Grant Francke - From The Railroad To $8 Million Portfolio

Grant Francke is a self-made real estate entrepreneur and author who built an $8 Million real estate portfolio from humble beginnings. Working for a railroad company, Grant knew he needed to build something else on his own to be able to leave that work behind, be in business for himself, and build the life he wanted. He quit his job in 2019 and has been working on his real estate portfolio full-time since then. He is the author of the book "The Unlikely Investor: A Path To Financial Freedom Through Real Estate". He lives in Nebraska and enjoys spending time with his wife and their two children.

In this episode, you will be able to:

• Master the fundamentals of real estate investing and kick-start your journey to financial freedom.
• Learn how to strategically build and diversify your real estate portfolio for long-term wealth creation.
• Discover proven tactics for making a successful transition to full-time real estate investing and gaining control of your financial future.
• Uncover innovative financing strategies to fund your real estate ventures and maximize your returns.
• Explore the untapped potential of value-add strategies in small towns real estate and unlock hidden opportunities for profit.

The key moments in this episode are:
00:00:00 - Pursuing Time and Financial Freedom Through Real Estate
00:01:25 - Grant's Real Estate Journey
00:05:23 - Direct Marketing and Building Relationships
00:07:09 - Investing in Small Towns
00:10:50 - Achieving Financial Freedom
00:11:03 - The Impact of Real Estate Investing on Lifestyle
00:13:35 - The Journey of Writing a Book
00:18:55 - Overcoming Financial Barriers

 

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Grant Francke
I spend more time with my family. We take a lot of fun trips, do those sort of things. But I'm also, like, in more control of, like, what I do. The railroad's just a rough life. You're gone a lot. You don't get to take time off when you want to take it off. So having that freedom, that time, freedom to kind of do what I want when I want to with my family has been the biggest thing.

Mike Swenson
Welcome to the REL Freedom show, where we inspire you to pursue your passion to gain time and financial freedom through opportunities and real estate. I'm your host, Mike Swenson. Let's get some REL Freedom together. Hello, everybody. Welcome to REL Freedom, where we talk about building real estate, leverage. Freedom. I am your host, Mike Swenson. If you want to get started on your real estate investing journey, check out our website, freedomthroughrealestate.com dot. That's freedomthroughrealestate.com dot. We've got articles, videos, lots of information for you to figure out how you want to get started on your investing journey. For most people, it's about figuring out a way to get get started, figuring out a way to get into the industry, and you can build and grow from there. So check that out. As for today's episode, I'm super excited. We've got Grant Francke here. Grant is somebody that came from humble beginnings, built an $8 million portfolio. We're going to certainly talk about how he did that, how he was able to quit his job, go full time in real estate. He's also the author of the Unlikely a path to financial freedom through real estate with a Ford, written by Brandon Turner. We were just talking about that offline single family, multifamily based out of southeast Nebraska. I think I've kind of covered the highlights. Grant, so excited to get into the conversation with you. Welcome to the show.

Grant Francke
Yeah, man. Thanks for having me.

Mike Swenson
Well, why don't you just go ahead and start, tell us a little bit about your background, and we'll go from there.

Grant Francke
Yeah, you bet. Grant. Francke. I live in southeast Nebraska, like you mentioned. I've got a wife, Laura, and two kids, Madeline and Brendan. Started investing in real estate 2016. The reason I started getting into it is I had a good paying union job. I was a conductor for BNSF Railways. But it just took too much time, um, away from my family missing birthday parties, christmases, that sort of thing. So I started looking for something to get me out of that, like I said. So we started buying in 2016, and by 2019, we had enough cash flow that we had made for me to leave my, uh, my w two job.

Mike Swenson
So talk about really getting started. I think a lot of people are concerned it's going from nothing to something. What if I screw it up? What if I lose everything and have to declare bankruptcy? I think that's the fear that people have when they jump in. So kind of talk about maybe those initial fears and getting over that to get. Getting your first deal and kind of how that one happened.

