The Co-Living Blueprint: Turn One House Into Massive Cashflow

Co-living is taking the country by storm. In fact, most people are going away from regular rentals and going into co-living. And a lot of Airbnb people are abandoning Airbnb and going into co-living as well. Why? Because it cash flows way more.

Now, in this series, we're going to compile all the most popular co-living videos that we've done on this YouTube channel, and you're going to learn everything about co-living that you need to know. However, I know the energy of a live training is a thousand times better than a YouTube video. So, what I have is I have an upcoming live 4-day training all around co-living. Where can I find the deals? How can I reach out to the sellers? How can I reach out to agents? How do I structure a deal? I will be doing all of that live. You guys want to come to that, click the link down in the description. We have we'll have a link goes to a registration page. Once you register, you'll be able to get emails and reminding you that this thing is coming up. Co-living is taking over the single family world and I want you to grab a big piece of it. So, enjoy this video. Take a bunch of notes. Come with questions cuz I'll be doing Q&A almost every single day of this 4-day challenge. The co-living challenge is going to be epic. Click down there below. RSVP and I'll see you there live.

In this video, I had Jack Selby from Ice Coffee Hour, who I'm partnering with on this deal. Flew out, we walked the property, and I talked about what the game plan is here. The time I went on Ice Coffee Hour.

>> Okay. We're doing we're doing we're doing a deal together. Extreme Distraction LLC.

>> Thank you. really appreciate you coming.

>> Appreciate it. I said, Jack, I really want to get you involved in a deal. How about I partner with you on this Myrtle Avenue deal and I walk you through it step by step so you know it's legit. At this point in my real estate investing career, evaluating and underwriting properties is like second nature to me. It's like breathing or putting on a pair of pants. However, what I love about doing a tour or walkthrough with somebody like Jo Selby is that I get to watch their facial expressions in person and see how good I am at explaining how I underwrote the deal. And so, it keeps me sharp, keeps me dialed in, and when I have newer people that really haven't invested and are just jumping in. I can also gauge whether I'm going too fast or going too slow, if I'm maybe overexplaining things, etc. So, it's really fun to get Jack to come to the house in person rather than a Zoom or a phone call. Being in person is a game changer.

What's great about this house is you've got this is a bedroom right here.

>> Mhm.

>> Right. This is like dedicated unit. So, this would go 875 bucks a month for this spot right here. Then right here is another room for 875 right here.

>> Really?

>> Oh, yeah. The number one strategy that's slept on right now is co-living. The ability for you to rent out each room amplifies your cash flow typically by a four or a five time margin. A lot of people will tell me, "Pace, man, single family properties right now are really hard to cash flow if I'm not doing Airbnb." First and foremost, who the heck is still doing Airbnb in 2024? Nobody. In fact, most of the people I know are selling their Airbnbs because the ability to cash flow has gone away. But with co-living, you can get that cash flow like people used to get cash flow in Airbnb in 2021, 2022. Co-living is going to be the number one growing sector of the single family marketplace over the next 15 and 20 years as affordability continues to go down. In fact, look at this right here in my newspaper. Everything has doubled. Costs have doubled across the board. Everything's quadrupled for the last four years. Co-living is going to save our country. I am truly making that statement. Is that big of a deal? And nobody realizes how much more cash you can make.

>> Oh, so it's kind of like Airbnb. People aren't staying in the rooms for like three months at a time or like six months.

>> No, the average tenant stays nine months. Your average time is nine 9 months. So this is like young professionals, people going to college, people who just got out of college. They just got their first job. They're like, I can't afford an apartment cuz an apartment is like 1,400,500 bucks plus utilities, plus internet. So, they'll get this plus the common area um and the kitchen for $8.75 a month. Utilities and internet included. It's insanely licensed.

>> One of the most commonly asked questions in the co-living investing space, Jack calls out right here.

>> What if they don't get along with the other tenants?

>> What a great question. The way that my team currently handles this is number one, we have a property manager. The property manager is not only finding the residents and filling the property so I don't have to, but they're also managing them once they're inside the property. Once they move into the property, they've already signed off on rules, regulations, times that they're allowed to shower, times that they're allowed to utilize the kitchen. There is no common space. So, they're not hanging out and watching TV together. Most people in the co-living space are coming to the house, sleep, maybe do a little bit of homework, and then they're going to work. Co-living properties are not typically houses where people are hanging out all day long. So, the altercations are actually incredibly surprisingly low. And when they do pop up, they've already signed agreement saying that I will get kicked out if I'm not agreeable with the other residents. And I'm not the one that deals with that. The property manager is. And that's why we pay them.

>> This room stays like common room. Right.

>> Are you going to have to put a wall up then?

>> Yeah, we'll close that one up.

>> Okay.

>> Then I would do I wonder where to put the door. I would

>> cuz you'd have to close that up as well.

>> Correct. And I would probably put the door to this room here.

>> Yeah.

>> Right. So like maybe literally right here. So you can put a bed up against this.

>> Liability as well. Somebody gets injured. Is that that's

>> insurance? I have insurance on every property. Um, okay. So and you tell your insurance company what you're doing with the property and they they underwrite it for that specific exit strategy. So like co-living they have a specific uh rider for that. This is another room. So, another 875. One, two bedrooms, three, four, and what's great about this, no carpet anywhere. It's already done. So, that's four, five, four, five, six. So, we've got six bedrooms. And the only thing you have to do is throw a a couple of walls. She's get uh letting me have all the furniture,

>> like taking everything. All right, this all sounds great, but what are the numbers and how much money are we going to make based on the fact that we're partners?

So, we're going to have seven people in this property. One of them is going to get the big bedroom with the dedicated bathroom, so they're going to pay a little bit more money. Then, we've got six people renting out each individual room at 875 on average per month. That adds up to 5,250 bucks. So, you put these together, right? We're at 6,350 bucks is basically the number. Sorry. $6,350 per month. That is our gross cash flow. Now, we've got a payment. We've got utilities. We've got some management fees. All in all, all of that's going to cost us, I'd say, about $4,000. Now, why is it $4,000? I've got a payment to the Myrtle sub 2 deal. I've got utilities, internet, landscape maintenance, cleaning the property, management fees, etc. totaling about $4,000 all in. That includes vacancy. That includes somebody breaking a window. So, Jack and I should walk away with about $2,350 per month on this property. That's kind of insane. $2,350 per month. If you think about this, that's how much I would be able to rent it out for if I just rented it out to one family. So, being able to put seven people in the house makes me net $2,350 per month rather than rent it out for 2,350 bucks. and lose money on the cash flow. Co-living solves all of the non-cash flowing issues in the single family world.

>> Okay, what about permitting?

>> Okay, we would get a permit for this. I would not get a permit for the walls inside the house. This would get a permit. And the reason why I would get a permit for this is a couple of reasons. One,

>> if I resell this, my buyer is going to have an appraiser make sure that the property is appraised at whatever they're getting a loan for.

>> Yeah. I will also get a a permit because somebody in the neighborhood will call and you'll get in trouble. So, you just want to avoid that route. Permits are 500 bucks. It takes about 2 weeks for something this small. You're not building a house and just trenching over and adding a toilet.

>> And how much would it cost to put up the the drywall?

>> Let's go take a look real quick.

>> That needs to be furnished with a bed and so does that. The average cost to furnish a bedroom is about $1,800 bucks. So, $3,600 for those two. Probably another $4,000 for the drywall and the paint. and then another $3,000 for the LED lights, I'd probably say to be crazy ultra conservative, you're going to spend 20 grand.

>> If all I wanted to do is just throw up the walls and the drywall and paint it, I'm probably 3,000 bucks. But I don't want to do that. I want to do that. Like I also could be like, "Hey, you know, I could rent it out with couches in it and I could be a freaking stingy weirdo or I could go to like the Goodwill and buy a $100 bed." But you want to have your tenants have something really, really nice and you want them to stay longer.

Okay, so here's the story over there. So Cherylyn, owner of the property, bought the property back in 2005. So she's owned this property 19 years. So the loan that we're buying sub 2 is 19 years old, you know,

>> which means there's like basically all the interest has been paid. It's basically principal only. The reason she owes so much is because she has a primary mortgage for like 200 or something like that. And she has a home equity line of credit in second lean positions. Why? Because she pulled money out on a home equity line. She hired a contractor that basically just worked her to the bone and took every last penny she had. And by the time, this is 20 like 2020 2021.

>> Mhm.

>> It took forever and she's hemorrhaging as a retired school teacher. She finally got it up and going on Airbnb and it barely covers like her living expenses.

>> Wow.

>> She just doesn't have the fulfillment.

>> She's not an Airbnb person. Yeah.

>> Right. Like if you go on Airbnb and I go on Airbnb, who's going to make more money right now based on our skill? You.

>> Right. But like if you do it for three or four years, you'll catch up to me. She's only been doing it for a year. So Airbnb changes the algorithm all the time. like how they're judging you and how this and how frequently you update your pictures and blah blah blah blah blah. And so you have to be really good at marketing even on the Airbnb platform. She's not good. So it's she's bringing in enough money that it covers the mortgage plus she makes $1,000 a month and she's like, "That's not enough for me to live. I just need to sell this property and I need to move on. I don't it takes up my whole life to manage this thing." So we're taking over a really good like 3% rate loan with no more little bit of interest, not much. And then the second position um her equity in the deal we are she's seller financing her equity to us for a 0%. So she pulled an equ home equity line of credit out. She paid it off and we're taking her equity over at 0% interest. She's giving us no payments on it for the first year.

>> After 12 months she's charging us 500 bucks a month. So at that point we would have that pro that room going up and going making 1,100 bucks a month and that would pay for 500 bucks plus we would make an extra $600 net.

>> Why would she not just sell it on the open market

>> but she just couldn't get the price she wanted the rates as well?

>> It's both. It's she couldn't get the price she wanted because of the rates, right? She hasn't she has an agent

>> that just couldn't get the job done and so she ended up calling us off RSU. Like she ended up calling our office saying, "Hey, I'm in an impossible situation." Yeah. My agent can't sell it. I'm hemorrhaging money. I make Oh, and so here's what's going on. She decides, I'm going to sell the property. So what does she stop? She stops marketing on Airbnb. So now she has no more income. She's on a fixed income. So now what's happening with the payments? She's behind.

>> So now she's in foreclosure. Two months. We're catching up for foreclosure, stopping her from having to lose the house and losing all her equity um or her perceived equity. A lot of times sellers don't have equity, but I allow them to keep equity. Does that make sense?

>> Well, she wouldn't have any equity if she forced,

>> right? Well, even if she sold on the marketplace, she doesn't she doesn't have any equity.

>> Why you say that?

>> Well, she couldn't sell it.

>> Oh, true.

>> Right. So, like the number she's she tried to sell on the market was enough to get her

>> like on the technically like on the note she has principal payments.

>> On paper, she has it shows that she has equity, but if somebody bought on the traditional market, she'd have to pay agents and she'd have nothing. Yeah.

>> So, what we do is I go to a girl like her and I go, "Hey, Cherylyn, I know you don't have any real equity in this thing really, like at the end of the day because nobody's willing to buy it. What number do you want and I'll make sure you get equity out of the deal?" She just wants she mentally like people people that haven't done what I do like doing this is like putting on a pair of pants for me. Doing this, she's like, "What would I have to do?" I'm like, "Nothing, Chairman. I just want to take care of it." She's like, "That seems too good to be true." I'm like, "It is. Nobody else is going to give that to you." She's like, "Why would you do that?" I don't need more money. I don't need more deals. I just love doing this. This is like a fun game for us and I love to I have this whole like seller call um recorded. And she's like I actually sat down with right here and this is where I walked in the deals at the appointment in the appointment. And she's like, "So, you would partner with me?" I go, "Yeah, you'll make a lot more money long term. Like, just let me do no money down and I'll I'll pay you monthly fees." And she's like, "No, I just want just give me $10,000 and I'm going to walk away." So, we're giving her 10 grand up front. I think I got to look it up. It might be five grand. Molly would know. So, she's getting some money up front and then she gets no payments until 12 months and then she starts receiving payments for a couple years until we wipe her all the way out.

>> Mhm.

>> Of the equity that she has on the note.

>> Correct. Yeah.

>> Okay. And so what she would do, what we would do is like in the contract I told her that when interest rates go below 5%. And the house appraises for what we can refinance with no money in a pocket. Like like that's literally written in the contract. When the interest rates go below 5%. To a point that we can refinance without putting more money into the property. We will refinance out.

>> So that could go on for 3 years. That could go on for 5 years. That could happen in 6 months. I don't know. It's not going to happen in six months, but you know what I'm saying.

>> All right. So, we've done the walkthrough. We broke this thing down for Jack Selby. You saw the questions he had. I answered those. And at this point, I'd probably be asking the question of like, how does this get done start to finish? What are the specific numbers? Can I see this all mapped out on one big whiteboard? That's where I'd be. That's the question I'd be asking. And if that's you, click the link on the video right now and go over to the video where I broke this all down. I I dissected this entire deal for the people that love the magic whiteboard and the pen. I mapped it all out, guys. Go and watch that video right now.

About a month ago, we did a video all about co-living a new property that I purchased with Jack Selby from the Ice Coffee Hour. And this property is going to make so much money. But you know what else it did? It created so many comments. Some of them good, some of them not so good. So, today we're going to be answering the questions in the comments and addressing the people's concerns about the co-living model. Today, I've got Jared with me. Hi. And what's cool about Jared is Jared has all of his living expenses covered by his three co-living properties. He's newer to the co-living space, but all of his monthly expenses are covered by his co-living property. So, probably somebody you should think about listening to. He's got a lot of experience in the last year. Your average property is cash flowing how much?

>> About 1,500 net.

>> 1,500 net. Now, when we say 1,500 net, that means 1,500 in his pocket after management expenses, etc. So, let's go through the first of the 10 myths that everybody has with co-living. By the way, we're reading right out of the comments, guys. So, make a comment on this video down below. Whatever your curiosities are, we want to know. And while you're down there, please give us a little bit of love on the subscribe button.

