ITF 25 | Real Estate Investing


We are super stoked this week to be joined by the one and only @MoneyHoney FI Queen Rachel Richards! Retired at 27, she is known for helping a growing number of fans get their Financial $hit Together, and real estate investing was a key strategy!

Investing in real estate can seem daunting, but 24-year-old Rachel Richards decided to accept the risks when she bought her first property. Two+ years and some 40 units later, she had enough passive income to retire at the age of 27 and is currently living off $15,000 a month! Now, she’s the author of two bestselling books with an 8-week online course on financial literacy.

In this episode, Rachel talks about her rentals, the lessons she’s learned as a long-distance landlord, and how real estate can be a means to an end. Stay tuned to learn more about property management and also self-publishing as a passive income stream.

Listen to the podcast here


Real Estate Investing With The FI Queen Rachel Richards AKA @MoneyHoney

I’m here with Zeona McIntyre. Big Z, how are you doing?

I am great, still enjoying Hawaii. If you have any cool real estate updates, how’s that duplex going?

We’ve closed on that duplex. We’ve got the contractor going in there. We’re pulling permits as we speak. He’s going in and painting because that’s the only thing you could do without pulling permits. So far, so good. There are a couple of hiccups that we’re already dealing with. I started on every single property and got them. We take them and it’s going to be a good deal once it’s all said and done, so I’m excited about it.

We found this cool house that looks like a scary den inside, but it’s got some great views. We might do our first big reno project. I’m going to check it out with my brother who’s a contractor and see how it looks. That could be fun.

Is that in Hawaii?

Yeah. We’re trying to get something here. We’ve been looking at places all over the mark. We have an opportunity here because I have so much family that’s in construction. I’m like, “Maybe we should get a rundown place.” Usually, that’s not my BHAG but we’ll try.

Try it out. If it works, great and if not, go back to what you’re good at. Speaking about being good at things, we have a phenomenal guest, Money Honey Rachel. If you haven’t heard of her, you should have because she’s crushing it. She has $16,000 in passive income and started with a low-paying job of $36,000 a year. She’s scrappy in her first few years picking up rental properties left and right, and then picked up 40-something units in two years.

To me, that’s a scary large number, but she did it in a smart way with multifamily. It’s not that bad when it’s just a couple of buildings, right?

That’s right. She’s got a couple of buildings. She picked them all up from 2017 to 2018. In 2018, she was happy with her passive income, and now she’s working on other streams of passive income such as book writing, developing courses, and all these other things. She’s a wealth of knowledge. Everyone here has something to gain from this episode.

If you don’t do anything else, follow her on Instagram because she has the most hilarious memes. I literally cry. You’ve got to check it out.

She’s funny on TikTok too if you ever listen to her on TikTok. Are you on TikTok yet?

I’m not on TikTok. Don’t make me do it.

She’s the old lady.

I am an old lady.

We still get the old lady wisdom from you.

I’m a wise sage.

That could be a meme. Speaking of wise sages, let’s get into the episode.

Money Honey Rachel, welcome to the show. How are you doing?

Craig and Zeona, I’m great. Thank you. How are you?

Better now that you’re here. This is going to be a fun episode. I’ve been looking forward to this one for a while. I finished up with your second book, Passive Income, Aggressive Retirement, which was super good. We’ll have to get into that.

Thank you.

First, we wanted to see how you come across financial independence? Where did you first learn about it? When was it? Tell us a little bit about your journey.

I’ve always been a personal finance nerd. I started reading The Motley Fool Investment Guide for Teens in sixth grade. I was a little nerd. I first read Rich Dad Poor Dad in high school and that was my first taste of, “Here’s a path to financial independence.” I became obsessed with real estate investing first and foremost. I went to college. I paid my way through college selling Cutco knives. Have either of you heard of Cutco?

Yes. I have a set or two. I love that.

They’re the best. I was able to graduate without debt, which was helpful because even though I was only making $36,000 after graduating in my first job, I was still able to save half of my income because I didn’t have any debt. That was helpful in terms of saving up a few thousand dollars so I could get that first rental.

You knew you wanted to get into real estate immediately after graduating college?

I wanted to do it as soon as possible. I held myself back because I thought I needed a ton of money, which I know now there are ways around that. I graduated college when I was twenty and I bought my first investment property when I was 24.

What year was that when you bought your first investment property?


When you invest in real estate, you can lose money. You can make mistakes that cost you money. You can make mistakes that cost you time. Click To Tweet

Tell us a little bit about that one.

It was a duplex in Louisville, Kentucky. All of my rentals are in Louisville, Kentucky. I had lived there for twenty years of my life and it made sense. I was with my fiancé at the time and we’re married now, my husband, Andrew. We made the investment together. A lot of people ask us, “Where did you come up with the down payment for this first property?” It goes back to a couple of things. We both graduated without debt. He’s a veteran so he used his military benefits. We were saving aggressively even though neither of us was making six figures or anything like that.

We were investing in Louisville, Kentucky, which is a great place to invest. Housing prices are reasonable. The cost of living is low. That first duplex was $100,000. That’s what we purchased it for. By then, my husband and I each had $10,000 in our own savings that we put into this investment property to get to our 20% down payment.

Why don’t you guys use the VA loan?

He had already used it for his primary residence, so there wasn’t enough left to purchase it for the next one.

