Have you heard of House Hacking? Break the game with this powerful lever of wealth!
Podcast Episode Summary
- Real estate investing and house hacking with Chad “Coach” Carson.
- On the path to financial independence, how much of your own budget is going towards housing?
- After Chad graduated college at Clemson, he got started with real estate investing in his college town.
- How financial independence and real estate investing have allowed Chad to move his family to Ecuador for about 1.5 years.
- When they moved to Ecuador they sold most of their possessions and rented out their house for 2 years.
- When Chad graduated college he kept his expenses extremely low and actually moved into his business partner’s spare bedroom to help save money.
- This led to his concept of “house hacking” as a way to keep housing expenses down to nearly zero
- House hacking: buy a multi-family rental unit and live in one unit while you rent out the rest and have them essentially pay for your house payment entirely
- Easy to become rich by saving the money you’d otherwise be paying for your house and car payments
- Keep it simple and pay attention to the fundamentals with your financial life
- How do you get started with real estate? Where do you find a multi-family unit to buy?
- What to look for: neighborhoods with charm, safe, public transportation nearby
- Avoid cookie-cutter neighborhoods on the outskirts of town with new construction
- Chad recommends hiring a real estate agent at the beginning. Have them run searches based on your desired neighborhoods and automatically send you new listings.
- It is essential to walk the neighborhoods and talk to people to gather intel. Tip: walk with your kids to seem less intimidating and go on a Saturday morning when they are out
- It’s important to think differently and take that extra step to find great deals. Have to reach out to people and get outside your comfort zone
- Real estate: The numbers crunching has to come into play at some point. Put together a profile of what makes a good deal upfront
- Follow the ‘1% rule’: You are looking for the monthly rent to be 1% of the purchase price ($1,000 per month rent = $100,000 house price)
- Chad was able to pull his equity out and invest in another deal
- Small investors need to avoid 5 or more unit complex in order to get the most favorable owner-occupied financing
- Once you have owner-occupied financing, you can move out and keep the favorable financing rates and rent all the units
- How to get started finding financing if you have no money saved and no contacts?
- Options: FHA 203k Loan in order to remodel and do a house hack or Fannie Mae Remodeling loan
- Building relationships with local real estate investors and private lenders
- Real estate debt snowball to fully own these properties as a path to wealth and financial independence
- Chad’s personal strategy: 15% of his assets are currently in index funds with a goal of up to 33% and the vast majority of the rest is in real estate, cash, and financing/note investing
- Chad and his business partner have approximately 90 rental units currently
- Chad is not interested in growing as large as possible – he wants to find a balance in life and keep it as simple as possible to meet his financial independence goal
- Hot Seat Questions
- Favorite life hack: Planning and actually writing it out. Weekly, monthly, yearly
- Biggest mistake: buying into other people’s goals and getting sloppy with purchasing a lot of properties at the height of the 2007 bubble
Listen to Brad and Jonathan’s thoughts about this episode on Episode 16R
Links from the show:
- CoachCarson.com
- Root of Good
- House Hacking Guide – How to “Hack” Your Housing, Live For Free, & Start Investing in Real Estate
- How to Retire Rich With Ugly Houses and Embarrassing Old Cars
- Stock Series at JLCollinsNH.com
- The Debt Snowball Plan – How to Get Free & Clear Rental Properties
- The All-Cash Plan – How to Get Free & Clear Rental Properties
- How Many Rentals Do I Need to Retire
- FHA 203k Loan information
- Bigger Pockets: “Why the Massive Real Estate Empire You Think You Want Won’t Give You the Life You Imagine” by Chad Carson
- Brian Johnson – Philosophers Notes/Optimal Living 101
- Dirtbag Millionaires – EatTheFinancialElephant.com
- Coach Carson on Twitter
Books Mentioned in the Show:
