From Active Investing to Passive Income: A Game-Changing Journey

Stephen S. (00:04.032)

Welcome back to the show where we interview the nation’s leading real estate entrepreneurs. If you’re joining us for the first time, you’re in for an absolute treat today. And if you’re joining us for the second, third or hundredth time, you’re also in for a treat. It’s your host, Stephen Schmidt, and I’m here with Rodney Miller. And today we’re going to be talking about the elusive topic of how to get your money working for you to where it’s passive from an active real estate business into that.

So desired place where you can actually be creating some passive income through it Ronnie’s been in the real estate business for over 20 years has wealth of knowledge and primarily is focusing on hard money lending in the Oklahoma and Texas markets now But has a wealth of knowledge across all niches within the real estate sector. So Ronnie welcome to the show today just before You’re absolutely welcome. And just remember before we get started an investor fuel we help real estate investors service providers

Rodney Miller (00:52.194)

Thanks for having me.

Stephen S. (01:00.054)

and real estate entrepreneurs, two to five X their businesses, which allows them to build the businesses they’ve always wanted to allow them to live the lives they’ve always dreamed up. Ronnie, tell us how you got started in this game, man. Give us a little bit of context and how you got to where you’re at now today.

Rodney Miller (01:15.118)

So I had a business, I’m from Texas, but I bought a business in Oklahoma City, totally unrelated, it’s a medical business. I’m not a doctor. Back in like 94, before you were born probably, I’m sure. Yeah, before you were born. anyway, I bought a, okay, All right, so, and I ran it for a while, and then I got married, had kids, and my wife.

Stephen S. (01:31.266)

I didn’t say that. That’s close to my birth year, but I’m not gonna say if it’s plus or minus.

Rodney Miller (01:42.52)

didn’t like me going to Oklahoma City from Dallas all the time. So we moved, we moved to, Oklahoma City to start to run that business. But I decided I was going to also take on, was in my late thirties, early forties, mean pushing 40 and I want, I didn’t have any retirements. I started freaking out, you know, I have no retirement and I have no real plan, maybe sell this business someday. So I decided to get into real estate business. I was going to learn real estate. So I became a franchisee of heart.

of we buy houses, which is kind of, I don’t know if it was new at the time, but they were run out of Dallas and they were starting to franchise everywhere. And so I bought that, I knew nothing about flipping houses, knew nothing about houses or real estate investing. And I got kind of a crash course from them and was off to the races and started wholesaling houses. After about a year, I didn’t like the franchise malls too corporate. So I got rid of the franchise mall and started doing my own thing. yeah, I just wholesaled a lot.

And then got tired of that. It was just kind like a job. So I just started accumulating rental property and I accumulate 110 houses over a fairly short amount of time.

and then started moving into other things over time. Multifamily syndication, like everybody and their dog is doing that now, but multifamily syndication, you know, just recently started doing some industrial builds, some land subdivides. I find people that know what they’re doing and I kind of give them the money and we kind of partner, we do like joint ventures and, but hard body lending.

favorite thing. I’ve been loaning money for the last 10 years but I got really serious about it about five years ago and that is where my passion lies. I’m loaning money to people. It’s just probably one of the funnest business in

Stephen S. (03:38.924)

You know, everybody that I speak to that’s in hard money says the same exact thing. What makes getting to that point where you’re no longer having to actively go do the deals, you’re just giving cash to a good operator to be able to actually get in, get out? Are you doing equity splits? Like what makes it so good from your perspective as somebody that doesn’t want to be actively like flipping a property on site, all that anymore?

Rodney Miller (04:05.836)

Yeah, if we do actually splits, but pretty much I’m a lender. So, you know, I like to bring 20 % down on a deal. Sometimes, you know, if you’re really seasoned investor, 15 % down. So, you know, I like like people have skin to the game and all that. But it’s just, you know, if you’ve accumulated some capital and you want to start most most I’m in a mastermind of lenders. I just got back from Charleston, South Carolina and

And most of the private money lenders, hard money lenders start off as real estate investors. And then a buddy asks them for a loan or they see another guy that’s struggling getting a project off the ground and they’re loaning the money. And they’re like, well, shit, that was easy. They get a good, I’m sorry to don’t mean to cuss me. I’m just to say that, that was easy. And then they do another one and they’re like, you know, living houses is fun and wholesaling is okay, but loan of money is really easy. So they get more into the loaning money.