So, number one, this is illegal, Jared. Okay, check check this out. This one's too good. Rooming housing is illegal in the cities. You have to check with the municipality first. Did you check with the municipality? I did not.

>> You did not. Neither have I. I've never checked with a municipality one time. This type of housing, it was a zoo. It's a zoo. Lots of complaints from neighbors and city. Just simply shut it down with a large fine. Think twice before you do this. Do your research. Does this sound like somebody who actually has a co-living property?

>> It does not. If you know what you're doing, that should never happen.

>> Okay, cool. So, let's talk about this. Is it illegal to have co-living properties?

>> Not to my knowledge. No.

>> Why would people think it's illegal? Is it because they think you have seven tenants in the property?

>> That's part of it. I think the municipalities and some of the cities have uh something along the lines of two or three non-family members, something along those lines. But in this case, it's not a tenant. They're members. It's a member agreement they sign, not a tenant agreement. Okay? So, this is being done in all 50 states, guys. They are not tenants. They're actually part of a group. they are part of a uh membership where they are a member that their rights get revoked if they break any of the membership laws and so they are not tenants they are members of a housing organization. Okay, kind of cool. That's how they get around all the laws. And by the way, this has been going on for a very very long time. In fact, multiple co-living property uh companies that manage co-living properties have gone public on the New York Stock Exchange. They've done IPOs. This has been around a lot longer than you think, you uneducated troll. This one's a good I like this comment. I've actually seen another video that does this for elderly. Many times they can't afford this. So Tracy Ka in the sub 2 community, she is doing what we call golden girls co-living where she is focusing on the elderly. What would you say is the demographic? So that's number two. The demographic that I get all the time are check this out. This is a great comment. I gotta pull this up because this is number This is number two. Okay, here we go. Michael Creel right here says, "Who the f wants to co-live? That would be awful. I don't even want my house within 500 ft of another house." Well, Michael, you're not everybody on the planet. There's 8 plus billion people out there.

>> What, bro? What are you talking about, man?

>> Let's talk about the demographic of your typical tenant.

>> It's not what I thought. I was thinking something along I don't know what I was thinking, but my typical tenant is it's working class. I do have some construction workers, but I also have a nurse. She's working three jobs. She's actually saving up to buy a house, which I think is awesome. I've got an insurance agent. Um, I have a couple of people that are entrepreneurial and all they're trying to do is save money on their living expenses. And one act, one of my members actually has a house, but he's living in Phoenix because he's going after something in the medical field. He's entrepreneurial, so that's why he's here. his house is in Nebraska. So, yeah, it's it's up and down the stack and ages, too. I have some elderly folks. Um, I do have some younger folks, but I'd say most are say the demographic is probably mid-30s to 40s, somewhere in there. Super interesting. This is the thought I had when I heard about co-living a couple of years ago. I said, man, are these people that just can't afford to live anywhere and they're just broke and they've got I I imagine the car they drive has two mismatched tires. One of the tires is constantly going flat. the paint is fading on their car. Maybe one of the windows is broken and they have a plastic bag over their window and they're driving up the house smoking weed. That's literally what I thought a co-living property tenant was. And then I run into all of them. They're all working professionals trying to save money or they're somebody getting ready to get married and they're saving for their wedding or they're saving for their down payment. I have a tenant or I should say member cuz they are technically not tenants. They are actually members. I've had members that come to me and go, "Man, thank you so much. I've saved $30,000 by while living in your property." Like, how is that possible? Like, well, my average rent. Let's go to the second the another question. What's the average cost of a member in one of your houses? Utilities, internet, cleaning, landscape, and their rent all included. What's the average cost?

>> I pay all of that. It's averaging around $200 a week per room.

>> $200 per week. So, he has $800 a month per member. Now, they rent by the week. Why do we rent by the week?

>> Well, um the property manager have established that, but renting by the week is so that way they have the ability to leave at any time and it's pretty flexible. Um, and I'll say the some people have trouble maintaining their finances, let's say. And so rather than waiting an entire month and be screwed out of the money every week, you catch it early and there's $25 late fees and if they do have an issue, you they are asked to leave. Okay, so let's just let's myth bust the thing about the tenants are jalapies and weirdos and all that kind of stuff. 90% of the people I've ran into are I'm like surprised because I didn't know co-living and I I've never lived in co-living so I make poor assumptions. So you, my friend, watching the YouTube channel have probably made some poor assumptions like Michael has of like maybe you're not understanding. Michael has probably a wife and kids and children that he would never collib obviously. But what about the people that haven't gotten married yet? Somebody just graduated college and they have student debt that's crippling them and they're like, "Man, I'm starting out at a lowpaying job. I want to save up money, get my first car, get my first this, pay off my student debt, whatever it may be. $200 a week with utilities,

>> everything,

>> internet, cleaning, landscape, and their rent included for 800 bucks a month.

>> Yep.

>> That's insane, guys. That's That's half the cost of what? Not even That's probably 30 to 40% of the cost that you'd get anywhere else, right? Okay. Ooh, this one's good. I like this one. They said, "Running a seven figure portfolio out of Charlotte. I'm crushing it." Um, you're dead if you're not doing this for real. That's what that guy says. So, that's kind of good. M M Okay, let's talk about occupancy. Okay, occupancy. Mike Flair says it's easy to see this as a complex business model. To keep that place rented out with seven people will be a nightmare. You can factor that revenue that you have 30 to 40% as you will struggle to keep this place fully occupied, eating up all your profit. You're netting $1,500 a month. By the way, that's a conservative. It's I've hit 2,000 multiple times. I gave you 1500 because that is a very conservative estimate and I like to be conservative. When I run my numbers, which we can get into if you want, I run it I have eight bedrooms in each house, but I run the numbers at six. So, I'm extremely conservative. So, it's actually I've hit 6,000 net per month, but I told pays 4,500 cuz I want to be uh real.

>> My my numbers are a little bit more aggressive. I will look at 8bedroom house and say 7. I look at my occupancy is always going to be somewhere between 85 and 90%. That's kind of my our goal. But yeah, we always have vacancy. There's always going to be a proper Are there days and months where all eight beds are rented out? Yeah. But then you're going to have a week here and a week there and a this and that and the other and whatever else, but we're somewhere between 85 and 90%. Do you know what your occupancy is?

>> I'm about 80% normally, but I'm at 78 right now. I had to ask a member to leave. So,

>> okay. And why did you have to have have them leave? He was smoking in the room and being loud and slamming the door at 4 in the morning and it was upsetting the other members.

>> Did you ask him to leave or did your manager ask him?

>> I asked him to leave. I

>> Why wouldn't the manager do that?

>> Because the manager that I have only manages the acquisition of the people and collects rent.

>> Okay, so you still have to manage the property yourself. Okay, got it. Third world living in the making. This person says third world living in the making. This is 33 trees says third world living in the making. This tells me he's not owned one of these properties. Are your properties third third world living?

>> No, my properties are very nice. We have granite countertops, stainless steel, cleaning services. I mean, it's I live there sometimes. I mean, I I'm staying there right now. Actually, I've been there for 3 days. So,

>> okay. Now, this one's an awesome one. This one you're going to get a lot of comments about people saying, "Seven people in one house. Talk about fights. How often are people getting in fights or are they always getting along?

>> I've never had a fight. I'm not going to say they're all getting along, but I've never had a fight. Uh, a lot of people have different job schedules, so I' I've never had an issue with it.

>> You don't get tenants going, "Oh my gosh, this guy bothers me. Get him out of the property." Nothing like that.

>> I've had one. Yeah, that's the one most recently I had to ask leave.

>> Okay. So, one person out of three houses, which is 24 doors that you have.

>> 24 units. Yeah.

>> 24 units. one person in a year, which means you probably have had a hundred residents

>> somewhere in there. And that one actually was my fault. I probably should have done a better screening uh effort on that one.

>> Did you have red flags when you were letting him in the property?

>> Um, not necessarily. It's just uh when I interviewed him, he was extremely loud and he was a little boisterous about, oh, you're not going to have problems out of me. And that right there should have clued me in, but I uh I learned, so now I know.

>> Okay, cool. So you have out of probably a hundred members, you've had one person you had to ask leave.

>> Yeah. Well, two, cuz in the very beginning, uh, I had an elderly gentleman that had a scooter and he wasn't a very good driver. Uh,

>> so he would bump in,

>> ran into walls, doors. Yeah. He was he was not a good driver.

>> Okay. So, um, interesting. Third world living in the making. Now, just like Airbnb, this one's a really good one. Just like Airbnb, won't take long before you got to deal with crippling regulations because of housing housing shortage, parking issues, and peace disturbances, and so on. So, first and foremost, there are no peace disturbances. Secondly, we'll get to the parking one. That's one of the top 10 questions that pops up all the time is that everybody assumes that they all have cars. That's the funny thing. And I like I've been to some of my properties fully rented out, not a single car in the entire front of the house. I'm like, where are all the cars? Well, most of the time these people are working like 16 hours a day. They might be working two different jobs. Secondly, they're a lot of them are taking bus, public transit, they're taking the the tram, they're taking whatever, right? Regulations because of housing shortage is exactly why this won't be regulated. If you saw in California, they're actually giving grants to people that are doing this. This just came out in Sacramento. The city of Sacramento is giving grants to people that are doing the co-living model. So, it's actually the opposite of what you're thinking. You're thinking the government guys in New York City right now, the city of New York will pay you if you own a property, they will pay you $300 a night. Okay? $300 a night because of all the immigrants that are coming in all over the United States. Guys, this is happening whether you like it or not. The way that we do it is just way more structured. And they actually have agreements and all of those types of things. It's happening in every metro. It's been going on in California for 100 years. It's been going on in Miami for 100 years. It's been happening. And you've never heard of regulations one time. Okay. Um, not only are they not giving regulations, they're giving incentives for us doing it. Interesting. I don't remember one time somebody in the government was like, "Let's give these Airbnb investors some bonuses and some grants for doing more Airbnbs." It's not the same thing. Okay. Um, all right. So, let's talk about utilities. So, that that was getting along utilities. Let's talk about utilities. This one says, "No one's talking about the HVAC in the house. When you start closing off main living areas or bedrooms, you are disrupting the design of the HVAC system. The return air that were once open to the whole house are now going to be isolated to one bedroom. You have three houses in the hottest state in the United States. How are your air conditioning complaints?"

>> None because I run them all at 72°. That's part of my acquisition and keeping people.

>> Um I also I cheated though. I have solar. So, and one of the houses is a legacy solar system. So, it's a 1 one.

>> Cool. So, you've got you have three houses right now. Two in Glendale, one in Phoenix.

>> One in Glendale, two in Phoenix.

>> Okay. One in Glendale, two in Phoenix. Guys, it's 105° right now.

>> No.

>> Okay. His houses don't have HVAC problems. Who's paying for the utilities?

>> Me.

>> So, that you're not splitting utilities. You're not running any of that stuff. Their rent is part of their plan and it includes utilities.

>> Yep. and highspeed internet.

>> Okay. You know, you get some people that are smart like Ri Ridge Wing It says, "They do this all around my college campus. It's been around for a very long time. Pace just brings it to the spotlight." Cool. All right. Next one. Cleanliness. Right. Number This is question number four. Cleanliness. What about cleanliness? Who's who's cleaning the property and who's in charge of all the cleaning?

>> Uh I'm in charge of the cleaning. I have cleaning comes through twice a month. But when I screen the members, uh, I make it very clear, abundantly clear, I repeat it like three times, that this co-living model does not work unless you can fit in the co-living model, which part of that is being clean. Uh, I learned that early on. And so I I put a lot of onus on the members of of doing that. And as such, I've had a pretty good um track record. I'd say the cleaning lady updates me like, okay, there's some things here and there, but in general, it stays pretty clean.

>> Okay. So you clean the property twice a month. It's a deep clean. I imagine.

>> Yeah. Well, common areas. We clean the kitchen and bathroom and hallways. We don't clean the bedrooms unless they ask.

>> Okay.

>> And that's And I'm not involved with that. The cleaning lady sometimes will clean the rooms if she's asked, separate from me.

>> And they'll pay her a little bit of money.

>> Yes. Yeah.

>> Okay. That's cool.

>> Yeah.

>> I love that. We um mine are a little bit different. We have I now have nine co-living properties. I think maybe 10. And we clean their bedrooms as well. Like we'll go in, we'll vacuum, we'll do all the stuff, we'll go around. We're not going to clean up their mess. If we open up their door and there's stuff everywhere, the cleaning girl is told to leave. If their room is tidy, then our cleaning girl will go and vacuum, get underneath everything, all that kind of stuff.

>> Cool. So, we pay for that. She's already there. Our thought is, if you'd like her to clean, please know you need to clean up. And it incentivizes them to keep their room clean so that they go, "Hey, that'd be nice. Somebody come in and vacuum my room and wipe the blinds down twice a month. That'd be awesome." And so they the cleaning girl just does it as part of her fee. I might be paying my cleaning girl more than you. Um, but she says the my understanding with the cleaning girl is that she's cleaning like six out of the eight bedrooms per um every 2 weeks

>> because they leave their doors open and they have their stuff tidy enough that she comes in and zips through and makes it easy.

>> Cool.

>> Just a thought.

>> I might steal that from you.

>> Yeah, it's not a bad idea. Um, okay. So, Matt Madden says, "All the joys of being a landlord times seven." You know, the worst part about being a landlord is vacancy. And when you have a single family property that you rent out and you have a vacancy on that property, you lose all the money for the entire month, maybe two, and there's no cash flow during that time frame. Whereas, if you have a repair on one of your properties, which I'm sure you've probably had some repairs here and there.

>> Had to replace an AC and it $7,000. So, yes, I've had some repairs.

>> Okay. So, that's kind of nice. He had $7,000 air conditioning unit that he had to replace. Probably an older house, older unit, right?

>> '7s.