Grant Francke
Yeah, that's super important. So I've. I've heard it said before, like, your first deal is the most important and the least important in the same. Same sense. It's the most important that you just get it done. You get it done. Don't lose money on it. But that first one is just. It's difficult because it's just a mindset thing. So once you have, like, I was in 2015 and 2016, I was consuming all the education you could possibly could on real estate, investing, bigger pockets. I was reading books, listening to podcasts all the time, so I felt like I had a really good knowledge base when I got that first deal done. It was a lot easier. Once you have that education, you have that confidence going in that you've ran your numbers well. You know how to manage the property, you know how to get to the closing table, all those things.

Mike Swenson
Was that one a single family?

Grant Francke
No, that was actually a duplex. We started with a duplex. Yeah.

Mike Swenson
Okay.

Grant Francke
You know, in my mind, I like the idea of having two tenants rather than one. So if one went vacant, then I've still got money coming in to cover it. So that's. We started out with a duplex.

Mike Swenson
Now, did you guys live in one half, rent out the other?

Grant Francke
We had two kids. My wife wasn't too keen on. On that idea, so we already had a house that we were living in, and we just. We started. I wish I would have went back and started house hacking in the beginning, but, um, we just bought it and got it rented out.

Mike Swenson
Yeah, I was going to say we started with that same idea. We were going to go actually in with some. Some partners, and we were each going to live in one side, fix it up, rent it out. And then we found out, um, then our business partners ended up getting a divorce and declaring bankruptcy within six months of that conversation. So you can't always change the past, right? Like, I. I'd love to have gone back and started that way as well. We actually got started because we bought at the worst time in the market, and the market crashed and so we ended up taking our townhouse and turning it into a rental because we didn't want to live in it for the next ten years before the equity came back. So yeah, um, yeah you're right. It's, it's the most important deal and at the same time once you get moving, the least important because you, you just have to get experience. Now I know some people will ask questions about like the, the financing of it. So how did you get started on kind of the financing and build and scale that?

Grant Francke
Yeah, so our first couple were just your basic 30 year Fannie Freddie loans. Um, you know you can get so many of those so we kind of tap those out right away. Uh, just your normal mortgage broker uh, went to a bank, got the 30 year note on it and, and did that way. So we were saving up capital from the beginning. You know, like I said, our goal was to get out of the railroad so we were saving up capital uh, leading up to that to get ready to buy those first couple duplexes.

Mike Swenson
Now how did you find these deals? I know it's, it's relationships, it takes time. How'd you get started with that?

Grant Francke
Yeah, so that the first deal we bought was really about the first and only deal that we bought off the MLS. It was just your basic listing. We went in, there wasn't a whole lot of cash flow to be made. There wasn't a value add deal, it was just a duplex that we bought and rented out. Since then we've, a vast majority of our portfolios come from off market deals. Just networking, building relationships with sellers, that sort of thing.

Mike Swenson
Okay, so you're going direct to seller. What type of marketing are you doing or what type of, you know, way were you doing to try to be able to scale that?

Grant Francke
Yeah, we do direct marketing but it's, it's a lot different than what you hear. A lot of people talk about direct marketing like I, I don't send a thousand letters a year, I send like twelve a quarter. I have very specific buildings that I'm going after, very specific sellers that I just, I'm building relationships with. Um, you know, keeping up with uh, if I see them around town I try to say hi or try to establish that relationship from the beginning. It's really just no offense to any agents or brokers, it's letting them know like I'm not a broker, I'm just an investor just like you. I just want to scale my portfolio like you did when you were my age. So just trying to build those relationships has really worked out for us. Robert.

Mike Swenson
You know that was one of the things that was surprising to me when we started to move into smaller apartment buildings. You know, I'm, I'm a real estate agent, I'm looking on the MLS, I'm scouring past solds, what's available, we're building relationships with brokers and in some ways I remember one time where I was kind of thinking from like a scarcity mindset of like gosh there's just not that much out there. And then I remember driving down the street and I was driving through a spot where there wasn't a lot of stuff that typically gets listed and I was like oh there's an eight unit apartment complex, there's a ten unit apartment complex, there's a four unit apartment complex. And you realize these small multifamily properties are everywhere. It's just finding the right people at the right time when they're looking to sell and building those relationships. But I, you know you can succeed in any market and there's you know, small towns of 5000 people, 10,000 people that have all these little small apartment buildings scattered all over the place and so they're out there. It just, it just takes a little bit of time to build relationships and so finding those mom and pop investors or whatever it might be, whoever's looking to sell at the right time, that's, that's a great strategy to just be specific. Target those, those properties that you want.