Stephen S. (04:51.861)

No, you’re good.

Rodney Miller (05:05.39)

And a lot of guys pivot and just go straight to loan and money. And, uh, you know, you can loan your own money, but a of people think you’ve got to be a rich multimillionaire loan money, but you don’t like, can go find investors and you can rate, can loan money at 13 and three, three points and 30 % interest. And then you can find investors that want to get a 10 % return. And so you just do the loan.

sell them a note, 10%, you service the note for them, and then you work off the spread. And that’s what a lot of people do.

Stephen S. (05:38.198)

Right. Yeah, I actually was the same exact. I was that exact person until probably the last six to 12 months where I just thought like, man, if you’re doing hard money, that means you made it. You know what I mean? And you’re trying like you’ve got so much cash. You’re just trying to get rid of it. So it keeps going and working. So it’s not just sitting in a bank account, not accumulating. And then I realized I’m like, wait a second. And in a for a.

Lack of a better analogy. It’s almost like you’re just the broker between the money and the flipper, right? It’s almost like you’re the wholesaler of the money even is how I would equate it

Rodney Miller (06:13.282)

Well, you can be a lot of guys have have their own money in it or they have a hybrid their money like me. I’ve got some of my money and some other people’s money. The difference between what I do and being a broker is that a broker gets a call and then they go try to find somebody with money. Lenders, we usually have the money, so we’re direct. We’re direct lenders like I will. I will do the loan first and then I’ll try to backfill it with investor money, so I’m not out there trying to find.

Stephen S. (06:20.172)

Right.

Rodney Miller (06:42.83)

somebody to place the loan and I don’t have to like source out people with different criteria. I know what my criteria is and plus I’m not just working off points. Usually brokers get a couple points and then they give it off to somebody else. I stay in the deal. I get the points and I get the interest and if I sell somebody a piece of the loan, you know, maybe they’re getting 10 % but I’m getting the spread which is 13 or whatever the difference is.

That’s the difference between being a broker and being a direct card money lender basically.

Stephen S. (07:15.426)

That makes total sense. I’m glad you gave some clarity there. So now tell us a little bit about what was that moment for you? Was it because you were investing and someone asked you for money, you realized, my money can work for me and I don’t have to spend any time once the thing’s done. Was there a specific moment or experience that you had where you decided, this is what I’m gonna do now, primarily?

Rodney Miller (07:39.374)

Yeah, I mean, it started 12 or 15 years ago where I had some IRA money and a Roth IRA and I’m trying to figure out what to do with it. And so I just started asking around if anybody needed to money and it was pretty quick. Some people said, yeah, I need to borrow money. So I loaned money out of my IRA and I just did a few of those deals and it went really well. It’s pretty smooth. I got an attorney to paper up the documents and all that. Not a big deal.

And then I did that for maybe 10 years. And then I decided I want to get more serious and turn it into a business because it wasn’t really a business. It was kind of like just a, just to kind of a side thing when I was flipping houses and doing it, running my business and all that. And so I found somebody that’s really good at it. Kind of, they kind of showed me how, how to really make a business out of it. How to, how to sell loans. Cause I was, it more than my own money. I had no idea how to sell loans to other people or how to fractionalize.

Stephen S. (08:37.154)

Hmm.

Rodney Miller (08:37.358)

Like I could loan somebody $100,000 and then I could say, you’ve got 50,000? All right, well, I’ll give you half of this loan and I’ll pay you 10%. And now I own 50,000, you own 50,000. And when a check comes in, you know, for the payment, we’ll split it in half. You know, I’ll hold out my fees and I’ll give you the 10 % or whatever. So I had to learn how to do it, how to paper it up and all that stuff. And then how to run a really a decent hard money lending business. And so got serious about it a few years ago, but

It just starts off very organically. just ask people around you, if you’re a real estate investor, know lots of guys that need capital, right? And then you just, you start small.

Stephen S. (09:20.088)

How important is it for people to have a relationship with you before you loan them money? Or what are some of the criteria that you look for when you’re analyzing a deal to see if it’s going to be the right fit for you?

