Mindy Jensen: Welcome to the BiggerPockets Money Podcast, show number 317, where we interview Rachel Richards and talk about real estate and passive income and self-publishing and just in general being awesome and living your best life.
Rachel Richards: Wanted to achieve financial independence so I could travel the world, and I’m finally doing it, and I’m working while I do it, and it’s so fun. I’m meeting people and I’m like, hey, what are you doing? How long are you here? And I’m meeting other people who are retired and who are on a 2-month trip because they’re retired and they’re in their 60s and 70s. And then when I tell them I’m doing the same thing, they’re like, how on earth are you doing this? And I’m like, oh, I own my own business and I can just work wherever I want and I have financial freedom. People look at me like I’m absolutely crazy.
Mindy Jensen: Hello, hello, hello! My name is Mindy Jensen and with me as always is my effervescent co-host, Scott Trench.
Scott Trench: What a bubbly introduction, Mindy. Thank you.
Mindy Jensen: Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you’re starting.
Scott Trench: That’s right. Whether you want to retire early and travel the world to Europe, Italy, and beyond, go on to make big-time investments in assets like real estate, or start your own business, we’ll help you reach your financial goals and get money out of the way so you can launch yourself towards those dreams.
Mindy Jensen: Well, Scott, today we are talking to Rachel Richards. She is Money Honey Rachel, and she is a passive income fanatic. She also makes me feel super lazy because she does just about everything there is to do out there. But she has a really fascinating story of becoming a financial advisor early in life. She was 21 when she started, and then decided that she wanted to do something else. She went through several things and now is out there living her best life with her own company, teaching women how to handle their money.
Scott Trench: Yeah, I think it’s a fantastic show. I think her story is incredible. We talk about the 4 levers of finance: spending less, earning more, creating assets, and investing. And she went all out on all 4 of those levers, which is why she’s a multimillionaire with hundreds of thousands of dollars in annual passive income by age 30 right now. So fantastic story. I think you’re going to learn a lot. And this is the reward of going all out on your financial journey early in life.
Mindy Jensen: I could not agree more, Scott. She has a great story and I cannot wait to bring her in. Rachel Richards, welcome to the BiggerPockets Money Podcast. I’m so excited to talk to you today.
Rachel Richards: Me too. Thank you for having me.
Mindy Jensen: I want to get into a lot of things, but before we do that, let’s introduce you to people who may not have heard of you, although who hasn’t heard of Money Honey Rachel, right? So let’s start with your financial journey. Maybe around high school.
Rachel Richards: Okay. In high school, I was already a money nerd. Proud of it. Still am today. High school is when I first read— excuse me. High school is when I first read Rich Dad Poor Dad, and I had already read a bunch of finance books by then. So I already knew I wanted to start investing in real estate, but that was the only passive income stream I knew of by then. So to me, it was my path out of the corporate environment. It was my path out of the rat race. I didn’t know that there were all these other passive income streams that I could pursue. So that is what I started with, and that was my goal back then. And after I graduated from high school, I went to college, started studying as a financial economics major, and I became a financial advisor after that.
Scott Trench: Okay, so we’re done. Story’s over.
Mindy Jensen: How do you get somebody to listen to your advice when you are not 50 years old? Because you don’t look like— how do I say this nicely? Because I think you’re wonderful, Rachel, but you don’t look like you know anything about money because you have such a youthful glow about you. Was that super, super, super ageist? You know what I mean?
Rachel Richards: I know what you mean. And it was difficult because here’s the thing: I actually graduated from college when I was 20, so I started working as a financial advisor when I was 21. So you can just picture me, you know, a 21-year-old woman advising people who were in their 60s and 70s who had saved up their entire life’s worth of money, and I was telling them how to invest all this money. So it was definitely challenging. But here’s what I would say: age is one of many qualifying factors when it comes to anything in life, really. There are a ton of other qualifying factors. There’s credibility, experience, background, confidence, relatability, authenticity. I mean, there’s a ton of other things I could keep going on and on. Maybe I was missing one of those things, age, but I made up for it with the rest. So I found that it really didn’t matter and it didn’t hold me back whatsoever.
Scott Trench: Now let me ask you this. Was the choice to finish college at the age of 20, was that something you backed into intentionally with the goal of financial freedom at the forefront?
Rachel Richards: Okay, so here’s the thing, Scott. I grew up in this really wealthy county, and it was a lot of the motivation for me to achieve financial independence, because by no means was my family living in poverty, right? But I grew up in a bubble. I didn’t know what the rest of the world looked like back then. And all my friends were driving BMWs. They were going on these fancy trips with their family. And in the meantime, we were juggling between 2 cars. We weren’t even going out to restaurants, let alone going on family vacations. Money was always a stressor in my family. So growing up, I felt like we were poor, right? I didn’t have the same things that everyone else had, and that was a big motivation for me to achieve more. So when I went to college, my parents were not able to help me pay for college. I knew that I was going to have to pay for it myself. Because of all the finance books I read, I was really motivated to graduate without debt. So I took a job—you won’t believe this—but I took a job selling knives. Have either of you heard of Cutco Cutlery?
Scott Trench: Absolutely.
Rachel Richards: Okay.
Scott Trench: It’s amazing how many entrepreneurs come from Cutco.
Rachel Richards: I know, I know. My mom was less than thrilled about the idea of me selling sharp objects to my family and friends, but that’s exactly what I did. So I paid my way through school selling Cutco, and because I was paying for a $40,000 tuition private school, it was in my best interest to graduate a year early, thereby saving myself $40,000. So that’s what I tried to do, and that’s why I graduated so young.
Scott Trench: Awesome. Can I ask you a question? I don’t know how to phrase this correctly. How many men and women— what was the male-female split for Cutco sales representatives at that point in time?
Rachel Richards: Oh, probably 70/30 or 80/20. I mean, definitely more men than women.
Scott Trench: Yeah, I think that’s really remarkable and unusual of a way to pay for college. I think for a lot of young women, and I think it’s really commendable the way that you were so aggressive about this approach to entrepreneurship and sales to pay for college. Was that hard, or was there any difficulty there? Did you find any trouble breaking in?