Do you mean that’s his primary residence or did you sell it?

We kept that one after I moved out of it so it’s being rented out now.

You bought that first duplex in Louisville, Kentucky together with your fiancé at the time for $100,000. What did the rent look like? What was the monthly payment? Go into those numbers.

One unit was already being rented out. It was $600 a month. It was super cheap. I knew there was potential and it was under rented. The other unit was completely uninhabitable and it needed a total gut job. Something we did well when we were negotiating this deal is we got a huge seller’s concession. That’s hard to do. Now it’s harder because lenders are looking for it and you’re not loud. We were able to negotiate a great seller’s concession where we were going to buy it for something like $85,000. Instead, we bought it for $100,000 and they gave us a $15,000 seller concession.

What does seller concession mean?

That means that they give you money at closing.

ITF 25 | Real Estate Investing
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

Cash and put at the table?

Yeah, but it’s an under-the-table type thing. Maybe I shouldn’t be talking about it on a show. Lenders are more careful and strict about that type of stuff. I don’t know if you can get away with it or if it’s legal anymore. That’s what we were able to do and it was so great because we were willing to take out a larger loan and to have that upfront cash so that we didn’t have to pay a penny of our own money to renovate that entire unit.

Seller’s concessions are totally legal. It’s just sometimes that they’re capped so it’s harder to do now. Depending on the type of loan, it can be capped. I was selling a home that they were doing FHA and they maxed them at 6% so they couldn’t get more money than that and it could only be used for closing costs. To use it for construction, I don’t know if you can always do that.

Thanks for clarifying.

One other thing you want to be careful of too is that you have to make sure that the appraisal is going to value the house at $100,000 and not $85,000. Did the appraisal come in at $100,000?

Yeah, I got lucky. First of all, I had my real estate license at the time and I never had it for the purposes of having my own clients or helping people buy and sell houses. It was just for my own purposes as an investor. It gave me a slight time advantage and I had total access to the MLS. I found this deal because I was going through canceled and expired listings on the MLS and I started reaching out to the listing agent.

I probably pestered this poor girl for six months or something and I was like, “Is this going to come back on the market? Please let me know when it does.” Because I was so persistent, she told me first. She let me put an offer before they even put it back up on the market. It was a super low price. They just wanted to get it off their hands. I got a great deal on it and I was able to make the first offer because I was being so persistent.

How did you do that on your first deal?

I had been reading so many books about real estate investing, everything I could find. I was starting to learn about some of the more creative ways to find properties like probate lists and bandit signs. I’m going around and looking for vacant properties, short sales and pre-foreclosures. That’s where I started.

What you’re saying is you are looking for people with a problem. It’s essentially what you’re looking for, expired, and all that kind of stuff. When you find people with problems, usually you’re going to inherit their problem for a lot cheaper than you would inherit like a traditional property. That’s a phenomenal way to find deals that are low priced. Good on you for doing that.

Thank you. It was a great price, $100,000, and now it’s probably worth $175,000 a few years later.

Hiring a property manager is not the place to be cheap and to cut corners. You want to hire somebody that's licensed, bonded, insured, and has all the proper certifications. Click To Tweet

Seventy-five percent growth in three years. The glory of real estate. You said you’ve got $600 for the first unit. You do a total gut job on that second unit. You’ve got $15,000 from the seller to do that. How much is the total costing, and then what were you able to rent it out for later?

That covered the whole renovation. It came in exactly $15,000. We got lucky. We were renting it out for about $750 or $800 after that and now both units are rented closer to $800. When we first initially bought it and after we completed the renovation and rented out the units, we were profiting about $500 a month in net cashflow. Now, it’s more like $800 a month.

That seems great for $100,000. I’m super impressed that you can do the gut job for $15,000. Did you guys do some of the work?

Yeah. That was a good price. We found good contractors. The thing was I stayed on top of them to make sure it didn’t drag out and go over the timeline. It was a three-week job. They had to raise the foundation because it was sunken in. That was the toughest part of it. It was getting it cosmetically updated as cheaply as possible.

I’m curious when you looked at that for your first deal, how did you not get scared? For a lot of people, they’ll buy something that maybe needs a newer vanity or something light to start, but to take on a whole gut job without any experience unless your partner had experience is brave.

Thank you. It was scary. I held myself back from starting sooner probably for a couple of reasons. A) I thought I needed more money and B) It’s scary. When you invest in real estate, you can lose money. You can make mistakes that cost you money and time. I was scared of it at first. One thing I did to get over that fear is to accept the fact that I was going to make mistakes and that it wasn’t going to be perfect. I had to accept that upfront and know that it was not going to be perfect and I was going to lose money. Once I accepted that as reality instead of trying to be this perfectionist, it made it a lot easier.

ITF 25 | Real Estate Investing
Real Estate Investing: One of the biggest mistakes that new investors make is they underestimate the expenses and how much it’s really going to cost.


The other thing is because I’m such a finance nerd and geek, which I love finance. I was conservative in the estimates. One of the biggest mistakes that new investors make is that they underestimate the expenses and how much it’s going to cost. It’s easy to look at, “Here’s the rental income minus the mortgage payment. That’s how much I’m going to profit.” No, that cannot be more inaccurate.

