BiggerPockets Money Podcast - From $15,000 to Financial Independence Through Real Estate

Episode Date: March 3, 2026

In this episode of the BiggerPockets Money Podcast, hosts Mindy Jensen and Scott Trench sit down with Grace Gudenkauf, a real estate investor who began her journey at just 23 years old with $15,000 in savings during COVID. Grace shares how she built a thriving rental portfolio in Iowa by leveraging local market knowledge, living below her means, and strategically balancing renovations, new construction, and entrepreneurship. Mindy and Scott unpack Grace’s approach to deal analysis, seller financing, local bank relationships, and pivoting strategies during rising interest rates. From flipping to building triplexes with a “build one, keep one” model, Grace reveals how she’s designing a low-leverage, resilient portfolio on her path to financial independence. If you want practical real estate investing strategies for your 20s—or a blueprint for long-term cash flow—this episode delivers. To go beyond the podcast: Kick start your financial independence journey with our FREE financial resources - https://biggerpocketsmoney.com/ Subscribe on YouTube for even more content- www.youtube.com/biggerpocketsmoney  Connect with us on social media to join the other BiggerPockets Money listeners - https://www.facebook.com/groups/BPMoney Connect with Grace Gudenkauf: Instagram: https://www.instagram.com/grace.investing/ We believe financial independence is attainable for anyone no matter when or where you’re starting. Let’s get your financial house in order! Learn more about your ad choices. Visit megaphone.fm/adchoices

Mindy and I are so grateful for the following sponsors who make Bigger Pockets Money possible. Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your taxed refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress.

Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make you life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code Pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in Edle. Achieve your financial goals

for good with Monarch, the all-in-one tool that makes money management simple. Use the code Pockets at monarch.com for half off your first year. That's 50% off at monarch.com code pockets. When I evaluate debt funds, I look for things like first position loans, personal guarantees, deep experience by the fund operator, low fund leverage, fast liquidity, and consistent returns. These are some of the reasons why I'm excited to partner with Pine Financial Group. Their fund six offers investors exposure to real estate credit, largely for construction and rehab, with loans originated by an experienced originator with over $1 billion in origination volume. They offer investors an 8% preferred return paid monthly and a 70-30 LP-GP split of everything over 10% paid annually.

The lock-up period is nine months with liquidity available within 90 days after that nine-month commitment. The fund is open to accredited investors only. The fund's minimum investment is typically $100,000, but Pine Financial is able to reduce that minimum for bigger pockets money listeners to a minimum of $25,000. Full disclosure, I am personally invested in this fund through my self-directed IRA. Pine Financial is sponsoring this message and our podcast. Go to biggerpocketsmoney.com slash pine, P-I-N-E. Please note that returns are not guaranteed and may vary based on fun performance. I love Matt, said no one ever.

Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes. But somehow, every small business owner ends up doing it. Your dreams of creating, selling, and growing get replaced by late nights chasing receipts, juggling invoices, and wondering if that bad sushi lunch with Scott counts as a write-off. Change all that with Found. Found is a business banking platform built to take the pain out of managing money. It automatically tracks expenses, organizes invoices, and even preps you for tax season without you doing

the heavy lifting. You can set aside money for business goals, control spending with virtual cards, and find tax write-offs you didn't even know existed. It saves time, money, and probably a few years of life expectancy. Found has over 30,000 five-star reviews from owners who say, Found makes everything easier, expenses, income, profits, taxes, invoices even. So reclaim your time and your sanity. Open a found account for free at found.com. That's F-O-U-N-D dot com. Found is a financial technology company, not a bank. Banking services are provided by lead bank, member FDIC. Don't put this one off.

Join thousands of small business owners who have streamlined their finances with Found. Have you ever wondered how quickly real estate can accelerate your path to financial independence or what it actually feels like to walk away from a steady career? We're covering all of that today. Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen. And with me, as always, is my bought his first rental in his 20s co-host. Scott Trutch. Thanks, Mindy. Great to be here. We're super excited to talk to Grace Goodenkov on the podcast

today to talk about the core tenants of her financial journey. If you don't know, Grace is a real estate investor, published author and the founder of Wire, Women in Real Estate. We are super excited to be talking to you about your incredibly impressive story today. Welcome. Thank you. Bigger Pockets was a huge piece, so I'm excited to talk about it. Fantastic. Can we get started at the beginning? Where does your journey with real estate investing begin? You know, it's funny. I've feel like my first memory of thinking about real estate was listening to a bigger pockets podcast in the truck with my boyfriend at the time, now husband. He was into real estate a little bit. He flipped a house with his grandpa when he was out of college. I was still in college. I'd paint a

wall or two and I thought, I'll do this when I'm 40. Sounds like it could be cool. I don't have money. Fast forward a couple years. I'm listening to a podcast episode in the car with him. And I just remember looking at him being like, I feel like I could do that. I think that I could do it if these people are doing. I don't remember what it said. But that winter, we decided it was COVID, 2021. We're in Iowa. We're going to be bored. Let's find the crappiest house that we can. Put some effort and energy into it and see what we can do. You started investing during COVID? Okay. And how old were you when you bought your first house? I was 23. I just graduated college. And I had a good job at the the time. But more importantly, I really had the time and energy. And so I really wanted to put that

