ITF 35 | Financial Independence


It’s never too late to start getting into real estate! Nicole Rueth first learned how to capitalize on real estate as a means to achieve FI when she was 41. Now, she has 24 investment properties under her belt, and she and her team are operating in 22 states—with plans to reach even more by next summer!

In this phenomenal episode, Nicole gives us an overview of her diverse portfolio and her goals before she retires at the age of 62, presenting the advantages of staying focused and working your way backwards. She also talks about her family and how the change in administration may affect the real estate market.

So tune in this week to learn wealth building and home financing strategies from one of Denver’s premier lenders!

Listen to the podcast here


A Lender’s Wisdom And The Journey To FI With Nicole Rueth

What’s up Z-money?

Not a lot. I’m pretty pumped because this is somebody that I invited to the show. I met Nicole because she invited me to speak at one of her agent education seminars that she runs. Now that she dropped some bombs in this about all the stuff that she teaches, I’m like, “I should attend some of those sounds. It sounds like they have some good info.”

She has it going on and provides a lot of value to her clients and the entire real estate community. She would like to hear that. She loves wanting to give back, but you’ll read about all that in this episode, as well as her real estate investment journey, which is a good one. She talks about how powerful it can be to hang on.

Nicole Rueth, welcome to the show. It’s so great to have you here. How are you doing?

I’m doing well. Thank you for having me.

I’ve heard such great things about you. You’re one of the premier lenders here in Denver. I feel like I see her name almost everywhere. Great job on marketing. Why don’t you tell us a little bit about how you heard about financial independence and when that was?

I’ve told this story a couple of times, because now I own 24 investments. The question is, how do you get there and especially trying to talk to people about helping them buy the first one? As a mortgage originator, that’s the passion that I have. I first learned about capitalizing on real estate to provide financial independence when I was 41.

It was a John Fisher’s Breakfast Club. I don’t think those are around anymore. That was before Meetup and before you used Facebook to advertise. I had gone to a John Fisher’s Breakfast Club as a loan originator to try to secure realtors is why I went. I went to go get business. This realtor was there who was on a mission to get clients.

The two of us sat together at a table. We had a great conversation. He was a much older gentleman then and I’m sure he’s retired by now. He and I started talking and he ended up winning. I didn’t get a realtor because I don’t know that he did much business, but he got a client. He had a pocket deal at the time. It was a fourplex in Arvada.

I bought it for $425,000. That’s my first investment property. He brought me through the entire process, kicking and screaming the entire way. I tried to bail out on him many times. It was too much, too big, too expensive, too big of an undertaking, the whole thing, but he won. I still own it. Two of the tenants still live there and it’s been a fantastic property.

This all started several years ago. We’re talking about 2009, 2010. To give all the readers a frame of reference. Nicole, you bought a fourplex for $425,000 in Arvada in 2010 at that price. There’s no way in hell you’re getting that now. $425,000 house in Arvada will barely get you a four-bedroom. It’s great that you held onto it. Do you mind maybe digging into the numbers in terms of what did it look like then and then what does it look like now?

Then, it was cashflowing. It was doing okay. We had four tenants that we didn’t have to replace. It needed some work, but we got cash back at the closing table from the seller to do that. All in all, for the lessons that we learned and we learned a lot of them. My husband and I, at the end of that process, we looked at each other and we were like, “That was a lot of work. That was scary.” We looked at each other and he was like, “I’m done.” I looked at him. I was like, “We need to do that again.” We didn’t do all that for nothing.

At the time, one of the units was destroyed. The tenant had a dog. One of the units was occupied by a gentleman who turned the whole building into a soap opera. He was always, I don’t want to say tattle tailing on other people, but that’s the easiest way to say it. There’s a lot of drama going on. We had related parties. We had a mom and a son in alternate units. It was a great unit. The numbers worked. With the purchase price at $425,000, we could make our mortgage payment with two of the units being rented out. Each of the units back then was rented out for about $1,150 a unit.

I am going to admit, I talked to Zeona about this, the way I do numbers is a little bit different than most people. My husband is the spreadsheet geek. As a mortgage originator, I get the blessing of working with a lot of people, helping them find their path to financial independence. It is something that I hold dear and a responsibility that I don’t take lightly.

When I sit down with a client, we’re talking about whether they’re converting their current primary to an investment or they’re purchasing their first investment, one of the things that we do is talk about, where are we going? Why are we buying an investment? Why even convert a primary into investment? Are we doing it because everybody else is doing it? Are we doing it to jump on the bandwagon? Are we doing it because we have a goal and a mission? What is that mission? I tend to think in decades. At what point do you want to retire? What do you want the rest of your decades to look like?

If I want to retire at age 60, what do I want my 60s, 70s, 80s to look like? What is that age when I start? How much money do I want every month in order to survive and to live the lifestyle I want? What does that look like? What do I have currently? Maybe I have some pensions or Social Security and I deduct that and then I’m left with something. That’s the nut that I can crack with real estate, with my clients. We’re back into where they are now, what’s their age and we start figuring out what’s the cashflow opportunities with different investment properties that will amateurize to a point to where it gives them the opportunities that they want in retirement.

When we looked at this fourplex, when I was 41, I told my husband that we wanted to retire when I was 62 and it amateurized in fifteen years. I was like, “That’s a yes.” By the time it’s all said and done, it’s well in front of our twenty-year amortization plan. I got there. Luckily, it was a pocket listing for a friend of his. We had a very long closing because it took me very long to get to there because I was a no for about 3/4 of the way. Through a lot of conversations and a lot of hand-holding we got there and now I’m very thankful that we got there.

