Mission Driven and Playing the Long Game with Nick Cooley

Retire on Rentals Podcast: Mission-Driven and Playing the Long Game with Nick CooleyEpisode 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 CapitalOversees acquisitions and investor relationsFormer single-family investor and Keller Williams broker with a decade-plus in real estateKey Topics Discussed: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 rentalsBuilt a portfolio of 18 single-family doors in Denver with his wife, Hannah, starting in their mid-20sEntered brokerage at Keller Williams to better serve their portfolio, frustrated by agents’ lack of investment knowledgePivoting to Commercial Multifamily (Timestamp: 6:30)Liquidated single-family portfolio in 2021 due to poor return on equity and operational inefficienciesRealized being “millionaires” didn’t translate to cash flow for family goals like starting a familyUsed proceeds as seed capital for Rodeo Capital, focusing on larger-scale multifamily assetsRodeo 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 lifeEmphasizes grit, tenacity, and a Western ethos of accountability, rooted in Nick’s small-town Nebraska upbringingTransparency and integrity guide vendor, tenant, and investor relationships, ensuring trust and alignmentMarket Selection and Competitive Advantage (Timestamp: 15:45)Shifted from high-cost Denver to Midwest markets (Western Michigan, Nebraska, Iowa) for better economicsExample: Bought Iowa property at $67,000/door yielding $1,050/month vs. Denver’s $275,000–$325,000/door for $2,200/monthLeverages local market knowledge for high conviction, avoiding policy risks in states like ColoradoInvestment Strategy: Buy vs. Build (Timestamp: 19:00)Currently focuses on acquiring existing buildings due to unfavorable development economicsTeam has developed over $500M in ground-up projects (hospitality, multifamily), poised to build when pricing alignsPrioritizes unlevered yield on cost and basis, aiming for principal preservation and steady cash flowFee Structure Philosophy (Timestamp: 21:30)Charges a lean 1.5% acquisition fee, no other fees, to align with investorsOperates from personal portfolio income, avoiding high fees that misalign incentivesBelieves low fees foster trust and prioritize long-term performance over short-term gainsProperty 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 projectsSeeks frequent, digestible data to translate operational challenges (e.g., unit turns, unexpected repairs) to investorsRaising Capital: Challenges and Investor Fit (Timestamp: 28:30)Hardest part: Countering get-rich-quick narratives; emphasizes principal preservation over IRR chasingVets investors through radical transparency about Rodeo’s long-term, predictable strategyTargets investors seeking steady 6% preferred returns, growing significantly over 30 years via debt paydown and inflationCo-invests 5–10% in deals, demonstrating “eating their own cooking”Lessons from 2024 and 2025 Outlook (Timestamp: 38:00)2024 takeaway: Define success clearly (e.g., unlevered yield, basis) to move with speed and conviction2025 plan: Actively acquire through all economic cycles, capitalizing on 20–25% discounts from 2022 peaksBullish on multifamily’s enduring utility, regardless of interest rates or macro trendsAdvice 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 passivelyWarns single-family cash flow is tougher post-rate hikes; suggests commercial for better returnsEncourages learning from experienced operators to shorten the “stupid tax” learning curveFamily Involvement and Risk Mindset (Timestamp: 40:00, 48:00)Wife Hannah, a former partner, now advises selectively; family members co-invest but don’t operateViews entrepreneurial risk as inherent, refined over time, but universal—entrepreneurs just confront it head-onBalances growth (Nick) with risk control (Hannah’s influence), learned from single-family challengesMemorable Quotes:“We’re millionaires, but I can’...