Ep007: Expand Your Empire With Rachael Schwalenberg

It wasn't a rah-rah perspective either. It was nuanced, it was thoughtful and, in my opinion, absolutely accurate. So as soon as I got home I got on the Google machine and tracked her down and sent her an email and since then we've become friends and referral partners. So Rachel's years of experience in the Columbus market as a realtor, a property manager, a broker owner, entrepreneur, investor, you name it it just makes her an invaluable resource to our listeners on both podcasts. So I guarantee that you're going to find some inspiration, some lessons, some actionable tips, habits and mindsets you can use in your business to generate more leads, book more appointments, write more contracts, close more deals. Well, you know the drill. So, without further ado, I bring you my interview with Rachel Schwallenberg.

Rachel: Good morning. Good morning.

Chris: I'm OK.

Rachel: Nice to talk to you this morning.

Chris: Same to you. So you've done so much and you've been so active in the Columbus market and you've helped so many people. If it's OK, why don't you just tell us all about yourself and how you got started and all that good stuff?

Rachel: Sure, yeah, for those of you who don't know me, I have a background in property management. I started a very long time ago I won't put a year to it and age myself, but a very long time ago just doing property management, leasing, you know, large apartment complexes, and I kind of worked my way through that corporate system, ending up in a regional position running lots of different REITs, working with large owners and kind of burden myself out. So at some point I had gotten my real estate license in 2008. It was during you know the downfall, but there was lots of opportunity for first time home buyers, the $8,000 tax credit, and I found a niche.

I built a business network and since I had decided to leave the corporate world, I took my broker's test in 2014 and opened my own brokerage. I had done some investing on my own. I had built, you know, a lot of good communications and different, you know connections. So I was lucky enough to start my own business in 2014 and grew that through networking small investors and, you know, lots of sales at that point and just kind of took off from there. So between property management, sales, investing, I've just kind of touched every level of real estate that I could, and that's the quick down-down version. But you know I've got a lot of history and I try and use that in my everyday business.

Chris: Specialized in working with investors, primarily correct, I mean, have you?

Rachel: My brokerage although I like to do some residential my brokerage, like the bread and butter of what I do, is working with investors on a daily basis. We help them identify properties. We'll help them sell their properties and reinvest. I'll work performance with them. We look at the property from a renovation standpoint, anything that we can do to get those dollars on their revenue. But yeah, we pretty much just work with investors on a daily basis.

Chris: That's what they like to do, they want to say, people grow. She does math.

Chris: She does math. No, I don't like math.

Rachel: I like using programs and spreadsheets that does it for me, because if I do that by brain, you're probably not going to be very profitable.

Chris: I mean it's amazing that you do it all and you do it well. I mean you know you're closing 20, 30 plus units every year and you've got I know you've got clients from all over the country. You're managing property for people, you're running your office and you've still got kids at home. I'm not quite sure how you pull all that off, but you know you make it look easy.

Rachel: We've stayed pretty small. In retrospect. We don't take on anything that we can't keep our hands on. I like to pride myself in the fact that I can really pick up the phone anytime an investor needs me. I think that our business could have been a whole lot bigger, but we've kind of chosen to stay relative and available. I think that's important. You and I have got a great job of being referral partners too, because that's important.

Chris: Do you have some long-term clients, people that you've worked with over the years?

Rachel: Yeah, I've got some people that I've had since I opened the brokerage and, like you said, I've got people from all over. I've had clients in Japan. A lot of my clients are in California, seattle, but, yeah, I've had some people that started out with me in 2014, 2015, and I still help them buy and sell their properties and manage their properties. We've developed really long-term trust and essentially, we can do a deal just by being over the phone, and it's great because we just have like an unspoken trust in each other where they know that I'm going to make sure I get the best deal for them.

Chris: Yeah, well, that's fantastic. So great agents connect right. So the podcast is Connect Practice, track and Grow. But again, you do so much with investors. We're going to run this on both podcasts, but so you sort of started this, but in a typical year, then where does your business come from?

Rachel: The majority of my business is actually referral based. A lot of investors talk to other investors and the word spreads. A lot of business comes from these podcasts, different YouTube videos People like to educate themselves and word kind of spreads that way. I do work with a lot of other agents, agents that are more residential agents, that don't do a lot of investments, and they will refer business to me. But I'd say the majority of it is word of mouth and investor referral.