>> The unit was from the7s. It was 50-y old unit. So, thank goodness he had the cash flow from the properties that uh he didn't have any vacancies on the properties and he was actually making money on the properties. That's the problem with like a regular rental. You lose one month of that tenant. It wipes out your cash flow for the entire year. Okay. All right. So, it's not the same. It's absolutely not the same. Can't compare the two. You got to You got to guys, get educated. You know, I love the smart people. Ryan Antonella says, "The issues pointed out in the comments are all issues Facebook marketplace landlords and college roommates have always had to deal deal with for eons. There's always a little bit of risk, some relation relation skills. You've had to learn some relationship skills and there's a little bit of strategy. But this is the reality of the world we live in today is that if you want to cash flow rental properties, you have to change strategies to this or section 8 in high yield areas or you literally cannot cash flow. I agree. I think I'm going to say it again like I've been saying it for 3 years. If you are trying to get into the Airbnb game, it is a waste of your time. The only time the only way to get into Airbnb is if you're getting into like national park areas and areas where there's massive traffic. You're not in HOAs and you're in places that people will vacation regardless of what the economy is doing right now. Every one of my friends, um I just saw Tiffany High, one of my friends, she's a wholesale trainer. She is selling her entire portfolio. Why? Cuz she has regular rentals and she has Airbnbs. Everybody that's getting their their asses handed to them right now are people that are in the Airbnb market. I don't know anybody that's in co-living that's like, "Hey, I'm having a hard time." Buy box. What do you want to stay away from? If I sent you a house right now that was a three bed, one bath house in Mesa, would you buy the house?

>> No, it it's not. My my buy box is a little bit different. I I look for 2,000 ft² or better, no HOA, no pool. My lawyer says stay the hell away from pools and plenty of parking, which means typically it's a corner lot or a widemouth culde-sac, something like that. So that way you have some street parking. But uh I'd say 60% of the people have cars. But you'd also want to buy near public transit so that way people that have um that don't have cars, they can ride the bus and whatnot. I do have people that use the scooters and the little electric bikes now are popular. So it helps out with the transportation.

>> Okay. So you are looking for what I'm looking for. I'm I'm 1,700 ft² is my minimum or a carport that I can enclose. And if I have a carport that I can enclose or a garage that I can enclose, I will look at it. I have full-time crews that work on my on my team. So things are inexpensive for me. What somebody else would spend 25 grand on, I would spend 15 or $16,000 on in closing a garage. And so we'll get a good another bedroom, maybe even two out of a garage. And that adds also another 500 ft², which is nice. We then add a mini split. So now we've got another air conditioning unit dedicated just to the garage for those two bedrooms. But we're not touching anything that doesn't have two and a half baths or more. Most of the time I'm looking for a third bath.

>> Yeah.

>> Okay. Because you're at eight bedrooms. What's your minimum bath that you want in eight bedrooms?

>> My minimum bath's two and a half. Uh try to hit the three, but two and a half I think is key. That half bath is is huge. And uh if I can add lid something here. I don't go to the garage. Uh my strategy is to basically add walls. So in the future, if I ever needed to, not that I want to, I could actually just tear the walls down and turn it back into the single family house. I know a lot of people are adding like kitchens and two or three bathrooms and splitting up rooms and all that. I'm not doing any of that to keep my construction cost down. And I I don't go to the garage either cuz the garage for me, like I said, I want to keep it to where I go back to the way it was. But also the garage is like 2x for me. I know you have a full-time construction crew. I don't. And so instead of that 5k per room, now it's 10k per room. And I just I just don't do it. Electrical, HVAC, all that. So I stay out of the garage.

>> Love that. So, when you're looking for deals, like right now this morning, I was in the sub 2 Facebook group and I saw four deals that are all four bed, two and a half bath or three bath and I said yes to all of them except I then dug into them two and in an HOA and one of them is um uh one of them the bathrooms they have one bathroom obviously is in the primary bedroom so it's dedicated in that bathroom. Then they have another junior bathroom that's in another bedroom. So only only way to get access to that is to go through another bathroom or bedroom. I'm like, "Dang it." So really, there's only one main bathroom in the main hallway. I really want at least one or two one and a half. And I said no to that deal as well. So you kind of have to look at those types of things. We have a property right now that I'm doing with Jack Selby that right now the property is seven bed and three baths. And we are going to add another bedroom in the garage once we stabilize and get the property cash flowing. So, there's things that you can also add along the way once the property the properties are actually shelling out cash. You don't need to do it all right out of the out of the beginning. The uh management, who the heck is managing these properties for you? What does that structure look like? You have somebody acquiring the tenants and and taking the cash. You are then doing what? What are you doing?

>> Uh I'm doing everything else. The maintenance, the way it's set up is the property manager is supposed to deal with the members, not the tenants. Um, but if you want to run a good service, I I do inject myself in there. I'm trying to provide the Alex Foros, you know, provide a good service type of thing or a good product. And uh, so I do inject myself for a couple reasons. One, I want to have a good quality service, but also so I know what's going on and how to pivot and change and uh, ask people to to change their ways if I need to.

>> People are like, "What if it's a one-bedroom apartment? You can only rent to one person." Okay, that's obviously not a deal. Goes back to the buy box. Um, wish you read these comments. I found my first seller finance house and he wants a ton of money down. Okay, go do a Morby method and he thinks it will rent for far more than real estate agent. Need this pretty property pretty bad because I have two daughters in college. Okay. Um, Butch Green, I do read my comments. Just go watch the Mori method videos and you'll figure out how to get that deal done. Your explanation of co-living as an alternative to Airbnb really made me think about shifting strategies. Cool. the way you detailed the tenant behavior and cash flow potential was unexpected and just made perfect sense. Thanks for the inspiration. It's amazing to me that one person will type that and then another person will be like, I'm skeptical. Just everybody is a little bit different. If this is the future, sad times ahead for this country. I actually agree with you. I sadly affordability has gone through the floor. It's plummeted. People can't afford housing. So what are we going to do? There has not been a president in the United States in the last 100 years that has actually made housing more affordable. Not one time has that happened. They

will give these incentive programs, but they're stealing the money from somewhere else and they're forcing somebody else to pay those incentives to then give to people. And the incentives they give are so limited that it really never makes an impact.

Name one president. Name one president that made affordability their main focal point and they actually solved it. It has not been solved. It has never been solved. It will never be solved.

And so what we could do, Jared and myself can either go, "Oh man, this really sucks. I wish somebody could solve the problem," or we can be real estate investors and solve the problem together.

Okay, so this is interesting. So people like look at me and you as we're the problem. Okay, so take a look at this. Co-living is going to save America. Not. So, so not being able to purchase your own home in America and having to cohabitate with a stranger isn't what's going to save us, right? Got it.

Tell us the story about the nurse again. How did you help that nurse go and help her buy a house?

Yeah, she was well, she was working her butt off to be honest, but uh working three jobs, but with that low cost, she lowered her overall expenses, so she could save a lot more to then go buy a house.

Okay, this is an interesting thing. Um, you have zoning laws. You cannot do that. This guy just makes these horrible ideas. No way.

Is this a horrible Do you actually have three houses?

I do. Yeah. One in Glendale and two in Phoenix.

But it's a horrible idea and this is all fake. I just made this idea up.

Oh, okay. Well, then tell that to all the hosts and the other 120 available units that are on right now.

Um, okay. So, here's an interesting one. The libertarian says voting Republican will save the country, not e not not the economy destroying Democrats. First, oh yeah, I see it. Voting Republican will save the country, not economy destroying Democrats. The Republicans have not helped out affordability and neither have the Democrats. The people who help out affordability are the entrepreneurs. So, you can either be a Republican or Democrat where you can both be wrong or you can be an entrepreneur and actually solve the problem as an individual.

Jared, do you feel like you're actually providing some valuable um skill, not skills, uh valuable products to these people?

I do and I actually, to be honest, when I started uh investing, I I didn't, this wasn't on the top of my list, but I went to one of the AIA meetups and there was a gentleman there that I think one of the investors had brought and he was living in his car and uh he was a little haggard, but uh anyway, he he was able to afford a place to live and get out of his car. So, I thought that was um that was pretty moving to me.

This guy gives such bad advice. You cannot just do this. Every city is going to have zoning laws and neighbors will surely complain. It's a horrible business model. How many neighbors are complaining to you? I'm genuinely curious.

I have I have no neighbors complaining. Part of that though is part of my strategy is I actually meet the neighbors. I don't tell them that what I'm doing, but I do tell them it's going to be a rental and I ask if there's anything that they need. Uh, example was Scott, my neighbor in the Glendale property, said, "Come here." And he walks me in his backyard and it's night. The guy waters this lawn, smells like $200. We're in Arizona, so like on his lawn is ridiculous. Nice big property. And I go in his backyard and I look up and he goes, "Look at that skyline. What do you see?" I said, "I see two old rusted out swamp coolers." He's like, "You get rid of those. You can do whatever you want." It's like, "Done." So, I did it that day. So, I try to make the neighbors happy. Um, they have my cell phone number, so if anything happens, they give me a call. But that's just part of my particular strategy.

Okay. So, um, you're not running into neighbor complaints. I've never had a neighbor complaint one time. I've never had a zoning law complaint whatsoever. And also parking. Are you having parking issues?

I'm not because part of my buy box is parking. That matter of fact, if I look at a property and it doesn't have parking, I don't even look at it. Um, because for me, parking in in the Arizona and the Phoenix area, I would like to have parking in case people do have cars, cuz it's a big city and you kind of need a car a lot to get around. Uh, I'll say um, another thing with the uh properties is I maintain the landscaping. So I don't give anybody an excuse to call or bug me or whatnot. I make sure that the properties are well-maintained. Here in Arizona, we have palm trees. Make sure the palm trees are trimmed and the yards are kept nice. I do try to uh get rid of the lawns and I don't want to water anything. So, it's usually rock, but the weeds are taken care of. Um, I've got two separate landscapers I use in case they're busy. So, try to make sure the properties look nice at all times.

So, I guess who cares about the communities you enter, huh, Jared? Hopefully, the cities and HOAs will find and stop you. Any any comment about that? So, where do people live if they can't afford these $1,200 uh studios with first and last and deposits? You know, what what's their options?

So, we're providing an option for people to um live affordably. So, I I disagree with that.

Okay. Um, but so you're happy to just squeeze peasants into a house and pay them and pay them make them pay you two times.

First and foremost, they're paying half of what the normal cost is to rent a property and they're getting utilities and high-speed internet and cleaning included. They're underpaying. They are dramatically underpaying.

Do you have tenants that thank you for giving them this space or do people complain that you're charging them too much money?

I have I have members that thank me for providing this space. I don't have tenants for any of the legal folks that are out there.

There you go. There you go.

So, yeah, they do. Uh, well, we also we make sure to we do put two refrigerators, you know, stainless steel appliances and all that, but I make sure because I'm running eight bedrooms. I make sure to have two refrigerators and and make sure to keep on top of maintenance. Um, we have two handymen that are on call, not on call, but I can ping them to handle any issues that come up. And then if they do come up, I I try to I go ahead and say, "Look, you know, like for example, we had one of those the faucet or bathrooms where the um sorry, the tub where you lift up and it does a shower. Somebody pulled and broke that. So, we just replace it with something hardy that won't ever break again, something solid. And so, that's actually my plumber, Isaac, if you're listening. Um, but, uh, I just tell them, go ahead and spend the extra cash to make sure that doesn't happen again. Um, so things like that.

Okay. So, again, the I think the demographic demographics has got to be the biggest thing is people, it's like crazy. They would all have these are all college students, right, guys? I was surprised, too. Truly, I was surprised. I, by the way, I gave you the address of my last co-living property. I do own these properties. I'm sure Jared, if you send him a message on Instagram, REI Jared, he'll tell you the addresses of the property he owns or he'll give you the link to the listing where he's marketing these properties.

When you need to find tenants yourself, I'm sorry, members, where are you finding your members when you need to find them yourself?

So, I'm I'm finding success with everybody told me that Facebook Marketplace was a thing. So, I'm not a marketer, but I have not yet. Well, I have one, but normally Facebook Marketplace isn't working for me. So, I started utilizing all these different tools, and I found that Turbo Tenant um actually works. And now, Turbo Tenant is more for apartments. And all four of the folks I've uh got recently are from Apartments.com. Now, Apartments.com doesn't do room for rent or rent by room, but they do u one-bedroom, one-bath apartments, which is how I've sort of marketed it. And so when they inquire, I I let them know, hey, that this is a one-bedroom or sorry, yeah, a rent by room model. So that's how I've been doing it for right or wrong.

Okay, I think I could just keep hammering through um people's just uneducated stuff. Check this out. Chris Cast says, "This is what I've been doing for 4 years with my properties. I rent by the room with one month deposit in advance and one-year contracts in the state of Utah." So he's managing it himself. He doesn't have the member model. He just he's he's not doing your same he's doing the same thing you're doing, but the legal structure of calling them a member is what you're doing and what I'm doing, right? They're a member of a club. This guy's just like, I'll just take a month, one month up and I'll give them a one-year agreement.

There's plenty of people that want this. This guy's been doing it for four years. Okay. State of Utah, by the way, has a lot of regulations in in um Utah. Let's see. Better make sure the HOA is good with it, which I highly doubt. We're not buying properties in HOAs.

Do you as a landlord worry about tenant conflicts fighting each other and causing harm to themselves or the house and injured and sue you?

Who do who who do they think people are? I don't understand the question.

Honestly, the biggest problem with the co-living model is they all think that the residents are pieces of they they are cast. They guess what I did, too. I I didn't think they were pieces of. I was just like, who wants to rent a rent by room because I never needed to in my life. I I had an opportunity. My parents taught me how to make money at a young age. I never had to rent by the room. But if I could go back in time and rent by the room when I was in my 20s, I could have saved so much freaking money. I was never home. I was never home. I was always working or going to school. And I look back at myself like, "Yeah, actually this would have made a lot more sense to me." But it wasn't really available back then. So, I think the biggest issue people have is they just don't know what these clients look like.

