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Sept. 6, 2022

100k+ Monthly Cash-flow Through Co-Living Investing w/ Sam Wegert

100k+ Monthly Cash-flow Through Co-Living Investing w/ Sam Wegert

What if I told you you could not only be providing a Tenant a GREAT deal, but also cashflow $100k+ per month? That's what we discuss today through the co-living strategy with Sam Wegert!

Sam Wegert was homeschooled K-12 with his seven siblings. At 15 years old, with a loan of $15,000 from his parents, he purchased his first martial arts school and graduated high school that same year. Over the next 15 years he expanded to 6 brick and mortar locations and through COVID and built an online program. His company, UpLevel Martial Arts now has over 1,500 students and has trained for than 20,000 students in martial arts in 25 states and 3 provinces in Canada.

Throughout his martial arts career, Sam joined GoBundance as the youngest member at the time in 2014 and began to invest in real estate through short term rentals and co-living properties. He partnered with his wife and now together they own 8 short term rentals, and 115 co-living beds.

Sam is now passive in both his real estate investments and his martial arts business and live in Charlotte, NC with his wife Rachel who is a HUGE supporter and his business partner.

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Transcript
brian:

Sam what's going on, buddy? how's it going, Brian? it's going good, man. We're both. We're both traveling themes over here. Man, talk to us a little bit about what you and your wife are doing. You're doing the van traveling van life. Yeah, man,

sam:

This is gonna be fun. I want to just express gratitude for you inviting me on first because. I see your stuff and it's so fun to follow your social media. And we were just chatting earlier about how we consider each other great friends. And yet we like know we have like a social media

brian:

relationship. I feel like, so we've hung out a couple of times, but yeah, like we haven't gone like in a deep conversation. It's every time we see each other, we're just like, Hey buddy, what's up, man? Haven't seen so

sam:

long. Exactly. So this will be fun, dude. This will be fun. Yeah, man. So I my wife and I decided to live out of a van. It was interesting. We, my wife and I have a have achieved the traditional version, if you will. Of success in a bunch of ways. And and the house, the car that everything you would think that you would want. And then I think we just got to a place where we were like, do we need this? Do we really need this? But we wanted to test it in real life. And our test in real life to see how much we actually need in life is to go from 4,800 square feet on the lake to 98 square feet in a camper van that where recently the AC works like 50% of the time.

brian:

there you go. It's only, that's the, it's only fun if the ACE is completely out, that's the only, that's the only way it's fun. The

sam:

crazy thing is like a brand new freaking RV like a camp branch, spanking new I dunno what's going on with it. But anyway, everybody tells us that camp fans have problems and they have some issues, so we'll see

. brian:

So how long y'all doing this for

sam:

the plan? The plant currently is three months. And there have been several threats of it being a lot shorter than that in the first couple of weeks, like my wife, two weeks into, it was like, Sam, I wanna talk to you about the van life. And I'm like, oh shit. I know what's going she's gonna, and sure enough. She's I don't know, like maybe the truth is her. And I both have had points where we're like, we don't know if we wanna do this. Because dude like you're with my counselor told me the other day, she's I don't know of any other couples that could do what you. Like I counsel couples on like having better relationships. She's I don't know, like the fact that you two are spending that much. Cause here's dude, here's the truth, Brian. If you wanna go somewhere, I don't have another car. Like we're not towing another car. So I have to either Uber or like just take my bike off the back and ride my bike. So it's been fun, man. I think a couple we've learned to give each other a lot more grace. We're reading this book right now called love and respect. And it talks about how, women who are feminine in their core really desire love like that's a big piece of what they desire. Not that they don't desire, respect too. Like they, they have a craving, maybe more of a craving that's in line with their nature. And then guys like, We don't necessarily care. We get like the lovey dove nest. We want be able to like respect who we are and respect what we've done. And like that they're the man, like they he's the man he's done some, and he's achievement. Yeah. Yeah. And so we're learning to give each other what each other needs. And that's been a big journey for us, man, but it's yeah, that's a high level view of what we're doing. I could keep

brian:

going, but no, let's hit on that for a second because I think that's super interesting because we're doing the same and you're going from. You know where you're both working. So we both were like living together for a year when we came out here. So for people that are listening that are brand new, we're traveling around the world right now. And it's me and my girlfriend. And, we left my house and now it's hotel rooms and condos and apartments and we don't have a car at all. My car is back home in. Be interned full time by a buddy. It is different. And then guess what we found out immediately is that she's a morning person and I'm fine with working afternoon. In evening. So we have a time difference. I was trying to explain to her, I said, Hey no, one's working in no, one's awake in the morning in America. but she wants to work in the morning. And then in the afternoon she wants to do stuff and then I wanna work in the afternoon in the morning. I wanna do stuff. I was like, okay. Cool. So let's get rocking and rolling. And so man. Yeah. They say if you really wanna test your relationship and see if you're gonna make it. Yeah. Go travel with them one on one for a while,

sam:

right? Yeah. Mean it's and it's funny be it's funny. You just said what you said, because you also said you're doing this

it's 11:

00 PM your time, right? Yeah. Yeah. So

brian:

here you are. You're

sam:

working your afternoons and evenings,

brian:

right? exactly. But my wife and.

sam:

My wife had the opposite men. She's I'm the morning person. She can sleep until noon and have a great time doing it,

stay up until one to 3:

00 AM. And I'm just like, I gotta get to bed at 10 30. Like

brian:

That was me too. But when I made this move part of the things that come with it is it's choose your hard, right? And for me, choosing my hard was being like, Hey, this time zone difference. Gonna be, it's gonna gonna suck. Yeah. That's worth it for me to push through that and to alter my lifestyle slightly. But anyways brother, so that's crazy. I wanna talk to you I wanna start with the van life because you and I are both forcing dis discomfort. Yeah. Forcing discomfort into our lives. So let's back it up a little bit. You said that you had achieved a certain level of success already. Financially. You had the house, you had the cars walk us through for people listening who you are and how you got there. So we can dissect it bit by.

sam:

Yeah, man. I There's so much to the story that I could tell, but I'll give a high level view of my story. I was homeschooled in a small town in Virginia. I'm one of eight kids. So my parents decided to have a big family. My mom homeschooled us all. My dad worked for a local, a university called Liberty university, which is one of the largest. Evangelical like Christian schools in America, even, actually in the world right now. Right outside of a town called Lynchburg, Virginia. And yeah I had an opportunity being homeschooled, I, and being homeschooled and in a big family, you I realized early on man, if I wanna be. If I wanna get noticed for anything, like I need to do something successful. Like I need to stand out. And my way of standing out was to make money and and to do business. And so my I had a lot of energy. I had undiagnosed ADHD, a D, and my mom put me in martial arts when I was probably 13 years old. I'm to her, by the way, for doing that, shout out to all the moms who just make decisions for their kids, man, and get 'em involved in stuff cuz martial arts and especially the ones that get involved in martial arts for me was huge. It helped me have more self confidence and discipline and gave me more focus and really gave me confidence truthfully to be who I am and of be a little bit different and martial arts. It's a really individual sport, like you progress at your own rate. And when I was 15, my instructor came to me and said, Sam, I'm burnt out. I'm done. I want to go fish professionally on the bass. He had this dream of fishing bass fishing professionally. Like, why not? So he sold me the school for $15,000 when I was 15 years old and really wait, what to convince. Yeah, dude, it was crazy. He had to convince my mom and my dad. He like took, I'll never forget, like he took them to Texas roadhouses. He took the mistake dinner and I was a student of his at the time and he was like, Sam's great. Sam can run this whole school. I'm gonna hire him a coach. But I wanna sell you to school. and and so we. And man I just I spiked my hair. So I looked older as I was 15, like running the school and my parents were like supposed to be there, but they weren't there. Like I was there sometimes all by myself, running a school of, it wasn't a huge school, but I had a hundred members, a hundred students at the time. But that put me on a path of entrepreneurship men, and I just started making money and I started saving money a lot. My parents were. Really big into thinking that Y2K was gonna happen. So they taught me to buy silver gold and all, they just basically they taught me to say . And so I just, I built a small martial Schwarz organization when I was 20 years old. I moved to a bigger town, opened up another school and started it just from nothing. Started it in a little. Like 20 by 20, 20 feet by 20 feet hotel conference room. And would go out in the street corner and all day would just be like hand out my car. It's Hey you wanna come take a free martial arts class? And we're offering a free 30 day membership. Come try class. And I did that on the daily. And so by the time I got to the by the time I built up that school, I put my brother in charge and. Literally was journaling. Like I've retired, I don't have to work cause my, I was making money was making like 40 grand a year, but my brother was running this, running the school and I didn't have to show up, it was pretty cool. And for me that was a lot of money at the time, 40 grand a year was a lot of money. I could, I that's

brian:

passive. That's

sam:

tightly passive, right? Yeah. Yeah. So I was what we call in GoBundance right. We called it being a hundred percenter, right? I was, I had no debt. I had no debt. I bought this little three bedroom, three bath condo with some money that I had saved. And so I was living in one room and renting out the other two rooms and like I was making money. It was good. It was cool. And yeah, man, it was a good, it was a good gig. And I, long story short, I moved to Charlotte, North Carolina, where I live now, I opened up five other locations there. I bought two and opened up three more, had a lot of bumps in the road, along the. And now we run an organization where we have six brick and mortar martial arts schools. And they're largely passive to a large extent. But I still stay involved and support, and coach the staff to some extent, and then just invested in real estate along the way. And but martial arts was a huge piece of who I was man. And martial arts taught me to empty my cup. And to always be humble and to always learn it taught me a lot about respect. And we were talking about respect earlier, but in a different sense of just like respecting myself and respecting others. Yes or no, sir. And all the, just all the hard work to achieve belts, martial arts, you have all these belt ranks, you get up to I I'm a fifth degree black belt right now. So I've been training the martial arts since I was I'm 31 now. So I've been turning the martial arts since I was. Probably 12, 12, 13 was my mom first got me started. So you know, a bunch of years. So it's funny cuz I forget sometimes that I'm a martial artist. I'm like, I just think everybody has that skill. not everybody does, dude.

