In this episode of The Rent-ish Pod, we welcome John Blatchford, a Cincinnati-based developer renowned for his expertise in historic property revitalization. John unpacks how house hacking can be a game-changing entry point for first-time real estate investors, focusing on smart funding strategies and proven methods for building equity from day one. If you’re eager to break into real estate and want practical tips on financing, renovations, and maximizing your investment, this episode delivers actionable insights and investor wisdom you won’t want to miss. Discover more about John Blatchford’s work at Cohorts and get inspired to kickstart your real estate journey!
Got questions, hot takes, or real estate horror stories of your own? Email us at questions@therentishpod.com—you might just make the next episode.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_03 (00:00):
What's going on, everybody?
I'm Zach, and I'm here with myco-host, Patrick.
SPEAKER_00 (00:08):
What is
SPEAKER_03 (00:09):
up?
We are your hosts for TheRentish Podcast, which is a
podcast kind of about rentalproperties and hosted by two
guys that work in the realestate industry and kind of know
what they're talking about.
But mostly don't.
That's right, Patrick.
Mostly we don't.
But we might have someone herewho does.
Spoiler! We'll get to it here ina second.
But you're going to have funhearing us talk to experts and
(00:31):
learning with us or laughingalong at how little we know
along the way.
Rentish Podcast, follow us, dothe things.
We talk about it every singleweek, right?
Anything that you can do.
We appreciate you for listeningto the show.
If you've gotten this far in theepisode already, we really thank
you for coming around andlistening to the show.
It's been really fun doing thispodcast with Patrick and all of
our guests.
And follow us on Instagram atTheRentishPod.
(00:54):
You can email questions atTheRentishPod.com if you have a
question or comment that you'dlike to share with us or maybe
just a topic suggestion, advicefor fellow renters or people
that are interested in realestate and property management.
Or if you're an esteemed guestor maybe someone famous and you
want to be on show, email us.
We'll thoroughly vet these, I'msure.
Yeah, that's about it for thepodcast.
(01:14):
Patrick, how are you doingtoday?
I'm good.
I'm full of
SPEAKER_00 (01:18):
energy.
SPEAKER_03 (01:18):
Yeah?
SPEAKER_00 (01:19):
Yeah.
In case you tell.
SPEAKER_03 (01:20):
Yeah.
Oh, I can tell.
I mean, you're very twinkle inyour eye.
You're ready to rock and roll.
Well, we got a special episodetoday.
We're not going to do thetypical rigmarole here at the
top where we talk about Supermanand the fact that it's coming
out in a Real estate investingseries, we're gonna be diving
(01:40):
into a strategy that's all aboutturning your living space into
an income stream.
It's called house hacking,apparently.
This one's especially popularwith younger investors, first
time home buyers, or anyonelooking to ease into real estate
without tacking on a ton ofrisk.
The idea, buy a property, livein part of it, and rent out the
rest to cover your mortgage oreven turn a profit.
And to help break us, help usbreak it down.
(02:05):
Lots of new words here, lots ofnew words.
To help us break it down, We'rejoined again by John Blatchford
from Cohorts, who was here a fewweeks ago to talk to us about
buying new properties andrenovating them.
And he's going to walk usthrough what house hacking
really looks like, how to makeit work, and who should or
shouldn't try it.
And judging by how rough myintro was there, I would say
maybe we shouldn't try it.
But we're going to learn aboutit.
(02:26):
John, thank you for coming backon the podcast.
SPEAKER_01 (02:28):
What's up, fellas?
Not much.
SPEAKER_03 (02:32):
I don't know.
What's up with you?
All's
SPEAKER_01 (02:34):
well.
SPEAKER_03 (02:35):
Yeah, all's well.
SPEAKER_01 (02:36):
That's good.
Sunny day, well caffeinated, andeverything's good.
Yeah, yeah, yeah.
SPEAKER_03 (02:38):
that's good that's good yeah I think we're all in
the caffeination department Ithink I've had a half pot of
coffee and a soda so I'm readyto rock
SPEAKER_00 (02:45):
and roll that's the problem I haven't had any
caffeine yet
SPEAKER_03 (02:48):
today no caffeine at
SPEAKER_00 (02:49):
all no that's what it is I was gonna make I've been
doing Earl Grey tea with honeythat's been my thing recently
and I heated up the kettle and Irealize now I forgot to pour it
in my mug the producer was
SPEAKER_03 (03:01):
just in the room asking you if you
SPEAKER_00 (03:02):
wanted to drink and you declined no I didn't decline
I said yes and he said too badno this is not how things gets
what
SPEAKER_03 (03:08):
they want.
That's what I'm saying.
I think you're wrong.
I think I heard you say no.
I'm good.
I said I want one.
You misheard.
I misheard.
I'm sorry.
John, educate us.
You're here to talk about househacking.
We're very curious to hear aboutwhat you have to say.
We're here with Open Ears.
I'm sure we're going to havequestions, but take it away.
We kind of are just youraudience today.
SPEAKER_01 (03:29):
This is your TED Talk.
Cool.
Thanks, guys.
I think we're kind of buildingon or continuing our series,
which I think is effectively howdo you go from zero properties
to whatever your dream is, say100 units or 1,000 units.
So we talked about my firstproperty recently and kind of
how I got into it.
And hopefully, from all themistakes I've made, I can help
(03:51):
people not make those mistakes.
But this is a good way to getstarted, this topic of house
hacking.
And I think the general idea is,if you are working at a job and
you want to get into realestate, what is the pathway to
do that?
And one consideration is like,what are you hoping to get out
of that?
(04:11):
Are you trying to ultimatelybecome a real estate developer?
Do you want to quit your job in10 years?
Do you want to just have somesafe investment over the next 30
years?
And I think that'll kind ofdictate what you want to do.
But one like fairly low bar,fairly easy way to get into real
estate is this idea of househacking, which is basically, you
know, instead of just buyingyour house, you know, which can
(04:32):
be a great lifestyle choice and,you know, can be a good
long-term investment, you know,turning that house or property
you buy into something that canmake you some money.
Right.
Or at least that somebody willpay to live there and can pay
your mortgage.
So this idea of house hacking, Ithink, is basically, you know,
the hacking part of it sounds alittle bad, I would say.
You know, like, oh, how do youhack your way in?
It sounds cool.
Like an 80s tech bro.
(04:54):
I'm going to hack this house.
Get into the mainframe.
But it's basically, you know,how do you get money?
How do you get somebody to pay,you know, pay your mortgage or
to pay to live in this house?
So, you know, I think there aredifferent ways to do that,
certainly.
But I think the first hack isthat if a house costs$400,000,
obviously you do not need$400,000 in cash to buy that.
You know, that would beimpossible.
(05:15):
And so there's this first ideaof just like, you can get debt,
you can get a loan against yourhouse.
And most people, you know,appreciate that when they get
their mortgage, but a mortgagemight come at like, you know,
20% down payment on the house orsomething.
So even for a$500,000 house, youknow,$400,000 house, you need
$100,000 in cash and which for alot of people, you know, won't
come until much later in life.
(05:35):
Right.
So, uh, one way to get into ahouse with less cash is an FHA
loan.
I've talked to a lot of people.
A good friend of mine, Donovan,has done it and now built a
really successful real estatebusiness.
But it's a way to sort of getstarted with, say, 5% down.
So on that same$400,000property, you now only need
$20,000.
A lot of people can work theirway up to having$20,000 that
(05:56):
they could invest.
With an FHA loan, you can buythe property if it's your
primary residence and you'regoing to live there.
And you can make it a littlebetter if you buy a duplex.
So there's two units.
You live in one and you rent outthe other one.
That's a place that you live.
It's your primary residence, butit also has a rental component.
And so, you know, your tenantsliving there will be paying your
(06:16):
mortgage.