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You bought the property for $425,000. You got $1,150. That’s $2,300 in rent in two units. What was the mortgage payment? Were you setting aside anything for reserves? Give us that full picture of what the numbers looked like on this first one.

The mortgage payment is $2,400 all in. Two rents almost covered it entirely, but not with anything else, and we managed it ourselves for several years. In fact, three years, we managed that property ourselves before. Now, we have a property manager who charges us 8%. We set aside reserves. It was our first one. We have money.

Both my husband and I had come from corporate America. We had our 401(k)s. I had the required reserves that I needed to buy an investment property, but I didn’t have cash reserves at the time. I didn’t know I was going to buy an investment property when I walked into that John Fisher Breakfast Club, I walked in to get a realtor. I didn’t have money set aside for that.

Coming up with the 25% down took our liquidity at the time, but we had our accounts. We set up our LLC and our bank account. We started putting any extra money into the reserve account to protect ourselves from any need. The seller gave us a seller credit because their roof needed to be replaced. One of the units, the tenant had a dog that had destroyed the unit. It has eaten up all the wood. All the trim and all the doors and a lot of the furniture fixtures and stuff inside, the unit was beaten up.

We got some money back from the seller for that as well, which is an interesting story because that tenant still lives there. I told them that I would gladly fix this unit as soon as the dog moved on. The dog is alive. The unit is still as it was when I bought it, that money is still in my account. I’m sure it’s spent on something else. We’re paying for it. We have it on a 30-year fixed and we pay it on a 15-year amortization. We use the rental income to pay off the loan on a fifteen-year am, plus pay the maintenance, management, and anything that’s needed for maintenance. The rest sits in that account.

Can you explain that a little bit? Maybe some newbies that are reading and even for me, because I’m not going to numbers, I’m like, “What does this mean when you got it at a 30-year fixed, but on a 15-year amortization?” Break that down a little bit, because it sounds cool.

Fannie Mae allows you to quitclaim deed a mortgage into an LLC. I like to take as many investors as I can, Fannie Mae, until they hit their maximum of ten financed properties. It doesn’t mean ten properties. It means ten financed properties. If you have some properties that have paid off or maybe you did a cash out refinance on one and paid off another, that’s a whole another strategy, but as long as you keep the number of financed properties, those buildings. It’s not by doors by building those buildings that have a loan on them under ten, you can continue to get Fannie Mae loans.

A Fannie Mae loan is a conventional loan that allows you to get a 30-year fixed loan at a relatively low interest rate, in the threes. The payment is low and most people know that because that’s why a seven-year car loan became so popular, because the payment was lower than the 5 or the 3 before that. When you go to buy a primary home, you want a 30-year fixed versus 15. It keeps that payment low and it offsets and cushions against cashflow.

As I mentioned, I’m not looking at the cap rate. I can’t tell you what the cap rate is on a single one of my properties, because I don’t care. If my properties all pay off, given my timeline, my bulls-eye, and my end date, and I can back into that, then they’re a good deal for me. If I like them, they’re in the area that I like to invest in, and if they’re the fourplex or property that I like to invest in, I have a series of rules.

Putting them on a fifteen-year amortization and so I can pay off that loan faster by running a mortgage calculator on any number of years I want, figuring out what the mortgage payment would be, and then I set it up on an automatic payment, so that amount is drafted from my bank account every month and paid towards a mortgage. It’s fully paid off by the time I hit the fifteen years. I can manipulate that as I wish.

You have this option of the 30-year payment, but you’re paying more, so it pays off on the date that you want. You crunch the numbers for that.

The difference between that and getting a 15-year fixed is then I’m committed to the 15. What happens if I have a vacancy or what happens if something like COVID, which we never expected happens, and I need to pull back on my expenditures. I can do that with a 30-year fixed because I’m choosing to pay it faster, but on a 15-year, if that’s what you sign, that’s what you’re forced to do.

ITF 35 | Financial Independence
Financial Independence: It’s a blessing to be working with people and helping them find their path to financial independence.


Even on a 15-year fixed, your property, which closes to doubles of your monthly payment, you were still cash flowing from day one there or not?

I was. It doesn’t double it. It’s more like a 2/3 because it’s a simple interest. The faster I pay down that principle, the slower that interest calculates. The one thing I do lose the way I do it is that the fifteen-year fixed is always a lower interest rate. That’s an opportunity cost, but I’ll trade that for the flexibility.

To confirm, you had all four units rented, right? Even though they pay off with two, you had all four rented.

I did. The beauty of having a multiunit property is whether you’re house hacking and you have multiple rooms rented out, or you have that rentable basement in a single-family, but getting that additional rental income always allows you to accelerate those payments and hit your numbers or your dates the way you want to.

Roughly, you’re making around $4,000 a month, if you were saying that they were about $1,000 a unit and then your mortgage was only $2,400. That sounds like a good deal.

Now they’re renting for a lot more.

Before we jump into the rest of your story, I do you want to hear, what are they running for now? A lot of our readers are in year 1 or year 2 of their investment journey. I get the question all the time, “Should I sell? Should I 1031?” I’ve also heard the advice from one of my mentors that said he regrets every house he’s ever sold. I want to hear because you’re a living proof of holding the property for an extended period of time, what is the cash that looks like now and what do you think that property is worth now?

I haven’t run an estimate on the value in a while, but I would guess based on what I’m seeing other properties going for and it’s in a phenomenal location compared to some of the other fourplexes that I’ve bought, so best guess it’s worth $850,000 and that might be low, maybe more than that.