brian:

What? So I'm curious. Yeah, I'm curious. Let's go back to like 15 year old Sam real quick. What did this guy see in you to say, oh, well obviously this 15 year old kid can take over my business and I'm gonna sell him the business.

sam:

Mean, I think it's funny you asked I, part of me just thinks he was really wanted out yeah.

brian:

Mean, yeah. You have to really want out to sell it to a 15 year old. Yes. Sam fair. But that's still ridiculous that you're I'm so obviously I'm assuming your parents like fronted the money. And then yeah. Did they loan me the money? yeah. They loaned you. My parents were not wealthy. Yeah. How long did it take for the, how long did it take for you to pay them back? What was the cash flow like on that?

sam:

I was grossing. I was grossing in this little martial arts school, like 12 to 15 grand a month, which is not a lot for martial arts schools. That's a very, that's, our school now grows 40 to 60 grand a month, sure. But for that little tiny town, I was grossing 12. If. 15 a month. And I, my bills were probably six, five, maybe, rent was three other little bills too. So I'm 15, I'm like five, six grand a month. I paid them back pretty. I think I paid back in

brian:

four months. So you rent a 50% profit margin? Yeah. 15.

sam:

Yeah. And that was, that's like with no, and I was the only really real worker there. So technically that didn't include my, if you included me getting paid salary, if you included salary. Then the profit market would've been left, but, was just taking it all home, yeah. But I remember then when somebody came in one time and they were like, Hey I'd like to buy a helmet, like in martial larger where these like, protected helmets. He's I wanna buy a helmet with a face shield. And I'm like, cool. I like look up the price sheet and was like 80 bucks. And I was like, it's 80 bucks. So he whips out his wallet and he pays me cash. And at that time I like wasn't. I wasn't depositing cash, right? Like just old schools, put the cash in your pocket, don't pay taxes on it. And so I did, I like took the 80 bucks. I put it in my pocket and I wrote that right in this receipt. And I was like, oh, this is what it feels like to be entrepreneur cause $80. I would've had to worry like eight hours for that. I still just and man, like that shaped my mindset. Like even now I obsess about what I can build. Like what businesses can I build? That can produce cash flow. That's a big piece of what's next for me. I think you were talking about you taking this time to figure out what's next for you. I'm in the, I'm in the same season with the van life, right? We're putting paws, we're selling some assets. I'm actually selling some, our short schools right now I'm selling six houses. And so I'm just in this process of wait what's next. And building keeps coming up, building cash flow businesses and assets keeps coming up from me.

brian:

So we'll get into the real estate here in a second, because I know a bit about the real estate, but an observation I've had of you dude. So yeah, obviously you're super add. Yeah, of course you are fix that. Yeah. And I am too. Which is why for some reason I don't know if this is like this for you made this a good question, but whenever I feel like I'm doing these shows, like this is my. State, whenever I do these shows, it's probably how you feel when you're doing martial arts. Oh my gosh. This, yeah. Yeah. This is what makes my brain like flow and operate at the exact frequency that it does. But anyways, an observation I had about you when I first met you was you are very. Focused whenever you are talking to people like ironically. So I find it ironic that you're such a high energy dude and you're so scattered, like with everything you're like, ah, but then whenever you meet you, right? If you are talking to someone you are pure eye contact. Like you, aren't looking left right up and down and it's just you are so zoned in on people. Yeah. Whenever you meet them that it's it's memorable. You're like, I'm like, whoa, my God. Like this dude was just like listening to me. I'm curious. Is that been how it like, is that how you've always been or is that something that you've gained from martial arts? Because that's a noticeable thing that you

sam:

have. Yeah, man. I I really appreciate you saying that and that feels good. Martial arts definitely has honed to that. And I would say even more than martial arts training, like martial arts business, because in martial arts business if you were not attentive to your students needs, they don't pay you, right? Yeah. Like we don't sell a widget. Like we don't sell a widget. We don't sell something. You can test, like we sell a. Like literally, that is what we sell. We sell a feeling like you, if your kid comes to class and they love class when they leave and they think they got a little bit better. then they're gonna come back to class, they're gonna continue to pick you. And so that was my livelihood literally rested on my ability to make people feel a certain way. yeah. So that's just ingrained. And as a 15 year old, I probably truthfully overreacted to that. Like I was overly attentive to people to the point where now in my adult life, like I'm doing a coaching course right now, teaching people at real estate and my business partner regularly is like, You are not responsible for people's results. Hey, Gar, you're responsible to give them good information. And like he's having to coach me on pulling back from that. And I'm like no, like it didn't happen for them. And I feel responsible and he's no, there's a difference. You're the coach. They're the action thing. I probably over overcompensated somewhat, but I do enjoy a lot of presence with people. I I enjoy people too. I get worn out. Like I'm an introvert for sure. But like really worn out. Yeah. Yeah. That's how I recharge, man. I need to go into the woods and recharge. But I, I enjoy being super present with people and I I think that people really thanks for saying that. Cause I think that people really enjoy that. I think it's a lesson that I think a lot of people would do better to like, you can learn a lot about people, you know this, right? Like you get off on asking people questions. I feel like getting to know people. You're a very people person.