to use. Okay. So describe this first property. You wanted to find the worst property in Iowa. Were you successful? You know, I saw a for sale sign. And for some reason, I had the audacity to call and pretend that I was an investor. And I called this guy and I could tell that he didn't know what property he was talking about. So I said, are you an investor? And he said, yes. I said, great, Me too. Can you send me a list of all your properties and I want to walk the crappiest one? I don't know why I had the gumption to say that, but we walked it. It smelled awful. It was disgusting. But I knew that there was meat on the bone just by looking at comps. I did know my area really well. I invested in my backyard. It never even occurred to me. You can invest long distance, which I do now.

But we thought, okay, it smells awful. I know we can fix the smell. We can fix all these other things. So we got started on what we thought was going to be a three-month, $23,000 renovation and ended up being a six-month, $36,000 renovation. And that was like all of our money, like all of our money. Well, that's interesting because I always say double the cost and triple the timeline or double the timeline and triple the cost. It flip-flops back and forth depending on, you know, what's going on in the market. So that's interesting. You did double the timeline. You didn't triple the cost.

you one and a half times the cost. For your first deal, honestly, that's a rock star grand slam home run. As the CEO of Bigger Pockets, I really became interested in or dive deeply into different markets, right? Because real estate investors who started at the time you did had very different outcomes, depending on where they invested, right? If we were talking to you and you were from Austin, Texas right now, we'd be having a very different conversation about your experience as an investor. One of the themes that I remember very vividly coming out of 2020 was there was a

global geopolitical strategist named Peter Zeehan. I don't know if you ever heard of him, but he gave a very popular talk at the University of Iowa saying Iowa is among the best positioned places in the world for the next 20 or 30 years for a variety of reasons, right? One is America's relative strength compared to other countries and with a lot of advantages. Climate change is benefiting Iowa unquestionably with longer growing seasons and those types of things. Manufacturing coming home to the United States in a lot of cases is benefiting places like Iowa. And it just seemed all signs are pointing to Iowa. I haven't actually bothered to look back since remembering this talk from five years ago.

But has that been prescient? Has that has Iowa really seen some really strong tailwinds? And specifically, where are you? And has that translated to a tailwind for you in your investing? Yeah. When I first started, I went off a feel. It didn't even occur to me to look at the numbers and the job growth and the population. I just knew, I know my area.

And I can invest here. and I know I can find the contractors and buy a good deal. Now that I'm six years in and can see some shifts that have happened, Cedar Rapids, Eastern Iowa, where I'm at, has definitely, I don't want to say booming, but experiencing what I would say a really strong demand in housing. That is because of a few specific things. The city approved a casino. It approved a data center.

We've got great hospitals. The University of Iowa has great hospitals. So those are all some things that are really helping. bring in, especially the midterm rental demand. In general, I think Iowa was great. And again, I didn't know this when I started because it's affordable. People stay where their roots are. They tend to not leave as much. And it's near a lot of expensive cities like Chicago, where a lot of people are leaving Chicago and coming to where it's more affordable to live. Awesome. So there's been a real structural tailwind to your success that's been underlying some of this.

And I imagine also that you haven't seen this like enormous boom in supply to offset that demand growth. It hasn't been like a boom town with tons of new units or is that an incorrect assumption? I would say it's pretty correct. Within the last two years, we've seen a lot more development, but it's not a boom like you would see in a big city. Okay, awesome. Yeah. Sorry. I would love to go back in your tactical journey. I just, I just, that was a question I have because I think it underpins a lot of the success that real estate investors have over time. is there's creativity and gumption and the skill to get these properties. And there's how that market ended up doing over the last couple of years and can't really do much about the Austin, Texas headwinds right now.

You're having a bad time if you invest in there a few years ago. People are hearing you say, oh, I had to double my timeline and I one and a half Xed my expenses. I have done deals. And let me tell you that that double timeline is not a big deal at all. And you only one and a half X your expenses. Did you underestimate the amount of work that the property would need? Or did you open up walls and find more problems? Both.

We bought it for 825, put 36 in, and then it appraised for $185,000. So on paper, it's like, oh, my God, everybody would do that deal. But the thing I want to point out is I was there on weekends. I still had a job at that time. And it was on California time, so two hours behind. I would go in, paint for a couple hours, go back home, get on my job. and then go back to the property at night. My significant other and a partner, he was there like all day, every day.

