There are people who spend everything and go bankrupt. How do you rebuild your credit after losing everything? Jennifer Grimson has been in that same position and got out. Listen to this episode, as she will help you get out as well. Jennifer is an investor, entrepreneur, and Founder of the Micro Empires Podcast. Listen to her story of how she lost everything twice and still managed to rebuild her credit. Discover why it’s important to find a good team for your deals. Learn some financial tips that can help you when you’re in a financial crisis. Join your host Lisa Hylton as she talks to Jennifer on how to build financial credit today.
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Say Goodbye To Your Financial Crisis: Rebuilding Your Credit With Jennifer Grimson
I’m super excited to bring to you another amazing guest on this episode. Jennifer is a single mother who lost everything twice. She rebuilt by creating small empires for financial independence. She created over $1.4 million in income-producing investments with nothing more than a W-2 and grit. In 2020, she created the Micro Empires Podcast to share her story and pull back the curtain on the path to financial independence. I’m excited to have you. Welcome to the show.
Thank you. I’m excited to be here. This is fun.
I have seen you out there on social media with your podcast, Micro Empires, and I’m inspired by it. I love all of the great episodes as well as the people that you’ve had on, which are somewhat similar to my show as well. I’m excited to have you on. My show is broken into three parts. One is the background, then we get into the meat of the episode, and we wrap up with the level of questions. To get things started. Can you share with my audience where in the US do you reside?
In Nashville, Tennessee.
What do you like to do for fun?
Travel and spend time with my grandchildren.
I was saying to you before the show that you don’t look like as you have grandchildren. You’re doing an awesome job.
Thank you. I don’t feel like I should have them but I have them, so here we go.
Can you share with us how did you get started investing in real estate and losing everything twice?A corporate job is never going to protect you from losing everything. Click To Tweet
It happened the other way around. I lost everything twice and then I became a real estate investor by happenstance. I lost everything twice, when I say that, it’s no car, no job, no place to live, no money, two kids to raise and Chapter 13 bankruptcy twice. The first time, I moved in with my mom. I had to live with her and rebuild. I did that through a corporate job. I built a house. I did a whole bunch of things.
The second time, I had to move in with my sister for a few months while I rebuilt, but the second time is when I realized that even a six-figure corporate job was never going to protect me from losing everything. Let me tell you how and why I lost everything. I think that it doesn’t matter if people have poor spending habits or investing habits. In my case, my decisions were relational. I had an ex-husband. We were married in California. He sued me 25 times in ten years to the tune of $500,000 in attorney’s fees.
The second time around, I had gone into a relationship with someone where I turned my financial wellbeing over to them. When that relationship ended, I took a look around and was like, “I have nothing again.” That happens to a lot of people and sadly, it happens to a lot of women. Some of whom are married for decades, and wake up and realize that they don’t have an income or the divorce doesn’t work out. It’s not like on TV, “You’ll get half of everything.” Wait until you go through the court system.
All that to be said, I realized I had to rebuild in a way that would protect me and I was laser-focused on that. That’s my background. The first thing I had to do was to get my credit back. That took about three years. I go into great detail on that on my show if anybody cares to know it, and then I bought a house here in Nashville. That was the first step, and that was very hard because of bankruptcy and I had to come with an enormous amount down. I had money, I saved up and I had a good job, but having a bankruptcy in your background absolutely obliterates your ability. The ability to get a mortgage was incredible.
The rebuilding credit part is like if you’re going to do it, you have to devote your time to do it. In my case, it’s pretty extreme. This is back before we could go online and do everything. I had to write letters, etc. but number one was establishing credit and that was very hard. Do that in any possible way that you can. My way was to go to my boss at work and say, “Would you please give me a corporate credit card,” which was a huge risk and she did it. We’re still friends. I use the corporate credit card for work only, but it was tied to me and tied to the company. I’m paid the bill out of an expense report but tied to the company. That instantly started to build my credit.
Prior to that, I was unable to get a credit card at all. Some people buy a car or you can get poor credit and all these financing things you see on TV. If I didn’t already have a car that was paid for, I probably would’ve bought the car. Another hack that I tell people all the time is if you have poor credit, if there’s someone in your life who can add you as an additional signer on their credit card for a short period of time, even if you never get the credit card.
Lisa, if we were good friends and I came to you and said, “My credit is shot, could you add me?” You add me but you never give me the card. Three months later you take me off. That will probably increase my credit score by 20, 40 or 60 points. I’ve done that with several people and helped them do that. That is for sure you need to get credit.
