Dave:
Hey, everyone. Welcome to On the Market. I’m your host, Dave Meyer, joined by Kathy, Jamil, James, and Henry today. Good to see you guys. First time we’re all back together since we are in Denver together.

Kathy:
Great to see you. I’m excited for today’s show. Do you hear two live deals?

Jamil:
Feel like I’m going to embody my Kevin O’Leary today.

Dave:
Do you have an impression of Kevin O’Leary for us, Jamil? If you’re listening to this, he just made a very ugly face.

Jamil:
Yeah, and I hissed.

Dave:
We’re going to do this. We’re going to do a new format today where we have a couple listeners joining us. They each are doing a deal right now, and we’re going to learn about what they’re going through really as we speak, as you’re listening to this. This should give you a really good insight into the types of deals that are on the market and how people just like you are adjusting to market conditions and are still making good deals work. What do you all think of our conversations with Matt and Michael today?

Jamil:
Incredible.

Kathy:
Oh, it was so fun.

James:
The fact these guys are out there getting after it is awesome and mean, and one of them fell into a home run. So I’m a little jealous.

Kathy:
And I just loved hearing everybody’s tips and solutions. I felt like I just got an advanced education in the last 45 minutes.

Henry:
Yes, folks, pens and papers, take some notes because you hear some great advice on how to pivot a deal and you give some great advice on how to negotiate and talk to sellers. There’s great stuff being able to listen to this, and I’m just a deal nerd, so hearing people’s deals and talking about them and hearing people’s suggestions for how to work those deals is like music to my ears, man. I love this stuff.

Dave:
All right, great. Well, with that, we’re going to get into it, but first we’re going to take a quick break.
Michael Ye, welcome to On the Market. Thanks for being here.

Michael:
Thanks for having me, Dave. I am so excited to be here.

Dave:
Well, great. Let’s get into it. Can you just start by introducing yourself to the audience and letting us know a little bit about your experience in real estate?

Michael:
Sure. My name is Michael Ye and I am a pastor that’s transitioning out of ministry and into the real estate space. I started in real estate about six or seven months ago. I drank the Kiyosaki Kool-Aid and started down that trek and I just started just drinking in BiggerPockets every single day. I think I’ve must have listened to at least like a hundred hours of BiggerPockets stuff. And I ran across this dude named Henry, Henry Washington and heard his story and he was offering some sort of mastermind class, and I was like, “I got to be a part of that.” And so I did, and that was about six or seven months ago, and now I’m on On the Market. This is amazing.

Dave:
That’s awesome. Well, we’re glad to have you here and would love to hear about the deal that you have to share with us.

Michael:
Sure, sure, sure. So the property is in St. Cloud, Florida, which is right outside of Orlando. We are in central Florida, and it’s not a triplex, but it has three units. It’s a single family unit that has three units. It’s got a main unit that’s a three bedroom, two bath, a studio, and also a mother-in-law suite, all in the back, all on the same property. I purchased it for 240 rehab, just to get it up to speed to be able to rent out. It’s only about 15K or so. ARV is 400. According to Rentometer, I should be getting somewhere in the $3300 a month range combined between the three units.

Kathy:
Score.

Dave:
Yeah. Yeah, I don’t know why you need advice on this. It just seems like you should just go buy this. But before we jump into this one, can you just tell us a little bit about the market?

Michael:
Yeah, Florida in general is just a really, really hot market right now, but central Florida in general, it’s kind of a dark horse, I feel like. The sexy area is Tampa obviously, but central Florida, everybody always thinks of Disney, but central Florida is actually, from what I understand, Florida’s market has consistently kind of experienced very extreme highs and extreme lows, and has fluctuated a lot. But out of the Florida markets, apparently from what the other real estate people tell me, central Florida has been the most stable out of all the markets in Florida. So I live here. Being that I’m a first time investor and such, I do my best. I want to see the property, I want to be able to put my hands on it, that kind of thing. So I started investing here first.

Dave:
That’s great. And before I turn it over to the rest of the panel, last question is, how’d you find this deal?

Michael:
So it was through a wholesaler, a wholesaler that I’ve had a relationship with, and I promised him some money if he brought me the deal first before he blasted it out on email. And lo and behold, one day he just calls me up, he’s like, “Mike, you need to come and get this right now.” And I did.

Kathy:
Money talks.

Michael:
Yes, ma’am.

James:
Well, I know what my first piece of advice is, it’s to sell me the property. The numbers on this look extremely strong. Hey, Michael, have you already closed on this property or …

Michael:
Yes, yes. I closed on it last week actually.

James:
And how did you structure the deal as far as closing? Did you set it up hard money, conforming financing? Did you get a rehab loan or how did you close the deal?

Michael:
So I got hard money because the wholesaler said that we needed to close in two weeks. So yeah, I went ahead and did the hard money and my contractor says that the rehab shouldn’t take more than three weeks or so, so we’re going to be coming out in conventional. I’ve already started the paperwork on doing the conventional loans for this property, so hopefully we’ll be up and running by April.

James:
Then are you going to short-term rental or mid-term rent it, or are you going to go with the long-term rental or are you going to go do a mixture between the two?

Michael:
We’re going with the long-term rental. In this business, relationships are everything. And it just so turns out that my contractor knew a guy who really needed to move into a space and the space was just perfect for him. And so he decided that he’s going to rent out all three units. And so I’m running my credit checks on him right now and stuff, but it seems like it’s a go.

James:
And then how much based on the lenders you’re talking to or which lenders are you trying, what’s the end goal? So when we’re buying, I know when I’m buying single family rentals, a lot of times I’m buying for high cash flow like this deal or with some kind of equity position with a development upside on it. But for me, I’m always wondering how much cash do I have to lock in the deal or do I go with a different type of lender to try to leverage back? Are you going to plan, are you planning it on leaving your initial with your hard money guy? I’m guessing you’re putting 20% down roughly?

Michael:
Yeah, something like that, yeah.

James:
Are you planning on leaving that in the deal or are you able to burn this property and get your capital back out?

Michael:
For right now, I’m planning on keeping it in there just for the time being, and then I’m hoping to maybe refinance out of it when the interest rates do inevitably drop at some point and to get some of my money back out that way. But honestly, the property itself, the area is just starting to show signs of the first phase of gentrification, unfortunately. And so gentrification, I have mixed feelings about it, but from a property owner standpoint, it’s great for me. So yeah, it’s really an equity buy more than anything.

Jamil:
Michael, nice to meet you. Congratulations on getting this deal as well, seven months out of the gate and you’ve taken action. Phenomenal. There’s a couple of questions that I have about the exit. And so you’ve mentioned that the property is zoned single family, but there’s three units on the property that can be rented out. Now, my experience is that conventional lenders are going to make sure that the zoning matches what the use case is for your property before they’re going to loan on it. And so immediately the red flag that I get is when the lender comes and they notice that you’ve got a threeplex on a single family, they’re not going to want a loan on the property. How have you mitigated that situation and what is your plan if you can’t get conventional financing?

Michael:
I’ll be perfectly honest with you, Jamil, I don’t know quite yet.

Dave:
Sell it to James. You already know. You have another exit strategy.

Michael:
There you go. Yeah, I’ll be honest with you, I haven’t thought that far ahead. I just closed on it last week and I’m just trying to get all of that taken care of. But from what I understand, my lender, my conventional lender, it seems like it’s not going to be a problem. I’ll be honest with you. I didn’t think about that, what you just proposed.

Kathy:
So that’s exactly what I was going to ask is are those units permitted? Do you know?

Michael:
Yes, yes, they are.

Kathy:
All those areas are permitted, but not as a triplex.

Michael:
Not as a triplex, yeah.

Kathy:
Okay. Because I know obviously Florida law is very different than California law, but a lot of people don’t realize they’ll create these extra units and rent them out, but they’re not covered. They’re not covered by insurance, and you can get in big trouble for that if you get caught.

Michael:
Yeah, yeah, I made sure that they were covered, so we’re good.

Henry:
I think the benefit is what you did well here is a lot of people look at a deal like this and they say, “Oh, I’m willing to pay triplex numbers because I’m going to rent it like a triplex.” But you analyze the deal like a single family, which is at its true form what it actually is, and you bought it based on those numbers. And so renting it as a triplex is icing on the cake, which is I think the proper way you look at something like this, and yeah, Jamil’s right, you could run into a conventional lender not wanting to finance it because it’s three units, but you could also run into a conventional lender that will finance it.
The first property I house hacked, I still own it. It’s on an FHA loan and it’s a house with a mother-in-law house behind it. And they did say something when we were buying it and we sent them some pictures and told him it’s a single family, but it’s got a mother-in-law suite behind it and then they financed it. So it know it’s going to depend on that lender, but he’s absolutely right. Something to definitely, definitely think about, and it just means if that lender doesn’t want to do it doesn’t mean that another one won’t.

Michael:
Absolutely.

Jamil:
Michael, another question. You mentioned the $15,000 rehab, but you said a timeline of three weeks. And so instinctively for me, I have a lot of experience with contractors and I have always learned that you double everything that they tell you something is going to cost, and you also double the timeline, not because they’re dishonest, but because they’re dishonest. And so when you take that into consideration, how long have you known this contractor and what’s the experience that you have with him? I think $15,000 sounds very low, in considering today’s inflated material costs. You can get nothing done these days for 5 or 10 or $15,000. And so I’m curious, what does the scope of work look like for $15,000? Because three weeks is actually in the world of renovations quite a long time, so I’m interested to understand what that scope of work is.

Michael:
Sure, sure. So the contractor, interestingly enough, the contractor is a pastor.

Jamil:
Oh, good. Okay. So that checks the dishonest box off, right?

