Podcast: Texas Real Estate & Finance Podcast
Episode Title: TREFP #31 Rachel Grunn
Host(s): Mike Mills
Guest(s): Rachel Grunn
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Mike Mills (Host) | 00:00:13 to 00:00:32
Here we be. We are officially live now, and we are going to have a lot of fun today. I'm very excited for this one. Rachel, you're going to be the first person that I have here that I've never actually met in person prior to sitting down. I'm honored to be here.
Mike Mills (Host) | 00:00:33 to 00:00:50
So you're unique in many ways, and we'll get into all that, too. But, yeah, we had a great little conversation before you came in, chatted for a little bit, and I really appreciate you. You drove a long way to get here, so I can't thank you enough for that. I have an electric car, so it's not that bad. Oh, you do?
Rachel Grunn (Guest) | 00:00:50 to 00:00:55
Okay. What do you have? I have a VW ID four. Okay. Highly recommend.
Rachel Grunn (Guest) | 00:00:55 to 00:01:04
It's fantastic. It's like half the price of a Tesla, but has like, all the bells and whistles. I love it. So I actually have a Tesla. Well, I should say you could have.
Rachel Grunn (Guest) | 00:01:04 to 00:01:12
Two ID four s. My wife has a Tesla. Let's put it that way. But, you know, it's funny. I don't know if you get this.
Mike Mills (Host) | 00:01:13 to 00:01:40
We're going to get off on a tangent for just a second, but I hear a lot from people about with those cars, like, oh, you're tree hugging hippie trying to save the environment. I'm like, look, I'm not opposed to that. I think it's good. But if you look into where you get batteries from and how electricity is produced, there's all kinds of conflicting issues with total comes to the environment. But it is the most fun car that I've ever driven in my entire life.
Rachel Grunn (Guest) | 00:01:40 to 00:01:46
Zippy. Right. It's like a video game. It is. And then it has, what is it?
Rachel Grunn (Guest) | 00:01:46 to 00:01:56
The go cart mode where when you let your foot off the gas, it stops. It's crazy. Yes. That's basically when I explain to people, it's like a souped up golf cart. Yeah, a golf cart.
Rachel Grunn (Guest) | 00:01:56 to 00:02:14
Yes. So when you go and you take your foot off the gas, it just stops. I mean, it doesn't stop like dead stop, but it slows down. What I haven't figured out, because I haven't looked, and I don't know if your car does this, but it was one of my wife's questions right in the very beginning. She was like, well, when we take our foot off the gas and we slow down, is it brake lights?
Mike Mills (Host) | 00:02:14 to 00:02:24
Like, how do the people know behind us that we're slowing down? Do you know? No, but now I have to go do like a social experiment. Now you got to go try it out. I got to go figure it out.
Mike Mills (Host) | 00:02:24 to 00:02:38
You have to film from the rear to see if you're slowing down or not. Yes. I'm like, never even thought of that. Your wife's a genius. Yeah, well, we call her safety Susan because what she's mostly concerned with at all times, like, if you're not buckled up in her car, we're not going anywhere.
Mike Mills (Host) | 00:02:38 to 00:02:45
That's just how it works. All right. So sorry about the electric car tangent there for a second. Important stuff. That's right.
Mike Mills (Host) | 00:02:45 to 00:02:59
So this is Rachel Grunn. She is joining me today. She is a realtor with reflect real estate, amongst many things. She hosts a podcast called Good Investing. She is a current former model.
Mike Mills (Host) | 00:02:59 to 00:03:20
Something along those. I was, when I was stalking you before we went through, I was looking through your Facebook page, just kind of seeing what you were into. We're going to talk about horse stuff, too, because very interested in how you got into that world because I have a lot of experience in that world, believe it or not. But I saw you were like, on the Wall Street Journal. Like, you had like, a picture spread in there.
Mike Mills (Host) | 00:03:20 to 00:03:29
It's a nice little fall outfit thing. It's impressive. And you traveled the world for doing this as well. London, Paris, kind of been all over the place. So that's fascinating.
Mike Mills (Host) | 00:03:30 to 00:03:48
But we're going to start with, because this is the Texas Real Estate and Finance podcast. We're going to start with some stuff related to real estate. Now, you have a very similar situation as myself in that you are a real estate couple. You and your husband, Dylan. Correct.
Mike Mills (Host) | 00:03:49 to 00:04:18
Dylan was a loan officer like I am currently now is a realtor like you, and you guys are a team together. My wife is a realtor. So we are all existing in this wonderful market that we're living in right now. Yes. The great thing about being in the same business is that when things are good, things are amazing, and when things are bad, things are not so great, and you got to adjust and you got to prepare and all that kind of stuff.
Mike Mills (Host) | 00:04:18 to 00:04:45
So I'm curious, how did you guys get into the business together and then what are you all experience right now with this market and where things are going? So we got in the business together back in 2020 during COVID I think COVID, for a lot of people was like a pressure cooker. So it was like, is what we're doing working or do we need to pivot? Right. And at the time, we were both working in the entertainment industry, so Dylan and I actually met on a film set.
Mike Mills (Host) | 00:04:45 to 00:04:57
Oh, really? Yes. We were actually playing a couple, getting. A divorce, which is how wonderful, how beautiful. We worked through all that stuff up front, but, yeah, so we were in the entertainment industry in LA.
Rachel Grunn (Guest) | 00:04:57 to 00:05:05
Work just dried up overnight. I mean, you can't work from home when you're a model and an actor. Oh, because of COVID and you're doing model and acting, it goes away. Gotcha. Can't do it from home.
Rachel Grunn (Guest) | 00:05:05 to 00:05:24
So at that point, I grew up in a real estate family, and at this point, let's see, three years ago, I had, oh, gosh, like, six years of investing experience. Now it's about nine in real estate. So I already had properties. And you were familiar with it? Oh, very.
Rachel Grunn (Guest) | 00:05:24 to 00:05:38
So whenever we were like, you know what? We want to start a family. We don't want to live paycheck to paycheck anymore. We don't want our income to be dependent on something crazy, like a pandemic. So we made the difficult decision to move back to Dallas.
Mike Mills (Host) | 00:05:38 to 00:05:44
So you're both from Dylan's not. So Dylan's from city. Oh, wow. That's where we met. Got you.
Rachel Grunn (Guest) | 00:05:44 to 00:05:56
So I'm from Dallas, and so we made the decision to move back here for family and work. And then we were like, you know what? What do we know that we could do? And real estate just made sense. So that's when we both decided to jump in.
Rachel Grunn (Guest) | 00:05:56 to 00:06:06
He started out as a loan officer, and then my business kind of took off. In 2021. You got to follow the gravy train. Yeah. I said, come on, I need some help.
Rachel Grunn (Guest) | 00:06:06 to 00:06:11
Jump on in. The water is warm. Absolutely. Yeah. But the market has shifted.
Mike Mills (Host) | 00:06:11 to 00:06:20
Yes. No secret. In the past six months, it's been dramatic. So it's great. Like you said, it's difficult because you're both in the same business.
Rachel Grunn (Guest) | 00:06:20 to 00:06:48
So when it hurts, you really feel the squeeze. But you can commiserate together and you can also workshop and brainstorm together. So we found ways to kind of take the market by the horns and pivot and still find lots of success in business. And we're just as busy now as we have been. So what are you guys doing that you feel like is kind of carrying you over to next year?
Mike Mills (Host) | 00:06:48 to 00:07:11
Because we're coming up on 2023, and everybody is saying, which also is concerning because everybody's saying it, but you see a lot of places that next year could be rough for a lot of things. I don't necessarily think it'll be that bad for us. I think this year will be. When we look back at the end of 2023, I feel like we will see 2022 as the really downside of it. And I think you'll start to see an upturn in 2023.
Mike Mills (Host) | 00:07:11 to 00:07:33
But overall, the economy going into recession and all that kind of stuff, what are you guys doing being in real estate? To try to prepare yourself to be in the best position possible. So when the market does start to turn around a little bit, you're in front of people more than otherwise you would be. Yeah, man, that's a really good question. And it is kind of like looking into a crystal ball.
Rachel Grunn (Guest) | 00:07:33 to 00:08:05
No one knows. No people speculate, but no one actually knows. So right now, what we're doing is we're just getting creative. So we have technology on our side, and with technology comes a lot of interesting programs and a lot of awesome information and education, the opportunity to educate on a large scale. Whereas maybe like 15 years ago, you had to get on the phone and call all your clients, all your sphere, to update them on, like, hey, I know interest rates are getting higher and that's scary, but these are some options that you have, right?
Rachel Grunn (Guest) | 00:08:05 to 00:08:18
It's not 20% down, and you have to pay this interest rate. You could buy it down, you could get concessions, you could refinance at a later date. There's so many different ways to go around it, right? So right now it's awesome because we're just creating lots of content for education. Yes.
Rachel Grunn (Guest) | 00:08:18 to 00:08:33
And we are just pumping it out there. I mean, probably twice a week, I post some sort of educational bit on my Instagram and Facebook just to show people, like, listen, there's no way you could have known this unless I told you, right? Because you're not a real estate professional. But I am. You're not talking to lenders every day.
Rachel Grunn (Guest) | 00:08:33 to 00:09:16
But I am. So I can give you the best information that's out there right now and tell people, like, I know it's scary to buy right now, but there's actually no better time than to buy right now, especially if you don't have lots of cash in the bank. It's funny, I think there's a shift that's happening, especially in our space with real estate or really any kind of, hate to say, selling. But if you're in the business of selling and presenting yourself as somebody who is straight, commission based, and this is what you're doing, the concept of how to sell has changed. I don't know that everybody's moved in that direction.
Mike Mills (Host) | 00:09:16 to 00:09:31
And you're 29 years old. Okay. I'm 44, so we got quite a bit of separation there. And I'm just learning this myself. But I do find myself gravitating to paying attention to what younger people in my industry are doing versus myself.
Mike Mills (Host) | 00:09:31 to 00:09:51
And I'm not even that old in the industry. There's way more older folks than me. But there's this change from, hey, I'm going to take great care of your needs. I'm going to call me at this number to list your house. I'm going to tell you all these positive things about why I'm so good at my job and I've been in the business for 25 years and all of this stuff, right.
Mike Mills (Host) | 00:09:51 to 00:10:07
And I think there's not a misconception, but it's just starting to shift in the other direction to realize that most consumers these days don't want to be sold things. No, right. No. They want to be educated. They want to be told, hey, this is how you do this.
Mike Mills (Host) | 00:10:07 to 00:10:30
This is how you do this. I mean, we are living probably past moving on the age of information. So information is important. And when we are in a business where unless you do it every single day because it changes so rapidly, you don't know what's going on. So you're not aware of what's happening on a day to day basis or even a month to month or year to year basis in our industry because it changes so much.
Mike Mills (Host) | 00:10:30 to 00:10:54
So I think there's such a value on providing people with education without the expectation of getting something in return, 100%. And I think the days of like doorknocking, cold calling, stick your foot in the door type sales, I mean, it's just such a turn off. It is to me, it is to everyone else. I always say I want to bring value to someone before I ever ask them for business. Yes.
Rachel Grunn (Guest) | 00:10:54 to 00:11:14
And then you're also positioning yourself as an expert when you're bringing value. But here's the thing. People's attention spans these days are so brief, so you have to be able to deliver that education and that value in a concise and simple way. So that's really what we've been endeavoring to do. How can we totally blow people's minds in 45 seconds?
Mike Mills (Host) | 00:11:14 to 00:11:29
Right? Yeah. And that's hard because you have to come up with creative new ways and you have to be engaging. People have to want to, you got to use humor. You have to use nowadays, especially with video being what it is, little editing tricks and all these kind of things.
Mike Mills (Host) | 00:11:29 to 00:11:55
And if you're not familiar with that stuff or you don't use it on a regular basis, there's a strong learning curve. And I think it scares a lot of people away from doing those type of things because they feel like their ignorance is making them nervous about what to do and how to do it. And so then they just shy away from it completely. And that's why I think it's so important. If you've been in this business for a long period of time and you're not going anywhere, you got to keep selling stuff.
Mike Mills (Host) | 00:11:55 to 00:12:42
Then you need to start paying attention to people like yourself that are doing interesting, creative things to make yourself an expert in your field. So that way when people think about anything related to real estate or finance or whatever the case may be, they're going to think about you in some form or another. It's kind of like I was talking with somebody else the other day about this, but just something simple like a CRM, which is your customer retention management software. So you're putting someone's phone number, email address into a database, and they're going to send out the silly emails, the birthdays and the anniversaries and all that kind of stuff. And from the surface, you look at that especially, like, well, I get 8 million emails a day.
