 2 Years Through “Aggressive” Rental Property Investing

Do you want to work only because you want to and not because you have to Rachel Richards has built a real estate portfolio of 38 units by the age of 26 and is now passively earning 20 000 per month In this episode she tells us how she stopped trading time for money by investing and opening up passive income streams other than real estate She also shares why she continues to work and find ways to challenge herself even after retiring and achieving financial independence Rachel Richards is the best-selling author of Money Honey and Passive Income Aggressive Retirement Listen in to know more about her journey 00 01 – 07 54 Living off of 20 000 in Passive Income Monthly Rachel on being a finance nerd and on her experience in the industry Why people should look for off-market deals This is how she found their first duplex From self-managing to hiring property managers to self-managing again The biggest mistake they made so far Don t be cheap Owning real estate out of state 07 55 – 14 15 Passive Income Strategies You don t have to own a rental property to generate passive income Self-publishing and making 4 000- 10 000 a month Rachel s goal to make income more and more passive Being a limited partner Setting boundaries and being more intentional Looking at opportunities in mobile home parks and self-storage Screening syndications and doing due diligence 14 16 – 17 55 Creating Impact Through Her Work Living freely and having time for things that fulfill them Writing to inspire others especially women Doing what serves them and the people around them 17 56 – 19 06 Closing Segment Reach out to Rachel Step into the path of financial freedom with Rachel s FREE Passive Income Starter Kit Links Below Final Words Tweetable Quotes Being cheap can cost you a lot more money in the long run This is not the place to cut corners when you hire people like contractors and property managers – Rachel Richards Don t be afraid to invest out of state It really forces you to be an efficient property manager and owner of real estate – Rachel Richards I want to make a big impact and help as many people as I can That s what I m passionate about especially helping women – Rachel Richards —————————————————————————– Connect with Rachel Follow her on Instagram and visit her website Money Honey Rachel Get her FREE Passive Income Starter Kit and check out her books Money Honey and Passive Retirement Aggressive Income to know more about money management personal finance and investing Resources Mentioned Rich Dad Poor Dad by Robert Kiyosaki HOLD by Steve Chader The Hands-off Investor by Brian Burke Connect with me I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns Facebook LinkedIn Like subscribe and leave us a review on Apple Podcasts Spotify Google Podcasts or whatever platform you listen on Thank you for tuning in Email me sam brickeninvestmentgroup com Want to read the full show notes of the episode Check it out below Rachel Richards 00 00 The great thing about moving away is that we ve been forced to streamline and systematize all of our processes and doing that has made self-managing so much easier I was so afraid to move away But owning real estate in another state is so freeing and it s a lot easier than I thought So if that s anyone s hang-ups if you re listening to don t be afraid to invest out of state it really forces you to be an efficient property manager and owner of real estate Intro 00 27 Welcome to the How to Scale Commercial Real Estate Show Whether you are an active or passive investor we ll teach you how to scale your real estate investing business into something big Sam Wilson 00 39 Rachel is the best-selling author of Money Honey and Passive Income Aggressive Retirement She built a real estate portfolio of 38 units by the age of 26 Rachel welcome to the show Rachel Richards 00 50 Hey Sam Thanks for having me Sam Wilson 00 52 Hey pleasure s mine Three questions I ask every guest that comes on the show 90 seconds or less where did you start Where are you now How d you get there Rachel Richards 00 58 I started my real estate investing journey in 2017 My husband and I purchased our first duplex that year And within two years we scaled our real estate portfolio from zero to 38 units When people hear that they make some assumptions So I ll get those out of the way I m not a trust fund baby And I never made six figures from a job or career So let s see where am I Now I am now investing in syndications I ve invested in eight syndications as LP as a passive investor and I m now financially independent and living off 20 000 per month in passive income Sam Wilson 01 35 Wow that is really cool Congratulations and a job well done Zero to 38 units in over how many months was that Rachel Richards 01 43 24 Sam Wilson 01 44 24 months Okay so you re buying a property We re actually more than one and a half properties a month Rachel Richards 01 50 It was six buildings 38 doors Sam Wilson 01 53 Six buildings 38 doors That helps So you re not one and a half transactions every single month Got it Six buildings 38 doors That s cool Absolutely Love it Is this tell me Is this all you re based in Denver Colorado Is this all in Denver Rachel Richards 02 06 This was all in Kentucky where I lived for 20 years Sam Wilson 02 10 Okay cool So you had some experience obviously in the local market there What did you do I mean to identify that many assets and that short of a time what were you doing to do that Rachel Richards 02 21 So I ve always been a finance nerd And my whole life proud of it And I read Rich Dad Poor Dad in high school I after college I was a financial advisor I also took a couple of jobs working with a real estate investor and learning from him and then working under a realtor So I did have some experience in the industry And I read every book I could get my hands on One of my favorite ones is this book called Hold by Steve Chader That one was really helpful in learning how to analyze properties