Moving into building your financial stability. You talked about buying that house in Tennessee. I’m guessing by then you were in a more financially stable place to then be able to make that purchase.
In order to get the house because of my credit, I had to liquidate every single solitary penny that I had and borrow money. I needed to bring $70,000. I also had zero experience in real estate like real estate hacking. I wasn’t familiar with different types of loans. I could have bought a duplex or things like that. I wanted to get a place that I could start to build equity. I made mistakes. I brought probably the most expensive house on the street, but I bought it in a rough neighborhood. Still, it was the most expensive and I’m literally sitting six blocks from that house because that neighborhood has changed so much. I got into the house and that was a miracle. It’s a mortgage that I could afford and I had a steady income. I was a salesperson and I started letting people rent rooms for me to gather income.
I had other small things. I’m an artist. I started painting and selling my paintings. I’ve always had a side business. I’m helping people on LinkedIn and connect and career counseling. I always kept all those balls running because I could get fired from a job at any point. The big changer was in 2014 when somebody told me about something called Airbnb, which I had never heard of. I wrote it down on a piece of paper. I came home that night and looked at it. I did the math and realized that if I could rent my house 6 to 8 nights a month, it would cover my mortgage. I went to my dear friend who was living with me and paying rent and I said, “Get out.”
I told her my plan and she was paying me $600 a month, and I was like, “This is going to get me $1,500 to $1,800 a month. I have to do it.” She understood and she left. I didn’t know what I was doing. I got on the app. This is before regulation. This was before anybody knew and people thought I was crazy. They were like, “You’re letting people sleep on your couch? I don’t understand.” I put it out there and I was like, “We’ll see what happens.” I booked every weekend for three months immediately. This is back in 2014 and 2015 but Nashville has changed so much. I just started that journey.
I was sleeping on my mom’s couch and staying at friends’ houses. It wasn’t fun. That’s the big lesson that I learned. It’s to get comfortable being uncomfortable. None of these decisions was fun. I was a woman in my 40s. I did not care to be calling up people saying, “Can I stay at your house this weekend?” I did not want to clean other people’s laundry at the end of the weekend.
Stock the coffee bar, take the calls like, “We can’t get the TV working.” Any of that stuff. I had no interest in doing any of that but I had cared more about establishing security for myself. I was willing to do that. I also had joined a real estate investor group. I started to learn about FHA loans if you have good credit. At this point, I had amazing credit.
I learned that I could buy a house for 3% or 5% down. I found another house in a struggling neighborhood in Nashville and I bought it. These are some of the hacks. I learned about borrowing against my 401(k) without taxes or penalties, and people are usually confused about that. That is a tool that everybody should be using.
I was able to borrow $22,000. I put $11,000 down on the new house. I moved in with an air mattress and my dog and nothing else because I had to leave everything. It’s not fun, not comfortable, and not sexy. I had met someone who was going to become my husband at this point and he never knew what address I’d be at, if we’d have an air mattress or an actual bed. He watched as I did all this. We set that house up in about six months, got it up and running, and then bought a third.
I bought the third house in 2017. In that short period of time, two things happened. The city of Nashville started to do hard crackdowns. Basically, trying to outlaw short-term rentals because of the party houses and all the nightmare stories that we hear. I want to give a shout-out to bachelorettes. You can say anything you want about them, but I’ll take a whole gang of women drinking, putting on makeup, having fun, and screaming over a group of men all day long. I don’t care if that’s sexist. I made a lot of money from bachelorettes, so thank you, bachelorettes. They tried to shut us down and it was a long hard fight. It was three years of planning meetings and fighting, and I’m not saying it’s over.
The second thing that happened was that investors got wise. I had been telling my real estate investor friends how lucrative this was and they didn’t believe it. They didn’t like it, didn’t believe it and didn’t get it. As soon as it caught on with investors, and they started buying up big buildings and buildings specifically for short-term rental. How do my little houses compete? They did but I’m a believer that when things start to narrow, you need to get out.Be comfortable being uncomfortable if you want to establish security for yourself. Click To Tweet
If you’re seeing a path that’s not looking good, I’m a believer in get out or pivot to something, but don’t hang on going, “It’ll get better.” It might but it might not. In 2019, I saw my numbers go down quite a bit. Mostly it’s competition. I had weathered the storm, grandfathered in, and we had won the fight, but it was the competition. The housing prices were going up.