You have to account for all of the expenses, maintenance, repair and HOA fees. Who’s going to pay for lawn care and utilities? You were the tenant. What about pest control, property management and capital expenditures? There are all these different things you have to account for. When I saw that deal and ran the numbers, it was crystal clear. It was an amazing deal. I did have some confidence in doing the calculations. Even if it costs a lot more for the renovation or we don’t rent it for as much as we think, we will still be profiting a lot of money.

How much money did you have in the bank before you got your first deal, before the down payment for the rehab? When did you feel comfortable to pull the trigger?

We had been saving money in our retirement accounts but in terms of our savings, we were risky with it. Here’s how it went for us and also the reason we were able to scale. I have my real estate license so I knew that if I represented myself as the buyer’s agent on the deal, I was going to get a commission check at closing. We would totally deplete our savings to buy each property, but I have the comfort of knowing we’re about to get a few thousand dollars back that we can put back into our savings and save up for the next down payment. At least I had that little bit of a safety net with that.

One of the perks.

It’s so great to have your real estate license as an investor.

I always say if you’re going to do at least one deal a year, it’s worth having your license.

That’s exactly what I say.

That was a good feeling for this first deal, $100,000 duplex in Louisville. You’ve got $600 and $650 to start and now you’ve raised the rents over the last couple of years. They’re now at about $800 each, so you’re getting $1,600 in rent. Did you tell us what the mortgage payment was?

When you think about your finances and spending, it's not good to be too extreme on either side. Click To Tweet

It is $675 including taxes and insurance.

The whole monthly payment is $675, so your rent over the mortgage is at about almost $1,000 a month. Let’s say $900 minus any property management and any stuff like that. You’re probably cashflowing $400 or $500 a month.

It started out that way. It’s closer to $800 a month now in profit. It’s amazing. I told my husband, “This is going to be the best deal we’ve ever done.” We were in the right place at the right time and it has one of the highest cash-on-cash ROIs of all of our properties.

That’s insane. I suspect you have property management in Louisville.

We’ve gone back and forth. I can share a funny story about property management where it was a big mistake I made. It’s embarrassing, but I like to share it so that other people can learn from it. We got to the point where we had probably about 26 doors we were managing and we both were working full-time. I was writing books, so it was clearly time to hire a property manager. Here’s the thing, I tend to be frugal, which can lead to being too cheap in certain areas and not spending enough money.

There was this couple that had already been working for us, husband and wife. They did a lot of the cleaning of the common areas. They did some of the maintenance, the lawn care. These were the hardest-working individuals I had ever met. They always went above and beyond. My first thought was, “What if we made them employees of our company and they manage the properties for us? Because that way we could save some money and be a little bit more hands-on with the way they’re running it.”

That’s what we decided to do. That was our huge mistake. It started off great and then about six months in, my husband went to pick up rent on-site one Saturday because we have locked boxes on-site. He noticed there was a lot of rent missing. It was not just the normal tenant paying late. It was a significant amount. We’re calling our property managers trying to get ahold of them and we don’t hear from them at all. In fact, we never heard from them again. They disappeared.

It turns out, they stole $6,000 of rent income that weekend. We found out that they had been squatting in vacant rooms and units on our properties for almost a year, so that was awful. I can laugh about it now because it’s funny in hindsight. At the time, it was not funny. It’s an expensive mistake that we made and that we’ve now learned from.

The moral of the story is hiring a property manager is not the place to be cheap. It’s not the place to cut corners. You want to hire somebody that’s licensed, bonded, insured, and has all the proper certifications and everything they need because if we had done that and one of their employees had stolen rent from us, they would have been liable for those damages, not us. I like to share that because I feel naive and it’s embarrassing in hindsight, but just so somebody else can learn from my mistakes.

That’s an important one to share.

That wasn’t the duplex, right?

It was later once we have several buildings. We had about 26 units at the time.

There’s a gap we need to fill there.

I want to go back into talking about being too frugal and how that leads to problems in your life. Often, we talk real estate on this show, but part of the FI world and early retirement, we do get into that space. I battle that often. Maybe Craig’s too rich to have this problem, but you’re probably cheap as well. I would love to have that conversation briefly. It’s an important thing to tell people. How does that come up for you and how would you be able to pass that?

ITF 25 | Real Estate Investing
Real Estate Investing: You can also be too extreme on the frugal side where you’re really pinching pennies and you’re not even living a full and happy life because you’re so worried about spending money on stuff.


When you think about your finances and your spending, it’s not good to be too extreme on either side. Most people are too extreme that they spend way too much or they spend more than they make. You can also be too extreme on the frugal side where you’re pinching pennies and you’re not even living a full and happy life because you’re so worried about spending money on stuff. I have been there. It’s sad and isolating, and it’s hard to find that balance. I’ve gotten better year after year.

Another example is with my book. I’m the author of two books. I was feeling along the lines as if I was hitting a wall. “Where do I go next? How do I strategize and grow this company?” I had been doing everything on my own up until then. I refuse to hire anybody. I didn’t want to hire a coach because it was too expensive so I was reading books. In hindsight, I wasted a lot of time doing things on my own when I could have paid someone for the easy answer. Now I’m much more willing to hire a coach or a mentor or join a mastermind because it’s so worth the money to invest in yourself.

Thank you for sharing that. I’m curious with you, Craig, how does that come up in your life?