Michael:
Definitely. So I arrived in Orlando maybe about four months ago or so from New Jersey, and one of the first things I did as a pastor was I wanted to meet all the other pastors in the area, and I met this guy and turns out that he was a contractor. I was like, “Hey, I’m just getting into real estate myself. You want to work together?”
“Oh yeah, sure.” So that’s kind of how we met and we talk every day. We have a level of trust with one another and all of that stuff, and we analyze deals together and we have that kind of a close relationship. In terms of the scope of work, what we were talking about, like I said, just to get it up to speed is we’re talking some paint. We’re talking changing out a couple of the baseboard stuff and some kitchen counters. That’s pretty much it.

Jamil:
Really minimal stuff.

Michael:
Really minimal stuff to just get it up to speed.

Henry:
What a deal.

Michael:
Yeah, it’s pretty excellent, I got to say, man. But there are other things that we would like to do. I guess one of my questions to you guys was I want to be able to rent it at the top of the market, but I would say that right now as it stands, the environment is probably like a C plus neighborhood. And so how much is too much renovation? You know what I mean?

Jamil:
Does the neighborhood have the potential to go to a B or a B plus? Because if you have comps that are a B plus, then you can anchor on that number and then you can elevate to that and change the entire scope.

Michael:
Yeah, it does have the potential, but I would say if I were to just guess, I would say we’re probably about five to 10 years out.

James:
I think that’s a great question question, because we buy a lot of property as well that we can condo off later down the road. In the short term, we want to keep as rental property. And for me, when I’m looking at a five to 10 year appreciation play, which there’s nothing wrong with that, I typically like to put in cheaper material that will last longer, or not cheaper material but more bulletproof, but like LVP, solid types of floors, more indestructible items, and I’ll spend the money there, but I won’t go for the full cosmetic because what’s happened, what we’ve been doing in Seattle is we kind of land bank those because as the density changes throughout the whole United States, like in Washington state they just passed a new law that there is no more single family zoning allowed. Everything is allowed to be condoed off, built and sold separately.
So my recommend, when I’m looking at those deals, I actually try to put in, make sure it can be a great cash flow because this thing cash flow is at 24% cash on cash return with leaving 20% in the deal. That’s a great return. You can ride that cash flow and I would suggest doing the bare minimums that will last. But then once you get to that next path of progress event, which is in five to 10 years, then go for the full rebuild because you might be able to actually condo all three units off, sell those separately, and then 1031 those a larger amount into a bigger property.
But when you do those condos, sometimes you have to do some substantial renovations to improve it, add new water lines, do types of sewers. So in my opinion, it’s always best to get it bulletproof rental style, wait for that path of progress, then vacate, and then go for the optimal pricing. Because if you do it now, the market could look different in 10 years and then you have to redo the whole thing all over again. And so if you think it’s that five to 10 year play, then just make it to where it can sustain itself and you’re not going to get bled out by fees and maintenance costs and then go for the big rip in five to 10 years.

Dave:
Michael, you said that you wanted to rent at top dollar, which is obviously everyone’s goal, but you are also renting all three units to one tenant. Do you think that’s helping your rent situation or did you lower your overall rent for the convenience factor?

Michael:
I lowered the rent just for the convenience factor. And also the guy who’s coming in is a strong renter, and I figured, rather than having to deal with managing three separate units we just had the one guy, and it turns out the guy is also a contractor, so he said that he’d be willing to do some menial stuff for me and stuff, so that was attractive as well. So I did lower the rent a little bit for him.

Dave:
Does he need three kitchens or what’s the plan for three units?

Kathy:
Yeah, that’s what I was going to ask.

Michael:
Actually, his college age children are just graduating out and they need a place to live for at least a few years. And so the idea is that everyone’s going to kind of live on the property together. So I figure we will be good for at least a few years.

Dave:
Well, definitely go with the cheaper stuff then if there’s college kids going to be living there.

Jamil:
Is the rent rate with the one tenant the 3,300 a month or is it below that?

Michael:
So we’re at 32.

Jamil:
Okay, so just a hundred dollars discount. Not bad at all.

Kathy:
How did you screen for him? How do you know he’s a good tenant?

Michael:
I put him through the RentRedi process, RentRedi, the software. Also, he came armed with an Experian report that was done a month ago or so, and I had him submit his bank statements plus his tax return from last year. And so I did all of that. And I’m still kind of looking through government stuff to see if there’s any bankruptcies or anything like that, but everything seems to be a go.

Henry:
I want on top of that call references. So if he has a past landlord, I’d get on the phone with them. I love asking past landlords, because they’ll give you a report. And then the last question I typically ask them, as I say, either if it’s a landlord, I asked them, would you rent to them again if you had the opportunity? And if it’s a employer, you should also call his employers if he’s not self-employed.

Jamil:
I would want to add to that, go to landlords back because the last landlord may lie just to get them out.

Dave:
Exactly.

Kathy:
Yeah.

James:
One thing, Michael, you mentioned was this guy’s willing to do some work on your property. I have done that numerous times. I’ve done it the right way and the wrong way. One is the verbal like, “Hey, I’ll help you work on this property later.” And that’s great, and that’s a great gesture. But the problem is a lot of times that doesn’t actually happen. And so this is an opportunity I always look for. How can I bundle up things to reduce my expenses, whether it’s construction, whether it’s rental maintenance. If I’m renting to a property manager or something that works in there, maybe I give them a lower rate because they’re looking over a building. But this is a great opportunity to slow down and go, “Hey, I’m willing to give you a discount of a hundred dollars a month. Market is 3300, you’re getting it for 3200, but I would like you to cover these maintenance items for the duration of the rent.
And because that could save you hundreds of dollars a month, which will substantially affect your cash flow. And you don’t have to make it huge, but just say, “Hey, if when any of these 10 items happened, you’re willing to come out there and do the labor for free and I’ll pay for the materials.” And I would say it’s better to lock that in up front because the overall return on that, if he’s there for three years, you’re going to put an extra 4, 5% back in your pocket with cash flow because you’re not going to get bled on the maintenance expenses. So just put it in writing and then because I have had it where I’m like, “Hey, you said you were going to do these things.” And they’re like, “Yeah, here’s your bill.” I’m like, “Well, now I’m overpaying.” And so that’s a great opportunity, especially as a first time landlord, to really lock in a person in your property that can make your life easier for the next two to three years.

Kathy:
Oh my gosh, I can’t agree more. Make sure it’s all in writing, legal. People have different ideas of what is cool. So I’ve done that where I ended up with purple walls. So anything they do, in my opinion, needs to be approved. You need to know what they’re doing.

James:
Purple walls aren’t a good way to maximize your rent.

Kathy:
It cost me several thousand dollars to repaint it because it’s hard to paint over purple.

Michael:
Oh, God.

Dave:
Well, Michael, thank you for bringing this deal. Is there anything, any last questions you have for the panel before you get out of here?

Michael:
It’s funny because I had a whole bunch of questions and now that we’re at the end, I don’t feel like I have any left.

Dave:
Well, that means we did our job, I guess.

Michael:
Yes, you did. Yes, you did. So happy to have been here. Thank you so much.

Dave:
Of course. And congratulations. Sounds like a great deal.

Jamil:
Absolutely.

Henry:
Congrats buddy.

Michael:
Thank you. Thank you.

Dave:
Matt McMains, welcome to On the Market. Thanks for being here.

Matt:
Hey, thanks for having me, Dave.

Dave:
Well, let’s start by telling us a little bit about your experience in real estate.

Matt:
My experience is somewhat minimal. I do have a primary house that I bought right at the beginning of COVID, which helped instill me into the real estate world. And then refied out of that and bought a rental property in Pensacola, Florida, and initially started off as an AirBNB and then come fall we had transitioned into a long-term rental.

Dave:
Okay, great. And that’s not where you live. In Florida?

Matt:
Correct. I grew up in Orange County, California, Southern California, and I went to college in Pensacola. So that’s where the familiarity comes with that area.

Dave:
All right, great. So tell us a little bit about the deal you’re looking at now.

Matt:
All right. So it was an on market deal I found in Pensacola just by scrubbing everything that’s been on market more than 90 days. And this one actually was only at 40 days when I found it, but I had noticed they had dropped the price three times. So to me I was like, “Oh, probably trying to get rid of it, so let’s just throw an offer in.” And as Henry says in his Mastermind, “Just put offers in and let them choose if they want it or not.” So that’s what I did. And this one actually stuck. It was listed at 161. I got it locked in at 140 currently.

Dave:
Awesome. Well, I want to hear more about that. Before we do, for those of us who don’t know anything about Pensacola, can you just tell us a little bit about the area?

Matt:
So Pensacola, there’s a few colleges there and there’s the Naval Air Station. So there’s a lot of movement and traffic into the panhandle of Florida, but it’s kind of near the Alabama side. The market analysis I did you just looking back over the years, it did good through the last recession. There wasn’t too much fluctuation there. So I took that as hey, they could probably be pretty stable moving forward through anything else that comes their way. And also the sale to list ratio was pretty good. So that’s where I just chose. I have the familiarity of just the area. They’re building the downtown so there’s a lot of good things coming, I believe.

Dave:
Great. And your plan is to flip it, right?

Matt:
Correct. My plan is to putting 20% down on properties isn’t really cutting it for me because I’m two properties in and I’m already pretty much dry. So I’m trying to do just zero or low money out of my pocket and try to flip this first one to ultimately start BRRRR-ing and putting renters in and refinancing out of it, but using other people’s money.

James:
Matt, so on your rehab budget you have on this property, A, I like the price point in this property, 140, that’s great for a first when you’re flipping remote, especially lower price point, it sounds like more of a cosmetic turn. And I think when you’re buying out of state, cosmetic turns are great because there’s less variables in there. My concern with this deal is it’s a little tight. I think the numbers look good for a lot of different ways, but on a flip, it can be a little tight, especially if you’re flipping remote, because if you can’t control the cost as much, if it creeps over a little bit be you could go into red fairly quickly on this deal.
In addition to if you’re stacking the leverage and you’re looking for 100% financing, that debt cost is going to be higher than a normal flipper at that point. A lot of times when we’re flipping, we’re leaving 20, 25% in the deal, which is going to usually get back to us in the six to nine month period at that point. Because when I was looking at the flip numbers, have you established your hard money rate yet on this deal? What’s your debt cost on this? Because that’s going to make a big impact on the margin.