So while on paper it looked like it was great numbers, it was a lot of freaking work. It is a lot of work. I am also a DIY investor and I don't have the luxury of going home to work at my job. I live in Flip. So I am living in that construction zone. I am currently in my last Live In Flip. I have decided I don't want to do this anymore because it is so much. work. What was your experience at the end of this property? I mean, when cashing those big checks

really makes you forget about all the hassle and garbage and late nights and all weekend long that you spent once you're like, oh, look at all this tax free money. In my case, because I am living in the property. What did you do with this property after it appraised for, what, 85,000 more than you paid for it? Yeah, we did a cash out refinance. it felt like the biggest check I ever had in my life. It was maybe $40,000 or $50,000 had to pay ourselves back. I can't remember the exact numbers. But we immediately bought another property.

So of course we didn't see anything. I think maybe we went and bought like one little thing. I can't remember as a way to celebrate it. But all the money went right back in to do the next property because at that point I was addicted. And what did you do with this property that you still owned? So we rented it as a long time. rental, still have it. I'm actually just had the tenant move out and I'm going to sell it today. So for five years, it was a long-term rental and actually performed pretty well, but I started to realize

this is not a property I want to own for the rest of my life. You said you spent all this time working on the property during the weekends and evenings and a huge amount of your free time while you're rehabbing it. Could you give us an idea of what your hourly rate, like your hourly average at your job was during this period of time? I probably worked a 30 to 30. 35 hours at my job. I was a mechanical engineer working remotely. I think my salary was like $85,000 a year. We can talk about how I decided to quit that. But if you actually looked at my hourly rate of the hours I put into this property and what I made off of it, probably not a great hourly rate. But I got to basically make it appear out of nowhere out of my time and effort. And that's what I had. It didn't really have money, but I had the energy. What I want to call out here is this exercise is immensely valuable, right?

This, even if the hourly rate wasn't there during this particular project, because it sets you up for the rest of your career to be very comfortable with those types of projects to understand the costs and risks and tradeoffs and how to analyze those deals. But what I think is really interesting is that it's very hard to pay that price that you paid on this property 20 years into your career when life looks very different. The best time to pay that price in learning is right when you did. and now you just reap the dividends for the rest of your career. It would be very hard for you to break into it, I imagine, today. But now you can ride that experience set for the rest of your life. And I think it's just a very, it's an observation I developed at bigger pockets where you'd see, you'd see all these folks that were getting into it.

And they would, you know, the first deal, yes, no, hit some win, some lose, some or so-so. But especially in your 20s, you're paying that price and getting into it. Boom, decades. You get to ride it. And on the other hand, higher income earners later in their careers really hated their experience with real estate in a lot of cases. Especially once you hit that five year mark and you can really look at the numbers and see a little bit of movement on debt pay down appreciation and the tax advantage.

That's something that I'm starting to look more of like what was the total return of this property, not just the cash flow. What are all the different ways that I was able to make money off of it? And I do think it takes like at least five years to kind of see it eat away at both ends. The debt gets paid down. You add a little bit of equity. and now you're starting to see bigger and bigger pieces of equity in your portfolio. So you've owned this property for five years.

What makes you want to sell it? Five years in, I'm now a long distance investor. I live in Tucson, Arizona. I do everything remotely. And I've really started to realize, how do I make my life easy? It's not these older maintenance-heavy properties. So I actually started doing new construction last year. I didn't mean to.

I fell backwards into doing it. And it really lit off a light bulb of like, okay, this is the next phase with my portfolio where I can have no maintenance, really great tenants in a property I feel really good about. So now I'm kind of selling all my old properties and building new construction. Okay. And how does an older property that you bought for, maybe less money, compare cash flow-wise to these newer construction properties? It's definitely going to be better cash flow because it's cheaper. and there's a bottom on what you can get for rent. But what really eats your cash flow is that maintenance and that time and that energy. And I think a lot of investors, especially who don't have bookkeeping, don't realize that that $100, that $50, that $200 adds up over time.

And you have to coordinate that. I self-manage. We wrote the book on self-managing with bigger pockets. So I am a big believer in that. But how can I self-manage in a way that is as easy as possible for me? me, I'm looking at new construction. And you said your long distance investor, where are these new construction properties? All in eastern Iowa. Everything that I own 20, 30 units is within 15 minute radius. Who's building this new construction? So I built it. I had a partner who helped me

GC it, but I was going out and getting the design, coordinating with the architect, getting the initial quotes from different types of contractors, which was very overwhelming and I learned a lot. But now I have a partnership 50-50 where he is the G.C. And then I'm really focusing on getting the land, designing it, and doing the tenant or sale piece, depending on how we exit it. How many such units are you building? And how do you decide whether to sell it or keep it? So we did one triplex. We're now on to triplex number two, a loft and an ADU, all on one lot. So that's like a third of the way done. And then we just closed today on another double lot that we'll build two triplexes on. And I really like the idea of build one, keep one.

so that I can have like a low leveraged asset and also set comps so that I can do good cash out refis and get my money out of it because I'm doing triplex builds. So it's a little bit unique in Cedar Rapids. There's not a ton of them. And it's actually a really interesting layout. So I'm setting my own comps, able to get money out of one of them and also have a higher cash flow property on the second one because I'm able to pay off from the proceeds of the other one. So what kind of cash flow are we talking about?

what kind of return on investment. You know, let's talk real numbers here because you were working at a job that paid you $85,000 a year. Then you started working on your own property to save money because it's so much cheaper when you do it yourself. And you were making like $1.50 an hour if you're really, really honest. I mean, I talk about cashing these big checks, but I don't talk about how much like per hour I was making. The return on time is rather low. So right now with my portfolio, excluding the ones that are in progress, I make 36K and rent and my mortgages are 21K. Obviously, that is a very small piece of the picture.

