I've been asked by many of you how I'm still able to invest where I invest, with no money, get the 5X cash flow I get, and have a wait-list of investors.
I've never written about this publically until now. Below is the blog-post. I hope it is clear- we've been using it for years. Please let me know if you have questions or thoughts you'd like to share.
Thank you Grant!
@david davido you're very welcome. Thanks for reading! I'd appreciate hearing any of your thoughts on it, if you don't mind sharing.
Nonsensical dribble. A fantasy told by a fourth rate writer. What BS
@Don Konipol I certainly am not making money by writing, so you got me read-handed there <grin>. We have raving-fan investors and residents (renters), not through writing, but through a solid and fantastic strategy. We believe very thoroughly in he who provides the most value makes the money money. So far, we are very grateful!
@Davido Davido you're very welcome. Thanks for reading! I'd appreciate hearing any of your thoughts on it, if you don't mind sharing. Do you have any experience with this kind of thing?
@Grant Shipman , thank you for sharing your promising Real Estate investment strategy in the above post and in your Blog, “Up Your Net and Lower Your Risk”; https://www.biggerpockets.com/member-blogs/12319-co-living-up-your-net-and-lower-risk.
As I understand your strategy, you’re able to:
- purchase owner-occupied Single-Family Homes using all investor money (or mostly all investor money) -from a waiting list of eager investor partner’s.
- achieve monthly cash flows of up to $1000/home (which is 5X's the $200/mo cash flow that other investors seek but seldom achieve with SFH's).
- keep your administrative costs, vacancies and maintenance costs low by attracting high quality tenants who enjoy the prestige of high-quality homes and the healthy “household” that you are careful to plant.
If I understand your post correctly, -then what I perceive you to be doing is wonderful! The essential parts that I was able to identify were.
- Rent a single family house by the room.
- Select Desirable, High Quality Homes
- “Plant” High Demand “Households” (culture -lifestyle?).
Grant, what you are doing is of considerable interest to me. I am doing something similar (renting a 4/2 by the room), on a rural 3-acre property. And I have plans to expand my use of co-living arrangements by creating an in town 20-bedroom 24-bathroom tri-plex. My own plan is not focused so much on long term room renters. I expect to mix month to month rentals with short term rentals, a few dormitory style rooms and some RV spaces.
Despite my interest, I was only able to grasp what you’re doing by reading the other posts (and replies) in your blog. My recommendation is that you include a link to your blog in every post you make. The additional info in you blog is helpful to understanding what you’re doing. Including your 1st post “The 2003 Shift”. “In 2003 … the single-person household became the dominant household. … How can I get in front of this trend and make a **** ton of money by adding value?”
Another Blog post titled, “The Easiest Way to Get into Real Estate”, did an excellent job of describing the problem that many new investors have.
“Then I did my math- to support my goal of $5,000/month cash-flow, all I would need is…..25 rental houses or 50 multi-family doors. ****. Actually wait, I had no money, so I was going to do this with 50/50 partners, so this would require 50 houses or 100 multi-family doors. ….Can you relate?”
The same blog post went on to tantalize the reader with this promising note -but the details were left waiting.
“That’s what led to where I’m at now- each house gets $1,000/month cash-flow, 50% cash ROI, and the spread out risks of multi-families. Plus- I didn’t spend a dime out of my own pocket because investors all wanted in on the action I had! This is all due to the secrets of beyond-househacking + household-planting.”
Jerome Charles was spot on with his recommendation to provide examples of what you’re talking about. I’d love to see a quick summary of the income/expense figures from a typical property rented by the room (with a well planted “household”), compared to what the income/expense figures would look like for that property rented monthly? Your readers could see at a glance the significant difference your plan makes. Be careful though in your choice of words. I noticed that in this post your description of house hacking included the sentence, “… the househacking strategy scores her an investment property for about 1/4th of the cost.” Pretty sure you meant that by house-hacking, the investor could get into a home with ¼ of the down payment, or that by house-hacking her out of pocket costs would be ¼ of what a commercial mortgage would require.