Mike Mills (Host) | 00:12:43 to 00:13:01
But it's another touch in a weird way because when I'm going through and I'm this way because I'm OCD with my email, I go through and delete everything all the time. But I very rarely unsubscribe for stuff. Very rarely because that takes an extra step. And I'm willing to swipe and delete, but I'm not willing to go in there, put my email in, why am I leaving? Blah, blah.
Mike Mills (Host) | 00:13:01 to 00:13:24
And I'm not saying it's good to spam people. What I am saying is that, that action of swiping your name and deleting your email, it's still your name and maybe even your face that shows up in their feed, in their life a little bit on Monday, a little bit on Wednesday, a little bit on Friday. They may not buy a house or one mortgage loan for years, but they see you constantly. And that's the goal, right? Yes, exactly.
Rachel Grunn (Guest) | 00:13:24 to 00:13:37
Even if it's subconscious, even if they don't realize. Yes. You're trying to be there in front of someone touches. So then you also have a podcast that you started and we were just talking about. We're kind of on.
Mike Mills (Host) | 00:13:37 to 00:13:43
I've got about 31 episodes here. And you're about to. I just released 32. There you go. We're right in line.
Mike Mills (Host) | 00:13:43 to 00:14:01
So you have a co host with it. And so how did that all come about? Okay, so this kind of ties in really nicely to the squeeze that we're feeling in the marketplace as well. So let me go back real quick to when I started. So our podcast is all about multifamily syndication.
Rachel Grunn (Guest) | 00:14:01 to 00:14:12
Multifamily investing. A syndicate is just a fancy word for, like, crowdfunding real estate. Okay, so we are essentially crowdfunding real estate. You're like a private REIT. Yeah.
Mike Mills (Host) | 00:14:12 to 00:14:31
Yes. Similar, but better. And I'll tell you why. But anyway, so my business partner and I, her name is Andreas Wick, and we met at a multifamily event a little over a year ago, and we just bonded on the fact that we are both so passionate about education. Again, because education is a great equalizer.
Rachel Grunn (Guest) | 00:14:31 to 00:14:54
No matter where you come from, where you've been, where you're going, knowledge is available for everyone, and we love to make it free and accessible. Right. So that's why we started good, good investing, because we're like, how are people going to know that there's a better way to invest and to fortify your portfolio for something like a recession or economic downturn that we're experiencing right now? Right, right. So I started investing in multifamily syndication seven years ago.
Rachel Grunn (Guest) | 00:14:55 to 00:15:11
My mom found out about it. And here's the thing. Multifamily syndication is very protected by the regulated. Excuse me. Regulated by the SEC, the Security and Exchange Commission, not the NCAA conference, the SEC.
Rachel Grunn (Guest) | 00:15:12 to 00:15:18
And so for this reason. That's funny. We're not talking about basketball, guys. We're not talking about basketball. Talking about securities and exchanges.
Mike Mills (Host) | 00:15:18 to 00:15:27
Yes. I'm like, we're regulated by the SEC. And they're like, LSU tells you what to do. Yeah, but because of bad apples like Bernie Madoff. Right.
Rachel Grunn (Guest) | 00:15:27 to 00:15:35
So they really cracked down and what's the other guy? FTX? No. Yeah, it was FTX. Sam Bankman Fried.
Rachel Grunn (Guest) | 00:15:35 to 00:15:47
Yes, that's right. Anyway, so for that reason, we're not allowed to advertise our offerings. And for that reason, there's not a lot of knowledge out there publicly available. There's no HGTV shows. Right.
Rachel Grunn (Guest) | 00:15:47 to 00:16:03
There's just very limited information. And a lot of people think that commercial real estate investing, because we're buying, like, $40 million complexes, like, huge. People think that's reserved for Warren Buffett. Yeah, exactly. And they think one person buys, it's like.
Rachel Grunn (Guest) | 00:16:03 to 00:16:13
No, it's like 100 plus investors that all go in together. So started doing that about seven years ago. My mom completely changed her life. She was able to retire in five years. Wow.
Rachel Grunn (Guest) | 00:16:13 to 00:16:33
Just through multifamily investing. And I just caught the bug. I just started doing it and invested in a couple, and then started doing it on the active side, where I'm actively going out and finding the properties, getting them under contract, et cetera. And it's just completely changed our financial future because it's entirely passive. That's amazing.
Mike Mills (Host) | 00:16:35 to 00:17:09
I'm always torn with stuff like this a little bit, because operating in the world that we do with real estate, I feel like we're in a place right now where the dream of homeownership is kind of drying up for people, especially young people. And the reasons for that, I never put intentional maliciousness on it. It's just kind of how things go, and that's what a lot of life is, just how the stuff works out. But what I'm seeing nowadays, and I even just read something right before we came in. Housing starts for single family residences are way down.
Mike Mills (Host) | 00:17:09 to 00:17:25
I read today, Dallas Morning News did an article where they said it's a 33% decline in housing starts in single family residences in DFW. And that's the lowest it's fallen in over twelve years, since 2009.
Mike Mills (Host) | 00:17:27 to 00:17:57
In one thing, that's not a good thing, because this is the path to wealth for most Americans, and it has been for a very long time. But what has gone up, and what is going up is multifamily, is apartment complexes, condos, townhomes, these kind of things. And the way I always feel about all things is you have to understand what the situation is, whether you can change it or not, whether you can do whatever you want to do about it, who knows? But if you're a young person who. I want to buy a house.
Mike Mills (Host) | 00:17:57 to 00:18:23
I want to own my own home, but I don't have a down payment, or I don't have enough for a down payment. The houses are $300,000. I can only afford a $200,000 whatever. Well, there are ways that you can invest your money in small doses and start to grow that money, to put yourself in a position to deal with the higher cost of homeownership as it goes down the road. And one of those things, I think, is the multifamily space.
Mike Mills (Host) | 00:18:24 to 00:18:43
Huge, because you tell me, because I don't know. But for what you're doing with that, I would imagine that the initial investment, I mean, I'm sure there's a vetting process and stuff you have to go through, but I would imagine there's probably an entry level that you can start off with. It doesn't cost you a ton of money. And then you can kind of grow your size from there. Would that be true?
Rachel Grunn (Guest) | 00:18:43 to 00:19:01
Yeah. So, I mean, it's definitely less than a lot of people would spend on an investment property or even down payment on a home. Right. And we do accept accredited and non accredited investors, which is great because it means, really anyone can invest that has investment experience. And so our minimums are typically $50,000.
Rachel Grunn (Guest) | 00:19:01 to 00:19:29
Okay. Again, probably less than an investment property because you're having to pay 20% down. On that closing costs and everything, closing. Costs and all that kind of fun stuff. And what is so cool about multifamily right now is that it does kind of shelter my husband and I from a little bit of the blow on the residential side, because there's a growth, like you said, when residential starts to suffer or slow, you see a huge boom in demand on the multifamily, whether it's temporary or permanent housing.
Rachel Grunn (Guest) | 00:19:29 to 00:19:42
Some people are moving into multifamily just to wait out a hike on interest. Other people are moving in because they frankly can't afford anything else. And rent is one of the only variable expenses they can control because they can't control gas or food. Right. So you are seeing a huge.
Rachel Grunn (Guest) | 00:19:42 to 00:19:59
And this is the other thing about investing in multifamily, especially during an economic downturn, is how it's valued. So I know you've bought commercial properties before. We're sitting in one. And so you know that in commercial real estate, the value is based on income, it's not based on comps. Right.
Rachel Grunn (Guest) | 00:19:59 to 00:20:37
So right now, your home is worth what your neighbor sells for. Correct. And when you're seeing neighbors start and other owners in your neighborhood start to cut prices to sell their home, it's affecting your value. So in commercial real estate, as long as we are keeping expenses low and keeping rents steady or increasing them periodically, we are gaining value. So, for example, on a 200 unit complex, if we were to increase rent $50 across all units on 200 units, and it was at a 5% cap, now, I'm not going to go into cap rates, but a 5% cap, I would say, is probably a little bit higher than it is in Dallas right now.
Rachel Grunn (Guest) | 00:20:37 to 00:20:50
Okay, so pretty standard cap rate, $50 increase, 200 units. You have just added $2.4 million in value for $50 rent increase. Because of the revenue? Because of the revenue. Because it's a formula.
Rachel Grunn (Guest) | 00:20:50 to 00:20:59
And so with that same $50 rent increase, if you owned a rental property, you would get 50 extra dollars a month and no change in value. That's it. Right. Your value doesn't matter. It's economies of scale.
Rachel Grunn (Guest) | 00:20:59 to 00:21:08
Yeah, for me. And like you were saying, it is similar to a REIT. However, in a REIT, you don't actually own real estate. Right. You buy shares of a company.
Rachel Grunn (Guest) | 00:21:08 to 00:21:19
Yeah, exactly. So with this, our passive investors are actually purchasing equity in the property. So they get the tax advantages. They get to know exactly where the property is. Because in a REIT, you don't know where you're investing.
Rachel Grunn (Guest) | 00:21:19 to 00:21:27
You're just putting money. You're just putting it into a group. Exactly. So it's not liquid like a REIT is. I would say that's the difference, but for that reason, it means it's not volatile.
Rachel Grunn (Guest) | 00:21:27 to 00:21:42
So we're not subjected to market volatility in the stock market and all that kind of stuff, which is also great. And then we do do refinances on our properties because we buy value add. So value add is like when you're buying it, rehabbing it. Right. And adding value.
Rachel Grunn (Guest) | 00:21:42 to 00:22:06
That way you're forcing appreciation. And so we'll do a refinance generally in year two or three, return anywhere between 50% to 90% of our investors original capital back to them. Now, that's a non taxable event, because it's a return of their capital, not a return on their capital. They can then take that money and put it into another deal. And now their 20% annualized return is a 40% annualized return.
Mike Mills (Host) | 00:22:06 to 00:22:39
And will you talk a little bit, too, about the lending side of it, too? Because I think that's something that people don't understand when it comes to, and it's based on what you were saying a minute ago, how the property value is based off the revenue that it brings in. But that's also what the lending is based off of as well. The value of the property, obviously, is considered, but they're not looking at you as an individual as to whether or not you can like for a house. If I'm evaluating someone's ability to purchase a home, I'm looking at their monthly income, I'm looking at their monthly expenses, and we're trying to determine whether or not it can fit within a predetermined ratio.
Rachel Grunn (Guest) | 00:22:39 to 00:22:42
Yeah. And their tax return and all that. Correct. Credit. Yes.
Rachel Grunn (Guest) | 00:22:43 to 00:22:57
Oh, my gosh. It's so nice because I take advantage of what's called bonus depreciation. So, as you know, in the home that you own, you get to claim depreciation on it yearly, and that's on a 27 and a half year schedule. I don't know why. I guess someone said 28.
Rachel Grunn (Guest) | 00:22:57 to 00:23:03
Someone said 29. Or someone said 27 and 20. They paper, rock, scissors for it. Yeah, I'm like, 27 and a half. Makes sense.
Rachel Grunn (Guest) | 00:23:03 to 00:23:23
So, in multifamily, we hire a specialist to come in and actually itemize everything in the buildings and units and put them on a depreciation schedule. But we actually get to claim all of that in year one. Wow. So you get a really big. We get huge tax write offs, and we pass that on to our past investors.
Rachel Grunn (Guest) | 00:23:23 to 00:23:44
Right. And they're able to use that depreciation benefit to offset their passive income. I mean, it's just game changing. So, myself, personally, I don't pay a lot of taxes, so I'm hoping that in 2022, I will actually pay no taxes. So for me, it's really hard to get a loan on a single family home when I'm reporting $25,000 in income.
Rachel Grunn (Guest) | 00:23:44 to 00:23:56
Yes. But I can be a part owner in a $40 million syndicate. So here's the thing is, no one, the lender, doesn't care what the passive. By the way it sounds. So I'm in a $40 million syndicate.
Mike Mills (Host) | 00:23:56 to 00:24:12
They're like, whoa, what are you involved in? Yeah, exactly. It's like, don't ask too many questions. Yeah, but, yeah, so the lender, frankly, doesn't care what the passive investor's financial situation is, what their income is, what their credit score, tax return. They don't care.
Rachel Grunn (Guest) | 00:24:12 to 00:24:30
Right. But our passive investors still get the opportunity to invest in real estate and get the benefits from that, even if they can't get a loan otherwise. So from the lending standpoint, we have what's called KP's key principles. And so those are people that can actually show an asset statement totaling the price of the loan. Right.
