Bonus mini episode: Jared Rusten’s real estate misadventures

With the Grain

Jared Rusten recounts his turbulent journey from financial instability in the Bay Area to becoming a commercial property owner in Stockton.

Key takeaways

Jared utilized an interest-only loan with a three-year term to purchase his Stockton warehouse for $210,000.
A childhood friend named Ben provided $40,000 in capital to help cover the necessary down payment.

Main topics

Commercial real estate acquisition
Financial resilience and debt management

Notable quotes

I realized we do have a pretty epic story that's related to our move.

Conclusion

A powerful story of persistence, demonstrating that while business inv

Transcript preview

Speaker 1 (0:01) Yo, yo, yo, what up everybody? Welcome to With the Grain. My name is Pete Diebel. I'm a furniture builder, and this is the show where I interview other furniture builders, mostly, for now anyway. We'll see how that evolves over time. Today's episode is a special mini bonus episode featuring Jared Rustin. Jared was featured in my second episode, and we realized after that conversation that there was a lot left on the cutting room floor. A lot of details and interesting tidbits and primarily a lot of detail in regards to his move from San Francisco to Stockton and the process of buying a commercial piece of property, which is where he and his wife Emily now live and work. And so it has a little bit of a disaster component to it, but it also just helps fill out his story, make more sense of his trajectory. And it makes sense of how. he makes this all work which is one of the big questions i'm always trying to figure out so i thought it was a really interesting addendum to his story and i wanted to share it with you all uh Next week's episode is going to be a banger. I'm looking forward to it. It's with Ricky TV. If you don't know this guy, look him up and start getting psyched right now. It's a really entertaining conversation to say the least. So, all right. Hope you guys enjoy this conversation, guys and gals. And by the way, yeah, I know we got to get some gals up on this show. That's going to happen. Don't worry. It's coming soon. All right. Let's get into it. Here's my conversation with Jared Rustin. Speaker 2 (1:54) In the other podcast, when you asked about, you know, disaster stories, I was coming up on a blank. And I don't know if it's because I blocked out some of these things. But I realized we do have a pretty epic story that's related to our move. And also thinking about, you know, what might be interesting or helpful to people. Because, you know, I grew up in San Jose, which is... Which is fairly privileged and there's a lot of tech and stuff like that. But we were the brokest people on the block. We grew up in food stamps and single mom and stuff like that. So fairly humble. I didn't know anything about property ownership. I didn't expect that I would ever own property. Fairly unsophisticated in terms of financial things to begin with. Speaker 2 (2:51) And then just to kind of set the table a little bit, moved to New York to like build this bar, come back, get divorced. Economy is tanked. It's like 2008. I'm in San Jose, kind of licking my wounds from my New York experience, realizing like, well, my tribe, you know, all the other creative folks are like up in Oakland and San Francisco. Speaker 2 (3:17) And also thinking like I need to downsize because I had been renting my own warehouse space in San Jose. And so I'm faced with the prospect of, okay, do I just sell everything and get a job because there's no work coming in? Or do I just kind of downsize and try to make this work? And, you know, you start, you know, when I like gave up my health insurance, that was. You sort of go down this road of... Speaker 2 (3:49) Of like, you know, trying to trying to keep things together. But you're like, dang, I can't believe I'm a person who like can't afford health insurance now or I can't. You know, I can't believe I'm a person who is not paying my credit card bills. Yeah. And, you know, whatever. Speaker 1 (4:08) Like, oh, Speaker 2 (4:09) crap. Like, I thought I was on the upswing and now I'm I'm headed downward. And so I. OK, can I do that? Quick aside. Speaker 1 (4:17) Quick aside here. Do you just full disclosure, I don't have health insurance. My family hasn't had it in probably five or six years. Are you still on the no health insurance plan or has this been rectified since? Speaker 2 (4:30) No, like thanks to Obamacare, honestly, like we can afford it because previously I had Kaiser, right? Right. And before the ACA, you could get