Your idea of "planting households" interested me. Yet, the description of this key concept leaves me wondering just what actions you take and what procedures you follow to create the desired household environment which as described to Jerome is:
“Creating a healthy household (through household-planting) beats finding better tenants every time.”…
“Average tenants become good
-Below average tenants become average
-Bad tenants don't feel like this fit, so they self select out”
Since, the idea of planting households is a term of your choice and a key component of your strategy, it is hard for readers to grasp without more details. It would be great if you would use a future blog post to site examples of actions and methods that you or your team use to establish a non-hierarchical household with a shared culture and rules that create “healthy peer pressure for tenants to do better than they would do on their own.” (plant a household).
Of course, not everything can go into one post, but also helpful would be more information on how you select both the tenants and the homes that are most suitable for this strategy. Where do you advertise the space you have available in order to get the high-quality tenants you want? I’m guessing you don’t find most your “engineers, chefs, architects” from Craigslist? Do you find that larger homes are much better for renting by the room? and the more bathrooms the better? I can rent a room with private bath for 30% more than a room with a shared bath. I also find that renting rooms is most suitable, near down town, on a bus line, close to shopping, near a park etc. Quality schools are much less a concern. What do you look for in selecting a home for room rentals?
In regard to this question posed on your blog,
"2) If getting in front of a trend makes you rich, how do you you know whether it's a trend or not? " from the post "He Told Me Your Wrong". Here are companies that believe in the trend and are getting in front of it.
Grant, thanks for your posts and blog. Do you see other possible profit centers suited to your method of renting rooms? RV parking? Storage Lockers? Laundry Income? Commissary & Snacks? Rentals of Cars, Bikes, Equipment? Card Operated Gas Fireplace? (A NW thing), Utility Surcharges? I’d enjoy the details.
Hi @Davido Davido ,
I think your response/thoughts is about the most encouraging thing I've read in months. Myself, my team, my investment partners, and the household residents are absolutely smitten by all of this. However, I've not been able to successfully communicate it to those who are not here to see it, so I haven't gotten great responses yet. However, I truly believe in sharing what we are experiencing, as renters are experiencing healthy households (and saving money) and investors are making more money with less money and less risk.
Your advice and questions have been very educational and helpful also! Great points about being more careful/accurate with my wording i.e. "1/4th the cost".
Thanks also for understanding that I'm not able to fit everything in one post. I've tried to keep the blogs relatively short, and I have more planned to specifically discuss Household-Planting, property criteria, marketing, screening potential residents, and case studies with specific examples, etc. I also love your idea about showing real financial numbers our houses are getting compared to what that same house would get rented out as a one-unit (traditional rental). What a great idea!
I'm very intrigued by the cool plans you mentioned about the 20 bed 24 bath triplex! My friend has a 14 bedroom triplex house in Austin that I've been very involved in and learned a lot from. What has you wanting to provide both short & long term rental options? How short term are you planning to offer?
I really like the list of links you posted! I was aware of most of them, but not all of them. I'm looking forward to checking out the ones new to me. It is incredible the amount of institutional money being poured into co-living. I'm working with a marketing and educational crew in order to put together what we're doing, so individual investors too can take advantage of the co-living trend. And if I'm honest, I'm a very value-add/mission-driven investor, so I'd really like to see co-living houses as an option to renters in any city of 50k or more.
I'm going to print out your response and spend a lot of time on it because it's that good. As I write an address how we do co-living, I'll tag you to give full answers to your questions. Thanks again!
"Incredibly helpful" is how I felt about your "Beyond-House Hacking: 5x'd Cashflow" post. I'm pleased, that you found my reply to be supportive.
Any difficulty you've had in getting positive responses to your posts is understandable when you’re using new terminology. In my experience it is essential to carefully define new/unusual terms and provide examples. Your choice to keep blogs relatively short is also well taken. Perhaps, end your blog posts with a short note -regarding the subject or idea that will be coming next.
