Robert Leonard joins the show to share his house hacking experiences.
Robert bought his first house hack at 20 years old. Five years later, he has built a portfolio of 6 properties while working a full-time job. Plus, he hosts two podcasts – Millennial Investing and Real Estate Investing.
Robert's House Hacking
Let's take a closer look at Robert's house hacking strategy.
Robert's First House Hack
Robert bought his first property, a condo, at 20 years old in the Boston area worth around $130,000. When he closed on the property, he had no intentions of house hacking. He simply bought it because it was an affordable option in an area that he enjoyed living in. After living there for three months, Robert decided to put the spare bedroom to good use. Once he found a renter for the spare room, Robert's house hacking journey began.
Each month, Robert was responsible for a $1,100 mortgage. That total monthly cost, including the HOA fees. The loan closing process took several months due to some rearrangements happening within the HOA. Although condos and townhouses sometimes get a bad rap due to mismanaged HOAs, it has worked out well for Robert.
When he rented the spare bedroom for $750 a month, he was able to cover most of his housing expenses. With the extra disposable income, he was able to spend his discretionary income on fun purchases like a convertible BMW.
After a year of living in a house hack, Robert decided to sell his first property. The HOA had recently updated the entire property. With that, he took the opportunity to sell it for $160,000.
Robert's Next House Hack
After selling his first property, he moved back in with his parents for a couple of months. With changing life circumstances, he started looking into real estate investing and discovered the idea of house hacking. He decided to pursue a live-in flip and bought the house as a primary residence for him and his new family.
The property he bought had some cosmetic issues that allowed it to sell for much less than the rest of the neighborhood. Robert and his girlfriend chose this property with the intention of fixing it up to sell within two or three years.
Growing Into Real Estate Investing
Before completing his first deal, he had some limiting beliefs about his ability to pursue real estate investing as a long-term strategy. After completing two real estate deals, Robert decided that he could pursue real estate investing as a strategy.
Without the mindset shift that came with his first real estate deal, Robert may never seriously pursued real estate. He encourages anyone interested in real estate to get started by taking the first step. At this point, he has completed six deals. At this point, he is not taking out any money from his real estate investment business.
Buying Real Estate As An LLC
When Robert first started investing in real estate, he was convinced that he would never buy a property if it wasn't through an LLC. He wanted the legal protection that the LLC provided. However, finding competitive financing for a 1 to 4 unit property can be difficult through an LLC.
As an alternative solution, Robert decided that he would buy the property in his own name. Once he owned the property, he planned to quitclaim the deed into the LLC. But this can cause extra paperwork, especially for an out of state real estate investor.
In the end, he decided to keep his properties in his own name. But he has purchased a great insurance policy that essentially duplicates the protection an LLC could provide. So far, it has worked out fine.
Why Robert Expanded His Search
Robert lives in Boston, but most of his investment properties are in Texas. He decided that branching out into a different state allowed him to invest in more affordable opportunities.
Also, he splits his investing between the stock market and real estate investing. He has the goal of building a portfolio with enough rental income to quit his W-2 job. In terms of real estate investing, he is focusing on completing five house hacks by the time he is 30.
Here Are The Tools Robert Uses
Robert uses City-data.org to analyze markets around the country. He likes to look at population growth, income growth, house value growth, crime rate, where crime is trending, and job growth.
As a long term landlord, he relies on this tool to expand his geographic area.
The Famous Six
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What is the biggest bucket list item you haven't accomplished yet?
What is your favorite life hack?
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How to Connect
- The Ultimate Guide to House Hacking
- The House Hacking LeapFrog Strategy
- Maximizing Credit Card Reward For Real Estate Investors
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