Rachel and I were joking that we’re the same person. I agree, I used to do wicked cheap and I’m like, “Let’s just read books. All the experts have written books so they can get all their knowledge by reading a book.” It’s totally different when you hire a coach. I’ve hired a coach and I joined a group called GoBundance. These are tens of thousands of dollars that I was spending that I would never spend before to better myself. I can already feel my life going up to the next level. One of my goals this 2021 is to spend more money personally. That is one of my goals because I was like you, Rachel. I’m spending $20,000 a year and I thought I was happy, but then there are a lot of things in life that I’m missing that I could probably introduce now.

I love GoBundance. Are you learning from David Osborn?

I haven’t spoken with David Osborn yet. I joined not too long ago, so we’re more like GoPods and I’m getting to know the guys that I’m close with. There are events once COVID dissipates a little bit. Hopefully, we can go to some events. Rachel, let’s get back to your real estate journey here. To go back, you’ve got that first property. It was like a homerun for you. You’re fixing it up, all that stuff. What did you do to get property two and what was that?

I thought this was going to take a longer time for us to build out our real estate portfolio, but we didn’t have any debt and we were already saving about half of our income, and then I started getting commission checks every time we would buy a property. We were able to save up quickly for the next property and the next down payment. That’s how we were able to scale so quickly.

The next property we bought was an 11 or 12-unit building, and it was at the end of that year. That one was a lot more. It was $400,000. We had to come up with the $100,000 down payment. It’s incredible that we could save that much at that point off of our salaries, off of reinvesting the cashflow from the first one, and the commission check. We were able to get there quickly.

If you live in a high cost of living area, don't confine yourself. You can be a long-distance landlord. Click To Tweet

How much were you making at this time?

After I graduated, this was way before I started investing, I was making $36,000. In 2017, I was making $75,000 and by then, my husband had gotten over six figures or was close to it at that point.

You’re making almost $200,000 for both of you. You’re able to say up between your real estate income and your rental income. You’re able to get this $100,000 to put down on a $400,000 property, so you’re not house hacking. You’re just buying these properties straight up. What did that property look like?

It’s a huge brick building that has 11 or 12 units inside it. It was move-in ready so we didn’t have to worry about anything. It was already fully rented. It was an insane deal because I found all my properties on the MLS. I can’t believe somebody didn’t scoop it up faster. There’s part luck and part if I wasn’t working so hard, I wouldn’t have been in the right place at the right time. We were working hard. We had some good luck and that was the next one that we bought.

I love hearing that a house in Denver is $400,000 for a shitty house. In Louisville, it’s so great that you could get twelve units. It’s such a good reminder that sometimes people get stuck and focused on where they are. Open your mind a little bit to what else is in the US even and outside in the world as well. There’s so much opportunity around, especially Midwest and out there on the East Coast.

I always encourage people, if you live in a high-cost area, don’t confine yourself. You can be a long-distance landlord. Of course, I used to say that and I wasn’t, but now we’ve moved to Colorado and I am a long-distance landlord. It’s easier for me because we would go down there twice a week. Whenever something came up, we’d be at our properties constantly when we were in Louisville. Now that we’re here, we’re forced to outsource everything so we’ve streamlined our processes. We have team members in place and it feels much easier to manage. It’s encouraging to see that and that’s why I tell other people to do that, too.

There’s a great book out there. David Greene wrote the book, LongDistance Real Estate Investing. I highly recommend it. If you’re thinking about investing out of state, pick it up, especially if you’re looking for a cashflow-type market. Denver is super expensive, $400,000 for a single-family house, but you’re not going to get a whole lot of cashflow on it. There are creative ways to do it, which is what we do. In Rachel’s case in Louisville, I bet you make a lot of cashflow, but maybe the appreciation isn’t like it would be in Denver, Seattle, Austin or something like that, right?

That’s exactly right.

I’ve got a lot of questions on this one. How did you have the cojones to go from a duplex to a twelve-unit under a second deal?

We were hungry and eager. When I look back at that period of my life, I’ve never worked harder in my life. It was exhausting two years, but we wanted to make it happen quickly. We sacrificed a lot of our freedom back then, even mental health, which wasn’t intentional. Going back, I would have done things a little bit differently. We made a lot of sacrifices and we made big bets in the most riskless way possible and it worked out. We were able to get up to 40 units only three years later.

With this first twelve-unit, did you rent out these units yourselves? Did you help them help?

Yeah, we were self-managing the first three properties we bought. We had the duplex, a twelve-unit, and then another twelve-unit. By that point, we could not do it on our own anymore. We needed help. That’s when we hired those awful people.

What did you rent out each one of those twelve units for roughly?

ITF 25 | Real Estate Investing
Real Estate Investing: We knew all the tenants personally. We wanted to keep an eye and see what was going on, make sure everyone was paying rent.


They were about $500 a month on average.

You’re making $1,600 a month and you’re earning income from that and your mortgage payment is around $2,000, $3,000?

Between that, $2,500 or something like that.

No wonder people like multifamily so much.

Multifamily is the best and Louisville is so great. Anywhere in the Midwest is where you’re going to get the biggest ROI.

Midwest and southeast are the biggest cashflow regions of the country. What year did you pick up that twelve-unit? 2017 was your first one.

That was at the end of 2017.

In less than a year, you went from 0 to 14 units in all of 2017. That’s crazy. When’s the next one?

That was in the spring of 2018.