Rachel Grunn (Guest) | 00:24:30 to 00:24:43
So we do leverage debt on everything. It's pretty standard agency loans. Freddie and Fanny. And then right now, the leverage is pretty low. It's like 65, 35.
Rachel Grunn (Guest) | 00:24:44 to 00:24:59
But I won't get into all that. But anyway, so, frankly, as long as there are key principals on the deal that have an asset statement or a bank statement totaling the cost of the loan. So like $20 million or so, then it's all gravy. It's all good. Yeah.
Mike Mills (Host) | 00:25:00 to 00:25:16
I had a friend of mine on here recently. I've had him on a couple of times, actually, and he's just within the last, I don't know, probably five or six years. He's gotten heavily into. He does have an apartment complex, so he has a multi unit. I say complex, I think it's ten units or something like that.
Mike Mills (Host) | 00:25:17 to 00:25:48
In Hillsborough, I think. But either way, we were just talking about leveraging assets when it comes to getting into real estate, especially on the investment side of things, not just commercial, but also residential as well. And I was amazed just because it's always like, you learn things and when you hear it, you're like, well, I mean, I guess I knew that, but I didn't know that. You know what I mean? If someone tells me, like, okay, that makes sense, but then it doesn't really resonate and you're like, wait a minute.
Mike Mills (Host) | 00:25:49 to 00:26:12
If I know that, then why the hell haven't I? So he had bought a piece of property in, like I said, like a task or some small town. He bought it for Like $4,000, like it was in some sort of an estate sale, something. It was like maybe an acre, acre and a half. It was dirt cheap, came across it, paid cash for it, knew that the value actually, because he looked into it, the value was about $20,000.
Mike Mills (Host) | 00:26:12 to 00:26:33
That's what it was worth. But it wasn't in high demand because of some of the limitations on what they could put on it. But that wasn't why he bought it. He bought it because he paid four and it was worth 20, and it added to his portfolio that he could leverage then to go buy other properties and not have as much cash come out of his pocket to be able to do so. Right.
Mike Mills (Host) | 00:26:33 to 00:26:46
And it's that kind of thing where you just go, wait a minute. Okay, so you bought this thing for no other purpose rather than using it as leverage so that way you could go purchase other things. It's like. That's exactly what it was. Yeah, genius.
Mike Mills (Host) | 00:26:46 to 00:26:59
It's just like, okay, well, why don't more people do this kind of stuff? So smart. And in commercial lending, that's what they care about is like, your asset statement and your bank statement, not necessarily your reported income. Exactly. Yeah, because it's just a different world.
Mike Mills (Host) | 00:27:01 to 00:27:31
All right, so real estate stuff aside, to some extent, I know that you guys do a lot more on the good, good podcast, good, good investing, other than just real estate. Again, you're a younger person. What is she going to teach? I'm telling you, people, like you said before, education is free. And the people that spend their time learning and putting knowledge into their brain that therefore they can implement and use.
Mike Mills (Host) | 00:27:32 to 00:27:50
Being 29 and being in real estate for nine years, it means you started when you were 20 and you've had tremendous success for what you and your husband have been able to accomplish in such a short amount of time. And that's drive, that's determination, that's will. I know you just recently had some daughter, is that right? Yeah. Yes, little girl.
Mike Mills (Host) | 00:27:50 to 00:28:08
So you start adding family to the puzzle and things. Priorities shift a little bit. Sure. But you certainly use those years before kids to really get yourself in a great position. And regardless of how old you are, the effort and time that it takes to get yourself in that place is impressive.
Mike Mills (Host) | 00:28:09 to 00:28:41
So my question to you on what you guys do with the podcast is what other investment strategies? Because once you start understanding how real estate works, and once you start real estate understanding how finance works, and once you start putting these pieces together, then you start going, okay, wait a minute, I've got the real estate piece. I've got income coming in from these places, but I don't want to keep all my eggs in one basket. I got to spread stuff out a little bit and try to figure out where to really, it's for protection, where to balance yourself out. So when things go south, you have a little bit of coverage.
Mike Mills (Host) | 00:28:41 to 00:29:00
So what else are you guys really focused on and putting into your portfolio, as it may be? Yeah, great question. I think diversity is so key. Obviously, there's a lot of reasons. I love multifamily, and I think there's other assets that can also complement that, depending on what your needs are.
Rachel Grunn (Guest) | 00:29:00 to 00:29:15
So there's a really cool strategy called infinite banking, which you may or may not know about. It's just like a really awesome way to become your own banker. Does this involve insurance policies or something like that? Yes, life insurance policy. Okay.
Mike Mills (Host) | 00:29:15 to 00:29:24
Yes. Okay, all right. Before you start on that, all right, so I see this because I'm on the socials, right? Flipping through stuff, and I see this all the time. Okay.
Mike Mills (Host) | 00:29:24 to 00:29:33
And I see you guys talking about this, but immediately, I'm just being honest with you. Immediately my brain is, okay, all right, we're in a life insurance policy. You can sell yourself, okay. Right past it. All right.
Mike Mills (Host) | 00:29:33 to 00:29:47
So I'm willing to, because I'm operating from a point of ignorance. I literally know nothing about it. I just hear it and I'm like, okay, whatever. That sounds like BS. So explain it to me like I'm a dummy, because I am, so I can understand.
Mike Mills (Host) | 00:29:47 to 00:30:09
And then dig into it a little bit, because I do see it all over the place. And sometimes when you see things that frequently, whether or not you think it's valuable or not, or you think it has merit, if there's that many people doing it, kind of have something. Yeah, no, it is. And I actually know a lot of people in the multifamily space that are also doing infinite banking. Quite a few people.
Rachel Grunn (Guest) | 00:30:09 to 00:30:18
And I'm going to be honest, I don't know all the nuances of it. That's okay. That's why I trust experts with that. I'm a five year old, so just talk to me like I'm a five year old. But yeah.
Rachel Grunn (Guest) | 00:30:18 to 00:30:52
So it's essentially a way to borrow against yourself and then you pay yourself back with interest. So instead of going to maybe a small bank and getting a loan, whether it's like a personal line of credit or whatever, right. You're able to actually use that, whether it's for your kids college fund or rehab on your home, and you can actually take out a line of credit against your insurance policy and then pay it back with interest. So you're paying yourself back with interest for money that you borrowed. I mean, it's kind of amazing.
Rachel Grunn (Guest) | 00:30:52 to 00:31:16
It's so complex, though. I would definitely not try and do it yourself. I would get with like, I know there's financial advisors do it all the time, so if you have a financial advisor you trust, I'd talk to them about it because it's super nuanced and I think there's a lot of due diligence you have to do before you go down a path like that. But it is game changing. Well, game changing.
Mike Mills (Host) | 00:31:16 to 00:31:49
So it sounds like to some extent, maybe you know this or don't, but the banking system in general, I think it would surprise a lot of folks to understand how exactly this stuff works in that if I'm bank of America and I have, let's say they have way more than this, but let's say I have a million dollars in deposits in my bank. Well, I can then take that million dollars worth of deposits and I can lend out. Is it ten X? I think, or something like that. It's like $100 million or 10 million that you can lend out.
Rachel Grunn (Guest) | 00:31:49 to 00:32:10
That's insane. Which puts more money into the economy, which is what, when People say we're a debt based economy, that's really what they're talking about. Because that's why if everybody at once decided to pull their money out of bank of America, you wouldn't be able to get it because. Correct. Because it's not sitting in.
Rachel Grunn (Guest) | 00:32:10 to 00:32:27
It's the same with life insurance, actually. It's so funny that we're going on this tangent about life insurance because so many life insurance companies invest in multifamily, right? So many. There's like all these private equity firms that have life insurance funds, and they all put them in multifamily, and it's hilarious. But same thing with multifamily.
Rachel Grunn (Guest) | 00:32:27 to 00:32:36
Sorry. Same thing with life insurance is that whenever you pay your policy, it's not sitting in an account, they're investing it. Yes. They're putting the money back. They're making money on your money.
Mike Mills (Host) | 00:32:36 to 00:32:41
Yes. So it's fascinating. The same thing with the banks. Okay. All right, so I can see this.
Mike Mills (Host) | 00:32:41 to 00:33:07
So you put in a certain amount of money into your policy that you have, and then you have a certain amount that you can access because this policy belongs to you. Yes. And it grows cash value. And it grows cash value. And I would imagine there's a lot of tax benefits to this as well, because this is another piece I explain a lot of times to people when we're talking about buying properties, and they say, well, I'm going to put down 50% of my money to buy the house.
Mike Mills (Host) | 00:33:07 to 00:33:36
Why are you going to do that, especially in the house that if you're talking about investment property, because you can leverage it for other things. Okay, I can see that a little bit. But if you're talking about your house that you're going to live in and it's basically an expense for you, that money is useless to you because you buy a $400,000 house and you put $200,000 into it, all you're doing is saving your monthly debt expense and you can't grow your money. Yes. And so we talk a lot about how I use billionaires as an example.
Mike Mills (Host) | 00:33:36 to 00:33:58
Like a guy like Musk, right? Elon Musk goes and buys Twitter, but he doesn't pay cash for off. He gets money, investors and people, their roundup or whatever. But what he does. And the reason, if you've seen recently that he sold a lot of Tesla shares, that's because the value of Twitter dropped, and that's because he had margin calls on what he took out as debt against his stock.
Mike Mills (Host) | 00:33:58 to 00:34:02
Okay. In order to use that money to buy. Right. Well, people say, well, debt is terrible. Okay.
Mike Mills (Host) | 00:34:02 to 00:34:34
Well, it depends on how you use it. And in this circumstance, the reason it's not a bad thing is because if he were to go sell that Tesla stock to cash it out to then go buy Twitter or put his piece in to buy Twitter, that's a taxable event. And so from when he put that money in there and when he takes it out, that's a taxable event he's going to pay taxes on. Correct. But if I go leverage that asset that I have which is the Tesla stock, and I take out debt and then go buy Twitter or my portion of Twitter.
Mike Mills (Host) | 00:34:34 to 00:34:36
There are no taxable events that have.
Mike Mills (Host) | 00:34:38 to 00:35:00
Can you. I try to put it in that simple terms for that, but can you explain that a little bit better than my little feeble brain as to why using debt isn't as terrible as a lot of people think it is if you use it the right way. Oh, my gosh. I'll tell you right now that Dave Ramsey is probably the person I dislike most on the planet. Be careful.
Rachel Grunn (Guest) | 00:35:00 to 00:35:22
There's a lot of people that love know. They got envelopes and stuff. They're going to come for me. I know, but his whole no debt thing, all debt is bad, is such a wash. I mean, you just cannot put a blanket over such a huge industry as the lending industry.
Rachel Grunn (Guest) | 00:35:22 to 00:35:43
Now, here's my feeling on debt and leverage. If the interest on the leverage is lower than your return that you're making off using that leverage, you're printing cash. Right? For instance, if your interest on a house. A rental house.
Rachel Grunn (Guest) | 00:35:43 to 00:35:56
Yeah. Say a rental house is what, 3%? 3%. But real estate is appreciating 10% a year. Well, that's fantastic, because you're making 7% on that debt, on that leverage.
Mike Mills (Host) | 00:35:57 to 00:36:24
But, Rachel, Mike just told us that that money, that equity that I have in my house is useless and I can't do anything with it. Not true, because you can also use that asset as collateral, as leverage for a HELOC to borrow, like your friend did. Right, with the lanD. And the other really great thing, to your point about not putting a bunch down on your house. So say you were to put $100,000 down on a $400,000 house.
Rachel Grunn (Guest) | 00:36:24 to 00:36:35
Okay? And it appreciates 10%. SO next year it's worth 440. Right. You have put in $100,000 and you made $40,000.
Rachel Grunn (Guest) | 00:36:36 to 00:36:39
What is that? I can't do math. A 40%. 40%? Yeah.
Rachel Grunn (Guest) | 00:36:39 to 00:36:47
What if you only put down 5% instead of, what is that? 25%. Right. Well, what would that be? 5%.
Rachel Grunn (Guest) | 00:36:47 to 00:36:54
It'd be 80,000. Would it be? No. $8,000. Let's see, $400,000.
Mike Mills (Host) | 00:36:54 to 00:37:03
5% is 20. 20,020 gRand. Great. So say you put down 20,000 and you made 40. You just did a 200% return on your cash.
