Hack Your Home & Live For Free with Craig Curelop #445

financial independence two years later in twenty nineteen. And house hacking it played a major role in Craig's rapid assent towards financial freedom, and that is what we're talking about today. Craig's written the book The House Hacking Strategy, and we're gonna cover all of the ins and outs of house hacking and how it is that it changed Craig's life.

We're going to discuss the different house hacking methods because there are a variety of options that you can go with um and some of that actually too depends on your personal situation, like if you're single, if you have a family, and so we're going to cover what you need to know before you start house hacking as well. Craig, thank you for joining us today on the podcast. Matt and Joel, thank you so much for having me on. Thanks for the great introduction. And yeah, it was amazing

to meet you guys a couple of months back. That's right. Yeah, we got to hang out in person, Craig, which was a true honor, a pleasure. And yeah, we love meeting our fellow money nerd friends. We got to see his mustache in real life, which was always you'll be able to touch it? Maybe, oh, impress empty there. That's um, that's a very very kind of you to offer, Craig.

The first question, right, Yeah, the first question we ask everyone who comes on the show, though, is you know, Matt and I, everybody knows that we like a good craft beer and we don't mind spending money on it. It's something that we splurge onn while we're also trying to save and invest well for the future. So yeah, for you, do you have a craft your equivalent, something that you exploge on in the here and now while

also house hacking and saving your money. So this might be a cheap, but tell me and if it is, I'll make him another one. But I splurge on having people like do things for me if that makes you know, So it's like, you know, an example is I had this table that I had to put together, and I just kept dreading it and dreading it, and so I just called a task Rabbit and for thirty dollars, they came and put together at the table in like an hour, and I was like, that is the best of the

dollars I've ever spent. And like, you know, those lingering tasks that like you gotta get it done, you gotta get done because like you never find times to do it. I just have been hiring those out and they're usually like thirty to fifty dollars to get done. I feel like that's a splurge. And it's just so amazing to have things that you don't want to do already done for you, especially when you are able bodied and you know, like you're like I could do that, I just don't

want to. Yeah, I think if that is a splurge and occasionally a worthwhile one. So yeah, I like definitely a splourish, But dude, for me, I think it would be so difficult because I get a sense of satisfaction when I'm able to accomplish, you know, even if it's a menial task where something that's more where the physical labors involved, that sense of accomplishment like yeah, I like not doing it and having it get done and being like,

holy crap, it's done. Well. Someday, Craig, you're gonna hire one of those tasks out and it's gonna be Matt who's the task grab it that actually shows up because it makes me so happy. If it makes you so happy putting the other furniture, like dropping random things off at random places, it does for myself. I'll say that maybe maybe less uh anomaly for everybody else who's looking to hire out there. But you know, Craig, let's kind of dive into this. You've called yourself an average guy

just doing average things. You've said that motivation is your distinguishing factor, and so you know, question we have for you, like do you really think that basically anyone can incorporate the strategies that you're using to build wealth? Yeah? I mean I think anybody, anybody on this earth can do what I've done. Right. Um, And as you start are doing things and you start being a little different, is when more and more opportunities start to come your way.

And so people may say, oh, yeah, well, like you wrote a book from your pockets. Well it's like, well that came like three years into my journey and I had written fifty or sixty blog posts for them and all that stuff, and so there was an opportunity that came right. And so I think that if you start doing things a little differently, you'll see more and more opportunities pop up. And you know, that's when your life

really opens up. Okay, all right, I like it. So, yeah, there's an element of you gotta put in the work, and you've got to be motivated to put in the work before you're going to see the results. And I think sometimes in like the Instagram world we live in, we see results on display all the time and we don't see like the backstory of what it took to actually achieve that. And so yeah, I think that can be demotivating for some people, um when it doesn't happen,

success doesn't happen overnight for them. But but let's specifically, let's talk about house hacking, and can you get us a set up, like, how do you define house hacking? What does it mean? Yeah? For sure, so house hacking is the idea that you purchase a one to four unit property with zero to five percent down, so you're doing a low percent down purchase on a wonderful unit property. You need to live in that property for one year because that's what allows you to get the low down

down payment. And while you're living there, you're renting out either the other rooms if you're living in a single family, or you're renting out the other units if you're living in a two, three or four unit. That rent that you're getting covers your mortgage and you're able to live for free, thereby reducing or eliminating what likely is your largest expense in housing. So this is obviously something that

you've done. But why is this? Like it seems like this is one of your favorite wealth building tactics, you know. So so first of all, why is that? And then I guess, maybe, yeah, what got you so excited to

share this with other people? So you know, everyone probably listened to this podcast understands financial dependence, right, and that that basic formula of hey, once you're passive income exceeds your expenses, your financially independent and for me, the quickest way to achieve financial independence was to just pick up enough rental properties with that rent or passive income exceeds my expenses. And with house hacking, you really only need such a fraction. You know, you only need three or

five percent down. Right, So let's say you're gonna buy a five hundred thousand dollar house, right, which is a fairly expensive house for most of the United States. You're gonna put three percent down. That's fifteen thousand, maybe twenty dollars after miscellaneous costs. So with twenty dollars, you're able to purchase this five hundred thousand dollar asset that's gonna pay you, hopefully a thousand dollars a month of passive income.