Rachel Richards: Oh, it was extremely difficult. Talk about rejection. I mean, it’s a sales job. It’s a direct sales position, but I learned some very valuable lessons about how to ask for a sale, how to handle rejection, how to market yourself and speak confidently and be a good public speaker and be a leader and be an assistant. So these lessons, I actually learned more from that job than I did from my college degree. And what I learned from that has translated to my current business and to writing books and marketing books and building a platform. And it’s helped me more now than I think anything else I learned during college, ironically.
Scott Trench: So, so you graduate college, you’re debt-free at this point, is that right?
Rachel Richards: Yes, I graduated debt-free.
Scott Trench: And then you got a job in financial planning. What kind of financial planning are you doing? Is this a sales job as well, or is this a fee-only role? How does that work?
Rachel Richards: So I was a licensed financial advisor. I was Series 7 and 66 licensed. And at the firm I worked for, I could sort of decide how I wanted to be paid. So you could be paid off commissions or fee only. And here’s the thing with financial advisors: you have to ask how they’re paid. If you’re trying to hire a financial advisor, you really need to understand how they’re paid, because if they are paid off commissions, they’re going to be incentivized to sell you certain products—products which might not be good for you. Even if they’re a fiduciary, they’re still going to have that incentive, that incentive to sell you something. So I did not like that. I did not want to be incentivized. So I wanted to be paid fee only. Now, even a fee-only advisor, they’re going to get paid whether your assets perform well or whether they don’t. So I don’t know, I just found that there was never a really great structure, but fee only is really the way to go because they’re not going to push certain products on you. However, I found that it was still very much a sales position. And although I can excel as a salesperson, and I clearly did with Cutco, I’m an introvert. And everyone is always surprised by that, but I’m very much an introvert. And it was very draining for me, and I did not want to do that. So after 9 months, I quit. But the passion for helping people with investing and for helping women learn how to manage their money never went away. I just had to find a different way to do that. So I quit the financial advising and I moved on to other things.
Scott Trench: Let me ask you this while that’s going on. What does your financial position look like? Where are you investing in assets at this point in time? Are you building up financial runway? Are you holding a large cash position? How are you thinking about your personal finances through this transition?
Rachel Richards: Okay, so I was investing in the stock market. I was contributing to my Roth IRA, and I was trying to maximize my savings. Because when I quit the position, I didn’t have another job lined up. I just quit because I didn’t want them to keep paying me a base pay, knowing that I didn’t have anything else to go to. It was just an integrity thing, or I don’t know. So I quit. I didn’t have anything else lined up, but I later regretted that because I was living off my savings for several months and I depleted my savings, and it was a really scary thing. And then what I ended up doing, which I thought was so irresponsible at the time, but I don’t regret it now, I ended up going to Italy to be an au pair. And I did that for 3 months, but I did it to buy myself time. But I ended up making so much money as an au pair and having an incredible experience. And I came back to the US with like €3,000. So I saved a bunch more money in Italy, and I lined up a job working with a real estate investor while I was in Italy. So I came back having the perfect position where I could learn about what I wanted to learn about. So it all ended up working out really well.
Scott Trench: Awesome. So you’re back in the US after 3 months in Italy. What’s your situation look like? What year are we in, and what happens next?
Rachel Richards: We are in 2015. So this was 7 years ago. I take a few jobs in the real estate investing world. I start working for this horribly abusive boss. Things aren’t going well. They turn south again. I have a lot of experiences with her where my self-confidence is getting pummeled. I’m not being paid well. I feel like I’m overqualified and underpaid. And I just realize I have got to get out of that. So it kind of kicks my butt into gear where I’m finally like, okay, I have to make this happen because I can’t continue to be in this toxic workplace. So I finally started investing in real estate in 2017. I also got myself out of that job and into a corporate finance role. And in 2017, that’s where things started happening. I started building passive income streams and things really took off then.
Scott Trench: Awesome. So we have a real estate investor, realtor, and then this third job. And by that point, you’ve—so several—you’re bouncing around from job to job. And you’ve, I imagine, saved up some nest egg from which position to begin investing in real estate. Is that right?
Rachel Richards: Right. And all those early years, I was making between— I started making $36,000, and then $32,000, and then $42,000, and then $45,000. So I wasn’t making a ton of money up until about 2017. And then I got a pay raise to $75,000. So it wasn’t like I was making 6 figures where I was saving all this money to invest in real estate. I was scrimping and saving to get by.
Scott Trench: What’d you do to get that raise?
Rachel Richards: I started applying for jobs. I just got a really good, strong job offer. And then I got a job offer from another company I wanted to work for even more. And so I bounced those 2 job offers off one another to get them to increase their salaries for me. So then I got it up to $75,000, which was really nice. I felt like that was more money than I ever was making before. So I felt like I was rolling in it.
Scott Trench: Okay.
Mindy Jensen: So 2017, you started investing in real estate. What kind of real estate are you investing in and where are you investing?
Rachel Richards: My first duplex, my husband and I bought together. It was a duplex in Louisville, Kentucky, and we purchased it in 2017. So we had each saved $10,000 of our own savings by then. And this was a $100,000 duplex. Now, I know people are probably gasping at that price right now. Okay, so it was a different market, and this is Louisville, Kentucky. We’re not talking California or Chicago or Washington, D.C. or anything. But here’s the trick: this was an off-market property. And I truly believe, and know for a fact because I have clients that I help do this same thing, that there are deals to be found in this price range still to this day. The mistake people are making that are trying to do this starting out is that they’re looking on the MLS. And I’m sure somebody out there is going to get really lucky and find a great deal on the MLS, but you have to do 2 things if you want to find great deals like this. You have to look off market and you have to be willing to look out of state. Because if you live someplace like California or Denver, Colorado, where I live, or Austin, Texas, and that’s where you’re looking, I mean, you’re not going to find a parking spot for $100,000 right now, right? Let alone an awesome duplex. So you have to look off market and look out of state if you want to find these really great deals.
Scott Trench: Awesome. Can you tell us more detail about this first purchase? And then I think if people want more detail, we’ll get the highlights. But you were also on the BiggerPockets Real Estate Podcast on episode 454, I believe.