Grant Francke
Yeah that's, that's what we did in the beginning. So our first property we bought was in Lincoln, Nebraska, which is the capital of Nebraska. After that we went to a smaller town thats 12,000 people. I was looking at the market and I saw a duplex on Craigslist when that used to be a thing where you could buy properties on Craigslist. And I was looking around the market, I was like theres no way that I cant do this better than the rest of these people are doing it in this small town. So we went to that small town and thats really where we got our foothold and thats where I got my cash flow enough to leave the railroad. Those small towns, it's not super fun or super sexy but they, they provide cash flow, you provide good housing for people, it works out.

Mike Swenson
Now did you do the management of that yourself or how, how did that work?

Grant Francke
Yeah, so like I said, the whole reason I was doing it was to leave the railroad. So I wanted every single penny of cash flow I could. So out of necessity. I started managing myself and then, you know, once we started to scale, I kept managing and I still do manage our portfolio ourselves. Um, the reason we were able to do that is, you know, we started, you know, with the end in mind. Like I knew I didn't want to be in the day to day once I got to this point. So we started scaling and building processes and systems, um, to kind of help with those issues as they come up.

Mike Swenson
Yeah. So now you're, you're not the one swinging the hammers, you're not the one changing the locks. You've got people that do that but you're still kind of overseeing it.

Grant Francke
Yeah. So at each small town we've kind of got a handyman or a partner that helps us out with things. And then I, a year and a half ago I brought on a full time va. So she handles all tenant communications, leasing, maintenance issues, applications, listings, all that stuff she does for us now. So that was a big game changer. It really took me out of the business so I could start working on it and scaling it a little more.

Mike Swenson
Robert, what do you feel in terms of occupancy on the properties, smaller towns? I know a lot of the concerns are what's going to happen ten years from now, 20 years from now? Because as I started to look to scale everything, I heard Washington find these, you know, centers where, you know, Tesla's putting a new factory and Google's putting a new factory in and you've got this. And the population rate has to be growing, the job market has to be growing, but there's all these hidden gems of small towns out there. We've looked at a lot of them ourselves as well. And how do you handle that in these small towns where there's not going to be major corporations plopping a bunch of jobs in, but still people need to live there.

Grant Francke
Yeah, that's why I try tend to look at those mid size, like for us mid size, those 1020 thousand population units. You dont want a place thats declining, right? Thats obviously would be a bad thing. But all these small towns just keep chugging along. Even from 2008 there was really no housing crash in these small towns. They just chugged along and they stay about the same size. So for us, finding those ones that are not declining but are slowly growing or staying the same, as long as theyre not overbuilding in those places, then we feel comfortable investing.

Mike Swenson
Now are you typically looking for value add type opportunities or are you just looking for things that once fully occupied, once running well cash flow. Well, and you dont have to add a bunch of opportunity because in small towns, you may not have that population that wants to or can afford to take on a property thats the rents got increased by quite a bit after youve added value to them.

Grant Francke
Yeah, we try to weigh both. We do both options. The way I like to do it is if I buy a building. Last fourplex we bought, yeah, it was under rented. The units were older, but it was cash flowed. I don't buy stuff with the cash flows on day one. So we just leave the tenants in there? I'm not going in and kicking tenants out. Then once it vacates, we'll come in, increase the rents by fixing the units up. So we try to keep a good balance of those two options.

Mike Swenson
So it took, what, three years for you investing to be able to quit your job? Now you're what, about five years outside of quitting your job in the railroad? Maybe talk about how your life has shifted over these last five years.