It's going to increase in value over time if you hold it long enough, you're going to get tax advantages, and you're gonna get loan paid down, So your net worth increases in four different ways by putting such a small amount down, such that your return on investment is

pretty much over every single time. Like I've done five house hacks now, every single one has been a hundred percent or more return on investment, and I've helped out hundreds and hundreds of people directly get house hacks at almost every single time their returns on investment are a hundred percent or more. And I just don't know any sort of real estate or any sort of investment in general that you can consistently achieve one hundred percent returns

without the risk and without speculation. Okay, Yeah, Matt and I we like real estate a lot too, and we have participated in various house hacks. I had a renter in the back of a duplex for a while, and actually the first house I bought, I had a roommate in that house who paid most of the mortgage, So I totally get where you're coming from. Matt had an Airbnb in this basement, which is now our podcasting studio.

But while you you've just sung the praises, you also in the book you do mention the downsides, which I appreciate because even as exciting of a prospect this house hacking can be for people, it's nice to know all the information. So, yeah, what would you say if are the worst things about house a house hacking? What are the downsides that people need to be aware of before they like jump in with both feet. Yeah, so the downside is that it is more it is work. You

have additional responsibility if something breaks in the house. You know, if the rooms aren't filled like you're in, there's higher risk because your mortgage without any tenants is going to be more than your rent probably and so you will probably lose in the short term if you don't get tenants.

So you have a little bit of pressure and a little bit of responsibility to get that thing filled, to make sure your tenants get along, make sure your leases look good, make sure you screen your tenants wisely, make sure the property is working right, and so there is a little bit more work that is involved in the short term, right, But the whole idea is that you're building assets when you're relatively young, so that in five to ten years from now you can offload that to

a property manager. It's a little to no work for you and you're just chilling with the passive income. Got it, And you know, Craig reo quick I want to talk about too. I mean, like Joel mentioned, were in the real estates here a little bit in addition to the other pursuits that we have, but you specifically zero to five percent down. We often talk about down to avoid p M. I can you share with our listeners how they can go about getting a property with even zero

dollars down. Yeah, so zero dollars down that is typically reserved for military folks. The v A loan allows you to purchase a property with zero percent down. Now, the downside, so that is the v A loan is a little bit harder to get accepted by sellers. So in a competitive market, you just might have a little bit of trouble. But because you're putting zero percent down, you can probably afford to go a little bit higher, right because you don't have any down payment, So that might be a

way to counteract that. Another way to get zero percent down is what's called the U. S d A loan, And yes it's the same you know, the same corporation or the same entity that grades your beef like U. S d A graded the opera housing loans, but it's more for people in rural areas, so you'll have to just look online to see if your area qualifies. But if you're anywhere near like a bigger city, you probably

won't qualify for that. Okay, I go to the same place for my stake and from a home loans personally, and I love kind of how how you talk about real estate in general, you say that a big part of the problem is that we're just thinking about housing all wrong. Like the way we think about buying homes needs like a refresh, because we're looking to basically buy the nicest single family home that we can comfortably afford

into our budget. Like why why is that method, which is the traditional method, which is the route that most people go, Why is that such a bad idea? Well, that's such a bad idea because you put yourself in a position where if you lose your job, which can literally happen tomorrow, or you suddenly stopped liking your job, your life becomes miserable because you need to work. Right, Don't get me wrong, I'm all about owning a home. And we're actually under contract for a million dollar forever

home right now, but that's after seven house acts. Between me and my girlfriend. We've got twenty something properties, and our income from those properties can easily satisfy our mortgage payment. And so you know, it took five plus year of of kind of hustle and living in unideal situations to live now in our ideal situation, which we're very comfortable, comfortably able to afford and so I'm not totally against it.