Rachel Richards: Yes, that’s correct. This first duplex I found off market because it was an expired/canceled/withdrawn MLS listing. So I was looking through all of those and emailing the listing agents, you know, once a week, once a month, trying to find out what happened. So I was doing this consistently over a 6-month period and just wanted to stay top of mind. So one of these listing agents finally reached back out to me and she said, hey, this duplex is going to come back on the market. Do you want to make an offer first? Which was really, really nice of her. So I said, yes, absolutely I do. Made an offer, got an accepted offer. That’s how we got this first duplex. It is to this day the best deal we have ever done. Our first deal—so we got lucky. But again, luck happens when you work really hard. So it was $100,000. One unit was being rented, but it was under-rented, and the other unit needed a full gut rehab. And I didn’t have the money, so we negotiated a seller’s concession. So this seller basically paid us a large cash amount so we could do that renovation. And I talk in a lot more detail about that on the BiggerPockets Real Estate Show. But after all was said and done, we were renting it out for— I think we were initially making $500 in cash flow per month. So $250 per door, which was amazing on a $100,000 purchase. And we put $20,000 down. And now we’re making $800.
Scott Trench: Times 12 is $12,000. And you put $20,000 down. So that’s 60% cash on cash, right? Am I doing that right?
Rachel Richards: So $6,000 in cash flow per year, right? Divided by 20.
Scott Trench: Per unit, right?
Rachel Richards: Wait, $500, $250 per unit.
Scott Trench: Oh, okay. Never mind. It’s 30%. Yeah.
Mindy Jensen: 30%.
Rachel Richards: Next story. Oh yeah. That sucks. Right. And now it’s cash flowing $800 total per month. So it’s increased over time because rents have gone up. And it’s still under-rented, by the way. We could raise rents way more, but we want to keep our tenants there and everything. So it’s a really, really great investment for us.
Scott Trench: Fantastic. And so what happens in the years following this? How do you go about building your portfolio from there?
Rachel Richards: We were saving a lot of money. We kind of did 3 things that helped us scale. So first of all, we were still living frugally, even back when I was making $36,000, living alone, single, I was saving half of my income. I was living off a budget of $1,500 a month in Louisville, Kentucky. So being super, super frugal. So even when we were making more money and we had a combined income of over $100,000, we were living frugally. And when we started making this cash flow of $500 per month, this is after we had made offers on tons of properties. This is after we had accepted contracts that fell through. This was 9 months into the process. It felt very discouraging at times and we wanted to quit at times. So once we got to this point where we made cash flow, it would’ve been very easy for us to say, “We’ve done it. We made it. We can get a new car. We can upgrade to a new place. We can live it up a little bit.” Instead of doing that, though, we were like, okay, no, let’s keep going. Let’s stay disciplined. Let’s save this $500 a month and reinvest it and put it towards the down payment on our next property. So we tried really hard not to give into lifestyle creep yet and to continue to delay gratification. So we kept saving 50%. We didn’t give into lifestyle creep. And then the third factor that made it easy for us to scale quickly is that I had my real estate license. So I didn’t have this for the purposes of helping other clients. It was just for our own purposes for investing. So we would deplete our savings every time we purchased a property, but I would get a commission back at closing because I would be the buyer’s agent on the deal. Sometimes this commission would be thousands of dollars, and I would save that big chunk of money for the down payment on the next property. So it was easier than I thought to come up with a 20% down payment again and again. And we scaled from 0 to 6 buildings, which was 38 doors, in under 3 years. And that’s kind of the high-level version.
Scott Trench: Awesome. And how much cash did you put into these properties?
Rachel Richards: Off the top of my head, it’s hard to tell. But we had 2 single families initially because my husband used his VA loan. So we basically house hacked those first 2. So that was a really big benefit. If you’re military, make sure you’re using your VA loan to get started because that’s an amazing benefit that you have. Then we had the $20,000 down payment. Then maybe it was, we bought a $430,000 house and then a $325,000 house and then a $125,000 house. And we put 20 or 25% down payments on all of those as well. So I can’t do the math, but whatever that adds up to.
Mindy Jensen: Okay. You mentioned that you’re a real estate agent. I’m a real estate agent. I do the same thing when I— well, sometimes I do, and sometimes I say, you know what, I don’t wanna pay taxes on that income, so I’m going to take that as a reduction in the price instead of taking the money. But I’m also not trying to scale up. I’m in a different place than you are. Would you recommend that others get their license if they wanna start investing in real estate? I’ve heard answers yes and no on this, so I’m curious what you think.
Rachel Richards: My opinion is yes, especially if you need cash and you’re wanting to scale quickly like I did. So in my opinion, getting a real estate license makes sense if you’re going to do at least one transaction a year, because it will easily pay for itself. For me, in my experience, it’s cost me $1,000 to $1,500 per year to maintain my real estate license, or maybe to get it initially, and then, you know, about $1,000 to maintain my real estate license. So if you’re going to do a transaction per year, it will easily pay for itself. And again, some of my commissions were $10,000, $11,000, $12,000 depending on the property I bought. And it can be way more than that if you’re buying a more expensive property. So I think it’s well worth it. And I’ll add to that— it’s not just about the money benefit. You can have a time advantage as well. So for example, one of the duplexes I bought later, it came up on the duplex, and because I had the MLS access, I had set myself up on a search subscription. So it alerted me immediately that this listing came up that was within my criteria and within a certain price range and a zip code. It met all of my criteria. And because I had MLS access, I saw that first. And I literally left work immediately when I saw this listing come up because the price was too good to be true. I said, “I need to take my lunch break early. I’m leaving.” I go down to this property. I let myself in because I’m a real estate agent and I can. I let myself in. 20 minutes later, I’m making a verbal offer on the phone. So I’m making an offer 20 minutes after it’s listed. And that is because I’m a real estate agent. And I did that before anyone else could even get down there and access the property. So I wouldn’t have been able to get that property if I hadn’t been a real estate agent. So for me, there’s multiple benefits.