Matt:
So as far as the hard money, the way I’m planning to structure this deal is it’s hard money for the purchase and the rehab. And then I have a private money lined up that I met at a real estate meetup here in Orange County that is willing to do the down payment and any overhead costs on that. But the hard money I should have locked up today, their quoting me it will be around 12% with 10% down. So currently waiting back to hear from there and then that’ll dictate where I’m at on a deal.

Jamil:
Matt, what do you, what’s your full-time W2?

Matt:
I’m a federal officer.

Jamil:
Oh, awesome man. So you’re pretty well versed in being able to understand if somebody is telling you the truth. How do you feel about your contractor? Do you feel good about the numbers that they’re giving you do, do you think that the scope of work is in line with what’s being presented?

Matt:
I’m pretty confident. I’m reviewing two right now. One, when I locked this property up my estimate was 60,000. I had two contractors come out, both I have a fairly relationship with them just through my last deal out there. One came in at 52 and the other one’s at 65. So I’m kind of juggling those. I feel like either one or I’m going to be just fine truthfully, but I haven’t made a decision on it.

Jamil:
Are you past your inspection period on the property?

Matt:
Yes, as of Saturday, so just a day ago. Yeah.

James:
So Matt, your debt caught, I want to come back because I’m trying to figure out the flip. Because flip’s always based on A, I think your approach to the best thing you can do to build capital is to wholesale and flip as you’re trying to build up to keep buying your rental properties. It’s a great engine, it’s a high tax engine, but it really does work. And for me, when we’re looking at flips, it’s all about cash on cash return. And my concern on this deal is I think this deal on paper could work really well for a couple different exit strategies including wholesaling.
But on a flip deal, if your construction’s already creeping over a little bit over on cost and your debt is going to be at 12%, what’s the sale cost out in Florida? Is it typically … In Washington we pay roughly about 10% when we’re selling something out the door. Excise tax, closing costs, real estate fees, what’s the cost out there? Because if we were in Washington, the margin would be almost under 10% or it would be under 10,000 as a profit, which is going to not have a lot of cushion in this deal. And then my other question is for that specific market, when you’re selling at that 250 range, is that something that buyers are expecting their closing cost to be paid for? Because that’s something that can also substantially affect this deal on the margin.

Matt:
Great questions, James. So I’ll be honest, I’m not sure what I was estimating around like 6,000 to 10 in closing costs, but I do need to probably do some due diligence there and make sure I know exactly what that is going into this.

James:
Yeah, because when you’re flipping, we got to pack all these costs in, your debt cost, your construction cost, your sale cost, and then look at what that net number is. So I would definitely dig into what the sale cost is. Cause I know each county varies. I know in Washington we have a sliding excise tax, depending on your price point, you can pay 1.2% and sale cost, or if you’re expensive, you pay up to 3% as an excise tax. And so it can make a big, big variance on the deal.

Kathy:
And you have property tax and insurance and all of these things really add up the longer you hold it. I’m curious if you do end up having to hold it because you can’t sell it for what you want, you don’t want to lose money. Have you qualified, are you able to refi into a longer term rate?

Matt:
Yes. I did already speak to a lender as a potential out the cash flow if I do need to rent it will be minimal, but it will cash flow. So I do have that as a backup exit strategy.

Jamil:
Will you be able to take out your private money lender with that refinance?

Matt:
Yes, it’ll be close, but I’ll be able to cover it.

Jamil:
Awesome.

James:
Matt, what kind of loan did you get set up? Because when I was looking at the rental numbers on that, typically you’re going to be able to get a loan for 70, 75% of value, which is going to give you a balance loan of about 160, 165 on this, and you’re all ins at 200 plus debt costs. And so is that something that you’ve looked at that you feel pretty comfortable leaving 30, 40 grand on that deal?

Matt:
It’s definitely not my … Yeah, I wouldn’t say I’m super comfortable with it, but kind of have some things to work through on that exit front.

Jamil:
Just as a one last ditch negotiation technique, Matt, and I know you’re past your inspection period, and it’s not necessarily the best form to try to negotiate anything deeper once you’re past your due diligence periods, but it happens. And so I’m curious if, because I think you do need about another 10 or $20,000 in cushion in this deal. And I feel that if you look at the motivation of your sellers, how much do you have risk right now for EMD?

Matt:
1300.

Jamil:
Okay, so it’s a substantial amount, but I don’t think enough for your sellers to say, “Hey, let’s take the money and run.” So Mike, I’m curious if you’ve comfortable with trying to go back, even though you’re a day past inspection period, to go back and say, “Hey, after looking at my numbers, I think I do need to ask for an additional credit.” I think if you got another $20,000 off the purchase price of this deal, you would be in fantastic shape. And I would recommend, even if they refuse, Matt, even if they refuse, taking the shot is always worth it because you still have the right to say, “Okay, they refused. I’m still going to move forward. I don’t want to risk my $1,300. I’m going to close and we’re going to move forward with the deal.” But you still have the right to try and to move forward. So I’m curious, is that something that you’d be comfortable doing? And if so, I can help you with what that best technique could be.

Matt:
Yeah, definitely comfortable. I don’t mind, I’ll certainly ask.

Henry:
He’s in law enforcement, of course he can ask.

Matt:
Yeah, confrontation is not my weakness. But yeah, definitely, and I would appreciate the help too. Absolutely.

Kathy:
Jamil, I’m curious, are there any creative options he might have bringing the seller in somehow on splitting any profit there might be if they do lower it to encourage them to do that?

Jamil:
Given his purchase price here, I would’ve opted for innovation where the seller would’ve retained title of the property and Matt would’ve brought the private money lender into the deal, had the renovation done and had no origination costs or no loan costs to get into the property. Then all he’s got is that renovation that’s there. And he agrees to a sale price at 140 with his sellers, but he’s going to save like $7,000 in just closing and origination fees. And so creatively for me, that would’ve been the most strategic move because then he just brings his private money lender to the table. He doesn’t have to put 20% down because he doesn’t have to take title, private money lender comes in with the $52,000 in renovation expenses, they’re in it now for 192, he sells for 250. There’s a profit.

James:
The only concern I would have is just knowing that sale cost and then who. On these first time home buyer markets really dig into the comparables. Most times, I know in Washington we can see whether closing costs was paid or not. That’s three and a half percent a lot of times right off the deal, and that’s 50% of the profit on something like this, but I think that’s a great way to structure that because the problem is the debt cost is going to destroy this deal. And then if it goes long, it can go red fairly quickly.

Henry:
Jamil, what are your thoughts being a master wholesaler? So what are your thoughts if in that negotiation you are asking the seller to come down, but you’re also asking the wholesaler to come off his fee a little bit to make up for, so there’s a middle ground there?

Jamil:
So this got bought from a wholesaler as well, or was he the one who went, I think he went directly to the agent, right?

Matt:
Sister and agent on market.

Jamil:
Yes. Okay. So I think that there could be a play to ask the agent to come down on because did they do dual representation, Matt? Listing agent represented you?

Matt:
I went through my own agent.

Jamil:
Okay. So I like doing dual representation because you now put the listing agent in a situation where they now have double the commission to play with. And when they really want to get something done, they’re willing to get play with 3% often because they want the deal to close. And so normally when I’m buying on market, I’ll always go directly to a listing agent, ask for dual representation, or I’ll just say, “Hey, look, I can come in unrepresented, let’s give the 3% back either to myself or to your sellers, depending on the price point that I’m coming in at and just to make the deal sweeter or make it make more financial sense for myself and the homeowner.” I think in this specific instance, you’ve got a buyer agent, which is good because their fiduciary duty is to you.
And so I think you’d really need to have a heart-to-heart with your buyer’s agent and say, “I am looking at these numbers and I’m starting to get a little concerned looking at my loan cost, looking at the market.” And even though the market is strong in Pensacola, I’m really bullish on Florida. We just had the economic data right now is not the best. The Fed is signaling more rate hikes. And so with that said, there could still be some depreciation in your asset that you haven’t accounted for. And if you take another 5 or 10% dip in your ARV on that property, it’s done. This is a reality, and I think even over the weekend and over through last week, we’ve seen so much turmoil, banks shutting down, bank runs happening. There’s just so many things that you can use as economic indicators that make you nervous for moving forward. And I think that if you brought these situations to the table, also hiring a licensed inspector, did you do that for your inspection period? Did you get an inspection report done?

Matt:
No, I had two licensed contractors come out and dig through the property.

Jamil:
Okay, perfect. Good enough. So I would also use those. And I think that it’s smarter for you to use the higher of the two numbers just because the higher one is probably more likely to be the right number than the lower number. When you look at the world of contracting, I’ve never had a deal come in less than what they said. It’s always more, and my sister’s my contractor, I trust her more than anyone in the world and it’s still always wrong. And so with that said, I think that you’ve got a really strong case to present to your buyer’s agent who will then have to make the case to the listing agent. So there’s going to be a little friction there because you’re going to play telephone game. And you can even give your agent the right to forward your email.
I would make a case, I would say, “Look, given this bid that I got, given the economic data that we’re looking at and seeing all the things that happened over the week last week, I am feeling less confident about this deal at this price. And I really think this sellers want to move this house. I really want to perform on this deal, but I’m feeling very nervous to perform at 140.”

Kathy:
I love what you’re saying, Jamil, because this house has been on the market and they want to get rid of it.

Jamil:
And they had three price reductions. And that’s a signal that these people are motivated.

