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Real Life Planning Podcast Episode 18: House Hacking for Beginners with Lauren Bellis (Part 2)

Real Estate Coaching

In Episode 18, I continue my conversation with Lauren Bellis about house hacking for beginners and how it is a powerful real estate investment strategy to start your journey to financial independence. Lauren also shares insights on how to balance comfort versus profit as a house hacker.

“How you can be most successful is just doing the homework and having your team in place and then the ball just rolls on its own once you're there.” - Lauren Bellis

This week on Real Life Planning Podcast, Cynthia will cover:


What should you consider when developing a house hacking timeline? [00:01:35]


 What are ways to lower stress if you are house hacking with your significant other?  [00:04:02]


What are ways to achieve a balance between comfort and profit as a house hacker? [00:06:20]


What is the most important thing to do before getting started on a house hacking strategy? [00:9:38]


How do you calculate your budget for worst case scenarios? [00:12:32]


 Are you ready to become a landlord? [00:15:49]

Takeaway Quotes:

“Find a way to have that balance of happiness in this [house hacking] and then it will be worth it.” - Lauren Bellis

“For those people who are just getting started as house hackers, you're not just real estate investors and homeowners, but you're landlords.” - Cynthia Meyer

“You can do this [house hacking] on your own, but you’ll be a whole lot less successful if you do it on your own.” - Lauren Bellis

Connect with Lauren Bellis:

Connect with Cynthia Meyer:

About the Real Life Planning Podcast

Host Cynthia Meyer welcomes fascinating guests to share real life stories of how they are realizing their financial potential. Each episode explores practical, realistic steps to create results.

Transcript - Real Life Planning Podcast - Episode 18

[00:00:06] Cynthia Meyer: And now you've just finished a renovation, right? 

[00:00:09] Lauren Bellis: Yes. So. I'm glad you asked. We're in a duplex; tenants downstairs. We're in the upstairs apartment that's fully renovated now. We did the renovations while we were living in the apartment. Talk about comfort versus profit, right? So it was not comfortable. It was not- it's tough. A gain, it's that trade off, right? When we did our kitchen; we didn't have a kitchen for a couple months.

[00:00:30] This is post COVID, but still we're still seeing all these, delays and ordering supplies and staffing and stuff like that. So everything took a little bit longer than expected. I always say, for time and for expense, when it comes to a project, it should be about one third, more than expected. One third longer and one third more expensive. If it takes a little bit less time you're pleasantly surprised.

[00:00:52] Cynthia Meyer: I think that's really great guidance Lauren. That certainly has been my personal experience with contractors, in general. Maybe not a small electrical or plumbing job, but like bigger projects is that sometimes the 10% contingency is not enough of a contingency, right? Yeah. 

[00:01:06] Lauren Bellis: I'd rather be pleasantly surprised in giving myself more slack there than being super inconvenienced because I didn't prepare myself for the amount of time. So, especially with that kitchen, we had a dedicated space in our living room with a folding table that had a microwave and a toaster oven. Shelves with our dishes on it.

[00:01:22] Cynthia Meyer: The card table kitchen.

[00:01:23] Lauren Bellis: Oh, yeah, for sure. And I am such a , I'm kind of, have borderline OCD tendencies. I was cleaning every day and I was really stressful, but the end result is so worth it. The kitchen came out beautiful . The bathroom, all the rooms, everything looks great.

[00:01:38] Just recently had the pictures taken and posted online. This is where things get a little bit dicey when you're talking about timing, right? Our apartment is done. We're still living in the apartment, and we're in the process of looking for our next house hack opportunity.

[00:01:51] We're looking for another two, three-unit building. So we can live in and then rent out the other ones. We put in a couple of offers and haven't had a successful outcome yet. But I'm still listing the apartment that we're currently living in for rent because the timing has to work out.

[00:02:07] Cynthia Meyer: Right. 

[00:02:08] Lauren Bellis: The pictures came out great for the apartment. We've received, oh my gosh, over 200 inquiries in a very short amount of time. 

[00:02:14] Cynthia Meyer: Wow.

[00:02:15] Lauren Bellis: I thought that unit was under priced, but we ran the numbers multiple times. I think the pictures just came out that great that it looks beautiful and everyone wants...