First, I sold the most low-performing house, and then in February 2020, 30 days before COVID literally hit when we shut down the country, I sold the other two. I got out of the business altogether. I put all that cash away and thought there were easier ways to make money, then COVID hit and I was very happy, even though Airbnb has come back and gangbusters which is great.
I have a personality type that weathering that storm of several months of having no income would have made my husband insane because I would have made him insane. That’s when I made a stronger pivot to multifamily. I made my first investment as a joint venture into 67 doors in Knoxville. That’s why I call it Micro Empires. I put my toe in the water.
It wasn’t a big investment. It wasn’t money that I was going to be like, “I can’t eat if I spend this money.” It was a small investment, but I wanted to get a feel for how it all worked. I had been building relationships. That’s the other thing too. Who you work with, your team or whatever that is, is more important than anything.
You could have a bad deal but if you have a good team, it can work out okay. If you have a great deal on a bad team, you could go to jail. Those are the people I interviewed. They go to jail. They had lots of money and great deals and they went to jail because they had a bad team. That’s how I did that and now I’m pivoting again, which we were talking about.
Before we get to your next pivot, can we talk a little about joint ventures? For people who don’t know what a joint venture is? What is a joint venture?
A joint venture is when you have a group of investors who come in and they invest in a property. I’m not an expert at this. I happen to be somebody who is in it. The big difference is as part of a joint venture, I participate. I vote on what we’re going to do. I helped to decide, “How are we going to spend the money on these capital expenditures? Are we going to raise the rent? Are we going to keep flipping the apartments? What color will we paint the outside of the apartment complex?” It is more involvement but not a ton, and I hope more gain. That is what a joint venture is versus syndication.
From your experience of being in businesses and even in this joint venture now, what are some of the key things you look for in partnerships that you think are key for people thinking about investing in real estate, in joint ventures or any other types of partnerships?
I keep going back to the team. A lot of it is just look and feel. Are these folks that will get on the phone and Zoom call with me answer my questions? One of the things that I talk about all the time is you want to work with people who will answer your questions in a manner that you understand. A good example of that is you’re talking to your lawyer, doctor, CPA or somebody who speaks a different language. The entire time they’re talking in clinical or legal terms that you don’t understand. If that person is not willing to sit with you and explain to you until you understand, that’s not a person you want to work with. I look for people who are willing to answer my questions again and again until I get it, and that takes time.
That’s another thing in real estate. People think, “I got to get in and I got to hurry in.” You don’t have to do anything like that. That’s a key differentiator. Secondly, as I’m looking at an opportunity brought to me, there are some numbers that you want to hit. You want to compare what’s normal, what’s good and what’s bad. I don’t know that I know all of that, but what am I looking for is, have you analyzed the deal? Can you do the breakdown of all the numbers and how it’s performing now? Where are their big gaps for value add?
We’re purchasing C properties. We’re not purchasing brand new and beautiful builds. There’s a reason for that because C properties perform even in the worst economic times because that’s where people will end up if they’re not there already. We don’t have a problem with vacancies, but I want to know that you know the ins and outs of everything going on. Is it mom-and-pop? Have they been overpaying for something or are their salaries going out? That needs to all be laid out in the proposal before we invest. What’s your capital plan, when will you return the money, and when does cash happen? Those are the things that I look for and complete transparency around that as best as you can.
It’s so important because you do want people coming totally prepared with what the plan is because that’s important. If there’s no plan, then it’s like, “What’s going on here?” Whether they have done this before, what is their experience and track record in this particular area? That’s awesome. I’d like to pivot to now. When we were talking before, you’ve returned to a little of Airbnb. Can you talk about your next pivot?
When people ask me what I invest in, I say, “Anything that makes money.” That’s my goal. I’m open to all things, but what I’ve done in the past years is move more into multifamily because I liked the way it works. The thing with real estate investing, especially syndication, when you make an investment like that, the important part for people to remember is you may not see returns for 3 to 5 years.
It’s got to be money that you can say goodbye to for a while, but there are a couple of ways to do that. It’s an incredibly important tool that I learned about was when I left my corporate job, I took my 401(k) and moved it into a self-directed IRA. When I talk about, “I invested $100,000.” I didn’t write a check for $100,000. I had a self-directed IRA and they wrote the check. That’s me just dictating. That’s another tool altogether.
