Podcast Summary
From Financial Hardships to Financial Independence: Rachel's painful job experience motivated her to build a rental property portfolio and retire in 2 years. Be resourceful and strategic in real estate investing, like Rachel's unique approach.
Financial hardships and difficult experiences can serve as motivators for personal growth and financial independence. The guest on this episode of the Bigger Pockets podcast, Rachel Richards, shares how a painful experience at a past job led her to become determined to never let financial constraints hold her back again. She went on to build a portfolio of rental properties and retire in just two years. Another key takeaway is the importance of being resourceful and strategic in real estate investing, such as Rachel's unique approach to buying properties. Additionally, the quick tip offers an opportunity for listeners to become guests on the podcast if they have done at least a dozen deals, and introduces the concept of investing in rental properties with no money down through Rent to Retirement.
Maximizing profits in real estate through full-service vacation rental management and easy business banking: Vacasa offers full-service vacation rental management for homeowners, allowing them to earn more revenue and have peace of mind. Relay simplifies business banking by allowing users to open an account online.
Both Vacasa and Relay offer solutions to simplify the process of owning and managing a vacation rental property or running a business, respectively. Vacasa provides full-service vacation home management, allowing homeowners to earn more revenue and have peace of mind, while Relay offers an easy and convenient way to open a business bank account online. Rachel's strategy, which she calls the "yard inch strategy," involves buying and selling real estate in smaller units, such as by the foot or inch, to maximize profits. Overall, these tools and strategies can help investors and business owners streamline their processes and make the most of their investments.
Starting young and staying persistent are keys to financial independence: Start young, sell to pay for education, persist in pursuing deals, and be resourceful to achieve financial independence by age 24
Starting young and staying persistent are key to achieving financial independence. The speaker shares how reading finance books in 6th grade sparked her interest in becoming financially independent. She faced limiting beliefs but overcame them by selling Cutco cutlery to pay for college and becoming a financial adviser. Despite having no distinct financial advantage, she saved aggressively and, at age 24, purchased her first rental property with her husband. This first rental was a great deal due to her persistence in following up with the listing agent over several months. While there were successes, there were also challenges, but each experience was a valuable lesson. Overall, the speaker's story emphasizes the importance of starting early, staying persistent, and being resourceful in achieving financial independence.
Exploring creative financing options during real estate transactions: Being flexible and creative during negotiations can lead to significant benefits, such as seller's concessions, which allow buyers to secure larger loans and close deals with limited resources.
Being creative and flexible during real estate transactions can lead to significant benefits. The speaker shared an experience where they initially struggled with a duplex deal, with one unit rented and the other in need of a total rehab. They were short on funds for renovations and considered increasing their offer price in exchange for a seller's concession. This strategy allowed them to have the seller pay for all renovation costs, enabling them to secure a larger loan and get the deal done. This approach is known as a seller's concession, where the seller contributes to closing costs or other expenses. However, it's essential to note that rules around seller's concessions have changed, so consulting a lawyer is recommended. The speaker emphasized the importance of thinking outside the box and exploring various options during negotiations to make deals happen, even when resources are limited. They've used similar strategies in the past, such as asking for a credit at closing or having the seller cover closing costs. These tactics can help buyers secure more cash at closing and make real estate investments possible.
Real Estate Agents: A Lucrative Opportunity for Investors: Real estate investors can earn commissions as agents to fund their next property purchases and scale their portfolio quickly, but consider expenses and time commitment.
Having a real estate license and being an agent can provide significant financial benefits for real estate investors. By earning a commission as an agent, investors can immediately receive a portion of the sale proceeds, which can be used towards the down payment for the next property. This can help investors scale their portfolio quickly, especially if they are doing a high volume of deals. However, it's important to consider the expenses associated with holding a real estate license and whether the ROI is positive. Additionally, investors should consider their time and resources and whether they can effectively manage their properties themselves or if they need to hire a property management company. Overall, being an agent and earning a commission can be a smart financial move for real estate investors looking to grow their portfolio.
Managing Properties Without Proper Resources and Expertise Can Lead to Financial Losses and Risks: Hiring licensed, bonded, and insured property management companies mitigates potential issues and saves investors from costly mistakes and unnecessary stress.
Attempting to cut corners or manage properties on your own without proper resources and expertise can lead to significant financial losses and risks. The speakers shared personal experiences of rent theft and financial mismanagement, emphasizing the importance of hiring licensed, bonded, and insured property management companies to mitigate potential issues. The financial component of risk is often overlooked when individuals decide to manage their own properties, and it's crucial to understand the role of property management companies in taking on these risks. By focusing on dollar-producing activities and letting professionals handle the behind-the-scenes tasks, investors can avoid costly mistakes and save themselves from unnecessary stress.