[00:02:23] Cynthia Meyer: It sounds like you did a beautiful renovation, right? 

[00:02:25] Lauren Bellis: Exactly. Yeah, for sure and staging in the pictures and all that stuff really made a difference. So anyway, we have this issue of talking to prospective tenants for the home that we're living in. Getting ready to do viewings and showing so we could secure a tenant because the time it takes from identifying a tenant to move in can be 30 days plus and then we'll have closing. Eventually, once we do get an accepted offer on a property that we want to purchase for our next one, we'll want to have that timing be as seamless as possible. This is a super stressful time for us; just trying to kind of make that timing work. 

[00:02:57] Cynthia Meyer: And the whole order of operations, right? 

[00:02:59] Lauren Bellis: Exactly. 

[00:02:59] Cynthia Meyer: That it happens in a way where you don't have to move back in with your mom or something like that. 

[00:03:03] Lauren Bellis: Exactly. That's literally what it be; with the dog and the cat at our mom's house. It's putting all this stuff in storage, but you know what? Again... 

[00:03:10] Cynthia Meyer: Occupational... uh, 

[00:03:12] Lauren Bellis: It is! And you just have to do what you have to do. You have to find a way to make it work. Because this is our business. This is not our home. This is the business that we chose to create and build as real estate investors using this house hacking strategy.

[00:03:25] So, will we do this forever? Maybe not. Maybe eventually, we'll get to a place where we'll we can't do it anymore. I can't live in one more kitchen renovation or I can't deal with one more tenant next door, but for now it works for us. We're in a place in our life where it's really adding value. So, we'll see. 

[00:03:40] Cynthia Meyer: Yeah. 

[00:03:40] You've certainly been very successful at it, and I have no doubt that you're going to be really successful at your next project. I can't wait to see what it looks like. I wanted to dig into a little bit about the renovation work that you and Winston did together.

[00:03:54] Lauren Bellis: Sure.

[00:03:55] Cynthia Meyer: How did you find a balance as a couple between enjoying life now and working on the renovation?

[00:04:02] Lauren Bellis: It's not easy. And I'll tell you as couples, I think in general, it's easy to argue over money or, kind of typical life stuff. It's stressful working with your significant other in any regard, right? 

[00:04:15] Cynthia Meyer: Right. No matter how well... 

[00:04:16] Lauren Bellis: Exactly. But when it comes to physical labor, sometimes in the heat of summer, or working outside and when it's colder out or whatever the case may be, there's so many additional elements of stress that are involved.

[00:04:27] And for us, it's really just been finding ways to communicate and find that balance for each other so that it's not all work which is really easy when you're working at home on a renovation that you live in and you want to live in a nice clean renovated house, especially with my, you know, I don't know, Type A personality or whatever you call it. "Tomorrow we'll do this and then we'll do this." And it just drives everyone crazy sometimes. Until we found that really works for us is just listing out everything that needs to be done and kind of breaking things down into the smallest, actionable steps possible. And then just kind of scheduling it out. We basically did one room at a time. So the last...

[00:05:04] Cynthia Meyer: Oh, that makes sense. 

[00:05:05] Lauren Bellis: Yeah. So we did the common hallway last. So we finished the apartment downstairs. We did the apartment upstairs, and then that common hallway area got neglected and kind of saved to the very end; almost forgot about it. We're like, "Oh, we gotta paint the hallway out here because nothing's been done to it in a few decades. So, we literally broke down step one: Prime the ceiling. Step two: Prime the walls and caulk all the little holes. Every single little step that needed to be done.

[00:05:31] And then, we just said, okay, so, Monday through Friday or Monday through Saturday, whatever, from this time to this time, And then kind of just scheduled each one of those tasks. When we do that versus when we are just shooting from the hip... 

[00:05:44] Cynthia Meyer: Winging it. Yeah. 

[00:05:45] Lauren Bellis: Yeah, exactly. We're so much more successful with the amount of work that we complete. And we're so much more successful with our peace and our happiness; in our ability to find time to take our dog, Rufus, for a nice three-mile walk versus just spinning him around the block a few times out of necessity. Enjoying the day, right? So that's a tool that's really worked for us.

