Financial Freedom with Just Two Group Homes

0:00So for me I had this misconception that I needed 100K in order to get into real estate I don't know why I just in the back of my head I'm like if I save up 100K that's a barrier to entry to get into real estate and so that's why I did delayed gratification live below my means I threw every single commission dollar into a savings account and once they hit 100K then I was like all right I'm ready to go let's do this real estate thing and so what I ended up doing was putting p pen to pad which I think is super important so I actually wrote down my goals because I was telling everyone I was going to buy real estate for like the last three years prior but once I wrote it down within 30 days I made a couple offers got my first house accepted and I went from Portland Oregon to Phoenix Arizona and with an intention to house hack so I was like all right what's the best way to lower my expenses two major expenses transportation and housing if I can eliminate both that

0:48Would be a game Cher and so that's what I did bought a house multiple bedrooms started renting out the bedrooms and that's kind of how I got started with the house hacking so so smart like so many people will say oh you know it's so unaffordable these days you know I can't survive on on my salary and and but they're not willing to look at you know is there a way that it could work could is there a way to eliminate your entire cost of housing is there a way to eliminate your transportation costs like you know it's not what most people do but that doesn't mean it's not possible especially if you're younger and you know you don't have a family yet you know like that's it's very within the realm of possibility so how did you do that when you moved to to Arizona what did that look like for you yeah I knew no one in Arizona I would just come out every

1:37Like three months for a couple days because I needed some sun man like Portland's amazing but gray skies and Rain 90% of the year it's a little bit rough and so I went out there with the intention to also connect with a lot of entrepreneurs and business professionals since I read a tweet and yeah like you said if you're in your early like if you're in your 20s early 30s you're single you don't have kids like this is a no Riner to get into real estate it's like the easiest less risky way to do it and so for me it's surrounding myself with the right people so I bought the house multiple bedrooms and from there just started renting to people who I was intentional with who were like-minded who were growth-minded which ended up becoming the concept of the growth house but just people who are business professionals and entrepreneurs and so that was kind of like the strategy that I did and I ended up living for free in the master bedroom and then renting out

2:25The other rooms and I was Cash flowing while living there over $2,000 a month geez living for free and making two grand from from the house most people it's opposite you're paying two grand a month so the growth house then so you you were intentional about renting the rooms not just to anyone who would pay but to people who were entrepreneur shared a similar mindset what did that look like like how did you guys start to like build a business together did you collaborate or H how did that go yeah first there was no like real strict vetting process it was more so like hey I'm put this on Facebook Facebook anyone interested you know come to a tour now we have like a formulated process but it was really just kind of painting the vision out there on Craigslist on Facebook on all these different platforms saying hey you know business professional house these

3:13Are kind of the people who are already in it because you got to be careful not to say hey it's only for this certain person but you can describe the roommates in the house and so that's what I did and that's why I attracted the people who were in the house at first and then about six seven months later my life completely changed and I think it was really the pro proximity because proximity Is Power if you're surrounded by people who are also thinking the similar way you're able to elevate your level of success so much quicker and so for me it was that belief in myself I'm like if these guys in the same house as me also run their own business I can too I can do this and so from there it was really the concept started happening in my head and then people reached out saying hey do you have any more bedrooms and I was like no I don't and so that gave me kind of more inspiration and motivation to buy the second home and so that same year I actually had someone across the street say hey Jesse I'm looking to sell my house

4:01I love what you're doing across the street do you want to buy this I'm like absolutely and so I went met with them did a walk through same floor plan and I was excited ready to go and we had a verbal offer and then like two days later he hit me up and he said Jesse I'm sorry but I just sold it to open door for $20,000 more I was like damn because I literally had it written down I had it written down man I was like I'm gonna buy two houses in this first year and so at that time I was just like all right maybe you know it's not in God's timing and then I thought about it I'm like wait a minute why am I using God as an excuse you know I'm a person of Faith so I'm always thinking like all right is God just trying to test me is he's trying to say like you know get out there actually work for it it's not just going to fall in your lap every time and so it's kind of fun Story how I got my second house was I ended up that same weekend I told everyone in the house hey guys we need