What part of Arvada is it in?

It’s right near the secondary rec center in Arvada, so not the one with the big pool. It’s on 59th.

59th and Kipling?


I’ve got a property right around there too. You’re low-balling at $850,000. You can get closer to $1 million for that.

We’re not selling it. We get offers all the time. That one will be passed down to the kids.

I want to highlight for our readers out there, this is a ten-year plan. Maybe this performed above or below your expectations, but either way, you gained $600,000 of net worth in ten years from this. That’s $60,000 a year. That’s a normal person’s salary. Not to mention the $1,500 to $2,000, maybe even $3,000 a month of cashflow you’re getting right now on top of that. This property in itself, ten years from when you purchased it, is adding $100,000 to your net worth a year, at least probably more than that.

Plus, the principal reduction. I only put $120,000 into it. Somebody is paying down the mortgage, which is very low at this point several years later because we were paying it on a fifteen-year amortization. Now, we’re getting $5,500. It’s below $6,000. We’ve got two 3 bedrooms and 2 bedrooms. The 3 bedrooms are $1,500 and the two bedrooms are $1,350. We might even be charging on the low side, but we try to keep up with the market rent as much as possible, but at the same time, two of the folks still live there from several years ago. I haven’t had a turnover. I haven’t had much vacancy. There’s a benefit to that.

The fact that the mortgage payment is still so low and especially during this last year and a half of 2020, and in the beginning of 2021, we wanted to keep our tenants happy. One of the things that we did with all of our units is we humanize the entire experience. We reached out to them as humans, as fellow members trying to work through this season.

With that and the way we approached it, the fact that we let them know what help was available, that we were here to support them. We needed to do anything that they needed and if they needed something like a disposal or a dishwasher or whatever, that we could do that as well, just let us know. We only had one tenant that had to go on a payment plan, and even she kept up with that.

Let’s move on from the first quad, because you’ve got 25 somewhat properties. You said you and your husband came to a little tiff about whether you should continue going or not. You won, but how did you win that battle?

We bought another one after that. That was a little single-family home that we still own. We’re going to put that on the market and buy it into a shopping center. We still own that one and it’s done well as well because we bought that one a month later. The second one didn’t hurt as bad. By the time, the second one didn’t hurt and we seemed to know the questions to ask. By the time we bought the third one, we missed out on some things on the second one, we realized that we should have asked for some different things.

Each one has its own set of lessons, but we did better. That was what was the conversation between my husband and I. I was like, “We’re getting the hang of this and I get it. I can see the longevity in this. I can see not only the sustainability and the ability to provide financial freedom for us, but we have these three amazing kids, who at the time were in junior high school.” We didn’t grow up that way.

You have to grab the opportunity to understand how to capitalize on real estate and the ownership of real estate and how it can create something more than a job can. Click To Tweet

The way we grew up, we didn’t have the opportunity to understand how to capitalize on real estate, the ownership of real estate, and how it can create something more than a job can, and so if we could teach our kids that. It started to become part of our experience and part of our life in a way that it was not just purchasing something like our stock.

You put money and you give money to your financial advisor and he buys stock for you. He puts money in your 401(k) or whatever that mutual fund that you’ve invested in. It’s not part of your lifestyle. It’s just you know that it’s there. This started to become part of our lifestyle and then we started to talk about it and teach on it. It was hard to sit down, so I won is the bottom line on that.

I’m curious, what is your financial end goal? When I talked to a lot of investors, they didn’t think about the payoff date. I wish they would because so many people would buy less properties. Maybe they’d only need five if they were thinking about what they’d have when they pay it off and do like a snowball payment.

Many people are only looking at that $200 or $300 a month of cashflow, and they’re like, “I need a million properties.” You are looking at that end goal and seeing how well even 1 or 2 of your properties have done. I’m like, “Are you guys going to have like $50,000 a month?” What’s your aim at the end of this all?

I prefer not to say what the number is, but our goal is to have choices. I have this team that I employ and that we all work together in support of our clients. I want all of them to buy investments. All but one own primary home and several of them are buying investment properties. One of them was telling me that she’s under contract on a church that she’s going to convert to a multiunit. It’s infectious.

I’m changing the lives of these twenty and of all the people that we get the pleasure of working with. For me, it’s about choices. It’s not so much about, “I want to hang my hat up at age 62,” because that’s the number. The monthly number is a funny large number, but it’s also about being able to spoil my kids, my grandkids, to pay off all their colleges, be able to travel and not have to worry about things, and to continue to give back.

You get to a certain age in life and 52 has affected me in this way where one of the goals that I have is to give away more than I receive. On a daily basis, we’re trying to give away. One of the parts of the number being what it is when we hit 62 is about the ability to continue to fund the things that we see continue to add value to the people around us. We’re on track to meet our goals.

Do you need a few more places or are you guys good?

No, we’re good.

Are you buying for fun at this point?

We’re buying for diversification at this point. We have a number of fourplexes and single families. I have three amazing kids who light up my life and they’re young adults now. The two boys both have their first homes. They got their first homes when they were twenty years old. My daughter is up for her first home. I hope that I can help them buy five homes before they’re 30 years old. You talk about changing the trajectory of their lives. They can be a math teacher. They can be a nurse. They can do whatever they want to do and know that their retirement is fully funded.

What are you doing to help your kids? Are you co-signing for them or are you giving them the down payment or both?