Yeah. I have a client. He's a insurance adjuster guy. I don't know what he does, but he's actually in Florida right now for the the hurricane damage, but that's what he does since he travels so much. He just needs a place to call home, home base. And so, I it's actually a perfect member cuz he's never there, but he just wanted a cheap place to call home for whenever he comes back. So, it's a it's a perfect member.

This is the last one I'll go over. When I give you guys numbers on YouTube, remember I'm only giving you guys when I say net, I mean net. When I say um when I give you guys numbers, I'm assuming my property with vacancy, repairs, all of that stuff. My numbers are always including that. Same thing with you. What are you making on every property on average? Including management, vacancy, and repairs.

That's the 1,500 net. Same as you. I'm that is net. That's property management fee is a 15% taken out. That's taxes, insurance, maintenance, everything. So 1,500 net and and again that's a conservative number. I I I regularly hit 2,000 on two of the properties. One of them I hit about 1,700. So when I say 1,500 net, that's a low, very conservative number.

And here's my last comment of the day. Screw you guys for bringing down neighborhoods. Would you want to live next to a co-op? Any comment about that?

I wouldn't have a problem with it. So I run them. So, no.

Um, I would actually I would have a problem with it and that's why I choose to live in a different neighborhood. I I choose to use guys information on YouTube is free. ChatGBT is free. This is a wealth of knowledge on the YouTube channel for free. You can figure out how to do this too. So, you can either either and moan that somebody else is doing it or you can ride the wave and make the money as well. We're providing a service and a product to people that couldn't afford it otherwise. Look at your story. You've got a nurse that's like, "I want to save up all this money and go buy my own personal house." Guys, we're providing a stepping stone for people. And you might not like it, but we are reacting to the marketplace. This is what entrepreneurs do. I can tell you, you're just going to be a victim mentality for the rest of your life. You're like, "Screw this guy for bringing down neighborhoods." You want to see the houses, all of the houses that I've bought and put into go living before I bought them. Did you improve the houses or did you make them worse?

Big time. Improved them and I maintain them. So, I have one neighbor that's across the street. I already mentioned him, Scott. He actually thanked me because the person that was there before, h the yard wasn't the best. It was kind of maintained. And also, obviously, the taking the swamp floors off the roof was a was a big plus.

Okay, this one's got to be the last one. This is nothing new. Grooming and boarding houses. Hard to insure and expensive to insure with several unrelated tenants. Are you having a hard time insuring these properties?

No, I uh insure him with my regular um rental insurance and then I have a balloon uh or not a balloon umbrella policy as well.

Okay, so he's got two insurance policies, guys. If you need insurance, you could go to sub2 insurance.com. The sub2 insurance will insure any property, any type of exit strategy, Airbnb, co-living, does not matter. And you can also get a co-living um rider on top of it. So, you tell them I'm doing co-living and they will insure the property. Subtoins insurance.com, that's who we use. Um, and thank you guys for screwing me. For the people that actually enjoy this content, addressing every one of the negative comments and the positive comments, give us a like, a subscribe, maybe share this with somebody that has a little bit of hate to to share, and we'll see you guys in another video all about co-l livingiving.

In a world where every house hides a story, where chaos meets opportunity, one team took on the ultimate challenge. You watched us on Triple Digit Flip as we tackled the wildest, most mind-bending flips in Phoenix, aiming for that elusive $100,000 profit. But today, we're shifting gears. So, buckle up because Raheima, our queen of transformations, has a new project that's set to blow your mind. Join us as we step inside her latest masterpiece.

So, when we got this house, we started Monday. The first thing we did, we tore up the roof. We knew the roof needed to be replaced. So, we don't waste any time. This house has to be done in 30 days. So, from Monday to 30 days, I have no choice. It furniture gets delivered, so it has to be done. Okay.

That's crazy.

This used to be a wall that separated the house from the garage. It's no longer going to be that anymore. So, the kitchen used to be there. The kitchen is now here. Now, I'm sure that you've already been talked to about what a passport is, right? Communal living.

Yeah, they they know.

This was originally a three bedroomedroom, two bathroom. This is going to be a 7bedroom, 7b. Where I'm standing right now is my new kitchen and my new laundry room. My kitchen is different than a traditional kitchen. I've got seven pantries. Oh my gosh, these are so smart.

Two stoves, two microwaves, no dishwasher, two sinkers, no dishwasher.

You don't need a dishwasher cuz then who who washes the dishes?

Who washes the dishes? This is going to be one counter bedroom here, another bedroom here. We got bedroom number three here.

What's the one special thing she does about each bedroom?

I do a mini split in each bedroom for a pet split to survive. And when I say survive, I mean you don't want turnaround, right? Every time you turn around, you lose a couple days. Every time you lose a couple days, you lose a couple dollars. And I don't want that. I want no conflict living. What are the areas of conflict? There's no room in the fridge for my food. There's no room in the pantry for my food. Seven pantries means you got your own pantry. Two refrigerators means there's plenty of space for refrigeration. Everybody's got their own space. Everybody's got their own mini split. At $450 a mini split, it's cheaper to have a mini split than a new HVAC. It's just cheaper. Eliminates conflict. When you first walk into this house, you know, my kitchen's there. So this is like communal dining, right? So I've got like four cafe tables. Think Holiday Inn Express. You walk in, there's a few cafe tables and your kitchen is there. And this is the it for for communal living. This is the only place where they have.

This is already the best padsplit setup I've ever seen.

Looks great.

Like the seven pantries, no dishwasher, like just starting from scratch as a padsplit. Most people are like, "How do I retrofit this into a padsplit?" You're like, "Let me show you how to pad split." Well, this is I'm not doing any additions to this house. I'm only using the footprint of this home because I don't want to escalate costs. I don't want to have to um, you know, extend the roof line. I just don't want to do any of that. So, I'm I look at the house and say, "Where can I tear things around to make it work?" So, where you're standing, handsome, is going to be the new hallway, right? Because that's a bedroom now. All their bedrooms are on that side. This is a hallway. This is communal community space and that's community space. So we've counted three bedrooms. Let's keep going. This is a bedroom. So number four, this is a bathroom here. So this used to be two closets.

And what I'm going to do is I'm going to make a bedroom a bathroom for this guy and a bathroom for this guy out of this space right here. So I eliminate any kind of hall closet. We don't need that. Another bedroom here. Another bathroom there. Another bedroom. Another bedroom. Another bedroom. So, seven bedrooms, seven bathrooms.

What's the square footage?

I think it's 1,700.

Seven bedrooms.

Yeah.

With a fairsized kitchen, a fairsized laundry room, and communal space to eat.

Wow.

No TVs in the common area. And I give everybody a TV, a $99 TV from Best Buy. Passwords was first saying to me, "Well, you don't have to give them a TV. Everybody's got a device." You know what? Everybody doesn't have a device. And for $99, no conflict. No conflict. That's my specialty. I don't want conflict.

When you're planning this, do you just look at it as a shell and figure out where you can move your pieces around and screw the walls? You'll move them where they need to be.

Yes, I move them where they need to be. Now, I want to talk to you about something really interesting. Where are you from?

San Diego.

San Diego. If you want to do a passment in San Diego, you would call me first and I'd say, "Okay, hang on. talk to the lenders in your area and see what is going to be their specification for you to be able to pull your money back up."

I have a seven-bedroom flip. I was wondering what to do with that. So.

How many bathrooms are you?

Four and a half.

Okay. Can you add like the passment model is four bedrooms to a bathroom? So, you can rent it that way, but is there a way to add some bathrooms?

Sure. The bedrooms are huge.

Okay. Yeah, perfect. So, tomorrow this will start getting saw cut because I know that this is already a 70-year-old house. I have to redo the plumbing. I don't have a choice. So, if I'm going to redo it, I might as well add the extra plumbing. And then I furnish it.

Okay.

Usually, I start ordering the furniture on day 25. So, it gives the leeway. It gives them 5 days to get it all together. They set it up in one day. I take pictures. I hand the pictures to pass. It's and it's up online.

You stayed as owner on.

This one is not my house. This is an investor. So this be the process of it for the investor.

Yep. And then this investor is planning their plan is to move take their money out and do it again.

So they'll refinance, hold it.

You refinance, you'll actually pull cash out.

Yeah.

Which will be tax-free and then you'll cash flow with none of your money in in perpetuity.

So how do you do that with a higher interest rates if you're refinancing?

Because of the cash flow like you'll get $1,000 per room.

I see.

Out of this. So this will be $7,000 a month gross. So, you're going to put people in first and have the rent roll for how like 6 months?

Three months.

Three months. Okay. And then the refinance.

Yeah. You have a private money lender with 75 grand.

Yeah.

Okay. What if you said to your private money lender, "Give me 75,000. I'm going to buy the house. 50 grand for the down payment to buy the house. 25 grand for the down payment for the construction loan." Right? So, now you're 75K in you'll get the construction financing. You'll get this thing, whole thing constructed, leased up with pads split, right? Everybody comes in here now, you're get generating your income. So, you're getting $7,000 gross. When you refi it, it'll appraise cuz you're going to buy it wholesale, right? So, it's going to appraise for way more than what you bought it for.

So, you'll have equity in the house. You'll be able to pull out not only your 75 grand, but probably another 20 on top of that.

So, you'll get all of your cash back. So, your PML gets 75 back plus say $10,000 in tax-free money plus $2 to $3,000 a month invenue

cash flow in perpetuity with no cash in. What private money lender wouldn't do that deal with you?

Yeah, I know. I have two private money lenders that funded the whole seven bedrooms and that would probably stay in if I knew how to pitch it, right? So, I don't think selling it is the right way to go. Airbnb. What's the difference of Airbnb and renting a room midterm?

So, and with midterm, you're basically, if you took a company like Padsplit, you're you're have a lease agreement with Padsplit.

I see.

So, you're not a short-term renter. You're a long-term renter. You have a one-year lease with Padslit. Passplit then has members that pay them a fee to live in that house.

So, they're basically like a property management for this setup.

Right? And then they don't have to deal with evictions.

Because they can eject their member cuz it's they they're the actual less sort not the person who's staying in the house. Person staying in the house only paid a membership fee.

And so they're not actually the tenant.

Pat splits the tenant.

Which also.

That's the tenant.

Right. Yeah. Which helps you get around people that don't want midterm or short-term rentals in their community.

How do you get it done in 30 days?

That's what I want to know.

Honestly, that's a question. that she's a she's psychotic. I we because she got used to having to do these things really fast for the TV show.

It would be start stop start stop start move on to the next house and then this house isn't like nothing's happening and then they're like oh yeah by the way that house that we started 3 months ago it needs to be done in 2 weeks.

And she's like we just demoed it. They're like 2 weeks.

If you give the crew time to do they'll kick around things for 6 months. But if you say look this has to be done in 30 days. So what are we going to do? like order your windows now, order your kitchen, order all the stuff that you think is going to give me a headache in lead time. Order it today. What's really important is to how to how to realize whether or not the house is suited for a communal living area, right? So, you want there to be transit because not everybody that's going to live here is going to have a car. You don't want them to all have cars because that's the one thing that if seven cars parked out here, we're going to have problems.

What about access to the backyard? Is that a communal space as well?

So, that would the the backyard is going to have a side door. I'm going to build. Yeah. Somewhere over there. I'm going to put in a little side door.

And the backyard is just gravel with some chairs on the patio. That's it.

What are you doing on the garage when you're building filling that in?

I'm I'm going to put a new garage door there so that I have the facade of a garage, but I'm going to have a a wall.

Oh, okay.

I don't want people calling down the neighbors.

Yeah.

You know, you I don't want the house. That's why I don't do crazy additions. I'm not going to put a story on this. I'm just

working within the footprint of whatever property I have and making it work.

Right.

So, what would you say your role is? Are you property manager, project manager?

Project manager and I own the property management company.

That keeps the investor to be hands off. You run the crew.

Yep. I'm like, I see.

Are you saying that by the the model that it is, it doesn't uh it's not subject to short-term rental tax or it is?

From the beginning? I

I don't know anything about short-term rental taxes. I have no idea. But I'm not short-term rental renting this. I'm renting it to a company.

And I don't know what that company does with this house.

Right. That company does its own thing with this house, but my my lease is with one company and it's for a year.

Right. So, long term.

Long term.

Yeah.

It's so nice to say this house that was like forgotten, old, kicked in, is now going to house seven people that probably living in their car.

And it wouldn't cash flow otherwise.

Right. This is not an Airbnb. N

It's not It could maybe be a mid-term rental, but interest rates are so high that it's going to destroy that. Yeah.

This fixes all the problems. Hey guys, how can you get started in real estate? I don't know where to find the deals. I don't know where to get the money. I don't know how to manage the properties. I don't know how to design it. I don't know how to do the exit strategy. Oh my gosh, it's all overwhelming. Well, we're going to solve that in this video today. Let's go through it. We're at Okato Street in Phoenix, Arizona. And we've got a couple of special people here with us hanging out, doing a little day with Pace. I've got Luciano who found the deal. Luciano, you made how much money on this deal?

19,000 on this one. Homeboy made $19,000 working with a wholesaler who couldn't get the deal done. He ended up locking it up under a sub2 contract as a 3.25% interest rate. So, I didn't find the deal. So, this whole thought process of pace, how do you find these deals? I didn't find the deal. I went to people who found the deal. Okay? One of the sub 2 community members and said, "Luciano, I'm looking for deals in Phoenix, Arizona. Can you help me out?" There's your homework. Go find people in the sub 2 community. Where can I find them? Maybe in the free Facebook group, Creative Finance with Pace Morbby. Hey Luciano, will you find me a deal? Luciano says, "Yeah, what are you looking for?" How many deals did you send me in the last couple months?

Three.

Okay, cool. How much did you make?

Total 72,000.