Your idea of seeing co-living arrangements as an option for renters in any city of 50k or more, was directly in line with my own vision. As was this wonderful statement; “I truly believe in sharing what we are experiencing, as renters are experiencing healthy households (and saving money) and investors are making more money with less money and less risk.” Therefore, I too look forward to connecting more. The co-living and household creation work you are doing is of considerable interest -especially as to actions that increase the desirability and longevity of renting rooms.
I'll send some basic info to you via private message regarding my own plans for a co-living multiplex. Best wishes and thanks again for sharing your ideas.
@Grant Shipman @Davido Davido - Just going through your posts, but are you basically talking about cohousing for renters? In a nutshell? Getting ready to do a house hack myself and a cohousing environment is one of the first things that came to mind. I've been interested in cohousing since the early 2000s, but it was never an option for me because I was a renter. To be able to bring that concept to others would be amazing.
@Michele Zugschwerdtm , Yes Michele. This post is about co-housing (renting rooms). It works out well for some of us. It does require some management and setting up standard and systems. Sounds like your heart is in it. So go for it.
@Davido Davido - I would absolutely love to have a conversation about finding the people interested in this. I see that Grant kinda went dark when his idea wasn't getting across, and I'd love to be tagged in on any other discussions about this technique you might know of, here on BP.
We're currently searching for the right property and hope to be moving in by this July. Finding tenants will quickly follow.
I have question like, do you furnish the common areas, or allow the tenants to furnish it themselves; do you stock kitchens with equipment? If residents are managing in common is there still a property manager to handle maintenance requests? Are there unique insurance considerations, etc. I'd just love to read about how anyone is handling these situations.
@Michele Z. , posts along similar lines come up on BP weekly. Like this one,
Michele, I strongly suggest that you select which key words you want to follow (like co-living) and set up your BP profile to notify you when those words occur in a post.
Also check out https://www.biggerpockets.com/faq for other best practices and FAQ's.
We started renting rooms (co-housing) because our rental property had several acres with pond, gardens, orchard, timber, outbuildings and fencing that all needed maintenance. Renting rooms allowed me to keep the income coming in, while allowing me complete access to and control of the yard.
A friend and I did a one day shopping spree to stock the kitchen with everything but food (silverware, counter appliances, dishes, towels, pots & pans, glassware, utensils, etc. We also spruced up the bathrooms with some cleaning supplies, paper products (TP, Kleenex, Paper Towels) extra shower curtains, hand soaps and hand towels. The common areas were barely furnished at all - a small kitchen table and 4 chairs, several stools and only one couch. There was nothing in the bedrooms but empty closets. The laundry had a washer and dryer and a cheap tool kit for the household. The problem I have is tenants bring there own furniture, and don't take it with them when they leave. In 3 or 4 years I've spent several hundred in dump fees.
I tell the residents that all utilities (elect, water, internet, sewer, & garbage collection) are kept in my name, added up (by me) each month and the cost is divided equally among them (current average = $55/mo for each of 4 residents in a 2400 sq ft home. Utility billing is a lot simpler on everyone if the landlord sets an amount certain each month, but when the tenants know their utility cost will be the same each month they get pretty wasteful. Last winter, in order to save money, my room renters agreed amongst themselves to keep the electric heat pump and furnace off all winter. They chopped and burned several cords of wood in the wood stove instead. We supply the WiFi. You might find my blog post about various uses of WiFi to be of interest. https://www.biggerpockets.com/member-blogs/12388/87022-some-of-the-many-advantages-of-landlord-wi-fi
Insurance has to be a "Landlord's Policy". Our insurance was upgraded to a higher coverage (1 million), with a higher deductible ($550/yr). And we are about to add an umbrella policy. The agent didn't seem to care whether we rented rooms or to the whole house.
Michelle, my recommendation is that you require all rents to be paid online Online payment is instant, convenient for all, and leaves a permanent online record. I use free services like PayPal.com, Venmo.com and CashApp.com. I encourage emails and texts from all my tenants so there is a written record. While phone calls are fine for chatting, if a call is about something that needs to happen, I either ask the caller to send a text, or I'll make a written record of it by sending a text or email back to them. I downloaded software that syncs all texts to a program on my laptop. It is simple to copy texts and texted photos into a file on my computer.