And so immediately you'vebasically, you know, moved into
a house that's now, you know,it's not free, but somebody else
is basically paying for yourhouse.
Right.
So that's the hack, right?
Because for now, a$400,000property with two duplex, you
know, two units, it's a duplex.
You now are into it for$20,000and somebody else is going to
pay that loan for the next 30years, right?
(06:37):
So that's like a pretty good wayto get into real estate.
SPEAKER_03 (06:39):
Yeah.
SPEAKER_01 (06:40):
That's the hack with John Blatchford.
SPEAKER_03 (06:42):
Can we, can we trademark that?
I like that.
Like that's a great t-shirt.
Like that's the hack.
And then with John Blatchford onthe
SPEAKER_02 (06:49):
back of the t-shirt, that's awesome.
Yeah,
SPEAKER_01 (06:52):
exactly.
SPEAKER_02 (06:52):
Yeah.
SPEAKER_01 (06:52):
So that's one way, right?
You don't have a ton of money.
You know, you have a salary.
You're just trying to like,okay, how do I start building
some equity?
How do I maybe start buildingfor retirement?
And that's one way to do it.
And you don't need, you know, aton of cash.
You know, the potential downsideof that, of course, is you can't
do that regularly.
The whole program of the FHA islike your primary residence.
So, you know, you're supposed tolive there.
(07:14):
I think you can only do one ofthose like once a year.
And so, you know, that's thehack.
You get into it and, you know,that's like a good way to get
your first property.
SPEAKER_00 (07:22):
And FHA works for duplexes?
SPEAKER_01 (07:25):
Yeah, if it's your primary residence.
SPEAKER_03 (07:27):
Okay.
Yeah.
This is a safe space for allquestions, whether they be the
most intelligent, beautifulthing or the stupidest thing
ever.
Are you about to ask a terrible,stupid question?
I'm about to ask a stupidquestion.
What does it stand for,
SPEAKER_01 (07:41):
FHA?
Fair Homes Act, I think.
Okay.
And the intent of that programis our housing policy throughout
time, throughout history, hasbeen fairly racist.
Certain people, certainly blackpeople, could not get loans.
And, you know, homeownership wasexpensive if, you know,
historically it would cost a lotof money, 20 percent, 50 percent
of the home cost to buy a home.
(08:02):
So to buy, you know,$200,000house, you need$100,000 in cash.
So this program, you know, it'sa federal program where now you
only need, you know, say 5percent.
And it's really trying toencourage homeownership for
people that, you know, aren'talready rich.
And then, you know, you pay thatoff over over 30 years.
SPEAKER_03 (08:20):
Hmm.
Yeah.
Interesting.
1934, Congress created the FHAloan.
Little trivia fact.
That's cool.
SPEAKER_01 (08:26):
And then, you know, and then depending where you
are, depending who your lenderis, you know, there are a lot of
sort of like first timehomebuyer programs.
You know, friends of oursthrough Wells Fargo years ago,
you know, were able to buyhouses, I think, with even less
money down.
And, you know, so there's reallykind of creative ways that you
can especially buy the placethat you're going to live.
And then the hack is like thenyou get a tenant.
(08:47):
The extreme hack, which myfriend did, is not only did he
have a duplex that he rented outone unit, he then in his unit
had roommates who who paid himrent.
That's a lot of people withinone building.
That's a pretty extreme way todo it, but he was in his maybe
early 20s, so that's one way.
That's
SPEAKER_03 (09:06):
awesome.
That's very, very cool.
I don't want to speak for theboth of us, Patrick, but amongst
all of my friends straight outof college getting big boy jobs
for the first time, like rightwhen you leave school.
This was the most common tacticfor home buying for most of my
close friends was we bought aproperty, we bought a duplex, we
(09:28):
rented out one unit and westayed in the other one.
And then eventually once we feltcomfortable with that, we bought
a property that was just formyself and my wife, for my
partner.
And then we rented out the otherunit and now we have this
investment property that's onthe side.
This is like This is like themost common thing I think used
by people in my age bracket forsure.
SPEAKER_00 (09:48):
I had my first friend to buy a house.
It was pretty much right out ofcollege.
He got some sort of, I don'tknow how, but he got a
rent-to-own contract.
It worked really nicely for him.
And then he had a roommate whopaid rent to him to help cover
that rent-to-own thing.
And then I lived there for liketwo months and crashed at his
place for a sec too.
But rent-to-own, that wouldn'tbe the same thing as house
(10:11):
hacking.
Is house hacking specificallylike owning a property, living
in that property, and thenhaving somebody also live in
that property paying you?
That's the term house
SPEAKER_01 (10:20):
hacking.
So again, the hack is likeanybody can buy real estate.
You can go out and buy aproperty, but the expensive way
to do it is$40,000 property, youput in$100,000, you get a loan
for the rest, whatever.
So the hack is really like,okay, it's your primary
residence, you need much lesscash, and then you have a
tenant.
And I think the other good, likeassuming you want to get maybe
(10:42):
more into real estate is this.
It's such a good, relatively lowrisk way to appreciate what it's
like to have a tenant, to havemaintenance issues, to maybe do
a little light renovation, toredo the kitchen, you know, see
if you can add value.
Like, oh, someone might rentthere for$700 a month.
But like, what if you redid thebathroom?
Would they pay$750?
You know, so you can start tolike all the fundamentals, I
(11:05):
think, of real estate.
You can get, you can start toget through that, you know,
managing a construction thing.
Maybe you want to invest$5,000into the kitchen over there and
invest a little more there.
and just see what that's like.
What's it like hiring a plumber?
What's it like finding aflooring person?
No, they didn't show up.
Oh, they took your money andran, whatever.
All the things that, those arethe exact same problems at a
(11:25):
$100,000 project and a milliondollar project.
You start to get a taste forwhat it is to own real estate,
manage real estate, and doconstruction.
Yeah, so it's a really nicelead-in, I think, too.
SPEAKER_02 (11:37):
Okay.
SPEAKER_00 (11:38):
Would you always recommend house hacking to
first-time buyers, or is theresituations where that might not
be the best idea?
I
SPEAKER_01 (11:46):
think as an investment, I think a mistake
people make is viewing buyingyour primary house as this great
investment.
It can be a great investment,but you're still going to pay
that mortgage every month.
The roof fails and you have tofix that.
You're really just hoping itgains value over time, which it
has pretty much the last 20years, but that's not
(12:09):
necessarily a guarantee.
So I think you should buy yourprimary house to be happy.
You You want it to be yours.
It has the bedrooms you need.
You can paint the kitchen and,you know, all that kind of
stuff.
Right.
It makes you happy.
But if you want it to be aninvestment, you know, somebody
paying your mortgage or loanevery month like that starts to
be a really great investment.
Got it.
Gotcha.
SPEAKER_03 (12:28):
OK.
Are there any local zoningconsiderations or legality that
you have to consider when doinghouse
SPEAKER_01 (12:35):
hacking?
Yeah.
So, you know, again, I think thehacking piece, people think
like, OK, I can do this thishere and then, you know, I don't
even have to live there and thenI can do another one.
And, you know, people try to getsneaky with that.
And obviously, you know, you'retaking money from the federal
government.
And so, you know, I think youneed to be careful that you're
like doing what the programintends, which is, you know, to
buy and live in a home.
And then, yeah, anytime you'redoing construction, if it's not
(12:57):
already a duplex and you'returning it into a duplex, you
definitely want to check that.
Does the zoning allow for a twounit, you know, don't buy a
property that's only a singlefamily home, expecting that you
can maybe build a accessory unitor you can turn the attic into a
rental like, you know, thatthat's pretty highly regulated.
And, you know, if you getcaught, it's like you have
someone living in this fire riskattic.
(13:18):
That's a pretty serious thing.