$72,000 he made in assignment fees. So, there's multiple ways to make money in these transactions. Luciano decided, I'm a knucklehead and I'm not going to take this house for myself. I bought it for myself. I'm going to take the now money, which is smart actually in a lot of ways. And he's not a knucklehead. He lives in Orlando. He didn't want to have this property. It makes a lot of sense, but he made money on it himself, assigning it to me. Now, the next question might pop up and say, "Well, where did Pace get the money for this deal?" If Pace always says he's not using money of his own, then where the heck did Pace get money for this deal? Where did I get money for the deal? Private money lenders like Tiger. Tiger, come here for just a second. There are thousands and thousands of private money lenders in our community, just like Tiger, that are looking for a place to place their private money. Now, not only does she have money of her own, but she has money of other homies of hers, other private money homies, PMH's. She has lots of private money homies that she wants you to reach out to her. So, we'll put her Instagram in the description down below. We'll put Luciano in the description down below. Now, Pace, I don't know how to make something look good. I don't know how to get good furniture and cheap stuff and blah blah blah. Then you get a Bri. Bri, come in here for a second. Okay. Bri, also in the sub 2 community says, I know how to design things. In fact, what's your Instagram?

Briana Ruth_.

Okay. And you're doing mostly short-term rentals.

Yes.

So, you know how to design things and make them look dope?

Yes. Make them look absolutely amazing and you're going to want to stay no matter what.

I love it. So,

one little house.

I don't have to find the deal. I don't have to fund the deal and I don't have to design the deal. Make sense? So, as you're overthinking and you're on the YouTube channel saying, "Oh my gosh, it must be nice." Yeah, it is nice. Make some friends in the sub2 community. They'll help you out. Go to Creative Finance with Pace Morby Facebook group. But let's take a little tour on this property. Let's go. I want to tell you why this property is so dope. Okay, this property is dope because I've got a portion of the house right here. Used to be a garage. This is rented for $1,700 a month. Okay. Now, the rest of the property, come on in. This is where everybody's heading, guys. Everybody is heading to affordable housing. So, you look at a place like this. How much would you rent this out for nationwide? The average rent rate in the United States is bing. Well, somebody's going to rent this for $900 a month. They're going to get internet, utilities, everything all included with that $900 instead of going to an HOA managed apartment complex and pay $1,700, $1,800. So, think about how many people would take this. Now, this is unit number four. So, that should tell you something. Means that we have unit 1, 2, and three to look at. Now, don't mind the mess. Okay, we have a bunch of furniture that is not brand new, by the way. This is used furniture that we've got through certain mechanisms that allow us to get used furniture. And I don't have to go and spend a bunch of money on furnishing the property, but this is going to be a pads split. So, go to splityoupad.com to learn more about how I'm using padsplit to manage properties like this. So, pace, I don't know how to manage people. I don't know how to find tenants. I don't know how to do this. I don't know how to do that. Oh my gosh, what if a tenant bails and I don't know how to find the next tenant and I don't know how to collect the money and I don't Padsplit does all of that for me. That is who we use to manage these properties. So this is room number one. That's $900. They get all access to the kitchen. That's cool. Then you've got bathroom number one. This is bedroom two right here. And right behind us, we've got bedroom number one. Now this bedroom rents for more money than anybody else or anything else. They have their own dedicated bathroom and it is the primary bedroom. Okay. So, the person that stays in this room is going to pay probably around 1,100 and the person over here is going to pay 900. And this room right here is a smaller room. So, they're going to pay probably 825, a little bit less, but they are directly across from the bathroom. So, there are some benefits. You got to figure out which room should be rented for how much and all that kind of stuff. Pace, how do I do that? Oh my gosh, I'm already overthinking. splityoupad.com. Go to padsplit. Make sure that they know that you got a property coming on board. They'll help you out. Now, even better yet, here's something cool I want to tell you. A couple of months ago, I actually did a dedicated training all on Padsplit. I'm going to give you that training down below. It is a training where they answer every question like, "Where do the people park? Oh my gosh, what about sharing food? Oh my gosh, are these people okay living with each other? Oh my gosh, oh my gosh, oh my gosh. Overthinking. Overthinking. Overthinking." All of those overthinking questions are answered with a dedicated training all about Padsplit, the model that we are using here. This property seller says, "I don't want this property anymore. I've got an opportunity somewhere else and I want to get the heck out of Arizona." Great. We'll take over your payments. So, we bought this property subject to 3.25% interest rate. The property that's my private money lender. Principal, interest, taxes, and insurance all in is $2,000. With utilities, pads split management is another $1,000. This property will generate around $5,000 to $5,300 per month on average. So, I will walk away making $2,000 a month. And I didn't even use any of my own money. My private money lender brought the money to the table. Everything you're seeing here that got paid for, private money lender. I didn't have to use a bank to get this house. Now, I can step back, let Padsplit fill the rooms, collect the money, deal with the tenants, and I kick back and collect $2,000 a month. Now, that doesn't seem like a lot of money, but when you take into consideration, yes, I'm making $2,000 a month, plus my tenants are paying down my mortgage, plus I didn't have to get any money out of my pocket. $2,000 a month to own a piece of real estate that's going to appreciate over the long haul. It's pretty amazing deal. So, go over to the link in the description. You'll get more training on padsplit. I love that training. It's actually two different Zooms that I did with my Sub 2 community breaking down padsplit in the model. And you'll see my rep that I use, her name is Mandisa. See you later.

So, here we are today in Phoenix, Arizona. We are here with the the Padsplit crew and we're going to go through and talk about what to do in this house. Um, this property, if you guys remember on the YouTube channel, this one this video got like, I don't know, 15,000 views or something. We did pretty good on it. People really love the breakdown of the sub 2 deal. Actually, we just posted the the uh me calling the seller the other day. That was a good little insert you did there. Um, so we're going to talk about this house, what we think we should do with it, and how much money this house can generate. Right here, we've got Attekus. You came all the way from Atlanta.

I did.

That's my favorite town in the whole entire country.

Wow.

Yeah. I love I love everything about that town.

I'm glad to hear it.

Except Summertime.

I was going to say it's it's not my hometown. It's my uh my adopted town for the last 20-ish years.

Where how did you get there?

Uh from via New Orleans.

You're a New Orleans guy?

I am.

Best food I've ever had in my life was in New Orleans. And I'm an anti- New Orleans guy. Like

I'm still a Saints fan, so we'll have to we'll have to reconcile that.

Bro, the the So people are like, "All right, you got to have the oysters." I'm like, "You're the oysters are full of dirt." Did you ever notice that?

I mean, that's They're oysters. They eat dirt.

Well, it's like from It's like the oysters from the Mississippi, so they're just full of like Mississippi dirt. Um, so Atlanta I love Atlanta. You You've been there 20 plus years.

I have.

What took you over there?

A girl.

Of course, dude. It's always a freaking girl.

Why are you in Phoenix, Eric? Probably because a girl.

Born and raised.

Okay.

You should have said a girl, dude. Come on. And where are you from again?

Colorado and a girl. So.

Oh, really?

Actually. Yeah.

Where were you? Where were you born?

I was born in Atlanta. So I born and raised in Atlanta. Moved to Colorado about 10 years ago now.

Atlanta's pretty awesome, though.

Atlanta's great. Yeah. I love going back home. Bugginess and the bugs. Everything's great.

Yeah, the bugs are pretty bad. Like Florida's bugs are comparable.

Yep.

Atlanta has M. And the vines, dude.

Oh, that's it's a jungle. the freaking vines that are taking over the trees there is like something you've never seen before. And when you drive on the freeway, you're like, man, are these I don't know if these are trees.

It's like a hallway of green, right?

And especially from here in Colorado where we don't in Colorado, we have barely any trees. But seeing that stark difference and even going back even though I was born there is pretty shocking.

It's very shocking. Okay, so uh today we're going to go through this house. I bought this house with Creative Finance. We were going to do a light renovation and just do a regular rental on this because on a regular rental I'd make maybe three 400 bucks a month in in net cash flow. And then I was at a Vegas meetup just recently, maybe 6 weeks ago, maybe two months ago. I meet Mandisa. She got her car stolen that night.

Did you ever find that, by the way?

I think she got an insurance claim. I don't think she found the car, though. Yeah, she got a new computer, too.

Brutal. Poor girl.

I know.

So, I meet her and she's like, "I'm from Padsplit." I was like, "Uh-huh, sure. Great. Thank you." And then one of my students came over and was like, "Dude, you got to know that girl. She their whole company is like they're going to blow up. They're unbelievable." Like, what do they do? And he told me what they you guys did. And I go, "Uh, sounds like too much work." Then he says, "No, no, no. They do the work. They screen the tenants. They find the they find the tenants. They do the marketing. They screen them. They somewhat manage everything. They collect the money. I'm like, "Oh my gosh." So, they take all the work off your plate. You guys are basically doing what my Airbnb managers do for my Airbnbs. You're finding the tenants. You're dealing with the postings. You're dealing with the money management side of things. If there's a issue on the management side or on the maintenance side, I'm I'm responsible for that, but you guys dish that out and go, "Hey, here you go. You guys are in charge of this or go take care of this." So, I calculated I have 16 houses that are vacant in Phoenix right now. Some of them we've already made the decision to do Airbnb, but some of them, like this one, that I'm only going to make, I don't know, three, four hundred bucks a month net, it seemed like a really good idea to have you guys come over here and go, don't turn this into a regular rental. Turn this into a pads split. And then have a conversation of what we could how much money we could make here. What do you like about this neighborhood, by the way? Tell me what what are the good signs of a good neighborhood for pads.

If you're looking for a pad split property, and it's like you just mentioned, right? You have Airbnb. This is not appealing for Airbnb. single family rent, negligible prices as far as cash flow goes.

Why is it for people that are watching like it's obvious for you and I, but for people that are watching here, what is obvious that this is not a great Airbnb area?

I mean, it's a

And why you got to do me like that?

C-class area, right? But I mean, that's I I love C-class.

So, maybe like solid, not sexy.

Yes.

Solid, not sexy. I like that. Okay. So, AC like across the street, for example, my neighbor's roof hasn't been replaced in 30 years.

Yep.

Right. Like that kind of stuff. Um, other things like everything's hodge podge like if you look at my neighbor they have cinder block wall is two different colors right um, there are completely a lot of people parking on the street.

Big one.

That's a big one like you won't see in a B-class definitely not an A-class neighborhood if I park in my neighborhood across the street like if somebody comes to my house and they go I don't know where to park Pace has these weird driveways I'm going to park across the street to not bother Pace case. It's the weirdest thing. My neighbor will call the police on on me and go, "Get your freaking blah blah blah." That's a class neighborhood. So, you don't want to be doing pads split in an A-class neighborhood, right?

I mean, it depends on the host, but but overwhelming majority are like these are workforce kind of bluecollar. Again, solid, not sexy. uh you're essentially going into those areas that where you can get high cash flow but not necessarily outstanding appreciation or uh in some cases they're transitional but in some cases the the neighborhoods are just they have been kind of bluecollar for a long period of time.

Okay. Is the demographic. Somebody, the way I think of it, and you'll have to educate me, is that it's like somebody that moved out of mom and dad's house, can't quite afford to live in a full-fledged home on their own, and they go, I I don't want to be I want to live on my own in a house, um, but I don't want to have to pay $2,000 for rent plus utilities plus all this kind of stuff. I I'd rather pay a much lower fee.

Yeah, it's certainly a big segment. I mean, if you do the math, it's onethird of the entire rental population in the United States that are

singles or two person households that make less than 35 grand a year.

Put that on the screen.

That's a That's a really good statistic.

42 million rental households, 14 million are one or two person households that make less than 35 grand a year.

What how many?

Uh 14 million.

14 million. 31% of all US households are single people and that's growing because of millennials who are staying single longer or boomers who are aging in place longer, living longer.

So out of 42 million rentals, 14 million of them are making less than 35,000 a year.

And are one or two person households.

That's a really great statistic. So essentially we're going after that 14 million and just saying, "Hey, you can rent here. It's way less expensive."

Correct. Have you done the numbers on nationwide rent plus

Utilities plus upkeep as a as a tenant?

Yeah, so for for us it's around $720 $29 per month.

Yeah, that's dramatically lower than probably utilities, Wi-Fi, usually includes laundry, of course, parking. Uh we even include credit reporting. So any payment that they make on time gets reported to credit agencies. So average credit score increase is 48 points.

Holy crap. Are you kidding me? There's a ton of incentives for the members and we always want to keep that alive as a member as a mission based company.

We you and I did a whole zoom with the sub 2 community a couple weeks ago. We had like seven or eight hundred people on there. Uh Mandisa did a great job by the way. Um if you guys want to see that training, click in the a link in the description. will give you the full hour and a half training that Padsplit Pads Split came in and did.

729 a month is what the average Padsplit tenant is paying compared to I wonder what the national average is for rent plus utilities plus Wi-Fi. It's got to be like $1,800 bucks or something.

Yeah. I mean, it's it's well in the the it's got to be double. So, the opportunity is not slowing down. The opportunity is accelerating because things are becoming less and less affordable.

Correct. Yeah. In markets where we have more properties, you actually see rooms fill faster, uh, which has been super interesting. Uh, average time from a listing to a first booking across all 6,500 listings that we have right now is less than 3 days.

Wow. 6,500 listings. And you guys took the time to come hang out with me. This is this will be my first listing with you. Wow. I'm like a drop in the market.

We heard this was our opportunity to get famous. You guys will get famous for sure.

Okay. 14 million 35,000 729 48 points because you guys are reporting to the credit uh bureaus 6,500 listings you guys currently have. Um what do you think a neighborhood like this could get me per room on a weekly basis?

So full disclosure, have never seen this neighborhood before. Have never been here. Uh have no idea like what the market rent is.

Okay. on any market you're in. Typically, what you're seeing is, call it 70% of a one-bedroom market rate for that for that area. Ballpark for this for this market, I think you're probably call it $1,100 bucks for a one-bedroom apartment if I were to guess. And so, I would say you're probably in that $750 to $800 a month per room range per room.