You seem to have $100,000 again that quickly. What was the purchase price on the second twelve-unit?

It was an enormous duplex. I’ve never seen such a big duplex that we converted into a multi-unit easily. I want to say it was $125,000 and it’s probably worth $300,000 now because of how much cashflow we bring in. It’s producing so much income because of what we did.

What did you do?

We divided it up into ten units. We can’t remember the exact units on each building. We built more bathrooms. Something we did on two of our properties was we took out the central AC and we put window units everywhere. I don’t know how that’s worked out from an ROI perspective, but our tenants appreciate that. We were making about $5,000 or $6,000 in revenue per month from that, but our mortgage payment is $1,000. Now it’s worth something like $300,000. That was amazing. That was another one of the great deals.

Coming from a property manager because I’ve done a lot of that, I want to know a little bit about how it was when you took on that first twelve units. Were there five units vacant and all of a sudden, you’re scrambling around to fill them? Were they all filled and it was about when somebody was leaving, bumping the price, cleaning it up? How was that for someone who’s just managed two units?

That’s not as bad as I thought it was going to be. We had our expectations set correctly because we were down there every single weekend, clockwork for probably an entire year because we were wanting to make sure we were on top of things. We knew all the tenants personally. We wanted to keep an eye and see what was going on and make sure everyone was paying rent.

You don't always want to go with the cheapest contractor because they can end up costing you the most money. Click To Tweet

I remember Andrew and I, especially later on when we had all the units, we would be down at our properties from 8:00 AM until 2:00 PM on Saturday, every single weekend. There would be more trips throughout the week. If something came up or somebody got locked out, we’d have to run down there. By no means was it easy. I know when we talk about it in hindsight, it’s like, “We bought this one and then this one.”

I’ve never worked so hard in my life, but I wanted to make sure that we had invested so much money. I wanted to be on top of it and make sure that the numbers were going to work out. We also wanted to self-manage for as long as possible for those same reasons so we could learn and understand how to fill the vacancies quickly. That way, we knew what to expect if we were ever going to hand it off to a property manager.

A lot of times, all you hear is the flash in real estate. It’s important for people to see the sacrifice, the hard work, the blood, sweat and tears. I appreciate that you’re sharing that because it is easy to be like, “I made $5,000 a month flash in the pan,” but it’s not like that. It’s important that people know that.

There are a lot of downsides. Managing tenants is hard. We’ve had to evict tenants before. When I remember buying that first twelve-unit, I’m a non-confrontational person but we would start having to confront tenants a lot if they were late on payments or they were making a lot of noise. We started having these issues. We were like, “We need to go knock on their door and talk to them.”

I specifically remember the first time I had to do this for this guy, Derrick, which we later ended up evicting. I approached his door. I was giving myself a pep talk like, “You’re going to tell him he needs to pay by today or he’s getting a late fee.” I was physically shaking to have to do this. It’s so funny looking back where you start out and how scary it is and how much you learn over time because now I can be like, “What’s going on? Pay your rent with no problem.”

I imagine you don’t have the locked boxes anymore. You guys have upgraded to those online payments.

Yes, everyone is paying online now.

Online payment is absolutely crucial. When you’re going up there and you’re shaking, your stomach is dropping. It happens to everybody at some point in this real estate investing journey. Whether it’s when you put your first offer in, whether you evict your first tenant, that whole thing is growth. Look at you now. You can go up there like you’re not scared at all. Don’t be afraid of those moments. Embrace those moments and be ready for those moments because real estate investing is just that. You’re constantly growing. I’m trying to keep track. You’ve got the duplex in 2017, twelve-unit at the end of 2017, and early 2018, you’v got this duplex that you converted into a ten-unit. How much did that cost?

ITF 25 | Real Estate Investing
Real Estate Investing: You don’t want to argue or be assertive or start a confrontation, but you just have to remember, this is your money you’re protecting.


It was $40,000.

To add all those bathrooms and split up the units?

Yeah. We had cheap labor. That’s one thing we did well with contractors. Another mistake people can tend to make is they just have one person come out and do a quote, and they go with the first quote. We’ve always had as many people as possible come out to quote the property because when they know it’s that situation, they have a certain profit margin so they know that they can underbid the other contractors by a certain amount. That’s when you can get them to try to compete against one another.

This is another example though of where you could potentially be too cheap, and this is what happened on this property. We hired a contractor and he had done great work on that first duplex. It was the same contractor, but he was starting to subcontract out his work. He wasn’t there every day overseeing, doing the budget, and making sure people were doing their job. He had subcontracted it out. I didn’t know better than to push back on that. I was like, “That’s fine. We trust you,” but it was a nightmare.

This was a renovation that should have taken 1 or 2 months maybe. It dragged on for 4 or 5 months. It was the first time where even with my conservative estimates where I built in a 20% buffer and I built in all these extra things, we went over budget and over the timeline which sucks when you’re wanting to fill these units and get people in to start paying rent. That is another example of you don’t always want to go with the cheapest contractor because they can end up costing you the most money.

There’s always that joke, “If you think a $100 electrician is expensive, you should try to hire a $10 one.” I want to go back to you with the managing contractors and getting quotes from contractors. It’s no secret that you’re a female investor. Did you feel that they were trying to take advantage of you because you were female or anything like that?