Kathy:
They’re a great sign to go back and say you’re getting cold feet and just this past weekend is enough for them to understand, that there are bank failures and give it a go. What do you have to lose?

James:
And that’s one, I think important thing right now is the market has changed and the velocity of the market has changed. We were all writing everything with no inspections, quick inspections the last two years. You don’t need to do that anymore. And what’s really important is you’re prepping your deal, your inspection timeline can be extended. And if you have not locked your debt, your bids are not firm and you don’t have the full grasp of the cost, that’s okay. You want to ask for that extension on the feasibility at that point, get more time. The more time you have, the better you can prep your deal. The more time you have, the more prep you have, the less risk in a deal. And so never waive until you are all the way locked in on that to where you feel good about your financing, it’s set up.
Because also, if that secondary lender bails on you last minute, if that’s not locked in and has a full commitment on that, that’s where your earnest money can be at risk. And so use that feasibility to get your term set up correctly. And I do think, Matt, one question I have is what will this rent for? Because I think maybe flipping just the wrong kind of dispo on this and maybe bringing it to someone like Jamil that has buy and whole renters, I mean that’s a good price point in an area with some growth in it that people can afford. I’m looking at them if you have a loan for 160,000, which a lot of people will leave 40 grand at a rental property that’s a payment of 1250 a month. You might just be able to wholesale that off, which gets you to your goal of building capital and not taking on this risk, which is a little thin.

Matt:
Yeah, I like it. The median rent and the cost for that specific area are at 1475 monthly. So the rents are definitely strong over there.

Jamil:
I’m happy to connect you with some strong disposition people there as well. I think in tandem, Matt, if you, when’s your closing date?

Matt:
April 3rd.

Jamil:
Okay, so you’ve got a little time. So what I would do in this period is make a case for a strong renegotiation. In the meantime, try a wholesale exit strategy. Even if you make $5,000 on this, Matt, it’s $5,000. You risk 13 to make 5 grand. That’s a great return. You transact it, in and out, move on to the next. But I also think that you have an opportunity to add more upside if you are successful in that renegotiation. Say you say wholesale this for 145 and you get another $10 or $20,000 off the purchase price. Now all of a sudden you’re making what you were going to make in the flip on flipping the paper. And that to me, coming from a person whose business model is wholesale, I’ll tell you that makes me more excited than putting a hammer to a house any day.

Kathy:
I’m also wondering if you did decide to just have it be a buy and hold if there would be less to repair if you don’t have to really make it flip ready and more rental ready, could that construction price come down?

Matt:
That’s a good thought, definitely something that I would like to look into after talking to you guys.

Kathy:
It does sound like a great rental. Yeah, it’s a great market. Lots of dynamics. My biggest concern about that property as a buy and hold is that Pensacola got hit so hard by hurricanes that I imagine the insurance is just astronomical, but still, the numbers could still really work for a buy and hold investor at that price.

Matt:
Very good point on that.

Henry:
I wholeheartedly agree with Jamil. My same suggestion was going to be a, maybe see if Jamil has some buyers in that market because that is a great buy and hold price point. The other thing is, as you’re going through this renegotiation, I would pull up all the LLCs who own houses in the neighborhoods around there. Because typically those are investors who are using it as rentals. And then I would prioritize that list based on the LLC that owns the most. And then I would find who owns the LLC and I would call them and say, would you want this deal for XYZ price? Because clearly they like the neighborhood, they’ve got other rentals in the neighborhood and they may be willing to pay that price. And you could find your buyer that way as well. So I would do that today.

Matt:
Great suggestion, Henry. Thank you.

Jamil:
And if you’re not familiar with that process, Henry can probably walk you through it offline as well. I have some utility that I can help you with in skip tracing and you’re a federal law enforcement officer, you know how to find anything.

Dave:
All right, Matt. Well, thank you. Hopefully this advice has been helpful to you. We appreciate you bringing us the deal and sharing all this with us.

Jamil:
Thank you for your service too, Matt. I

Matt:
I appreciate it. Thank you guys. I feel like I got educated, so thanks for it.

Kathy:
Awesome.

Dave:
All right, well, thank you all for participating in the infomercial for Henry’s coaching business.

Kathy:
I love to see the difference he’s making. Just wonderful meetings.

Dave:
No, seriously, man, that was awesome. Both of them, both Matt and Michael were super interesting, knew what they were talking about, were open to feedback. It was great talking to them. So Henry, how’d you feel about your students joining the show?

Henry:
Man, I thought it was amazing, man. Helping people invest in real estate is obviously a passion of mine. That’s why I’m here on this show in general. But I get more excited when my students get deals and when I get deals, man, and obviously Michael hit a home run for his very first real estate deal with his three unit single family deal. And that’s obviously what everybody would love to do. And then I think some people are going to look at Matt’s deal and go, “Oh man, that’s a tough spot to be in.” But I’d urge everybody to look at this in a different light. What Matt’s done is he’s taken massive action. He’s learning trial by fire. And so many people are scared to do that. They’re scared to get out there, analyze deals and make offers.
Because they think the world is going to end if they get themselves into a bad deal and bad deals are no fun. Don’t let me put that out there. But at the end of the day, if Matt walks away from this deal, because he doesn’t like the risk he would take on, he loses $1,300, but he doesn’t really lose $1,300. He paid $1,300 for an incredible education, for more education than he could have ever got in somebody’s class. More education that he’s getting in the Mastermind. He got trial by fire, he had to go find a deal, analyze the deal, talk to an agent, put in the offer, do the inspections, go back and renegotiate to try to get the deal to where it makes sense now, and then look at multiple exit strategies to try to get out where it makes sense.
And then if it doesn’t, then he has to get out. Then he has to get out and lose 1300 bucks. Well, man, so many people wouldn’t do that. And because they wouldn’t do that, they’re not going to find themselves in a position to build wealth. But Matt is going to find himself in a position where he could make money on this deal, or if he doesn’t, he’s going to hit a home run on the next one because of the education that he bought himself with that $1,300, I think it’s incredible that he’s taken that action

James:
Contacts equal contracts.

Henry:
That’s right, absolutely.

Jamil:
I think he learned a lot of really important lessons as well. And like you just said, Henry, all of this is phenomenal, but how do I get Michael’s deal?

Henry:
Do you want me to give you the link to join my program?

Dave:
I was going to ask for it if we can get a discount.

James:
Yeah, Jamil, you’re the wholesaler. Will you get me Michael’s deal.

Jamil:
Right. I mean, I was trying to talk him out of it, but he already closed it, so I was like, oh.

Kathy:
He better not get used to those numbers because that could be a hard one to find again. But who knows?

Henry:
That’s a screaming deal, screaming deal.

Dave:
Good for him. Well, thank you all for being here. This was a lot of fun. We’d love to hear your feedback on this. This is the first time we’ve done one of these live shows with a bunch of people. You can find any of us on Instagram or you can post on the BiggerPockets forums where there is an On the Market forum specifically that we will check and check in with. So hope you all appreciate it. Thank you all for listening, and we’ll see you for the next episode of On The Market.
On The Market is created by me, Dave Meyer and Kailyn Bennett, produced by Kailyn Bennett, editing by Joel Esparza and Onyx Media, researched by Puja Gendal, and a big thanks to the entire BiggerPockets team. The content on the show On the Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.

David:
This is the BiggerPockets Podcast show, 745.

Henry:
I love, obviously love house hacking as a strategy and oftentimes when I’m talking to investors, the main objection that I hear is, “I don’t want to share walls.” Or, “My spouse, I can’t. I’m not going to get my spouse to share walls.” Or, “I don’t want to live next door to my tenants.”
I’m living in my dream house right now because I bought a house hack for two years. Two years of uncomfortability, one year of uncomfortability could change the trajectory of your life. Do you want to be wealthy or do you want to be comfortable? And if you want to be comfortable, why are you even here?

David:
What’s going on everyone? This is David Greene, your host of the BiggerPockets Podcast here today with my co-host, Rob Abasolo and Henry Washington as we break into the most important phenomenally underrated strategy you cannot afford to miss in 2023. Yes, that’s right. We are talking about house hacking.
Today, we’re going to cover what you always need to keep in mind if you’re house hacking, and how things might have changed in 2023 causing you to look at this a little bit differently. We get into affordability, risk, cash flow, why experts are doing this, why more experts should be doing this. And for those of you with capital and experience, make sure you tune in because I think everyone should be house hacking throughout the real estate investing journey. I know I do. And so do others like James Dainard, Brandon Turner, Mindy Jensen, Rob Abasolo, Henry Washington, and more.
Today’s quick tip. Don’t just house hack, adopt house hacking as a mindset. There are a lot of ways that you can find expenses in your life and you can either eliminate them or turn them into income. I was blown away the first time that I heard Amazon would do this, is they would literally look at their expense sheet and say, “What do we spend money on? Well, we’re spending a lot of money for servers to host our thing. Well, why don’t we start our own company where we have our own servers and then hey, we can rent them out to other companies that need them.” That’s a company that became AWS.
That mindset, that way of looking at expenses and asking, “How can I turn them into income?” Can change your financial situation for the future. Train yourself now to start thinking like that.
Today’s show, we’re going to get into three things, we’re going to cover in today’s show and more. Why house hacking in 2023 is one of your best options? Both the benefits and the opportunity that you may not be thinking about. How you can get started and why this is not something just for beginners? Why you shouldn’t be stopping at just one or two?
House hacking isn’t just about houses, it can unlock capital everywhere. All right, Rob, Henry, anything you guys want to say before we get into the show?

Rob:
I think this is one of those episodes that spouses are going to send to their spouse and they’re going to say, “See? See? Rob, Henry and David said to do it, we got to do it.” And I think a lot of people will kind of change their tune on their stance on this.