One of the important things I think for people to do right now is look for off-market deals because the market is so intense The MLS is saturated and competitive And it s really difficult to find good deals if all you re doing is looking at the MLS One of the ways we found our first duplex was pretty much an off-market deal So we looked at the withdrawn and cancelled and expired listings on the MLS And I was reaching out to those list agents to find out what happened You know why did the seller take it off the market Did they change their mind Are they is it going to come back up And I remember feeling like I was pestering this one list agent about this duplex for months But really I was just trying to be polite and stay top of mind And when the seller was going to relist it she reached out to me first and she said Hey this is about to come back on the market Would you like to make an offer which was really beneficial because I could make my offer before anyone else did And that is how we got that first duplex Sam Wilson 03 45 Wow that s cool Now did you self-manage these Or do you self-manage these Are these be plugged in the property management company How do you handle that Rachel Richards 03 54 We self-managed until we got to about 26 units I think And here s the thing my husband and I were working full time So we were working 40 to 50 hours a week I was writing my book in the evening And we were acquiring and managing our rental properties on our own on the weekends and everything So once we got to 26 units we were like we definitely need a property manager And we ve made our share of mistakes hiring property managers as well But now to this day we re back to self-managing Sam Wilson 04 20 Okay that s really Yeah that s interesting because you at some point you re right You need that outside help But it sounds like there were some mistakes made along the way where that help wasn t so very helpful Rachel Richards 04 30 Absolutely This is our biggest mistake to date So my mistake is that I tend to be too cheap and being cheap can cost you a lot more money in the long run This is not the place to cut corners When you hire people like contractors and property managers You don t cut corners here So what we did is we were looking for a property management company and we you know they charge you anywhere from 10 to 12 And we had this couple that was working for us doing things like maintenance lawn care they were so hard working some of the hardest working people we ve met and they always went above and beyond So we figured let s make them employees of our company and they can be our property managers We can save some money and be a little more hands-on in the way that we are training them and managing them to manage our properties felt like a win-win right It was not it was not a win-win It was a win-lose So everything started off great And then about six months in my husband went to pick up rent from the onsite lockbox is one weekend and he noticed a lot of rent was missing And it was not just the normal tenant or to paying late it was a significant amount So come to find out this couple had stolen 6 000 in rent that weekend And we found out they had been squatting in vacant rooms and units in our properties for almost a year Devastating Yeah it was one of those occurrences where I was like we should quit This is not meant for us This is awful And that lasted for a few days And I got over it but it was devastating and such a violation of trust And the moral of the story is that again this is not the place to be cheap You need to hire a licensed insured properly-permitted you know everything reputable property management company because if we had done that and one of their employees had stolen rent from us they would have been liable for the damages not us So it s embarrassing to share Because in retrospect it seems so obvious It s so naive of us to have done that but I share it in the hopes that others will learn from my mistake Sam Wilson 06 24 Yeah no thank you for taking the time to share that that is painful I mean I m curious you said your husband had gone to pick up rent from the on-site lock boxes Now you live in Denver and these properties are in Kentucky So were you flying back to go pick up rent monthly Rachel Richards 06 39 No we were still living there at the time So we only moved to Denver a couple years ago Sam Wilson 06 43 Got it Okay cool Wow that s really intense Rachel Richards 06 46 Yeah Now we re not quite that dedicated But the great thing about moving away is that we ve been forced to streamline and systematize all of our processes And doing that has made self-managing so much easier I was so afraid to move away But owning real estate in another state is so freeing and it s a lot easier than I thought So if that s anyone s hang-ups if you re listening that don t be afraid to invest out of state it really forces you to be an efficient property manager and owner of real estate Sam Wilson 07 16 You know I ve heard that and I let s see do I own anything I own stuff that s four hours away So it s you know I guess that s I mean obviously involved as a general partner on deals that are much further away than that So I get it Yes I m trying to remember what that state where you re mentioning we re allowed to and maybe hearing this and going Gosh I can t quite wrap my head around it But you does all the things you just mentioned where it s like oh you know what I ve got to find a way to solve this without going to the property Got a way to find a way to solve this we re now taking all electronic payments there s no checks there s no cash being dropped off like this is the way we do business That s in fact a very freeing freeing thing to get in place I think once you ve done that tell me about your self-publishing journey I know you ve written the book And I know I read the title out here and we kick this off and I can t remember what it was now But tell me about the title of that book And then tell me about what