I’m sure there were moments where that happened that I probably can’t recall at this point years later, but I can be assertive when I need to be. When it comes to numbers, I will be. They could sense this, “We’re not going to mess with her,” in a way. I didn’t experience as much of that as I thought I would.

If there’s a female reading this, how would you help them avoid that? It is a fear that many females do have when it comes to real estate investing.

You have to be your own advocate. Don’t believe the first quote that they give you. Don’t believe the first suggestion that they give you. Always be pushing back and questioning. That’s something that’s uncomfortable for a lot of women and men because it’s awkward and it’s uncomfortable. You don’t want to argue or be assertive or start a confrontation. You have to remember this is your money you’re protecting. You have your money and your lifeline on the line. You have to be your own advocate so that you’re not getting taken advantage of.

I can tell by the way you talk that I’m sure you were talking with confidence eloquently and clearly. That is probably huge in terms of like, “This chic knows what she’s talking about.” You’ve got to be specific and you’ve got to know what you’re talking about and your stuff, so you don’t get walked all over.

You can’t be afraid to push back and be like, “That window isn’t what we talked about. What happened here?” State things confidently, don’t approach it as if you’re asking a question, come into it with a statement, and state things clearly and confidently.

We’ve got an idea of your first three properties, so that brings us to 25 or 26 units?

Something like that.

How many properties do you have in total?

Don't believe the first quote and the first suggestion that they give you. Always be pushing back and questioning. Click To Tweet

6 buildings, 38 or 39 doors.

Why don’t you briefly take us through the other properties? It sounds like the moral of the story here for how you’re acquiring these is that you’re super frugal. You’ve got a lot of different ways that you’re making money between the real estate and rental income that you get and your jobs. I suspect there are other ways.

There are other ways, and I didn’t know of them at the time so I was like, “We have to be frugal and save every cent that we can keep buying properties.” In hindsight, I could have done the BRRRR Method easily because that initial duplex, we had equity in it almost instantly after we finished the renovation. If we had needed more money for a down payment, we could have done that. It’s just that we never ran into that because we were fortunate.

I’ll go over my whole portfolio. We have our first duplex, the next one which is 10 or 12 units, the next duplex which we converted to ten units, and then we got another building that was around twelve units. We then have two single-family homes, which were the previous primary residences that we kept and rented out after we moved away.

This is another concept that comes up a lot in FI. What is enough? Is this the end of your portfolio or do you guys like more and more and you’re something working? Tell us a little bit about that.

I’m glad you asked that because a lot of other investors are surprised to know that we stopped acquiring properties in 2018. A lot of people are like, “Why aren’t you continuing to build out your empire?” For me, I’ve never been so passionate or in love with being a landlord that this is what I want to do. It was more of a means to an end. I’m passionate about what it can do for me.

ITF 25 | Real Estate Investing
Real Estate Investing: Don’t approach things as if you’re asking a question. Come into it with a statement and state things clearly and confidently.


We had this number in our minds of $10,000 a month in passive rental profit essentially. Once we got there, we didn’t want to keep acquiring because we wanted this income coming in so that we could then pursue other things that we cared about and other things that were fulfilling to us, hiking and traveling. I love to write my books and teach young women about financial literacy.

The real estate for us has never been about, “I want to own 250 units or have a $20 million portfolio.” It was just a means to an end to get us to financial independence. If anything at this point, we’re thinking about starting to sell some of our buildings because we now are at a financial point with our income that we are thinking about transitioning into something even more passive. Going from direct real estate ownership to doing more real estate syndications, that’s probably going to be our next move.

It does continue to grow. People don’t realize that. Rents keep coming up and your mortgage stays essentially the same. Maybe taxes go up just a smidge, but it continues to happen to the point where you’re making so much more values go up. Do you want to keep all of that? It is a liability and it’s more things to think about, so why not simplify it and have it work for itself in other ways where we’re not as involved?

What was your net worth when you hit that $10,000 passive income amount?

My net worth is the only thing that I don’t share.

The reason why I was asking is because a lot of people in the FI community use this 4% rule because if you have $10,000, it means your net worth would be $2 million-something. I suspect that you had a much more efficient portfolio than that. You don’t have to share it.

You’re right, a lot of our rentals have cash-on-cash ROI of 15% to 25%. To us, it wasn’t about building up this nest egg to draw the 4% off of each year. Although I know that’s a popular way to achieve FI. We wanted to hit a certain passive income level where once our passive income exceeded our living expenses, then we’re financially independent. We got that with $10,000 in rental income and now we have all these other passive income streams where we’re making so much in passive income and still saving a lot. It’s the best of both worlds.

What are these other passive income streams that you so graciously talk about?

I have my book royalties. I’m a self-published author. I have two bestselling books. Money Honey was my first one, which I published in 2017. 2017 was a big year for us. It started off making probably $1,000 or $1,500 a month in royalties but in 2020, the average was $4,000 or $5,000 a month. For two months, I’ve made $10,000 a month in book royalties. That one’s almost more than our rentals at this point, which is exciting. I have my online course, which since it’s all pre-recorded and created, it’s passive. I’m making on average a little over $4,000 a month from that as well.

What does it take to write a book? What inspired you? Have you become a bestselling author? Especially in 2017 before you even had anything.

