How to Transform House Hacking into Million-Dollar Wealth w/ Ryan Greenberg

got first deal done , second deal done , how he did house hacking .

But now I find it something where in the beginning I guess it was always about the money and then , when you get the money , it's about your time , the camp of when you can do what you want with your time and your life is financially okay with you doing what you want to do , whether that's working , building businesses , going fishing or going to the movie ,

theater , whatever it is . If you could pick what to do and financially you are stable , I think that defines success . For me , that's a huge thing .

Do you think that you chose success at some point , or do you think it was a natural thing with ?

I was not happy . I felt like I had hit it . There was a ceiling that I wasn't happy hitting and that life to me was kind of just a little boring .

So at that time I did a simple numbers game and I was like I could go get another job and replace this other income if all things go to hell in the real estate market . But if I take the time that I'm taking over here at this regular job and push it into this other venture , that could 10x , where my teaching career could never 10x .

That was never an option . Teaching career could never 10x . That was never an option . It never was going to be scalable because you have a set salary and it goes up one to two percent a year , whatever it is . When I was seeing the real estate stuff , the money just made more sense .

It just was like , OK , the more I work , the more I put into this , the more I understand , the more I earn . And that to me was made it very easy . I called my mom one month and I said I'm not going back to work , I'm done , and she was very upset .

And the the month that I quit . I'll never forget it . It was the month before , it was June , and then I had to tell the school that I wasn't coming back in July because they were expecting me basically second week in August to start . And I looked at our , our June numbers and I think we made something like $168,000 in profit that month .

And I looked at my salary as a teacher at that time I was like $48,000 a year . So I was like , if I could do this in one

month now , even if this was an exceptional month versus the other ones , I don't need to go back to this job .

That was like if I take the time that I'm spending at this job and just put even half of it back into the business , I'm going to get a way better return If I had a job making a quarter million dollars a year as a scientist or something , a doctor , maybe I would look at it differently . But all I had to do was replace $48,000 a year in salary .

I could do that working at Starbucks almost .

Yet when you like your podcast , you look at everyday millionaires right , there's a lot of fallacies in my mind about becoming a millionaire is just so different . So far off , so far away . Today it's almost own your own home . You're a millionaire type thing . I mean it's . It's crazy , uh , where we're going to .

But what did you learn in all that time interviewing all those millionaires around ? What is the traditional , what's the typical millionaire look like today ?

If you have a home in like the mid range of , let's just say , half million to 800,000 , which is kind of like not that crazy anymore and you have a regular job , even if you don't own a company , you don't make that much money , you know . You make low six figures , which is most jobs .

Now , you could become a millionaire in 15 years without doing anything exceptional . You just pay down your mortgage , right , just pay off your mortgage and put the rest you know some of it into the S and P 500 . And then boom , you're a millionaire , you know , by 35 , 40 years old , whatever it is . Um , the .

The one thing that I look at when I'm interviewing people on my podcast is what drove them to get where they are . Most of the people are entrepreneurial and it's not at that point for the most of them . The common denominator it's not about the money , it's a game that we're trying to play and level up .

And when you think that , when I think back to when I started . I was like all I want to get is a million dollars in assets . I didn't even care about the millionaire status , I just wanted to collect a million dollars in rental properties . That was my goal . And then I got to a million and I'm like , oh , I want 5 million .

And then I got to 5 million , I want 10 million .

And now I got to that point and the goalpost just keeps on moving and it's not even about the number , it's not about the money , it's like I look at it almost as like points in a game , in a video game , and that's the common denominator that I've found with a lot of the entrepreneurs that I've interviewed is that the money will come , but it's the grind ,

it's the game , it's whatever you want to call it . That's the addicting part . That's what I feel like most of the entrepreneurs that I've interviewed all have in common .

And that's where , if you look at it , there's one similarity in the vast majority of millionaires , they own their own business and they pay off their own home . I mean that , or sorry , two similarities . I mean when I read the Millionaire Next Door . I mean that , oh , sorry , two similarities .

I mean when I read the Millionaire Next Door , Stanley and Danko's research 4,000 millionaires they interviewed . There was nothing special about any of them , they were just tenacious . They built their own business , they paid off their own home .

In fact , interestingly enough , Ryan , the number one profession of the spouse of the business owner millionaire was schoolteacher Funny that . Then it was nurse , then it was nurse second . Schoolteacher first , nurse second . It was the two things . So let's look at real estate then . And what made you decide real estate was your game or your investment strategy ?