Rachel Grunn (Guest) | 00:37:04 to 00:37:13
Yes. Is the difference. Real estate is going to appreciate no matter how much you put in there. But the more you put in, the less return you get. And it's hard when you say real estate is going to appreciate.
Mike Mills (Host) | 00:37:13 to 00:37:37
It's so funny, because again, if you're not in the business and you don't do it on a regular basis, you don't have perspective sometimes on what that means. But they'll say, well, right now, well, my house isn't worth more than what I paid for it two years ago. So you say real estate is going to appreciate, but it's not. And my answer to that is we'll stretch that out over ten years and go look back. Go Google any value chart you want to find.
Mike Mills (Host) | 00:37:38 to 00:37:55
St. Louis Fed puts out a ton of those charts on a monthly basis about single family starts, rents Appreciation, house appreciation. Go back 50 years, and everything is like this all the way. Now it goes like that, Right? Up and down, up and down.
Mike Mills (Host) | 00:37:55 to 00:38:13
But it up and down, up and down, up and down, all the way. Up, up and to the right. Correct. And it's the Mark Twain like, buy real estate, and they're not making any more of it. And I think that appreciation that you pick up gets lost in the shuffle because you're thinking to yourself, because, again, people live in the monthly payment land.
Mike Mills (Host) | 00:38:13 to 00:38:42
Okay, what am I having to pay every month to do this? And what I think is so beneficial about what you do, especially with the education on the finance side of things, is that if you really want to grow your nest, right, you want to build your wealth, you want to build up your bank account, you have to think beyond monthly payments now. You have to do it intelligently. You don't over leverage yourself and put yourself at risk for complete collapse, because people do that as well. But you can start slowly and work in that direction, right?
Rachel Grunn (Guest) | 00:38:42 to 00:39:14
Correct. So if you were talking to your 20 year old self, which seems ridiculous, but if you were, and let's say you had 20 grand, for whatever reason, got a birthday present, mom left a tea or whatever, you've been saving, working hard, where would you start? Where would you put that money to start with and say, okay, I've got this money, I'm going to put it here to start with, and then I'm going to start building in this direction. Where would you put the foundation of your investment career and head in the right? That is such a great question.
Rachel Grunn (Guest) | 00:39:15 to 00:39:24
No doubt I would put it in real estate. Okay, now what class, by the way? I did. No idea she was going to answer it that way. So this is setting her up.
Rachel Grunn (Guest) | 00:39:24 to 00:39:38
No doubt. What other asset has appreciated so consistently historically? I mean, real estate has been around since beginning of time. Do you know how many data points we have for real estate as opposed to something like crypto? Not that I have anything against crypto.
Rachel Grunn (Guest) | 00:39:38 to 00:39:43
I don't understand it, frankly. We can talk about that. I know a lot about crypto. Can of worms. Yeah.
Rachel Grunn (Guest) | 00:39:43 to 00:39:52
This could be a two hour long podcast. I love it. But, yeah, for something with so many data points. Right? So it's such a stable investment.
Rachel Grunn (Guest) | 00:39:53 to 00:40:05
But on top of that, what other asset can you claim a loss on while making a gain? Yes, it's depreciation. That's it. That's the game changer. It's the consistency and it's the depreciation.
Rachel Grunn (Guest) | 00:40:05 to 00:40:18
So 100%, I'd put that 20K into real estate. Your own real estate, or like, let's say you didn't own a house. Would you buy a house for yourself or would you buy an investment property first? I would buy an investment property first. I'd buy something that cash flowed.
Rachel Grunn (Guest) | 00:40:18 to 00:40:33
Airbnb, probably. Or I would do something like travel nurse housing. Because travel nurses get their massive industry. Massive industry. And they get paid by the hospital for that.
Rachel Grunn (Guest) | 00:40:33 to 00:40:46
So it's just like guaranteed rent. You're not having to chase tenants and all that. And also it's short term. So here's the thing with long term rentals, I don't like. When the market turns and you're ready to sell, you got to wait for that tenant to their lease to expire.
Rachel Grunn (Guest) | 00:40:46 to 00:40:54
You want it to be in a flexible situation. So maybe travel nursing, which is usually anywhere between 60 to 90 days, or Airbnb.
Mike Mills (Host) | 00:40:56 to 00:41:05
So I have two Airbnbs. My wife and I do on lakes. We have one in Cedar Creek Lake, and we have one at Lakewood. Beautiful. Oh, my gosh.
Mike Mills (Host) | 00:41:05 to 00:41:28
Well, that's what the show was, the Cedar Creek property. But we've been looking at some neighborhood stuff. And again, this is why I wanted to have you here, because it didn't dawn on me. I do loans every day and I talk to people constantly that are in the health industry because they're actually one of the industries that's doing pretty well. They're making good money.
Mike Mills (Host) | 00:41:28 to 00:41:32
There's a lot of need for it. But there's a ton of travel nurses.
Mike Mills (Host) | 00:41:35 to 00:42:02
It's a big shift just in the last, I would say the last five to ten years, it's been just a massive shift from individuals working directly for hospitals or for clinics or whatever to. They're basically independent contractors that work for themselves, do contracts at three and six months, but they get paid insane amounts of money, insane amounts for what they do. And they get rental stipends. Yes. Which is great, but the beauty of that is on the rental side is anytime you have an institution that is paying the rent, that's what you want.
Mike Mills (Host) | 00:42:02 to 00:42:34
Yeah, right. So, same friend of mine, which I didn't realize this was a thing, too, but section eight housing, all right, regardless of what you think about it, I did not know that you can basically identify almost any property as section eight housing. And there are limitations, HOAS and things of that nature that will put constraints on that. But if you go out into rural America and you find somebody that can be a renter, there's management pieces to it. So I don't want to make this sound like this is a wonderful thing.
Mike Mills (Host) | 00:42:34 to 00:42:52
I'm just saying this is a process. But the government pays 80% of that rent, and it's incumbent on the person living there to pay their 20%. If they don't, then within usually less than 60 days, they're out. And again, process to that. There's a lot involved.
Mike Mills (Host) | 00:42:52 to 00:43:36
Not making it sound easy, but you have a guarantee every month on the same day that you're going to get a check for 80% of your rent, no matter what. Right. And just that peace of mind alone, whether it's a company, like a staffing company that's paying it, or it's the government that's paying it, anytime there's an entity paying your rent every month, which is why commercial property is so great, because it's usually businesses that are paying and these things are automated and you're not waiting on like a single family residence where you've got the mom just lost her job and dad's hurt and they've got three kids and like, hey, look, I'm not saying that good, bad, what? I'm just saying that these are the things that occur. It's a headache.
Mike Mills (Host) | 00:43:36 to 00:43:50
Yes. It's another thing you have to deal with. And when you can factor out a headache like that, when you know you're getting guaranteed money every single month. Yeah, there's no sense you can't replace that. I also really like, speaking of different type of asset classes for real estate is triple net properties.
Rachel Grunn (Guest) | 00:43:50 to 00:44:00
So those are like properties in retail centers. Think like Autozone, CVS, Planet Fitness. I owned a restaurant for about seven years and we had a lease. Triple net. Triple net.
Rachel Grunn (Guest) | 00:44:00 to 00:44:26
So quickly for the listeners, triple net just means that the landlord is not responsible for taxes, insurance or maintenance. That's the triple and the triple net. So it's a fantastic property to invest in because you're not responsible for any of that stufF. There's really no variable expense. And whenever you buy, like a dollar general or a dollar tree or something like that, if that, say, dollar tree and waxahatchee can't make their monthly rent, dollar Tree, corporate takes care of steps in and pays.
Rachel Grunn (Guest) | 00:44:26 to 00:44:35
So it's guaranteed rent. Really good. It doesn't apPreciate, I think, in the same way, but it's a really good cash flow. Yes. So those can be cash cows.
Rachel Grunn (Guest) | 00:44:35 to 00:44:56
I'm actually invested in a fund. It's a triple net fund. So this syndicator, I'm just a passive investor in it, but he's buying up a bunch of different of these triple net retail stores, putting them into a fund, and then that fund will become a REIT. It'll go public. So that's like the big multiplier is whenever it goes public, when you have.
Mike Mills (Host) | 00:44:56 to 00:45:22
All that money flowing in from the public, huge. So right now it's private and we've invested in it, and we're so excited about it. Well, and the beauty of that, too, is because you're involved in a lot of things, and that's great, even if it's just passive to some extent, because, and this is, maybe we'll get into crypto in a minute. But I have been doing crypto for a little while for a number of different reasons. I'm not, what do you call it?
Mike Mills (Host) | 00:45:22 to 00:45:49
A fanatic about it, necessarily. I feel like I'm a reasonable human. When you're not a crypto, bro. No, but the reason I got into it was because I saw that there was a technology and an opportunity for something that would have great benefit in a lot of other parts of our society, not just in some coin that somebody created, but the technology behind it. The blockchain, wire transfers would be 700 times easier.
Mike Mills (Host) | 00:45:49 to 00:46:03
Exactly. With the blockchain. Yeah. So that piece of it, what it made me do is I wanted to put a little bit of money, because I believe that if you want to learn sOmething, put something on the line, because you will learn it much, much quicker. Not a lot.
Mike Mills (Host) | 00:46:03 to 00:46:30
I'm not saying go out and drop $100,000. I'm saying even with the crypto stuff, it was like $100, $200, $300, just to see. Because then what happens is your attention shifts, because now you're not forcing yourself. Now I have money in there. So it's like people that are gamblers, like, if you like to gamble on the NFL, if you like to bet on NFL games, you're reading every article, you're looking at every person's opinion on what's coming up with the game, all that kind of stuff, it's the same thing.
Mike Mills (Host) | 00:46:30 to 00:46:54
So if you get into multifamily, if you get into the triple nets, if you get into that stuff, even if it's just dipping your toe in there and not being full forged, you will learn so much because you're just in it and you see it every day. You have a little bit of skin in the game. Yes. And I think that that's so important. Whenever you want to start looking at doing different investment styles is figuring out the cheapest way you can get in.
Mike Mills (Host) | 00:46:54 to 00:47:19
So that way you can start the education process because then you can grow it from there. The person that wants to show up one day and say, okay, I've got 100,000, I'm going to put it all. Learn about the space first because you're going to make a lot more mistakes than you are going to get the right things done. And if the pain isn't as bad, right. Because you don't lose as much when it does happen, then you can continue to grow that area.
Mike Mills (Host) | 00:47:20 to 00:47:31
Is that something that you guys did intentionally where you're like, well, I'm going to try this out. I want to try this. Or did it just bleed into other things as you went along? Oh, gosh. I did the exact opposite, actually, which I don't recommend.
Rachel Grunn (Guest) | 00:47:31 to 00:47:44
I cashed out everything. I'm not saying it's bad, I'm just saying it's risky. That's all I'm saying. I had a lot of money in Tesla stocks back before, like in 2018. I did actually cash it all out to put it into multifamily.
Mike Mills (Host) | 00:47:44 to 00:47:48
Okay. So I'm not in the stock market. Okay. At all. You have nothing.
Mike Mills (Host) | 00:47:48 to 00:47:57
No index funds, no 401K, no mutual. Funds, no four hundred and one K. I mean, I'm self employed. I've never had a 401K, but I. Only have a sole or IRA or whatever.
Rachel Grunn (Guest) | 00:47:57 to 00:48:03
Nothing? Yeah, no, I'm all cash and all in real estate. Okay. I'm all in. Okay.
Rachel Grunn (Guest) | 00:48:03 to 00:48:24
But I think to your point, it's so important to educate yourself. But you can also get into a pattern where you are only consuming and you're not actually doing anything with the information. So I think it's an interesting balance. It's like educate yourself till you're comfortable, but at a certain point you're going to have to take a risk. You're going to have to do it in order to move that needle.
Rachel Grunn (Guest) | 00:48:24 to 00:48:32
Right, because you're right. 100, $200. But it's going to make you focus on that asset yes. But at the end of the day, it's not going to move the needle. It's not going to change your life.
Mike Mills (Host) | 00:48:32 to 00:48:45
No. So it is important, once people do get educated, that they take action. And I don't know who said the quote, but I love it. It's don't wait to buy real estate. Buy real estate and wait.
Mike Mills (Host) | 00:48:46 to 00:48:51
Yes. I've actually seen that. It's a popular one. I don't know who said it. I want to say Winston Churchill, but I don't know.