Henry:
I agree. I think you hit the nail on the head when you kicked us off by saying, “Underrated.” I can’t reiterate that enough how underrated of a strategy this is and people do, they stick their nose up at it either because they’re experienced and don’t think they need to do that anymore or because they don’t want to deal with some of the uncomfortability or inconveniences that come with it. But I’m telling you, stick around and hear us out. This is something we all need to continue to do.

David:
Yes, sir. And you need to understand the cost of not doing this. We are talking about hundreds and hundreds of thousands of dollars if not, millions of dollars in money that you could be making and saving in the future. And Rob tells a story about how his first deal turned into his first house hack, which turned into a million dollar empire that he’s sitting on now built at the feet of real estate.
And after your spouse does listen to this and they finally agree and the weight is lifted off your shoulders and the two of you are approaching real estate together and you’re full of gratitude, simply DM me on Instagram for my mailing address and you can send me the gift that you no doubt will want to, after they listen to this show.
All right, let’s get into it.
All right, welcome my friends, Rob and Henry to our show today. We are going to dive into probably the most oatmeal bran muffin, boring strategy in real estate yet by far my favorite strategy. I cannot stop talking about it. I’m an evangelist for this. I do long distance investing. I do BRRRR investing. I do short-term rental investing. I do multifamily. I do commercial. I do all of it and I still can’t stop preaching the gospel of house hacking. It’s just way too good.
So house hacking for those that have been living under rock and haven’t heard, is turning your house into an investment property. Basically it’s taking the place you live and using it to journey income. There is a host of benefits to using it and we are going to talk about why 2023 is your year to house hack. Rob, what’s your thoughts on this?

Rob:
I am a big fan of house hacking. I have said for many years that I attribute all of the wealth that I’ve ever built, because of house hacking, because I was able to really sacrifice the short-term comfort for long-term gain.
I shared my space with strangers, with friends. I’ve rented, I’ve Airbnb’ed tiny homes on my property, little studios. I’ve mingled with people. I’ve had awkward conversations with people, but all in all, the rent that I’ve been paid from house hacking has saved me from ever paying a mortgage and I could not be more grateful for this niche in real estate.

David:
Awesome, man. Henry, what about you?

Henry:
Man. House hacking literally changed my life. I have multiple long-term rental properties and I can tell you without a shadow of a doubt, that I am literally sitting here right now in my dream home that we bought because we were able to house hack for two years.
I can also tell you that, even if I had never bought a single other rental property for my portfolio, I still could have got into this property and lived here and afford to live here just because of the house hack I did alone, changed my life.

David:
That’s awesome, man. Now, house hacking helps you in so many ways, one of which is it covers your housing costs, why you’re trying to break into real estate investing. So few investors understand how important it’s to actually manage their own money, have a budget, track your expenses, know where your money’s going to be going. They just think, “No, no. I want to buy real estate estate so that I can spend money on whatever I want.” And it rarely ever works out like that.
When you start tracking your income, one of the first things that you’ll find is your biggest expense is housing, right? So it’s very common to get these books about saving your way to being a millionaire over 700 years of putting your money in the stock market and it’ll grow. The problem is that whole save a cup of coffee every day, don’t spend five bucks model. It’s such a small chunk of your income that if we were Methuselah and lived to be 900, that might actually work. By the time you hit four or 500 years old, you’d have a lot of money, but we die before that. There needs to be something more aggressive.
Eliminating your biggest expense, your housing allowance is a far, far sounder and wiser way to get money saved so that you can get into real estate. And the problem is when you don’t house hack, you’re giving up more than just what the property is going to be worth. You’re giving up all the future properties that you would’ve made.
See, real estate works in this exponentially progressive manner, whereas snowball forms. You get your first deal, you create equity, you pull the equity out, you buy three more. Those get even more cash flow, you save that and equities growing, you reinvest the cash flow, you reinvest the equity. Now, you went from one to three to eight and it exponentially grows.
That’s why you hear people like us that have been investing for five to 10 years that are having conversations that are, it just seems so easy to us. Well, it wasn’t when we were starting. It’s hard for every snowball to pick up steam when you first get started. When you don’t house hack, you’re giving up the future 10, 20, 30 years down the road of tens of millions of dollars that real estate will build for you.
There’s several ways that you can get involved. There’s the low down payment options. This is probably why I like it the most, it requires less money. FHA loans or you put 3.5% down if you’re having trouble coming up at the rehab and you can find a contractor that’ll work with it. There’s a 203(k) loan, which is like an extension to an FHA loan where you can borrow a 97 and a half percent of the construction cost as well.
And when you’re only putting down a small amount of money, this is why I think it’s even better than BRRRR when you can pull it off. The value of BRRRR is that you get your money back out of the deal. Well, if you only put three and a half percent into the deal, there’s nothing to get out. You don’t need to go through all the headache of finding this fixer upper property and going through a construction and hoping the appraisal comes in.
Doing all the things we do to make real estate work, it’s easy. You just buy the best house in the best area that you can afford with as much money as you can get pre-approved for and put as little down as possible and boom, you’re started with real estate investing. Anyone can do it, people can do it, families can do it.
If you want to get investing in real estate, but your spouse isn’t completely on board, you can often get them into this as opposed to, “Let’s go put 25% down on a $500,000 house. Let’s take our whole a hundred thousand dollars nest egg.” Dump it in one property and hope that it works out, versus, “Yeah, let’s just take out of that a hundred thousand dollars to buy a $500,000 property. We only need about 17 grand, 17,500.” That’s a much easier pill to swallow than the full a hundred thousand dollars.
So that’s what I think about it. Do each of you have anything you want to share on just how people should be looking at house hacking in 2023?

Rob:
Well, what I like about house hacking is that you can get very creative with it. So when you talk about what the actual definition of house hacking is, it’s renting a room or a space or a unit on your property to subsidize your mortgage. That’s ultimately what it boils down to.
And so a lot of people will say, “Well, I don’t really want to. I don’t want a stranger in my house living with me. I don’t think I can do it.” I think I’ve got some thoughts around that. I think Henry does too, but you don’t have to let people live in your house.
When I bought my house in LA, it had a 279 square foot apartment studio underneath it, and I Airbnb’ed that studio for a long time and then I rented that to a long-term tenant. I never had to see those guests or those tenants, and they subsidized 50 to 75% of my mortgage, of my $4,400 mortgage. And then I built a tiny house in my backyard, and again, that’s not connected to my home. I would see guests walking in and out of that house, but there are just so many ways you can break into it.
I talked about this on another episode where I actually rented an Airbnb, that was an Airstream in someone’s backyard that they craned back there and they were charging a hundred bucks a night and that subsidized their mortgage. So you can get super creative with it and depending on how introverted or extroverted or social you are, I think you can sort of adjust what house hacking means for you.

David:
All right. Henry, let’s move to you. What are some ways that people can get started if they want to get into house hacking?

Henry:
Yeah. Absolutely. I think the best way, what I like about what Rob said is you’re absolutely right, you can get creative. But the best way to get started is obviously you need to find a place that you’re going to want to live and house hack.
So it’s all about that property search and it’s all about, to me, it’s about getting creative because if you don’t want to live in the same direct home as somebody else, then you look for a duplex, quadplex, multifamily. If you don’t want to live in a duplex, quadplex, multifamily, you can look for properties that have mother-in-law suites or in-law quarters or some sort of other detached type of living situation.
So whatever your comfort level is, there is probably a property out there that will fit your comfort level and needs. You just have to be diligent and smart and creative about how you’re searching and what you’re searching for. So it’s about that open communication with your real estate agent who’s helping you to look, setting up the right keywords with your searches.
I was fortunate enough that my house hack was a whole separate house behind mine, so didn’t have to share the walls. And then what Rob said is also true. The true definition is just monetizing that house to subsidize your mortgage. And so people hear house hack and they go, “I don’t want to be next to my tenants.” Or, “I don’t want to share walls.” But that doesn’t have to be the case. Just like Rob said, you can also look at something like, I call them super short-term rentals.
You can look at something like a platform like Peerspace, where you just rent maybe a room that you’ve curated to look a certain way or maybe an office or some other small space, where you can rent that space by the hour to somebody who wants to come in and shoot a commercial or a video or all kinds of things. People look for curated spaces for hourly rates.
There’s even ways where you can just ranked out random space in your garage for other people to store their stuff. There’s so many ways to house hack. So being able to find a property that fits your comfort level and your needs, is huge.

Rob:
Yeah. I think there’s a website called Rooster. I don’t know if they’re still in business but, and it is basically Airbnb for storage where you say, “Hey, I got a whole garage. Come put your storage into my garage and pay me $75 a month.” Or something like that.
And I was like, “Man, they’ve really thought of everything.” You can really rent out anything in your house, and it probably makes sense. They’re going to start renting out fridge space here pretty soon, I feel.

David:
I’ve had clients that bought a house with us and they’ve rented out the pool in their backyard. People would pay 150 bucks for two hours to go swim laps or teach their kid how to swim. I’ve seen people put little mini putting greens in their backyard and people will pay to go back there and use that. They’ll rent out the RV access and someone will pay a couple hundred bucks, kind of like a mobile home park to put a trailer back there.
As we were talking, Henry, I was thinking about how there’s people that will teach, make 200 cold calls or drive around for seven hours looking at houses and mail a letter to someone with a shabby yard, but they’re not willing to look on Zillow for a property that has more bedrooms or more space in the backyard that they could use. Unfinished square footage that could be very easily converted. I think house hacking is, it’s the one of those things that’s so obvious that you just look right over it.
Now, it can’t be that easy, it has to be harder. Let me go try to find something that’s more difficult. What do you guys think about… Oh, no, first, Henry tell us about your Washington Wealthy Walls principle.

Rob:
The WWWP.