Mindy Jensen: Okay. I like that answer. I agree with it to a certain degree. I think that you do need to be aware of the upkeep that is involved in having a license. But like you said, I mean, if you’re in hyper growth mode, if you are in “I want to scale” mode, then having your license, being able to— I mean, how many of us listening to this show have wanted to invest in real estate or even just wanted to look at a property? You call up your agent and they don’t answer right away. Then they call you back and then they have to call and make an appointment and then the appointment time isn’t available and then they call you back. And by that time it’s 6 hours later or the next day, by which time it’s already under contract in a hot, hot market. So being able to— wow, I got an instant notification. I called up the showing service. “Hey, I’d like to schedule an appointment.” And they say, “Sure, here’s your—when do you wanna go?” I’m like, “Right now.” They say, “Great, here’s the code.” You go over there, you look at it. Once you’ve been in properties over and over and over again, it gets so much easier to be able to walk a property and just walk through and, “Oh, nope, this is gonna be terrible. It’s not for me.” Or, “Hey, I know how to fix this. I’ve seen this model before. It could be amazing. This will make a great rental. This won’t make a great rental.” You’re able— it’s just like running the numbers. You have to be in the property. I think the world of David Greene, but I also think that you need to be in the property, especially when you’re starting out, because you cannot smell a picture.
Rachel Richards: I totally agree.
Mindy Jensen: Okay. Yeah.
Scott Trench: I’ll give a quick counterpoint to that. I have my license and it has not been worthwhile for me. I have used it very infrequently. Unlike Rachel, I haven’t bought a lot of properties in a condensed period of time. I buy one every year or two. And I’ve actually ended up using an agent on most of those transactions because they’ve brought me deals or made life way easier. So for me, in my situation, it probably hasn’t been worthwhile. And for Rachel, it probably easily has been and saved you thousands, tens of thousands, or hundreds of thousands of dollars between commissions and then the accessibility or ability to offer instantaneously on deals like the one she just shared.
Rachel Richards: Ooh.
Mindy Jensen: So, neutral third-party observation, Scott is someone who has a lot of work to do. He’s the CEO of a big company, whereas Rachel had a job, but she didn’t have the same level of responsibility that Scott did, and she was looking to grow. So in this case, Scott, I don’t want to say it’s worthless for you to have your license, but it certainly doesn’t help you in any way. Why did you get licensed, Scott?
Scott Trench: Because I thought I was going to do what Rachel did.
Mindy Jensen: Ah, okay.
Scott Trench: And then I ended up having a lot more work at this startup I joined that took on a lot more of my time. So paradoxically, I joined BiggerPockets and did less real estate investing than if I hadn’t joined BiggerPockets.
Rachel Richards: That’s hilarious. I will say, after I stopped acquiring real estate aggressively in 2018, I put my license in escrow, so it’s been inactive for a few years because I haven’t needed it, and therefore I haven’t been paying for it. So that’s always an option as well.
Mindy Jensen: Yeah, I think that if you’re considering getting your license— I mean, this was one of the top questions that I had seen on the forums when I wrote an article a long time ago about it. It’s like, this is the cost of getting your license. It’s a lot of coursework. It’s a lot of time. You have continuing education, you have background checks and MLS dues and on and on and on and on. If you are going to be helping people, if you want to actually work as a real estate agent, that’s great. There is no better way to learn the market than to be in it all day, every day. If you want to scale aggressively and have the opportunity to do it, that’s great too. But if you can be honest with yourself and say, “Hey, I am the CEO of a company and I have no time at all,” then it is totally worthless for you to get your real estate license. Because you’re never going to use it. It’s just going to end up costing you money. You can do yourself a better service by finding a really, really great real estate agent. Hey Scott, where can I find a really great real estate agent to help me with my investing needs?
Scott Trench: BiggerPockets.com/agents.
Mindy Jensen: So there you go.
Scott Trench: Thanks, Mindy, for the plug.
Mindy Jensen: BiggerPockets.
Scott Trench: Okay, so we’re in 2020 after this shopping spree for real estate. What happens now? What’s your position look like? What’s your passive income situation? I know you’ve got books and you’ve got this whole other business. When does that start getting going? And how does that play into the whole picture here?
Rachel Richards: For sure. So by 2019, I actually was able to quit my job, because by then, we had built our real estate portfolio to where it was making $10,000 a month in profit. And that was our goal. That’s what we wanted to do. I had more than replaced my full-time income. So I quit my job. And that was a really exciting year. And that way, I could focus on building my business. Because by then I had 2 books that I self-published that were doing really well. And I wanted to focus on teaching women about money management. I wanted to help females feel excited about their financial futures and feel confident and capable. And I wanted to teach them how to invest in real estate. So I started doing that full-time and working on that. And I was telling people that I, you know, retired, basically retired from my full-time job. And I think people have problems with that word, which I totally understand. I use “retired” and “financially independent” interchangeably. So I just meant that I was working because I wanted to, not because I had to. And what brings me fulfillment and joy are a few things: hiking, traveling, and working on my business. I love my business. I love what I do. I will never stop working. I don’t want to. So that’s how I spend my time now. And in my business, I have my books, my courses, my programs, and that’s basically what I do.
Scott Trench: So your business was developed in parallel to your real estate investing?
Rachel Richards: Yes, I self-published my first book, Money Honey, in 2017, which is also the year that we first invested in real estate.
Scott Trench: Awesome. So can you tell us about that process of publishing that book?
Rachel Richards: For sure. Yeah, I came up with the idea because, you know, when I was a financial advisor, all my family and friends came to me for financial advice, which was amazing, and it’s what I love to do. And I also remember thinking, why aren’t they reading books or learning on their own, or reading up, looking up websites like BiggerPockets? And I thought to myself, “Oh yeah, it’s because personal finance is boring, right?” It’s intimidating, it’s complex, it’s overwhelming for most people. So I thought, well, how can I make it fun and sassy and simple? And that’s where the idea for Money Honey came from. So I sat down and I wrote this book and it was really exciting and it was a passion project for me. I didn’t think it was going to go anywhere, but I self-published it in 2017, and to my surprise, it took off and it did really well and it resonated with female millennials. So I struck a nerve somehow and I recognized that there was a need in the market. There was a hole in the market that I filled somehow. So I just sort of followed that instinct and that hole and I just kept trying to solve problems. That’s how I basically built my whole business.
Scott Trench: Awesome. How long did it take you to write the book? What was that like? Then can you walk us through the mechanics of self-publishing in case anybody is interested in repeating that?