I'm just totally against first home is your forever home jump right out of the gate and you're paying to three tho dollars a month in a mortgage payment. Yeah, I think that's a different mentality that a lot of especially first time homebuyers, homebuyers need to keep in mind

as they're starting to look at properties. They I think they do have that mindset when they're looking at houses for the first time, and they thinking about it more as an investment, as a you know, compared to something that is just going to be your forever home right out of the gate. Is an important thing to keep in mind a little bit that sacrifice early on can pay off big dividends down the road. Totally. Yeah, yeah, Craig. So currently the market is really hot right now, you know,

prices are they're up double digits year over year. Do you feel that it's possible right now to still find an investment property that makes sense, you know, to house hack, even in this climate. Yeah. So, you know, it's funny. I actually just did a TikTok I went like semi viral about this exact thing where you know, in everyone works. By the way, you will never hear me saying congrat thank yeah, it's my second one. So I'm like, oh,

I'm gonna roll. So you know, in seventeen I bought my first place and everyone was scared of the market was going to crash, and people were like, yeah, I'm gonna wait, right, every year is the same story, right, And so the point is it is just like the market, you really can't time it. You can't time the real estate market either. So if you're just able to buy a house every year on the year, and you can make sure that it cash flows, then it doesn't matter

with the market. Dose right, My houses can all lose half their value tomorrow and they'll still be cash fling me a thousand dollars or so a month. And even if rents decrease by they'll still cash for me eight dollars a month. So that is like the whole thing is, if you can hold on and you're not forced to sell,

then nothing will happen. What happened to two thousand eight was there was a bunch of flippers and a bunch of people trying to make a quick buck and that's why, and they were forced to sell and that's why the prices, you know, the market crashed. So I don't see there being a big crash. What I see is there may be a a a crash in some other market I don't know, potentially crypto, potentially student loans, student whatever, right,

that may cause the market to go down. And then because the market goes down, people will have less liquidity, maybe they lose their jobs and whatnot, and so then the housing price the housing market will then just kind of go down a little bit, right, But I don't see the big crash because I don't see real estate as being like the fundamental flaw of this next crash

whenever it happens. Yeah, there could be some reverberations because of other financial issues in the economy potentially, but but still yeah, like because it's a physical place, uh that that you own, and people always need a place to live, there's a certain element to which you're right, Like rents can decrease, but they're not going to go to zero and uh, Craig. We want to get into your story though, because you just mentioned the fact that you're buying a

million dollar home now. But we we want to like discuss like all the hard work that it took to get there, because your story and the specific house hacks that you undertook are really interesting. So yeah, we're gonna ask you all about that right after this break. Alright, we'll back to the break. We're talking with Craig Curlap about house hacking, and uh, let's let's start way back at the beginning. Craig, we want to talk about your your first ever Craig and diapers right now, the first

alice that you purchase. Tell us about your first house ack, because you're all about living for free, but this one didn't get you to that point immediately. Can you tell us a little bit about that one. Yeah, So it was back in two seventeen UM. I was coming from a job that I hated to Denver, right, so kind of wipe the slate clean and I pretty much went all out right, So I was living. I found a duplex. It was up down duplex, totally redone like very pretty,

very good looking. But they were both one bed, one bathroom apartments and it was a mile and a half from the office as to where it worked. So I knew I could bike or walk to work pretty easily. And so what I did was I rented out the top and lived in the bottom. However, the rent from the top didn't quite cover my mortgage fully, so I rented out my bedroom on Airbnb and kind of put up like a curtain in a room divider with a food on in the living room and rented out my bedroom.

And so that allowed me to you know, live a d percent for free and even make like six dollars a month on my living What do you call that? Like blue collar house hacking? Like that, that's like house hacking to it's like furthest possible extent. It seems like, yeah, I would say maybe one step further is like getting a camper and like putting that in the driveway and living in the camper. To some people is actually probably more desirable because at least you have your own private space. Um,

but I didn't think of that at the time. So the living room is kind of you know what I did, and that's kind of like, oh my god, I would never do that. But that whole thing allowed me to, say, of another thirty or forty grand in the next year so that I can then purchase the next one, right, So I knew that it was just like a foundational

approach to it was a building block, yeah, exactly. And so it's like, you know, if you're listening to this and you're like, then you're single and you don't have a family or anything, like you gotta take your situation

that you're in and make the most of it. And the most of that situation is kind of living like kind of like a bum right, Like do that for a year to save, and then you'll, you know, then you can start buying house hack after househack after house hack, and after four or five house as you'll find yourself, you know, with a pretty sizable net worth, with a good amount of passive income, and then you can start doing some more fun things. You can start giving back

in your life. I mean, it becomes easier, you can regain some of that privacy. Did you like a deadline or an end insight? Because now you're engaged, you're buying your own home. This was this was like, you know, almost five years ago at this point when you undertook like living in the living room of this duplex in order to maximize the dollars the cash flow into your life. Like did you say, all right, I'm gonna do this, I'm gonna grin and bear it for six months, nine months,

or a year. Obviously, this wasn't something you wanted to do for a decade. This this was, like Matt said, a building block. How did you know how long you were actually going to be willing to Yeah, commit to the strategy. Yeah, So ultimately I knew my life would change, right. I knew I would it. Some day, I would meet somebody it. Some day I'd want to settle down and that this was not a forever thing. But I figured until then, why not just hustle and get it done.