We’re doing a lot of education. That’s the biggest thing that we’re doing for them. They come to my classes. They learn about this. We talk about it at home. My daughter is at DU. She’s pre-law and got a minor in Real Estate. She’s like, “Would it make sense if I got a minor in Real Estate with a pre-law?” I go, “It makes sense because I want to run your portfolio.” We help them first by educating them because the last thing I want is trust fund kids. I don’t want them to not understand what, number one, what it took to get here, and number two, what it’s going to take to maintain it and to grow it.

We have dedicated to 10% down on their first one. It’s my 10%. If I choose, they’ll have to pay me back that 10% when they sell it or refinance it, but now my 10% is cooking in their house and then I’m co-signing because they’re in college, so they don’t have jobs. I use them as the primary homeowner and then I co-sign.

My oldest now has a job. He is a working nurse, so he can do his own second home. He’s got some money that he’s saving up. He can put 5% down on his second one. I don’t think I’ll need to co-sign because we’ll get tenant income on the first one, but if I do, I will. It’s about the continued support, motivation, and education.

ITF 35 | Financial Independence
Financial Independence: We start figuring out what the cashflow opportunities with different investment properties today that will amateurize to a point to where it gives them the opportunities that they want in retirement.


You could write their loans, right?

I can and I will.

Will you give them a discounted rate?

They will get the best rate possible, but I give a lot of my clients the best rate possible. I’m pretty easy. I’m a pushover.

It’s great that you’re teaching your kids and that they’re interested. Almost half the battle is that oftentimes they see mom and dad do one thing and the kid wants to do a different thing. It’s awesome that they’re able to do that as well. You’re good at winning people over in this battle, your husband and your three kids. Let’s get back to your story. We understand that you bought your first property. It was a great success. Your second property, when your husband over, but there’s twenty something other properties here.

It’s 24 doors. Some of those are fourplexes. They start to add up that way. We then didn’t buy anything for three years. At that point, it was about, we managed the fourplex and the single-family ourselves. We didn’t hire a management company. We had day jobs. My husband was working in corporate America. I was running a branch for Fairway Mortgage, but we were both figuring out what does it take to manage properties.

What does it cost to replace things like water heaters? What does it take when you have a vacancy? How quickly can you get somebody else in there? How do you choose what the market rent should be? How do you do the credit checks? All these stuffs took some time to get used to and to figure out a rhythm for it. Somewhere along the line, we got a single woman who was doing a little property management. We figured out what didn’t work about her or what maybe did work about her. We were also figuring out our partners and who those right partners needed to be.

The first couple of years was about us getting our landlord feet underneath us. We bought another fourplex down in Colorado Springs. That one did not fare as well. We ended up selling it few years later and 1031 exchanged it, but we bought it in an area that was later told to us was called Heroin Alley. I don’t know, Colorado Springs. I don’t even know where that is, but one thing I learned from that is I never bought again in an area that I didn’t know, or with the financials that I didn’t understand.

What drew you to that property? Was it like, “It’s a quadplex for super cheap. It’s going to cashflow. Let’s do it.”

The fact that it was a quadplex, the numbers made sense, but it was also because it was a referral. An agent that we worked with found this property, said it was a great deal. The numbers on paper worked. When Peter did the spreadsheet, they work. They weren’t super sexy, they weren’t as good as maybe the Arvada property, but they did work enough that we wanted to buy it. It was very quickly when we figured out is, especially in this area in Colorado Springs, there were a lot of turnovers. Every year we would end up having to have vacancies and turnover in an expense around finding a new tenant and getting them in.

What year are we at here, 2014, 2013?

We were at 2014 at this point.

2014, you buy it, 2017, you sell it, you 1031 it. Are you buying any more in that timeframe?

After that one in Colorado Springs, we bought two fourplexes at the same time. There was a group of four fourplexes that came available up in Lafayette on a circle. We grabbed two of those. Those numbers have been very good. They’ve worked out. Those were $625,000 by the time things happened because the price of everything had gone up. Those were renting at the time that we bought them at $1,250 a unit.

That one is not as much of a cash cow as the other one. What was your investment thesis going into those Lafayette properties and why would you like those?

What I realized was how lucky we were and how I wish I had bought more properties earlier on. In hindsight’s 2020, if I could have bought all of my properties in 2011, 2012, 2013, I would have, but I was out of the market during 2012, 2013, and 2014. The best years to buy, I didn’t understand until I looked backward, what the gifts that we had been given at that time with everything being on sale.

At that time, I was trying to figure out what it looked like to be a landlord, what it looked like to have these expenses, what my guiding principles were, what my why was again, and rearranging things. By the time I jumped back in, things were starting to tick up and price. Things are starting to tick up in rate, depending on which one I was buying. The ones in Lafayette worked.

No longer could I take two units and pay off my mortgage and have no problem on a fifteen-year fixed, but now it was like almost three to pay off the mortgage, but I could still squeeze out the fifteen-year amortization. For me, that was the biggest thing. Remember, it wasn’t necessarily about the cap rate because it was less sexy at that point, but I could still meet my retirement goals and the numbers I wanted to hit with these two properties.

They got us that much closer because I was thinking, “As we get to that age with rent increases and the principal reduction and appreciation, they might be running $6,000 a building in rent.” After maintenance and management, that was still a huge chunk of money that added towards the monthly revenue that we were looking for when we got to 62.