Because the old axiom of you don't have to , you know , you don't have to be rich to invest , but you have to invest to be rich is true , you started small , worked your way up , but why real estate ? What were the things that said I've got to be in this game so when I started investing back around 2015 , 2016, .

There was no , you know , running $10 million construction companies and property management companies and all the other stuff that I'm doing now . None of that was even in my foresight at all . It was this was just buy the house . I had an opportunity with a private lender at that time Buy the house ,

you rent it out , you collect money Over the 30 years that I'm going to be sitting in the school teaching . The mortgage will get paid off and at the end of 30 years of my career , I'll have this many houses that are paid off and I'll be good , I'll be set .

And then the goalposts kept on moving , like I said , and you do a flip and you realize , oh , there's some money in the construction piece of it . You start a construction company , you have to manage the properties , you start a property manager company .

All those things came later on , but the first thing was passive investment , something that most people know is a tried and true game to be in . That's it . It wasn't anything special . I heard a couple of podcasts , man , and I was hooked . That was it .

I went and looked at 50 homes and by the time I'd looked at 50 homes , I knew what to ask , what not to ask , what to look for , what prices , what rental incomes . I knew all of the things and it's like , yeah , read the books , do the podcasts , but just go look at homes .

Now you started with a strategy , though , that I love and I just think it's one of the most brilliant strategies for a young person you rented out rooms in your own place to offset your costs . How did you stumble into that ? Or did you learn it and then do it ? Or what was the ?

Yeah , you know it's got a little bathroom , a little thing . You know , it's just the basement . I'm in the bay , I'm the guy in the basement , but , um , that's what got me thinking like , oh , this guy's collecting you know 850 bucks , whatever it was . I was spending a month on me and his mortgage is only 1600 .

And he's got another person renting another room . Upstairs . There's three people . If he rents it to him at eight , 50 , if he rents it to him at 850 , he's not paying anything to live . That , to me , was simple math . So my first piece of real estate that I bought that's what I call it house hacking . Now it's like I was going to buy the house .

I rented out two of the bedrooms and I wasn't paying anything to live . So typically your rent , your mortgage for somebody in this country is their biggest expense every month . If you get rid of that and just invest it into anything S&P 500 or treasury bills , for God's sakes over 30 years , it's going to be worth a lot more than you think .

That was it . There was no other brainpower besides me seeing somebody else do it that I was part of on the other side of the coin and said this is a no-brainer , I'll go buy my house I think my first mortgage . I still have that house .

I believe the mortgage is like $1,100 and my mortgage interest is like $275 or something crazy low and right now it's currently rented at like $1,800 , but when I was living in it I lived in one room and rented out to two other people and I was basically net positive like $150 a month .

I think that it's good for people to realize there are that many people that have paid off homes and that sort of thing . So when you start thinking about and you've said it several times the goalposts kept moving , how was it that you know you ? I mean , you learn something I always say when you hit one street corner .

Only then can you see what the next potential is . What was some of those sort of like goalpost moving events , like I did this and then I went holy heck , I've got to do that . And then I did this .

Give us some of those stories , because I think that stuff's valuable for people to understand that you can not just get into real estate , but you can level up yourself in real estate .

So I had a couple of people where I'm from in New York saw me doing what I was doing just on social media and all I was doing was posting , happy , I just got to buy my first rental property , and then pictures of me renovating my first rental property and people were like , are you doing this ? Especially the people in new york ?

I'm like , oh well , down here in maryland , where I was , where I live now , the numbers are a lot cheaper than what you're used to like . We're buying houses in the 150 to 250 000 range and we're renting them out for 1500 to 2 000 a month , where in other places in the country that's not not a possibility .

You know you're half half million for a little shanty shack in New York . So that that's kind

of when people started contacting me and realizing , hey , maybe I should get involved in what he's doing on a state I had . The first aha moment was when somebody said , hey , I've been trying to invest , I'm in New York . I have this much money . I couldn't find any deals in New York . Can you help me find deals in Maryland ?

She came down that first weekend . She bought three houses with me . At the time I was not a real estate agent , I was not a construction guy and I was not a property management company , but I was managing my own properties and I was managing my own construction on my properties . So she said , hey , do you know any contractors ?

Because I don't have anybody down there to help fix these places . And I was like , huh , well , I just used this guy , this other guy , for my house . I could just probably manage him to do your house . And she's like , okay , then for property management , like how are you managing your own properties ?

And I was like , oh well , I'm using a software called Buildium . I have an assistant now , that's you know the lady in the office kind of thing doing the admin work . And I was like , yeah , I could do that for you too , and I'll just collect a fee on it . So that couple of first transactions . I was like huh .