Rachel Richards: Absolutely. It took me 9 months to write the book. Keep in mind this was around a full-time job because I was still working my full-time job. And this was around us acquiring rentals, managing tenants, self-managing our properties. So I was doing this in the evenings and on the weekends, and I quit for 4 months because I was convinced my book was trash. And who was I to write a book about personal finance? So I could have done this a lot faster, but it took me 9 months from start to finish.
Scott Trench: Was this in 2016 that you were writing the book?
Rachel Richards: 2017.
Scott Trench: It was published in 2018 then?
Rachel Richards: No, I started in January 2017, published it in September 2017.
Scott Trench: I’m asking because I was writing Set for Life at the end of 2016. And it released in April 2017. And I had a very parallel experience, I think, in writing the book, that probably overlapped heavily with yours.
Rachel Richards: That’s amazing. It gives me comfort to know we were both probably struggling with imposter syndrome at the same time.
Mindy Jensen: So you said it took 9 months to write this book. Scott and I wrote a book called First-Time Home Buyer, and it took us— we sat down and we banged out our outline in about an hour. I mean, it took us almost no time to bang out the outline. And I think 12 short months later, we were missing our deadlines for our company’s publishing department that was very, very loosey-goosey for us because he’s the CEO. He’s the boss of the whole company. So he could kind of do whatever he wants. Who’s going to tell him what to do?
Scott Trench: I got to hit my deadlines with that.
Mindy Jensen: Yeah, you do. But also, they’re only kind of deadlines for you, Scott. But it’s like, it’s hard to write a book. So you said you quit for 4 months. That means you wrote it in 5 months, which is still very, very impressive. And it’s done well because you make money from this book.
Rachel Richards: I make a surprising amount. Yeah. Between my 2 books, I make $8,000 a month in profit, or that’s what I made last year in 2021.
Mindy Jensen: $8,000 a month. And this is self-published. So basically all the money comes to you.
Rachel Richards: Yeah, so Amazon is great because when you self-publish a book, you get to keep a large percent of the royalty. Mostly with traditional publishers, you would make a 10 to 15% royalty. When you decide to self-publish, you can keep anywhere from, I think it’s like 35 to 70%. So on an ebook, I make, I think it’s about $5. I forget. It’s been a long time since I looked. On a paperback, I think I make $3 to $5 per book. It just depends on the pricing. But it’s way more than I would make on a traditionally published book.
Mindy Jensen: Okay. So in 2017, how old were you?
Rachel Richards: I just turned 30 on Sunday. It’s my birthday week. So what does that make me in 2017? Thank you.
Mindy Jensen: Is that 5 years ago? You were 25.
Rachel Richards: 5 years ago. Yeah. I’m losing all sense of time.
Mindy Jensen: Yeah.
Rachel Richards: I was 25. You’re right.
Mindy Jensen: Okay. So 25 years old, you wrote a book that then starts cranking out money. I mean, $8,000 a month is nothing to sneeze at. I think even Scott could live off of $8,000 a month. Scott?
Rachel Richards: Well, it didn’t start making that much. The first month it made $600 and then it was making $1,000 a month pretty consistently. And it was just Money Honey then because I hadn’t published my second one yet. So it was making $1,000 a month pretty consistently. It might’ve crept up to $1,500 after in the second year. And then once I published Passive Income, Aggressive Retirement, that was a big bump, but it really didn’t explode until 2020 when I went on a podcast tour and I got on all these podcasts and really put all of my efforts into my business. And that’s when my book sales went up a lot.
Mindy Jensen: Okay, so let’s look at the mechanics around self-publishing. Did you print actual books, or do you have print-on-demand books?
Rachel Richards: It is print-on-demand, and that’s what is so amazing about this income stream, because it is a more passive income stream. Now, when I say passive income, I just want to talk about this for a second, because passive income is a phrase that is so misused and misunderstood. And I think when people say passive income, they think people are sitting on a beach not doing anything, or making money in their sleep. I hate that phrase. Okay, there is still work that is spent, effort that is made. It’s just a lot— it’s very minimal compared to a 9-to-5 job. So I define passive income as money that is earned with little to no ongoing effort. Most of the passive income streams I talk about still require a couple hours a week or a few hours a month to maintain the passive income stream. Okay, so with print-on-demand books, what’s great about this passive income stream is that I put together this book, I write this book, I do all the formatting and the cover design, or I outsource this—I have other people do that part. So I have this beautiful finished product. I give it to Amazon, I submit it to Amazon, and Amazon handles all of the pricing and the sales and the printing and the shipping. I don’t have to do anything. So when someone buys my book, I get paid a royalty and everything else gets handled. I don’t have inventory risk, I don’t have financial risk. So I don’t have to buy 20,000 copies of my own books and then hope that they sell, or hope that I can sell them and then ship them out and then lose money if they don’t sell. So it’s made to order, it’s print on demand, and it’s a really beautiful concept. Anyone can self-publish and then not lose a ton of money if their book doesn’t work out. So that’s what I love about it.
Mindy Jensen: So what was your cost all in, not including your time, which has value—but you paid somebody to do the cover design and you paid somebody to do the layout and all of that, how much money did you spend to get Money Honey ready to go, out of pocket, approximately?
Rachel Richards: This is a great question, Mindy. With Money Honey, I made a lot of mistakes, and the mistake I make in all areas, which you’ll learn about on the BiggerPockets Real Estate Show I was on, episode 454, is that I’m too cheap and I try to do too much on my own and I don’t outsource enough. So I spent $561 on Money Honey to get it out the door. It was very little because here was my thought: I was like, no one’s gonna buy this. To me, this was a loss. This was already a loss. I was like, any money I spend, I’m not gonna make back. So I just wanted to spend as little as possible just to get this done, because it was a passion project. I had no idea this was gonna be the start of a business. I really didn’t. This was something I felt compelled to do. So I created my own cover initially. I’ve since had it redone—it looks a lot better now. The initial cover was horrendous. I also did all the interior formatting initially. I’ve since had it redone. The one thing I did do is I hired an editor, and it was a really good editor that I found on Fiverr, and I was very lucky that I found someone who was just starting out but was very talented and had a really low rate. So I think I spent the bulk of that $561 on a really great editor, and then maybe a little bit of other money on advertising, but hardly anything. So that’s how much money I spent. I figured it was gone, but again, to my surprise, I made all of that back in the first month.