Chris: So you to me, you light up a room in a good way and I don't want to say I'm envious of that, but I'm kind of envious of that. You invited me to a networking event. You recently did it at BrewDoc. Why don't you tell us about that? How did that come about, and is that something that you do on a regular basis?

Rachel: Yeah, so I don't usually hold a lot of them, as you know, but I like to attend them. I'm a very social person. I'm not afraid to talk with strangers, but the whole point of that was to try and get more investors to come out meet our hard money lender. A lot more people are going to hard money now. It's just a little easier with the interest rates and whatnot. So we really wanted to bring that lender out, have people meet them, meet our title agency, meet me. You know I want to be able to help more investors grow that word of mouth.

But yeah, I mean, networking is so easy to do. You can get people to refer you, you can get people to sponsor your event. It's just a very easy way to get your name and your face out there, and I'm not a shy person by any means, so I love being able to attend those to hold them even more fun. So, yeah, I just think it's a great way for people, especially agents, to be able to kind of build their book of business. But I had one recently and it was a lot of fun. We had a good time.

Chris: How do you keep track of all your relationships that you've built up since 2008 and probably before that?

Rachel: I'm very lucky to have a fantastic memory and I live off of my phone. So you know my phone has names in it with addresses attached and you know it's just used the tools that you've got. I have reports and I send Christmas cards every year to all of my clients and it's just keeping track with whatever works best for you. But yeah, I've got a lot of different ways that I kind of remember everyone. So, and then there's always the clients that you remember.

Chris: Clearly, your entire business is built on relationships and you know, I think you, I take that for granted, but it always strikes me as crazy when other agents are out there. You know, fighting, fighting and they're just going for the next transaction. I mean, why do you think there's so many agents out there that don't look at the business the way that you do? What do you think is I can't figure out another way to do it, but there's obviously other ways to do it why do you think other people don't take your approach?

Rachel: I think everybody's out there just for the dollar, especially newer. When talking to a newer agent especially, I told them it doesn't happen overnight. You know you've got to definitely work your network. You've got to plan on having a few years where maybe it's going to be a struggle. You've got to really be creative.

It's a hard business to get into. You can't just make a buck quickly and expect to be rich. You've got to really use your personality. You've got to use your tools. You've got to use your relationships and then build upon those relationships. You can't be a fly by night agent. You've got to do the nitty gritty and the hard work.

If somebody wants you to see 90 houses, you're going to have to show them 90 houses. As much as that's going to suck, they're going to remember you showed them 90 houses when they go to sell and look for another house. That's just how it works. You've got to be the good stand-up person to do that. My clients remember the things that I've done that went above and beyond. That's why they keep calling. I don't spend money on marketing. I do not have a marketing budget. I have spent my time with my clients doing everything I can for them within my fiduciary duty, going above and beyond and building my book of business. It's not easy, but that's what you've got to do in order to earn people's trust and be an respected agent.

Put yourself out there go networking events, do all of those things that maybe you're not comfortable doing yeah, I think what you say is absolute gospel.

Chris: Quite frankly, there were so many people who got into the business to make a quick buck, you know, just after we knew we all weren't gonna die of COVID in 21, 22, and I think those people have really so many of them have just damaged the business because their motivation I don't want to sound sanctimonious, but their motivation wasn't pure, you know, I don't know that they were in it right they weren't in it to build a profession.

They weren't trying to build a you know a practice, a personal practice or a business that was going to take care of them for the long term. And the fact is you've got to look at this as a long-term Commitment and, yeah, we can teach people. You know how to work by referral and you know when we have agents come aboard, we, you know, everybody has to go through. You know, hundred days to greatness, that opinion, company training, and every single time somebody comes on and actually does the work, they do get that that first transaction in the first hundred days and usually they have something else under contract. So there, there are ways to get the ball rolling. You know, when you're focused on relationships, so working by referral, that when you get into the business in 21, 22 and you didn't have to do anything or you got sloppy, stick it aside in the yard and just waited for the, you know somebody else to sell it for you.

Rachel: It's a, it's a thing, but I think yeah here's the deal, and in 2022, people were making money without even trying. Yeah, deals were just being handed to them. They made a ton of money and they thought it was that easy. 2023 the second half, third and fourth quarters changed that and those agents are now looking at getting jobs. They're struggling, they don't understand why they're not making money and the end result of that is you've got to try a little harder.