SPEAKER_03 (13:19):
As someone that owns a lot of property and have
developed property inCincinnati, I feel like I have
witnessed a lot of some, let'scall them janky homes, like old
Cincinnati homes that have beenrenovated into three family
units or whatever.
Do you see this relativelycommonly?
People trying to get around itand doing this sort of stuff
(13:41):
with house hacking?
SPEAKER_01 (13:42):
Yeah, and there are it often does happen that
historic buildings don't need tomeet current building code like
that is allowed some of the timelike for example buildings we
renovate where the stairhandrail is lower than the
current building code but theydon't make us match the current
building code because it's ahistoric building it's
historically protected so thereare cases where like it's still
(14:03):
legal it's totally fine it justdoesn't quite match what we
would expect today but there'salso the case of like yeah if
you turn a single family houseinto three units and you don't
have a fire escape you know likethat's quite risky and that's
that happens a lot arounduniversities it happens around
uc i think you know there havebeen cases recently or not
recently but years ago like youknow kind of unpermitted
unapproved attic unit thatbecomes super dangerous so yeah
(14:25):
you want to be careful of thatbecause okay maybe you can sneak
by for a period of time buteventually like you know that's
like pretty life-ruining rightyeah you're caught doing illegal
stuff
SPEAKER_03 (14:33):
so in short check make sure you're within those
guidelines check professionalresources and all that yeah
SPEAKER_01 (14:38):
yeah if you're doing construction you know there if
it's a small thing you oftendon't need a permit but you know
if you're redoing the kitchensor a wiring and plumbing and,
uh, you know, you need permitsfor that kind of stuff.
SPEAKER_03 (14:48):
Yeah.
But it seems like a lot ofpeople that do end up going the
house hacking route tend to lookfor places that are already
pretty established as duplexes.
Um, and my, it's going to costmore to be able to do like to
buy a place that's not suitedfor, to be a duplex or a
multifamily and then renovatingit yourself that takes
additional costs.
So
SPEAKER_01 (15:03):
yeah, exactly.
Yeah.
Yeah.
So our current duplex and, youknow, and the, the, if it exists
as a duplex, that's the bestcase.
And If you can then invest alittle bit of money, make the
kitchen nicer, make the bathroomnicer, add another bathroom, add
a bedroom, you know, legally.
You know, if you can add alittle value, that also like
obviously creates, you know,
SPEAKER_03 (15:22):
makes a more
SPEAKER_01 (15:22):
valuable property.
SPEAKER_03 (15:23):
So we've talked a lot about the positives of this
thing.
It sounds good.
It sounds too good to be true.
It sounds like a cool tool touse for a lot of different
people.
What are the cons?
Are there any big like glaringlike this might be something
that you really need to reallyconsider for your your
day-to-day life if you decide togo this route
SPEAKER_01 (15:44):
yeah so it's it's a great question i think you now
have a tenant right and in anapartment building or you know
the unit you're renting that's24 7 if their heat goes out at 3
a.m right you have to fix theheat at 3 a.m and especially if
you're going to try to manage ityourself you know that's the
most cost-effective way you justdirectly manage it but that
means you're the maintenanceperson your support your you
(16:05):
know you're the support linethey'll call you they text you
and you live next to them andthey're going to see you all the
time you know like hey that leakis still going on you know in
the roof like hey you know so itcan be like quite uncomfortable
it can be quite annoying yeahand you know yeah you just now
have to live you know next to ornear you know effectively your
customer so i think that'sprobably the main thing uh and
you know i think the other islike you know this by itself is
(16:26):
probably not going to make yourich you know you have a big
loan on the property sure sureit's worth three hundred
thousand dollars but your loanis for you know 285 of that so
you know it's not it's not likeyou don't you're not all of a
sudden own a three hundredthousand dollar yeah So there's
that.
But yeah, I think the main thingis you now have a customer that
lives right next to you.
They're gonna have maintenanceissues that could potentially be
(16:48):
24-7.
People can trash places.
You guys know, you've talked alot about the horror stories of
managing property.
So if you have a bad tenant or abuilding that's falling apart,
it can be painful.
SPEAKER_00 (17:00):
Would this be considered house hacking?
Because I know it's like somepeople who Airbnb a room out of
their house, for example.
Like they've got a basement roomor something else.
Is that kind of in the umbrellaof house hacking?
SPEAKER_01 (17:12):
Yeah, I think Airbnb and the short-term rentals have
opened up kind of a whole newworld where if you're traveling
or if you have a space or a roomthat you can rent out, again,
legally check your regulations,blah, blah.
But a place that you can rentout legally on an Airbnb or a
short-term rental site, I thinkthat's a similar thing.
And that's potentially opened itup to a lot more people where
(17:32):
you just have a four-bedroomhouse and you can rent one room
occasionally on Airbnb orsomething.
So yeah, which I think is smart.
Again, it's the same problem.
you have to manage, you have tobe checking in, you have the
same potential issues, but ifyou can make 10 grand a year or
five grand a year from rent,that could be- Yeah, it's a
constant flow of income.
SPEAKER_03 (17:49):
Imagine doing the trifecta, right?
You get it all.
You buy the duplex, right?
You rent out one of the units tosomebody that you know.
You have roommates in your roomthat you can also have pay you
rent, and then you have a shedout back that you convert into a
luxury weekend Airbnb.
Do they call that in the in theindustry, the ultimate hack.
(18:12):
That's a supreme hack.
The supreme hack.
That's like the matrix.
You basically just have it, youknow.
Exactly.
Numbers swirling around yourhead.
You can see through time.
It's perfect, yeah.
SPEAKER_01 (18:20):
I think, you know, another version of this too is
there are a lot more There aremore areas that are allowing
like ADUs, if you've heard thatterm, like an accessory dwelling
unit.
So for example, in likeCalifornia or Houston, Texas,
you have single family areas.
They're pretty low density, youknow, big lots of land, but now
they're allowing you to build anaccessory dwelling unit.
So you have a big yard on theback of your yard.
(18:42):
You can build like a onebedroom, little, you know, tiny
house and potentially rent thathouse.
Barn dominium.
Remember we
SPEAKER_03 (18:48):
talked about that?
You could build a mini barndominium house in the backyard.
That's
SPEAKER_01 (18:52):
cool.
And rent that out.
And you know, you took a littlezero yard and now you have a
rental unit there.
SPEAKER_03 (18:57):
Can you house hack in the big city?
Like, I mean, we talked aboutlike having like a rural area or
a duplex or whatever like that,but like here in like a highly
populated sky rise place like aCincinnati or a New York or
wherever, it's like certainlymust be harder.
SPEAKER_01 (19:10):
Yeah, I think, you know, I think there are versions
of, you know, investing in acondo and fixing that up and
renting it out.
You know, a friend of ours didthat, basically had a condo and
then, you know, lived there fora year and then rented it out.
So I think you can do that inmore of like a high-rise condo
setting but I think the truehack of like you live in one and
rent out the other one like it'spretty rare to be able to buy
(19:31):
like two units as part of like abuilding condo okay applies a
lot more like a standalonebuilding that has two units
already in it
SPEAKER_00 (19:41):
okay yeah I guess my first landlord, I think that's
pretty much what he had aproperty.
And then he made like the firstlevel, like a separate unit,
like through construction andstuff.
So I guess that was technicallyhouse hacking.
Yeah, probably.
SPEAKER_03 (19:55):
So what's the biggest mistake you often see
first time house hackers make?
Is there like, you're likereaching through the, you're
like, I wish I could have justtold you this.
Don't do this one stupid thing.
Is there anything that jumps outat you when you see people go
into it for the first time?
SPEAKER_01 (20:09):
Yeah, I think the idea that like this, alone will
make you rich.
I can think of a friend of ourswho was doing this and renting
out properties and was like,okay, now I can own this
building forever.
But at some point you're justkind of managing tenants and you
have this asset that if you soldit, you could put whatever
(20:32):
$50,000 or$100,000 of cash inyour account.