4:50More room so I got to go buy another house and look at me like how are you going to buy another house in the neighborhood like doesn't happen like that and so I said I got a plan I got a plan I'm gonna go door knock on every single neighbor's home and that's what I did I put a backwards hat on because I don't want to look like pest controller or solar salesman so I just like did a little jogs for like three seconds I'm literally jogging like house to house knocking on the door hey I'm your neighbor this is my pitch by the way and I want people to take this story and to say just get creative like you don't have to have it perfect I had analysis paralysis for five years before my first house but you'll see what happens when you just you know go out there and try stuff and get creative with it and so I knock on the neighbor's door this is my script I'm Jesse I'm your neighbor well kind of I'm actually homeless because we have people renting my house but I love this neighborhood so much that I'm looking to buy another

5:38House here are you looking to sell that was my pitch and I people look at me crazy yeah and I kept doing it I'm like sweating my ass off because it's Arizona it's hot and I get to this neighbor's house across the park as the Sun is setting I knock and I say hey I'm Jesse they're like hey you know what we're renters I'm like oh no worries but they said we're about to sell the house and this when I stopped I'm like oh can I talk to the owner and they said sure that same day made an offer 30 days later we closed the second house by door knocking wow wow yeah there's so much that people should not skip over in the Nuance of what you talked about you know you got intentional initially wrote down your goals which I think is super important it's amazing how quickly things come to fruition once

6:26It's crystallized not just some general thing out there and then you took action like that you know and you didn't know exactly how it's gonna turn you didn't have growth house like pictured in your mind but you know you start like with a concept and then it evolves from there that's that's how great things happen they don't just like you go from zero to amazing overnight it's like iterations along the way and you have realizations then improve and so I love that yeah door knocking is is tough I mean that's I mean you really jumped in and but that's how you find some great deals sometimes is doing those things that no one else is willing to do so how I guess if we could back up a little bit how did you finance the first deal and then how do you buy a second deal then were

7:15You still work in your corporate job at this time and what what did that look like yeah so how I about the first house I was technically still living in Oregon and my job was based in Oregon so I ended up getting a second home out in Arizona so I did 10% down and then I think my mortgage and everything it was when rates were pretty pretty nice so I think everything was like $2,000 and then if you added the co-living or I guess house hacking expenses ended up being around 36 and then if you think about it what I was renting every bedroom for was around $1,000 so we had five bedrooms in the main house I was sleeping in one so that's $4,000 of you know I guess revenue or cash flow and then another oh this is a hack d citas I love those you can always rent those out on Airbnb

8:04As like another source of income so I was averaging about two grand on the Cita inside the house four grand and then the other bedroom I was sleeping in so four plus six and my expenses were 3600 you'll see the cash flow is pretty solid and that's just that first house so that's kind of like the numbers behind it because I always like to be transparent and share you know what does it actually look like yeah no that's great and that's such a great point you bring up with the the Cita you know here in the Midwest we call them more like Carriage House or Adu but you know some structure that's a separate separate apartment in itself in the back and what I tell people all the time because we just literally finished one of those two weeks ago we bought a single family house with this studio apartment in the back and what I tell people all the time is that is pure profit because

8:53Your expenses really didn't change much with that extra structure like maybe a little bit more utilities something like that but it it all just goes to your bottom line it's like just adding on another layer of profit on top of what you're already doing so super smart to to do that did the second house have that same feature yeah and I was very intentional I ended up getting the exact same floor plan the outside looks slightly different like paint but if you walked in you'd be like is this the same house with just different paint colors yes it is nice so five bedrooms in each of them so you got basically put potentially 10 streams of income plus the two Casitas out of just two mortgage payments M we actually added another bedroom to this house and an office so technically this one the second one we had seven

9:43Rooms six bedrooms plus the Cita so yeah it's just like highest and best use that's what how I always think of it what's the highest and best use we can do for a single family property and for me I like consistency so you know we have longer term people stay yeah and and what what did you pay for those properties the first one $3.95 and then the second one that same later that same year I believe it was 465 wow and I ended up moving into that second one which actually ties into the story which I'll pick that story back up but essentially the second one I moved back in so I was able to do I think I did 5% down and so at this point I now have a idea in my head I'm like growth House like-minded people living together live build Network together I like this concept let me put a more direct