Rodney Miller (09:33.932)

I’m not at all because I loan money to people all the time I have never met before and I never

Rodney Miller (09:41.886)

You know, we run credit. don’t, we do a lot of sub 600 credit scores, but you know, there’s, there’s a, there’s, we look at the reason for low credit. You know, if it’s, you know, they have a lot of debt, you know, carrying a lot of debt with their rentals and stuff. That’s one thing. Or if they just don’t use credit, all cash, you know, that’s another thing. But if, you know, if people are chasing them for money and payments, well that’s.

Totally different thing. We don’t want to deal with those people. We don’t want to get outside.

Stephen S. (10:12.504)

Sure, you got three accounts and collections for repos like

Rodney Miller (10:17.518)

Yeah, we want to be in line to chase people for money. So we’re looking at that. But we do a lot of people, you know, 580, 550 credit score. But there’s a reason for it. And so those are people come to me and we’ll pay the higher interest rates. you know, it’s really the deal. know, most lenders want to stay in a deal like 65, 70 percent of the value of the property. And so we look at the deals and a good deal. Is there a good exit plan? Do they have an exit

Stephen S. (10:21.058)

Right.

Rodney Miller (10:47.79)

Like if your exit plan is to rehab a property and refinance me out of the deal in a year, but your credit score is 500, that’s not a good plan, right? So, but if it’s to sell it and you’re into it, right? And we could tell you have a good construction budget, you bought it right, and you have a good plan to fix it up and sell it. And maybe you’ve done three or four of these before. That’s what we’re looking for. We’re looking for a good plan, good property, good borrower. That’s really it.

Stephen S. (11:14.36)

Are there any immediate red flags that you look at when somebody comes to you that you’re just like absolutely not giving somebody money? Like what are some of those red

Rodney Miller (11:26.242)

Yeah, not so much credit, people just don’t know what they’re doing. Like they’ve never flipped a house before and they bring it in their construction budget. It’s $20,000, but it’s a gutted house down to the studs. know, just the obvious signs. You don’t know what you’re doing, There are signs, there are signs that somebody is going to screw something up royally. We don’t want to people up for failure. We don’t want to set people up for, we want to make sure that they, and a lot of people think,

Stephen S. (11:41.688)

Right.

Rodney Miller (11:54.348)

The hard money lenders want to get the property. You know, they want to take it back and they want to like we don’t get the property. We have to take it through sheriff’s auction. It takes 9 to 12 months. If somebody files bankruptcy, you could take take longer than that. We really don’t want the property with cash flow. And so when you’re dealing with investors like if I place if I do alone and I place a deal with an investor, he wants that monthly cash flow. He’s probably somebody a retired dentist or something. He wants to see that check every month. He didn’t want it to stop.

for nine or 12 months while we’re pursuing foreclosure. So we do not like taking back property. That’s why we really underwrite these deals because we don’t want to set people up for failure. So sometimes you think we’re being hard asses or we’re being a pain in the butt. We’re not giving you what you need, but we’re really trying to protect you from yourself. I’m an investor. I flip hundreds of houses. I get it. And I can spot a bad deal from a mile away.

If you overpay for a house, if you bring me a deal and you say, oh, this thing’s worth 150,000, why do you know that? The realtor told me, the wholesaler told me, well, I can do, no, you gotta do your own. Let’s run some comps. So I’ll jump on Zillow and look it up and go, nothing in that neighborhood has sold in the last year for under over like $80,000. This is not 150,000 a house. So just stuff like that, just obvious.

Stephen S. (13:17.4)

Yeah, you know, it’s so funny. I was interviewing someone else recently within the past couple of weeks when you said that and they said that’s exactly how their first property went as they bought it. Thought it was going to be like $30,000 rehab because the house was gutted and turned out to be like $80,000. They thankfully bought it really well, but that is a huge mistake people do make. And I think a lot of that’s just because like most people getting into it don’t have a construction background, don’t realize.

Rodney Miller (13:35.832)

Sure.

Stephen S. (13:46.732)

how in the last even just five years, materials have doubled, right? Because of production issues. So it’s like, you you used to be able to get boards at OSB for 30 bucks, like right now, I think they’ve came down, but they’re like 90, 95 bucks depending on where you’re at in the country, right? So if you gotta replace the roof, that cost is now tripled if there’s wood rot, you know? So.