Don't Cut Corners on Safety: Investing in qualified professionals and valuing time over money leads to long-term growth and safety.
It's important to prioritize safety and hire the right people for the job, even if it means spending more money upfront. The story shared about a friend's experience with an unqualified electrician who disconnected pool wires, potentially putting lives at risk, serves as a reminder of the consequences of cutting corners. This mindset of being frugal and resourceful is understandable in the early stages of building wealth, but as we grow and scale, it's crucial to shift our focus to investing in qualified professionals and valuing time over money. The fear of holding back financially can be a limiting belief, but ultimately, making this mindset shift allows us to continue growing and scaling our investments.
The power of mindset in achieving success: Believe in investing in yourself and making scary decisions for future gains, even in financially strained situations. Surround yourself with the right people and adopt their mindsets for faster success.
Our mindset plays a crucial role in our success journey. Operating from a scarcity mindset, driven by financial constraints, may lead to poor decisions in the short term, but in the long run, an abundance mindset serves us better. The idea is to have faith that investing in ourselves and making decisions that feel scarier will pay off in the future. It's challenging to believe this when we're in a financially strained situation. However, learning from past experiences and recognizing that our current mindset might not be where we'll be in the future can help us make better decisions. Surrounding ourselves with the right people and adapting their mindsets can help us reach higher levels of success more quickly. Rachel shared her experience of rapidly acquiring properties without much time for reflection, but recognizing the importance of mindset shift in 2018 when they stopped actively acquiring properties. The podcast hosts agreed that the mindset is the number one x-factor in how quickly we get where we're trying to go.
Real estate investing for financial independence doesn't always mean growing a larger portfolio: Some investors aim for profitability as their retirement goal and shift focus towards passive opportunities like syndications
Financial independence through real estate investing doesn't necessarily mean continuing to grow and manage a larger portfolio. For some, like the couple in this discussion, reaching a certain level of profitability became their retirement goal. Once achieved, they shifted their focus towards becoming more efficient with their time and resources. This led them to consider selling some properties and investing in more passive opportunities, such as real estate syndications. It's essential to remember that everyone's financial goals and passions are unique, and there's no one-size-fits-all approach to real estate investing.
Overcoming limiting beliefs and fears around money: Determination and hard work, along with a shift in mindset, can help individuals build wealth and achieve financial independence despite past experiences and limiting beliefs.
Having a strong and determined mindset is crucial for building wealth and achieving financial independence. Brandon shares how his upbringing instilled limiting beliefs and fears around money, leading him to become financially independent at a young age. He also shares how negative experiences in the workplace further fueled his determination. Through hard work and saving, Brandon was able to build a portfolio of multifamily units, starting with two single family homes and scaling up to larger buildings. Despite the financial challenges, he remained committed to his goal and used every experience as a learning opportunity. This mindset shift from being a victim of external circumstances to taking control of his own financial future has been a powerful motivator for Brandon and continues to drive him towards success.
Starting with what you have and evolving your strategy: Begin investing with available resources, be open to different approaches, and adapt to new opportunities for success in real estate
Successful real estate investing often involves starting with what you have and evolving your strategy as you go. Rachel shared her experience of saving and investing her earnings from rental properties to build a substantial portfolio, even when her initial plan was to buy a single family home every year for 15 years. She emphasized the importance of not waiting until everything is perfect to get started, and being open to different approaches and asset classes. Rachel also highlighted the role of unique properties and cash flow in her success, which allowed her to retire in just 2 years. Overall, the discussion underscores the importance of taking action and adapting to new opportunities in real estate investing.
Exploring unconventional property management strategies for higher rent revenues: Implementing shared living spaces and effective management systems can lead to increased rent revenues, but requires commitment and long-distance investing can simplify property management.
Unconventional property management strategies, such as renting out properties by the bedroom with shared kitchens and bathrooms, can lead to higher rent revenues. However, it comes with added responsibilities and more work, requiring effective management and reliable systems. Long-distance investing can make property management easier by forcing the implementation of good systems and processes. Ultimately, focusing on financial freedom means prioritizing activities that move the needle towards that goal rather than getting bogged down in the day-to-day tasks of property management.
Identify and delegate non-revenue tasks: Focus on revenue-generating activities by identifying tasks that don't generate income and delegating them to others to grow your business or personal success.