Henry:
WWWP. So we here at the WWWP, our firm believers in that wealth is not built inside of your comfort zone. No one ever builds wealth in a comfort zone. You’ve got to get at least a little uncomfortable if you want to start building wealth.
I love, obviously love house hacking as a strategy and oftentimes when I’m talking to investors, the main objection that I hear is, “I don’t want to share walls.” Or, “My spouse, I can’t. I’m not going to get my spouse to share walls.” Or, “I don’t want to live next door to my tenants.” And those things are or can be viewed as minor inconveniences.
Why are you looking into a way to build wealth? To replace your income, replace your job, get to financial freedom. These are tall tasks, life-changing tasks. And you’re concerned about sharing a wall for a short period of time? Are you kidding me? You’ve got to get a little uncomfortable. Who cares if you have to share?
I’m living in my dream house right now because I bought a house hack for two years. Two years of uncomfortability, one year of uncomfortability could change the trajectory of your life. Do you want to be wealthy or do you want to be comfortable? And if you want to be comfortable, why are you even here?

David:
That’s a great point. Rob, one of the big issues in 2023 that we’re all struggling with, is affordability. Sellers don’t want to drop their prices to the point that we think it’s a great deal as a buyer, but interest rates are so high that even as prices come down a little bit, they’re still not at a point where they’re going to cash flow really strong or sometimes at all. So there’s a bit of a stalemate. What do you think about house hacking in 2023 as a solution to this affordability standoff?

Rob:
Personally, I think that house hacking is the most important pivot that real estate investors can start to consider for 2023 because you’re right, things are really expensive, and now I do think that sellers are starting to drop prices a little bit, but even with that, the interest rates are still really high. So even if a seller drops their price $50,000, interest rates being what they are, still makes that a relatively expensive place to live, relative to what it was a year ago.
And so I think people now, are at this standpoint, that at the fork in the road, “Do I want to live in a house and sacrifice a little bit of comfort?” Or, “Do I want to keep renting?” And I think for the people in the former group who are willing to rent a room to subsidize the mortgage, it can effectively make it significantly more affordable.
Let’s say that you’re talking about a $3,000 mortgage, that a year ago might have been $2,300 with lower interest rates. Well, if you’re willing to sacrifice some of that comfort and you can get a house, that you can rent a room out for a thousand dollars, now, you effectively have subsidized it to where it is a little bit more normal to what prices were a year ago.
So I think people really have to start opening their minds to this, especially for the people that are very impatient and have been waiting a long time to get into a home and are really frustrated with the interest rates. We got to do things that make us a little uncomfortable to get ahead.
Just like Henry was saying, “Do you want to be uncomfortable? Do you want to be wealthy?” And I think most people that are in this space and that are listening to this podcast right now, I think we all have the similar mindset that we want to build wealth.

David:
Yeah. And I think there’s a huge contingency of people listening to this right now who’ve got some money saved up, who’ve been waiting for the market to crash. They want to buy real estate. They know that they don’t want to be a renter forever. They’ve already committed to that. They don’t know when. “When do I jump in?” It’s like game of Double Dutch and you’re like, “Urgh.” You’re waiting, you’re watching that rope go. You’re trying to time it, but it never quite feels like the right moment. And then oftentimes the market can take off on you before you realize what happened and you’re like, “Oh, that was my window right when I blinked.”
One thing I love about it is the hesitation that you get to buy real estate when you’re not sure what the market’s going to do is you feel like, “I got one shot.” You’re Eminem. It’s the beginning of eight mile. You’re sitting there with vomit on your sweater, you’re super nervous. You’re like, “I only get one chance to go crush this.” And that’s massive pressure.
When you’re house hacking, you take that a hundred thousand dollars, $50,000 savings, whatever it is that you’ve earned over time. And you only have to spend a small chunk of it. You are decreasing your risk and preventing yourself from spending your entire nest egg on one deal at the wrong time. Instead of spending the whole hundred grand, you’re spending 17,000 of it, which you could save back again over a period of time.
So that it’s not like it’s the end of the world if you jumped in too soon. It’s better that you actually got the property. And then when you’re extending that over the next 30 years, there was no perfect time. The perfect time was 30 years ago. When you’re looking at it in the moment, you’re really trying to get the timing right. When you’re looking at it over a longer period of time, it doesn’t matter quite as much.
And so when you’re house hacking, you’re reducing your risk of even buying in at the wrong time, because you still have a lot of capital for it to buy another one next year to buy another one next year, versus when you’re going in there trying to buy that perfect Airbnb, you got to put 25% down on the deal, then you got to dump the money into furnishing it. You can run out of cash. Rob, what say you?

Rob:
Well, let me ask you this, David. If you’re going the FHA route and you’re putting down three and a half percent, can you tell me a little bit how often can you do that? What does the FHA guideline say? Can you buy a house every year or is it every two years?

David:
You can buy a house every single year, but you can only have one FHA loan at a time.

Rob:
Okay.

David:
So you’ll get an FHA loan, you’ll put three and a half percent down. The next year you’ll just use a 5% down like a regular conventional loan, and then maybe you can refinance out of the FHA, when you have more equity and then use the FHA on a future deal. And this is so important in 2023 because we don’t know what the market’s going to do. That’s what I’m getting at. It could go down. It could go up. There is no sound advice we can tell you guys because no one knows.
We don’t know what the fed’s going to do. We don’t know what the Biden administration’s going to do. We don’t know what the next president administration’s going to do. But we know that if you don’t buy real estate at all, you never actually get out of your situation. So this to me is like the perfect medium.
You don’t want to spend all your money and hope that you bought in at the right time, but you don’t want to do nothing and just keep watching as life gets away from you. So you reduce your risk by taking on more discomfort just like Henry said. You rent out rooms to people, maybe you got to deal with some noisy walls, you learn the fundamentals of real estate, but you put as little down as possible to get as much real estate as you can.

Rob:
I mean, ultimately my personal belief for house hacking, it’s not about printing money and making gobs of cash. I just genuinely feel that house hacking is about getting out of your mortgage, because the faster you can get out of paying for your mortgage, the faster you can start saving that money and compounding it over time.
So if you’re able to get into a home, let’s say that $3,000 mortgage example I was talking about earlier, and you’re able to get two or three roommates in that home that pay your $3,000 mortgage, what have you done? You have saved yourself $36,000 a year that you would not have otherwise, and now you can use that $36,000 to invest in real estate, in some other capacity.
And we just did an episode, I don’t know if it’s aired yet, that talks about how to get into real estate for $10,000. 36,000 bucks, you can do all the things we talked about three times, three and a half times.

Henry:
I’m so glad you brought that up, Rob, because that was exactly where I was going to go next. I talk about house hacking changed my life and it did, but what really changed my life was the amount of money that I was intentional about saving because I didn’t have to spend it on the mortgage.
We actually took what we were currently paying in our mortgage before we bought that house and put that up against what we then had to pay or not have to pay by doing the house hacking. And we were intentional about continuing to make that mortgage payment we were used to making. We just made it to ourselves in a savings account, and we could watch that money grow. And as we watched that money grow, it triggered the chemicals in your brain that want to continue to see that grow, and so every time we found some extra money, we were throwing it in the savings account.
Just by doing that house hacking and seeing that money grow, it helped us to get more creative with more saving, that helped us save up the money that we could then use to invest in another property. So it’s really, yes, house hacking is a phenomenal strategy, but if you’re not intelligent or diligent about the savings that the house hacking provides, then you’re doing yourself a huge disservice.

Rob:
Yeah, it’s basically meaningless at that point, right?

David:
All right. So we’re all on board with house hacking as the best strategy that we can think of in 2023. It’s a combination of the lowest risk and the highest returns. It also sets you up to buy more real estate in the future, hopefully when the market crashes and we all want to jump in.
Now, you’ve got all this money set aside that you’ve been able to save from the examples that Henry and Rob both provided. So when it comes to getting started, Henry, what are some things that people need to know about underwriting the deal, what it looks like to get your first property? Et cetera.

Henry:
Yeah. I mean, if you’re shopping for a home, people are very familiar with shopping for the home process. It’s very similar. You’re just shopping for a home that’s going to meet your particular house hacking requirements. So you need to connect with a real estate agent, preferably one who’s either worked with investors before or understands the concepts of house hacking, so that they’re sending you deals that make sense to kind of save you the time of waiting through lots of listings that aren’t going to make sense for you or your goals.
You want to also get pre-approved for the loan product that you are going to use, to be able to buy that property. So you can know how much you are going to have to put down or how much you are able to get approved for. Now, there are some caveats to that as well, because there may be some education that you have to provide to either your agent or your lender on the process or what they’re looking for, because there are multiple loan products for this, and not every lender is familiar with the types of loan products that you can use to do this.
And so you do need to do some of your own education, but you want to make sure that you’re working with people who, if they don’t understand, are open to you educating them. I know, that you have this, you are in the mortgage industry David, what do you think about being able to connect with the proper lender to meet your house hacking needs?

David:
Well, you want a lender that has worked with people doing the similar thing before, because a normal lender can get you a loan, but now you’re sort of on the hook to figure out what pieces you might not be aware of.
So there are different down payment requirements for duplexes, triplexes and fourplexes and single-family houses. That wasn’t the case a couple years ago. If your lender isn’t aware of that or doesn’t tell you that, you’re like, “Oh, I’m pre-approved for $500,000.” And then you go find a duplex or a triplex that’s 500,000, they go, “Oh no, those you got to put 10% down or 15% down. It’s not like a single-family home.” You did all that work. Now, it’s not going to be helping you.
There’s other lenders that can propose creative solutions. So you find a property and you don’t quite have enough money to buy it and they say, “Well, if you can get a gift from a family member, you can use that for the down payment.” You might not have even known that was a possibility if your lender didn’t bring that up to you.
And then you also have the good lenders, like how we train ours. They’re going to look at your other assets and they’re like, “Well, you got an FHA loan on this property you bought seven years ago, that you’re at a 5.75 interest rate. We can refinance you out of that, get your PMI dropped off of it.” It’s called something different on an FHA loan, but it’s the same idea as PMI.
“Save you some money there. Maybe your rate goes from 5.75 to 6.25, but your payment’s actually less because you don’t have PMI. And you can pull a little bit of cash out of that property and now you can use an FHA loan on the next deal.” And you go from like, “Oh, how am I going to do this?” To, “Oh, that’s super simple and there’s other benefits.”