Rachel Grunn (Guest) | 00:48:52 to 00:49:13
Probably. Okay, so we're headed into unknown waters on what's going to happen next year for 2023. Everybody's got their guesses on what's going to occur, but nobody really knows. We'll just see. But if things do go downward, that usually creates opportunity.
Mike Mills (Host) | 00:49:13 to 00:49:31
Right. And whenever everybody else is selling, as Warren Buffett would say, you need to be buying. When everybody else is buying, you need to be selling. Well, everybody else was buying in 2021 and a lot of people didn't sell. And now they're having to sell because they're where they are.
Mike Mills (Host) | 00:49:31 to 00:49:58
What would you say? Or how does someone prepare themselves to stay in a position, your average somebody that's not looking to become a real estate investor necessarily. But I've seen you mention things like your freedom and your magic number and these things where you're trying to get yourself to a place where you can feel secure. Because at the end of the day, I think that's what most people just want. They just want to feel secure.
Mike Mills (Host) | 00:49:58 to 00:50:18
They want to feel like I have enough to. Where if a tragedy occurs in my life or something changes dramatically, I'm going to be okay. Right. So I have another term that I like to use from time to time that I got from somebody that it's called fu money. I won't say it fully, but I'm not talking about fu money.
Mike Mills (Host) | 00:50:18 to 00:50:45
Fu money is you can do whatever the hell you want and piss off anybody that you want, and you're fine, okay, because you got enough to sustain it. I'm talking about just the average person that just wants to take care of their family and feel know, tell me about your freedom and your magic numbers to, and what are they first, then, and then how do we get to that point? YEah, I think. Do you watch shark tank? I have.
Mike Mills (Host) | 00:50:45 to 00:50:58
I don't watch it on a regular basis. So in shark tank, Mark Cuban always says, whenever people come into the tank and they ask him a question and they're, know, what's your customer acquisition cost? What'S your net revEnue? WhAT's your gross? All THIS kind of stuFf.
Rachel Grunn (Guest) | 00:50:58 to 00:51:15
And if people, they're like, you need to know your numbers. You cannot operate as a business unless you know your numbers. And I think even if you don't run your own business, even if you're just an employee, your household is a. Business, your home is a business. You are a business.
Mike Mills (Host) | 00:51:15 to 00:51:21
Yes. You're making income and you're spending money. That's a business. There's income coming in and there's expenses going out. I'M sOrry.
Rachel Grunn (Guest) | 00:51:22 to 00:51:34
You're a business. Yeah. So you need to know your numbers. And we have this tool, quick plug on goodgoodinvesting.com. We have this tool called, you may be richer than you think.
Mike Mills (Host) | 00:51:34 to 00:51:39
OKAY. It's a net worth assessment. And I think I like the title. Of that, by the way. It makes people like, oh, really?
Rachel Grunn (Guest) | 00:51:39 to 00:51:46
YEAH. BUT IT IS. There's so many people where I'm like. You didn't want to call it, you don't have enough. As you don't have enough, you want to give it that name.
Mike Mills (Host) | 00:51:46 to 00:51:57
IT'S a NEgATIVE namE. YEAH. You may be richer than you think. And I think people will surprise themselves because they don't know, like you were saying, with the leverage, they don't know where they can find money. Yes.
Rachel Grunn (Guest) | 00:51:57 to 00:52:08
You can find money in your house. You can find money in retirement funds. You can find money in your life insurance policy. I think people don't. They think the only money they have is what they're paid by their employer.
Rachel Grunn (Guest) | 00:52:08 to 00:52:23
And that's not true. Right. And so I think, knowing your numbers, what is your net worth, really? And so it's a super simple tool, but it goes into finding your freedom and your magic numbers. So once you've identified what your net worth is, you have your net worth, and then you have your investable net worth.
Rachel Grunn (Guest) | 00:52:24 to 00:52:32
Right? Like, what's liquid, what can you, what can you access? Right. And in multifamily, we do accept retirement funds. So that would be an investable part of your net worth.
Rachel Grunn (Guest) | 00:52:33 to 00:52:58
And then there's also this tool on the second page of the net worth assessment, and it's identifying your freedom number and your magic number. Now, this is really what's going to be the blueprint for your investing journey. Your freedom number is how much you need to make every year in order to retire. Okay? So I'm not talking just pay the bills.
Rachel Grunn (Guest) | 00:52:58 to 00:53:15
I'm talking, like, keep your lifestyle. Right? What are you spending on travel, on food, on incidentals, on your emergency fund, like, all of it. And it's itemized you can insert in all that information to find your freedom number. I call it the Freedom number because once you've achieved it, you don't have to answer to anyone.
Rachel Grunn (Guest) | 00:53:15 to 00:53:43
You can quit your job, you can open an Etsy shop, whatever, and then how you find your magic number. The magic number is how much money you need invested in order to passively make your freedom number every year, right? So how much money do you need to have somewhere where you got cash flow coming back so it's enough that you can. That's financial freedom, right? When your passive income offsets your active income, you've made it, because now you're.
Mike Mills (Host) | 00:53:43 to 00:53:52
Not trading your time for money. Exactly. You can literally do whatever you want with your life, and you're still making the same income. So find your freedom number. That's going to be how much passive income you need per year in order to quit your job.
Rachel Grunn (Guest) | 00:53:53 to 00:54:03
And then your magic number. And we have formulas. We spent a lot of time on this assessment. And so there's formulas in there you can just plug and play. It's so fun and easy.
Rachel Grunn (Guest) | 00:54:04 to 00:54:27
But just for the sake of anyone that's sitting watching this with their phone in their hand, say you wanted to make $120,000 a year in passive income, and then you can quit your job. Well, in multifamily, at least, we have an average cash on cash element to our deal. So we pay our investors on average. It depends on the deal, but around 8% per year. And that's just in passive income, right?
Rachel Grunn (Guest) | 00:54:27 to 00:55:03
So if you were to use that as your appreciation, whatever. So you're making 8% a year in passive income, but you need to get $120,000 per year. With our formula, what you do is you make that 8% of percentage, or decimal. So, 0.8, you take your freedom number, $120,000, divide it by 8%, and that equals 1.5 million. So I would need $1.5 million invested in this specific multifamily asset, or whatever it is that's giving me 8% a year, and I will be able to retire.
Rachel Grunn (Guest) | 00:55:03 to 00:55:16
So it just lays it out there because you can say, yeah, I want to retire. I want to invest. But unless you know your numbers, you're walking blind. What do you think? What holds people back from doing this?
Mike Mills (Host) | 00:55:20 to 00:55:41
Me and my husband or me and my wife, whatever, are working, and we're living paycheck to paycheck, basically, kind of barely making it. And if I sit down and do this assessment, I'm just going to be depressed, right? Because I don't have anything or I don't have enough or whatever. What would you tell somebody to get past that psychological part of it? To where?
Mike Mills (Host) | 00:55:41 to 00:55:55
Because I think it's like going to the doctor part of the reason. As a lender, whenever agents refer people to us, when I have new agents come in, I always tell them, go show them a house. Just show them one. Go look at a house. Go check one out before you make them go get pre approved.
Mike Mills (Host) | 00:55:55 to 00:56:07
Now, if you're showing 50 houses a day and you don't have time for it, fine. Then get a buyer's agent and have them go show a house. But either way, the point of it is, if they go see a house and they feel comfortable, they get the appetite. Right. I love this place.
Mike Mills (Host) | 00:56:07 to 00:56:27
I want to try to do something, then they're going to be more willing to speak to me. Because talking to me, whether your financial situation is great or not, it's just not something anybody wants to do all the time. Right, because you're stripping down financially naked in front of somebody that you never met before. Yeah. And people say, well, I just got divorced, and that's why my career.
Mike Mills (Host) | 00:56:27 to 00:56:34
I'm like, look, you don't have to explain anything to me. You don't need to justify it. I see this stuff all the time. It's just life. Life happens, things happen.
Mike Mills (Host) | 00:56:34 to 00:56:48
It's okay. But what would you say to somebody who is like, man, this all sounds great. I really want to do this, but I know it's going to be bad, and I don't even want to go down that road because I'm just going to be sad and depressed, and I know I'm not going to be able to do anything.
Rachel Grunn (Guest) | 00:56:52 to 00:57:12
It's kind of the same thing with not wanting to open your online baking app because you don't want to see what's in there, but it doesn't make it any less real. Right. And I think at a certain point, if you want to see change, you're going to have to face the music, even if it's painful. And that's why a big reason of these people that are like Paycheck to paycheck. And of course, you need to invest smart.
Rachel Grunn (Guest) | 00:57:12 to 00:57:42
Always keep an emergency fund. But a lot of people don't know that they have money in assets that aren't just, what is it? Disposable income. Right. So that person that's paycheck to paycheck, maybe they're sitting on 200 grand in a HeLOC on their house, or maybe they have a 401 that's worth 150 and it's just making whatever, 7% in the mutual funds.
Mike Mills (Host) | 00:57:42 to 00:58:12
Or maybe they have 600, $700 worth of expenses every month that if they just looked at what they were paying out, you look at your bank statement, if you look at your debit card and what you're charging every single month. Subscriptions, they forgot about. Yes, that happens to me all the time. Well, there's an industry now, there is literally an industry that is built up with software and different things that examines your accounts and tells you all the stuff that you're paying for on a regular basis that you may or may not even realize that you're doing. Because everybody wants a monthly subscription.
Mike Mills (Host) | 00:58:12 to 00:58:25
Everything that you do is a monthly subscription these days. And just going through and seeing all of your expenses and going, this is everybody. This isn't just people living. This is anybody. Because especially it gets worse.
Mike Mills (Host) | 00:58:26 to 00:58:41
The little bit more success you have, a little more income you have coming in, you tend to just, oh, yeah, let's do that, let's do that, let's do that. And then you go back and look six months or eight months later, and you're like, I spent how much on this? And we've never used it one time. What's Hulu? I don't watch Hulu.
Mike Mills (Host) | 00:58:41 to 00:58:53
What is this? But that stuff happens. And if you don't pull the curtain back and if you don't look under the hood, then you're not going to see these. And it is scary and it is vulnerable and it is hard. It is hard, but you have to do it.
Rachel Grunn (Guest) | 00:58:53 to 00:59:01
If you really want to make change, you have to do it. And then you also have to assess your own goals. What do you want? Do you need cash flow? Are you retired?
Rachel Grunn (Guest) | 00:59:01 to 00:59:24
Are you more interested in something that appreciates because you have a great job and you don't really need to see that for another five years or so. So I think also analyzing not only your financial goals, but also your lifestyle goals, what's the life that you want? Because there's going to be an asset to invest in that's going to be able to service that well. What is it that's up for you to determine? But that's why education is so key.
Rachel Grunn (Guest) | 00:59:24 to 00:59:47
Once you know the buffet of options available to you, you know, oh, my gosh, there's so much more I can do outside of the stock market. I can get creative within my investing journey. Yeah. And I think people get wrapped up in their day to day life and they wake up, they take the kids to school, they go to their job, they have lunch, they come home, they feed their kids dinner, they go to football, baseball practice, whateVer. And then it's 930.
Mike Mills (Host) | 00:59:48 to 01:00:07
And you're like, I'm just tired. I don't want to mess with anything. I'm going to watch Game of Thrones, and I'm going to go to sleep, and on the weekends, they're going to a tournament, or they're visiting the family, or they're hanging out with some friends from time to time. And I found this saying this because this is something that I experienced and kind of came to revelations over the last couple of years. I spent all this time just doing stuff constantly.
Mike Mills (Host) | 01:00:07 to 01:00:43
It was constantly doing stuff that I never stopped to sit down and think and just think about a thing, whatever that thing is. Like, I'm trying to get my finances together, or I'm trying to look and see what I have currently and where I need to go. And taking some time to yourself, an hour, 2 hours, whatever it may be, once a week, whenever you can find it, is so critical because you have to self examine these things and you have to sit down and go through everything, but that takes time. And we have this. I don't think people necessarily don't want to do it.
Mike Mills (Host) | 01:00:43 to 01:01:19
And I struggle from this and even work and all kinds of stuff of I'm doing something, but the whole time I'm sitting here, the whole time we're sitting here talking, I've got three or four other things in the back of my head that I need to be doing that I'm not doing. And so there's almost like this guilt of, well, I'm doing this thing, but I should be doing these other things. Sure, but it wouldn't change if I was doing one of those other three things, then I'd be thinking about this or something else that I need to be doing. And it's just this mechanism that happens in your brain, especially if you haven't given up. I'm trying to do everything I can, but I think because we don't slow down and go, okay, I need some time to think, I need to examine.