I think people are romanticallyattracted to owning real estate
and having that for a long termand that by itself will lead to
wealth.
And it's more like a goodinvestment strategy rather than
like a wealth builder, I wouldsay.
And so like once you do thehouse hack, I would say like you
want to try to add some value,redo a kitchen, redo a bathroom,
(20:54):
pay down the mortgage, maybereplace the roof, like, you
know, add some value to it.
And then for me, like, I don'tthink you then probably want to
own that property forever.
Assuming you want to like try tobuild some wealth.
If you're just trying to likesave for retirement, then sure,
just own it for 30 years.
UNKNOWN (21:08):
Okay.
SPEAKER_03 (21:09):
Patrick, you got any questions for our My friend John
here.
SPEAKER_00 (21:14):
No.
You took a while to think aboutthat.
That's good.
No, yeah.
I think you covered pretty muchmost of my questions.
Okay.
How do you think you would do,Patrick, as a house
SPEAKER_03 (21:26):
hacker?
Professional house hacker,Patrick.
SPEAKER_00 (21:27):
How do I think I would do?
I mean, like, it was always kindof, it made sense to me to get a
duplex, live in one unit, rentout the other.
I didn't know that was calledhouse hacking.
I just thought that was calledbuying a duplex.
Yeah,
SPEAKER_01 (21:43):
again, like the special house.
hack is if you can do that withan FHA loan and get a$400,000
property, which that numbersounds impossible to buy for
most people, but if you onlyneed$20,000, which is still a
lot of money,
SPEAKER_00 (21:55):
you
SPEAKER_01 (21:56):
can imagine saving your way to get there.
And that's a hack to, oh, youare now literally a multifamily
real estate owner, and it onlytook$20,000.
So I think that's the hack.
SPEAKER_03 (22:06):
And you might have clarified this with the FHA, but
for everyone listening, you canreally only utilize that once
Right.
Or is that something that youcan do multiple times with the
FHA loan?
Like, could you theoreticallyget one as your first property
and then like use another FHAloan for another property
SPEAKER_01 (22:23):
down the road?
You then have to live there fora year.
OK.
And then I believe if you sellthe property, there's some like
lockout period where, you know,a period of time where you can't
do it again because, you know,they're not trying to like build
real estate developers.
They're trying to build likehomeowners.
Yeah.
How
SPEAKER_00 (22:39):
does one get an FHA loan?
Is it a pretty easy process orare there like a ton of hoops?
SPEAKER_01 (22:44):
It's not a ton of hoops.
It's basically a governmentprogram administered by banks.
Gotcha.
So like there are, you know,they have to be like an FHA
registered bank and there's, youknow, certain banks that will
specialize in that.
But yeah, basically a governmentprogram administered by like any
or a lot of like local banks.
SPEAKER_00 (22:59):
And would most like first time home owners be able
to get approved for one?
pretty easily?
Yeah.
Okay.
SPEAKER_01 (23:07):
Yeah.
Yeah.
I think, you know, their intentis to encourage, you know,
SPEAKER_00 (23:11):
home buying.
So for people like me and Zach,who've never owned property
before, but like want to in thenext few years, like an FHA loan
is a very real thing that we canlike realistically have.
Yeah.
Okay.
SPEAKER_01 (23:22):
And again, you know, the main thing is you just need
a lot less
SPEAKER_00 (23:24):
cash.
Yeah.
I mean, it just sounds, now arelike the interest rates like a
lot higher on FHA loans?
No, I think they're competitivewith like,
SPEAKER_01 (23:32):
you know, your normal mortgage rates.
Okay.
Yeah.
SPEAKER_03 (23:35):
Sounds too good to be true.
That's what I'm saying.
What's the catch?
The government's like, come on,Zach, come on,
SPEAKER_02 (23:41):
Patrick.
The government wants us to dowell.
SPEAKER_01 (23:45):
First time home buyer.
I think that's really theintent.
But yeah, I think the main thingto look out for, which is true
for any rental, is just likehaving good tenants, right?
Like a bad tenant can ruin yourlife, especially if they live
right next to you or below youor whatever.
SPEAKER_03 (23:59):
I mean, you've had experience with this.
How do you maintain a goodtenant-landlord relationship?
SPEAKER_01 (24:04):
I think even if it's someone who seems nice and
whatever, you put them throughthe normal screening.
Yeah, for sure.
They apply, credit check, allthat.
You have a proper lease.
You can evict them if thingsdon't go well.
I do think in my experience...
you want to be friendly andlike, Oh, someone's a little
late on rent and okay, they canpay it, you know, but the more
(24:24):
you kind of let that stuff go,the worse it gets in my
experience.
So
SPEAKER_02 (24:30):
for sure,
SPEAKER_01 (24:31):
uh, you know, it's just an agreement and you know,
rent is due at the beginning ofthe month and there are quiet
hours and you know, whatever youwant to put in there.
But, um, yeah, I think your lifeis a lot better if you like kind
of enforce the lease, I guess.
Okay.
And screen up front, you know,cause it's, once you get someone
down there, like that's adifferent situation.
Yeah.
SPEAKER_03 (24:49):
Maybe one of these days we'll have to bring you
back on the pod to talk about anin-depth on doing applications
and getting a tenant screened.
I feel like that could be a goodthorough discussion that we
could have.
Like the whole onboarding atenant process.
Yeah, right,
SPEAKER_01 (25:02):
right, right.
Yeah, that would be good.
SPEAKER_03 (25:05):
Okay, cool.
Any other tidbits of wisdom thatyou feel like sharing before we
wrap this bad boy up?
SPEAKER_01 (25:10):
No, I think that's it.
I think...
If you're looking to buy yourfirst property, you're looking
to buy your first home, I thinkthis House Hack FHA is a good
way to do it.
And it really just comes down towhat's the goal.
Do you want to be a real estatedeveloper?
Do you want to build forretirement?
And I think that really is goingto impact how you view buying
(25:32):
property.
But yeah, if you're looking tobe an investor, if you want to
build some net worth, build someretirement, I think property
where people pay you makessense.
For sure.
But owning a primary home isjust a great way to be happy.
But those are two separatethings.
UNKNOWN (25:49):
Okay.
SPEAKER_01 (25:49):
Cool, cool.
Makes sense.
SPEAKER_03 (25:50):
Well, that is a wrap on our deep dive into house
hacking.
Real estate strategy is partinvestment, part lifestyle
shift.
And email questions atTheRentishPod if you've done the
Ulta hack.
What did we call it?
Mega hack?
Ultra.
Ultra hack.
The Matrix hack.
Yeah, the Matrix hack.
If you've been able toaccomplish the Matrix hack,
please email us.
(26:11):
John, it's been a pleasurehaving you on the show.
Do you want to tell the folkswhere they can find out more
about you and about cohorts?
SPEAKER_01 (26:18):
Yeah, I run a community, basically a real
estate operator and developersand investors uh it's called
cohorts so join cohorts.com andthen i'm on all socials linkedin
twitter at john j blatchford canyou spell cohorts.com yeah so
it's join cohorts.com joinc-o-h-o-r-t-s.com
SPEAKER_00 (26:38):
join cohort i thought you were talking to join
the entire site join cohorts.combut it's join Join cohorts.
SPEAKER_03 (26:47):
Patrick, we're trying to inform the audience,
not confuse them.
No, I got it.
I got it.
All right.
Well, whether you're splitting aduplex, renting out your
basement, or just listing aroom, house hacking can be a
smart way to lower your cost ofliving and start building
equity.
We've learned that with Johntoday.
Thank you for listening toanother episode of The Rentish
Podcast.
As a reminder, we can be foundat The Rentish Pod on Instagram,
(27:08):
email questions attherentishpod.com.
And yeah, give us a rating, areview if you're on Spotify,
five stars if you're on ApplePodcasts.
podcast or any other podcastservice.