And so you know, the first one again, that was really aggressive, right, I really it wasn't as bad as people thought. Most days were totally fine. There were a couple of nights where it was rough, but um, that was kind of like I just knew. It was like, okay, this is one year. It's one year. And so you know, if you ever read the read the book, or you know the comfort continuum, I was like, you know, the trade off, it's comfort and profit. I was very little comfort,

very high profit. But when you have next to nothing, right, like you said in the beginning of the show, I had negative thirty net worth and so I had nothing. So I need to make the return on investment that I do have really really high so that I can get there faster. And then as you build up your nest egg, you need a smaller return to achieve the

same amount of passive income. And so I'm okay taking a smaller return being less profitable, but more comfortable because you know, I start valuing having my own room, eventually having my own place. And now we have, like, you know, our fully owned place with our own yard and everything. And so it don't get me wrong, We're still gonna house act that million dollar home. We're gonna probably rent out the basement and put some tiny houses on the backyard,

but like very nice. You know, it's at least something that we enjoy and and will have a really pretty space for us. Yeah. Well, so you know, kind of as we're at this end of the spectrum, right, you're on the profit profitability end of the spectrum. A lot of times you're dealing with roommates. And you know, we've talked on the show before about screening for tenants. How does this change the equation? Is it a similar process or is it different when you are screening roommates. So

when you're screening roommates. Um, really, you need to look for a background. You need to do a background check in the credit check. I like to use a company called a rent Ready and rent Ready. Basically you can send your prospective tenants and application. You know, they put in their social Security number and there whatever, and they'll pull a background check and a C check on that. So as long as they meet your criteria, there you're good.

You can then call and ask for employer references for previous landlord references to make sure that they're actually at their job and to make sure that they you know, they didn't cause trouble for previous landlords. You know, you're probably gonna meet them to show them the house. You can get a pretty good feeling for who they are there, and so they kind of check all your boxes. Then you're like, Okay, I want to live with you, or

it's not gonna work out. Yeah, And I appreciate that you do all those things because, honestly, Matt, and I've said this many times on the show before, that's where so many landlords fall flat on their face. They do so many things well and right, and then they skip out on the on the screening process. They don't do a thorough job, and they don't call the previous and lords. They don't verify employment. Uh, they're they're they're not checking

the credit score. And if you don't do all of those things, then the chances that you're going to get someone who doesn't pay just increase exponentially. Let's talk Craig about your next house acts. You have the duplex, living in the living room, essentially like two househacks in one, and then you've got enough cash to to purchase your next property. Where did you go from there? Yeah, so

I got a little bit smarter. I bought a five bedroom, two bathroom house a little outside the city, probably like seven miles north of Denver, but still right along the highway. You can get to downtown Denver in ten fifteen minutes. And so that one I bought, and I lived in one bedroom and rented out the other bedrooms, right, And so I think that's kind of you know, and I talked about a lot about that in the book, and so I think that's where the rent by the room

model got pretty popular. And that's probably my my recommended method, because honestly, I actually made more on that from a casual perspective, and it was a lot more comfortable because I had my own bedroom with like door and a closet and a window and and all those great things that you'd expect in the bedroom, not just cardboard and a curtain, a partition like you're in a hospital wing or something that the Charlie Munger approach to building buildings

to where windows are not a priority exactly. Well, Greig, yeah, I mean you kind of hinted at it, but you know, in your book you talk about six different house acking strategies that you share, and you know, it's it's nice to know that there isn't just one way to do it. There are like a few different flavors. And so what are some of the different, you know, some of your

favorite house acking strategies that folks can implement. You actually just kind of hinted at one of them or at one end of the spectrum talking about the trailer in the yard thing, But that is actually one of the approaches you talk about. Yeah, I mean I know plenty of people that have done that. I know it's very common amongst like rock climbers and kind of van life for people they're like, well, I do this anyway, So

why not buy a house and rented out? And so that's kind of one end of the spectrum, right, that's like the profit of ability side of the spectrum. The other side is the comfort ability. Now, this is what I recommend families, and you know people that are like, oh, I don't want to live with people do right, So you're you're at the utmost comfort side. It's still better than not doing it at all, but you just won't

profit as much. So you can buy a house with you know, the house of your dreams basically right like you name it. You've got the Florida glass ceiling windows, the pool in the back, whatever, whatever you need. But maybe you have like an additional dwelling unit in the back right where you can rent out that one bed, one bath or two bed, one bath a d U and you can rent that on Airbnb. That brings in