Mindy Jensen: I was just gonna say, remember, you made $600 the first month, so now you have broken even and actually made $39. So congratulations on being in the black by $39 your first month. And then it’s just— so book publishing to me is passive, truly passive. How much time are you spending on book publishing when it is all done by Amazon? What do you do in the month? How much time do you spend per month on this?
Rachel Richards: Initially, that first year or two, I literally didn’t do anything, because I was still dealing with so much imposter syndrome. So I want to share this story about that four months that I quit, because I think it’s really important. I quit writing Money Honey, and I had no intention of ever picking it back up again. This was about five months into writing it. I did a complete mental 180, and I was telling myself things like, “Who do you think you are, Rachel, to write a book about finance? You’re a young woman, who’s gonna listen to you? Your writing is terrible. This is gonna be an embarrassment if you go through with this.” That’s what I was telling myself, so clearly being really nice to myself. And it wasn’t until I sat down and had lunch with a good friend a few months later, and I confessed to her my book idea, and she looked at me and she said, “Rachel, you have to finish what you set out to do. You are really onto something here. You need to finish writing this book.” She gave me just enough encouragement that I picked it back up and I finished writing it. And I told myself, if I can just help one person, that’s all I want to do, that’s all I care about. So if I can just help one person—so I lowered the bar as far as the bar can be lowered with my expectations. If I literally could just help one person, I will be happy that I went through with this. So that’s one way that I overcame imposter syndrome, along with surrounding myself with the right people, like that friend. And I went through with publishing it, and again, it took off. But I still was so overcome with that self-doubt, because in those initial weeks and months, all of your family and friends are encouraging you and supporting you and buying your book and telling you how awesome it is. But of course they’re going to tell you that—they’re your family and friends. So it wasn’t until six months later that I started getting all these emails from strangers, from people in different states around the country that I didn’t even know, and messages on Instagram. And they were telling me things like, “Rachel, thank you for writing this book. This book has changed my life. I’ve paid off student loans. I’ve paid off my credit cards. I’m no longer struggling living paycheck to paycheck. I can breathe now. Thank you so much.” I started realizing maybe I wrote a good book. Like, maybe this is actually helping people. And then I started having confidence in myself. But that’s why I didn’t do anything at first, and I couldn’t actually get behind my own book, promote it. I just didn’t have the confidence so early on. And so what I want to tell people in terms of overcoming imposter syndrome is, you know, I’m thinking about those emails that I would start to get. And I used to ask myself before I published Money Honey: what if I do this and I fail? What if I do this and I get laughed at? What if, what if, what if? So I challenge you to ask yourself, what if you don’t? What if you don’t do this and you don’t share your unique gift with the world? Who out there will continue to suffer because they need you and you were too afraid to publish that book? So I think you have a responsibility to use your creative gifts for the good. You are needed and your voice is needed, so please don’t give in to that fear.
Scott Trench: I love it. I think that’s really good advice, and I think another way to think about it is that it doesn’t have to sell. It doesn’t have to do that, but at least you’re doing something that you’re passionate about. You’re putting it out there and you’re taking a shot, and you’ve created an asset. If it doesn’t produce any income, so what? Go do another thing next quarter or next year. Buy another property, do that next side business, whatever it is, but take your shot and do it. And writing a book is an option that is available to folks. If you have something you’re truly passionate about and well-researched in and feel like you’re an expert on, go do it, go write it, see what happens. You’ll be glad you did later in life, I think.
Rachel Richards: Exactly. And you do not have to monetize your hobbies to justify them, period.
Scott Trench: Love it. Okay, so you’ve got two books that you wrote between 2017 and 2020, is that right? And you have this business that’s blossoming, I guess, during that same time period. Can you walk us through the other parts of that business and how that led to kind of your end state in 2020?
Rachel Richards: Absolutely. Okay, in 2020 I launched my first online course, which is called Get Your Financial Bleep Together. I don’t know if I’m allowed to cuss.
Scott Trench: We like our clean rating on iTunes.
Mindy Jensen: Okay.
Rachel Richards: Get your—yeah, get your financial stuff together. And ironically, I launched this course in April 2020, which is right when COVID first happened. So it could have been the worst time or the best time to launch this course. But I recognized that my clients and my followers and the people who read my book, they needed me in a bigger, more hands-on way, right? Because anyone can read a book. Here’s what I was starting to realize—anyone can read a book, anyone can look up a diet routine. You know, I looked up diets, weight exercises, whatever routines, all the time. How often did I actually implement them? Not enough. And I had goals—I wanted to build muscle tone and I wanted to get stronger and I wanted to be able to lift weights. And so I realized it’s hard to have self-discipline and to do the things that you’re learning about. We can all read a book. How many of us are implementing what we’re learning in that book? So I thought to myself, okay, well, what if I can actually help hold people accountable to what they’re learning in my book, Money Honey? So I put together this online course with a group support system and accountability, and I just figured this is another problem that I think that I can solve, because accountability is the hardest part, in my opinion. Knowledge—there’s the quote, you know, knowledge is power. I disagree with that completely. If knowledge was power, we would all have the muscles that we want. We would all not have the debt that we didn’t want to have. We would not be in credit card debt. We would be wealthy. We would all have everything we want because we know the things that we should be doing. We know to pay off our credit cards and to save more money and to invest in the stock market and to eat more protein or whatever. So why don’t we do it? It’s because actually executing on that knowledge and implementing and taking action, that is the hard part. So I put together the course. The course took off because I recognized the problem and I solved the problem. And that was kind of the next piece of the business that I put together, online courses. I also started doing one-on-one coaching. I put together a really high-level mastermind. I just put bits and pieces of my business together whenever I saw a new problem arise, and I just solved that problem as quickly as I could.
Scott Trench: Awesome. So what does your position look like today, and what’s next?