Mike Mills (Host) | 01:01:19 to 01:01:43
I need to look at all this kind of stuff. You look up and it's ten years, and you're like, oh, shit, where'd all my time go? I had all this time, I had all these plans, and I never did it. But that's because you didn't stop and slow down for a second and just examine what you're doing. When I was about, I don't know, 35, probably something like that, I was a huge sports fan.
Mike Mills (Host) | 01:01:43 to 01:02:01
Baseball, football, basketball. I was MaVs, Rangers, cowboys, listening to sports talk radio, twenty four seven. Like, I was obsessed only because that was just where the world I had come out of. I played high school and was a big fan of everything and was involved in it and sort of got my kids into it and all that. So I was into it.
Mike Mills (Host) | 01:02:01 to 01:02:30
But then one day, and I don't remember what it was, I just kind of was like, what is all this knowledge getting me? Where am I really headed with this kind of stuff? Yeah, I can sit at the bar with my buddies and we can shoot the shit about the running back situation for the Cowboys or they're going to sign a new pitcher or for the Rangers or whatever. But is there a real benefit to me? Like, am I getting anything from this personally for my family, for my life, other than just pure entertainment?
Mike Mills (Host) | 01:02:30 to 01:03:01
The answer was no, it wasn't. And I'm not trying to knock anybody. That's, we all have our hobbies and things that we like to do, but I made a shift in my head to say, okay, I'm going to start focusing my hobbies or the things that I'm interested in on things that are going to benefit me. Right. So if you go through my TikTok or if you had access to my phone and you could go through my TikTok page or my Instagram or whatever, YouTube, it's all crypto taxes, entrepreneurship, motivation.
Mike Mills (Host) | 01:03:02 to 01:03:36
It's all this stuff because we demonize social media a lot, but you create the world that you live in in that place. And so I made a conscious effort to say, if I'm going to dumb my brain down by sitting here for an hour every day to have a release, I'm at least going to make this information something that I can use and retain for other things. Oh, yeah, totally. So how have you guys, with your business and everything else? What are you all doing, speaking of social media, what are you all doing to really try to grow your client base for what you're trying to do for the real estate side?
Mike Mills (Host) | 01:03:36 to 01:03:50
Are you using that to promote the multifamily investing as well? Is that part of the reason the podcast came about? What are your strategies that you're using. To kind of grow that? I do kind of keep both worlds pretty separate.
Rachel Grunn (Guest) | 01:03:51 to 01:04:14
I do have crossover, right? So there's people that have invested with us on the multifamily side that have gone and bought residential with us and vice versa. But I do like, on socials and everything, keep them pretty separate, and that's just because in the residential side, I'm servicing people in North Texas. On the multifamily side, I'm working with people across the world. Gotcha.
Rachel Grunn (Guest) | 01:04:14 to 01:04:19
So it's just kind of just a different base. Gotcha. There is a ven diagram of crossover. But.
Rachel Grunn (Guest) | 01:04:22 to 01:04:38
Kind of like I said earlier, we are just like, just like you said. Those TikToks that you're watching that are easy to understand, quick consumables. You're getting info, you're getting value, you're getting your mind blown. Second after second, you're getting that dopamine rush. We try to recreate that.
Rachel Grunn (Guest) | 01:04:38 to 01:05:04
So stuff that blows my mind, I simplify it and record a video and post it. And you don't have to do all these crazy edits or anything. But I love sharing information. I love just for free, even if someone wants to use another realtor, even if they have no interest in ever investing in multifamily, I still want to teach them stuff that I didn't know. Right.
Rachel Grunn (Guest) | 01:05:04 to 01:05:21
And actually I went to a Tony Robbins event and he said something that blew my mind. He said, stop endeavoring to give your kids what you never had, but rather endeavor to teach them what you never knew. Oh, yeah, that's great. And it's so good. I love that.
Rachel Grunn (Guest) | 01:05:21 to 01:05:38
Because when you teach someone something, they can then go, they can teach man to fish. Exactly. Yeah. Instead of just like giving them $100 or whatever, it's like, here's how you can make $100 or here's how you can take $100 and make it $10,000. Whatever.
Rachel Grunn (Guest) | 01:05:39 to 01:06:04
So education is just huge for us. I just love it. Well, you said you went to, I mean, you mentioned Tony Robbins, you mentioned you met your podcast buddy at a multifamily event. So you're obviously yourself going to trainings and seminars. Conrad, number one contributor to the show is officially checked is Conrad's, the guy I was telling you about that had the land that he leveraged.
Mike Mills (Host) | 01:06:05 to 01:06:06
So he's always involved.
Mike Mills (Host) | 01:06:09 to 01:06:26
So you're going to all these events and you're participating in this stuff yourself, which is an indication of how much you value the education piece. Networking. Yeah. Well, what would you say to somebody? Because this happens in real estate all the time where they're know they have a Tom Ferry event or they have Brian Buffini or whatever these things are where they do real estate training.
Mike Mills (Host) | 01:06:27 to 01:06:43
And I'll hear agents say, well, I'm not going to go to that. I've been there before. I saw that. Or he says the same thing as this guy, and I've already learned that. What would you tell somebody that gave you that reason as to why they wouldn't go continually go to these trainings and education seminars and learn stuff?
Rachel Grunn (Guest) | 01:06:44 to 01:06:59
Well, I think, okay, you can learn stuff for free on the Internet. And sometimes these events do have a cover charge, right? Of course, yes. I don't really go to them for education. I go to them to shake hands.
Rachel Grunn (Guest) | 01:06:59 to 01:07:17
Because you cannot do that online. You cannot do that on social media. You cannot make a meaningful connection with someone over the Internet. In my opinion, going to these events and showing up in person, that's how I created one of the most profitable partnerships of my life with my business partner, Andrea.
Rachel Grunn (Guest) | 01:07:19 to 01:07:35
That's how I find sponsors to invest with. That's how I learned to trust people. I mean, partnerships will take you to the stratosphere, and you cannot find them, you cannot make them unless you're putting yourself out there meeting people in person and shaking hands. COVID was rough. We're past it.
Rachel Grunn (Guest) | 01:07:35 to 01:07:48
Get yourself out there. Go to events, meet people. Yeah, hopefully you learn some things. But honestly, I spend a lot of time in the hallways outside of the conference area, just talking with people that are there attending because you're there with. Like minded people that think the same way that you do.
Rachel Grunn (Guest) | 01:07:48 to 01:08:04
And then they're the ones that are telling me like, oh, yeah, you're in know. Have you tried infinite banking? And I'm like, okay, let's skip this talk about whatever depressing recession. Let's go get a coffee and talk about how you've. And people are just so open and willing to sharing information.
Rachel Grunn (Guest) | 01:08:04 to 01:08:39
And Andrea and I actually started our own meetup, which is free, but it's called the Passive Investors Network, and it's here in North Texas. We meet in, like, Plano, usually because, for the same reason, to network with other passive investors or other active real estate investors. Yeah. I didn't even really think about it in terms of that, just the amount of people that you meet, because that's the other thing is you have mentioned this on this thing many times about, you are an amalgamation of the five people you spend the most amount of time with. Right.
Mike Mills (Host) | 01:08:39 to 01:09:09
And I'm not telling people that they don't need to have their friends and don't need to do spend time with their budy from high school. But what I am saying is, if your goal is to continue to drive yourself forward and continue to build whatever version of success you want to call, it doesn't have to necessarily have to be money. You've got to put yourself around people that think the same way. Yeah, right. Because the more you're exposed to it and the more you're in front of it on a day to day basis, the more likely those things are going to come to fruition for you.
Rachel Grunn (Guest) | 01:09:09 to 01:09:18
People that think the same way but also might know more so they can kind of. Yeah, you don't want to be the smartest person in the room. Never. Yeah. It's not going to work out in your favor if you are.
Mike Mills (Host) | 01:09:18 to 01:09:24
All right, well, man, we're already an hour and ten minutes into this, but. Are you kidding? No. You were serious. It did fly by.
Mike Mills (Host) | 01:09:24 to 01:09:31
I told you it goes quick. It did fly by. All right, real quick, though, I want to ask you about the horses. All right. Because I see you on the horses.
Mike Mills (Host) | 01:09:31 to 01:09:45
I've seen your Facebook page. Where did all that start? Oh, back when I was an itty bitty baby. What did you do? My grandparents started me in lessons when I was, like, five years old, and then they bought me a horse that was actually pregnant.
Rachel Grunn (Guest) | 01:09:45 to 01:09:57
And then she gave birth and that horse was like. It was on their farm. They lived in Shiner, Texas. And that horse was like my love. Her name was Cinnamon and she was so sweet.
Rachel Grunn (Guest) | 01:09:57 to 01:10:07
And so I kind of just got the bug way back then. I don't know why. My family is not into horses. None of my siblings are into horses. And then I started traveling for modeling when I was, like, 17.
Rachel Grunn (Guest) | 01:10:08 to 01:10:20
I leased a horse when I was living in LA, but it wasn't. People like, you can lease horses. Yeah, I actually have my horse up for late now. Yeah, I saw that, too. Anyway, and then when I moved back to Texas, I was like, you know what?
Rachel Grunn (Guest) | 01:10:20 to 01:10:31
I'm in Texas. There's tons of land. Horses are not that expensive. And so I bought a horse and I keep him on a farm in Pilot Point. And I do have him leased right now.
Rachel Grunn (Guest) | 01:10:31 to 01:10:44
It's a co lease, so I can still go ride him. We, like, split the cost because I just don't have time and I just want him to be ridden. But it's amazing. And so we actually travel the country. My stepmom has two horses, so we travel the country.
Rachel Grunn (Guest) | 01:10:45 to 01:10:58
Oh, gosh, no. We just do western pleasure. So trail riding. We went to Bryce Canyon last year, and we went to Oklahoma a few weeks ago. And then two years ago we went to Arkansas.
Rachel Grunn (Guest) | 01:10:58 to 01:11:03
We want to go to Wyoming and we just, like, trailer with them and. Go ride trails around all over.
Mike Mills (Host) | 01:11:05 to 01:11:40
My family is from Illinois and they moved here when I was really young. My grandparents and everybody and my grandmother got into horses at a very young age. My great grandmother bought her a pony when she was little, and then they ended up having a farm in Illinois, and my mom and her sisters were raised there and shoveling horse manure and cleaning stalls and stuff in the. So then they moved here. So my whole family is knee deep in horses and I'm not as big in it these days as I was.
Mike Mills (Host) | 01:11:41 to 01:11:56
And it's funny, I wasn't into it in the sense I was excited to do it necessarily. It was just around me all the time. I just grew up around it. I have an aunt that I think she slowed down a little bit, but my cousins do. They do cutting.
Mike Mills (Host) | 01:11:56 to 01:12:09
My grandmother was in dressage. My mom and my sister have a horse that they invested in and won some national thing. I don't even pay attention sometimes. That is crazy. Yes.
Mike Mills (Host) | 01:12:10 to 01:12:32
But what I found, though, is that I've ridden a couple of times in the last couple of years in multiple situations, and I really miss it. I enjoyed it a ton. And what's crazy is, and I'm sure everybody has this, but my wife and I, we watch know, like everybody else. Although this season, I think this season is terrible. Oh, controversial.
Mike Mills (Host) | 01:12:32 to 01:12:49
Yes, I do. This season of Yellowstone is awful. If I have to see one more scene with Rip and know pining over each other, I'm going to jump out of. Yes. But anyway, but watching that and seeing them, know, cutting the cattle and doing their thing, like, man, I really want to go.
Mike Mills (Host) | 01:12:50 to 01:13:02
I want to go to Montana and ride a horse for like a day and go sleep on the ground, come. To Pilot Point and ride a horse. Yes. I may have to. Well, I mean, the truth is I can go up street five minutes from where my mom lives anytime I want.
Mike Mills (Host) | 01:13:02 to 01:13:16
I just never do with the kids and everything. But people that don't get into horses miss sometimes is. It really is an obsession. Oh, yeah. And it's crazy because everybody that I've ever met that's into horses, they're either.
Mike Mills (Host) | 01:13:16 to 01:13:29
Well, I mean, there's no middle ground. You're either all the way in and you love them and you're doing everything you can to get on them as much as possible, whatever that means, or you have no interest whatsoever. There's not very many people that are just like, lukewarm. Yeah, they're fine. No.
Mike Mills (Host) | 01:13:29 to 01:13:35
And it's like a pet. It's like your dog. I mean, they have personality. They're incredibly smart. Yes.