you know, maybe that covers half your mortgage. So instead of paying three thousand dollars a month for your mortgage, you're paying a month. That's still a massive savings and you still come out very far ahead. You know. Another way, if you can't find a house with an a d U, which because those are a little bit uncommon. Maybe you can find a house that you can section off, Maybe you can section off the basement and you rent out the basement on Airbnb. That brings in. You know, that's

what we're kind of doing now. Uh. You know, buy mortgagees three thousand dollars a month and we're making up we're you know, going to make about three thousand dollars a month in Airbnb. So I'm living on the top floor, three bed, two bath, me and my fiancee. You know, we're living basically for free in a great area. So

you know, it's a win win all around. So basically you're saying, like there's a spectrum and uh and and almost everybody you think can get in on at one end of the spectrum or somewhere in the middle based on kind of their desire for privacy and profitability. And yeah, you're right, Greig, because that I think for me, Yeah, I was willing to do the roommate model, do the duplex model, and now that I've got like three kids.

We even't did the duplex model with a with a tenant in the back for years while we had kids. But now we've got three kids and we're like, now, we don't want to mess with that, but we would totally do the a du thing. And so I think, yeah, as like your needs change as your life changes, Like there's there's something on that spectrum for everybody. Uh, if you care about like saving money and potentially living for free, right for sure? Yeah, And again it's your largest expense.

So I think if you can if you can knock a signific can amount off of that, you can have all the coffees you want, right and like you know, if you can buy the organic protace, it doesn't matter. Just like my thing is like keep the housing and transportation costs low and the rest of your legal take care of itself. Yeah, yeah, well, Craig, I want to kind of get specific to about some numbers when it

comes to maintaining a property. Oftentimes you hear like put one percent of the of the value of the home towards maintenance and repair. With these maybe shorter term rentals, whether they're on Airbnb or just with when you're cycling three more, folks, I can imagine that there's going to be potentially more damage to a property. Do you change the amount of money that you set aside to handle those repairs. It's funny, actually the short term rentals are

less they're less changing. You know, I was going to ask that because I found that it never got super dirty. Yeah, whenever someone is only there for just like a day or two. Uh, it never gets super grimy in there, right, exactly, Cleaners coming in two or three times a week. They're probably not using the appliances and stuff because they're probably going out to eat. They're hardly ever, they're because who comes to a house just just to stay in the airbnb? Right?

Who comes to a city just to stay in the airbnb? And so you find that there's actually not a lot of damage done. I mean maybe they like knock a suitcase into the corner and there's a chip here and there, but you know, those are easy enough to fix. Um, it's it's the long term tenants that have their you know, their curry sitting in the pot that starts to make the walls turn orange or whatever is really the damaging stuff. Gotcha. Yeah, all right, Okay, we got a few more questions to

get to include. We want to talk about like where do you go location wise to get the most successful house ACKs? Will We'll get to that question and some others for you right after this break. All right, we're back again. We're talking with Craig curl Op about house acking and like Joel alluded to before the break, Craig, you know, real estate in general, it's all about location and when it comes to house acking, like how do is what part of the country you live in impact

your ability to successfully house hack. You mentioned how you had that smaller duplex there in the city, but you found it to be more profitable further out of the city. Is there a dynamic that folks you keep in mind when it comes to house hacking and a more suburban area versus a more urban environment for sure. So so there's a bit of a trade off, right I say that property didn't cash flow me that well, Um, but

you know a few years later it really does. It cash flows and you four a thousand dollars a month, And because it's in such a great area, it's also appreciated by far the most out of any property. So appreciation is how you really get rich in real estate.

So if that's kind of your goal, like from a net worth perspective, Um, you know they're being in the city is okay, But you just have to know what you're getting into, right, Like, if you're in San Diego or l A or something like that, Like it's gonna be hard to you know, get a property that's gonna cash on a thousand dollars a month, but it's gonna appreciate probably a couple hundred grand next year. Right, So, um, there's that trade off that you need to think about.

One thing that I really like are kind of these like secondary tier cities, right, Like think about Denver, right, you definitely would not put that in the same ballpark as l A, San Diego, San Francisco, Boston, Chicago, New York, right, Like those are cities of their own. But like think about like a Denver or a Seattle or in Austin word, like the average person can pretty much still buy a

home in these cities, and especially in the suburbs. And so getting out into the suburbs, right and some people want to want to live acquired for life. And there's they're bigger, you know, they're bigger homes, there's more bedrooms that you can potentially rent out, there's a yard for the dog, and so being out in the suburbs in growing cities is really good because as that city grows, right, it's going to grow from the city of the center the city center outward and so eventually you know your

housing is going to appreciate quite a bit. So one of the things you mentioned too was being close to work and and you know prior you prioritize biking, which we're with you on that is that do you like when it comes to infrastructure and specific location in a city beyond just the like suburbs versus like interior of the city debate, like what else are you looking for? What other amenities nearby? Are you saying? Like that's going to make this house hack more successful than maybe another one.