s in the book and why you wrote it Rachel Richards 08 08 Yeah so one of the great things about passive income is that you don t have to own rental property to create passive income And so a lot of the things that I hear from people is like well I don t want to be a landlord Rachel I want to create passive income but I don t want to be a landlord And the great thing is you don t have to be a landlord to generate passive income There s a lot of other ways to do it besides investing in real estate I have found self-publishing to be an amazing way to generate passive income So in 2017 I self-published my first book Money Honey and it was the thing I did because I used to be a financial advisor All my family friends came to me for financial advice which I loved At the same time I thought Well why aren t they learning on their own You know why aren t they reading books listening to podcasts And I had this aha moment where I realized oh yeah personal finance is boring right It s overwhelming It s complicated It s intimidatin for most people No wonder people don t like to learn about it So I thought to myself How can I make this topic sassy and fun and simple And that s where the idea for Money Honey came from So I wrote it I was really excited Something I felt very compelled to do I didn t really think I was gonna make money to be honest I was so hesitant to invest in it So I spent like 560 on the book launch thinking I would never make that money back It was just a passion project But I published it in September 2017 And to my surprise to this day it just took off It resonated with female millennials it started selling spread by word of mouth I was making 1 000 a month in profit for the first year And I launched another book And last year I believe I made about 99 600 or something and profit from my two books I was like so close to becoming a six figure author but it s still really amazing to think you know these books now bring in anywhere from four to 10 000 a month in passive profit and it s just an example of you know you don t have to invest in real estate to create passive income streams Sam Wilson 10 05 Right No that s absolutely true I mean it can be books it can be other businesses It can be you know a variety of things that you do Tell me on since we re talking about the money side of things I know you said you re making about 20 000 bucks a month off your rental property off a 38 units That s over 500 bucks per month profit per unit Rachel Richards 10 26 Yeah and it s not that s including all my passive income streams Okay Yeah So at one point when we had 38 units we were making 10 grand a month from those 38 units It was about 260 per door Sam Wilson 10 26 Got it Okay Yeah I was gonna say that s it sounds pretty incredible 500 bucks a door in profit every single month So that s really really awesome Now you re a limited partner in eight syndications why are you going this direction and not buying more active real estate Rachel Richards 10 55 So great question real estate investing for my husband and I was always a means to an end we never wanted to build this huge empire And our goal was to get to 10k a month in profit from our rentals And once we did that we wanted to stop that was sort of our fat fire number We could become financially independent and not have to work anymore once we got that number So in 2018 we achieved that and we stopped acquiring real estate and it shocked some people you know they were like Well why not build an empire of 200 doors or 250 doors And we were like well that s not what we want to do So we stopped And I m proud that we were able to do that because you can really get caught up in you know enough is never enough And sort of always moving that goalposts further but we were able to stop and be intentional about what we wanted to do with real estate So that was why we stopped acquiring Now why we ve transitioned things is because the goal is to always make the income streams more and more passive And back then when we were building up this empire we had a lot more time than money We started off pretty broke in my opinion Again we didn t have like I wasn t a trust fund baby I wasn t making six figures we were just scraping the money together to get 20 down payments right We did have time and we were willing to hustle to make cash flow Now that we have a lot more money we would rather invest in syndications which are a lot more passive So last year we sold three of our big multifamily buildings And we ve transitioned that money into syndications And it s a much more passive way to directly own and invest in real estate So that s why we sort of change strategies Sam Wilson 12 31 Gotcha Let s talk about what you are investing in right now Are there certain asset classes you re favoring Where do you see opportunity as a passive investor Rachel Richards 12 42 So I favor multifamily just because I m so familiar with it And I can easily analyze those syndications So that s my comfort However I really want to invest more in self-storage and mobile home parks Because I think there s a supply-demand thing with self-storage right now And definitely with mobile home parks because it s a scarcity thing It s a limited resource And there s only so many and you re not allowed to build any more mobile home parks So I m really wanting to invest in more mobile home parks Sam Wilson 13 07 Right you obviously talk about mobile home parks you know commonly on this show and you ve hit a lot of the highlights that kind of go into why that s still a great asset class a great asset class to be involved in how have you gone about picking the sponsors that you are working with Rachel Richards 13 24 Great question because picking the sponsor is almost more important than picking which syndication you re investing in Because really when you re deciding to invest in a syndication you re placing your money with the person you re trusting the person and you need to find somebody that has enough knowledge who s done this