10:31Ad on Facebook saying what I'm trying to do have this random guy hit me up on Facebook he goes hey man I'm living on my friend's couch I'm an entrepreneur just started my business Airbnb Property Management I got three properties making about a th bucks a month can I come check out what you got going on I'm just anyone who's excited I'm excited so like yeah come over I forgot to mention that the houseold was a disaster because I just bought it all the carpet was ripped up the whole house is getting like remodeled inside and my other house like I mentioned there was no more room for me so I moved into the kitchen for a month in this new house so I'm having this guy come see this new house with this whole entrepreneur concept he walks in and he's like this place is kind of a mess and he goes why is your

11:19Bed in the kitchen I just remember this Sly I'm like don't worry about it this is what it's gonna be I started painting The Vision hey we're gonna have a master class here this is we're going to have like a whiteboard here and we're going to have you know weekly accountability meetings we'll put the coal Plunge in the back and I'm just you know painting this vision of what it's going to be and he looks at me kind of crazy but I saw in his eyes I'm like you have the same craziness I do as you see the vision so he puts his head on his hips and he says all right man I'm in and that's how I got Derek mcmonagle who's like one of my best friends to this day the first person to ever believe in this concept and it's it's actually crazy because within six months of him living at the house he was able to go from three properties to 30 plus properties in three different states and now a year

12:08And a half two years later he still lives in one of these houses and he's making over half a million dollars in Revenue in his Airbnb Property Management business this is incredible wow that is awesome yeah and and getting Scrappy like you talked about like you you moved out of the other one so now all a sudden you can finance a primary residence again you know and so you can put 5% down on a new property and then combining that with a house hack there's like layers of just smart strategy you know layered in to where it equates to at the end of the day a a significant amount of cash flow and you know you can only do that so many times with the primary residence but if you can do that in the beginning and get to a place of Financial Freedom it frees up 40 plus hours a week of

12:56Your life back to you to where then you can to employ other strategies as well so that is that's awesome so I think when when people hear co-living you know their mind goes it tends to go to like like I'm trying to think of like like Veterans for example you know like homeless veterans or something you know sharing rooms or you know it's not typically like entrepreneurs that that I've heard of in the past but can you kind of Define co-living rentals and what that means to or I guess what what different shapes it could take yeah yeah great question and I think that is the common way to think of co- living it is more so solving the affordability of

13:44Housing because that's a huge need right now especially in Arizona we're definitely needing to build a lot more houses to to have everyone you know live in amazing place so I mean there's a company I always like to shot them out called pads split and I think that's kind of a company that's taking that approach where hey we can't you know afford normal rent because rent's nuts and so we are providing these homes and turning these homes that are maybe four bedrooms into seven bedrooms and then they have a place to stay so I guess co- living if you want a definition it's more so like you take a house and you add bedrooms to it you kind of take away a lot of the common areas and you're able to rent by a room and you can do it furnished you can do it unfurnished in the terms of the B the bedrooms but the rest of the house is furnished got it yeah yeah

14:33And eus LeBlanc who who founded pet split came on this show probably about man it's been about two years now yeah super smart and that was kind of the first like intro to me to this model and I was like man you really got this dialed in and and the cash flow is so much higher than than long-term rentals it it makes a ton of sense how do you manage you know I think once once you get a lot of personalities like in one space like there can be problems that come up you know just some people like to have their coffee mug and you know no one else use it and you know like it might cause issues you know sharing some some common areas so how do you manage that part of it great question and I like to say I don't manage it because it's pre

15:22It's pre-managed during the vetting process I think that's where you know you have to be pretty strict with the vetting process like hey just want to make sure you understand these are the type of people that already live here does that fit your Vibe CU for us it's all about Harmony like you said in the house so we want to make sure people get along so for example when we do these homes a lot of times we do this process where it's it's an application first after the application it's like a questionnaire right they hop on a call with me or my assistant and then after that they have a FaceTime tour with someone that's in the house so you actually get to meet one of the roommates prior to moving in we usually don't do inperson tours we just do FaceTime so they get to meet someone in in the house get the vibe get the feel of it and then after that there's still a good fit obviously we do credit background check and then the last step is actually a house call a FaceTime call with the house so a

16:10Lot lot of times these guys are eating dinner together they're hanging out afterwards and hey there's someone that's looking to move in get on a FaceTime call with them awesome they're excited because they actually are the people that have the final say in vetting someone that moves into the house so it's more of a house decision rather than Jesse or growth house like it's got to be a good fit for the entire community