So if you can get somewhere close to public transportation, that's a pretty big bonus. And it also depends on what city you're in, right, Um, I know Denver is really not huge and their public transportation, but it's still like a nice little perk, right if you can kind of walk or a short ride or maybe even a bike ride to restaurants and um in bars, that's superplus.

My first three house ACKs, I really wanted to be close to bike paths because I like to bike to work, and so in biking on the bike path is a lot more pleasant than biking on the streets and stopping at every red light and whatnot, So that was kind of a priority for me. But again, like I would say, most people probably aren't riding their bikes to work, and it was just like a thing for me, So I

could also cut down on my transportation costs. Right yeah, and again that's the second largest line item on our monthly budgets. Right, yeah, you're killing two birds with one stone by being on the bike path in that duplex. So, Craig, you know, let's talk about debt. Let's talk about leverage a little bit. Obviously, you believe that it can be used well, right, it can be powerful in helping folks to accelerate their wealth building potential, But you can also

get in over your head with too much leverage. Are you worried about folks who might be taking things too

far and over extending themselves. I'm not worried about anyone who who educates himself, anyone who's listening to this podcast, anyone who's actually, you know, wisely buying properties, right, Like I would be scared if someone was over leveraging a property that they wouldn't be able to cash flow, right, But like as long like the name of the game is like can you service your mortgages if the market were to decline? And so if you can, then you won't be over leveraged, right, I mean I've got so

much debt, right, but they're all mortgages. It's probably like three or four million dollars worth of debt, which may scare a lot of people. But I don't pay it off, right, tenants do. And so you know, if all my tenants were to move out, then you know, then that would be a problem. But like the odds of that happening are just so low, right, and so you have to

like play your odds wisely. So, so what numbers are you crunching than Craig, Like, as you're looking at a property and you're saying, like, what are the specific numbers that you're looking at to say, yes, this one works, yes, this one doesn't. That's definitely one I want to buy and invest in because I think it's gonna make sense.

And especially when you're talking about different ways of making money, whether it's an airbnb, right, Uh, that's that's a different way, potentially more lucrative but there's like a little more risk reward there versus like a long term lease on a property, Like, yeah, what numbers are you running and how are you figuring out whether this is like going to be profitable for you, like in the short term and in the long term

for sure? Yeah, I love that question. So the first thing you want to do is obviously talk to a lender and figure out what your monthly payment will be because everyone's interest rate will be different all that stuff. So what's your principal interest, taxes, insurance in your p m I every single month? Right? And so you know those are physics fixed expenses that you need to pay

each month. And then you go to you know, rent Dometer or Zilla or whatever when you look at comps and you figure out, okay, like what can this place rent for? Now? If you're in a city like in Denver, You're you're hardly ever going to find like a single family house that can rent out as a single family the house and totally cash flow to the way you wanted to be. But like I look for, can I split this single family house up into two units? Right?

Like it does the layout easily accommodate that? And if it does. I'm like, okay, well I can get a lot more if I split this up. And so I like to show I like to make a thousand dollars over my mortgage in rent without me living there. So um, and how that looks is just you know, a thousand words over the mortgage. That'll be enough for me to cover any vacancy, any repairs, any maintenance, all that kind of stuff. And that's just kind of my number. Different

things work for different people. My most recent purchase, you know, our mortgages three thousand, we expect that we could rent out if we didn't do Airbnb. We expect we can rent the top out and we can rent the bottom out for I think like eighteen hundred or so. So that's about four thousand dollars or three thousand dollar mortgage, Like it kind of pencils out on Airbnb. However, right, I'm gonna be able to rent out the bottom for

even more. And so like I'm so, I have got multiple strategies that can get me to that thousand dollars, you know, and in the thousand dollars is just my number, right, you might be comfortable with five hundred and and I'm

not saying that would be a bad deal. I would say it's it's more important to act quicker than it is to like make sure that your number is exactly pencil out when it comes to hot secking, And you probably want to be a little conservative when you're running these numbers two, Right, you don't want to assume that if you put it on Airbnb, that it's rented out

twenty eight nights out of the month. You might want to assume that it's gonna be renting out for seventeen or eighteen nights out of the month, and just make sure that you're not like over assuming the income that that property can provide. Yeah, I would say you don't want to be over conservative, but you also don't want to be so conservative that you're scared and you don't take action. Because with house hacking, it's it's more like

any other type of real estate investing. Yeah, you want to get like the best deal, but when your house hacking, it's all about the timer, right, Like, so your timer doesn't start until you close on that first deal, and then you can buy the second one third, one fourth one and that's where the power comes in. You're not