Single bed, no private bath.

Okay. Okay. Single bed, no private bath. All right. So, if you gave them a private bath, then it bumps up a little bit.

Yes.

Okay. So, obviously working with this is what's great about you guys is that you have reps in all of your areas. So, if I'm a client, I can reach out and I can say, "Hey, will you underwrite this and help me understand how do I price this or how do I chop this house up?" Which is actually what I want to do today.

Sure.

Cuz I think there's a big question here. It's like I could throw I could enclose this carport for probably $10 to $15,000 and this could be two additional rooms. Right, there's Molly. Watch. Watch how good of a student I am. Okay, I'm going to act like I'm working for Padsplit for this is Molly.

Hi, Molly. Nice to meet you.

Nice to meet you. How you doing, Molly? Nick,

nice to meet you on Zoom. Yep, we did.

That was a great Zoom. It was a great Zoom. Okay, I'm going to teach you a couple things.

Okay.

There are 42 million rental households in the United States. 14 million of them are either one or two person households that make less than $35,000 a year.

That's why they're renting. That's why they're Well, that's why they're renting. But that is where the opportunity for pads split comes in because the average rent rate in Arizona from last time I checked was like three or four months ago is like spread across the whole valley it's like $1,500 bucks.

Okay. The average rent rate for all of their 600 6500 listings is $729 a month including utilities, Wi-Fi, etc.

So that what an amazing opportunity.

Yeah. Have you ever been to You haven't been to Flower, have you?

I haven't been here. No, I'm looking at all the code violations everywhere that

Oh, yeah. Nobody cares about in this neighborhood.

Yeah, we don't need to worry about those. I guess that would be a good sign for a C-class neighborhood is that code violations are just fine.

Well, I mean, yeah. I mean, it's not necessarily the code violations are just fine, but I mean, for for most of our hosts, we recommend, look, your house should be one of the nicest ones on the block. When you're when you're done, if it looks like it's one of the nicest ones on the block, that's a pretty good indication.

Yeah. Uh but at the same time, the neighborhood is safe, clean, quiet.

Okay. This this neighborhood is definitely safe, clean, quiet.

Absolutely. Yeah, I would say it is. It's a bluecollar neighborhood. A lot of Hispanic, hardworking people in here that are just like, you want a great handyman, this is the neighborhood to get one. You want a great roofer, this is the neighborhood to get one. Um anything you want, this is this neighborhood is amazing. And the this is one of the neighborhoods that still has ice cream cream trucks cruising around in it. Hopefully they still have a bill and

they have the loud music, dude. They just blast it. Okay, so here's what we want to do. I want to go through this house and see what you guys think we should do because I think here, let's go inside. I think the house is a 32. Is that right, Molly?

Yeah, it's a 32. I don't think a lot needs to be done in here except for paint and freshening up immediately.

Okay, maybe some dog and a pool.

Immediately, I think this should be a room right here, right?

Yes. Yes.

Okay. What about this living room right here?

Could also work. I would absolutely make the wall. You've got two additional rooms. Maybe even two rooms in here.

Uh so you need you need an egress window. So that is an exterior wall. And I mean theoretically you could probably you could potentially fit two 8x 10 ft rooms. I think you're probably too close for comfort. In general, I would encourage hosts to think about just quality of experience in addition to just that extra room looks great on a proforma. And this is why it's helpful to see the room in person to say, "Okay, well, yeah, I think legitimately if if you have a either a full wall here with permits or a temp wall, uh like this is a solid respectable bedroom and plenty enough room for

But if we did the two extra rooms, we'd have to add a bathroom.

That's correct. Yeah. So, no more than

I mean we do have we do have two bathrooms here.

There is. Yeah.

Oh, I haven't been here. Sorry.

Yeah. So, no more than four bedrooms can share one bathroom. In general, 3 to one is is going to be just a better long-term experience.

Do you know what our payment is here? Can you pull that up?

$1,270 a month roughly.

Okay, that's great. So, if I can get hypothetically eight people in here at, let's say, $750 bucks a month, this property could bring in six grand a month on Padsplit. Holy shikes.

And it's been so great. Nobody's tried to get into this house. We had a broken window. That little window that looks cleaner than the other one was broken.

Attic is still the copper still in that little shed over there.

Literally, there's the copper still there. That's a great sign.

Okay. So, if I have I bring in $6,000. Hey, editor, pop this up on the screen. Molly, have you ever even watched our YouTube channel?

No. It's so great. So great. Um, okay. So, $6,000 a month is what I could bring in. I imagine I should probably have some allocation for like vacancy, right?

So, maybe 10%.

Yeah. Okay. So, let's take out $600 bucks. That's $5,400 I can bring in actual money in in a month. Then out of that, I'm going to multiply that by 0.85, 85, which is after your guys's fee.

Yep. Right. So, you guys take a 15% fee to manage and do all that kind of stuff, including credit card processing and all that stuff.

So, great. So, that means this property could bring in $45.90. You take out our $1,300 a month in payments with $3,290 bucks a month.

That's insane.

No, this This is stupid. Well, we also have a car for it. Like, we could put a room out there, too. 32. Give me all of these houses right now. $3,290 bucks.

Yeah. I mean, we had a we had a guy recently who had an accessory dwelling unit in the backyard, too. Uh, and I mean, those are also just going super fast. So,

Oh my god. Dwelling unit. How long you guys a week?

Jeez. How long you guys in town?

Uh, about another hour and a half.

And then you're getting on a flight.

Yeah. That's all I got you. Can we go to Can we go to Monroe with them, too? That one's not safe.

It's down by the airport. Proximity to employment center is as important.

It is. It is. Yeah, but the light the methadone clinic are there's not a bus stop nearby because the light rail is right there.

Well, neither is this one. Take over.

You would be shocked. We have I mean, we have units. My main concern is just this the safety. Like you said, this house is safe. This neighborhood is safe.

Molly, that neighborhood is turns into zombie. Go stay there one night. 32 32. Look at 3290. She's wrong. I think I think she's wrong.

Gonna do like ghost busters or whatever where they go and stay in a house in a night. We're going to have Pace Morphe go stay with a camera and like talking about the neighborhood though. I mean, that's one of the the tests that I like to suggest to folks. I mean, when I I started buying houses in 2008 in the crash, and my strategy was, all right, I have to be willing to go there at night uh to collect rent with with my wife in the car. Yeah. And if it didn't fit that criteria, I was like, I'm out. And so now it says you think, okay, well, if I would have would fail that my sister

100% failed in zombie land. I'm not even kidding you. It's drug addicts and homeless people just roaming the streets in the house. I have a couple examples in Vegas. I was just telling out the first pet spot I ever went to. Walked in with the investor. There's a squatter in the other room. We got him out there. He did a renovation. It's been six people in that house ever since. It operates amazingly. My house in Orlando, my GCs were working and two guys were trying to break into the window in the living room. And he told me that. I was like, "Damn, I got to get tenants in there quick." Ever since that day, we got them moved in. No issues at all.

So, yeah. So, here's the thing. If you're going to do a neighborhood like that, you just need to buy like six or 10 on the same block so you can circle the wagons. These people are not felon. These people are like, "Get out of here. They don't want us there."

Okay. So, this room, bedroom, that room, bedroom. So, that gives us five.

Mhm. I I Here's what I think we do, Molly. I think we get this room. This is one room. This living room, this little space right here is another room. Okay. And then I think what we do is we get it cash flowing. And then we add two more in the carport.

Closet. That's a good spot.

Yeah, it's a good spot for a closet. I mean, look at this woodwork.

Oh, yeah. You wouldn't want to. You want to put it in your house?

One. Where's the bathroom? Bathrooms.

Bath. There's one.

Oh, maybe I'm wrong. I think I think I don't know.

No, it's right here. Or does that connect to this one?

No. There's two bathrooms right here.

Two. Two bathrooms. Yeah. Love the mirrored ceilings, too. You got to You got

Don't you have those? Well, everywhere.

Yeah. Especially in all our rental houses. So, you're thinking five bed with an on suite? That's bizarre. I'm thinking a five bed with an on suite and then get it cash flowing and then convert the carport after I've got started cash flowing and add two more

house anyway. Yeah, my house in Orlando is a five with an on suite and it's it performs great. I love that number.

This one's perfect for it. I need eight people in here though for that $3,000. If we only do f If you do six people,

you will because we'll add the carport. But if we add the carport, we probably need to add a bathroom because

Yeah. On to that. I would add the bathroom and a room on that carpet.

They already be plumbed though. Do you get any bonus for having a pool? Do they enjoy having a pool or do they not even hang out?

It's tough. They're like they show they show up, they work, they go, they live.

Yeah. Our thought is more like liability issues. I would definitely do away with the pool. That's what I suggest to all my investors, you know.

Damn it. So, what do we just fill in put over it?

People have done that. Some people drain them. Some people cover them. I know it can damage it if you drain it, right in this climate.

Yes. I tell you what, I mean, we have a number of these in apartments, and the pool is a uh certainly an added bonus for marketing. Those things fill fast.

I think we leave the pool. Let's leave Let's leave the pool. And what we'll do, Molly, is we'll turn this that room into a room, the living room into a room. And then what we'll do is once we get it all cash flowing, we'll then have Chava come over and add a bathroom and two bedrooms and a carport cuz that'll

two bedrooms in a carport. Two bedrooms. I think if we can get to seven people here, taking out the carport here. Let's see if we can find them. Am I just being greedy?

You could do a Jack and Jill here. Do bedroom here, bedroom there. That would be

Look at all this plumbing in here already. Yeah, that would the challenge is the air conditioning.

No, we'd have to put um Yeah, we'd have to put a mini split in. Okay. S if we had five people in the house and we'd probably have to upgrade electricity at $750 with five people net after pool maintenance, landscape maintenance, utilities, Wi-Fi, everything, we'd make $1,500 bucks a month on this property with five bedrooms. If we came back and we added two more bedrooms and a bath, that would cost us probably $30 grand to do that, but it would bring in extra $1,500 bucks a month.

Not net, probably bring in another $1,000 a month net. If that brings in $12 grand a year net, still works though. It's Yeah, they already have a $47,000 renovation estimate for for this a $30,000 investment or even a $40,000 investment to net a,000 bucks a month.

Yeah, it's great. I would tell Benny to do a budget of 50 grand to add to do everything on the inside plus add two bedrooms and a bath for 50 grand. He could do that. What about electrical upgrade? Probably somebody upgrade the electrical. We're going to add another slip. probably add a mini split and then you'll have to upgrade the panel. The panel is going to be on the back of the house.

Yeah. So, two that's 200 amps. Oh, it's only 125.

Yeah. 125. We would have to upgrade the panel to a 200.

If we did five bedrooms, that means permitting, that means city, that means all that stuff. Yeah.

Okay. So, here's what we do. We do five bedrooms.

Okay. Don't add the other bedrooms. Let's just get the property cash flowing and get the this all cleaned up. I think we do a we tell Benny we need a budget of 25 grand. I think that's what we do. We put this f we get five people in here. It's easy to on board with you guys, right?

That's it. Let's go. Let's go to Monroe. Let's go to the zombie house. Okay, guys. This will be a multiple part series where Molly and Pace are going to have differing ideas and we'll see who we'll see who wins.

Good cop, bad cop. I think we go five bedrooms now. Actually, I think we're on the same page.

Yeah, we're on the same page here. Five pa five bedrooms now. You and I have a different opinion about the budget.

Yeah. You're like, let's spend more money.

No, I'm not. I don't want to spend more money.

Okay. So, five bed. What about landscape? Do you have to mess around with landscape too much? Like, they don't need like a hangout spot, backyard, anything like that. It's not like an Airbnb.

Yeah. I mean, what you've got here is fine. I mean, if if you have

Where the hell were you guys 10 years ago?

I know. Are you kidding me? Every time I do an Airbnb, it's like, "Oh, you don't have enough cute things. You don't have enough awnings." And

it's definitely not the hospitality business. It's Yeah. If If you've got the little plastic chairs that they sell at Lowe's or Home Depot, that's an upgrade.

Yeah. You're doing really well. Wow.

Okay. Those are very appreciative. We need to buy all these freaking C-class neighborhoods. Are you kidding me? C stands for cash flow.

You know, I'm now we're doing children's children's videos. Yes. And C stands for cash.

Okay. We'll see guys in part two of this video. What we'll do is we'll have do an update with Benny walking the property. We'll do like halfway through the construction. I'll give you guys an update. I'll give you guys um access to the estimate that Molly got and then we'll take a vote in the comments of who's going to be right about the estimate. I think Benny can do this whole job. Five bedrooms ready to go for 30,000 bucks.

Do you agree or disagree? I agree. I do think we

What do you think is the number? Cut it down.

I think we'll probably end up being closer to 40 between exterior exterior. So, just doing interior we'll do 30, but ex between exterior getting this pool clean.

All right. 40 40. Okay. Got it. So, 40,000 bucks. We'll give you guys the um construction estimate in the next video. So, um, to watch the training that I did with Padsplit a couple weeks ago, there's a link in the description down below. And then we're going to go over to the zombie house. The house, you guys, have you guys heard about this house?

No. Homeless people are running um a Only Fans. A a homeless only fans out of this house.

Interesting. I want to go now.

Yeah, you have to go, bro. It's very Vegas. I mean, The Walking Dead was filming an saw somebody key. Someone got a key and they were selling nightly stays for five bucks and filming each other having filming each other having sex and and putting the stuff on only fans. What? It's true. It's happening. Chava's Hey guys, if you want those videos, go watch watch the watch uh it on the zombie house. We'll see you guys in that video.