Go ahead and slide that scaleall the way up to 10 or however
far it goes and drop us acomment.
Tell us how much you're enjoyingthe show.
And I've been Zach.
That's been Patrick.
That's been John.
And we'll see you guys nexttime.
SPEAKER_01 (27:28):
Thanks, guys.
What's going on, everybody?
I'm Zach, and I'm here with myco-host, Patrick.
SPEAKER_00 (00:08):
What is
SPEAKER_03 (00:09):
up?
We are your hosts for TheRentish Podcast, which is a
podcast kind of about rentalproperties and hosted by two
guys that work in the realestate industry and kind of know
what they're talking about.
But mostly don't.
That's right, Patrick.
Mostly we don't.
But we might have someone herewho does.
Spoiler! We'll get to it here ina second.
But you're going to have funhearing us talk to experts and
(00:31):
learning with us or laughingalong at how little we know
along the way.
Rentish Podcast, follow us, dothe things.
We talk about it every singleweek, right?
Anything that you can do.
We appreciate you for listeningto the show.
If you've gotten this far in theepisode already, we really thank
you for coming around andlistening to the show.
It's been really fun doing thispodcast with Patrick and all of
our guests.
And follow us on Instagram atTheRentishPod.
(00:54):
You can email questions atTheRentishPod.com if you have a
question or comment that you'dlike to share with us or maybe
just a topic suggestion, advicefor fellow renters or people
that are interested in realestate and property management.
Or if you're an esteemed guestor maybe someone famous and you
want to be on show, email us.
We'll thoroughly vet these, I'msure.
Yeah, that's about it for thepodcast.
(01:14):
Patrick, how are you doingtoday?
I'm good.
I'm full of
SPEAKER_00 (01:18):
energy.
SPEAKER_03 (01:18):
Yeah?
SPEAKER_00 (01:19):
Yeah.
In case you tell.
SPEAKER_03 (01:20):
Yeah.
Oh, I can tell.
I mean, you're very twinkle inyour eye.
You're ready to rock and roll.
Well, we got a special episodetoday.
We're not going to do thetypical rigmarole here at the
top where we talk about Supermanand the fact that it's coming
out in a Real estate investingseries, we're gonna be diving
(01:40):
into a strategy that's all aboutturning your living space into
an income stream.
It's called house hacking,apparently.
This one's especially popularwith younger investors, first
time home buyers, or anyonelooking to ease into real estate
without tacking on a ton ofrisk.
The idea, buy a property, livein part of it, and rent out the
rest to cover your mortgage oreven turn a profit.
And to help break us, help usbreak it down.
(02:05):
Lots of new words here, lots ofnew words.
To help us break it down, We'rejoined again by John Blatchford
from Cohorts, who was here a fewweeks ago to talk to us about
buying new properties andrenovating them.
And he's going to walk usthrough what house hacking
really looks like, how to makeit work, and who should or
shouldn't try it.
And judging by how rough myintro was there, I would say
maybe we shouldn't try it.
But we're going to learn aboutit.
(02:26):
John, thank you for coming backon the podcast.
SPEAKER_01 (02:28):
What's up, fellas?
Not much.
SPEAKER_03 (02:32):
I don't know.
What's up with you?
All's
SPEAKER_01 (02:34):
well.
SPEAKER_03 (02:35):
Yeah, all's well.
SPEAKER_01 (02:36):
That's good.
Sunny day, well caffeinated, andeverything's good.
Yeah, yeah, yeah.
SPEAKER_03 (02:38):
that's good that's good yeah I think we're all in
the caffeination department Ithink I've had a half pot of
coffee and a soda so I'm readyto rock
SPEAKER_00 (02:45):
and roll that's the problem I haven't had any
caffeine yet
SPEAKER_03 (02:48):
today no caffeine at
SPEAKER_00 (02:49):
all no that's what it is I was gonna make I've been
doing Earl Grey tea with honeythat's been my thing recently
and I heated up the kettle and Irealize now I forgot to pour it
in my mug the producer was
SPEAKER_03 (03:01):
just in the room asking you if you
SPEAKER_00 (03:02):
wanted to drink and you declined no I didn't decline
I said yes and he said too badno this is not how things gets
what
SPEAKER_03 (03:08):
they want.
That's what I'm saying.
I think you're wrong.
I think I heard you say no.
I'm good.
I said I want one.
You misheard.
I misheard.
I'm sorry.
John, educate us.
You're here to talk about househacking.
We're very curious to hear aboutwhat you have to say.
We're here with Open Ears.
I'm sure we're going to havequestions, but take it away.
We kind of are just youraudience today.
SPEAKER_01 (03:29):
This is your TED Talk.
Cool.
Thanks, guys.
I think we're kind of buildingon or continuing our series,
which I think is effectively howdo you go from zero properties
to whatever your dream is, say100 units or 1,000 units.
So we talked about my firstproperty recently and kind of
how I got into it.
And hopefully, from all themistakes I've made, I can help
(03:51):
people not make those mistakes.
But this is a good way to getstarted, this topic of house
hacking.
And I think the general idea is,if you are working at a job and
you want to get into realestate, what is the pathway to
do that?
And one consideration is like,what are you hoping to get out
of that?
(04:11):
Are you trying to ultimatelybecome a real estate developer?
Do you want to quit your job in10 years?
Do you want to just have somesafe investment over the next 30
years?
And I think that'll kind ofdictate what you want to do.
But one like fairly low bar,fairly easy way to get into real
estate is this idea of househacking, which is basically, you
know, instead of just buyingyour house, you know, which can
(04:32):
be a great lifestyle choice and,you know, can be a good
long-term investment, you know,turning that house or property
you buy into something that canmake you some money.
Right.
Or at least that somebody willpay to live there and can pay
your mortgage.
So this idea of house hacking, Ithink, is basically, you know,
the hacking part of it sounds alittle bad, I would say.
You know, like, oh, how do youhack your way in?
It sounds cool.
Like an 80s tech bro.
(04:54):
I'm going to hack this house.
Get into the mainframe.
But it's basically, you know,how do you get money?
How do you get somebody to pay,you know, pay your mortgage or
to pay to live in this house?
So, you know, I think there aredifferent ways to do that,
certainly.
But I think the first hack isthat if a house costs$400,000,
obviously you do not need$400,000 in cash to buy that.
You know, that would beimpossible.
(05:15):
And so there's this first ideaof just like, you can get debt,
you can get a loan against yourhouse.
And most people, you know,appreciate that when they get
their mortgage, but a mortgagemight come at like, you know,
20% down payment on the house orsomething.
So even for a$500,000 house, youknow,$400,000 house, you need
$100,000 in cash and which for alot of people, you know, won't
come until much later in life.
(05:35):
Right.
So, uh, one way to get into ahouse with less cash is an FHA
loan.
I've talked to a lot of people.
A good friend of mine, Donovan,has done it and now built a
really successful real estatebusiness.
But it's a way to sort of getstarted with, say, 5% down.
So on that same$400,000property, you now only need
$20,000.
A lot of people can work theirway up to having$20,000 that
(05:56):
they could invest.
With an FHA loan, you can buythe property if it's your
primary residence and you'regoing to live there.
And you can make it a littlebetter if you buy a duplex.
So there's two units.
You live in one and you rent outthe other one.
That's a place that you live.
It's your primary residence, butit also has a rental component.
And so, you know, your tenantsliving there will be paying your
(06:16):
mortgage.
And so immediately you'vebasically, you know, moved into
a house that's now, you know,it's not free, but somebody else
is basically paying for yourhouse.
Right.
So that's the hack, right?
Because for now, a$400,000property with two duplex, you
know, two units, it's a duplex.
You now are into it for$20,000and somebody else is going to
pay that loan for the next 30years, right?
(06:37):
So that's like a pretty good wayto get into real estate.