There’s this statistic I had read at some point that’s something like 82% or 84% of Americans dream of writing a book and becoming an author. It’s this dream that a lot of us share. I had always wanted to write a book ever since I was a little girl. I read this book called Published. by Chandler Bolt, which is an excellent resource for, “Here’s how to come up with your idea and validate, outline, write, market and launch your book.” I follow that to a tee. Once I had this guideline of how to do it, I sat down and followed his process.

The book took me nine months to write, but I did quit about halfway through. It started off being this fun thing. I used to be a financial advisor so all of my family and friends came to me for financial advice, which was great. That’s what I love to do. I also began to wonder though, “Why aren’t they reading books or learning on their own about personal finance?” I had this epiphany where I was like, “That’s because personal finance is boring. For most people, it’s dry, complex, and intimidating. No wonder people don’t like to learn about it.”

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I thought to myself, “How can I make this topic sassy, fun and simple?” That’s where the idea for Money Honey came from. When I first wrote it, I was excited. The words came pouring out of me. About four months in, I quit because by then, I had done a complete mental 180. I was telling myself things like, “Rachel, who do you think you are to write a book about finance? Who’s going to listen to a young woman? Your writing is crap. If you go through with this, it’ll be an embarrassment.” I talked myself out of going through with it. I quit. I had no intention of ever picking it back up.

Luckily, I sat down with a good friend and I confessed to her what I had been working on. She said, “Rachel, you’re onto something here. You have to finish what you set out to do.” She gave me enough reassurance and encouragement that I decided I’m going to pick it back up. The only reason I went through publishing it is because I told myself, “If I can help one person, that’s all I want to do. That’s all I care about.”

It helps to have that perspective because if I had truly been out for this quick money grab, the readers would have seen right through that. As I had the right intentions and had such a unique idea and I was solving a market problem, the book took off. I was shocked it started selling. It became a valid income source and it’s done well.

I needed to hear that because I’m in that stage of quitted. I’ve already quit all these opportunities and things to do. The book will come but I’m going to check out the Published book, so thank you for that.

It’s a great resource. Another one is You MUST Write a Book by Honorée Corder. She is amazing.

From your second book, Passive Income, Aggressive Retirement, you mentioned that book quite a bit, Published by Chandler Bolt. That was the next book I read because of your recommendation and I finished it. I had a four-hour plane ride from Denver to Boston. I finished it in the entire ride. It was a good and easy to read. If you do want to publish your own book, that’s a great one to pick up and it also convinced me to self-publish my next book.

Joining the self-publishing train is the best.

I’ll probably be picking your brain on that at some point. Is there anything else that you want to share that we didn’t tap in on?

I have so many rental income horror stories that I’m happy to share that are fun. Any other questions you guys have?

I feel complete, but should we have one horror story?

You can’t tempt us like that.

This one’s good. It was the third property that we bought, that duplex that we renovated. I was down at the property and this was right after closing. My husband was out of town because he was at a conference. He was in a different state. We had all these appliances delivered right away so that the contractors would get straight to work and start installing them and everything. We had probably $10,000 or $15,000 worth of appliances that we had delivered sitting in the property the week after we closed.

I got a call the morning after the appliances were delivered from a contractor. He said, “I have bad news.” I said, “What?” He said that the property had been broken into. My heart dropped. I was like, “Are the appliances there?” He was like, “Yes.” I was like, “I cannot believe the appliances were still there.” What we concluded was that these were some teenagers or kids that were breaking into the property because they took everything they could carry. They took the microwaves and ironically, the security system that we were about to set up, then some tools of the contractors and stuff.

That was a huge learning lesson for me because the first thing you do when you have a vacant property after you close on that property is you go down there and you put cameras up because people know it’s vacant. When construction starts, people can tell no one’s living there so it’s an easy target for someone to break in and vandalize or damage or steal stuff. This is another thing that feels so obvious in hindsight, but I didn’t know any better.

Part of the funny story too is that there was this whole key situation. I got locked out because the contractor had their own keys, so I had to break into my own rental unit that day. I had to climb up to the second-story window and break into the property that we just bought so that I could get inside to set up Wi-Fi and set up a security system by myself. That was exciting. I have picture evidence and everything.

ITF 25 | Real Estate Investing
Real Estate Investing: We just wanted to hit a certain passive income level, where once our passive income exceeded our living expenses, then we’re financially independent.


Where’s Andrew? He could probably reach the two stories.

He was out of state. He was out of town at a conference. He had left so I was dealing with it all on my own. It was so funny.

For reference, Andrew is Rachel’s husband but he’s also 8 feet tall.

He’s 6’6”. It would have been easier if he was there.

That’s great he did that. That is a horror story and they certainly come with any landlord.

Landlord props.

That leads us into the final part of the show, The Final Four. Z, do you want to kick us off?

Rachel, you’re such a wealth of book recommendations. Is there something great that you’re reading now?

The first book I read in 2021 was Playing with FIRE. It was great. I was like, “I need to read this. I can’t believe I haven’t read it yet.” I felt a lot of lifestyle creep in 2020 and my expenses were getting a little out of hand. It was such a great reset of what are the things that bring us joy and fulfillment? Once you list those things out, chances are, it’s not having a big house and having a fancy car. It’s things like walking my dog, spending time with my husband, going on a hike, and traveling. Most of those don’t even require money. It’s a good reset to spend money in a way that aligns with my values.

I have not read Playing with FIRE. I’ve read The Hunger Games, Catching Fire, things that mixed up.