What happened is that I’ve sold the single-family home Airbnbs. We’ve moved into what we hope will be our final home and live here forever, and we have another house on the market. Meanwhile, we had some amazing opportunities come up for us to invest and I didn’t want to miss those opportunities. I thought they were good, so I went ahead with cash, a self-directed IRA, and made those investments. What happened, and this happens to a lot of people, is my house didn’t sell as quickly as it should. I’m going, “Where’s my cash?” Now it has sold. It’s gone under contract, I’ll close it but it gets my brain thinking because after losing everything twice, my brain always goes to a little of fear if I don’t see money coming in. I get scared.
I started looking at the Airbnb option again. Having the experience that I had in Nashville, I immediately thought, “I’m not going to do it in Nashville. I’m going to do it in a friendly environment where it’s costless to get in and the cost base is less.” I realized that as an owner, I could do it in my backyard above my garage. That was step one.
I’m building an apartment above the garage, which is allowed here and that’s the most friendly way. I still live in an incredible neighborhood that’s walkable and close to downtown. The difference with putting your toe in the water that way, it’s the same way with the first house that I did, is we were going to finish it anyway.You could have a bad deal, but it can work out if you have a good team. Click To Tweet
If that makes no money, I’m not dependent on the money. I don’t have to pay a mortgage on that. That’s a great way to learn about the industry. The things that are going to make me uncomfortable, I don’t want to manage an Airbnb again, but I’m going to have to. I don’t want to deal with all the things that happen when customers and guests are here, but I want to make cashflow happen first. I’m getting into that plus we are doing a 1031 Exchange, which I’m sure you’re familiar with. We’re going to do some of that in multifamily. We’ll probably do some into a vacation rental as well that we can then convert into a home later. We will never have to pay those capital gains.
You’re still are trying to sell your house. Once you sell it, that’s what you use to then 1031 Exchange into both short-term vacation homes and multifamily.
It was the sale of an apartment complex. We had 51 apartments that we owned outright. We sold that and we’re in the process of 1031. The personal home that I’m selling was never an investment property. I can’t do that. I’ll take the cash from that and use that to live on and breathe until 2022. I don’t know what I’ll be doing in 2022.
To wrap this session up. Before we started talking, I asked you, what did you do before real estate? Can you share with my audience what you did before you got into everything?
I was an executive salesperson. I worked for many companies. I primarily did healthcare technology. If I had to go back to a corporate job, I would go back to healthcare. I like healthcare. It’s a good environment.
This is so good. Lots of good tips. Before we move on, one other thing. You talked about borrowing from your 401(k) without the tax penalty. Can you talk a little about tips for that for people who might be thinking about doing that?
For anybody who’s reading this and has a W-2 job, I want you to not block out in your mind, “This doesn’t apply. I don’t want to pay the penalties.” It doesn’t happen that way. All it is is if you have a W-2, you would call up your 401(k) provider and simply say, “Am I allowed to borrow?” Some companies don’t allow it but most big fidelity allow you to do it.
They’re going to allow you to borrow a certain percentage of your 401(k). For me, that was $22,000. I would share how much money it was. I borrowed that and they wrote me the check. I said, “Yes, write that check.” The deal is I pay it back through my payroll or paycheck with interest but to myself over a period of time. It’s a very nominal tiny amount out of my paycheck every month back into it. You cannot borrow again until it’s fully paid back.
What I did was I borrowed against it first. It was 2014. I paid off my car and debt. I put some more money into my home for Airbnb to make it more attractive. Because I was in a good place, I went ahead and repaid the full amount. I’ve been making payments then I repaid it. Once I repaid it, I borrowed it again. The same $22,000.
That time I bought a $260,000 house but I put $12,000 on. I used the remainder to furnish the house for Airbnb. I’m paying it back through my paycheck the whole time and then once Airbnb started to perform, which happens pretty quickly and I had enough cash, I paid it back again, and I borrowed again. I borrowed it three times. The same money three times. There are no taxes and penalties at all. Let’s say you have $500,000 in your 401(k). Maybe it’s a percentage that you can borrow. For me, I only had over $100,000 in there. That was the amount that I was allowed to take.
I feel like a lot of people who’ve been working for a couple of years or maybe ten years have at least $100,000 in their 401(k). Reading this story, this is how you could tap into it. Granted, you do live in a good market in Tenessee, a $200,000 home. In California, it’s not so much. You did use to live out here in California. Was there a reason why you strategically moved to Tennessee?