And then I was renovating another property of my own and somebody came up to me and was like hey , I see , you just did the roof on your house , my roof's leaking , can you help me fix it ? So I just contacted my roofer and I said , hey , can you go over there and fix this person's roof ? He said , sure , he charged me $1,200 . I charged them $1,800 .

They were happy . He was happy , and I made some arbitrage on it and I was like , okay , this is the next step now . Now I can do this for other people . And now I would say my biggest profits come from the construction company , from building . We're building custom homes , we're building apartment buildings . Those , those profits are are really , really good .

So that was I stumbled into that . That was not something that I had planned . I had never swung a hammer in my life . That was just something that came , came about , hammer in my life . That was just something that came about . And that's when the goalpost moved , because I was like , hey , I just made $800 or whatever it was $600 , doing nothing .

I just made a phone call , I just collected $600 and I've been getting yelled at by kids all week in the school .

New York's rent to value is lower because high capital appreciation will have lower rental income . It balances out Maryland lower capital appreciation , higher rental income , it balances out .

I think it's really important and obviously you saw this pretty quick as being invested in Maryland rather than in New York that there is a balancing factor of you will get more rent but you won't get as high a capital appreciation . But in the beginning more rent is most important .

So that five hundred dollars of arbitrage every month that I was making on the rent , times it by five properties , I just doubled my salary . That's a big deal , right ? So I couldn't care less about appreciation at that point , because appreciation didn't pay my bills . If I had something go wrong , the appreciation couldn't bail me out unless I sold the property .

And we've all played Monopoly , right ? You don't want to have to sell the property , you want to keep it So- .

That $500 delta there is your arbitrage right .

I look at level one of real estate investing as just buy and hold Okay , just you just buy in and hold it , and your first buy and hold should be your own house and , as you've said , you can turn that profitable , especially if you're young .

I think that even couples should try and buy a duplex or something so that they've got one for them , one they can rent out or something like that . Second level , where you got into really early was the buy and renovate that property sort of thing . When you renovate today , do you have any like financial rules ?

Like I should be only investing 10% of the value of the property , I want to be increasing the value by 30% , or anything like that . That can give people a little bit of guidance based on your experience .

And I was pretty much buying in the same asset class ARVs after renovation value for the listeners that don't know what that stands for I was looking in the two to 350,000 range . I was looking in the two to 350,000 range .

So my thing was , at the end of the day , I wanted none of my own capital to be tied up in the house because I didn't have any capital at that time to get tied up .

$100,000 , just to make the math easy if the house appraised at $100,000 and that you were going to get a loan from them , the bank would give you $80,000 in a loan right Now . The goal back then and now , like I said , it shifted a little bit now with the rates was that at the end of the day I would have that 20% built equity by doing the construction .

So if I was all in the property for 80K meaning I bought it for 60 , I renovated it for 20 , it was worth 100 . Then I refinance it the bank's giving me my 80 back . That's what I had in it . Now I'm net zero . I got no money in the deal .

So any money that I get is just an exponential return because there's none of your own money tied up in that asset . Now I'm more in the camp of like if I have less than 10% invested at the total value , because as an investor you're not getting those anymore . Right now it's like 70% . They want 70% LTV , 65% in some cases .

happy Because that's a good , that's a safe place to be . If I'm making a net 10% cash on cash return and the house is appreciating and my debt's getting paid down , you're really looking at a much higher return on investment than 10% .

If you support us , we're going to support your success and help you achieve big success together . Yeah , for those that don't understand , cash on cash might be if I'm into the property with $50,000 in cash and I'm making $30,000 a year , or after rent after all of those things , if I'm getting 20% a year , I'm getting $10,000 in extra money .

It's $10,000 on $50,000 . So it's cash on cash . Sometimes that's referred to as internal rate of return , but that also . Then you take into account depreciation , taxes , all of those sorts of things on top of it , plus appreciation , and every state has different software . Every country has different software . You just have to type in .

You mentioned one you were using for management , ryan . Are you using an off-the-shelf version currently for evaluation of cash on cash or internal rate , or are you using something you've developed ?

Typically you're getting high-end government employees living there and I bought it for $550,000.ance . So I got back a big fat check $100,000 plus check at the refi table and then I had a big tax I don't want to say issue , but I had to find some ways to get rid of some income of last year .

So we did what's called a cost segregation study on that property and what that does is takes future depreciation . So you're allowed to depreciate rental properties for 27 and a half years .

But if you do what's called a cost segregation , you can actually fast forward that right and say I'm going to take my depreciation this year and that comes off of your taxable income .