gonna get that rich off one house. You're not gonna get that much passive income up one house, and so you can get a killer deal and you may makes of cash flow instead of a thousand dollars a month cash flow. But I'd rather have two houses making a thousand dollars each basically in like thirteen months than having two houses making three thousand dollars in two years. Right, Yeah, this is one of those instances where for you having it be pretty damn good is going to be better, uh,

multiple times than having perfection staring you in the face. Right, exactly right. So Craig, you know, like we've talked about the passive income obviously that's one of the benefits of house hacking, but you know you're not a c p A. But you're right about the tax benefits as well. When it comes to investing in real estate. What are the

top tax perks of house hacking? So the biggest one is that you can write off a lot of the things in your house that you wouldn't typically write off, think like toilet paper, dish soap plates, bowls, forks, nis, especially if you leave them with your house when you leave, right, So it's it's housemade items. Also, the one of the

biggest things is depreciation. Depreciation is probably the biggest thing, the biggest tax right off that you get, right, And so the I R S says that your house will depreciate to a zero dollar value over twenty seven and a half years, so they allow you to take that reduction. You know, let's say it's a five thousand dollar house. You divide up by twenty seven and a half and whatever that number is, you can take that as a deduction on your taxes year over year over year for

the next twenty seven and a half years. Right, And so let's say you make I don't know, twenty dollars on your rental property, Well, you're acting. Typically you'd be taxed on that, like if you made and a job to be taxed on it. But because you've got that depreciation, it will offset that. And if you end up with a negative number, which oftentimes you do in deppreciation, you can actually offset that to your regular W two income.

And so you can actually like let's say you make a hundred thousand dollars a year from your job and after the depreciation, all that your rental property taxes show that you lost twenty dollars you'r. The I R S will show that, hey, you actually know you only made eighty thousand dollars this year, so you could potentially lower your tax brackets or lower percentage tax as well as the amount you're actually tax on. And so that you know,

in itself is super powerful. And that's how you see a lot of people who are like really rich, uh, don't pay any taxes because they buy these massive buildings and take a massive depreciation expenses on them. There you go a little tax hack in addition to the house hack, a little two hacks in one. But I'm not an account so right now, but it's true. It's true. I mean that is That is definitely one of the things about real estate investing. It it can be helpful from

a tax perspective. Even though your house isn't necessarily depreciating, the I R S says that it is, and that helps you out when it comes to your bottom line. Um, craig, just final thoughts, what else do do people need to know about house hacking that we didn't cover? Do you have any parting words of wisdom for somebody who's like, all right, I'm intrigued and I feel like, obviously it's done.

It's been great for Craig and they've they've heard Matt and I stories over the years about how real estate investing has been helpful. Obviously we have not house hacked to the degree that you have. But yeah, what are what are the final things that you would say to them at the end of this episode. I would say, make sure you know. I would say you need to take action. And one thing that will make your life a lot easier is finding a team that knows what

you're doing. So, you know, finding an investor, friendly realtor, finding someone that has house acts of their own. Finding someone that invests on their own will allow you, you know, they'll be able to help you, you know, figure out what house works, what house does it. They'll be able to help you. They probably have a whole list of vendors of contractors and stuff they work with. They have lenders that understand house hacking can help you qualify for

the second house. So just having a team in a community that knows what you're doing will beach mendestly helpful. And so if there's one thing you do, I would recommend doing that nice And of course that is what you do because you are a realtor and that's something that I know that you do for your clients. There, Craig, But man, we really appreciate you coming on the show.

We appreciate you talking about not only your personal journey with house hacking, but sharing how it is that others out there, like honestly, wherever they are in life, like whatever their family status, there are different ways that you can house hack yourself. And so, uh, yeah, where can listeners learn more about you and what you're up to. Yeah, So we have a podcast of our own. It's called invest to five or actually we're rebranding to invest to five,

but it's also called the five Team Podcast. So search either one of those and you'll you'll se you'll find us, and also on Instagram and TikTok I am at the five Guy. Awesome, Well, Craig will link to all that stuff in the show notes. Hey, we really really appreciate you joining us today. I appreciate you guys having me on. It's been a pleasure. All right, what an information laden episode. I feel like we just had. We had a lot

of questions for Craig and he brought the answers. We were able to talk through just a ton of the different things that folks need to keep in mind as they are thinking through First of all, just you know, thinking about their homes differently, right, Like it's almost like this mindset shift that needs to take place in order for you to think about your first especially your first home, not as a place that you're gonna be living out for the rest of your life, but thinking about it

like like a stepping stone. They're building blocks that are going to get you closer to financial freedom. But that wasn't my big takeaway, by the way, But what what was your what was your big your key takeaway for