When I actually dig into what do I actually take home cash flow, it's probably right around $7,000 to $8,000 a month. So I could live off of that. I don't. I also have flipped. I'm now building to sell. I've done other things within the entrepreneurship realm. but that is about what 26 units in eastern Iowa looks like for my portfolio. Tax season is one of the only times all year when most people actually look at their full financial

picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make a your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch

subscription with the code pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision actually moves in a needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code pockets at monarch.com for half off your first year. That's 50% off at monarch.com code pockets. When I evaluate debt funds, I look for things like first position loans, personal guarantees, deep experience by the fund operator, low fund leverage, fast liquidity, and consistent returns. These are some of the reasons why I'm excited to partner with Pine Financial Group.

Their fund six offers investors exposure to real estate credit, largely for construction and rehab, with loans originated by an experienced originator with over $1 billion in origination volume. They offer investors an 8% preferred return paid monthly and a 70-30 LP-GP split of everything over 10% paid annually. The lockup period is nine months with liquidity available within 90 days after that nine-month commitment. The fund is open to accredited investors only. The fund's minimum investment is typically $100,000. But Pine Financial is able to reduce that minimum for bigger pockets money listeners to a minimum of $25,000. Full disclosure, I am personally invested in this fund through my self-directed IRA.

Pine Financial is sponsoring this message and our podcast. Go to biggerpocketsmoney.com slash pine, P-I-N-E. Please note that returns are not guaranteed and may vary based on fun performance. Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audiobook completions on Audible alone, and I still regularly re-listen to the highest impact titles. Lately, I've been listening to Bigger-Liener Stronger for Fitness,

The Anxious Generation for Parenting Perspective and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful as its breadth. Beyond audiobooks, you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more. All accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at Audible. dot com slash BP money. The investor market has really dropped ever since, I think it was June of 2022 when the Fed

started raising interest rates. How did that affect your ability to buy houses? Are you paying cash for these? Are you getting mortgages with these? A little bit of both. I am really trying to do burrs where I can cash out refinance the money and keep it moving. So when the interest rates went up, I really had to slow down. And A, pivot to flipping so that I could build up my cash a little bit.

And now at the point in my career where I want to decrease my leverage, increase my cash. And secondly, when I did see like a long-term rental that would make a perfect burr, it wasn't just I can do a perfect burr. It was also, is it going to be worth my time to hold and manage this property? So I had to find a little bit better deals. I had to try to negotiate a little bit better with contractors and vendors and just be pickier in general about what properties I wanted to keep. I find it interesting that you switched to flipping after the interest rates started going up

in my market, which is Colorado, the market kind of slammed to a stop as soon as interest rates started with a five, which I think is really funny because now as soon as I've been saying, as soon as interest rates start with a five again, the market is just going to be overwhelmed with people who've been sitting on the sidelines for the last three and a half years. In Iowa, in the Midwest, the market is pretty. steady. When other people see these big spites, whether it's up or down, especially in Iowa, it's just staying the same. There's not a lot of crazy action happening. So that's a benefit from my risk perspective. But at the same time, I'm not going to see six figures of appreciation

on a property. It's not even worse six figures. So I yearned to have great appreciation, but I'm thankful for the steadiness. And for the flipping, I just realized I want to have more cash and how am I going to do that? So that's what I did. And it was actually more like 23, 24 that I was doing flipping. Are you still flipping? No. Now that I'm building new construction and doing the build to sell, I really want to be done with older houses. I hear that. Do you consider yourself financially independent? So I would say my short answer is yes. My long answer is no because I make enough money I could live off of if I didn't have to keep working. All of my income is self-generated. I have two businesses, but I keep working because I want to continue to increase that income.

Does that make sense? Yes, but I would argue that you are financially independent because your income covers your expenses. However, does your passive income cover your expenses? Passive-ish. Real estate is not passive, even if you're a landlord and everything's going great and perfect, it's still passive-ish. Yeah, it could. I think it could. If I had to, it definitely could. I would prefer that I still work and make income elsewhere.

Okay. I really like that answer. I think there's actually something really good to the way you're describing this. You're saying there's a baseline level of wealth that my portfolio generates. And because I'm building housing, I get more money. And that then enables my trip to Belize, which I like, but do not have to do to declare myself financially independent. I don't know wherever your trip is, but is that the right way of articulating what I just

heard? Yeah, and I'm still at the point where I don't take that money. That is still getting reinvested. So I'm not living off of it. And I'm able to still have income from other businesses that I've started that allows me to live. And for the first two years in real estate, all we had was real estate. My husband did not have a job.