denied. for like any reason, pre-existing conditions. Right. Like, and the premiums could just increase. So I would, you know, I started at like, whatever, $170 a month with Kaiser. And within four years, the premiums were up to $300 a month. And then like $350. Right. And the thing is, and you know, like my income, I could pretty much zero out my income almost every year. Speaker 1 (5:14) To not pay taxes, you mean? Speaker 2 (5:15) Yeah, I mean, so what I'm showing on paper, I mean, because of, like, reinvestment in the business. Yeah, you're writing Speaker 1 (5:23) off everything. Speaker 2 (5:24) Right, everything. I mean, clothes, shoes, everything's getting finished, spattered on it, you know, cell phone, internet. You know, you've got to be careful, whatever. Sure. But years where I need to show more income, I can. And years… So the point is, because the ACA is income-based... It's based on your tax returns. So it's like, so actually I could qualify for Medi-Cal based on my income, like based on my profits. But I'm like, well, I still want Kaiser. So I was actually claiming more of my income. So I would like get just above that threshold. But it's like at the end of the day, my taxable income might be like. 20k or 30k or 50k or something so um that subsidy made a huge difference and got it and and also to fast forward like in san francisco and i may have mentioned this in the last podcast it They have their own subsidized health care plan if you're a resident of San Francisco, which is like super awesome. Because it's like if you're on medication and you kind of need it, you know, and you haven't found a way to get it out of pocket through Canada or something like you kind of need health insurance. But I would say these days, the way that Kaiser has clamped down and is like. lowest common denominator status quo. You got to like bug them five times to get a test or whatever. I'm seriously considering like just not having or having like a super high deductible PPO plan. Right. It's just for catastrophic stuff because – Speaker 1 (7:12) That's what I think health insurance should be anyway, but that's another discussion for another time. But yeah, I mean I will say once you switch to paying cash, it's crazy how the conversation switches. Like my wife tore her ACL and – or one of the ligaments in her knee. I forget which one. Anyway, they were like, yeah, we can get you a – what's called an MRI. We can get you an MRI in like six weeks. And she's like, wait, I don't want to walk around for six weeks with a janky leg. And they're like, well, we got to talk to your insurance company. And she's like, no, no, we're paying cash. And they're like, oh, you can come in tomorrow then. And it's like, that's, that's the difference of paying cash. And then like, I'll negotiate all the time. I'll Speaker 2 (7:53) be Speaker 1 (7:53) like, okay, I know your normal price for this surgery is 3000. Could you do it for like 2000? And they'll be like, ah, we'll do for like 2300. You're like, all right, that's cool. So anyway, um, I'm not recommending for anyone else to not have health insurance. I'm just saying there are some upsides. And when you pay with cash, the conversation's way more efficient. That's for sure. Speaker 2 (8:12) Right. We're all just like paying in because we're scared of. Yeah, like Speaker 1 (8:17) I said, like Speaker 2 (8:18) catastrophic injury or cancer or whatever. But yeah, it's goofy. I mean, or just go to Tijuana. That's another Speaker 1 (8:29) option. All right, well, we're going to disappear down this rabbit trail too far if we're not careful. But I'm kind of glad this came up because, you know, we're 10 episodes in and the topic of health insurance hasn't actually come up yet. So, all right, so let's get back to your story. So you are at this point. Speaker 2 (8:45) Have you moved to San Francisco yet at this point in the story? So I've got a shop full of machines that are nice, and I'm not really ready to give those up. So I'm looking for a shared workshop space where I can bring my machines. And in Berkeley and Oakland, there's quite a few co-ops and shared situations. So thankfully, I find a shop where I can move my equipment. And they already have some equipment there. So it's kind of redundant, which is nice. So I could be like, okay, nobody use my jointer without my permission or whatever. So, and I get that shop space for 500 a month. I move in with these kind of, you know, artists dudes in Oakland in this like tiny house. I have a bedroom that is, there's like a foot of space around my full size bed. It's like. tiny tiny tiny space I do