SPEAKER_03 (06:39):
Yeah.
SPEAKER_01 (06:40):
That's the hack with John Blatchford.
SPEAKER_03 (06:42):
Can we, can we trademark that?
I like that.
Like that's a great t-shirt.
Like that's the hack.
And then with John Blatchford onthe
SPEAKER_02 (06:49):
back of the t-shirt, that's awesome.
Yeah,
SPEAKER_01 (06:52):
exactly.
SPEAKER_02 (06:52):
Yeah.
SPEAKER_01 (06:52):
So that's one way, right?
You don't have a ton of money.
You know, you have a salary.
You're just trying to like,okay, how do I start building
some equity?
How do I maybe start buildingfor retirement?
And that's one way to do it.
And you don't need, you know, aton of cash.
You know, the potential downsideof that, of course, is you can't
do that regularly.
The whole program of the FHA islike your primary residence.
So, you know, you're supposed tolive there.
(07:14):
I think you can only do one ofthose like once a year.
And so, you know, that's thehack.
You get into it and, you know,that's like a good way to get
your first property.
SPEAKER_00 (07:22):
And FHA works for duplexes?
SPEAKER_01 (07:25):
Yeah, if it's your primary residence.
SPEAKER_03 (07:27):
Okay.
Yeah.
This is a safe space for allquestions, whether they be the
most intelligent, beautifulthing or the stupidest thing
ever.
Are you about to ask a terrible,stupid question?
I'm about to ask a stupidquestion.
What does it stand for,
SPEAKER_01 (07:41):
FHA?
Fair Homes Act, I think.
Okay.
And the intent of that programis our housing policy throughout
time, throughout history, hasbeen fairly racist.
Certain people, certainly blackpeople, could not get loans.
And, you know, homeownership wasexpensive if, you know,
historically it would cost a lotof money, 20 percent, 50 percent
of the home cost to buy a home.
(08:02):
So to buy, you know,$200,000house, you need$100,000 in cash.
So this program, you know, it'sa federal program where now you
only need, you know, say 5percent.
And it's really trying toencourage homeownership for
people that, you know, aren'talready rich.
And then, you know, you pay thatoff over over 30 years.
SPEAKER_03 (08:20):
Hmm.
Yeah.
Interesting.
1934, Congress created the FHAloan.
Little trivia fact.
That's cool.
SPEAKER_01 (08:26):
And then, you know, and then depending where you
are, depending who your lenderis, you know, there are a lot of
sort of like first timehomebuyer programs.
You know, friends of oursthrough Wells Fargo years ago,
you know, were able to buyhouses, I think, with even less
money down.
And, you know, so there's reallykind of creative ways that you
can especially buy the placethat you're going to live.
And then the hack is like thenyou get a tenant.
(08:47):
The extreme hack, which myfriend did, is not only did he
have a duplex that he rented outone unit, he then in his unit
had roommates who who paid himrent.
That's a lot of people withinone building.
That's a pretty extreme way todo it, but he was in his maybe
early 20s, so that's one way.
That's
SPEAKER_03 (09:06):
awesome.
That's very, very cool.
I don't want to speak for theboth of us, Patrick, but amongst
all of my friends straight outof college getting big boy jobs
for the first time, like rightwhen you leave school.
This was the most common tacticfor home buying for most of my
close friends was we bought aproperty, we bought a duplex, we
(09:28):
rented out one unit and westayed in the other one.
And then eventually once we feltcomfortable with that, we bought
a property that was just formyself and my wife, for my
partner.
And then we rented out the otherunit and now we have this
investment property that's onthe side.
This is like This is like themost common thing I think used
by people in my age bracket forsure.
SPEAKER_00 (09:48):
I had my first friend to buy a house.
It was pretty much right out ofcollege.
He got some sort of, I don'tknow how, but he got a
rent-to-own contract.
It worked really nicely for him.
And then he had a roommate whopaid rent to him to help cover
that rent-to-own thing.
And then I lived there for liketwo months and crashed at his
place for a sec too.
But rent-to-own, that wouldn'tbe the same thing as house
(10:11):
hacking.
Is house hacking specificallylike owning a property, living
in that property, and thenhaving somebody also live in
that property paying you?
That's the term house
SPEAKER_01 (10:20):
hacking.
So again, the hack is likeanybody can buy real estate.
You can go out and buy aproperty, but the expensive way
to do it is$40,000 property, youput in$100,000, you get a loan
for the rest, whatever.
So the hack is really like,okay, it's your primary
residence, you need much lesscash, and then you have a
tenant.
And I think the other good, likeassuming you want to get maybe
(10:42):
more into real estate is this.
It's such a good, relatively lowrisk way to appreciate what it's
like to have a tenant, to havemaintenance issues, to maybe do
a little light renovation, toredo the kitchen, you know, see
if you can add value.
Like, oh, someone might rentthere for$700 a month.
But like, what if you redid thebathroom?
Would they pay$750?
You know, so you can start tolike all the fundamentals, I
(11:05):
think, of real estate.
You can get, you can start toget through that, you know,
managing a construction thing.
Maybe you want to invest$5,000into the kitchen over there and
invest a little more there.
and just see what that's like.
What's it like hiring a plumber?
What's it like finding aflooring person?
No, they didn't show up.
Oh, they took your money andran, whatever.
All the things that, those arethe exact same problems at a
(11:25):
$100,000 project and a milliondollar project.
You start to get a taste forwhat it is to own real estate,
manage real estate, and doconstruction.
Yeah, so it's a really nicelead-in, I think, too.
SPEAKER_02 (11:37):
Okay.
SPEAKER_00 (11:38):
Would you always recommend house hacking to
first-time buyers, or is theresituations where that might not
be the best idea?
I
SPEAKER_01 (11:46):
think as an investment, I think a mistake
people make is viewing buyingyour primary house as this great
investment.
It can be a great investment,but you're still going to pay
that mortgage every month.
The roof fails and you have tofix that.
You're really just hoping itgains value over time, which it
has pretty much the last 20years, but that's not
(12:09):
necessarily a guarantee.
So I think you should buy yourprimary house to be happy.
You You want it to be yours.
It has the bedrooms you need.
You can paint the kitchen and,you know, all that kind of
stuff.
Right.
It makes you happy.
But if you want it to be aninvestment, you know, somebody
paying your mortgage or loanevery month like that starts to
be a really great investment.
Got it.
Gotcha.
SPEAKER_03 (12:28):
OK.
Are there any local zoningconsiderations or legality that
you have to consider when doinghouse
SPEAKER_01 (12:35):
hacking?
Yeah.
So, you know, again, I think thehacking piece, people think
like, OK, I can do this thishere and then, you know, I don't
even have to live there and thenI can do another one.
And, you know, people try to getsneaky with that.
And obviously, you know, you'retaking money from the federal
government.
And so, you know, I think youneed to be careful that you're
like doing what the programintends, which is, you know, to
buy and live in a home.
And then, yeah, anytime you'redoing construction, if it's not
(12:57):
already a duplex and you'returning it into a duplex, you
definitely want to check that.
Does the zoning allow for a twounit, you know, don't buy a
property that's only a singlefamily home, expecting that you
can maybe build a accessory unitor you can turn the attic into a
rental like, you know, thatthat's pretty highly regulated.
And, you know, if you getcaught, it's like you have
someone living in this fire riskattic.
(13:18):
That's a pretty serious thing.
SPEAKER_03 (13:19):
As someone that owns a lot of property and have
developed property inCincinnati, I feel like I have
witnessed a lot of some, let'scall them janky homes, like old
Cincinnati homes that have beenrenovated into three family
units or whatever.
Do you see this relativelycommonly?
People trying to get around itand doing this sort of stuff
(13:41):
with house hacking?