brian:

So you are a 15 year old kid who for the next 16 years essentially is building up these karate studios and these martial arts studios. And now. By the time you start investing in real estate what does your first purchase look like? And then how do you get into the realm of co-living? Because I wanna get into co-living here in the entire back half of the show. Yeah. Because that's something that's so important to what we're heading towards in the real estate market and in the economy co-living is gonna be more important than ever. So I think we need to, yeah. First touch. How did you get into real estate and then how did you transition? Yeah,

sam:

It's a good. My first. So I've regularly thought back to how I first was inspired to buy my first property. And I honestly don't remember. I think it was rich dad, poor dad. Like I read that book by Robert Kiosaki and I think that just inspired me. And then I had some mentors, I was always under so I, let me rewind a little bit when that guy. The school to my parents, really, to me and I pay my parents back when he sold it. When master Clements was his name, when he sold it, he hired me a coach. And I didn't know the value of coaches. Because it was just like give, it was hired for me, but the truth is man. Like I, I just realized that like I would not be getting to the places I was, I would get to, if I didn't have someone really guiding me and helping me along the way. And so I had coaches and mentors along the way, specifically in the martial arts space. And he was a martial arts business coach, master Arthur was his name. And I think he, he encouraged me to invest right. To save and invest. And so I bought this little foreclosure condo. It was $67,000. Believe it or not. I saved up $67,000. I was probably 17, 18 at the time. Wow. I guess I, I bought it on my own, so it would've had to been at least 18, 18, 19. I think I bought it in 2000. 10 I that the dates anyway, it was I was, 18, 19 at the time and it was a foreclosure and it looked crazy and I actually went and looked at it with an agent and walked out. It was nasty. There was crap piled up to the ceilings. And I remember telling the agent, like I would never buy that property. Anyway, it was, it came up for sale again, two months later and I went and I was like, wait haven't we looked at this before. And she was like, yeah, we looked at this one before, but someone had cleaned it out a little bit. So we ended up buying it $67,000 and it was a three bedroom, three bath. In the town of Charlottesville, Virginia, right outside of university of Virginia. So it was set up for college housing. So I lived in one room. Each room had its own bath. I lived in one room and I rented out the other two for 600 bucks a month. And I lived for free and I had saved up, I bought a cash. And it was that was my first purchase meant. And that was what even got me started on this concept. Like before I even knew it of, I can rent out rooms and I can double or triple. The amount of income that I can make from renting it out as a single family home. That's in essence that let, that got me to start on that path. Now I didn't have that realization yet, but I was at least started on that path.

brian:

Yeah. Hey that's crazy. That's crazy. It's so cool. Whenever you see people. So here's why I keep going back to over and over again. I keep seeing repeating patterns and I keep seeing trends in these interviews and these guests and what I'm seeing. Is that? Yes. You have like wonder kids, right? You'll have one or two, like one or 2% of people are like a wonder kid, like a will brown. He came on the show. Dude's just a genius at 21 years old, 22 years old. Yeah. Dude's just a fricking genius. But for the most part, the dudes that you're seeing that are 25, 26, 27 31 yeah, we're still young. But we have time horizon. Like the time horizon is never sacrificed the time Horizon's always there. It's like the difference is that the person that is a millionaire at 23 years old was buying real estate at 17. Right or 16.

sam:

So know what I mean, time horizons? You mean they started early,

brian:

is that, yeah. They still put their years in. They just started earlier. So you don't have a 20, it's very rare that you have a 25 year old millionaire that just started buying real estate at 24. You know what I mean? Like they were brought up in real estate. 1718. They were buying some the 19 20, 21 22. So that's very interesting. So you're, so

sam:

we've still paid our dues. It just, I got a good, I got a head start on a lot of people because it was like, I was homeschooled. That was a big head start. I didn't have to do, my parents really let me focus on what I wanted to focus on and that was business. So they were like, yep. Buy this school. That was kind like, they saw it almost as part of my education, but it allowed me to start at 15 yeah.

brian:

That's crazy, man. So that is cool. That's a great, that's a great observ. So walk us through how you went from there. Walk us through the journey to now what you're doing full time, which is essentially co-living and you're even selling houses, selling schools so that you can focus on this full time. So first let's walk through the ideas and concepts, the co-living, and then how you've scaled up to this

sam:

put living in, in essence is somewhat of an affordable housing. It is renting a room versus the entire house. So you're looking for a specific type of house, that has 2200 square feet or more. That you can put 6, 7, 8, or nine, or even 10 people can share this home. So it's shared living in a sense, used to be called rooming houses, but these rooming, but these, when people think of like a rooming house or a boarding house, they think of a pretty nasty kind of beat up, like in the ghetto type house. These are not that like section eight. Yeah, exactly. We're but we're buy. Great houses and great neighborhoods taking care of them extremely well. I We want them to look just as good, if not better than all the other homes in the neighborhood, when it comes to landscaping and lawn and like they look good and we're cleaning the inside, we're cleaning the common area inside and we're adding a few bedrooms. We're adding a few bathrooms, we're making it a, we're taking a four bedroom house and making it at a seven bedroom house, maybe adding a bathroom or two so that, and some are shared bathrooms. Some are com some are private bathrooms and in. The whole goal is really two things. Number one, from an investor standpoint, you are double tripling or quadrupling your return on investment, hands down. Like some of these homes, some of these homes, if I rent them as single family homes, man, they would lose money hand, but I'm rigging in the cash because they are co homes. Does that make sense?