Now it's back to the norm of you've got to go out there and find your business and Sometimes that also means you've got a little. You've got to spend a little money to make money. I've resorted before to using the low leads, or realtor comm leads. Those are not dead-end leads. If you work them appropriately, you also need a broker that's going to support you and be available to you and answer questions. That's incredibly important. There's a lot of brokers that are just there to hang their license. If you have somebody that's going to push you and you know, chris, I know you've got a whole program that you use Somebody like that is going to be very valuable to an agent that maybe doesn't quite understand what they need to be doing.

Chris: Yeah?

well, I'd like to think so, yeah no, it is and it's funny, it's like you were talking about you know. You know I connect this practice, track and grow. You know when we talk about practice. You know what you just said. You know what my question always is what do you want, you know your future clients to know about you and you basically just Said it right. You know you do work hard, you are focused and I think one of the things that sets you apart is you're present in the moment, right? You know, when you're with the client, I think you're absolutely, absolutely with the client and you're not afraid to work. You're not afraid to do what you say you're gonna do. You show up. You know you've gotten a tremendous. You know it's one of those things where we meet so many agents. You know, not just new agents, but they've got 20 years of business. The problem is it's the same year 20 times. You know You're one of those unique individuals that learn something every year. You build on it. You know, and you get better.

Rachel: So yeah, and there's. There's so many examples of agents that I think Struggle, especially newer agents, and they don't want to put the work in. And I can tell you it's hard. I had an agent recently that was a newer agent and Struggled because they didn't want to do the extra work and said you know, it's just, it's too much, I don't want to spend my evenings doing this and I don't want to. You know, and I think my thing was you know, none of us really want to do that. You know, I was up last night late writing a contract and dealing with a sick child. If you're gonna post this video, I look tired, you know, but these are the things that we have to do. And you know, my thing was we don't necessarily want to do it, but we know that it's in the best interest of our client. We've got to get those things done and sometimes there's easy days and there's hard days and you got to do it both. You can't pick and choose if you want to be successful. That's what you got to do.

Chris: What else sets your practice apart from the competition? You've seen your agents come and go for years now. What else sets you apart? What makes your practice, especially when you're working with that, with investors what? What makes you special?

Rachel: You know I don't think we do anything particularly special. It's that I don't take on any more work that I can't handle. And I think a lot of brokerages and a lot of agents will take on anything and everything that comes through their door and it's very important to me that I Want the work. I respect every person that comes to me and appreciate it. But if I can't give you a hundred percent of my time and attention, then I know I'm not going to be the right person for you. I don't want to take on things that I'm not going to be able to. You know, run to the property quickly to look at it, take all of your phone calls. You know I can only handle so much.

I'm a. I'm a person. I have other obligations and I want to make sure that I can give you all of the time and attention that I can't. I think that sets us apart. If you respectfully understand that, I can send you to Somebody that has the time. I can refer you to another property management company. We've been doing a lot of business back and forth, you and I. It's knowing your limitations.

Chris: I agree with you. But I would also say, you know, and as you know, we came off a really tough year last year and part of the reason was, you know, we were, we let COVID, you know COVID got to us too right. You know, we thought during those couple of boom years that we were just God's gift to real estate. And then when the tide came out and suddenly people didn't have all that extra cash in their pocket to pay the rent, they started moving again. Oh my God, we had the toughest year and a half, you know, we've ever had.

But one of the things that I realized was and I think you said this it's you have to be able to fully commit, you know, to the business you're going to take. But the other thing I think is critical is that you're very discerning about the business you choose to accept. And one of the things that you know we found last year was we signed up a lot of owners that had no business buying properties, you know, respect us, didn't know what they were doing, didn't want to learn, didn't want to listen and, quite frankly, had we just not taken everything that came through the front door there for a while, we wouldn't have had the same issues we had last year. So you know I always say we don't work with assholes. You know sometimes you make a mistake but you've got to be willing to let some people go and hold on to the people that you and you care most about and build those relationships. But you know you're going to commit to them. But you also need to expect and I know your clients commit to you as well and it goes both ways.

Rachel: Yeah, absolutely, it does go both ways, and I'm not afraid to turn around and fire a client. I need that client to understand that I'm very good at what I do. I respect your opinion and I definitely want to listen to it and I'll even give it a try. But when it's not working, you know we need to do what's tried and true and I can help you the best way. I know how and you know I need you to respect that and know that I can make you successful. But when that's not working and you're not listening yet, there's definitely a communication issue and I've fired many clients. You know. It's just knowing when to say when and throwing the towel. We all want to be productive and respectful of everyone's time. So, yeah, there's definitely those people that are maybe just not investing in the appropriate ways.