Mike Mills (Host) | 01:13:36 to 01:13:39
They're temperamental. They have their moments.
Mike Mills (Host) | 01:13:42 to 01:13:56
It's a great hobby. And you get a good exercise, too. I don't think people realize when you ride the leg exercise that you get sitting on a horse all day long and how sore you are if you've been riding for, like, three and a half hours or whatever. Oh, 100%. No, for sure.
Rachel Grunn (Guest) | 01:13:56 to 01:14:05
Yeah. That's so funny. It's like 99% of my personality now is horse girl. Yes. I very much resonate with that.
Mike Mills (Host) | 01:14:05 to 01:14:21
Yes. No, I think it's great. I love it. And it's a lot of fun to do that, especially if you've never done it before. One of the times we went and went to Hawaii and I took my kids and my wife, we went out riding and they were all, like, pissed off about it because they didn't want to ride a horse for three and a half hours.
Mike Mills (Host) | 01:14:21 to 01:14:29
And then we went out there and even rained on us. Oh, my gosh. Yeah, it was brief. I mean, I say it was in and out, but we got wet. That sounds fun.
Mike Mills (Host) | 01:14:29 to 01:14:44
But when they were done, they loved it. They were like, that was a blast. It was so much fun. I'm like, I told you, if you guys would just listen to me, I'm going to show you what's fun. But if you've never done it before, I would certainly recommend giving it a shot because it is a lot of fun.
Mike Mills (Host) | 01:14:44 to 01:14:58
If you're not into outdoors and dust and if you sneeze a lot, maybe not the best idea. But before we go, I do want to know, because you brought it up a couple of times. Do you want to know? Okay. What are your thoughts on crypto?
Rachel Grunn (Guest) | 01:14:59 to 01:15:15
I am not opposed to crypto. Okay. I don't understand it. And that's probably on me because like you said, there's a lot of education out there, need to take my own medicine. But I will say that some of my friends have lost a lot of money in the past six months in crypto.
Mike Mills (Host) | 01:15:15 to 01:15:24
They have lot. Yes, a lot of people have. Most people have that have been so. With crypto, and I don't understand it. Granted, I think there are a lot of awesome benefits to it.
Rachel Grunn (Guest) | 01:15:25 to 01:15:38
I heard about someone trying to buy a house with Bitcoin. I think you're definitely going to start seeing more of that, which is. Yes, there's lenders now that will. The principles are the same. They'll leverage your bitcoin or whatever.
Mike Mills (Host) | 01:15:38 to 01:15:51
You basically put it in their account. You hold it as yours, but they will leverage that for the purchase of the house. It's like mad. So I think it is the future. I don't quite understand it.
Rachel Grunn (Guest) | 01:15:52 to 01:16:17
So I'm not going to poo poo on it because I think there's a lot of people that have poo pooed on a lot of things, and then they were like, ate their words because it was the future. Right. Electric cars, for instance, full circle. But I don't understand it, and I don't think because it hasn't been around a long time and there's not a lot of data points to show what the trajectory has been or will be. Do you know how long it's been around?
Rachel Grunn (Guest) | 01:16:17 to 01:16:23
Well, what, like 20 years? Okay. Yeah, just about. A little less than that. Since 2008.
Mike Mills (Host) | 01:16:23 to 01:16:29
Bitcoin was the very first one right after the crash. That happened in eight. So just about 15. Right.
Rachel Grunn (Guest) | 01:16:31 to 01:16:38
I'm just comparing it to real estate, which is 2007. Absolutely. And I'm not like, saying one is better. No, I'm not saying it's good or bad either. I'm just curious.
Mike Mills (Host) | 01:16:39 to 01:16:47
When you say you don't, is there one thing in particular that you could say? I don't get this. What do you think that is.
Rachel Grunn (Guest) | 01:16:50 to 01:16:58
With crypto? I don't get NFTs. Okay. Is that crypto? Yeah, I guess I don't get if.
Mike Mills (Host) | 01:16:58 to 01:17:15
That'S the same thing. Okay, so let me back up. So I hate the term crypto, and the reason I don't like it is not because it's not necessarily accurate, it's just that it has a negative connotation. Okay. Because when you think cryptocurrency, you're like fake money.
Mike Mills (Host) | 01:17:16 to 01:17:28
Everybody just says, well, it's just fake money. Right. It sounds like the word cryptic, which is not a good word. It's a Ponzi scheme, which, look, anytime you deal with money of any kind, there's going to be room for fuckery. Okay?
Mike Mills (Host) | 01:17:28 to 01:17:55
Yeah. That's just what it is. All right. There's going to be problems that come up whenever you're dealing about money, and that involves any aspect, real estate, banking, stocks, crypto, whatever, there's going to be people that are going to take advantage of other people and do bad things. And especially right now, crypto is so unregulated and there's nobody paying attention to what the bad guys are doing, that there's a lot more room for that kind of stuff.
Mike Mills (Host) | 01:17:55 to 01:18:13
Okay. Anytime you have an emerging market, something that's new, it's going to be problem. Right. So I don't like crypto. I don't like that word because really, when I look at it, when I first learned about it, I look at the cryptocurrency market as a stock market, not as a currency market, because it's really not currency.
Mike Mills (Host) | 01:18:13 to 01:18:35
Some things are right. Bitcoin, if you want to call it a currency, you can. If you want to call it an asset, you can. The only reason that bitcoin has grown to the degree that it has is because it was one of the first ones that got in. And what's unique about it is that because it's decentralized and because the person that created it, nobody knows who they are.
Mike Mills (Host) | 01:18:35 to 01:19:00
And that individual, whoever that was, still has a wallet with an insane amount of bitcoin in. It has not moved, it has not sold, it has not done anything with it. In that period of time. There isn't a single entity that is making money off others because of it. So, like the FTX thing, the reason that was a big deal was because it was an exchange.
Mike Mills (Host) | 01:19:00 to 01:19:19
It was a place where people would buy and sell their cryptocurrencies, just like you would with the NASDAQ or you would with the S and P 500 or whatever, the New York Stock Exchange. So you're changing money there, but you're also holding money there. Right. So my exchange I use is Coinbase. So I have money that I have sitting in there with different cryptos.
Mike Mills (Host) | 01:19:19 to 01:19:45
Well, if Coinbase goes bankrupt tomorrow, because there's no regulation and no banking restrictions there, all that money goes away. So it's very risky. So when things go sideways, it typically occurs with the third parties related to it. Okay, so with crypto in general, everything is based off of transparency and decentralization. Okay.
Mike Mills (Host) | 01:19:45 to 01:20:03
So the reason bitcoin has grown is because you have greater amount of users. You have people coming into the space using it and holding it. So the more users you have, the more decentralized it becomes. Because the way that the blockchain works is it's held on multiple servers. Okay?
Mike Mills (Host) | 01:20:04 to 01:20:28
That's what mining is, essentially, to some extent. But this is held on hundreds of thousands of people's, basically, servers that manage this. And whenever a transaction occurs, it's recorded on the blockchain, which anybody can access. If you want to go onto the bitcoin blockchain right now and see who's trading and moving stuff, you can absolutely see it. You don't know who they are because it's a wallet.
Mike Mills (Host) | 01:20:28 to 01:20:45
It's a hash number that's very long, but you can see the same wallet. This wallet's move stuff. That's why there are literally accounts on Twitter that are called, like, whale accounts. So they'll say, hey, somebody just removed $2 billion worth of bitcoin from this exchange, just so everybody knows. So it's very transparent.
Mike Mills (Host) | 01:20:45 to 01:20:59
I can't go into bank of America's books and see what they're doing. No, of course not. Yeah. Right. So that's part of the appeals because there's this idea that it's this, like, underground, and this all comes from Silk Road, which is the whole other thing from years ago.
Mike Mills (Host) | 01:20:59 to 01:21:19
Yeah, but what the people of Silk Road didn't realize is that your wallet is still tied to an IP address and they can still find you. So it's actually way more transparent than even cash. So if I want to pay you in cash, nobody can trail that at all. Right. But if I want to pay you in bitcoin, if you dig hard enough, you can figure out who I am and where it came from.
Mike Mills (Host) | 01:21:20 to 01:21:47
So the appeal of the transparency is very, people find very attractive, and then the decentralization, meaning not one person can swing things massively. Right. So that's where the appeal comes from. The NFT piece of it is, NFTs are non fungible tokens, which are essentially what I would call a one of one. Okay, so you modeled.
Mike Mills (Host) | 01:21:47 to 01:22:04
Right. So if Calvin Klein creates a sweater and they sell it, and let's say it's a limited edition sweater, they're selling 50 of those sweaters and that's it. Well, that is a physical NFT because there's only 50 of those. Sure. Okay.
Mike Mills (Host) | 01:22:04 to 01:22:19
And you cannot duplicate them. I mean, there's knockoffs and all kinds of stuff like that. But at the end of the day, if you could prove that this was the original one that Calvin Klein created, the value of that is immensely. I mean, if. If you value that.
Mike Mills (Host) | 01:22:19 to 01:22:27
I may not value that, but you may. So it all depends on your taste. Sure. So what an NFT is, it takes that concept and makes it digital. Okay.
Rachel Grunn (Guest) | 01:22:27 to 01:22:38
Yeah. So now I can. And the easiest way to understand it is art because that's where it's being used the most right now is if I'm an artist and I want to create a piece of digital art, whatever that be.
Mike Mills (Host) | 01:22:40 to 01:23:06
The board, ape, yacht club guys and beeple and all these people, I'm now creating this piece of art and I'm recording it on the blockchain, and then I'm going to sell that to you and it moves from my wallet to your wallet. So now that transaction for that item is recorded on your wallet and it's yours and you own it and nobody else does. Okay. Now can you take a picture of it and share it with somebody else and do whatever. Yes.
Mike Mills (Host) | 01:23:06 to 01:23:15
They can have it on their phone, but they don't own it. Right? They have an image of it. Just like I can go to the Louvre and I can take a picture of the Mona Lisa, but I don't own the Mona Lisa. Right.
Rachel Grunn (Guest) | 01:23:16 to 01:23:29
That's actually explained really well. Right. So where the value for that is is when you look at future use cases. Okay, so let's start with. I know you have young kids, but I have a 13 year old son and a 15 year old daughter.
Mike Mills (Host) | 01:23:29 to 01:23:38
Are you familiar with Fortnite? Do you know what Fortnite is? I know what Fortnite is. Do you know what Roblox is? And Minecraft?
Rachel Grunn (Guest) | 01:23:38 to 01:23:48
Yes. Okay. So those three games are littered with what I would call NFTs, okay? They're different. They're not recorded the same or whatever, but Fortnite's a great example.
Mike Mills (Host) | 01:23:48 to 01:23:57
My son started getting into Fortnite when he was like seven years old. Got into it playing the game all the time. He started spending money. I'm like, what are you buying? And I asked him, are you buying new guns?
Mike Mills (Host) | 01:23:57 to 01:24:11
Are you buying something that's going to make you progress and get better at the game? Like, are you spending money on that? He's like, no, it's a dance move or it'S a skin. Skin is like an outfit. And I'm like, well, I don't understand.
Mike Mills (Host) | 01:24:11 to 01:24:28
Why would you want to spend money on that? Well, they do because other people have them. It's like style and it's like taste and what you're into. I want to dress up like a munchkin today, or I want to look like Captain America, or I want to wear whatever, well, if I don't own that skin, then I can't use it. And I really like that.
Mike Mills (Host) | 01:24:28 to 01:24:49
So I'm going to buy it. I'm going to spend $2. I'm going to spend a dollar because now I own it and now I can use it. Sure, right? So imagine the, not that this is happening, but the metaverse and things, when you start moving in more digital spaces of, if I want to create one day and say, I have my digital house, that you're my mother and you live in California and I live in Texas, and what we want to spend time together.
Mike Mills (Host) | 01:24:49 to 01:25:15
So we put on our little VR headsets and we go to my house, and now I have a couch and I have a TV and I have all these. Like, that's where you could see things going, the better use case for it on NFTs is, let's say one of my favorite bands is the Foo Fighters. I went to Lollapalooza in Chicago a couple of years ago, and it was right before their drummer passed away. And it was one of the last concerts that he did. Well, I have a pass, and I have tickets to Lala Palooza.
Mike Mills (Host) | 01:25:16 to 01:25:33
Okay, well, let's fast forward 30 years. That ticket that I had to Lollapalooza. If you're a big Foo Fighters fan and you're a collector and you do all that, that's probably going to have some value. Okay, how much value depends many factors. But what they're doing now is they're doing ticketing for NFTs.