Rodney Miller (14:06.318)

And that’s probably what get the most of, people that just don’t know what it costs to rehab a property. First time deal, they way underestimate the cost to bring that property up to, you we look at the ARV, you know, is it going to be a rental or is it going to be, you’re to try to sell it for top dollar. And so there’s a rental budget for fixing the house up. And then there’s a, you know, we’re going to.

really shine this thing up and make it pretty and sell it and there’s a budget for that. And if the ARB does not match what their construction budget is, that’s something else. I think we’re kind of like coaches. We try to coach people along. really, when you work with us, you get a coach. We’re gonna try to keep you out of trouble. We’re gonna look at your construction budget and we’re gonna try to guide you along. We want you to be successful. If it’s your first deal, we, a lot of deals we could loan you money on, we could make really good money and you will not make any money.

try to stay away from that because we want you to have a good taste in your mouth when it’s all said and done. Bring us another deal, bring us another deal, but if you get burned on your first deal and we make money and you don’t, you probably get out of business.

Stephen S. (15:11.928)

Yeah, 100%. I love how you said that because really anytime you’re in in B2B sales that has somebody doing something in order for you to also make money, you automatically by default become a business coach to an extent. You are automatically a consultant at that stage. So I own a marketing company for blue collar companies. And like in order for the stuff to work that I did for those businesses, they had to have X, Y and Z that I didn’t do set up properly to.

Rodney Miller (15:26.051)

Yeah.

Stephen S. (15:40.888)

So it ultimately came into more of like here’s what you need to do over in this area as well. So that way this will work for you, right? So tell me, tell me this. That being in mind, like having a coach, I know you mentioned like pre-show, like you’re in a mastermind, like things like that. Like how important are those things? Did getting involved in a franchise model allow in the beginning of your real estate journey help you shortcut?

Rodney Miller (15:41.326)

Thanks

Stephen S. (16:08.35)

or circumvent some otherwise new mistakes you see a lot of people making. Like how important is it to have people further ahead than you coaching you, helping you actually get where you want to go?

Rodney Miller (16:19.022)

very important. I’ve always been big on masterminds and getting in rooms that people are smarter than me, especially if they know something that I want to know. I did it with flipping houses. Homevestors kind of helped me out there, but then I joined other mastermind groups. I’ve got a mastermind for hard money lending. I told you I just got back two days ago from Charleston, South Carolina. Bunch of hard money lenders across the country, good dudes, and we all just…

kind of mastermind on what’s going on in our different areas and what we’re doing differently and all that. Multifamily, when I wanted to learn multifamily, I think I spent like 40 grand to get into a group to learn that. And, you know, they had the bus tours and teach how to underwrite deals and stuff like that. And that’s where I met three of my partners from my multifamily syndication. We met there. And so it’s not just about the coaching yet.

It’s about the rooms you get into and about the networking and the people you meet that you never know who’s there that you’re going to meet that might change the course of your life. And that has certainly happened with me in more than one mastermind to where I just met that one person. You know, you get one nugget here and that you’re the same. If I just get one nugget out of this mastermind, it’s going to be worth it. But you also get relationships that you never expected to get to take you to a whole. Relationships are so important.

when you’re doing anything in business, that one good relationship can take you so far. And it’s probably the unexpected when you join these groups. But I spent hundreds of thousands of dollars on masterminds, coaching, stuff like that, in various areas. I have one for my, I just renewed one for our own medical clinics. And I was in a mastermind group we meet four times a year.

Usually in Florida or someplace really cool. It’s a bunch of chiropractors and business doctor, business owners. And I just stepped it for 30 grand, just renewed it. And so, you know, I’m probably in more math.

Stephen S. (18:24.024)

So you still all during this whole process, you still own medical clinics too, like other businesses and.

Rodney Miller (18:30.21)

Dude, own in Oklahoma City, I own the largest injury care medical clinic. Probably in multiple states around here, we have six locations. We have a traumatic brain injury clinic. Surgery, interventional pain management, all that. So yeah, that’s my that’s really my full time gig, but. I don’t enjoy it near as much as I do loan and money and being in real estate is fun. I love being.

It’s always been my deal. So that’ll be all right. I’m getting really close to retirement age. So when I someday liquidate the medical clinics, I’ll go all in on real estate and lending and just maybe I’ll try to start a nationwide hard money lending program.