Rob:
Well, isn’t there an opportunity as well to use the rents from a house hack towards your DTI? I don’t know… What are the rules there? Because I know that probably you can’t use rents from a room, but if you bought a duplex, couldn’t you apply the rents that you’d get from that duplex towards your DTI?

David:
They kind of swing back and forth on if you’re allowed to do it in a multifamily property. Most of the time they don’t want you to. But what you can do is buy a house as a house hack, move into a new house next year, and now you can use the rents from the first one to help you qualify for future ones.

Rob:
Got it.

David:
So you may not be able to do it on every individual house, but when the minute you get your second one, you start to get that snowball effect we were talking about and everything gets easier for you with progressive deals.
What’s your guys’ thoughts on how they can use BiggerPockets calculators to help them figure out what their payments would be on the property in case their agents aren’t David Greene team agents that are experienced and helping run numbers for them?

Rob:
My thoughts are, they should use it. It’s a very easy calculator to comp out a deal. Put in the numbers, put in your price, put in the rent, and it’ll split out basically if it’s a good deal or not. But it’s a very intuitive tool. I think you can go over to…

David:
biggerpockets.com/calc.

Rob:
And use it for free. I think you get several uses for free before you have to make an account or something like that.

David:
That’s right.

Henry:
It’s funny because this sounds like a shameless plug, but it’s not. Before I was ever associated with BiggerPockets, I was using that calculator. I still use those calculators today. They’re there because they’re good. So just use them.

David:
They’re easy. They just tell you exactly what to do and you don’t know what to do there’s a little question mark, you’re like, “Oh, that’s what that’s asking me. Thank you.” That’s what BiggerPockets does. We make things very easy for people that want to complicate it.
The highlight that I want to that take out of this how to get started here, is the goal is not to create a lot of cash flow out of a house hack. Occasionally that happens, sometimes a pitcher leaves a fastball right over the middle of the play and you just crush it. Those deals sometimes come your way.
Generally speaking, the goal is not to get cash flow. The goal is to remove your mortgage payment. The goal is to allow you to save more money. And when you do that over several properties, the savings of your mortgage turns into cash flow when you move out of it, and you eventually live the rest of your life never making a mortgage payment again. Which is how Henry was saying he’s able to live in his dream house.
It’s just a little bit of delayed gratification, getting that snowball rolling down the hill early that becomes something big that you then can use to take on some of the big cool multifamily projects or stuff that we talk about here.
All right. I want to transition a little bit into picking the market. Henry, are there markets you’ve seen where house hacking doesn’t work or doesn’t work as well?

Henry:
Yeah. I mean obviously, the more expensive coastal markets, the New York’s and San Francisco, sometimes even the LA’s and the San Diego’s, right? Where the cost of a house is so expensive that even when you house hack, you’re not going to be able to completely offset your mortgage and you’re still going to have to cover a significant amount of that mortgage. And then you start, and then you’re moving into the realm where house hacking could get risky because not everything goes perfectly.
If you end up in a timeframe where you don’t have a tenant, that’s all on you to carry that. And if you’re buying something with a mortgage that you can’t afford to pay, unless you’re house hacking in a very expensive market, you can find yourself in a sticky situation.
And so in those very expensive markets, I think you have to be super diligent with the numbers, super and be very open with yourself about your budget and what you can afford to do in a worst case scenario. And in those situations, maybe it makes sense to look at a different strategy, but make sure that you have budgeted and done the numbers and understand exactly what you would be comfortable paying above and beyond what your share of that mortgage would be. And if it becomes unaffordable at that point, then you look at pivoting strategies.

David:
Oh, first let me ask you, Rob, what do you think? You agree?

Rob:
Yeah, mostly. I don’t know. I think you can make it work in any market. I mean, I moved to LA and I made it work there. Now, you may not be able to rent it to somebody in the long-term sense, but I bought my house in LA, 624,000, it was about four times the amount that we bought the house in Kansas City, and that was a lot.
It was actually a very scary amount. We were scared to tell anybody in our family or friends how much this house was because we just didn’t want them to judge us for buying this expensive houses. And so in my mind I was like, “Well, I had heard about Airbnb.” And that’s kind of the beginning of everything, and I was like, “Well, I think this little 279 square foot apartment, if I rented it long-term, I could make maybe 12 to 1500 bucks a month month, which isn’t bad, but if I put it onto Airbnb and list it for a hundred bucks a night, I think I can make two to $3,000 a month.” And that’s exactly what happened.
So I was able to make that property work. When I was making $3,000 a month there on my $4,400 mortgage, now my mortgage is 1400 bucks and I was able to make that work. And then I built the tiny house in the backyard and I was renting that out for at its peak, three to $4,000 a month. So I was actually making money on that property very quickly once I figured out how to make that deal work.
But I didn’t walk into that deal blind. I had done the math, I had done my comps, I had run the numbers on Airbnb and I made that work for me. And even on the flip side of that, I mean I’ve looked at, I think it’s, you find the house that you want and you figure out how to make it work, right? Because I looked at a lot of houses in LA that were under 624.
There were houses that were $500,000 that I was like, “I would never dare put my wife in this house.” And so when I mapped it out, I was like, “If I don’t house hack and I buy a house at half a million dollars, we’re going to spend so much more money than if we just spent an extra $124,000 to buy our house.” And then we house hacked the little studio apartment under it. And so we made that deal work.
So it was actually a lot more affordable to us to buy a house in LA and house hack, than it would’ve been to buy a house, otherwise, it actually would’ve been impossible otherwise.

David:
I think you guys both make super good points and it’s this, I love that I now get to be the one to sort of parse out what each of you said and simplify it after hearing your cases.
Henry’s case is right. In more expensive markets make it difficult to get your mortgage covered completely or cash flow. A hundred percent true. So if you buy a triplex in the Midwest, maybe your mortgage on that’s 1200 bucks, you rent out each side for 600, so you end up living completely for free in that case. The tenants are paying 1200 and you’re living for free. Then you move out and you’re making 1800 on the triplex, but it only costs 1200. Boom. You got some cash flow right out the gate.
But if you go into a coastal market, you’re probably not getting a hundred percent of it paid for. The other side of that coin is that the person who bought the triplex is now making, they’re saving a total of $1,800 a month because that’s what they’re getting in rents. But the person in LA who was paying 4,800 for their rent and now only has to pay a thousand dollars, is actually adding $3,400 to their wealth every single month. So you end up making more in coastal markets, but it doesn’t show up on the balance sheet of cash flow. Okay?
So each of you are right in a sense, and that’s something that people need to be aware of, when they’re deciding how to house hack in their market. If you’re in California where we are, you’re not going to get a hundred percent of your rent paid, but you’re ultimately going to make more money every month than someone in a cheaper market.
And if you’re in a cheaper market, you do have the opportunity to get a hundred percent of your rent paid or maybe even get some cash flow, but you probably need to buy more properties to make up for the fact that not as much money’s coming in per property. That’s where you’re going to need to make sure what you’re doing. It’s even more important to save your cash so you can keep buying.
They work in both. You just approach it a little bit differently. So for some context here, if Henry was able to drop his mortgage from $2,500 a month down to $500 a month from house hacking, so he’s saving two grand a month, that’s about $24,000. And you buy a house for about 500 grand and put 5% down, that’s about $25,000. That is pretty much a hundred percent return on your money.
Where else in 2023 can you get a hundred percent return on your money and get real estate, where rents are going to go up every year and have a loan that you’re paying off? We haven’t even included in that return. And beginning appreciation and know that instead of your rent going up every single year, the tenants are paying you more every year in addition to the hundred percent return. I don’t think there’s anything even close in 2023 that will give you that, that isn’t wildly risky.
Okay, we’re not talking about a crazy cannabis enterprise here. We’re just talking about boring real estate. They get you a hundred percent return and all the future upsides. So now Rob, when it comes to house hacking, there’s more than one way to do it.
People typically look right down the box and they’re like, “This is the only way to house hack.” It’s actually tons of options available, many of which fall within your specific purview.
So tell me, what are some of the ways that when someone buys a house as a primary residence in 2023, that they can take advantage of some of the other more lucrative strategies with their home that maybe they couldn’t in other circumstances?

Rob:
Yeah, man. This is where the sky’s the limit. And I’m, before we even dive into buying a house, I actually think that you can house hack without owning a property. This is a very popular model in New York specifically, where you go and you obtain the lease and you effectively find the roommates. You’re the one on the hook with the landlord, but you actually find the roommates and you basically decide what they pay you for their room and you subsidize your cost that way.
At my wife’s best friend was part of this, and she understood that where she went and basically applied for a room at this lady’s apartment, and she knew that she was paying a lot more than market rate, but it was furnished and she didn’t even have to do anything. She didn’t have to pay a deposit or anything like that, but the person who was running that lease paid $500 a month versus the other two roommates paying $1,200 a month. So that’s just a quick example of a way to supercharge house hacking.
If you really don’t even own the property, if you’re like, “Man, I don’t have the three and a half percent, I got to stay renting.” That’s a total option for you too. Another way, obviously we’re talking about the 12-month rentals, but what I wish I would’ve done when I got started, I just didn’t know about short-term rentals. And we all know that that’s my thing and I love it.
But if you’re not the kind of person that wants to commit to somebody for 12 months at a time, which is super fair because you don’t know how your tenants are going to shake out, you could rent your room on Airbnb. There is a section on Airbnb that says private home, and then there’s entire home, shared space, shared room.
You can actually rent to two people to share the room, hostile style. You can rent the room one at a time, and you can actually make a lot more money doing this than finding a long-term tenant because you can charge 50 to $125 a night for your room. And if you did that 10 times a month, like 10 days for example, that might actually pay you more than renting to a long-term tenant for 30 days at a time.
And then there’s also the fact that you can do medium-term rentals as well. With short-term rentals, you never really know what types of regulations there are. And so if there are regulations against short-term rentals, the medium-term rental bucket actually gets you out of short-term rental regulation. And when you’re renting to people 30 days at a time, you’re allowed to do that in every city because that falls under long-term rental jurisdiction. So you could rent to people on a medium-term rental basis.
And also there are a lot of cities that will allow you to rent your property on Airbnb if you live in that specific property. It might be illegal if you don’t live at that property, but if you live there, they understand that they’ll write rules in place for those types of Airbnb hosts that are legitimately trying to subsidize their mortgage.
So it isn’t just, we’re not in the age of 12-month leases anymore. I think you could do medium-term rentals. You can rent your room five days a month if you want to. You don’t even have to own the property. The sky’s the limit here. So you find a deal that you like and you make it work however you want to based on your comfort level and how much money you need to make off that property.