Mike Mills (Host) | 01:25:33 to 01:26:18
So now my ticket to this event, my access to this event is an NFT, and I own this. And not only does it give me the collectible piece of it, but it also gives me access to other things. So now the VIP lounge that I'm going into, because I purchased this NFT, I have access to it. So if I was a group like Lollapalooza and I'm creating a certain culture around my concert experience. Okay, well, if someone had an NFT from the 1994 lollapalooza and I bought it from them, and because I have that special NFT that I purchased from this person and paid, now I have access to all these other events and all these other things that I didn't before because the ownership of that thing transferred from that person to me.
Mike Mills (Host) | 01:26:18 to 01:26:27
And I can't counterfeit it. There's no way to counterfeit it. Oh, that's so interesting. I love that. So it's the security, the transparency and the decentralization of it, actually, it makes.
Rachel Grunn (Guest) | 01:26:27 to 01:26:38
A lot of sense. Right? So that's where the technology is. And that's where I started really diving into and starting to understand a little bit better what blockchain is, how it actually fits into even our business. Right?
Mike Mills (Host) | 01:26:38 to 01:26:46
So I use. Sorry for any title, people, but I use title as an example. So think about Dr. Horton. Dr.
Mike Mills (Host) | 01:26:46 to 01:27:07
Horton builds A. Okay, and when they build the home, they record who the contractor for the concrete was. They record where the lumber came from, they record the electrical work, the cost of that. Everything is recorded on the blockchain, okay? The first person that comes in and buys it, they see all the work that's been done, who did the work, not that would matter, but it's all there.
Mike Mills (Host) | 01:27:07 to 01:27:38
Okay? So now I bought that house, and it's all recorded on the blockchain. Then five years later, I'm going to go sell my house again. All right, well, now all I have to do is transfer that information to the next person because from the time that that house came into inception, everything that's been done, every transaction that occurred, every repair that happened, everything that occurred on that home was recorded on the blockchain, okay? And so now I don't need a title company anymore because why do I need title insurance, right?
Rachel Grunn (Guest) | 01:27:38 to 01:28:08
It's all there. It's all there. You can't counterfeit it and you can't counterfeit it. So what the blockchain ultimately does is it eliminates middlemen. And that's where I get a little fearful for my job a little bit because I'm a bank or I work for a bank in that if you and I want to transact between each otheR, if I want to send you, if I wanted to buy your shoes or something like that, and I send you $100, I can zell it, I can bank of America, I can PayPal, I can do whatever, but I have to rely on a third party to get you that money.
Mike Mills (Host) | 01:28:08 to 01:28:32
Right? With the blockchain and with cold storage wallets and things of that nature, I can transfer that money directly to you with no middleman, no extra fees, no wait time, no nothing. Okay, so the use cases for this technology and what it has going forward is we don't even know, right? We haven't even scratched the surface on what it can do. It's like the Internet in 1995.
Rachel Grunn (Guest) | 01:28:32 to 01:28:43
Sure, right. Same thing. It's like Dogecoin, everybody. Okay, well you probably are too young. There used to be a, have you ever heard of Netscape?
Rachel Grunn (Guest) | 01:28:43 to 01:29:01
No. Okay, so Netscape was a web browser that existed in late 90s, early two thousand s. Okay, before Google, before Safari, whatever they all had, it was a web search engine that existed. It was called Netscape and I think it was produced by Microsoft maybe. And I used it all the time.
Mike Mills (Host) | 01:29:02 to 01:29:29
Okay, well back then you could invest in Netscape. Say Netscape is going to be the wave of the future, right? Well if you'd invested in Netscape in 1995 and you never sold it, you'd be broke today because it's out of business and it doesn't exist anymore. Okay. And there were 5100, 1000 other similar businesses, similar websites, similar services that all were based around the technology of the World Wide Web that are no longer active anymore because their use case is gone.
Mike Mills (Host) | 01:29:29 to 01:30:04
Where if you had invested in Amazon or you invested in Yahoo or you invested in Google back at that point, now you'd be a millionaire depending on how much money you put in. Right? So that's what the crypto market is, because most cryptocurrencies are some form of a technology. So Ethereum, which is the second largest cryptocurrency that exists, Ethereum is a platform, it's not a currency. So whenever a company wants to build some sort of application on top of it to do transactions and do business to business things, they build it on top of the Ethereum platform.
Mike Mills (Host) | 01:30:04 to 01:30:25
They use the Ethereum blockchain to record their transactions and operate within that realm. Right. Well, Ether, which is the currency, is what is used on that platform to transact. So if I want to buy something from you, and both of our businesses are on the Ethereum platform, and we want to do commerce or do business with each other, we do business in Ethereum. In Ether.
Mike Mills (Host) | 01:30:25 to 01:31:02
So then when I want to get off the Ethereum platform, because I want to take that and I want to go buy shoes at Walmart, well, then I can trade my Ethereum for dollars or for Bitcoin or for whatever else, just like a currency, right? Because if I'm traveling to Japan and I'm going to go stay there for a while, I need their form of currency in order to exist there. So it's the same concept. So all of these platforms, these different platforms have their own internal currency. It'd be like if Amazon had Amazon Bucks, and anytime you wanted to buy or sell with another person on Amazon, you had to use Amazon Bucks, but then you could take Amazon Bucks out and go buy something else if you wanted.
Mike Mills (Host) | 01:31:03 to 01:31:25
So that's. That's Ethereum. Well, then there's another thing called like ChainLink, which is an oracle that sits on top of the Ethereum platform, that takes data and pushes it into the smart contracts, which is what Ethereum operates, that gets recorded on the blockchain. So there's these layers to how the technology works. So it's like an IP address for your computer using a browser to search for stuff going to Amazon and looking at their website.
Mike Mills (Host) | 01:31:25 to 01:32:00
And it's these things that stack on top of each other. So all of these currencies, most of them are basically a business, and they're trying to be the best business in that space that they can. So when people buy cryptocurrencies, they're really just buying stocks and businesses. Well, these stocks go up and down and up, especially in the tech world, because whenever you have hard times, like recessions that come about, people get out of speculative things and they get into things that they feel more confident for. So if I'm an investor and I have a lot of money in bitcoin and the economy is taking a dive, well, I'm going to take my money out of Bitcoin and I'm going to go buy Pepsi or I'm going to go buy Berkshire Hathaway or something.
Mike Mills (Host) | 01:32:00 to 01:32:22
That's stood the test of time for the last 50 years. Right. So that's why when you see markets start to go down, you'll see the speculative markets crash heavier first because heavy investors pull their money out moving. Sure. So the only thing I see next year for cryptos as a place where there's going to be a ton of opportunity, but you have to understand the space.
Mike Mills (Host) | 01:32:22 to 01:32:57
You got to know what you're buying and what you're selling and what you're doing, and you can't go into it just blind and not have any idea. But if you want to see growth, because if you look at the trajectory, and bitcoin is a good example, they have these having cycles which I won't get into, but essentially it kind of creates more bitcoin that's available to buy and sell. But whenever these cycles occur, you will see big spikes and big drawbacks. So they have like what just occurred now, the money, it was at $60,000 for one bitcoin. And right now I think today it's at like 1716 and a half.
Mike Mills (Host) | 01:32:58 to 01:33:12
Well, that drawback is like 80%. Well, that's happened five times in the life of bitcoin and five different cycles where it's gone up 80, it's gone up dramatically. Now, again, it's all relative, right. It was five cents and it went up to $5. Right, okay.
Mike Mills (Host) | 01:33:12 to 01:33:18
And then it came crashing back down. But now because it's become, there's more users, there's more people involved.
Mike Mills (Host) | 01:33:21 to 01:33:56
The whole Robin Hood thing with that app that became available where now you could buy and sell stuff retail, people could get on there in 5 seconds and make a transaction. All of these things started to pile into the crypto space, which made it blow up. And then when you added leverage, which we've talked about and said, okay, well, I bought $5,000 worth of bitcoin. Well, Coinbase or FTX or finance or any of these exchanges would go, I will lend you $2,500 so you could buy more bitcoin. Okay, so my $5,000 worth of bitcoin is now 7500 because I bought more with it.
Mike Mills (Host) | 01:33:56 to 01:34:11
Now it went up, but my original investment was only 5000 okay. And then it goes up again because everybody else is doing that, right? Everybody's leveraging. So then it goes up and up and up and up. Well, then somebody decides something happens, black swan event, whatever, and it starts to go down.
Mike Mills (Host) | 01:34:11 to 01:34:26
Okay, well, the minute it starts to go down, depending on how much you've leveraged yourself, there's going to be margin calls. So it goes down. You're going to have a margin call. Well, if you have margin calls, you either have to sell or you have to put in more money. So most people, because these are mostly retail individuals, they're selling, selling, selling, selling.
Mike Mills (Host) | 01:34:26 to 01:35:03
So then you have this massive cascade down because most of it was built on leverage. So you have these big swings, but it's a cycle just like anything else. Sure. And once you learn how to see the cycle and you learn how to read it and when to buy and when to sell and when to hold and when to move through that and you understand the basis of the technology, you're not getting into speculative stuff like Dogecoin and Shiba and all these other ones that are just meme coins is what they call them, then you start to get a little bit better grasp on how that whole space works. But there are very few spaces aside from real estate maybe, where you can have a dramatic growth of your money.
Mike Mills (Host) | 01:35:04 to 01:35:16
You just have to be willing to go through the cycles and know how. It all fits together and understand it. Right. And that all goes back to education. That was a long whatever, but it was good.
Rachel Grunn (Guest) | 01:35:16 to 01:35:36
I learned a lot. So I do think because of your level of understanding things and education and how much you base your vesting stuff on it, I think you should just start looking into it because check it out. I do think it is something that's going to be big. It already has been, and it's going to continue to grow. I don't know where it's Going to be capped off.
Mike Mills (Host) | 01:35:36 to 01:35:53
All right, well, that is a really long time that we've been talking. I loved it, though. I really appreciate you coming in and doing this with me. Is there anything before we go? Because like I told you, we're going to chop and dice all this stuff up and try to get the word out to as many people as we can after we finish this up.
Mike Mills (Host) | 01:35:53 to 01:36:04
But is there anything you want to end with? Is there something you want to promote? Is there anything you want to say? Hey, if I'm telling you anything, this is what I want you to hear. Anything like that you want to kind of part ways on?
Rachel Grunn (Guest) | 01:36:04 to 01:36:15
Yeah, I'll definitely just plug my website again. It's goodgoodinvesting.com. And our podcast is goodgoodinvesting on all platforms. Our episodes are like 15 minutes. Yeah, it's not like this.
Rachel Grunn (Guest) | 01:36:15 to 01:36:21
No, this is great. I love the long form, too. It's awesome. But yeah. So head on over to GoodGoodinvesting.com.
Rachel Grunn (Guest) | 01:36:21 to 01:36:41
That's where you can get our you may be richer than you think net worth assessment, which is so fun. And then one parting thought. I just want to say to whoever is listening to this that success is for you. Success is for you. No matter where you came from, no matter who your parents are, no matter what your job is.
Rachel Grunn (Guest) | 01:36:41 to 01:36:58
We live in America. This is a fantastic country where you can grow the life that you want, no matter where you're from. So success is for you. Don't be discouraged. There's no such thing as a fatal failure.
Rachel Grunn (Guest) | 01:36:58 to 01:37:07
You can get back up and you can recover from absolutely anything. So, yeah, that's what I want to leave the listeners with today. Don't stop moving. Don't stop moving. Keep on grooving.
Mike Mills (Host) | 01:37:07 to 01:37:11
That's right. I love it. Well, thank you, Rachel. I really appreciate your time. We'll have to do it again sometime.
Mike Mills (Host) | 01:37:11 to 01:37:23
We get a little deeper into things. So I'm going to take a little break for maybe a week. I don't know. We'll be back. I've actually got Dana joining me next week.
Mike Mills (Host) | 01:37:23 to 01:37:39
On Friday, we're going to do a little New Year's prep, how to eat correctly and get yourself ready for your New Year's resolution. So you take care of your body, so you're helping people take care of their financial health. And we're going to see if Dana can help me take care of my physical health. Love it. She's good for that.
Mike Mills (Host) | 01:37:39 to 01:37:44
She's awesome. All right, guys, thank you. We'll see you around. And y'all have a great holiday. Thanks, guys.
Rachel Grunn (Guest) | 01:37:44 to 01:37:45
Bye.