You’re talking about like, “We missed out on things being on sale in 2011 versus 2014 or 2015,” but if you look at those prices now, everything looks like it was on sale. A lot of times, when you run those numbers, you could have all four units and it’s not paying the mortgage. Some of these places, it’s tight. Having it where two units and a half pay, the mortgage is still pretty good. You need the spreadsheet. You need to know what that cash-on-cash return is or the cap rate, but it still sounds pretty awesome, especially the fact that you could have eight right around each other, because there is something cool about the convenience of managing places all in one little spot.

It makes it easier. Anything I buy needs to cashflow in ten years. We know that’s more challenging, especially in this market, but that’s what I line up everything against is, is this something that based on the market rents, the mortgage payment and the interest rate, “Can I cashflow this and put it on a ten-year amortization?” If it gets me there, it’s still a good deal. I’m still buying. I might be shifting some things around based on diversification, but I’m still buying because even though some things are less sexy than they were, they still meet the goal of hitting the retirement advantage.

You seem so focused. I’m inspired. I’m like, “I lose sight of the things sometimes. I’m going to call Nicole. She’ll get me straight.

I was going to echo that same thought. It seems like you had a plan with that 62 and worked your way backward, and you’re sticking to it. Ninety-nine percent of other real estate investors, including myself, have shiny object syndrome like, “I’ll buy this one.” It’s 62, “I’ll have this much instead of this much of my original plan.” The second thing I want to say and I see this on every single episode, if you go back and look several years ago, everything was on sale.

People get caught up in like, “Maybe the prices will drop $10,000 if I wait six months.” They also increased $50,000 and you may never see prices like this again. More often than not, that is the case. Don’t wait for this “market drop.” They’ve been trying to call a market drop since 2016. I bought my first property in 2017 and then it was the top of the market then. People get scared every single year. Buy a cash fund property and don’t wait for what the market does. In 10 or 15 years, you’re going to be sitting like you are now on a few cash cows and rent.

Everybody wants every property that they buy to be a home run. If I could have bought ten Arvadas, looking back, I would have, I could have, I should have, but I can’t play that game because I don’t know. I’m in the market and realtors will say the same thing who are doing it on a daily basis, but don’t try to make every single one of them a home run. If you have the end goal and if it cashflows in the amortization that you need to hit your end goal and it knocks it off, because I’ll talk to people and I’ll ask them, “How much do you want a month in retirement?”

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They’ll tell me a number like, “I want $10,000 a month or $15,000 a month.” I had one client tell me $5,000 a month. That’s not enough. When they tell me what they want that number to be, I’m like, “Let’s talk about what properties will give you that money.” Maybe it’s one fourplex or it’s a couple of single families with rentable basements, or it’s a quad and two houses or some combination.

I was like, “These two don’t have to be fantastic. They have to be market. Let’s focus on this one, maybe being a little bit better on cashflow.” Taking that, I got to wait for the right one out of the equation and dumbing it down or simplify to these multiples. It’s like a jigsaw puzzle. I have to get a couple of the right pieces in place and it’s a winner. It doesn’t have to be the right pieces.

I could choose these 3 or these 3, and if I lock in any 3, it’s going to get us to the same result. It takes some of the stress away and allows them to find some of that joy of planning and visioning. What does that money get you when you’re 62? What is it that you want to do with it when you’re 62? All of a sudden, they get excited and it’s more than just buying a property because that’s a lot of work.

What you’re doing is you’re buying these single-family homes or 1-to-4-unit properties and it’s scalable, but it’s not like the most scalable. You mentioned earlier that you’re selling your single-family and you’re 1031-ing that into some shopping center. What’s your thesis there? Why are you doing that? How did that single-family investment help you lever up?

The single-family was that second property that we bought. It’s 850 square feet and we bought it for $130,000. Now, we’ll sell it for $350,000 maybe. As we sell that and the principal has been reduced, it’s very small mortgage. I could pay it off if I wanted to, but what’s left on that mortgage because tenants have been paying it down the whole way for us is I can sweep that money with a 1031 exchange over to a sizable fraction of a shopping center.

People have different opinions on shopping centers, especially right now, but there’s a place for shopping centers that are those kinds of services that you can’t get online like a place that I get my nails done or my hair cut, or I get my clothes tailored. Some of those things are internet independent. I want to look at this and go, “I want to diversify.” It’d be like having all of my money in the stock market and the stock market having a down year or correction year, the year I turned 61. What happens if another version of COVID happens when I’m 62 years old?

I don’t care what the value of my homes are. They could all depreciate. It’s not going to happen long-term because we all know real estate appreciates long-term. They could all go down, but as long as people are paying rent, I don’t care, because it’s like the only asset class where it continues to appreciate as it spits off cashflow. You have to sell stock to get the cash out and then you don’t get that appreciation.

It has some advantages in that way, but it still is subject to market shifts, whether it’s market shifts in the value or market shifts in my ability for my tenants to pay rent. I want diversification. I know real estate. I do have some stock markets, but everybody’s talking about Bitcoin and alternative financing and they’re looking at all different ways to invest. I like real estate. What can I diversify in different areas of real estate to ensure that when I do get to 62, I have several different avenues of cashflow that I feel good about?

That’s the reason why we didn’t set out necessarily to look for that specific purchase, but we set out to look for diversification opportunities and we put some feelers out. We started talking to people. This opportunity came up and that little single-family is a great little house for somebody who desperately needs a little house. I’m going to pick a buyer who makes my heart happy. That somebody’s going to get that little 2-bedroom, 1-bath with a bigger garage than the house that backs up to a creek because that’s what I want to do. We’re going to go put it in a shopping center.