Chris: Yeah, Well, you know, my goal, you know, like yours, is I want to make sure our owners have the best representation and counsel that they can have, period.

And that means they've got to. We've got to add more and more value to their lives and their businesses from a management perspective. But we also need to be able to help them, you know, expand their empire and that's why, you know, I used to talk about manage with Roost all the time and we're sort of transitioning to invest with Roost. And what's been great about working with you is, you know, I really feel like Gretchen and the team have the management piece down, but we don't have anybody, you know, at my company in Columbus at this point at all who is as immersed in the local investor market as you are, and the last thing I ever want to do is let any of our owners down, and that's why, you know, quite frankly, you're the only person that you know I'm referring any of our investors to go out and, you know, start looking for new properties to buy, because it's just not something I feel like we're equipped to do and do well, and you know, thank God I met you.

Rachel: Well, so far we've done a couple of really good things. I've been able to save owners from continuing and some poor investments. We've sold a couple of properties and we're going to be able to reinvest a few things. You know, I've sent some management in your way that I wasn't able to keep myself. So I think it's been a really great partnership and I think agents need to remember that they can't save the whole world. There's a lot of people that are like us that really want to make their, you know, real estate career success. But it is knowing your limitations and being able to really just focus on you know what you're good at and the clients that you can really help, one at a time.

Chris: So what's next for your practice? What do you? What does the next level look like for your clients? What are you hoping to, I guess, focus on this year?

Rachel: You know I haven't quite figured out the next level yet. You know I really enjoy what I do. You know trying to scale, you know partnering, merging, things like that. You know I want to be able to scale with. You know my, my clients, and you know, looking at the market, I think that it's going to open up more opportunity for more investing. So I'm really hoping that we can just take on some more investors here in the future, maybe some more agents, and really thinking maybe that we can grow Roost in a different way and build some agents there. And you know it's not that I'm going to be growing, maybe it's going to be I'm going to be growing Roost a little bit.

Well, that'd be okay with me too, but the two-way street, so yeah, and you know what well, we'll just see where it takes us, because I'm only one person and I think that growing some of my clients portfolios is going to be the most important for me. I think so too, you know, I do my own investing and you know personal investing is always really important to me. But growing some of my clients portfolios is going to be really important over the next few years with the things that I think are coming in Columbus.

Chris: So tell me about what you think is coming in Columbus. So what's your take on the Columbus market now? Maybe a quick review of the 2023 and what you see happening in 2024. What do you think or what?

Rachel: are your thoughts? I think 23 is kind of our alert that we're going to be heading back to what I call the norm. You know, 2020 was outrageous. 2023 is kind of starting to head us back to what the reality of real estate is, and I think 2024 is going to be probably a little bit of a plateau, maybe not going back to the normal prices, but really starting to level out. We're not seeing highest and best on a lot of properties anymore unless they're just really pressed aggressively. We're not seeing taking properties as is anymore. We're going back to what normal standards are Healthy market, I think a healthier market, quite frankly.

Yeah, and I think, as 2024 continues, we're going to start to see more properties coming on the market that are bank-owned, more properties that are probates, more properties that are going to be at a much healthier price point, and that's going to continue for a while, because we're going to start seeing more of a normal real estate. People are going to start buying heavily again as far as investors are concerned, and I just think it's going to be more reasonable and that's what I call, you know, the norm. That's what we were doing for years. The market before was just completely saturated and although we've got a ton of growth in Columbus, I think we're going to start to kind of level out as far as our pricing is concerned.

Chris: Yeah, I don't think we're going to have the same continuous monthly increases. I think that's going to level out, I think, diesel markets already.

Rachel: Yeah, it's definitely plateaued but, with that being said, everything in Columbus has not. Columbus is continuing to grow. The development around Columbus is growing. The things that are happening in Columbus we're projecting to be still a great major city. So as far as investing, I think it's a fantastic time to do so. Things with Intel that are happening Everybody knows Intel is coming.