It's essential for individuals, especially those in business or investing, to identify their strengths and weaknesses and delegate tasks that don't generate revenue. The speaker shares her personal experience of traveling and outsourcing tasks to focus on revenue-generating activities, leading to business growth. Additionally, she encourages individuals to step out of their comfort zones and test their systems in new environments. Rachel, the speaker, also shares her experience as a writer, where she turned the dry and complex topic of personal finance into an engaging and successful book series, "Money Honey," to make it accessible to a wider audience.
Creating passive income for financial independence: Write a book on personal finance, retire early with passive income, determine desired financial independence level, read 'Your Next Five Moves' for goal setting, invest in real estate for passive income.
Financial independence can be achieved through creating passive income, which exceeds living expenses. The speaker, who wrote books on personal finance for millennials, emphasizes that passive income is not a get-rich-quick scheme, but a way to retire early. She outlines various passive income models in her book "Passive Income Aggressive Retirement." Financial independence has different levels, from being able to quit a job and travel (level one) to owning a private jet or even a professional sports team (level three). It's essential to determine which level one desires and create a plan to reach it. The speaker recommends the book "Your Next Five Moves" by Patrick Bet-David for self-awareness and goal setting. In her personal experience, she bought a duplex in Louisville, Kentucky, and converted it into a 10-12 unit building, turning it into a profitable investment property.
Quickly securing a commercial property investment: Recognizing a good opportunity and moving fast can lead to a profitable real estate investment, even with unexpected complications and a lengthy renovation process.
Being prepared and recognizing a good opportunity can lead to a successful real estate investment, even with unexpected complications. This investor found a commercial property listed on MLS for $125,000 and made a full-price offer within 30 minutes. Although there was no intense negotiation, they had to secure a commercial loan due to the zoning and got 11 bedrooms out of the renovation. The average weekly rent is $130, and tenants tend to be blue-collar workers or travelers seeking short-term leases. Despite a lengthy and costly renovation process, the investment still proved profitable due to careful number estimation.
Creative thinking leads to profitable real estate investments: Imagine potential improvements to generate higher revenue and lower expenses, don't judge properties based on current state, consider different strategies, and work with a good property manager.
Creative thinking and a willingness to challenge the status quo can lead to profitable real estate investments, even if the initial conditions seem unfavorable. The speaker shared an experience of buying a run-down apartment building and turning it into a cash cow through renovations and management improvements. Despite the challenging renovation process, the investment generated a high cash-on-cash return. The key lesson learned was to not judge a property based on its current state but to imagine how it could be improved to generate more revenue and decrease expenses. The speaker emphasized the importance of considering different investment strategies based on personal circumstances and not following others blindly. The real estate market offers numerous opportunities for investors at various stages of their careers. The speaker's experience also highlighted the importance of working with a good property manager to oversee the investment and maximize returns.
Discovering impactful books for personal growth: Reading 'Rich Dad Poor Dad' and 'The Millionaire Fast Lane' helped Rachel shift her mindset towards entrepreneurship and wealth-building. Hiking and Wim Hof's breathing exercises also inspire her growth.
Reading the right books can significantly impact one's mindset and financial journey. Two books that have made a difference for Rachel are "Rich Dad Poor Dad" by Robert Kiyosaki, specifically the Brian Burke edition, and "The Millionaire Fast Lane" by MJ DeMarco. The former provided valuable insights into real estate syndications, while the latter helped Rachel transition from a consumer to producer mindset and appreciate the wealth-building potential of entrepreneurship. Rachel also enjoys hiking and traveling and is planning to climb her first 14,000-foot mountain. An unexpected encounter on a previous hike led Rachel to discover Wim Hof's breathing exercises, which she plans to try on her next hike to improve her endurance. Overall, Rachel emphasizes the importance of finding books and experiences that inspire personal growth and challenge one to step out of their comfort zone.
From criticism to action: The power of starting: Success in real estate investing requires both knowledge and action. Don't let criticism hold you back, start small and learn as you go.
That successful real estate investors act on their knowledge, while those who fail or never get started may lack the execution. Rachel shared her personal story of enduring criticism and the importance of taking action despite setbacks. She emphasized the quote from Zig Ziglar, "You don't have to be great to start, but you have to start to be great." For those interested in learning more about Rachel, her Instagram handle is @moneyhoneyrachel, and her books, "Money, Honey" and "Passive Income Aggressive Retirement," can be found on Amazon. Rachel also offered a free passive income starter kit for listeners at moneyhoneyrachel.com/bonus. Overall, this episode emphasized the importance of taking action and implementing knowledge to achieve success in real estate investing.
