November 23rd, 2022
Something I’m Reading
Just finished a Christian book called “Gentle and Lowly: The Heart of Christ for Sinners and Sufferers” by Dane C. Ortlund - it’s a neat, although more intelligent and thus a harder, read. It reminds me of something from the age of the Puritans. But very good look at the person of Jesus.
Something I Teach
Ten Tips for House Hacking:
(For those unaware, house hacking is when you buy a small multifamily unit using a very low-down payment loan… and then live for free - or close to free - because your tenants pay most or all expenses).
1.) Get pre-approved before shopping
2.) Look for properties that are single family home BUT have an extra unit. Agents often mis-categorize these as single family houses and not multifamily. Look for keywords like “extra unit”, “multigenerational living” or “multiple kitchens.”
3.) Consider buying a single family house and turning it into a functional duplex
4.) Find an agent that has worked with investors before and understands what you mean when you say “house hacking.”
5.) Understand that you don’t need to buy a crappy, dumpy duplex to house hack. I house hack a $3M house in Maui. It’s doable. It’s not just for 23-year old bachelors.
6.) You don’t need to live 100% free in order for it to be a successful house hack. If you can live significantly cheaper than normal, it might still be worth it.
7.) People pay more to live in nice properties, so after you buy your property, fix it up and make it look like something from HGTV.
8.) Know the REAL cost of owning rentals. Things break. Tenants don’t always pay rent. Deduct at least 20% of the rent for those “non-normal-short-term-but-totally-normal-long-term” expenses.
9.) Use the FHA loan to get 3.5% down payment, a VA Loan to do a 0% down loan if you’ve served in the US Military, or a conventional 5% down loan offered by some banks.
10.) You only need to live in the property for one year, and then you can move - leaving the loan in place. So do this several times to build up a nice portfolio at the beginning of your investment career!
Something I Photographed
Josh Dorkin, founder of BiggerPockets, whispering sweet nothings into the ear of Micah, the Vice President of Corporate Finance & Administration at Open Door Capital. This was taken at Wilder’s third birthday party last weekend!
Something I’m Excited About
We just landed an incredible apartment deal in Houston! And we’re structuring it as another Generational Wealth Opportunity (like our last fund which filled in 30 hrs). Long hold term, simple profit splits, conservative debt! Expected to close by end of year to capitalize on the last year of 100% bonus depreciation. Keep an eye out for an email from Open Door Capital over the next couple weeks! (Or if you’re not on ODC’s list, sign up at www.ODCFund.com).
Something I Can Answer
Every week, I answer one question asked by a BTB subscriber. Have a question you want me to answer? Reply to this text with your question!
Question: “What is one thing in your past (in your career, business, or real estate) that you would’ve done differently?”
One thing in my past I’d do different: I would have treated “hiring” as the most important thing, because it kinda is the most important thing. Hiring someone is not a decision to be made lightly, but I believe it should be made earlier than you might think. I would tell myself, “Don’t let fear and a lack-of-knowledge” stop me from hiring. Just learn how to do it.”
Your Friend,
P.S. Comment below and let me know your thoughts on this week’s BTB! Please be friendly :)