He accidentally quit his job because he thought we were going to California for my job. We didn't. And so we did DIY and we made it work. So I guess technically we were financially independent for those two years, but we were living like two broke college kids. And that's what allowed us to put in the time to build our portfolio to where now we're able to really see the benefits five years later. Let me take a second attempt in articulating what I'm hearing you say then. We are financially independent today with our portfolio.

We want to spend more in a future state. But we will only increase our spending once our portfolio is generating enough passive income. to cover that spending. Is that the right way to understand what you just said? Like today, but not tomorrow. I like that answer even better than what I thought I heard the first time. I think it's a wonderful way of approaching it. And I think the fire community needs a new acronym to appropriately reflect that. T&T, I'm fire today, not tomorrow. So what is that plan? Like, I would love to hear how that translates. We've got a great position today. What does that look like? That goal, is it defined or is it just kind of more for now?

We're happy now, but we want to be happier. And so we're going to keep working. What does that look like? My goal is 10K a month in cash flow. I have a pretty decent outline of how I can get there. Now that I've tuned into these new build numbers, and I'm going to be doing a lot of the same. I know how many I have to get.

And then also, since we're doing the build-to-sell model, I'd like to make another $80,000 a year, for this year, 2026, selling two of those triplexes. So for the first time, I have, like, decent numbers. and I've got great bookkeeping. I know exactly what I spend personally in my business. So I'm able to answer that. But I'll be honest, the first three, four years, I really was flying behind,

just making everything work and living below my means. Okay. You said the goal is $10,000 a month in cash flow. Does that mean the goal is $10,000 a month from your long-term rentals? Is that where the cash flow is coming from? Yes. Okay. Do you have any short-term rentals or is it all just long-term?

Long and mid-term. Mid-term. Okay, and the midterm is 30 days or longer. Yep. And are those furnished rentals? They're furnished rentals. And then an additional $80,000 a year selling triplexes. How many triplexes are you going to be selling every year?

How long does it take to build a triplex? My first one, I started in March, finished and people moved in in December. But that was, I will also add, there was like an entire year and a half of me twiddling my thumbs before that. But I actually broke ground in March. Now we're hoping to get closer to five, six months. I think it will be pretty feasible to sell to this year. We are underway on a handful already, although only one is to sell. The rest are to keep. Are you investing outside of real estate? Do you invest in the stock market or local businesses or anything like that? Not local businesses. I invest in the stock market through my IRA and I obviously had a 401k when I used to work. And that is something that I wish I had done better of balancing when I first got into real estate. A lot of real estate investors are extremely over leveraged in real estate. And we know that stocks are genuinely 100% passive. So something that I do is every year when I sell a property,

I always make sure I max out my IRA, me and my husbands. And then our goal for this year is to also, since we're again selling a lot of our portfolio and going to be a bit more liquid, making sure that we start a brokerage account as well. Do you have any full-time employees outside of your husband? Yes. On wire, we have three. Do you have separate businesses? Because I think you could benefit from a conversation with a solo 401k provider. Yes, I agree with that. That has been on the needs to get done and hasn't gotten done list. This is a seriously impressive situation that you just share with us, Grace. We're still unpacking, right? Like, I mean, this is a real portfolio, real new construction projects here. That's a serious real business. That's producing big numbers. And you just told us you have another business with the three full-time employees, which I assume is cash flowing itself on top of that and has, has reasonable prospects. I mean, this is an incredibly impressive position to build by 28. Would you say that portions of this are repeatable for others who start at 23? And have you ever kind of thought about what the

counterfactual for you is in the sense that if you'd stayed at your full-time job and just max out your 401k, what your position would look like? Because I bet you that it, It's not just some bleak trajectory. It probably also would have done well in the corporate world in there as well. So two-part question. I'd love to hear you react to that. Yeah. In terms of salary projection,

I've kind of tracked that every year. I'll look at my taxable income and say, do I think this was higher than what I would have been making as an engineer? I think it was year four that I was like, definitely this is higher than what I would be making. I think if I was still an engineer, I also will say the reason that I quit was because I was supposed to move to California for my job. And it was COVID.

And I had just started my first real estate deal. And I just had the thought, if I move, I'll never be able to do this. Like, this is my chance. I have no pets. I have no kids. I have no debt. I also paid my way through college. I've never had credit card debt.

None of that. Like, we very much live below our means. And that's allowed us to make some of these riskier decisions. And so I quit like two rentals. because I had the emergency fund that gave me like a six, seven, eight month landing runway. And I thought that at this age, I can be super risky because no one's counting on me. So anybody else listening in their 20s, if you're able to really get your personal finances together, I think you can take some of those risks because you're young enough, you can go get a job if you have to.

You still have your degree to fall back on. You don't have people depending on your salary or people that you have to feed. every day or take care of. So I do think that it's repeatable. And I think I got really lucky starting so young, but I was brave enough to make a lot of scary decisions. And I remember I wrote out in a journal, like, what is the worst thing that happens if I quit my job? And it was like, okay, I got a waitress and pay my mortgage, or I got to move back home with my parents, or I got to ask for my job back. Can I handle all of those situations? And I was like, yeah, that's the worst thing that happens. This is a risk I'm willing to take.

Grace, before you bought your first property, how much cash did you have? Not in your 401K or anything else. Just what was your cash position that you plunked down on that first guy? Maybe for me, maybe like 15,000. And for my, for brand, it was like 30,000. And we put 20% down on that house and then really had to figure out how to cash flow our way into completing that reno. And on our second one, I remember I needed a $9,000 down payment. And I had to count. out how many paychecks away I was. I'm like, 10 paychecks away. This is exactly how much I have to put into my high yield savings account to tuck it away so I can make that $9,000 check when I get to the closing table. What I want to observe here as well, another like classic pattern across success stories over time is cash came into your life in an early age. And it came in as you expected it to, maybe even perhaps outpacing it in some instances in there. And that's just a

huge signal, in my view, that you're ready for entrepreneurship if after-tax cash is actually piling up in your bank account, especially in your 20s, in a material way that you're actually then able to deploy on one investment after another. And I think it's like the number one signal for me that there's a high probability of success. You can still fail, of course, in there. But when several years go by and cash is not accumulating, those folks are going to really find pain when it comes time to start that business. And the folks that are actually able to accumulate cash, I have a really good shot at surpassing the opportunities in the W-2 world. And how does that cash build up? It's super easy math. You live below your means. It is so simple

and so hard for so many people to do. Anybody listening, I lived below my means for so long. I drove my mom's old 200,000 mile minivan around buying real estate at 24 because I did not care and I wanted to put my money into real estate. I had a super simple house. I had two room. mates. Should have rode a bike. Yeah, exactly. Too bad I lived in the country. But I really lived below our means. I still do. I have a seven-figure net worth, and I live in a very basic average house here in Tucson that is 1,200 square feet and the biggest house I've ever lived in. And so I think that is the pattern of people who are really successful. And if you're listening, any time you see somebody and you think they have it all and they're doing all this crazy stuff,

Every time I think that, I somehow see below the surface and there's a facade, whether it's credit card debt or something else. So don't ever compare yourself and live below your means and your life will be easier for it. So I have a question. I'm not sure whether to be jealous or not of your life right now. Do you have a lemon tree in the backyard? No, I don't. I tried. It died.

Oh, okay. Fair enough. Yeah. That was my favorite thing. I went to visit Scottsdale. We did a little weekend with our little one. and the house had a lemon tree. And I just remember pulling lemons off the tree and making lemonade for my, my daughter and being like,

this is the coolest thing ever. I didn't realize this was a thing in Arizona. Yes, very common. Okay. That's life goals next, you know, the next phase here will be the regrowing the lemon tree. Scott, I have a lemon tree in my front room, and I get one lemon every year. One lemon every year. One lemon.

That seems like one of the worst investments I've ever heard of. Oh, that's great. I think it was a $25 plant. And so far, $12.11s. All right, fair enough. Let's zoom in. I want to zoom in another piece of this conversation here. So we just talked about the frameworks that set you up to be successful here in the actual action that that's resulted in to get you the position.

But one particular moment in time I think is really interesting is the actual act of leaving a job. Can you give us the story of that situation? What was your situation like? What was the conversation like and what was the aftermath? It took a few months of me trying to be like, am I going to be like, am I going to be? move to California, am I going to do this? And my job was kind of really keeping me in a limbo state. So finally, I think I hit a breaking point where I was like, I can't even plan two months out because I don't know if I'm going to be living across the country. Like I said, I did the

worst case scenario. I made sure I had a $15,000 emergency fund, which for me at the time was more than enough for four or five, six months of living. And I wrote out how I thought that I could make money. I did a little bit of wholesaling to make money after I quit. And I remember I told my parents and they were super supportive, but I remember being so scared because I went and got a great degree, worked really hard, got a great job. And then I was basically just being like, never mind, I'm going this way. And I remember when I told my boss, he was like, well, I really wish you luck selling houses. And I was like, I'm not a realtor, but thank you.

And I just thought of like, what am I leaving on the table? What are all the things that I could do if I had this time back and this energy back? It's just like a huge, a huge leap that I think is very hard for especially engineers. Like I think that engineers in particular have this, you know, they want to engineer their money, their situation, their life, and there's a, there's a natural appeal to this. And the income is just over that hurdle rate where it's really hard to justify, stepping away from it. But I think you got off that trade into your benefit very early in your career before the

compounding of the salary at the engineering. work actually worked against you in your particular situation as an entrepreneur. Is that, is that right? Is this right through your mind ever? I didn't have to have the golden handcuffs. So many people do where they're like, I make a hundred and sixty thousand dollars a year and I don't work that hard. I don't want to leave my job. But I think it's just such a faint, like a fascinating observation because these folks like in the engineering world in particular, who are frugal, would also potentially make excellent entrepreneurs. And they're also the ones that that have such a good, clear path from the income perspective there. And I often wonder if the population of