Stephen S. (19:17.272)

But whatever keeps you active and the dopamine firing is also fun for you to do so it doesn’t take away from other stuff,

Rodney Miller (19:25.39)

was just like, hey, landing alone is like hitting a crack pipe. I’ve never hit a crack pipe, but it’s gotta be the same. Cause I’m like, bang. Yeah, if you’re buying a house and you get that contract on somebody’s kitchen table, you’re like.

Stephen S. (19:35.136)

Yeah, yeah, for sure. Yeah, it’s like it’s the same thing. It’s like closing a deal, right?

Stephen S. (19:44.822)

Yeah, 100%. Yeah, I’ve been a lifelong salesperson, you know, of my own ventures and other people’s and people ask me like, how long you been in sales? And I look at him and I say, look, I came out selling. I sold my mom with this cute ass face to give me a nipple and keep me alive. And people tend to get a kick out of that. But yeah, it’s just like, it’s that feeling. It’s that rush, right? That keeps us coming back for it. I think that’s one of the reasons real estate is so addicting.

to your point, kind of going back to the coast, the masterminds, et cetera, you know, even what you said, people always would say that thing about the one nugget. And for me, it had never been one nugget that I’ve ever gotten from any of them because I just, I’m a voracious learner in all avenues, reading podcasts, et cetera, always have been. And, but for me,

the biggest takeaways I’ve gotten from not hundreds of thousands yet, but tens of thousands that I’ve spent on masterminds and obviously now being a part of Investor Fuel is the relationships. Almost every one of my best friends, with the exception of one, two relationships that I have, every single one of them has come from being in a room. And I’ve made hundreds of thousands of dollars in the last few years personally off of being in the right room and meeting one person that led me to someone else. So.

Rodney Miller (21:05.774)

Sure, You know, on that note, also, I’ve got a YouTube channel, Hard Money Partner, check it out. Just for my hard money lending business, but I’ve, just from having hosts, hosting that show and having guests on there, I’ve landed, I mean, it’s almost like masterminding. You get to talk to people you wouldn’t normally talk to, but I mean, one deal.

Stephen S. (21:06.744)

Couldn’t agree more with you on that.

Rodney Miller (21:31.79)

wanted me building two industrial buildings, flex-based buildings with a builder. And one we’ve already sold, made really good money on it, another one, that just came from me interviewing them. So that’s a powerful tool too. Start a podcast, start a YouTube channel, start interviewing. So a good reason to interview people like this and get in front of people, you’ll build friends that way too.

Stephen S. (21:52.429)

Yeah.

It’s I think I think what you just said there actually is probably the future of relationship building with people that you otherwise wouldn’t have access to right because you know, for example If somebody calls you up and says hey Ronnie, I want you to come buy my stuff You know, mean and they call Gaia whether that’s like maybe you’re McKesson rep. I don’t know whatever right

or somebody that’s in the medical space. Maybe they do medical cells. I think that would be like a good applicable individual. And they call you up and they say that, well, it might take them six months, eight months, 10 months of following up. They might finally get in with you, might finally get in with one of your doctors, Whatever that might be. But if they hit you up and said, hey man, we really want to interview about your expertise in this space. Would you be willing to come on the podcast? Gets you free exposure, gets you to talk about yourself, which most people love to do.

Rodney Miller (22:46.542)

Yes.

Stephen S. (22:47.712)

And then ultimately you’re building that relationship and that seven touches, 14 touches of the sales cycle before you even get on the air with them. And then once their episode’s done. then how easier is it to shoe in, hey, by the way, you know, I know that you do this and I saw that, you know, we might be able to help you with that. And you’re already more apt, you’re warmed up to the relationship because everything comes from relationships.

Rodney Miller (22:53.742)

Yeah.

Rodney Miller (23:06.382)

Yeah, and so you’re coming up from different frame. You’re not selling. Hey, we think you’ve got something really good going on here and people want to know about it. We want to talk to you. You’re very interesting. So yeah, it’s a different frame. And then you just wind up bonding over these conversations and music carries on and stuff. yeah, think it’s a good

Stephen S. (23:27.128)

Right, 100%. So you have a hard money podcast that you mentioned there?

Rodney Miller (23:33.986)

Yes, it’s at Hard Money Partner on YouTube.