SPEAKER_01 (13:42):
Yeah, and there are it often does happen that
historic buildings don't need tomeet current building code like
that is allowed some of the timelike for example buildings we
renovate where the stairhandrail is lower than the
current building code but theydon't make us match the current
building code because it's ahistoric building it's
historically protected so thereare cases where like it's still
(14:03):
legal it's totally fine it justdoesn't quite match what we
would expect today but there'salso the case of like yeah if
you turn a single family houseinto three units and you don't
have a fire escape you know likethat's quite risky and that's
that happens a lot arounduniversities it happens around
uc i think you know there havebeen cases recently or not
recently but years ago like youknow kind of unpermitted
unapproved attic unit thatbecomes super dangerous so yeah
(14:25):
you want to be careful of thatbecause okay maybe you can sneak
by for a period of time buteventually like you know that's
like pretty life-ruining rightyeah you're caught doing illegal
stuff
SPEAKER_03 (14:33):
so in short check make sure you're within those
guidelines check professionalresources and all that yeah
SPEAKER_01 (14:38):
yeah if you're doing construction you know there if
it's a small thing you oftendon't need a permit but you know
if you're redoing the kitchensor a wiring and plumbing and,
uh, you know, you need permitsfor that kind of stuff.
SPEAKER_03 (14:48):
Yeah.
But it seems like a lot ofpeople that do end up going the
house hacking route tend to lookfor places that are already
pretty established as duplexes.
Um, and my, it's going to costmore to be able to do like to
buy a place that's not suitedfor, to be a duplex or a
multifamily and then renovatingit yourself that takes
additional costs.
So
SPEAKER_01 (15:03):
yeah, exactly.
Yeah.
Yeah.
So our current duplex and, youknow, and the, the, if it exists
as a duplex, that's the bestcase.
And If you can then invest alittle bit of money, make the
kitchen nicer, make the bathroomnicer, add another bathroom, add
a bedroom, you know, legally.
You know, if you can add alittle value, that also like
obviously creates, you know,
SPEAKER_03 (15:22):
makes a more
SPEAKER_01 (15:22):
valuable property.
SPEAKER_03 (15:23):
So we've talked a lot about the positives of this
thing.
It sounds good.
It sounds too good to be true.
It sounds like a cool tool touse for a lot of different
people.
What are the cons?
Are there any big like glaringlike this might be something
that you really need to reallyconsider for your your
day-to-day life if you decide togo this route
SPEAKER_01 (15:44):
yeah so it's it's a great question i think you now
have a tenant right and in anapartment building or you know
the unit you're renting that's24 7 if their heat goes out at 3
a.m right you have to fix theheat at 3 a.m and especially if
you're going to try to manage ityourself you know that's the
most cost-effective way you justdirectly manage it but that
means you're the maintenanceperson your support your you
(16:05):
know you're the support linethey'll call you they text you
and you live next to them andthey're going to see you all the
time you know like hey that leakis still going on you know in
the roof like hey you know so itcan be like quite uncomfortable
it can be quite annoying yeahand you know yeah you just now
have to live you know next to ornear you know effectively your
customer so i think that'sprobably the main thing uh and
you know i think the other islike you know this by itself is
(16:26):
probably not going to make yourich you know you have a big
loan on the property sure sureit's worth three hundred
thousand dollars but your loanis for you know 285 of that so
you know it's not it's not likeyou don't you're not all of a
sudden own a three hundredthousand dollar yeah So there's
that.
But yeah, I think the main thingis you now have a customer that
lives right next to you.
They're gonna have maintenanceissues that could potentially be
(16:48):
24-7.
People can trash places.
You guys know, you've talked alot about the horror stories of
managing property.
So if you have a bad tenant or abuilding that's falling apart,
it can be painful.
SPEAKER_00 (17:00):
Would this be considered house hacking?
Because I know it's like somepeople who Airbnb a room out of
their house, for example.
Like they've got a basement roomor something else.
Is that kind of in the umbrellaof house hacking?
SPEAKER_01 (17:12):
Yeah, I think Airbnb and the short-term rentals have
opened up kind of a whole newworld where if you're traveling
or if you have a space or a roomthat you can rent out, again,
legally check your regulations,blah, blah.
But a place that you can rentout legally on an Airbnb or a
short-term rental site, I thinkthat's a similar thing.
And that's potentially opened itup to a lot more people where
(17:32):
you just have a four-bedroomhouse and you can rent one room
occasionally on Airbnb orsomething.
So yeah, which I think is smart.
Again, it's the same problem.
you have to manage, you have tobe checking in, you have the
same potential issues, but ifyou can make 10 grand a year or
five grand a year from rent,that could be- Yeah, it's a
constant flow of income.
SPEAKER_03 (17:49):
Imagine doing the trifecta, right?
You get it all.
You buy the duplex, right?
You rent out one of the units tosomebody that you know.
You have roommates in your roomthat you can also have pay you
rent, and then you have a shedout back that you convert into a
luxury weekend Airbnb.
Do they call that in the in theindustry, the ultimate hack.
(18:12):
That's a supreme hack.
The supreme hack.
That's like the matrix.
You basically just have it, youknow.
Exactly.
Numbers swirling around yourhead.
You can see through time.
It's perfect, yeah.
SPEAKER_01 (18:20):
I think, you know, another version of this too is
there are a lot more There aremore areas that are allowing
like ADUs, if you've heard thatterm, like an accessory dwelling
unit.
So for example, in likeCalifornia or Houston, Texas,
you have single family areas.
They're pretty low density, youknow, big lots of land, but now
they're allowing you to build anaccessory dwelling unit.
So you have a big yard on theback of your yard.
(18:42):
You can build like a onebedroom, little, you know, tiny
house and potentially rent thathouse.
Barn dominium.
Remember we
SPEAKER_03 (18:48):
talked about that?
You could build a mini barndominium house in the backyard.
That's
SPEAKER_01 (18:52):
cool.
And rent that out.
And you know, you took a littlezero yard and now you have a
rental unit there.
SPEAKER_03 (18:57):
Can you house hack in the big city?
Like, I mean, we talked aboutlike having like a rural area or
a duplex or whatever like that,but like here in like a highly
populated sky rise place like aCincinnati or a New York or
wherever, it's like certainlymust be harder.
SPEAKER_01 (19:10):
Yeah, I think, you know, I think there are versions
of, you know, investing in acondo and fixing that up and
renting it out.
You know, a friend of ours didthat, basically had a condo and
then, you know, lived there fora year and then rented it out.
So I think you can do that inmore of like a high-rise condo
setting but I think the truehack of like you live in one and
rent out the other one like it'spretty rare to be able to buy
(19:31):
like two units as part of like abuilding condo okay applies a
lot more like a standalonebuilding that has two units
already in it
SPEAKER_00 (19:41):
okay yeah I guess my first landlord, I think that's
pretty much what he had aproperty.
And then he made like the firstlevel, like a separate unit,
like through construction andstuff.
So I guess that was technicallyhouse hacking.
Yeah, probably.
SPEAKER_03 (19:55):
So what's the biggest mistake you often see
first time house hackers make?
Is there like, you're likereaching through the, you're
like, I wish I could have justtold you this.
Don't do this one stupid thing.
Is there anything that jumps outat you when you see people go
into it for the first time?
SPEAKER_01 (20:09):
Yeah, I think the idea that like this, alone will
make you rich.
I can think of a friend of ourswho was doing this and renting
out properties and was like,okay, now I can own this
building forever.
But at some point you're justkind of managing tenants and you
have this asset that if you soldit, you could put whatever
(20:32):
$50,000 or$100,000 of cash inyour account.
I think people are romanticallyattracted to owning real estate
and having that for a long termand that by itself will lead to
wealth.
And it's more like a goodinvestment strategy rather than
like a wealth builder, I wouldsay.
And so like once you do thehouse hack, I would say like you
want to try to add some value,redo a kitchen, redo a bathroom,
(20:54):
pay down the mortgage, maybereplace the roof, like, you
know, add some value to it.