entrepreneurs is underserved or maybe undercompetitive because people of a very high caliber have great jobs and they stay in those tracks for a very long period of time. And I think it's like it's one of those things that I wonder about sometimes in the journey to financial independence. It's just cool to talk to somebody with the counterfactual there. I have a counter question. Did you ever consider staying because it's easier to get a mortgage when you have a job? Great question. I tried to go part-time and they were like, no. But I learned creative financing and I struck a few of my first deals were seller finance deals. I think it's a lot easier to do that when you're in a smaller area where you really know the people that you're working with. So that was kind of my answer to that. I'm going to figure out

how to do seller financing and I'm going to pursue those deals. Okay. Because I see you quit your job at 24, And my first thought is, oh, how are you going to get a mortgage? I was the community manager at Bigger Pockets for six or seven years. And I would see people announcing in the forums, I quit my job. I'm going to start investing in real estate. And my first thought was, no, go back and get your job. You're never going to get a mortgage to buy a property unless you're, you know, just sitting on a pile of cash.

The seller financing is a great option to get around the whole I can't qualify for a mortgage thing. But again, in a smaller community, that's going to be a lot easier to do. Have you hit up any issues with financing at all since you left? No. I had a great relationship with a small local bank from the get-go. And they pretty much did all our information once. And now when I want to refi, they give it to me like that.

I did a draw request last week for like $60,000 for one of my new constructions. They approved it and funded it in eight minutes. So I have a great relationship with my local. bank, and I highly recommend you get that in place before you quit your job. Your local bank is not the big bank chain that has a local location. Yes, I'm not naming names, but you feel free too. Your local bank is the tiny little bank that might have another location in the next town over, and that's it. That's a local bank. Your credit unions, your small one-offs, two-offs, tiny little chains around. That's the place you want to have,

especially if you are getting rid of your quote unquote source of income because they don't really care how much money you have sitting in the bank. They want to know that you can pay that loan back. So when you have this local relationship, a lot of times they do care how much money you have in the bank. One other thing. Someone who has trouble getting financing has a weak financial position. Their portfolio is not conducive to getting financing here. So when you say that it's not really never been an issue, it just means to me implicitly that there's, really not a leverage problem here. There's not, there's not an undue amount of leverage. You're

probably much more conservative than your portfolio would otherwise allow for. And you are creating a tremendous amount of cash relative to the cash outflows in your life and business. Is that, is that generally true? Could you, could you paint that picture for me in your portfolio today? Yeah, when you're when you have a small local bank relationship, they do want to have a little bit of insight as that relationship builds to the bigger picture of your portfolio and everything going on in your business. So if you're able to prove to them that you're a savvy operator who gets things done. You're great communicator. You're organized when you send them docs or budgets and it looks nice and it's easy to read. There's so much more likely to

want to lend and work with you, especially like you said, and you can show on paper that you're under leveraged, you're in a great cash position, and you have income coming from your rental properties and maybe elsewhere. Tell us about what a Tuesday looks like for Grace. Tuesday is actually my real estate like CEO CFO day. So with new construction, I send out an email to my partner of like, this is exactly what we've spent. This is our projection. Here's how much we have to spend. Here is our estimated date of completion. I like systems and processes, as you can see and like repeatable things. I pay all my bills. I work on usually outstanding bookkeeping tasks. And I'm also looking at deals and replying to my.

email. So like all of the really real estate heavy stuff. Right now I'm in a lot of different acquisitions and dispositions. So coordinating all of that is really what a Tuesday looks like for me. And then if I get all that done, I try to go hike in sunny Arizona. Well, Grace, this has been a fascinating conversation. Congratulations on your immense success and huge portfolio that you've built here. And where can people find out more about you and wire? Easiest place is on Instagram at grace. Investing or wire.comunity with two eyes. And thank you for having me, Scott and Mindy. Thank you so much for your time today, Grace. And we will talk to you soon. Thank you. All right, Scott, that was Grace Goodencoff. What did you think of her journey to financial independence through real estate?

Love it. I mean, this is just classic, you know, example of a success story related to bigger pockets of real estate. And I hope that as the years have gone on and we've learned more and more and observed, booms and busts and markets, and those types of things that we covered, you know, a major reason for this was Iowa being a great market throughout all of that time period, seeing steady demand growth, low supply, and providing a huge tailwind for grace. And then also coupling that with good execution in the context of that market. I love this mental challenge that I think a lot of bigger pockets money listeners and a lot of bigger pockets members have over the years of, should I quit my really good job or not? It's a really hard choice. And what tilts the odds and what actually causes people

to take the leap and then what doesn't? Who wins, who loses? We often talk to the winners, Grace being a clear winner of that decision. There's going to be losers or counterparts that were just as talented, just as smart in Austin, Texas, who just could not overcome the headwinds of that particular market over the same time period. But who if they started three or four years prior, maybe even doing better on net, net, net. It's just a really fascinating concept here. And there's a great deal of skill and wonderful frameworks. The fact that she spent so much less and she earned meant that one way or another she was going to win over a long period of time in the end. And I think it's just a really impressive and wonderful story.