Every move that you make is calculated. It doesn’t seem like anything is on accident with you or you make some hasty decision. It’s like, “An opportunity comes up. Let’s weigh the pros and cons. There’s diversification. Maybe you get some better cashflow.” This 2-bed, 1-bathroom, maybe it makes your heart sing, but it doesn’t make your bank account singing anymore. You’re like, “It’s time. The job has been done.” Now, you can sell it off to a lovely couple or whatever it is and you’re doing your thing. I love your strategy and the way you think.

Thank you. I can’t say that the whole change in tax laws that might be coming up this 2022 and maybe 1031 exchanges go with it. There was a little bit of the timing on that one where the time worked out where it had run a good run and we’ve had the same tenants in there for a few years, which I love that. I wanted them to buy it, but at the same time, I don’t know that the 1031 exchange will be available in 2022. That’s something that I’m talking to a lot of my clients about taking advantage of this year as well.

You’re threatening the 1031 taken away. That’s the Biden tax law thing that’s been circling around. You know more about that than a lot of other people. Do you mind talking about that?

There’s a lot of money being spent. As we all know, the $1.9 trillion, fiscal stimulus package was passed. At some point, somebody’s going to have to pay the piper. The taxes are going to have to be raised. It’s already been announced that they’re going to raise capital gains. They’re trying to do everything that they can to continue to support the American population. I love a lot of what they’re doing, so it’s irrelevant of who you voted for or what you believe. It’s this path that we’re on now.

At this point, I don’t want to say as bystanders, but we’re watching it unpack based on the promises that were made on the campaign trail. Some of those promises that were made focused around home ownership and helping home buyers and the $15,000 tax credit at the closing table, and raising capital gains to pay for some of these things.

As those capital gains are raised, one of the other things that were noted and Biden himself said it is that he is going to look at removing the 1031 exchange loophole as it was called that allows those who have wealth to move that money around between investments and not get taxed their due. It is a fantastic opportunity to kick the can down the road.

There are some ways that you can get out of ever paying for it the way it’s built now. I talked to my clients on those strategies specifically and how to roll those over and then roll them into your forever home, and how do you rent it first and then move into it, or how do you put it into a trust to give it to your kids with a step up in value.

As they’re talking about removing some of those step up in values, the 1031 exchanges, and raising the capital gains, we have to take that seriously because whether or not you think it might or might not happen, I’m telling you strongly that it will. It’s a matter of when. For this tax year, it’s already done. They can put it in place sometime between now and the end of the year, once they get COVID under control to have it be for the 2022 tax year.

ITF 35 | Financial Independence
Financial Independence: The beauty of having a multiunit property is getting that additional rental income always allows you to accelerate those payments and allows you to hit your numbers or your dates the way you want to.


It’d be hard to get it passed to affect our 2021 tax year. We have to know that it’s there and then make some decisions based on that. If I’m wrong and they push it out another year or if it doesn’t change, that’s a reason to continue to do the business that we’re doing. It doesn’t stop us from taking advantage of it in 2021.

Those make me sad. I did 1031 and they’re the shit. I love them. They’re amazing, but it makes me go, “You better like what you’re buying, because you might have to hold onto it.” I wonder if the effect of this will make it, so less people are moving property around while we have less inventory come loose because people are not exchanging as much as they were previously. Being cautious about what you’re buying and knowing that you want to hold on to that.

At least in my experience is the first homes I bought were the homes that I could afford. As a more seasoned investor, I’m saying, “I don’t want to buy the 100-year-old home that needs lots of maintenance. I want to buy a new construction that I can have for a long time.” I have been 1031-ing out of these old ones and into the new ones, but I still have some old ones. I’m like, “I got to get those off my plate this year.” Thank you for sharing that. It makes me think a lot differently about the way I’m buying.

Administrations change and so do tax laws. It’s not to say that it’s gone for forever. It’s not even gone yet. It could be gone with the current administration, but if that administration changes in four years, it could come back. Honestly, we’re a product of our circumstances and we’ll get there. We’ll do fine when we do, everybody adjusts, but I would say that if you do have properties, it might push some properties onto the market this summer, which would be lovely because we could certainly use the inventory.

In longer term, it could hold properties off the market. We have a lot of things that we’re holding the properties off the market. A lot of people, those mom-and-pop investors, are continuing to be a larger percentage of our investing. They have a majority of the single-family homes and they know that the biggest loss or regret of a lot of people’s lives is that they ever sold a property. They’re hanging onto them and they’re converting them into rentals, and that’s part of our entire inventory story.

Were the two fourplexes your last purchase or what have you been doing since then? We’re near the end of our show and I want to know everything you’ve done.

We have the Arvada still. We have a single-family. We bought those two up in Lafayette. We 1031 exchanged the Colorado after the Lafayette. We bought two more in Wheat Ridge. We have a single-family in by Regis University and another one in Lakewood. That’s our whole portfolio at this point, but they’re all doing well.

The fourplexes, to have 5 of those 20 doors inside the fourplexes, allows for those capitalizations on strategizing. I don’t have four roofs. I have one. If one door is empty, I can still make the mortgage payment. I only have the one water bill and all of those efficiencies of scale that I like, the single-family we’re selling into the shopping center. Now, we’re looking at commercial buildings.

Has your strategy changed over time? Have you been like, “I want fourplexes?” It seems like you’ve got a couple of single-families in there. I find that most of the time, when people go to multifamily, they like don’t want to mess with single-family anymore. I’m curious about that.