This means we're bad landlords. We are center block everywhere, right? So, front of the house on both sides, 3ft cinder block all the way through, new gate, even cinder block in the front, and then the back all the way around, 6t cinder block. Just make this thing like a fortress, right? Then this house was the worst house we've ever owned, but it worked out to be pretty cute. So, this carport in my mind could be another couple of rooms. This house is already a three bed, two bath, and the living room is really long. So, I'm like, dude, we could at least get five bedrooms in here easy, just as is. Kind of do the same thing that we have over there. Oh my god, I cannot believe that Chava got this house looking this good. We couldn't even walk on the property. It was so full of trash last time.

60 years of trash. 60 years.

She's lived here for 60 years. She didn't pay rent to her her landlord for 43 of the 60 years. Landlord was her family, by the way. Okay. So,

easily you could get two two rooms in here, right?

This looks like some of the past we have a big 800 ft. Like very similar.

How many? It's under 800 ft.

780 ft. Wow. Think about how much money we could make here. This is a big ass room for pads split, right?

So, for sure. It's great. Oh, yeah. Perfect. Stackable here. I thought we were coming into a war zone. We already fixed the war zone at night. You have not been here at night.

Is there only one bathroom in here? That's our problem.

So, I was thinking you've only had one room when we originally talked about it. Just in that front area where the fan is.

Okay. So, four four rooms in here. How much could she rent? What's our payment here? Have we refinanced it?

Um, it's not finalized refinance, but it'll probably be in the 2000's range. Viti.

Okay. So, let's say it's 2,200 is what you're trying to say.

Okay. You're trying to soften the blow. Mhm. Okay. So, it's 2,200. Is that just to be safe? Okay. So, 2200 I could do $750 times 4 here. So, I could bring in $3,000 a month. Take out their uh take out vacancy, take out their fees. We would cash Man, we wouldn't cash flow.

I'm telling you right now, it's just not I don't But we How come How much could we rent it for? about 2000 or or or listen to the orange started only fans for homeless people.

I took it upon myself and I told you about this to offer it to her on a hybrid where we have our equity.

So you're saying you want to sell it to her on seller finance.

Yes. where she would make our monthly payment but then we'd have an equity portion for whenever she chose the silent the silent second. Yeah.

So essentially she wouldn't have a payment for our equity. There would be no payment for our equity until she decides to refinance.

Just until she decides to refinance, which it's a really high interest rate because we're working with a hard money lender. So, she's going to want to refinance. It pains me to sell any property. This is the one that we got to This is the one I never wanted. And this is the one.

What do you think about the neighborhood as far as an active pad split.

Yeah, an active pad split. I think it's great for an iPad, but yeah, I haven't going to say that. I mean, I haven't seen anything that scares me to be honest, but I haven't been here at night.

It's just that the people have known in this neighborhood that this house has been vacant for nearly a year. That's the problem. People know that, right? So, when you get tenants in there, it's a different story.

And homeless people have um like sonar and they tell all the other homeless people, hey, this house is vacant. I mean, how how long has this house been in this condition?

A month. So, here's here's the problem with this particular house. I bought this house before the market trended downward, probably back in January of 2022.

June. Okay. So, she knows more than I do. But what happened is I have um we were going to wholesale this and make 10 grand. The person who I was wholesaling it to backed out. Sure. Well, guess what? I committed to it. And so, I'm like, I'm I'm a man of my word. I'm going to follow through. Even if it means I'm going to lose money on the deal, I'll follow through. So, I told Molly, I go, "Let's just get a hard money lender in here." So, we brought in a one of my students, Chloe, gave us 12% money. She paid for the whole deal plus the renovation. Or did we?

No, no, no. We paid for the renovation. We then went and refinanced her money out with my investor loan. Okay. And then we got bridge financing. So, we're on bridge financing right now that is getting ready to renew in June, obviously, because we've closed in June. So, then it'll be due a year later, basically. from when we got.

So, we're going to refinance again total. I'm already in the process of refinancing it right now out of the bridge loan.

Okay, got it. So, we'll go into permanent financing. That'll probably be somewhere like 7 to 8% interest.

Okay, so 8 to 9% interest. Our payment, what's our total? What do we are all in to this house purchase price plus all the renovation plus?

Um, it is probably 290.

That low? Mhm. 290. Okay.

I say we keep it. Well, I mean, we'll keep it and I'll long-term rent it because I could what I could do where it would end up cash flowing is I end up putting two more bedrooms in the carport here. Let's let's look at this real fast. You've got the 3-in the 3-in drain goes out to the back alley. So, I could just pipe in a I could pipe in plumbing here. We could put a bathroom a bathroom wall here. So, they both have their own little bathroom. Have a breezeway that goes through. Yes. And then they have their own little like doorways into each one.

You literally have a multif family across the street. You've got one, four, five, six. So six at $750 a month.

But it's higher than $750 for those two. That's the kicker.

Well, how much? I mean, those two would fetch at least $250 a week, right? So,000.

Okay. That's That's not You can't multiply by four. You have I know no I got that. These are just one.

Yeah. So, $750 * 4 over here. So, this would be uh $1,83 per month. Okay. $1,83 per month * 2.

Yes. Plus $750 * 4. That's $5,166 bucks a month. Okay. So, $51.66 per month is what I could bring in total. And if I multiply that by 0.9 for vacancy, I'm at $4,600 bucks roughly. And then I multiply that by your guys with your guys' fee, I'm at $39.51. I take out let's say my payment of $2,300 bucks a month. That's PITI. I then take out let's say $750 bucks a month for my utilities, Wi-Fi, landscape, whatever.

I'm I'm $1,500 bucks a month net. The only way to make real money on this is to to padsplit this.

True. Or else you're just holding it and it's great. Yeah. I mean, if if your payment is $2,300, that's the question. It's like, what's your renter slash

This? We will make Molly, we have to do a pad split on this. We already have. We already told the girl.

We have to tell the girl, sorry, it's not going to work out. The police told us you can't stay there. It's unsafe. That's quite a where we're standing right now.

Yeah, you guys should totally do the before and after. Look at the backyard. Look at the backyard. It cost us $14,000.

I hope you sold the truck. The trash out was just $1,400. we had to pay somebody $300 to remove the truck.

If you had a um a lease purchase or lease option on this Mhm. Uh what would they pay? They would pay our monthly mortgage payment, whatever, because we're at a high interest rate. So, I have they technically pay more than what monthly rent is. And then they would pay they would have a silent second for our like $60,000 we wanted or something. So, your $2,300 assumes the the 12% that you're paying or the bridge that you're paying now or is that

No, it assumes a new 8 to 9% interest is what I'm estimating. If we put two things here.

Okay. Well, I'm sure she's only signing a year lease. Let's let her get in here. Let's let somebody just stay here and then it not known that it's vacant and then

I if I just don't want to sell it. Okay, that's fine. She It's just a rental application. Basically, what I'm hearing is you've already told her yes.

We've already told him I the second I had my friend stay here and he was like, "Molly, there's no way." Then he came back the next night and somebody had put a piece of clothing over that light that turns on.

Oh, nice. And he's like, "I'm out of here." Yes. We're not selling it. We're not selling it. We're going to lease the property. What I want to do right now is I want to get the cinder block thing still done.

Yeah, we told her we would. And I want to get somebody to pull a permit for a two bed, two bath edition right here.

Okay, sound good? And in 12 months, what we'll do is we'll convert this to a pad split. Have you ever Obviously the city knows what this house freaking looked like.

Have you ever had the city come to you and be like, obviously you did other things here. Oh, yeah. Yeah. We're going to bust this place open and just see. Not that I'm worried about it cuz I feel like everything's done great, but do you feel like they'll give us even more of our time now that we're like, hey, can we add these ADUs here?

Nope. We can just tell the city, "Hey, we just bought the property. We It's too small for us. We want to add some square footage." And they go, "Well, I'd like to see the inside of the house." Go, "I'm sorry. That's not where we're pulling a permit." Yeah. No, you can't have access to my house. This is where we're pulling a permit. I mean, this would net $900 a month after vacancy, after pad split, after all that kind of stuff. Do you know how much cash we have tied up in this?

Probably 20 to $40,000. Yeah. But don't we have monthly payments that we've been paying? So that I'm talking about like everything

maybe maybe up to $60,000 at that point. Okay. So, $60 grand. If we were $60 grand and we then spend another let's say 60 to add this plus the cinder block we'd be 120 grand into this house cash that's and if we bring in $12,000 a month or $12,000 a year in cash it's 10% cash on cash return. Plus we get to keep the property and it pays down the t the rent. I don't want to have 120 grand tied up in the property, but let's say in three or four years the the interest rates go back down to like we can get a refi at five or six.

Yeah, we will. Then we can pull that 120 out. That's the plan. No. So, we're on the same page. We're not selling it. This is a winner.

Okay, great. So, here everybody in YouTube land, here's the challenge with this property. We bought the property. Bad time. I committed to the deal to a wholesaler. wholesaler still made 30 grand on the deal. Good for him. You know who it was?

Yeah. He's trying to sell you more crap deals and I give him about this one every single time. Yeah. It's like he every time he tries to sell us a deal, he tries to make 30, 40 grand on every assignment. It's like, bro, you made 30 grand on one of our worst mistakes. It wasn't even a mistake. It was just bad timing. And the person we were JBing with with bailed on us like two days before we were supposed to close. So if

and like you guys saw the videos like it was a it's it was a disaster really really bad shape here. You know what the biggest problem on this house was? We bought the house. The tenant that was in the house like we had mentioned she hadn't paid rent in 43 years. So when we took it over and I came I personally came I never come to the houses. We always have somebody else do it. But I come to the house on the TV show for A&E and A&E is like we'd love to see you interact with a tenant. I'm like, "Do you really want to see something crazy?" So, this lady I pull up, her name is Mercedes, and she says, "I'm sorry, but this is my house. I own this house. I've lived here so long and I've made all the payments that this house is basically my house." And so, for 6 months, we were in go litigation, going back and forth, and just to find out that she actually had moved out the day that we closed escrow, she had moved out. We thought she was here for six months and we were freaking trying to sue her to get out.

Stayed for like three additional months, but then it was vacant for three months because all must keep her here.

Yeah. Yeah. That we're signing. So that whole time that whole time interest rates are going up, value of the houses are going down and we're sitting there litigating with her and it's just getting worse and we're f we finally get her out, we go, "All right, let's renovate the property." And now here we are a year and couple of months later and we're having to figure out and navigate the exit. But this is what I love about Padsplit is that think about all the investors that you guys are going to be able to save their butts on like, hey, A, this property wasn't cash flowing. B, this house is not in such a desirable area.

Sure. Now I'm like, I'm going to start looking for C and D areas. Stick to the C. Maybe

maybe listen to listen to Molly? Listen to Molly every now and then. 95% of the time.

Do you think would you consider this a C area or a D area? I think this is probably C area. Honestly,

C is for cash flow. C is for cash. C is for cash flow. That's what I have. C is for kind of

Guys, please get a padsplit shirt that says C is for cash flow. I love that. We can work on that.

Yeah. Well, we're working on your landing page. So Oh, that's so great. Well, look, they give you only for sub two members only. Thank you guys. team's getting a little cocky since you said you crashed the other site.

Oh, yeah. So, there's no way. We'll crash it. They said there's no way. We crashed Privy. We crashed PCS. We crashed I mean, you saw the Zoom.

We had We had 85,000 unique visitors last month. So, I think maybe C is for crash. We're going to crash you. We'll cr We'll try and crash you. I like how you had already made a decision on this house. That's good. It took me a while to feel like I could make these decisions without like defying these creative ideas that you have, but at the same time, sometimes there's just necessary things that have to happen.

I'm glad that I never have to ask you to do anything. You are on it. You make decisions as well or better than I do. And just because we want to do something fun with Padsplit, we got thousand other houses we could do with Padsplit.

We'll still do it. This girl that you have committed to this house She says she lives two doors down and she'll And you're going to give her a one-year lease. Could you give her a one-year lease on that property?

Exactly. And then you build one right here. She would probably not really care if as long as the the yard was blocked off from our dogs.

Yeah. Could we do that? Cuz we're going to put we'll put a breezeway right here, right? So, separate. I mean, you're not touching the Yeah. And if you could do a a kitchenet or something in here with two bedrooms and a shared bathroom, right?

Let me see what the lease is. Oh my gosh. Cuz then while she's here covering the payment basically or nearly covering the payment and we can do the fence, we can do we can start working on this.

So we'd have to outline that in our I would I would certainly recommend getting a permit for this.

Yes. Uh, and it's probably better if she's living in there if you're pulling a permit of someone not going inside the house at that point. Right. Right. You've got nice little old lady running the house and

we did not pull a permit here. You can call me out on that. We did not. We tried to pull a permit here.

No. So, what happened and the city was a pain in the ass. Forget this. This lady's been here for 60 freaking years. Has had trash up to the roof house, right? So, trash up to the roof in here where we're standing.

Editor, throw if you see any of if she she's making these comments about these little like cutins. Oh, yeah. Cut.

Please cut that in. Flash it. Yeah. Right now. Then they we come in and buy it and they instantly put a violation on the house cuz they knew we What the freak? For 60 years this lady's here.

So, we put we clean it up. They keep coming by and saying there's still bricks in the yard. There's like little things like that. they wouldn't get rid of the the violation. And I'm like, are you freaking kidding me right now? Like, do you see where you are?

So, yeah. So, I think they'll be fine. I I mean, improvement. We ended up not doing a permit for them for all this work, right?

We did not, but I was concerned because of the violation. We got a new panel without a permit.

We did not do the panel because I brought I got the long-term tenant in here. So, if we do pull a permit for this, we'll pull a permit for the panel at the same time. You're right. I mean, it's fun to think through the pads split lens and look through the pad split lens at all properties because it brings properties like this to the forefront of your mind, which you never would have had a second thought about.

Yeah. Other people would look at this and go, "It's not it wouldn't cash flow for me. I'm just going to abandon it." And there's a lot of houses that are sitting out there even vacant. Like even in Atlanta, people send me deals in Atlanta that are vacant. I'm like, "It wouldn't cash flow. That price just doesn't make sense." But when you add two extra tenants at $750 a month or whatever it is, it's like that extra $1,500 bucks is really that final like push. Like you said, the fifth tenant makes it work. If you What's the most amount of people you've been able to get into a single family?