brian:

Yeah. So for people that are listening to this, so I've done this as well. With my house, with my homes, with my house. House hack I would buy. Yeah. So I'd buy five bed, four bathroom houses, like that's my sweet spot. 1970 split level. What David Green would call. Yeah. What David Green would call luxury house hack to where my my top units or what I call my HGTV units to where those are my three bed, two bath just my trophy units. Like they look. They look so nice and all the people are like, oh yeah, we'll absolutely rent that for the price of a regular three bed, two bath. And then downstairs, you have an entire extra kitchen. In-law suite two bed, two bath. And I'll rent those either, either by the unit or by the room as well. So have you ran into any issues with Zon. With this, or is this something that you account for and make sure that it's own multifamily or do you have any kind of stipulations that even arise with that?

sam:

Yeah the it's funny, I was talking with the CEO. Last week I was talking with the CEO of a company called pat split down in Atlanta. In Atlanta, they have 4,700 rooms. Now they rent all by the room and they're a management company that, that manages these homes. And I asked him that very same question and his answer. I'm gonna, I'm gonna share his answer because it's very similar to my answer, but his answer was, first of all, it depends on how you take care of the homes. If you take care of these homes you will rarely get complaints about that. If you have, if you figure, if you've thought through parking, If you have vetted the tenants correctly, you're not putting, you're not putting crack addicts in the home. If you're doing the right things, then you, unless you just have a crazy neighbor that wants to beat up on you, but that's number one. Yeah. That's been my experience. Yeah. So then it went, okay, what does it come to the legalities of it? I The truth is you have to, each local area is gonna have different zoning regulations and those zoning regulations, a lot of times. Involve a number of unrelated people in a single family home. The problem is. Is that, these laws were built and were put in place to keep out undocumented workers and prostitution houses. That was a lot of the behind the scenes of why these number of unrelated people living in a single family home were created in the first place. So they're they, they weren't meant these laws were not created to regulate politic cops. My point in saying that is yes, I've never the only challenges I've ever had. 1213 years of doing this have been with HOAs. So we stay away from all HOAs cause HOA have a lot of power.

brian:

In general, if you're investing in real estate, just stay away from HOAs.

sam:

Exactly. But as far as the zoning, we've never had a run in specifically with zoning that has caused us to have to change anything that we're doing. And it's a, it's a gray area right now, is the truth. Maybe think about Airbnb. Before Airbnb came out, it was, people were figuring out what exactly was gonna be allowed and what wasn't gonna be allowed. But it hasn't been a huge issue for us. I do look into it. And Charlotte right now, the Mecklenburg county where Charlotte, North Carolina is actually coming up with some regulations to try to regulate co-living and it's good. Like they're just basically saying, okay, we get that co-living is a piece of affordable housing. And actually the CEO of pat split, his name is Atticus. He I've. Yeah, he's a super cool dude. And he they've actually done some work with the housing development, like the federal level. Hu. I think it's SU stands for housing and urban development and HUD actually wrote. A document to all the local, like zoning ordinances, put it out and said, everybody needs to look at co-living to solve the affordable and workforce housing issue. Absolutely. So it's so my point is like there's a lot of momentum for it being looked at very positively. And I'm excited for that. And yeah, if you're, could you get into some trouble? Yes. If you're doing it incorrectly, but at the same time pad split and is fighting cases very successfully and winning those battles as well.

brian:

Yeah. And the only reason I ask that is because whenever I tell people that I'm house hacking and doing that, then they're like, oh, what about the zoning? So I wanna go ahead and knock out that before beforehand so that nobody can even say that. But yeah, so I do the same thing. So what you wanna do is you just wanna vet your tenants, just like anybody else. And then also when your tenants are coming in, Like you tell them 100% you say, Hey, here's the expectation. Here's the rules. And you put 'em through the same criteria that you would a long term tenant like that you would have running it out. That's right. And then also from my experience personally, they're so freaking pumped and grateful to have an affordable place to live that they're not gonna screw that up. That's been my experience. So walk us through for people that are listening and they're like, okay, cool, Sam. I like what you're saying. Walk us through what extra costs. And like when, say you're like looking at a property right now, take us through what extra costs you would be going through your head to convert one of these into a pad split. Type of house and then what the extra cash flow would look like. So if you're look, if you're an investor and this is your first time hearing about this, walk them through, like what the numbers look like.

sam:

Yeah, the numbers can look really good. In terms of the numbers to convert, you're looking at 10 to 12,000 per to add a bathroom to add a full bathroom. At least that's what I, that's what my contractor that I've used for a while can same I can get by. I can get by with. So if I'm looking at a, a three bedroom, here's one formula 1500 square feet is four bedrooms. And then every 250 square feet above that I know from looking at thousands of floor. That I can break it up into an additional bedroom, every additional 250 square feet. So if you gimme a house and you're like, Hey Sam, it's a 2000 square foot house for me. I know already that's six bedrooms. If you're like, it's a 2,250 square foot house. I know that's seven bedrooms. I know that I can do that working my magic and that house. So it's really gonna depend the conversion cost are gonna depend on how much. How many bedrooms you're actually trying to put in and how many bathrooms you're trying to put in? I try to have a ratio in all of our houses of two to one. So two bedrooms to one full bathroom. I don't try every once in a while we have a few homes with three to one, so three bedrooms to one full bathroom. And then obviously there's the master is in the private bathrooms that we're rent as well. Additionally, so that's You just have to figure out how many bathrooms you want to add. That's gonna be 10, 12 grand. And then the rest is pretty simple. The rest is, if you're gonna be, if you're gonna put over six people in a house you need have at least two refrigerators. So that's pretty simple. You need to put walls and add some closets. So you're gonna spend a few thousand in walls and doors. You're also gonna, put key pad padlocks on everything and keyless entry type stuff. So you're gonna spend some money doing that. But, yeah, if there were no bathrooms to add, 10, 15 grand, you could probably convert a home, a seven or eight bedroom home really nicely, but more than likely, you're gonna need to add those bathrooms. And that's just gonna be a matter of how many you wanna add,

brian:

Does that make sense? Yeah, absolutely. So then talk us through what the cashflow looks like, because I'd already know what the cashflow looks like on my rentals that I do this at. So walk us through so that people can know that this is fricking worth it

sam:

Yeah, it is. It is worth it. I It's The biggest piece is the management, right? You've gotta figure out what your plan for management is. Are you gonna self-manage are you gonna hire someone to manage, or you gonna get one of these new up and coming co living companies to manage? If you can figure that piece out then, like you're golden, but in essence, what happens is you're gonna rent a master here in Charlotte for probably nine to 9 5900 to nine 50. That includes utilities you're, and then you're gonna rent all the other bedrooms for anywhere between 700 and $800 a month. So if I take a home. I give this example on bigger pockets when I was on there. And I'll just use the same one, cause it's an easy one, but like one of my, one of my homes that I rehabbed it would've rented for $2,100 as the whole house, but we put eight tenants in it and it course is $6,300. So it just the numbers, that's a three times what I could have known my God.

brian:

Yeah. Yeah. Oh my God. So walk us through some best practices when it comes to management, because you do need to handle the management different with these properties. And there are things that you need to do that are separate. You need to be proactive about because that will cause problems. So walk us through some best practices for management funding, a management.

sam:

Yeah, there's a lot. I There's a lot of companies out there that are starting to pop up and manage these. So you've got bungalow, you've got live homeroom, you've got alcove. You've got common, you've got pad slim. You got, and those are nationwide companies that are really trying to expand and grow. So I think those are, I think that's really good. If, and then I also think you can just talk to a normal property. Literally just go to a normal property manager and say, Hey I want you to man. It, because each room is like an apartment. If you think about it that way, you're like, you're basically giving a property manager an eight unit apartment builder. If you think about it that way from a property management standpoint, then any property manager should be like, sure. Okay. Sure. I'm just, I'm renting each of these out as a little mini apartment, but you do have to have house rules and the lease. You have to be able to evict for house rules. You have to have some, you have to have some sort of protocol where if someone's breaking house rules and by the way, like we have a comprehensive house rules. Like you need to have no, no illegal activity, no, no drugs. We have a zero tolerance for drugs, no weapons on the property in time, no more than five overnight guests in one month without prior permission. Immediately upon using dishes or whatever, like you have to put it in the dis, you have to take care of it right away. And if people start breaking those rules, you have to be able to evict for those house rules. So that's the difference, right? Filling it. Becomes just like filling any other house or apartment, right? You need to have enough ads out there. You need to have enough leads. You need to follow up on those leads. You need to get applications. It's the same thing. You're just doing it for a different product. And you might wanna vet them a little bit more to make sure that they're not the party person that's gonna come in and destroy your house. But the truth is you'd wanna do that even if you were renting out as a, as

brian:

A regular rental. So we use

sam:

apartments.com. You can run credit charges, you can run background check, you can run. You can

brian:

do everything. Yeah. Rental, rental, history, DUI, criminal history, all that stuff. Exactly. Yeah. So for your operations account, do you add any extra padding to your operations account for extra turnover or chop? Is there extra turnover with these or are you seeing it normal, like years? Yearlong leases. We're

sam:

doing yearlong leases on over stop. We used to do month by month and then three months, but we stopped doing those all together. Okay. So it's a year long. It's a yearlong lease. I think we will do six months. If someone needs it at a premium, we do charge a hundred dollars move in fee. Like when someone puts their security deposit down a hundred dollars of it is completely nonrefundable that's to just flip the room, vacuum or shampoo the carpets, swipe down the walls, whatever we gotta do for that room. And then. Yeah, for operations, you're gonna pay for utilities, right? You're gonna need to calculate that internet, internet gas water electric, and then you're also gonna pay, we also pay for cleaning. So twice a month, we pay for cleaner to come in, clean all the, just the commonary. So it's not like a full house clean, right? It's a, commonary cleaning, like living room, dining room, kitchen, cleaning, just to make sure that it pops for showings and everything's looking good. So you need to pad that for your operations expenses. And then in terms of turnovers, no, We have people sta my longest tenant to stay probably since I started this in Charlotte. 10 years I've got, wow, 10 year, I've got a 10 year tenant just continuing to live in one of our properties. We get tenants to stay for multiple years. Wow. So I'm not sure it's if you do it right. And you get good tenants, then it's the right place for them to live for sure.

brian:

Holy crap. Okay. So how many of these do you own right now? And then what's that cashflow looking.

sam:

Yeah we rent like once everything, we have some homes right now that we just converted that are not full. Like we're still in the process, but once, once those are done, we'll be at 150 rooms that we rent. Wow. And yeah, man, I they, depending on, they can see or what's available, the cash flow can look anywhere close to hundred grand a month.

brian:

There you go. All right. Everyone co jump on

sam:

in every little bit helps. Obviously that's gross revenues,

brian:

but yeah, of course. But, so how do you, so what are your plans for scaling this? Cause I know this is something that you're gonna be focusing on a lot moving forward.

sam:

Yeah. So I just sold all of my, so I had five, four bedroom color. And even though they stayed full like those were, they were easier to keep full because it's like just four people on their, in they're in and it's fine. But like now I'm doing now. I wouldn't do a home unless it was at least. At least six, but 6, 7 89 is what I think, in up sharing a home is where the cash flow just starts to look crazy. Good. So I sold on my four bedroom homes where, and I think I'm, I'd like to build a building I'd like to develop a building that's specifically designed for cos like a ground up, kinda like it would look like a student housing building. You know what I mean? It would look like student housing and multifamily development. So I'm gonna be doing that or I'm gonna buy an old hotel and I'm gonna convert the hotel to co living and rent it out long term leases based on this. And just I wanna do something that's a block of rooms, like a hundred grams. At a time. It would almost double what I had in one fell swoop. So either building something from the ground up or buying it and converting it or buying a multifamily and converting it to this. And the reason for that for me is just, I can have more in a smaller space. that's

brian:

the plan. Yeah. I love that you're doing this because people are desperate for. Some kind of solution to all of this that's going on with multifamily. It's ridiculous. And I have a lot of multifamily guys that come on the show, obviously. And I ask them, because how do you buy the deals? How do you evaluate the deals? And they look at the deal and they say, okay, cool. We can raise rent by this much. We can fix it up. Turn. Get the old tenants out and then raise rent by this much. And I asked, even like Jake and Gino, like I asked Geno, I was like, at what point do we hit the tipping point here? And we say, Hey man I don't think we can raise rents much more in this demographic. So it's what did he say? What did he say to that? What was his answer? Yeah, he said, right now, he's you have to really look at the demographics. And he said, we're slowing down with that right now. And we're not relying as heavily on banking on increased rent growth because, sweeping the nation as well is, they're obviously different states and you and I are in states that are a little bit more landlord friendly, but there are states that are saying, Hey, you cannot increase past this. And, and there are times where I'm like, Hey, I agree. We don't wanna have people paying way more than they need to. And bankrupting people. We don't wanna do that as landlords either. So I really like what you're doing and I see it. God, I forgot what that guy's name? Preston Rutherford. He's doing that with the Aus over in California. Yes. Yes.

sam:

That's awesome. Yeah. I You get to be, I call it being a social entrepreneur, like being a social entrepreneur is you get to do good. You. Do good while you're making money and as investors that's the game, right? I lived in cold living houses for about 12. Like I lived in my co-living houses. This is something that I'm intimately familiar with. I lived it, I breathed it. I did it. And I saved a tremendous amount of money. If I've never done the math to add up like how much I would've spent, if I had rented a one bedroom apartment over that period of time. But I it would've been tens and tens and tens, if not hundreds of thousands of dollars for that chunk of my life that I would've just. Would've just disappeared into nothing, but instead I was able to save that. And then by real estate, it's it's a good thing. If you're, I don't know who exactly listens to your podcast and what your audience is, but if you're a young, if you have kids and you, if you got a wife and kids and all that, like this probably isn't the model for you. But if you're single and you're hustling and you're make like, this is a great way to live for a few years to save cash. And then we are also seeing a lot of senior. Like a senior start coming back. Maybe they're divorced. Maybe they're just, they're on a set income. They're coming back and saying, you know what? don't mind living with some people I live in this room and like it's gaining popularity in a senior population too.

brian:

I love it, man. This is, yeah, this is so cool. And especially as we're traveling right now, it's like the that ideas even awesome right now. I'd be like, holy crap. In Europe. I would love to do that, but the hospitals are like just rooms with like bunk beds. And I'm like, eh, I don't know if I wanna do that. I'm not that hard for yet, but I'm sure I will be talk to me again in three months from the base account, we're gonna buy some houses, something different. Yeah. Yeah. Let's go buy some houses, man. I love it. Exactly.

sam:

Exactly, man. You're an inspiration. I actually didn't know you were house hacking type stuff. I didn't know you were house hacking stuff too, but you're just taking split level homes. And I do a lot of split level homes cause they fit this model really well. So you're doing top and then bottom and even renting it as just two units, like taking a house and being like two units. You're doing some of that. Yeah.

brian:

So you get the benefit of both, right? So I'm not making it too much of a Frankenstein's monster. So I'm keeping I'm keeping the benefit of a long term tenant upstairs and I'm renting them for the market rent. That would be. For a three bed, two bath. So it's there's that rent right there. And then on the bottom, yeah. Then I'll start renting out by the room or I'll rent by the units, just depending on what I feel like dealing with personally. So right now it's I've got a guy that I went to college with that when I bought my first house in 2019 and I moved in, he moved in with me downstairs and he took the other unit and he's still been down. He hasn't left. He's paying me like 600, 700 bucks a month. Yeah. And and he's making good money. So I can't even tell you how much money he's saved living down there. Yeah. That's awesome. And it works for me and I did have two guys living down there. And then one guy moved out because he was getting a house of his own. And then it got to a point where the other guy was like, Hey, look like, I'm gonna be honest with you. I'll pay you a little bit more, but I'm not gonna cover what me and him were both doing. Cuz they were both paying six 50. So it was 1300 for the downstairs. And he was like, He's look, I'll pay you like 1100 bucks, 1200 bucks, like 1100. He's if I could just have the whole downstairs, he's so I'll manage the property. I'll look over everything. You're not gonna have to deal with anybody moving in over here, cuz he's cause if you move somebody in there that I didn't know, I'd probably move out. He was like, you know what? Okay, cool. I'll buy it because sometimes the real estate like peace of mind is better than profit. That's right. So I'm like, okay, go ahead. Go for it. And now I've got a new unit that's vacant that I'm trying to fill, so I'm gonna have to post about that. So we were getting settled down while we traveled over here. I literally came here hopped off of a ferry, hopped into this island, got a phone, looked at my phone, had 30 missed calls, the car that I left my car, my personal vehicle that I left for Toro with my friend. I forgot to update the registration. Somebody freaking guy. Yeah. So freaking no works. So a guy was driving, it got pulled over car, got towed and impound. So I get off this ferry for four hours. I find out that my car got impounded. I find out that the guy that was supposed to move into my old unit in my house hack, he's not moving in. He decided he didn't want to. So I'm like, okay, cool. So with a couple text messages, I'm out. $2,200 net here, cash. Oh shit. I'm like, okay. But here's the cool thing, right? Like I'm like, okay, cool. Now I'm having to delegate everything and build that muscle. Because I physically cannot be there anymore. So I'm like, okay, cool. This is a cool muscle to build because I'm like, okay, Hey, if you can help with this, I'll pay you this. You can help with this. I'll pay you this. Then everyone's okay. I'm like, oh, cool. It got fixed.

sam:

Yeah. Yeah. How cool is it that you're managing that from so far away, living your dreams? Yeah,

brian:

dude. Yeah. And I'm not gonna, and I'm gonna post every single thing that goes wrong too, so that people can see, like it's a lot of work. Just like the van life, right? Yeah. It's like sometimes, it's not always sunshine and roses, but what it is at the end of the day is worth it because you're, that's brilliant. Yeah. You're pushing your, you're pushing yourself outta your comfort zone. and that's where growth comes because I could have easily just stayed over there and been very comfortable. But now I'm forcing myself into this new environment and I'm like, okay, time differences. I'm doing podcasts at 11 o'clock midnight. I'm like time differences diet differences, language differences, but right. It's worth it.

sam:

That's awesome. I love that, man. I wanna do that too more. Sometimes I can talk about the benefits of co-living and I forget some of the struggles I initially went through. Even on the, even early on. So that's a valid point. I appreciate you sharing that.

brian:

Yeah, I appreciate it, buddy. But anyways, man, where can people find you so that they can learn more about what you're doing in co-living

sam:

man? I think co-living a lot of people find me on the bigger pockets podcast. I was invited by Brandon Turner to speak about co-living on bigger pockets. So I think jumping over to that and listening to that interview with David Green, that I did would be really great. If people wanna find out more about ING or they can just find me at scale your real estate dot com or just my name, Sam Wayer on all social media platforms.

brian:

There you go. All right, brother. I appreciate you coming on, man. This has been as awesome as I anticipated. I did not know that you took over the freaking karate studio at 15, but dude, you're killing it. Thanks for doing what you do. Thanks for being you man. Proud friend,

sam:

proud to have you as a friend and thanks for you for being you appreciate fun.

brian:

This is fun for sure. This has been Brian and Sam with the action academy podcast signing off.