Rachel Richards: Today I have active and passive income streams. With my passive income, I’m making $20,000 a month in profit. So if you already follow me on Instagram, you’ll see that in my bio. What does that mean exactly? Because I want to be really clear and transparent on what that number means. When I say $20,000 a month in passive income, I’m talking only about my passive income streams, not about my active income streams. My active income streams include my mastermind, where I’m actively teaching clients. My active income streams include one-on-one coaching. It includes my bootcamp, because that’s something that I run live. My passive income streams, when I say $20K a month, that’s profit—that’s not revenue. So that’s with expenses already taken out. So I’m making $20K a month in passive profit, really—maybe that’s the word I should use. And that includes the $8,000 a month in book profits, and then it’s $5,000 a month now in rental property profits, because we sold some of our units last year. It’s about $1,000 to $2,000 a month in rental real estate syndication profits, $5,000 to $6,000 a month in online course profits, the ones that are passive, and then there’s $2,000 to $3,000 a month in other miscellaneous things—print on demand, Fundrise interest, other miscellaneous things.
Scott Trench: Awesome. So what’s next for you?
Rachel Richards: I think keep doing what I’m doing. So I’m on a two-month trip right now in Italy and Croatia, which is so cool. I can’t believe I just said that, because this is what I’ve always aspired to do, and I feel like I’m finally making my dreams come true. I wanted to achieve financial independence so I could travel the world, and I’m finally doing it, and I’m working while I do it, and it’s so fun. I’m meeting people and I’m like, hey, what are you doing, how long are you here? And I’m meeting other people who are retired and who are on a two-month trip because they’re retired and they’re in their 60s and 70s. And then when I tell them I’m doing the same thing, they’re like, how on earth are you doing this? And I’m like, oh, I own my own business and I can just work wherever I want, and I have financial freedom. People look at me like I’m absolutely crazy. It’s just a lot of fun. So I just want to keep doing what I’m doing, traveling and hiking and hopefully impacting more lives and empowering more women to feel confident about their financial futures.
Scott Trench: I love it.
Mindy Jensen: I think that women, for some reason, feel like they can’t do this, and you’re here—I’m here to say you can. I don’t want to say it’s not that hard. It is work. It’s not that hard, but it is work. And sometimes you just need a little bit of encouragement to let women know that they can do it. I love it.
Rachel Richards: Yeah, and I used to be that woman. I mean, I used to feel completely hopeless and trapped in a toxic workplace. And it’s easy for me now to sit here and say, you know, leave your job, you have to get out of that. But I also remember the self-confidence that I lost when my employer was treating me that way, and the despair I felt, and how depressed I was in that environment, and how I was dealing with anxiety. And it’s easier said than done. And I have an overwhelming amount of compassion and empathy for any young woman in her early 20s, or whatever age, that is feeling that way. And the truth is we’re in a financial education crisis. And at no point in our lives are we taught how to manage our money, and then we’re left as young adults to figure it out all on our own. So no wonder I see so many people dealing with these feelings of guilt and shame and embarrassment when it comes to their money. And to me, that’s the real shame, because we were not given the resources we need. And if I can just help one more person at a time get out of those feelings, then to me that’s all I can do, and I’m very, very happy with that. So that gets me fired up. I’m passionate about it.
Scott Trench: Completely agree. That’s why we do what we do at BiggerPockets—same exact reason. Well, with that, should we move on to the famous four here?
Mindy Jensen: Yes, we should.
Scott Trench: Famous four.
Mindy Jensen: All right, Rachel, it is time for our famous four. These are the same four questions we ask of all of our guests. What is your favorite finance book?
Rachel Richards: Okay, I love the famous four. This isn’t a finance book, but I’m gonna say it because it can be related to your finances, and it’s kind of my favorite book of all time. It is Can’t Hurt Me by David Goggins. Have either of you read this book?
Scott Trench: I have not. I’ll have to go check it out.
Rachel Richards: Okay, I’m gonna send—I’m just gonna send you a copy, because it’s that good and you have to read it. But it’s just all about how you can overcome your circumstances, even the worst of circumstances, and just not be a victim of your circumstances. And it’s all about your mindset, and that you can do whatever you set your mind to do. It’s an amazing book. I’m a huge fan of David Goggins. He’s a Navy SEAL, and he’s a Black man, and he grew up in a really racist environment. He grew up in poverty, and he has achieved the most unimaginable things. So he’s like a hero to me. So I highly recommend the book. I’m going to buy it for both of you. Anyone out there, you have to read it, because it can really be applied to your financial circumstances as well. And it’s helped me overcome a lot of things. Anytime I’m like, oh, I can’t do this, I can’t achieve that, I just think about him and it just really inspires me.
Scott Trench: Awesome, I can’t wait to read it. What was your biggest money mistake?
Rachel Richards: My biggest—this is more general, and it’s still something that’s a mistake—but really just not flipping the switch from the scarcity mindset to the abundance mindset, being too cheap, not delegating and outsourcing more, and not allowing myself to enjoy the fruits of my labor and to enjoy the lifestyle I’ve created for myself. But kind of going back to delegating and outsourcing, like you wouldn’t fill your own cavity at the dentist—you know, you would go to a dentist to have that done. So why are you trying to do your own taxes? Why are you trying to do your own legal paperwork and write your own leases? You’re not going to treat your broken arm by yourself. You’re not going to do surgery on your leg by yourself. So you have to outsource things to the professionals.
Scott Trench: I would love to offer a mental model here and see how you react to it. I think that there’s a time and a place for that scarcity or do-it-yourself mentality when you’re getting started out and your time is worth $36,000 per year, or $18 an hour, at that point, right? That’s a good time to fix your own toilet, do your own lease, manage your property yourself, all that kind of stuff. And then that slowly flips over time as you earn more, as your wealth increases, as you generate more passive income, and parts of that need to begin getting outsourced more often.
Rachel Richards: Yes.
Scott Trench: Right? You never would do your own cavity. Of course, that’s not something that you DIY, but you might DIY your lease potentially in those early stages because that’s so meaningful to your financial position at that point in time. And then it flips, and it’s like recalculating the value of your time and using that as a tool to go from this abundance, from the scarcity to abundance mindset. I think that could be powerful for folks.