Uh I think I think I think 11. Yeah. Holy crap.

I will I will say the sweet spot is 6 to 8.

Yes. 6 to 8 is the sweet spot. 10 is just too many people. Too much parking.

It's Yeah. between parking and bathroom usage and kitchen usage. It's just it's more variables. It's harder to keep track. Um you have more just kind of in likelihood of internal conflict. But 6 to 8 is

What would you say to people that go, "Oh, so this is like this is like sober living." What's your response to that? I don't know that much about sober living, but I mean the reality is again onethird of the entire rental population in the United States, they don't qualify for traditional apartments or or any kind of traditional housing situation. And it's every TSA agent you ever met in the airport or anybody working in the kitchen at a restaurant.

School teachers. Yeah. I mean, school teachers, par professionals, you know, teaching assistants, graduate students, people going to communicate.

We just did this actually. We did. So we had a property in Atlanta. We both you boys, Atlanta boys, you are now you are you left, but we had a property in Atlanta. We bought it last year. Big house and um it wasn't cash flowing on an Airbnb. So it's an A area, so it wouldn't work for a pad split, but we convert it to a midterm rental and all of a sudden it starts cash flowing. And I got a couple of like insurance um companies that came in and rented it out for the whole year. And we got a big chunk of cash, like 70 grand all in one month from like a 3-month booking. And we go, man, let's go help somebody. Let's go. Let's go take some of this money and go buy some like a single mom who has kids, doesn't have a car. Let's go buy her a car, give her insurance, um pay for her gas for the year, her g what what else do we give her? Uh AAA membership, and a couple of other cool things. And we took So we took some of that cash flow and went and gave it away. ended up being a parah. Uh they call them paras. I didn't know what it was. And I'm like, "What do you guys do, man? They're helping like special ed kids, like rooms of 25 kids, but they're making like $17 an hour."

Sure. How the hell are you going to live on $17 an hour and expect to She has two kids. She doesn't have a car. Somebody has to drop her and her kids off to school every single day. And she's doing incredibly hard work.

You do the math. I mean, it's $300 bucks a month is what somebody's going to qualify for at that, right? And how many apartments are in your local area?

Zero. Yeah. Our like if you find anywhere to live in Phoenix for under $1,000 bucks, that's a steal.

Even in a bad area. Yeah. I imagine it's the same thing in in in

Absolutely. Average studio rent is $1,800 bucks in Atlanta.

In city of Atlanta. Yeah. Yeah, I believe it. Holy moly. 30% of renters. This is Dude, this is the game changer. Yeah, it's just I don't think a lot of investors are educated on this.

It's just math. I mean, it really is. It's you you look at you look at what the population is that that needs this type of option.

And then you look at what costs are. We need to get you guys on Bigger Pockets.

Absolutely. The whole entire country of investors needs to know this, cuz people, what people are doing constantly is they'll buy a deal and then they try and force it to be an Airbnb because they're like, in their mind, that's the only way to make additional money. And I, I look at Airbnb, I'm like, not only is it a little bit oversaturated, I think that in order to be a really great Airbnb host, you have to have some sort of theme or something that stands out or, yeah, like an experience, right? And then you've got legislation like Atlanta. I had 15 Airbnbs in Atlanta and then they come across last year with legislation just wide sweeping. They go, you can have one per license. So, you have to be licensed and registered and da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da da. I don't see that this is going to be anything that people are going to try and stop.

Yeah, I mean, it's it's clean, safe, affordable. And when you're talking about the the regulations or legislation, a lot of the people who live with us work at the counties, they work at the cities, they work in the sheriff's department. And so these are people who are there every single day. And on the one hand, all of these cities are saying, "Oh, we need more workforce housing." And then you just do the math for them at what? $15 an hour is $31,000 a year.

Before taxes get pulled out.

Yeah, before taxes get pulled out. So, guess what? That person doesn't qualify. Here you are lobbying for an increase in the minimum wage, and that person doesn't qualify for any housing option anywhere in your city. So how, how can you then say this will solve? If investors really hit hard on this, this would solve a good portion of the affordability crisis. I mean, think about all the, there last time we looked, there's nearly 5 million vacant homes in the in the country that are not second homes. They're just vacant. They're abandoned for whatever reason. And every time I go to Atlanta, I I drive around. I'm like, why are these vacant houses?

Yeah.

People are having a hard time understanding what's the exit strategy on this house. But with amplified cash flow, just an extra two extra $1,500 above what you could normally rent it for, that those extra two tenants makes just about every deal work.

Sure. I am the speed with a privatized solution. You know, we're not the government. We can move a lot faster. We're incentivizing investors to work with us because the cash flow is better. We can solve that affordability crisis way quicker.

You guys, you want to know how you guys blow up? You're a d, you're at the end of the day, you're going to become like a data company, right? In a lot of ways. If you could figure out how to segment the Padsplit neighborhoods that would be the best, right? By neighborhood to a certain degree and go, these are areas that work the best. Here's metrics of where we're seeing the highest performance. What you could do as an investor is you could go, I'm going to go pull a list specific for those areas, and I'm going to go, I'm only going to go focus on these areas because they're obviously there's great opportunity here.

Sure. You would have wholesalers calling and buzzing up every single empty property in all of those areas, focusing on them and saying, "It wasn't a deal yesterday, but with Padsplit, it becomes a deal." What's so exciting about this is when you, it's like you dis, it's like the next gold rush. It's like when people figured out that San Francisco was full of gold, everybody was like, everybody else that was digging for gold in the East was like, "We're going out West." I feel like what's will happen with Padsplit is once the investor world knows that this is a thing and it works, and people like me and Molly and our team are like, "Hey, we're willing to put every little number on our YouTube channel and educate you guys, get you guys on Bigger Pockets." And my gosh, you will have so many people that are like, "I'm dumping my Airbnb that's not performing well, and I'm going to go over to Padsplit. I've already renovated. The thing's barely making any money." I get a lot of people that go, "I air, I did an Airbnb. I went on AirDNA. AirDNA said it was going to make this much money. It's just not performing well." What AirDNA, AirDNA is not taking into consideration is that you didn't do a great job on your renovation. Your furniture is not top-notch. There's not a theme associated with it, and maybe your customer service isn't crushing, which are all four non-issues for a Padsplit.

It's like, as long as it's clean, safe, and

affordable.

Affordable. So, a lot of people's Airbnbs that did a poor job or maybe didn't have the budget that they they needed to like really get it to that level, a Padsplit, you convert it to a Padsplit. What's exciting about that is Atlanta, one of our favorite markets, is a market that is only growing and there's more adoption, more people are aware of it. I'm sure now your t, the tenants are talking to other people like their friends. The same thing with like an apartment complex. Like our North Carolina one, once you go new management, you repaint, you resurface the whole, we did a 48 unit in in Charlotte and half of our tenants come from the existing tenants just referring. So what's happening is in Atlanta, people are talking about Padsplit and they're like, "Oh, just go to Padsplit. That's where I got my spot."

Yeah, exactly.

And so now the whole entire um metro is talking about Padsplit. You compound that for a couple of years, you got 4,500 freaking listings in there. Think about, I mean, that's not just listings. That's Are those bedrooms?

Are there bedrooms?

Okay, 4,500 bedrooms. So, you probably have something like 8 or 900 doors or 8 or 900 houses.

Yes.

Okay. So, you got 4,500 of these people talking to their friends about where they live and Padsplit. And so, you just get mass adoption. How many houses do you guys have here?

Uh, Phoenix, do you know? 20ish in the pipeline. One live.

So, Phoenix is our newest market.

Okay. We're going to, we're going to lead the charge here. Oh my gosh. We're going to, we'll try and do two or three a month with you guys. That'll be great.

It works in more areas than you think. If you've got an employment center or, you know, some access to public transportation, or maybe there's just a university or a hospital or something. What I was going to say though is like the biggest thing and what you've done here with this house is I don't care who you are. I mean, I I have never been to this neighborhood at all,

but you walk into this house and you're like, "This is a nice house."

Yeah.

And you're asking me about the neighborhood. Well, this feels great. Like you walk in and you have a certain feeling and it it shows that whoever renovated this house has respect for me as a human being and like I can take pride

on the block.

Yeah. It's the it's the same thing when you're renting out rooms. If you have a situation where somebody's going to walk in there and say this place is nice and assume that they've never been to the neighborhood or never been to the city even,

like that's going to work. I learned about um investors that are just starting out, especially since I teach probably 20 hours a week. If you give them an ambiguous answer, they won't take action

because then they're going to question,

right?

Okay. But if you go, "All right, this zip code in Atlanta, this is the zip code followed by these four other zip codes are our top performers, and here's where you guys should focus." Then I show them how to pull the list there and go, "All right, guys. Pull the list of expired listings, um, foreclosures, vacant homes, blah blah blah. Let's drive for deals. Let's map every single house in these zip codes and find all the vacant houses and let's go focus on these zip codes." You'll have mass a massive amount of people take action. But if you go, "Hey, we have 4,500 houses in Atlanta. Here's the whole map." They'll go, "That's too much. It's I'm so overwhelmed."

See us for cash flow. Make it easy for them.

Yeah. D is for cash flow. A is avoid. B is beware of the HOA. C is for cash flow. And D is are you dumb?

Bullet point.

Maybe maybe D is don't get greedy.

Yeah, don't get greedy. Oh, that's very true. Cuz I think people probably chasing the D areas.

They're trying to get a cheap cheap house that they could then come

when they're trying to sneak in that ninth, tenth, eleventh bedroom. And you're just like, you know what? Don't get greedy. Works both ways.

Neighborhoods and

when you guys speak on stage, you guys want to Who wants to speak on stage? You guys want to speak on stage?

Sure.

Oh my gosh. You We'll have you guys speak all over.

You want You

happy to.

Okay, cool. You got to have put a shirt on, though. It's got to be ABCD.

That's We need a screen for that.

We're going to make the shirts now. Yeah.

I'm going to make a shirt that says Ask Molly.

That's great.

Or Call Molly. Atlanta's your number one market. Number two is what?

Uh, it's changing. So, it had been Houston. All of our Florida markets are ramping up quickly. Jacksonville and Tampa are really close. We're all the all the Florida markets are strong.

You said you've seen a scarier house in Jackson.

And then Vegas is the worst in scale.

Top five moving quickly. Okay.

Yeah. I mean, the the number of units that have been onboarding in Vegas is fast.

Gosh, this is I'm so

We're excited for Phoenix as well. And

Phoenix, North Carolina um is North Carolina would be really good. Charlotte, Raleigh, Durham. Um, where else do we see a ton of activity? Um, Memphis.

We're opening in Baltimore soon.

Oh, cool. You'll be in the DMV area. That'll be a great area. Virginia, I mean, you guys will be nationwide within two years, probably.

Yeah, we're in uh, we'll be in 15 markets by the end of this year. We're in 12 now.

You getting demand for California yet?

Oh, yeah.

Oh, yeah.

What do you guys do if you're not in a market?

Uh, what do you mean? What do we do? Like how if somebody comes to you with a house and is like, "Can you help me manage this house?"

We can we can do it anywhere. Okay. Right. I mean, so we're completely digital. If so, I mean, we had one in a village of 12,000 people in Wisconsin. We'll we'll do it. As I was telling Pace, like, we just won't be able to spend a lot of ad dollars the same way that we can in one concentrated market or be able to fund people like Nick or Mandisa on the ground in those markets. But we can still post on 60 different rental listing sites, which is usually what most people do in their in the best case anyway. Um, just in our core markets, we spend a lot of effort around building that marketing flywheel and

word of mouth.

Wow. Hey guys, I hope you got a lot from this. I did. Um, these these gentlemen flew all the way out from You flew out from Atlanta.

I did.

Attakus flew out from Atlanta. Nick, you flew from Colorado Springs.

It was a short flight. We can't really thank you too much. It was too short of a flight.

Drive next time.

Mandisa was going to come out, but she missed she missed out on hanging out with us and missed out on those tacos.

It's true.

Um, I literally I learned probably 20 or 30 things just kind of rounding out um, what are the what is the real opportunity with Padsplit? It's not a fad. This is something that's only going to grow over time. Is affordability going to change in the United States or is it only going to get worse?

I I wish the answer were that it would get better, but I don't see that on the horizon.

Right. So, um, this was an amazing day. These gentlemen spent two days with us. I found out Molly was two or three weeks ahead of me on making a decision on this particular property, but we'll do a ton of Padsplit um, content for you guys here locally in Arizona. We'll do some in Vegas. We'll do a bunch in V um, Atlanta. We'll be in Atlanta next month. So, as we bounce around the country, we'll do a ton more Padsplit stuff. And I think we're going to pull some houses off of Airbnb and convert them over to Padsplit. And we'll give you guys the numbers in future videos. Thank you guys so much for watching and make sure you subscribe. 81% of people that watch our YouTube channel do not subscribe.

What's the value of subscribing?

The value of subscribing um is a vanity metric. It makes us feel great and it makes my team

But they get notified, right? So they'll get notified.

No, they have to they have to subscribe and hit the notification bell.

If they don't hit the notification bell, we can't bother them. But if they subscribe and at least the videos like pop up in their side feed and tell them like, "Hey, Pace made a new video." It's a vanity metric for us. It tells the team that we've done a good job. So, if you care about how um Eric has to hold this camera for four or five hours a day, okay, the editors are slaving away doing so much hard work and making these videos look great and chopping out all the dead pieces and making us look making me look taller than Nick. Actually, make sure I look 6'5. Okay. Um, if you guys appreciate that, please hit the notification bell and the subscribe button and we'll see you in the next video. Oh, you want me to shake hands now?

Okay, here we go.

Awesome. Thank you.

Pleasure, man.

This is what we call Hollywood magic. Molly,

I don't think we've ever shook hands before.

No, we haven't.

Feel weird.