Stephen S. (23:37.08)

Perfect. That’s what I was gonna say. We’re kind of at that point in the show where if people wanna learn more about you or what you’re working on, where should they go for that?

Rodney Miller (23:46.158)

HardMoneyPartner.com, Hard Money Partner on YouTube. It’s probably the best two places.

Stephen S. (23:52.226)

Hard money partner, you heard it here first, So before we go, one last final question for you, Rodney, and you can take as much time as you want answering this. If you had to go back to the beginning, not start over now, but if you had to go back to the beginning when you got started in 02, 03, and you could take all of the lessons and everything you’ve learned in the past 23-ish years of being in real estate, what would you do different and what would you do the same with that knowledge?

Rodney Miller (23:54.572)

You can rate speak to either one of those.

Rodney Miller (24:23.455)

jeez, man. God, that’s a good question.

Rodney Miller (24:33.742)

I wouldn’t doubt myself as much. I was so full of doubt, just, for probably the first decade of my real estate career, man, I doubted everything. So I just didn’t go all in with anything. I dipped my toe in the water and I do some stuff. Yeah, I wish I would have just trusted my gut and gone for it. And probably…

You know, later in life, you know, I started doing the masterminds and getting in in the in the groups a little bit later on, man. I wish I would have started off with that and just getting more education and like investor fuel groups like that. I mean, they’re so powerful, man. You learn so much and you see other people doing stuff that you want to do. And most people are really cool. They’ll show you how they’re doing it. And so I wish I would have probably really.

embrace that more early on.

Stephen S. (25:29.868)

Yeah, embrace it. What would you if you had to pin that down to a single sentence? What exactly would you have embraced differently?

Rodney Miller (25:38.498)

I would have gotten in rooms with people smarter than me faster and I would have spent more money on my non-institutional education and gotten in those rooms with those people that I needed to be in the rooms with.

Stephen S. (25:42.093)

Hmm.

Stephen S. (25:53.496)

Sure. And so the flip side of that question was what would you have done the same?

Rodney Miller (26:00.787)

Rodney Miller (26:04.236)

the trajectory out, know, I started off like everybody else. I started small with this single family, one single family home at a time and cut my teeth on that and learned how to go negotiate a transaction, you know, from mom and pop and stepped up to multifamily. It got more institutionalized and just kind of slowly started with the single family and started moving into the more a little more sophisticated stuff. But I like the way I came through the real estate stuff.

I think it makes sense. A lot of people just jump right into multifamily or jump right into the bigger deals. I think it’s smart to start small and kind

Stephen S. (26:41.912)

Small and scale up. Yeah, that’s one of the one of the big mistakes I see a lot of people make primarily in the construction space actually, but that’s where it’s at least really rampant is you know, you’ll have a guy that does you know, 500,000 million bucks this first year. And then he goes up a little bit does 1.5 the second year and then he goes from 1.5 to 5 million and year three or year four. And then he’s out of business by year five because he’s completely castrated himself with cash flow.

Rodney Miller (27:10.126)

Yeah.

Stephen S. (27:10.192)

And it’s like you have to like start small and then acclimate to the level of where you’re going. Cause if we were to just jump right in and say, I’m brand new, I’m going to do 150 deals this year. Not that you couldn’t, but it’s a whole lot harder and you’ll be under a whole lot more stress and hiring a whole lot more people and probably lose a whole lot more money than if you just hit 30 or 50. Right. So a hundred percent agree with you there. Well, everyone.

Rodney Miller (27:24.547)

Yep.

Rodney Miller (27:35.15)

Yep, yep. You can go.

Stephen S. (27:39.634)

go ahead.

Rodney Miller (27:40.844)

You can’t grow too fast. I’ve seen a lot of companies grow their business from growing too fast.

Stephen S. (27:45.172)

Success loves speed, but you can’t go too fast. Well, everyone, I hope you enjoyed today’s show. Ronnie, thanks again for being here. If people want to connect with you for more, tell them where to do that again.

Rodney Miller (27:56.27)

hardmoneypartner.com or hardmoneypartner on YouTube.

Stephen S. (28:01.538)

there you go folks you heard it here first Rodney Miller go drop him a follow there connect with him for more and we’ll see y’all in the next episode