before successfully who has the experience and who s trustworthy I ve heard horror stories of syndicators running off with you know 50k of somebody s money And yeah they ll eventually get caught and get thrown in jail but someone s not gonna get their money back So I definitely want to find good trustworthy people I was making the mistake at first to try to go on Facebook groups and LinkedIn and reaching out to people But the problem with cold contacting somebody is that no one can speak for them No one can vouch for them for me So the best way in my opinion to find good sponsors or syndicators is to be connected to them through a mutual contact or friend who knows them and trust them and has already invested with them So that is what I now do I have a good network And a book that I really recommend is the Hands-off Investor by Brian Burke It is so good It s very dry It s very technical even for me and I m a finance nerd But it s something if you read it like have everything you need to know to screen syndicators and to do due diligence on a syndication Sam Wilson 14 43 Righ Yeah I think I ve read that book before It s been a while but I ll put that back on the list And we ll certainly make sure we reference that And also the whole book by Steve Chader Yeah we ll reference both of those there in the show notes Questions for you You said earlier when you guys had hit you or number that you said Hey we had units X number of dollars in passive income And we don t want to grow any bigger That s not what we want to do is go bigger What did you want to do Rachel Richards 15 11 We wanted to just live a free lifestyle we wanted to work when where and if we want a lot of people get bothered by my use of the word retire because I still work I still work on my business I teach women how to invest in real estate I have books I have courses I have programs But the thing is I work now because I want to not because I have to And we now spend a lot of our time hiking and traveling And we have free time And we work again because we have the choice to work And that s because we want to do so it s about having the time to do what is fulfilling to us and not have to trade our time for money anymore Sam Wilson 15 52 Right Absolutely So what does the next five to 10 years look like for you Because let s presume I mean at some point forgive me for my projects you might be like I hate this guy You know at some point you know the book sales may drop off that income stream may dissipate And then if you re doing courses or some other stuff along the way do you just keep building some other things that are generating passive income along the way Is that really the plan Or is there something there that you guys are shooting big for Rachel Richards 16 18 There s I have a lot of ideas I have a lot of ideas and not enough time to implement them all But one thing I know about myself is if I m not building and creating something I m bored so I don t see myself ever stopping or slowing down from that regard I want to make an impact And I want to make a big impact and help as many people as I can That s what I m passionate about especially helping women So I want to write more books that s for sure One of my dreams is to write a fiction book actually I ve thought about becoming a general partner and being a syndicator myself or helping to raise capital So that s a thought that I have I definitely want to continue finding ways to invest in real estate maybe as a silent partner hard money lender just continue to find ways to just do more things and challenge myself Sam Wilson 17 02 Got it I love that I think that s the fun part about it And I really appreciate how you guys have defined what it is that you want I think a lot of people you know they keep doing like you said they keep adding on to keep moving the goalposts because they see well that guy has a billion dollars in assets under management why shouldn t I Like you know why should I go out and do this or do that But in the end it was not what it is that it serves you or the people around you it s probably not that fulfilling So you got to do what it is that s in your heart and in your goal list of things to do So I really admire you and your husband s ability to set limits on it and say This is what we re building And then we re done At least with the real estate you know portfolio part Yeah obviously like you said you re either building or you re bored You re always gonna be building something Rachel Richards 17 47 I think that s my new tagline I like that I m either building or I m bored Sam Wilson 17 52 Guys that s me I wrote building or be bored So yeah So that s really really cool Rachel I ve certainly enjoyed this Thank you for taking the time really to come on today and share with us your story of what you have done are doing in real estate publishing and everything else I think it s a really cool story It s certainly inspiring to the rest of us If our listeners want to get in touch with you or learn more about you what is the best way to do that Rachel Richards 18 15 Yeah thank you Sam you all can follow me on Instagram moneyhoneyrachel And what I d love to do for your listeners is if anyone wants to download my passive income starter kit I will give that for free so they can go to moneyhoneyrachel com passiveincome to download that Sam Wilson 18 33 Awesome And we ll make sure of course that we put that also in the show notes Rachel thank you again Appreciate it Rachel Richards 18 40 Thank you Sam Wilson 18 41 Hey thanks for listening to the How to Scale Commercial Real Estate Podcast If you can do me a favor and subscribe and leave us a review on Apple Podcasts Spotify Google Podcasts whatever platform it is you use to listen if you can do that for us that would be a fantastic help to the show It helps us both attract new listeners as well as rank higher on those directories so appreciate you listening Thanks so much and hope to catch you on the next episode Click here to visit this podcast episode