this episode? Yeah, this is definitely a topic near and dear to both of our hearts as real estate investors and has people who have seen just the reality that investing in real estate and house hacking can dramatically lower your housing expenses, can just make you more nimble, more flexible,

provide more financial freedom. And so yeah, it was like we we know this, We've talked about it, but let's talk to the let's talk to the expert, the guy who wrote the book on it, and and Craig is definitely that and so yeah, I don't I think My

big takeaway was just the spectrum. I think sometimes when we talk about house hacking, it sounds like maybe some of our listener might too not they might be like, well, I don't want to own a quadplex and where they're like, I don't want to have to share up my bedroom exactly if they don't want to do it. Craig did, and I certainly don't want to do it. Craig did, but I'm proud of him for doing it. Is live in the living room while you're running out the bedroom.

But he had a time frame in mind, he had a mission in mind, and he knew, hey, I can put up this with this for a short time because it's going to provide so many opportunities, so much freedom for me, not too far in the future. So yeah, I don't know. I like that there's a spectrum though, and I think for a lot of our listeners they might say, you know what, I can house hack. I didn't think it was possible before. I thought that it was gonna be like too cumbersome, too intrusive on my lifestyle.

But I do think that there is a strategy for everyone, And yeah, I think that's just helpful to note and he definitely goes into more detail in his book about how you can accomplish those strategies and which ones are best for which kinds of folks, depending on what state of life they're in. But yeah, that's just as helpful knowledge. Yeah. Also, I'm just so glad that we got to talk about his mustache at the beginning of the episode. I feel like you and I we need more friends in our

lives that have a nice, burly mustache. But my my big takeaway, I wanted to highlight the fact that Craig was talking about the V A loan or the U. S D A loan, and those are mortgages that only require zero or five percent down. I wanted to talk about that because it's not something that we typically talk

about here on the show. Ideally, yes, you know you are able to put down when you're purchasing at home, when you are purchasing an investment property, but I do think that this is a sound strategy, especially if your house hacking right. And so if you find the right property, maybe you don't have all the money set aside, and like you said, uh, it can be a little more difficult to win a bid right to actually snag a property with some of these loans because they may not

be as competitive in a really hot market. But if that is the only option you have, and specifically, if you find the right house and you can see how you are going to be able to positively cash flow. If you can see that right out of the gate that you're going to be making a thousand dollars on a specific property, what gives you a ton of margin, you know, as opposed to if this was a house for yourself, that where you weren't on a house hack and you are just kind of maxing out what you

could afford and there is no income potential. Right. There's a big difference between purchasing a home with zero sent down for a lifestyle versus an investment where you're cash flowing a ton of money every single month. And so you know, that's not a strategy that you and I often talk about, but it is worth noting that that's an option that's available out there. Yeah, I agree, man,

I think those are two completely different circumstances. If you're buying a house to live in that you don't plan on house hacking, that you don't plan on making any income from, Like you need to do the hard work and say about the down payment, and I think that's lifestyle. Yeah, ideally even for house hackers like you would have more than three to five percent to put down. You would

have ten to twenty maybe even to put down. But if you don't, it is still a different calculation because of the fact that you can instantly be making money from that property. But you want to make sure you're running the numbers, like Craig mentioned, you want to make sure it's actually going to be profitable even if you don't come to the table with that percent down that we find preferable. Totally. Alright, man, let's go ahead, shift gears. Let's get to the beer that you and I enjoyed

on this episode. This was a beer by Reformation Brewery and it's called Jogger the Juicy Loggers. Then, what were your thoughts on this beer? This is a local one by the way to us here in Atlanta. Ye, just up the road up in Woodstock, Georgia. And yeah, this was I would say light and hoppy at the same time. It was kind of like a pale ale mixed with a pilsner, and I kind of I kind of liked it, like it's not a style that I don't think I've

ever had. What's anything that's been called a juicy logger necessarily usually I don't know, like loggers are usually a little more dry, fewer hoppy notes than this. But this is kind of running that middle ground between that the I p A or a pale and a pilsner. And it was nice. It was like light and refreshing and I like hops, So yeah, I kind of it kind of almost like a session I p A or something. Yeah, yeah, maybe it is. And they just called it juicy logger,

but I totally agree. This is a really good one, that kind of beer that you could crush after going for a run. Perhaps it's got a pretty low A b v H to boot And so yeah, I'm glad you and I got to enjoy these for this episode. While we talked with Craig, curl up, but Joel, that's gonna be it for this episode. We'll make sure to link to any resources we may have mentioned during this episode, and you can find that up on the website at how to money dot com. No doubt, So start saving

your money for that next home purchase. In that next home purchase, let's hope it actually makes you money. Yeah, all right, that's gonna do it for this episode until next time. Best Friends Out, Best Friends Out,