And I think, you know, it's just cool to observe that with the benefit of hindsight of this market's particular performance. She said something that I thought was so important. And I don't think we highlighted it enough. She said, I really understood my local market. And I think that is one of the biggest differences between people who succeed and people who do not. is that they have a good, truly good understanding of the market that they're investing in. And that is not something that you're going to get looking at real estate listings for five minutes. That's something you're going to get by living there, by investing.

She jumped in with both feet with one property, not 15 properties. Jump in and discover that it's always going to take more time. It's always going to cost more than you think it's going to cost. But if you get to the end of that journey and you're like, oh, I want to do that again, great. If you get to the end of that journey, you're like, I never want to do that again. Then you tried it and you move on to something else. But the underlying factor in her success is that she knew her market really, really well. Yeah. And her market performed really well. Her market performed really well. That's also a factor. But she would have had this same success in any other market.

I think that's the fun part of it. I just like in this. I think that her knowing her market was great. But I bet a lot of real estate investors say that they know their market. And it's like, which one actually did, which one didn't. I think the two things that really propelled her story for were one, the foundations of personal finance. This is a person who spent way less than they earned, period. And they applied that cash to one good bet after another in what I imagine to be a fairly low stakes, high effort, high hands-on approach, and made sure that each one won and could

not ruin her and apply that consistently over time. I think that's the number one ingredient. And the second, and the reason we're talking to her today, not her counterpart from Austin, Texas is her market worked out. We would have been talking to her, and we'll talk to the Austin, Texas counterpart in three years as that market reemerges, but that's, there's a big part of that as well. And that's something I find that really stimulating as a thought exercise about how all these success stories emerge over time.

Grace is undeniably, incredibly talented in there. But if I had started my investment journey in Denver in 2022, it would be a very different timeline for the outcomes that I achieved as a real estate investor, for example. Absolutely. It's a completely different market. Fun things to noodle on. And I think, you know, hopefully we'll hopefully we're getting a little better at our really just kind of digging into the success stories here. We don't talk to a lot of the folks who didn't win over time who also played really good hands.

And that's always fun for me to think about. Would you like to talk to somebody who didn't win, Scott? Absolutely. If you know somebody who has played a hand in real estate investing or stocks or across many of the best practices that we think are, you know, common across bigger pockets money and just didn't, it didn't, work, not because a lack of skill, not because a lack of hustle, not because a lack of ability to sustain cash flow, but because it just was bad timing. We'd love to hear it. I think that's an important part of the story that we don't cover enough. Yep. Email Mindy at biggerpocketsmoney.com or Scott at biggerpocketsmoney.com. All right, Scott, should we get out of here? Let's do it.

For free resources or to sign up for our newsletter, go visit us at biggerpocketsmoney.com. And you can always follow us on YouTube, Facebook, and Instagram at Bigger Pockets Money. All right, that wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench. I am Indy Jensen saying, see ya, Cheetah. When I evaluate debt funds, I look for things like first position loans, personal guarantees, deep experienced by the fund operator, low fund leverage, fast liquidity, and consistent returns. These are some of the reasons why I'm excited to partner with Pine Financial Group. Their fund six offers investors exposure to real estate credit, largely for construction and rehab,

with loans originated by an experienced originator with over $1 billion in origination volume. They offer investors an 8% preferred return paid monthly and a 70-30 LP-GP split of everything over 10% paid annually. The lockup period is nine months with liquidity available within 90 days after that nine-month commitment. The fund is open to accredited investors only. The fund's minimum investment is typically $100,000. But Pine Financial is able to reduce that minimum for bigger pockets money listeners to a minimum of $25,000. Full disclosure, I am personally invested in this fund through my self-directed IRA. Pine Financial is sponsoring this message and our podcast.

Go to biggerpocketsmoney.com slash pine, P-I-N-E. Please note that returns are not guaranteed and may vary based on fun performance. I love Matt, said no one ever. Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes. But somehow, every small business owner ends up doing it. Your dreams of creating, selling, and growing get replaced by late nights chasing receipts, juggling invoices, and wondering if that bad sushi lunch with Scott counts as a write-off.

Change all that with Found. Found is a business banking platform built to take the pain out of managing money. It automatically tracks expenses, organizes invoices, and even preps you for tax season without you doing the heavy lifting. You can set aside money for business goals, control spending with virtual cards, and find tax write-offs you didn't even know existed. It saves time, money, and probably a few years of life expectancy. Found has over 30,000 five-star reviews from owners who say, found makes everything easier, expenses, income, profits, taxes, invoices even. So reclaim your time and your sanity. Open a found account for free at found.com.

That's F-O-U-N-D-com. Found is a financial technology company, not a bank. Banking services are provided by lead bank member FDIC. Don't put this one off. Join thousands of small business owners who have streamlined their finances with Found.