Retire on Rentals Podcast: Mission-Driven and Playing the Long Game with Nick Cooley

Episode Overview:

In this insightful episode of Retire on Rentals, host Nicholas Cook sits down with Nick Cooley, co-founder of Rodeo Capital, to explore his journey from single-family rentals to leading a mission-driven commercial multifamily investment firm. Nick shares his strategies for responsible investing, the importance of transparency with investors, and lessons learned from scaling portfolios across multiple states. With a focus on long-term wealth preservation and community impact, this episode offers valuable takeaways for aspiring and seasoned real estate investors alike.

Guest:

• Nick Cooley, Co-Founder, Rodeo Capital
  • Oversees acquisitions and investor relations
  • Former single-family investor and Keller Williams broker with a decade-plus in real estate

Key Topics Discussed:

1. Nick’s Real Estate Origin Story (Timestamp: 2:45)
   • Introduced to real estate investing by a college friend over New Year’s Eve, learning about rentals
   • Built a portfolio of 18 single-family doors in Denver with his wife, Hannah, starting in their mid-20s
   • Entered brokerage at Keller Williams to better serve their portfolio, frustrated by agents’ lack of investment knowledge
2. Pivoting to Commercial Multifamily (Timestamp: 6:30)
   • Liquidated single-family portfolio in 2021 due to poor return on equity and operational inefficiencies
   • Realized being “millionaires” didn’t translate to cash flow for family goals like starting a family
   • Used proceeds as seed capital for Rodeo Capital, focusing on larger-scale multifamily assets
3. Rodeo Capital’s Mission and Values (Timestamp: 10:00)
   • Mission: “Responsibly create better places for Americans to call home,” balancing investor returns with tenant quality of life
   • Emphasizes grit, tenacity, and a Western ethos of accountability, rooted in Nick’s small-town Nebraska upbringing
   • Transparency and integrity guide vendor, tenant, and investor relationships, ensuring trust and alignment
4. Market Selection and Competitive Advantage (Timestamp: 15:45)
   • Shifted from high-cost Denver to Midwest markets (Western Michigan, Nebraska, Iowa) for better economics
   • Example: Bought Iowa property at $67,000/door yielding $1,050/month vs. Denver’s $275,000–$325,000/door for $2,200/month
   • Leverages local market knowledge for high conviction, avoiding policy risks in states like Colorado
5. Investment Strategy: Buy vs. Build (Timestamp: 19:00)
   • Currently focuses on acquiring existing buildings due to unfavorable development economics
   • Team has developed over $500M in ground-up projects (hospitality, multifamily), poised to build when pricing aligns
   • Prioritizes unlevered yield on cost and basis, aiming for principal preservation and steady cash flow
6. Fee Structure Philosophy (Timestamp: 21:30)
   • Charges a lean 1.5% acquisition fee, no other fees, to align with investors
   • Operates from personal portfolio income, avoiding high fees that misalign incentives
   • Believes low fees foster trust and prioritize long-term performance over short-term gains
7. Property Management Partnerships (Timestamp: 24:00)
   • Outsources to third-party managers in Nebraska/Iowa (Omaha-based) and Michigan (Grand Rapids-based)
   • Values quality reporting and transparency for investor updates, especially for value-add projects
   • Seeks frequent, digestible data to translate operational challenges (e.g., unit turns, unexpected repairs) to investors
8. Raising Capital: Challenges and Investor Fit (Timestamp: 28:30)
   • Hardest part: Countering get-rich-quick narratives; emphasizes principal preservation over IRR chasing
   • Vets investors through radical transparency about Rodeo’s long-term, predictable strategy
   • Targets investors seeking steady 6% preferred returns, growing significantly over 30 years via debt paydown and inflation
   • Co-invests 5–10% in deals, demonstrating “eating their own cooking”
9. Lessons from 2024 and 2025 Outlook (Timestamp: 38:00)
   • 2024 takeaway: Define success clearly (e.g., unlevered yield, basis) to move with speed and conviction
   • 2025 plan: Actively acquire through all economic cycles, capitalizing on 20–25% discounts from 2022 peaks
   • Bullish on multifamily’s enduring utility, regardless of interest rates or macro trends
10. Advice for New Investors (Timestamp: 44:00)
    • Depends on goals and resources: Low-net-worth beginners can house-hack with FHA loans; high earners should invest passively
    • Warns single-family cash flow is tougher post-rate hikes; suggests commercial for better returns
    • Encourages learning from experienced operators to shorten the “stupid tax” learning curve
11. Family Involvement and Risk Mindset (Timestamp: 40:00, 48:00)
    • Wife Hannah, a former partner, now advises selectively; family members co-invest but don’t operate
    • Views entrepreneurial risk as inherent, refined over time, but universal—entrepreneurs just confront it head-on
    • Balances growth (Nick) with risk control (Hannah’s influence), learned from single-family challenges

Memorable Quotes:

• “We’re millionaires, but I can’t buy diapers with it.” – Nick Cooley
• “If you and I shake on it, you can take that to the bank.” – Nick Cooley
• “Show me where and how I will die, and I will avoid that place.” – Nick Cooley, paraphrasing Charlie Munger
• “Real estate is a business that’s worked since the Romans.” – Nick Cooley

Fun Segment: Getting to Know Nick (Timestamp: 46:30)

• Dinner Guest: Winston Churchill, for his swagger and leadership under pressure
• Whiskey or Wine: Wine, as he’s studying for Sommelier Level 1, appreciating its nuances
• Risk Appetite: Born with some risk tolerance, refined through experience; sees risk as universal, managed through control

Sponsor:

• Sleep Sound Property Management – Portland’s premier management company specializing in multifamily and residential real estate. Visit sleepsoundpm.com for acquisition, operation, and sales support.

Call to Action:

• Like and subscribe to Retire on Rentals for more expert insights and strategies to build wealth through real estate.
• Stay focused, stay driven, and retire on rentals!

Connect with Rodeo Capital:

• Learn more about Nick’s long-term investment approach at [Rodeo Capital’s website, if available, or contact for details].

Next Episode Preview:

• Tune in next time as Nicholas uncovers more tactics for optimizing real estate investments and achieving passive income.

Timestamped Highlights for Listeners:

• 8:00 – Why Nick left single-family for multifamily
• 12:00 – Rodeo Capital’s mission to create better homes
• 20:00 – Why Rodeo buys in the Midwest over Denver
• 30:00 – How Nick vets investors for alignment
• 42:00 – Market outlook and buying opportunities for 2025

Note: Recorde…