Rachel Richards: I agree, I agree. So what I’m saying is that I did not switch, and I have not switched still from a scarcity mindset to an abundance mindset. And I worry about spending amounts of money that are not— I still live like I am making $36,000 or $75,000 when I’m— some months I make $36,000 when I used to make that in a year. And so figuring out how to flip that switch can be very difficult when, for the first 25 years of my life, I was living in that. So when you go from such scarcity to such abundance in such a short span of time, your mind— my mindset hasn’t caught up yet. So that’s what I struggle with, and that’s where most of the money mistakes that I make to this day come from.
Scott Trench: Love it.
Rachel Richards: So I totally agree with what you’re saying.
Mindy Jensen: What is your best piece of advice for people who are just starting out?
Rachel Richards: My best piece of advice is to understand your motivation, because this is going to help you with the discipline part that we’ve talked a lot about, and to kind of dig deep and find your why. So there’s this book that I love, it’s called The Compound Effect by Darren Hardy. Have you all read this book? This is so good. Okay, there’s this story he shares that I’m going to share here because I think about this all the time now. So he talks about— the author, I think his name is Darren Hardy.
Scott Trench: Mm-hmm.
Rachel Richards: He talks about, if you are on a building, a 100-level building, 100-story building, and somebody offered you $100 to walk a thin plank across the building to the building across, would you do it? $20 to walk the plank and risk your life?
Scott Trench: Nope.
Rachel Richards: Would you do it? This is not a trick question. You would probably not do it, right?
Scott Trench: Definitely not.
Rachel Richards: Okay, okay. All right, so let me ask you this— not on your leg, Scott. Who do you— yeah.
Mindy Jensen: Okay.
Rachel Richards: Who do you care about more than anyone else in the world?
Scott Trench: My wife.
Rachel Richards: What about you, Mindy?
Mindy Jensen: My kids.
Rachel Richards: Your kids. Okay, so let me ask you this. So, Scott, pretend like your wife is on the building next to yours, and Mindy, pretend like your kids are standing on the building next to yours. And that building is burning and it’s gonna go down. Would you walk the plank across to save them?
Scott Trench: Yeah, yeah, absolutely.
Mindy Jensen: Absolutely. No question.
Rachel Richards: Okay, no questions asked, right? And I’m betting you’re not gonna need a $20 bill to do so.
Mindy Jensen: No.
Rachel Richards: So what changed? Your motivation changed. Your reason for walking the plank changed. And I think this analogy is so powerful, because in one scenario, your motivation is not strong enough. In the other scenario, your motivation is so strong that nothing is going to stop you from doing what you need to do to get it done. So I think what you need to ask yourself— if there’s a goal you want to achieve, if you want to achieve financial freedom, or to be able to exit that toxic workplace, or to be able to go on that dream vacation, or travel the world, or not live paycheck to paycheck anymore, whatever it is— what is the motivation where nothing is going to stop you? Do you want it bad enough? Do you want it as bad as you want to breathe? Because that’s the motivation that you need to figure out so that you can achieve that goal. And if you don’t have that defined, where it’s that emotional to you, it’s gonna be really difficult to get up early in the morning and stay up late at night and do the things that are really hard to do to achieve the goal. So that’s my advice for people starting out, is to figure out what is that motivation.
Scott Trench: It’s the why— what, what, why are you doing what you wanna be doing, and is that strong enough of an emotion, to your point, to keep you going for years doing that activity or the activities that are conducive to that? And a good tool for that potentially is this artifact of a vision. What is it that you want your life to look like in 3 to 5 years from now? But I love it. What is your favorite joke to tell at parties?
Rachel Richards: Okay, this isn’t really a joke, it’s more of a quote, but I think it’s really funny, and it’s attributed to Bill Murray. He said, the best way to teach your kids about taxes is by eating 30% of their ice cream.
Scott Trench: Awesome. There will definitely be a dad tax in the Trench household.
Rachel Richards: Yeah, more like 50%.
Scott Trench: Depends on how much ice cream there is, right? It’s progressive. All right, Rachel, where can people find out more about you?
Rachel Richards: Thank you. So my Instagram is Money Honey Rachel, and you can find both of my books on Amazon. They’re in ebook, paperback, and audiobook, and they’re called Money Honey and Passive Income, Aggressive Retirement. And what I would love to do for the BiggerPockets listeners is, if anyone wants to download my Passive Income Starter Kit, I will give that free. So you can go to moneyhoneyrachel.com/passiveincome to download that.
Scott Trench: Awesome. And we will link to all of that in the show notes, biggerpockets.com/moneyshow317.
Mindy Jensen: Rachel, this was super fun. I could talk to you for literal hours, so we’re going to have to have you come back and talk more about all these other things, like maybe a deep dive into your self-publishing, because I think that is super awesome, and I think we just touched the surface there.
Rachel Richards: Awesome, I would love to. Thank you both for having me. It was a pleasure to talk to you. I really appreciate it.
Mindy Jensen: Well, enjoy traipsing around the world on your— on your journey, your little 2-month sabbatical— or not sabbatical, your 2-month, still generating income, trip. And we will—
Rachel Richards: Thank you. I appreciate it.
Scott Trench: Thank you.
Rachel Richards: All right, thanks.
Mindy Jensen: All right, Scott, that was Rachel Richards from Money Honey Rachel, and she is so much fun. I love her story. She is kind of the embodiment of, you can do it if you put your mind to it.
Scott Trench: Yeah, I mean, she’s crushed it. What an incredible journey. We have a career progression, we have spending extremely little, we have starting out in sales with Cutco, we have buying 30, 40 rental property units, we have selling them and redeploying the assets into passive syndications, which is a trend that I’m interested in observing with more and more people, it seems. We have starting a business, writing a book— all of these different things, all these different levers of personal finance, as I mentioned earlier, being applied. And the result is a huge abundance at age 30 that will follow her for the rest of her life. So really impressive, awesome to hear, and hopefully it inspires some people.
Mindy Jensen: I hope so. She really truly is a genuine giver. She has figured out— it’s not really secrets either— she’s figured out the steps to success and now wants to share them with everybody. I just love her story. Should we get out of here, Scott?
Scott Trench: Let’s do it.
Mindy Jensen: From episode 317 of the BiggerPockets Money Podcast, he is Scott Trench and I am Mindy Jensen, saying go make money your honey today.