The truth about Intel is that you know we don't see the real result of that for five to 10 years. So buying real estate here is still a fantastic time. Columbus is a huge buy and hold market. I think buying now you're going to see massive results in five to 10 years. What investors need to know is that you're not going to have maybe a huge cash flow right now. You're going to break even, have a little bit of cash to put away not much but you've got to look at your five and 10 year projections. Don't let it scare you off from buying because you're going to have five and 10 year projections 20 year projections that are going to be. You can't beat it when looking at other markets. So I think there's just a lot of opportunity to buy here over the next 12, 24 months and have some really solid, valuable property.

Chris: Columbus has always been interesting because you know how state university is not going anywhere, the state capitol is not going anywhere, you know, and now you've got Intel coming and billions of dollars in investment. But I think people sometimes think that, oh, intel's coming, I need to go invest someplace. And it's not so much like that. I think you're right. I think it's making Columbus that much stronger and that more unique of a market.

Rachel: It's the fallout of what happens for.

Chris: Intel.

Rachel: It's the population growth.

Chris: that happens Exactly.

Rachel: Yeah, it's. If you look at other cities that Intel has come into and you look at the studies that have been done because I've really researched this it's five to 10 years out that those cities are so much stronger with their infrastructure and their growth that values are higher. That, I mean it's just, it's everything that happens after that happens. Amazon is coming in here. We've got two huge Amazon call centers being built Nationwide. Children's is still growing. We have huge things happening that, although it's happening right now, it's the projections from that are really going to give us that great investment opportunity. So for those investors that might be newer, they are a little afraid because they're not seeing 100 or 200 in revenue every month, but don't let that scare you, because you're going to see a huge cash flow down the road and I think that's what everybody really needs to consider is that you're looking at having multiple properties, retirement, all of those things, and Columbus is going to give you that because our infrastructure is going to be huge in the future.

Chris: That's the beautiful thing about Columbus is there's years that, especially when you buy a new property, the first couple of years cash flow isn't fabulous and God forbid, you may be a little negative even in the first couple of years, but the appreciation never stops. So you're right, I think, for the market we wake up. Five, 10 years, 15 years my gosh, we're all going to be thrilled. And again it goes back to taking the long view and making that commitment that this is what we do as professionals. And we've seen it happen more and it's going to happen again and we're thrilled to be here.

Rachel: I had a client. We closed on it just two weeks ago. He bought a fantastic little house but he bought it knowing that he was negative, starting out $211 a month. But we pulled all of his numbers, we looked at everything, we did worst case scenarios and we pulled his projections and I think it was like year eight he was going to be making about 750 month and so on and so forth. So he was willing to take that short term loss in order to get to the point where he was going to be making. He was going to be making up for it within two years and then three years and four years.

all those things. He saw the long-term potential. So it's just, I guess the message is 2024 is it's going to really start to turn around, and I think 2020, just remember, you're going to start making money and it's buy now, don't wait.

Chris: I think that's a the property's right on it. I think that's a fabulous message, and the fact that you know your numbers like you do is just such a refreshing thing, and that's why I want every one of our owners and future owners and investor clients to listen to this podcast, because you're the person they need to be working with. It's just the way it is. So anything else you'd like to add before we close out today? This has been great. Thank you very much.

Rachel: I mean, I could talk for like hours.

Chris: I'm just-, we'll do it again, I'll do that.

Rachel: Let's talk again, but there's just so much I could say to agents. I would say you know, hang in there, it's going to get better. There's so many people out there struggling, but use your network, especially other agents, because there's so many people that can give you tips and tricks and people like Chris that you know can support you, and I'm always available to I love to meet and talk and help and to investors don't be afraid to spend a dollar. And, you know, hang in there too, and I think that there's just lots of opportunity here. Yeah, and trust your gut.

Chris: Yes.

Rachel: And the plus side is it's not right, it's not right.

Chris: You know I want them to know that. You know we're going to take care of you on the buy process. You know Rachel's got that covered and she's going to treat that like she was buying her own property and we're going to help you make money on the management side and treat that asset as if it were our own.

Rachel: So I think together we can help a lot of people here, always like we were going to live in it and own it ourselves. So if there's ever something that you don't feel good about, trust your gut. Your gut is never wrong. If you have a bad gut feeling about an agent, if you ever have a bad gut feeling about a contractor, a bad gut feeling about a property, trust your gut and you'll be happy you did.

Chris: Well, thank you so much. This was fabulous and we'll do it again real soon.

Rachel: Look forward to it.

Chris: Thank you, Rachel.

Rachel: Bye guys.