There were opportunities that came up and presented and they made a lot of sense. The fourplexes are our preferred. They’re hard to find and I hear that all the time. I have a girlfriend though, we’re in the middle of cash out refinancing her property. She bought a triplex by Sloan’s Lake for $720,000. She spent some of her own money, renovated it out of fourth unit. Now, it’s worth $1.1 million. Cash out refinance, we’re getting all of her money back.

There are still opportunities. I do a lot of mortgage business, 15% of my pipeline is still investors primarily in the Denver market. Although I’m licensed in 22 states, it’s primarily here. Nobody can tell me that there’s not a deal here. There are deals here. They look different and you have to get creative. Maybe it’s a rentable basement or an ADU, or it’s marketed as a 2-unit, but it’s a 3 or 4. There are plenty of opportunities still available now.

To echo your comment too, we bought a duplex right by Sloan’s Lake too. It’s a 2-bed, 1-bath, both sides, but there’s a massive garage in all that. We’re turning that into a 3-bed, 2.5-bath, side-by-side. The yard is massive. We’re going to split the two units and we could sell each unit. There was like a 2, 1 or 3, 1 down the street that was sold for $550,000. If we can sell them for $400,000 or $450,000 each, you’re making over $100,000 on that. We probably won’t sell them. We’re going to do your strategy and hold onto it. I love that Sloan’s Lake area.

I have another friend that brought a quad and the way they’re laid out. They’re two duplexes. He bought the quad for $750,000. He’s going to split them. He’ll sell each one of those duplexes for $550,000. You have to change your perspective and not look for the low-hanging fruit. It’s a little bit more of a puzzle.

My basketball coach back in high school would always say, “You have to take what the defense gives you. If the defense is sagging in the back, you have to pull up and take the three-pointer. If they’re tying tight, you got to cross them up and go to the hoop.” It’s the same thing, you have to take what the market gives you and you have to understand what the market gives you. That’s why you read this and the books and do all your research. You have all of these tools that can make deals happen.

I am so pleased to hear that you’re in 22 states because I have been dealing with the worst lenders in Florida and I’m going to call you up and be like, “Nicole, for all our next deals, you’re going to save my butt.”

We’re going to be in all 48 by next summer. We’re on a mission at this point, so wherever you need us. I say all 48, I’m not going to Alaska. New York might take a little while.

Let’s get into the Final Four.

What are you reading now?

Anything by Simon Sinek, I love. I re-read Start With Why, and that’s a common one. I’m teaching a class. I’m reading it myself and I’m teaching a group of realtors, The 12 Week Year. Talk about a game changer, the way you think about the strategy and getting things done, changes with that book. That’s been a whole lot of fun for me. It’s a little bit more of a work-oriented book. I don’t watch a lot of TV and I don’t read a lot of storybooks.

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

I had a pretty huge failure early on in my career in corporate America. The story behind the failure is irrelevant, but it was embarrassing and it was in front of 200 people. I put myself out there thinking that I was prepared and I wasn’t. That failure took me a long time to recover. It gave me some nightmares. You turn that story over and over in your head. I was a lot younger back then. I’m also an athlete.

Whatever the value of homes are, they could all depreciate. We all know real estate appreciates long-term, but they could all go down. Click To Tweet

Along the way, I’d have people, whether it was coaches or trainers, everybody talking into me about the recovery time. It’s all about the recovery time. The success is in the recovery time. I’m an endurance athlete and I do adventure races. It was all about training our bodies specifically for the recovery time, because you could push yourself to extremes that you can’t do if you know how to recover.

When my business coach took that information, because I was talking about recovery time at one point and he had said to me, “It’s the exact same, in business and everything.” He goes, “You’ve got to learn how to recover, so that you can leap so big and have such incredible experiences. If you’re always tempering that back because you’re worried about failing, you’re never going to have the success and the joy and the experience that you want to have.”

It was when I had partnered that and then had that realization that I’ve been able to do and accomplish so much more, because I’m ready. I’m like, “What’s the next leap? What’s the next failure I can look for?” If I fail big, it means that I tried hard. I got to quickly recover and I’d do it again. I’m going to succeed. That changes a lot when you stop thinking that your life is going to end if you make a mistake.

Number three is, what is your why? You were saying a little bit about how you took that break. Maybe that was you doing a little bit of a recovery, but you were reorganizing your why, you were learning the market. You were learning how to property manage. What changed in your why while you were doing that time?

I got a lot smarter. The next ones, I bought specifically with a market advantage. I do teach a lot of classes on understanding the market, what’s the psychology, and what’s going on with buyers and sellers. I have a lot of fun with that. The strategy changed, but the why stayed the same. I grew up with a single mom who was in sales. She’s a fabulous woman, who’s accomplished a lot in her lifetime. I love her a lot, but at the time, we had gone through a lot of struggles. It could be a week where commissions came in and we went to Disney World and it could be a week where nothing came in and we were at the church asking for groceries or on food stamps.

The way I was raised where money was this ever-changing factor in our lives was something that I never wanted for my kids. My why has always been my kids. How do I teach them to be more strategic in their thinking to achieve the kinds of things that they want to achieve and to capitalize on the knowledge that we have in real estate to allow them to do the things that they’re passionate about and not the things that they feel they have to for a paycheck?

If I can instill that and give them runway to have that fullness of life and still be comforted knowing that their financial situation was being taken care of, that’s my why. It grows from there. The older you get, the more you want to give. It’s how many people can I teach? How many people can I reach? How many people can I change the trajectory of their lives? Like this gentleman at the John Fisher Breakfast Club changed mine. It starts to multiply. I can’t wait to get out of bed every morning and do the job I was commissioned to do, which is change the trajectory of as many people’s lives as I can, that will allow me to get into their lives.