I lived in California and then I got a divorce and then I moved back to New England, which is where I’m from. That was the first time I ended up with no job, no car, and no place to live. I’m living with my mother and my children. We lived with her for 2 years, 9 months, 8 days, 4 hours, and 39 seconds. I moved down to Tennessee for a job back in 2004. That $260,000 house, I know it’s not the same as Los Angeles, it is a $500,000 house now. You have to have a vision. It was a brand-new build and was beautiful. There was this crack house next door to me. Across the street was a guy who had a huge Swastika flag in his window.
A lot of people didn’t want to live there but I lived there. There are still areas like that. I’m not saying that’s happening in California, but I would say when we talk about be comfortable being uncomfortable. If there are no opportunities where you are, go where you’re treated best. If Nashville, Tennessee’s laws are so difficult, so hard and their fees are so high, go do Airbnb where it’s welcomed like a town that only survives on tourism. Take your money and spend it where you’re treated best. I would say that’s a universal truth.
Some good advice to close out the show. This then brings me to my level-up questions that I ask all my guests. The first one is, what are you grateful for in your life right now?
I’m grateful for my husband. We’re newlyweds. I was single for twenty and anybody who will put up with me is a miracle. My mother is like, “Thank God.” She can die in peace now. I’m very grateful to him. For my health, surviving 2020 and not contracting COVID. If you didn’t appreciate your health before, I hope you do now.
What would you say has attributed to your success and continuous growth?
Being a lifelong learner. I still join clubs if they will let me. I hang out with people much younger than me. I look for advice everywhere. There is something to be learned always. We make a huge mistake when we get to a certain point in life and we think, “I know it all.” I don’t know it all. I think it keeps you young if you are willing to get on TikTok. That’s my new thing. I love TikTok. I’m not on there all the time or anything, but why close the door? Keep the door open.
That leads me right to my last question. What do you now know that you wish you knew at the beginning of your journey?You want to work with people who will answer your questions in a manner that you understand. Click To Tweet
The beginning of my journey would have been when I married my first boyfriend when I met him at 21. The most important theme in my life has been to not abandon myself. For many years, I abandoned myself as a wife. I put myself second. I turned myself over in a lot of ways that I knew were not healthy. It wasn’t until that second time that I did the hard work and realized no matter who I love, I love me more. Don’t abandon yourself. Believe and care for yourself as you would with a dear friend, a loved one, and a child. Think about yourself that way. We don’t do that enough.
One bonus question here is anything that you’d want to share with women out there who are growing up in this current culture of everything that’s going on and the lessons you’ve learned through your relationships, building wealth and sustaining wealth.
I would say to any woman and the women in my life, I start with don’t abandon yourself. Put your oxygen mask on first in an emergency. Women outperform men financially, but we statistically turn the finances over to men. Somehow, they’re supposed to know more. I wish I had the value and the self-worth that I have now than I had in my twenties.
I would say that all of these things that I’m talking about are muscles. It’s a muscle to get comfortable being uncomfortable. I don’t like having to ask for things that I don’t think that I deserve. If you practice that every day, doing things that you’re afraid of, you build that muscle. People think I was born this way. I wasn’t born this way. I had to learn to be this way but now, I know that I deserve to have all the things that I’m asking for. I don’t know if that’s a great answer but I hope it speaks to somebody.
If my readers want to learn more about you, what’s the best place they can go to learn more?
They can follow me on all the socials, @JenniferGrimson. Micro-Empires.com is my website. That takes you to all the socials as well. I have a podcast called Micro Empires Podcast. Like you, I interview people but I interview folks from all walks of life. I try to offer something very tactical in every show so that people can take it and go, “I can do step 1, step 2 and step 3,” and not just be esoteric conversations, but real things that you can do. I’m seeing those results from people and hacks. Things like the 401(k) and HSA. There are tools and ways to manipulate money that can help you build wealth. That’s what I would say.
Definitely go across. Check out her website as well as her podcast, Micro Empires. Thank you so much, Jennifer, for coming on.
About Jennifer Grimson
Jennifer was a single mother who lost everything…twice. The second time, she rebuilt by creating small “empires” for financial independence. She created over $1.4m in income producing investments with nothing more than a W2 and grit. In 2020, Jennifer created the Micro Empires Podcast to share her story and to pull back the curtain on the path to financial independence.
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