Now if you were to say the government Uncle Sam was coming after you for you know 250,000 , but you just depreciated that asset and you plan on keeping it right , you plan on keeping it .

It doesn't really cash flow . I maybe make $100 to $200 on each unit per month if you take into consider vacancy and capital expenditures and all that stuff . But I got $150,000 in my pocket as profit . That's non-taxable . It's a non-taxable event because it's in the form of a loan . And then I took a quarter million dollar paper loss on taxes .

That deal makes a lot of sense for me but for some other people that in the beginning of my career I couldn't afford to do that because the cash flow . You know you need the cash flow . So the deals all get analyzed in different ways depending on your needs .

If you're somebody that has $2 million in your bank account , well , your goals and your things that you can look at and you make a high W-2 job . Let's just say I know a guy locally that's a defense contractor that makes like $1.2 million a year at his W-2 job . He's in a different position .

He wants to buy things for tax losses and push the can down the road for Uncle Sam . He's in a much different position than me when I was a third year teacher , trying to buy a couple of rental properties .

I read books , listened to tapes , but the biggest thing I did is go find a realtor and ask him to show me around . You know , I literally found a guy .

We became friends because I ended up buying a lot from him over the years , but in the beginning it was just like I just need someone to show me the market type thing , and , as I teach today , go and find 50 . What did you ? How would you suggest to someone to just make the start to the track to get their first deal ?

For the last six years he's been running a successful company . His NOI is somewhere in the $300,000 to $500,000 range annually , so he's making a net profit of $300,000 to $500,000 a year . And he's been analyzing rental properties for six years and not pulling the trigger and he finally contacted me and asked me to basically coach him on what I was doing .

Within 30 days he closed on his first rental property . I shortened that learning curve . Now you said , find a realtor . Realtors are great as long as they know the investment space , as we know . I'm sure you know a bunch of realtors that don't do anything , they don't make any money , they don't really know about the real estate game .

It's it's real low barrier to enter to be a realtor . So , whether it's finding a coach or finding somebody that's already doing it at a high level and offering to add some sort of value to their life . You can't just go ask them for handouts , right .

But if you say , hey , like I have time , you have this experience , can I help you , can we JV on a property ?

I have this time to give , I have this money , I have this network , whatever it is , that is a good place to start Finding somebody that's in the position you want to be in and , just by law of attraction , just being near them will level you up .

And picking the people that you're around is really important and , if I'm sure you've heard and your listeners have heard , you know you are the average of the five people you spend the most time with .

For me , when I was starting my businesses , I started surrounding myself at these networking events , at on these Facebook groups , as with and communicating with these people that I knew were doing it , doing what I wanted

to do , and that I think that's a huge thing . That's overlooked is like , hey , can I take you out to lunch and just pick your brain ? I have this much money , I have this much time , I'd love to partner on something or I'd love to learn how you've built your portfolio .

That is a good starting point and this guy that I'm coaching now is getting ready to finish his first refinance and get into a second deal and he's like flabbergasted that he's able to do that and I'm like the analyzing deals for six years is not necessary , like we could shorten that curve by just . Let me just show you how I do it .

You know you're in a bad debt position to begin with , but if you're in a fairly much a cash flow you got a good job you should be in a deal in your first six months , no matter what . I think is a thing .

But you said something there networking groups , join real estate investment clubs , join real estate Facebook groups , join the groups , get involved , do that whole thing . Ryan , I always finish off with one question . That is what's the best advice you ever got or the best quote you ever read on the subject of success ?

So in the beginning you have to put in the time and the grind . So that's your 20s , that's what he said , and this was when I was in my early 20s . He said if you're not sleeping , you should be working .

And then when you get to your 30s and you get married and you start having kids and this stuff , then you need to be making money while you're sleeping . And if you do those two things , you will be successful financially . Now happiness and all that stuff goes , you know , is a different story . Some people have all the money in the world .

They're still never happy . But for me I am . Now . I feel location free . I could I have a house in Florida , that I spend a lot of the winters , that I have my boat down there and I go back and forth and I can still make money while I'm there and come home when it's warm here . Um , that freedom is my , is what I want , right ?

I don't need a billionaire , I don't need to be a billionaire , I don't need a fleet of private jets or anything . That my definition of success is that I'm time free , I can . If something were to happen with my family or something , I could take off and go take care of them and not have to worry about paying my bills , all that stuff .

That's what I look at now . So that was the biggest advice that I got was if you're not sleeping , you're working , and then when you're sleeping , you better be making money or you got to keep working .