I also resonate with that story. My dad was like in multilevel marketing and it was like, sometimes we were hitting it big and then sometimes we were on food stamps. Seeing how quickly money could change like that, it left an impression on me that I had to work out like years later, going like, “Money doesn’t disappear. That was just their situation.” It’s been a journey for me and finding consistency in my own life. I love knowing that about you.

The last question. You’re a mad scientist. What scientific experiment would you run if money and ethics were not an issue?

If money and ethics weren’t a question, I would try to figure out the whole affordability environment for homes. The way that the Denver affordability programs or the area affordability programs work now is so limiting because it caps what you can sell that home for. It never allows those people who need it most, the opportunity to build wealth. They can only transfer wealth. Instead of paying rent, I’m doing principal reduction, but I can’t have any appreciation.

I don’t know how much of a mad scientist this is, but I would try to upside down that whole model and figure out a way to allow people to get into homes. The same way that you can work for food or clothes. Work for a house and somehow build that up, like the Habitat for Humanity, but on steroids and figure out a way to break the affordability system.

Even if money and ethics were an issue, you could probably try to still test that and come out as a success. Maybe when you’re 63, that can be your retirement journey. Nicole, thank you so much for coming on the show. Where can people find out more about you and how do they know what states that you operate in?

We’re at I’ve got my cell phone on me 24/7. I still work in my business as much as I work on it. I love meeting with our clients. I have a great team of twenty people who are here to serve, sit down, and strategize with each one of our clients. On our website, we have the states we’re in. By the end of 2021, we’ll be in many of them. There’s rarely a state that you’d want to invest in that, we’re not going to be in already. We would love to support that continued growth of wealth.

Any other spurts of wisdom you’d like to share with the audience?

The one thing I would say is plan, educate yourself, but don’t wait for something to change. It’s the same thing with people wait to have a baby until they make enough money, or they wait to get married or they’re waiting for something to happen to allow them to take advantage of the next stage in their life. The cost of waiting in real estate is so huge and extreme that you’ll miss out. It’s a whole-time value of money.

If somebody had taught me what I knew and learned at 41 at 21, my retirement age wouldn’t be 62. It’d be 48 or whatever. It would have been many years before and I would have had a different trajectory. Every minute you waste waiting for something to change, you’re losing opportunity. I would tell people to educate and align themselves with a good partner, a good team, and then figure out the strategy to take advantage of what’s going on in the real estate market now. You don’t have to have 20% down to buy an investment. You can move into it as a primary home and build from there.

Nicole, this has been a phenomenal episode. Thank you for your time.

We’ll be seeing you soon. I hope to work with you.

It was my pleasure and a lot of fun.

That was Nicole Rueth. Z, what do you think?

One thing I want to highlight is as much as we try to plug ourselves and talk about how important it is to have an agent that knows how to invest, having a lender that understands investment is so key. It reminded me like, “I’ve been scraping around in these other states,” because I’ve got all my great Colorado lenders, but in other states I don’t. I’ve been using lenders that suck.

I’m going to make sure that I reorient to work with people like Nicole, because she seems like she gives such good advice. The last thing is I loved the way she worked backward with her investment planning. That’s going to be the next conversation I have with my partner on what we’re doing for our investments. How was it for you?

Stephen Covey always says, “Begin with the end in mind.” A lot of people will get distracted at the moment with trying to keep up with the Joneses and get that extra $5,000 of passive income or get whatever it is. If you can begin with the end in mind, you know what your end is and you do not have to compare that to anybody else’s.

The fact that Nicole started a little bit later. She started at 41. She already had that wisdom of like, “I don’t care what other people are doing. This is my goal. You don’t have any say in my goal. It’s my goal.” She rocked it. That is a good way to look at it if your goal is financial independence at an early age. Anything else you want to say before we head out?

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About Nicole Rueth

Nicole Rueth has been passionately advising clients on their wealth-building and home financing strategies for over 17 years. Her path has been as non-conventional as it is a benefit to her clients. As a BBA Finance graduate of the University of Texas at Austin, she went to work for Arthur Andersen/Andersen Consulting as a strategic business reengineering consultant. Nicole’s past experience of managing 100-person teams and facilitating million-dollar solutions allows her to negotiate, analyze and provide creative solutions for her clients where other lenders fall short. After the birth of their three children, Nicole stepped out of her corporate traveling schedule and went to work for a friend to reinvigorate and redesign his mortgage company. Here is where she found her passion. Where others in the industry were focused on the “deal”, she developed a passion for helping the client first.

Focused on building her knowledge capital, Nicole started in the operations side of Mortgage Financing, including warehouse management, lender relationships, FHA/HUD approval, post-closing, and loan product management. This background before originating mortgage loans gives Nicole’s clients a success ratio unparalleled in the industry. Added to that, Nicole offers her clients a closing guarantee; putting her reputation behind her commitment to closing on time and under budget every time.

As one of the top 200 Mortgage Advisors in the country, as recognized by Mortgage Executive Magazine, Denver’s own 5280 Magazine Five Star Professional, and her own Fairway Mortgage’s #1 nationally, her team’s expert knowledge of the industry and high level of professionalism will be hard at work for you and your family.

When not at work, Nicole is an adventure/fitness nut. She can be found at a Spartan Race or Tough Mudder, climbing a fourteener or on one of Colorado’s amazing bike trails. She has 3 beautiful children, a husband of over 22 years and her dog, Moose, who can be seen running beside her around the DU area.


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