Grant Francke
Yeah, it's been, I mean, it's been great, right? Like, I'd spend more time with my family. We take a lot of fun trips, do those sort of things. But I'm also, like, in more control of, like, what I do. The railroad's just a rough life. You're gone a lot. You don't get to take time off when you want to take it off. So having that freedom, that time, freedom to kind of do what I want when I want to with my family has been the biggest thing.

Mike Swenson
So what, what are you thinking in terms of, you know, future growth for you? How do you want to continue to grow? Is it aggressive plans? Is it at, you know, finding someplace outside of Nebraska or what? What does the future hold for you?

Grant Francke
Yeah, that's a good question. Something I've been, you know, struggling with. The last year's deals have kind of been tougher to pencil out. Uh, we're just kind of going with the control growth. Like, I don't need to stick my neck out for a plasti duplex that's not going to cash flow a whole lot. Like, that's just not where we're at in our business. Um, I also don't really have any intentions of being like Brandon Turner and having 13,000 units. Like, im going to keep pulling down little properties, a fourplex. We just got a 17 unit place under contract. So im just going to keep looking for those boring deals that are cash flowing. I dont need a lot of stress. I dont need a lot of that in my life were just looking for basic cash flowing properties.

Mike Swenson
Robert. And now that youre moving towards the commercial units or the five plus units, im assuming youve got small local banks that youre working with on finance, how does the financing change as you shift from kind of the smaller stuff to the larger stuff?

Grant Francke
Yeah, weve got a couple of banks in town that weve been using the last five, six years really since we left the railroad. We had tapped out on those Fannie and Freddie loans. So weve been working with a lot of commercial debt since then. So having a couple of good relationships in town. People that we know, they know us were not trying to hide anything from them. They know what were doing, what were trying to build has been really crucial for us.

Mike Swenson
Yeah. And its really good because they want to see success as well. Right. And so it's in their best interest to, to be able to provide loans on these properties. And obviously they want to see somebody that, you know, like yourself that has experience, cares for the tenants, cares for the buildings, wants to do well. So it's, it's really a good match. And, and that's what I tell people that are talking about financing is go talk to some of these banks because these really are going to be key assets for you moving forward and they're vested in your success. They want to see you succeed. You continue to put your money with them, they're going to continue to work with you.

Grant Francke
Yeah. And it's like I've said in my book, like they're one of the most important team members you have really, like without them, you couldn't get the job done. So as long as they believe in you and you guys have a good relationship, like, you can go a lot far with one bank. We, we did that for most of our stuff. It's just one bank, one banker. He knew what we were doing and it was just a great relationship.

Mike Swenson
So you mentioned your book. So I'd love to hear a little bit more about that process of how intentional was it deciding to write a book versus, hey, I've just got some stuff I want to share and I want to write it down. Everybody's kind of got a different story, so talk about the process of writing a book.

Grant Francke
Yeah, mine's kind of unique. So we were talking earlier about the better life. Try Brayden Turner's kind of mastermind. I was at the annual meeting for that and I was like, I want to create a goal for this year and I wanted it to be something that wasn't like, don't use your phone or work out three times a week. So I was like, I'm going to write a book, which is just like something that I never thought I would ever do. No one. That's just not something that would have ever made sense for me. So I started writing in January or December, and then we finished it up about April or May and launched it. So it was all just based off a goal. I wanted to do something that I'd never done before, and we got it done. It's pretty fun.

Mike Swenson
So talk a little bit more about it. So the unlikely investor, what do you cover in the book and how can you help people?

Grant Francke
Yeah, you bet. So the first part of it's a lot of mindset stuff like why are you investing? What's your why? Setting goals, that's been really transformational for me, and that's when I was writing the book. I thought I would really love writing about the nuts and bolts. Like, this is cash flow and this is how you analyze a deal. But I really found, and looking back how much the mindset of it was just transformational to me. My why of why I was investing was my kids and getting out of the railroad. So anytime anything went wrong, I knew my why. Because things are going to go wrong, right? You invest, pipes are going to break, toilets are going to overflow. Things happen. But knowing why you're doing it makes it so much easier when those things go wrong to keep trucking along. So the first half of the book is about that. The second half, it has a lot of my stories in it of how I found deals, underwriting deals. I go briefly into managing deals because like I said, I manage my old portfolio myself. So some tips and tricks for the new investor that's just getting started. Probably doesn't want to do a full property management system, but just some basic things you could do with free services like Google, um, to, to make it easier on yourself.