Best Wishes to you and your husband.
@Davido Davido - thanks, I'll check out your blog post. I actually updated my keywords shortly after finding this thread. I found why Grant went dark, he's doing his own thing marketing a program to get people started, which I suppose should have been obvious from how cryptic these posts were. lol But we'll figure it out the old fashioned way, I guess.
@Michele Z. & @Davido Davido Great to catch-up on your thread- and my hearty apologies for going dark :) I've been putting in hundred plus hour weeks for the last few months to produce a quality product to help investors do what I am doing, reinventing the household. Creating a quality product that actually gets people success has been a challenge- up until now I taught other investors personally.
My posts may come off cryptic b/c what I do can be replicated and be amazing for renters and investors, but not if it is understood incorrectly to mean rent-by-the room (or other common threads). Rent by the room has been tried for quite a long time by private investors, and any increase in profits is usually lost in the wash due to high turn-over, property damage, and tenant conflict. What I've done since 2000 is create high-quality households that renters want to be a part of. They may join for the lower price, flexible leases, and quality housing, but our residents stay for an average of 5+ years b/c they can't find what we offer any other place.
I very much support, love, and am a student of all types of cohousing: boarders, college housing, senior housing, rent-by-the room long term or short term, etc. To my knowledge none of these reliably produce 5X the returns of a standard successful rental house nor offer society (and renters) a re-invented household that people want to be a part of for years and years. This is what offer investors like us and renters like I use to be.
Did I cryptic the **** out of that? hahaha I hope not :)
I hope y'all are having a truly wonderful start to your new year!
@Grant Shipman - Yup, still cryptic. Mission accomplished. :) But seriously, the main reason I wouldn't investing in your course is that the cost is high enough that it would kill a significant chunk of my limited start-up capital - and prevent me from actually getting started investing. But even if money were not an issue, you're still not really giving me enough information to draw a distinction between your strategy and co-living built around some kind of shared interest or belief system, as opposed to just bringing together strangers who pass a background check and want to save money. Basically you're not giving me a reason beyond 5x PROFITS! I don't know, that's enough for the well off who have money to burn and are just chasing profits, or those who are too scared to start without a mentor. We're just a normal family who wants to take advantage of an opportunity and make a difference in people's lives. Mainly mentioning this as a way to help you craft your marketing. I hope you are successful. This country and this world desperately needs more community. :)
@Michele Z. I so appreciate your kind straight-forwardness. Let me say that again, b/c I truly mean it and want you to know it. I turbo appreciate your kind straight-forwardness. With that skill down, you should do great avoiding what trips up a lot of us private investors in coliving- creating an environment of straight-forward communication with household members and between household members. It's my personal belief that each person discovering and fleshing out their goals the best they can is what will upgrade the world, so I super support your and all of our good-hearted efforts. Whether your decision is to go with guidance through organized knowledge (books, courses, coaching, etc) or piece it together through great forums like this, the important thing is to take calculated steps, reflect on the results, and then take more calculated results. It's an encouragement to me b/c it sounds like you are doing just that, and I need more people around me that do that!
Sounds like you've also had a look at my product- Thank you for taking the time to check it out! Unfortunately, it is still not available to purchase, as I'm in the process of replacing my product development firm b/c I couldn't figure out how to manage them well enough to meet benchmarks. So that is eating up some time and I'm doing it all myself in the interim. All that to say, the price point will be a discounted $1k for those who partake in a free intro webinar. I've put in over $100k into training courses, coaching, and meeting w/legal and finance experts to start and sharpen my skills, and I've learned that people (including myself) often don't pay attention if we don't pay money. Also- I will be launching a beta-program shortly which will get to do the course for effectively free in exchange for course feedback. Again, I'm just sharing here. I hope y'all, @Davido Davido o Davido, myself, and others like us w/hearts for household, regardless of or temporary strategies, are synergistic through supporting one another.