David:
So where else in 2023 can you find a strategy that lets you do a short-term rental in a market that won’t let you do short-term rentals? It’s Los Angeles, Southern California, my real estate team down there. This is one of the ways we’ve figured out around all the restrictions against short-term rentals because the neighbors hate it. They just, “We don’t want it.” So then the city restricts how many permits that they issue, and they put all these ridiculous restrictions in place and it makes it so hard to do. And so you just, “I guess I can’t do short-term rentals in 2023.” Not so.
You buy that property, all of a sudden a lot of those laws that affect tenants don’t apply to you. It’s an absolute awesome loophole. So one of the things that you’ll see in a city like Los Angeles is they’ll say, “If you buy a property that has tenants in it and they’re paying $400 a month instead of $2,500 a month, you can’t raise the rent. You have to honor the lease that’s in place.” And it just makes it so those properties don’t make sense.
But if you’re going to live in it, you could absolutely bump them out of one of the units. I think of it as long as it’s the biggest one and you can move into it. And then after you’ve lived in it for a while, if you choose to want to rent it out, you can do that at market rents.
A lot of the stuff that stops investors doesn’t stop homeowners, and you have to start thinking of house hacking as a homeowner strategy that works for investing, and you couldn’t get around a lot of this stuff. That’s one of the reasons that I just wanted to highlight. House hacking in 2023 has so many benefits that other strategies don’t have.
All right, Henry, once you’ve gotten the strategy down, tell me what’s next? How do you get into this snowball that we talk about? Should you just get one or two house hacks and stop, or should you keep going?

Henry:
Oh, man. My personal opinion is you should house hack every single year until your spouse or your significant other says, “I do not want to share walls or live in a duplex ever again.” Until I hear those exact words. I would just rinse and repeat and repeat because of all of the highlights we talked about leading up until this, it’s such a phenomenal way to build wealth.

Rob:
Are you there yet by the way, or are you still house hacking? What’s your current situation?

Henry:
I am not house hacking in this one, but as we are, we have looked at other homes and I literally won’t look at them unless there’s a way I can monetize part of that home, going forward.

David:
It is, once you see it, you cannot unsee it.

Henry:
Yeah. My wife knows, man.

Rob:
We’ve house hacked for so many years. I’m at that point, she’s like, “Uh-huh, we’re good.” The money is not meaningful to us anymore. She’s like, “I know you want the content and I know you want to talk about it on you… No more.” And I’m like, “Okay, that’s fine. We did it.” We earned our badge of honor. I’ve done it. I’ve got my rite of passage.

Henry:
You got your merit badge.

Rob:
Yeah. Exactly.

David:
One of the things to highlight here is that house hacking is not just a strategy, it’s a lifestyle. It’s a way of looking at the world like Henry was just saying, “I can’t not look at a property and think, how could this produce income? Because if it doesn’t produce income, I don’t want it.” We’ll find some way to make that rhyme and it’ll be a fun thing that we start saying, “This is especially important for new investors that are trying to get started, that are trying to get that momentum going with the snowball.”
We know people, I think Craig Curelop wasn’t just renting out his house, he was renting out his couch and we were teasing him like, “At one point, he is going to rent out his clothes.” People start renting out their cars on Turo, and they’re renting out the pools in the backyard. They’re renting out saunas. There’s the Peerspace movement that’s starting.
This is not going to make you a multi-millionaire, okay? We’re not saying just start renting out your goldfish for other people to play with or something like let people take your dog home for a day if they want a dog. But the point is, you can learn the fundamentals using some of these strategies and those will make you a multi-millionaire in the future.
You’re not going to stay at this level of house hacking or clothes hacking or whatever we’re talking about forever, but it can kind of get you over that initial fear of, “I don’t really know how to do this.” And then once you get comfortable with it, you stop doing it in a small scale. You start doing it at a bigger scale.
Rob, you’re a great example of how that worked out. Can you just paint us a short picture of how you went from house hacking, an ADU in your backyard to now considering rental arbitrage on a 50-unit portfolio in Pigeon Forge?

Rob:
Yeah. Yeah. Okay. So that first house that I bought was $159,000, and we sold it three years later for $215,000, after all fees and costs and everything like that, we had a $40,000 profit. We used that $40,000 to put three and a half percent down on that property in LA, and after seller credits and everything, we actually only paid $18,500. And now that property today has gotten me over $200,000 in rents. It’s worth $1.3 million.
So just from house hacking, literally half a million dollars in net worth or are a little bit over half a million dollars, in net worth from sacrificing that. I could sell that house today and have half a million dollars in my pocket, because for four years I chose to be a little uncomfortable and have a roommate and have people in my backyard and people under my house. And that’s obviously led to the $200,000 in rents that I’ve gotten from that property has obviously led to me just reinvesting that into all of my Airbnbs.
I’m at 35 doors now, like you said, I just got approached about a 52-unit rental arbitrage, master lease in Pigeon Forge, and I can do everything that I am doing today because of what house hacking did for me, and I just can’t vouch for this strategy enough because it has opened every door in my life that I’ve ever wanted open.

David:
So here’s the magic. It’s not should I house hack or long-term rental, house hack or short-term rental, house hack or BRRRR. House hack can get you in the door, and then you can use medium-term rentals, long-term rentals, short-term rentals, renting out your pool, refinancing the house later, live in flip. You can buy a fixer upper as house hack, fix it up over a couple years, sell it, not have to pay any capital gain taxes because it was your primary residence as long as you were there for two out of five years.
All the stuff you hear us talk about at BiggerPockets, almost all of it is compatible with a house hack. I’m trying to think of the right analogy. You know that website Zapier? You guys familiar with that? It basically makes any computer program talk to anything else. If you have Zapier, you can do anything else with it.
House hack becomes that, at its flexibility, it’s low risk, it’s big upside, all of this together. It just over time and time again, shows up as the best strategy possible. And going into 2023, this is the one I can confidently tell everybody, this is what you should be doing. You guys have any last words on what you want to tell the audience about why 2023 is the year that they should be house hacking?

Rob:
I don’t, no. I put it all out there. I’m very staunch supporter of house hacking.

Henry:
Lift it all.

Rob:
I think it’s pretty clear. Yeah. I’m like, “I put it all out there on the podcast.” Just do it. It really is one of those things that at the very least, it builds thick skin and it allows you to just understand some of the discipline that goes into being a real estate investor.
And even if you do it for a month, you can at least say, “I did that.” And everything else after that is, I think it makes everything a little bit easier because once you’ve kind of done a house hack, it kind of just puts you out of the comfort zone that prepares you for the rest of your real estate journey.

Henry:
Exactly, man. What a low risk way to try several of these different strategies that you’re seeing, you’re interested in. A lot of people say they want to be landlords and then they’re landlords and they may not like it. Well, this is a low risk way for you to try it. A lot of people say they want to do Airbnb and then they do Airbnb and they don’t like it. What a low risk way to try it, man.
You can kind of cut your teeth on several strategies, learn what you do, love what you like best, and you don’t have to take on a ton of risks to do it with this strategy. And by the way, you’re going to be building wealth, so do it.

David:
Thank you guys. Rob, where can people find out more about you?

Rob:
You can find me over @robuilt on YouTube and Instagram. What about you?

David:
You can find me @davidgreene24, and please do on Instagram, social media and YouTube. Henry, what about you?

Henry:
@thehenrywashington on Instagram or henrywashington.com.

David:
And if you’re hearing this message and you are intrigued, you’re like, “Oh, this is what house hacking is. I’ve heard people talk about it.” Or maybe you’ve been knocked off of your perch of the ivory tower elite thing. “I’m too good for house hacking.” And you realized, “2023 is my year. I need to actually get in and do this.”
Head over to biggerpockets.com. We are more than a podcast. We are a website, and you can simply put in the phrase, “house hack” into the forums and literally have more information than you could possibly digest if you tried on that forum. Advice people that do it, challenges they’ve run into, how they overcame them, strategies that work, how people became millionaires just from house hacking.
Plus, you can get those calculators we talked about at biggerpockets.com/calc, and you can analyze to figure out what your property would cost in case your agent is not as good as one of us and doesn’t know how to do that.
But here’s what’s important. You don’t want to let 2023 pass and look back 10 years later and say, “That was one of those open windows where I could get into the best neighborhood. I could still get an inspection contingency, I could still get an appraisal contingency. Rates were a little bit higher, but they dropped after that I could have refinanced out of my 8% loan into a 5% loan and saved even more money, and I let it pass because I was too busy waiting for NFTs to make their comeback.” Don’t be that person. Get into real estate while you can and do it smart. You will not regret it.
This is David Greene for the BiggerPockets podcast host signing out.