And then for me, like, I don'tthink you then probably want to
own that property forever.
Assuming you want to like try tobuild some wealth.
If you're just trying to likesave for retirement, then sure,
just own it for 30 years.
UNKNOWN (21:08):
Okay.
SPEAKER_03 (21:09):
Patrick, you got any questions for our My friend John
here.
SPEAKER_00 (21:14):
No.
You took a while to think aboutthat.
That's good.
No, yeah.
I think you covered pretty muchmost of my questions.
Okay.
How do you think you would do,Patrick, as a house
SPEAKER_03 (21:26):
hacker?
Professional house hacker,Patrick.
SPEAKER_00 (21:27):
How do I think I would do?
I mean, like, it was always kindof, it made sense to me to get a
duplex, live in one unit, rentout the other.
I didn't know that was calledhouse hacking.
I just thought that was calledbuying a duplex.
Yeah,
SPEAKER_01 (21:43):
again, like the special house.
hack is if you can do that withan FHA loan and get a$400,000
property, which that numbersounds impossible to buy for
most people, but if you onlyneed$20,000, which is still a
lot of money,
SPEAKER_00 (21:55):
you
SPEAKER_01 (21:56):
can imagine saving your way to get there.
And that's a hack to, oh, youare now literally a multifamily
real estate owner, and it onlytook$20,000.
So I think that's the hack.
SPEAKER_03 (22:06):
And you might have clarified this with the FHA, but
for everyone listening, you canreally only utilize that once
Right.
Or is that something that youcan do multiple times with the
FHA loan?
Like, could you theoreticallyget one as your first property
and then like use another FHAloan for another property
SPEAKER_01 (22:23):
down the road?
You then have to live there fora year.
OK.
And then I believe if you sellthe property, there's some like
lockout period where, you know,a period of time where you can't
do it again because, you know,they're not trying to like build
real estate developers.
They're trying to build likehomeowners.
Yeah.
How
SPEAKER_00 (22:39):
does one get an FHA loan?
Is it a pretty easy process orare there like a ton of hoops?
SPEAKER_01 (22:44):
It's not a ton of hoops.
It's basically a governmentprogram administered by banks.
Gotcha.
So like there are, you know,they have to be like an FHA
registered bank and there's, youknow, certain banks that will
specialize in that.
But yeah, basically a governmentprogram administered by like any
or a lot of like local banks.
SPEAKER_00 (22:59):
And would most like first time home owners be able
to get approved for one?
pretty easily?
Yeah.
Okay.
SPEAKER_01 (23:07):
Yeah.
Yeah.
I think, you know, their intentis to encourage, you know,
SPEAKER_00 (23:11):
home buying.
So for people like me and Zach,who've never owned property
before, but like want to in thenext few years, like an FHA loan
is a very real thing that we canlike realistically have.
Yeah.
Okay.
SPEAKER_01 (23:22):
And again, you know, the main thing is you just need
a lot less
SPEAKER_00 (23:24):
cash.
Yeah.
I mean, it just sounds, now arelike the interest rates like a
lot higher on FHA loans?
No, I think they're competitivewith like,
SPEAKER_01 (23:32):
you know, your normal mortgage rates.
Okay.
Yeah.
SPEAKER_03 (23:35):
Sounds too good to be true.
That's what I'm saying.
What's the catch?
The government's like, come on,Zach, come on,
SPEAKER_02 (23:41):
Patrick.
The government wants us to dowell.
SPEAKER_01 (23:45):
First time home buyer.
I think that's really theintent.
But yeah, I think the main thingto look out for, which is true
for any rental, is just likehaving good tenants, right?
Like a bad tenant can ruin yourlife, especially if they live
right next to you or below youor whatever.
SPEAKER_03 (23:59):
I mean, you've had experience with this.
How do you maintain a goodtenant-landlord relationship?
SPEAKER_01 (24:04):
I think even if it's someone who seems nice and
whatever, you put them throughthe normal screening.
Yeah, for sure.
They apply, credit check, allthat.
You have a proper lease.
You can evict them if thingsdon't go well.
I do think in my experience...
you want to be friendly andlike, Oh, someone's a little
late on rent and okay, they canpay it, you know, but the more
(24:24):
you kind of let that stuff go,the worse it gets in my
experience.
So
SPEAKER_02 (24:30):
for sure,
SPEAKER_01 (24:31):
uh, you know, it's just an agreement and you know,
rent is due at the beginning ofthe month and there are quiet
hours and you know, whatever youwant to put in there.
But, um, yeah, I think your lifeis a lot better if you like kind
of enforce the lease, I guess.
Okay.
And screen up front, you know,cause it's, once you get someone
down there, like that's adifferent situation.
Yeah.
SPEAKER_03 (24:49):
Maybe one of these days we'll have to bring you
back on the pod to talk about anin-depth on doing applications
and getting a tenant screened.
I feel like that could be a goodthorough discussion that we
could have.
Like the whole onboarding atenant process.
Yeah, right,
SPEAKER_01 (25:02):
right, right.
Yeah, that would be good.
SPEAKER_03 (25:05):
Okay, cool.
Any other tidbits of wisdom thatyou feel like sharing before we
wrap this bad boy up?
SPEAKER_01 (25:10):
No, I think that's it.
I think...
If you're looking to buy yourfirst property, you're looking
to buy your first home, I thinkthis House Hack FHA is a good
way to do it.
And it really just comes down towhat's the goal.
Do you want to be a real estatedeveloper?
Do you want to build forretirement?
And I think that really is goingto impact how you view buying
(25:32):
property.
But yeah, if you're looking tobe an investor, if you want to
build some net worth, build someretirement, I think property
where people pay you makessense.
For sure.
But owning a primary home isjust a great way to be happy.
But those are two separatethings.
UNKNOWN (25:49):
Okay.
SPEAKER_01 (25:49):
Cool, cool.
Makes sense.
SPEAKER_03 (25:50):
Well, that is a wrap on our deep dive into house
hacking.
Real estate strategy is partinvestment, part lifestyle
shift.
And email questions atTheRentishPod if you've done the
Ulta hack.
What did we call it?
Mega hack?
Ultra.
Ultra hack.
The Matrix hack.
Yeah, the Matrix hack.
If you've been able toaccomplish the Matrix hack,
please email us.
(26:11):
John, it's been a pleasurehaving you on the show.
Do you want to tell the folkswhere they can find out more
about you and about cohorts?
SPEAKER_01 (26:18):
Yeah, I run a community, basically a real
estate operator and developersand investors uh it's called
cohorts so join cohorts.com andthen i'm on all socials linkedin
twitter at john j blatchford canyou spell cohorts.com yeah so
it's join cohorts.com joinc-o-h-o-r-t-s.com
SPEAKER_00 (26:38):
join cohort i thought you were talking to join
the entire site join cohorts.combut it's join Join cohorts.
SPEAKER_03 (26:47):
Patrick, we're trying to inform the audience,
not confuse them.
No, I got it.
I got it.
All right.
Well, whether you're splitting aduplex, renting out your
basement, or just listing aroom, house hacking can be a
smart way to lower your cost ofliving and start building
equity.
We've learned that with Johntoday.
Thank you for listening toanother episode of The Rentish
Podcast.
As a reminder, we can be foundat The Rentish Pod on Instagram,
(27:08):
email questions attherentishpod.com.
And yeah, give us a rating, areview if you're on Spotify,
five stars if you're on ApplePodcasts.
podcast or any other podcastservice.
Go ahead and slide that scaleall the way up to 10 or however
far it goes and drop us acomment.
Tell us how much you're enjoyingthe show.
And I've been Zach.
That's been Patrick.
That's been John.
And we'll see you guys nexttime.
SPEAKER_01 (27:28):
Thanks, guys.
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