The best thing I can offer from my experience and learning from others is twofold:
- 1) Use syndication to do multiple house hacks throughout the year (1-48 houses per year) b/c coliving + househacking enables this. Plus it means you could use no money of your own and benefit your passive investors (like I have). This is called HouseHacking 2.0
- 2. Use A Complete Household System: this is a mixture of rules, culture, communication methods, conflict management method, etc that form a living environment that you and the average person would want to live in for decades. It also means transferring much of the property management and household management on to the household members themselves b/c responsibility breeds pride, ownership, and deep joy.
By the way, I'm heading to ColivingHub's world conference this April in LA to learn from them. If either of y'alll happen to go, I'd love to meet face-to-face :)
David- I'd love to hear how your current projects are going if you don't mind sharing. For me- we just closed on an 8 bedroom ranch detached that is maybe my most favorite property so far, and I'm so looking forward to seeing the new household develop. I also just the first house I bought to inspect it yesterday, and it had me laughing b/c I found 17 cases of toilet paper in different places in the home (bathroom, garage, storage, laundry room)...it's like they were planning an epic TP'ing of another house....I wish, it ended up just showing a lapse of communication between the house members and the HPM (household-led property manager). #alwayslearning ...hahaha
@Grant Shipman - I'm happy to do your beta or to watch a webinar and give comments if that's helpful to you.
It's a fair point that many people do require a financial investment in order to take something seriously. But I imagine that's hard to balance with the people (and you read about them in here all the time) who spend a ton of money on training yet still never get started. But perhaps that's not the problem for the content creator, which group you end up in is entirely up to the individual.
In our case, we have to be up and running by July as that's when the military moves us to our next location. I think that Uncle Sam's forced timeline is probably giving us the same sharpened focus that spending money gives others.
I wish you luck at that conference, it sounds interesting. I hope you'll consider writing up something afterwards to talk about your experience.
Our first try will be multi-generational as we have a toddler, I certainly hope we can find people willing to give it a go. We will be there for the first year to get things going and once we're sent elsewhere, we will hand it over to a combination of a community leader for internal needs and a regular property manager for external management. All other things would be handled digitally.
Insurance is trickier. I wanted to use USAA but discovered yesterday that in our market they have a limit of 3 rental contracts per household. I initially wanted to have 4-5 contracts (i.e. 4 rental rooms with per house) something like a young family in the master suite (initially us), perhaps a couple in a room with its own bathroom, and single community members in rooms with shared bathrooms. So I need to contact another agent to see if that's a GA rule or specific to the company.
Regardless, the first house is a place to work out systems, etc. If it works there are many submarkets within any city that I'd like to find a way to bring this to.
@Michael Sato it sounds like y'all are doing quite wonderful things! Yes, I end up being in the category of educators/mentors who charge for my services. I'm working on getting my beta program for the course together- I hit a snag that has bummed me out a bit on it in regard to production logistics, so I'm jumping back on my feet from that. I love the challenge and it also drives me crazy sometime :) Do you relate to that?
It very much impresses me that you looked into insurance in that detail. Unfortunately, BP flags me anytime I put contact information here. If you want, please DM me, and I can connect you with the Livingsmith Risk Management Adviser Bobby Talbot. The guy is high-quality and only goes by referrals (usually only to high net-worth individuals, but I asked him to put together a policy for people exactly in your shoes). He's big on education, so you'll learn quite a bit (like I have) through chatting w/him. I hope you are having a great 2020!
Pretty cryptic. There are books on cohousing, e.g. Creating Cohousing, Building Sustainable Communities by Charles Durrett and Kathryn McCamant. Senior Cohousing: A New Way Forward for Active Older Adults ... by Sherry Cummings, Nancy P. Kropf. The Cohousing Handbook : Building a Place for Community by Chris ScottHanson and Kelly Scotthanson. See also - Pocket Neighborhoods: Creating Small-Scale Community in a Large-Scale World Hardcover – by Ross Chapin, Sarah Susanka (more architecture-related). There is also the Foundation for Intentional Community - ic.org.