Mike Swenson
So important that you touched on mindset. And I think that a lot of real estate investing, that's what it is, is, you know, figuring out how am I going to, number one, put myself out there, because there's a lot of risks that you're taking to do this, but they're calculated risks. And once you get more confidence behind you, you get a couple properties behind you, the numbers might get a little bit larger, but the, the ratios stay the same, right. It's just a. An extra zero on top or an extra zero on top of the units or the income, whatever that might look like. So you're taking calculated risks. But, yeah, to your point, um, there are challenges come up. There are difficult things, but being able to push through that and see the bigger picture.

Grant Francke
And.

Mike Swenson
And for you, you mentioned your family getting out of the railroad business, um, being able to do something on your own and being able to take control of your results in your future.

Grant Francke
Right.

Mike Swenson
You've got something that somebody can't come and take away from you. Well, banks could come and take it away, I guess, if they wanted to, but. But in theory, right, you're. You're in control of your destiny. And the thing for me in real estate investing, like you mentioned with your kids, is you're now building assets that are growing. And whether or not your kids want to be involved, you know, whether or not they want to do this on their own, they can or they can't. That's up to them. But at least there's the choice there of what they want to do. And worst case scenario, at the end of your life, you could always hire somebody to take it over and run it for you. Right. If your kids didn't want to take part in it, whatever it might be. But you've got the power of choice versus having an employer come in and say, you know, similar. My story was, you know, kind of, my parents both got towards retirement age, and their employers kind of cut their career a little bit short. Now, they were at the point where they could retire, but at the same time, they didn't really get to leave on their terms. And so all that mindset, all those challenges, all that difficult stuff that you face through real estate investing, that's why mindset is so important.

Grant Francke
Yeah. You know, like my job at the railroad, it was very dependent on the economy, right? We half rate. So if things are slow, I could get furloughed, I could get laid off. And having that, never knowing of what's going to happen with the economy, and I can't control anything of it, I wasn't comfortable with. So, like I said, once we started looking at different options, like real estate was the. The play to do it. You know, my son, he's eight, he's dead set. He's going to be take over the business. But again, he's eight. So we'll see how, how that comes out in about 20 years.

Grant Francke
Yeah, no, like I said, like the biggest thing for me, if you're just getting started, is the mindset, like know why you're doing it. It's, it's going to make everything a lot easier in the long run. Um, I'm big on setting goals. Uh, so setting goals like I want to buy a property. Okay, thats cool. But say I want to buy a cash flowing duplex in this town that makes $100 per month by the end of the year. So setting smart goals is also pretty important.

Mike Swenson
Jay and Then what do you say to people that have questions about I dont have the money, I dont know where Im going to get the money. What would that look like?

Grant Francke
Swenson yeah, my story is a little bit different. I had the capital saved up. Theres ways to go out and partnership with people. Weve got a few joint ventures. If you have the drive and you have the education, but you dont have the money, go find somebody. If it's a good enough deal, the money's going to show up that's going to want to invest with you. As long as you have the knowledge and you can get somebody to believe in you and take that leap with you.

Mike Swenson
And yeah, your story is very inspiring because you didn't come from all these opportunities. You rolled up your sleeves, you figured it out yourself. You put some deals on the board, built a portfolio, grew a portfolio. And so congratulations to what you're building. And in a lot of ways, it's not super sexy. It doesn't have to be. Like you said, you're not looking to do thousands of units. You're just looking to find good opportunities, build and grow, create a good life for yourself. So congratulations on that and all that you're doing for people that do want to reach out to you. Learn more about what you're doing. Grant, how can they do that?

Grant Francke
Best way would probably be Instagram rant Francke, f r a n c k e. Otherwise, my book is on Amazon. The unlikely investor, they can pick that up, too.

Mike Swenson
Well, thank you so much, Grant, for coming on and sharing. Best of luck as you continue to grow in the future.