get rid of and like sell a bunch of stuff and I'm paying 500 a month for that so I'm totally downsizing so now my monthly nut is a grand a month still hustling still trying to figure things out but yeah it's like totally slow credit card companies you know in the divorce we sort of split our debt and yeah we just had like stupid credit card debt and Try to negotiate with them and learn with credit card companies at least at that time that The trick is you just don't pay it you just suffer a couple months of collection calling you and and calling, you know random relatives or whatever and What happens is like they'll sell the debt and they'll sell the debt to sketchier and sketchier people and and you reach a point where you're like look I'll pay it. But you have to send me paperwork that shows once I pay this debt, I'm good. And the thing is, as that debt is sold, that paper trail disappears. And so I would never advocate skirting your responsibilities. That is theft. I don't believe in that. Speaker 1 (11:01) But Speaker 2 (11:02) when they're insisting on charging you like 30 % interest and you're like bro look at the economy like right you're you know blood from a stone you're not getting it that's right so um but i did set up payment plans with like those credit card companies and took me like six years of of like them snatching that money every month and i finally got it paid off but otherwise yeah Speaker 1 (11:27) it Speaker 2 (11:28) was tough and my best friend who you know childhood friend Ben, he also was going through a divorce at the same time. Okay. And we both got married super young. So we're both like, we never went to bars. We didn't really date. We didn't really. So we're like in our early 30s and didn't really even know how to navigate the normal adult world. Yeah. And I was only in that shared space and like a sketchy part of West Oakland for. Speaker 2 (12:05) You know, I don't know. It was like six months and things started to go south, like no garbage pickup. You know, there was this landlord that like kept coming around looking for the master tenant. He is nowhere to be found. Meanwhile, we're like still paying him rent. And of course, as it happens, the master tenant like went bankrupt and he had been collecting rent from all of us. but hadn't been paying the landlord. So the landlord is like, hey, you have two weeks, and then I'm putting locks on the doors. So we all have to scramble. And my buddy, who was doing business in China, he's making a lot of money. I mean... One of the days we go out, I look over his shoulder and he's got seven figures in his checking account. Just in his Speaker 1 (12:57) checking account. That's insane. Speaker 2 (12:59) Meanwhile, you know, I'm, I like am existing on ramen, you know, and like not paying my bills. Yeah. But he's still kind of based in the South Bay to be close to his kids, but he's coming up to SF to date and hang out and be social. And he ends up paying all this money for these hotel rooms in San Francisco. Okay. Three weekends a month. And so he tells me, look, you've got to move shops. Instead of finding another sketchy co-op place in Oakland, if you can find anything in San Francisco, I'll pay you. a thousand dollars a month or so to just have like a a bedroom just have a place to crash in the city rather than you know give that amount to hotels over a month or more okay and so i was like okay that's awesome um yeah that's rad Will you also like cosign a lease because I don't you know, right? I don't think I'm gonna have a lot of success if uh, if a commercial landlord is looking at my bank statements and stuff He's like, yeah, no problem. So I'm on Craigslist like every 20 minutes refreshing like looking at spaces and At the time, you know, the economy was still like down but like so small spaces were tough to find. Large spaces were available. Our budget was like about $2,500 a month. So we find this cute little warehouse at 5th and Harrison in Soma in San Francisco. And we tour it and it's like, okay, it's going to take some work, but it already has an upstairs with a shower and bedrooms and stuff. And it's like, okay, we can make this work. The broker's like, No problem. Nobody's shown any interest in this, so you're guaranteed to get it. Sweet. And my buddy is a pretty hard negotiator, and he's like, well, if nobody's shown interest, let's get pretty aggressive. Okay, we want a five-year lease with five one-year options. Interesting. And this is going to take a lot of work, so we want three months free rent. Speaker 1 (15:18) Whoa. And Speaker 2 (15:19) we want this and this and this. And