I also love that series.

Rachel, second question, what is the best piece of advice you’ve ever received?

I’m going to twist it because there’s a piece of advice that’s given to a lot of entrepreneurs and that I received that I don’t agree with. When you’re starting out, whether you’re an investor or an entrepreneur, people tell you to say yes to every opportunity that comes your way. I agree with that to an extent. When you’re starting a business, you need to hustle and do everything that you can to get your name out there but there comes a point where if you continue to follow that advice, it will hurt you because you can’t say yes to every opportunity that comes your way.

I had a lot of trouble with this and it led to burnout, anxiety, and feeling like I didn’t have any control over my schedule. I learned that when you say yes to everything, your schedule fills up with everyone else’s priorities except for your own. I’ve learned that there’s a lot more power in knowing when to intentionally say no. That’s what I try to think about every time I get a request now. I’m being protective of my time and having clear boundaries.

That’s good advice. What is your why now? I imagine it’s changed a lot in your journey. What keeps you going on this path?

It has changed a lot. When I think back to when I was little and why I had this motivation in the first place, I grew up in a wealthy county. People in my high school were getting brand new BMWs when they turned sixteen. My family was not operating that way. We weren’t going out to eat at restaurants, let alone even going on family trips. At a young age, I felt like I didn’t fit in and that’s not the way you want to feel in middle school and in high school.

I always had this desire of, “I want to be financially independent. I don’t want to have to worry and be on a strict budget for the rest of my life or have to borrow money from family and friends to make it to my next paycheck. I wanted to be different.” I realized that what I did then would either set me up for wealth or for poverty. The initial motivation was to get myself out of that situation and have financial independence so that I never had to be constrained about finances.

I’ve worked through a lot of that and now it’s about knowing when is enough enough because we have more income now than we need. For me, it goes back to what is the most fulfilling use of my time. For me, I want to help more young women with financial literacy. I want to help more people invest in real estate. That’s why I still work so hard on my business, even in “retirement” because that’s what’s fulfilling to me. It’s not about increasing my income. It’s about helping as many people as I can.

The funny thing is that if you go full circle, if you have a child, you probably wouldn’t buy them a BMW for high school because you were so smart about money.

If everything had been handed to me, my life would have turned out a lot differently. Fear can be paralyzing and motivating. For me, it was motivating. If I didn’t have that scarcity, I don’t think I would have been motivated to do the things I’ve done.

Final question, what movie would be greatly improved if it was made into a musical?

This is so interesting. This is already a musical, The Greatest Showman. I’m like, “What else could be good like that?” I’m drawing a blank of all the movies. You guys have to remind me of some of the good movies that have come out.

I feel like The Hangover would have been a good musical.

That would have been hilarious. I second that.

We watched Good Will Hunting, which is one of my favorite movies of all time.

That could be good. I like Good Will Hunting. One of my favorite movies of all time is October Sky. It’s an old movie and it’s not as well-known. I don’t know if it could work with the musical thing but that could be interesting. I love that.

We’ve got a few good ones there. October Sky is your final answer though. Why don’t we do the letter to put your favorite movies over there? That’s pretty much it, Rachel. Where can people find out more about you?

Both of my books, Money Honey and Passive income, Aggressive Retirement are available on Amazon in eBook, paperback, and audiobook. What I’d love to do for your readers is if anyone wants to download my passive income starter kit, I will give that to them for free. They can go to to download that.

Thank you for that, Rachel. To our readers, go ahead and download that. Rachel is a wealth of knowledge. Be like her. Did you get an article published about you?

Yes, CNBC posted it. It was crazy.

$16,000 in passive income.

Great job.

Thank you. Thank you, guys, so much for having me. I love what you guys do, so I’m excited to be part of it.

Same here. I know we’ll be in touch in the future. Thanks for coming on.

Thank you.

That was Money Honey Rachel, everyone. Z, what did you think?

I like her so much. I hope we’re going to be best friends. For me, I love that there was a lot more depth in this episode. That’s my thing. I want the depth. I liked hearing about the concept of enough and more of these FI things. I also loved hearing from her how she is a bestselling author and she quit. If she hadn’t talked to her friend, none of those books would have been out there that are probably helping thousands of people right now. It makes me think of how many people are out there that quit on some project or course and they could be doing a lot of great things in the world. Get out there and finish your projects.

I can’t echo that enough. Every author, every person goes through that. It’s called the imposter syndrome like, “Who are you to write this book?” Who are you not to write it? If you’ve got the content for a book, everyone’s got some knowledge that no one else has. Do it, put it into a book, and if it sells one copy, great. You’re helping one person. I love how that was her approach. “If I have helped one person, it means I made a difference in someone’s life.” That’s good enough for her. With that being said, I’m going to go enjoy. It’s quite nice here in Colorado. It’s 60 degrees in mid-January, so we’re going to go enjoy some of that. Z is like, “60s? What?”

I’m sweating here. I would try to wear a long sleeve. I like a little profesh but no sweating. We’re going to go hit a sunset session versus surfing. We’ll see you guys later.

Catch a good one for me.



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About Rachel Richards

ITF 25 | Real Estate InvestingHi, I’m Rachel. At the age of 27, I quit my job and retired, and I’m now living off over $15,000 per month in passive income. I am on a mission to empower female millennials to take control of their financial future.





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