[00:06:05] Cynthia Meyer: What do you think it is the best piece of advice that you've ever received? 

[00:06:10] Lauren Bellis: That's a really good one. And I think it ties back into the conversation we were just having that you really do have to focus on what makes you happy today. You and I talked about this when you know, I was looking for where our next investment will be because we've really changed our house hacking strategy as of late to find a way that we can buy our properties and travel at the same time. The way we've done that is to buy homes in different states, in different areas so that we can experience living in different areas for... 

[00:06:39] Cynthia Meyer: That's really cool. Yeah. 

[00:06:41] Lauren Bellis: The two years that we were working on the project, we started off just looking at numbers to say, "Oh, we have family in Arkansas and properties are really cheap there. We can make the numbers work; maybe we should do that." We'd love to live in California, but we can't afford a lot of space there. And we would be in the desert versus near the coastline. 

[00:06:56] And settled on looking in Florida because what makes us happy every day is, or at least me more than for Winston is the beach. It would make me happy every day to live in a duplex or a 3 unit building that's within 20 minutes of the beach. And kind of defining that for myself and Winston really fell in love with the Tampa Bay area in Florida. There's a lot going on there; lot of jobs and fun things to do. We have family and friends there as well, and just kind of deciding for us, that this next step for us would make us happy every day versus something else that would be profitable. It's a good idea, but would it make us happy every day? This is not just a journey to an end. The goal isn't just to be multimillionaires someday.

[00:07:39] Winston and I have chosen to run our business in this way so that we can enjoy our lives now, while we're still relatively young and we're in a place in our lives where we have built more flexibility into our lives. Because as a real estate investor, as a real estate agent, I can take a two-hour lunch on a Wednesday and every once in a while, when I can, instead of spending that two hours just cleaning my house, I can go out and just go do something fun for the day.

[00:08:03] It's really important that you do what makes you happy. If this is just going to be stressful for you, if you're just going to run yourself into the ground doing the work, or if you're going to take out loans to pay for renovations that you can't afford, it's not going to make you happy, and you shouldn't do it. Find a way to have that balance of happiness in this and then it will be worth it. 

[00:08:22] Cynthia Meyer: I think that's really great guidance, Lauren. A lot of times when people are starting with their first home or their first investment property, or in this case, as a house hacker, it's important to know just how much work you're constitutionally wired to handle.

[00:08:37] Some people love to work on their house and their garden as almost like a hobby, right? They just love to do that. If you're one of those people, house hacking, I think, is probably going to be a great path for you. 

[00:08:50] If you're the sort of person that doesn't even like to hang your own pictures, it might not be for you. 

[00:08:55] Lauren Bellis: Right. That's a great way of thinking of it. That being said, you really can contract out more work than what we're doing, and maybe not hanging pictures. 

[00:09:03] You can hire a property management company to service your tenants. Even as a house hacker, I do know plenty of investors that do that. They'd never even tell their neighbors that they own the house. They just live upstairs like they're a tenant and they have the property management company act as the face of their investment property. There's a way you can find balance; it's just more expensive. So again, you're trading that comfort versus profit. You just have to find that breaking point that works best for you.

[00:09:28] Cynthia Meyer: What would you recommend for somebody who is listening today and is thinking, "Oh, I want to dig into this house hacking idea a little bit more." What would you recommend that somebody do? 

[00:09:38] Lauren Bellis: I think step one and the most important thing in real estate investing is building a team on day one. If you're thinking about becoming a real estate investor, specifically becoming a house hacker, talk to a real estate agent and start having them send you over listings so you can look at the properties. 

[00:09:52] Cynthia Meyer: And get kind of an idea of what floats your boat and what's your numbers.

[00:09:55] Lauren Bellis: Yeah, exactly. You can start with casting a wide net; tie in that happiness. Will it make you happy to stay close to home? Maybe you want to be closer to your kids' grandparents so they can help take care of the kids or... 

[00:10:05] Cynthia Meyer: Staying in a specific school district, right?

[00:10:08] Lauren Bellis: School district. Yeah. You want to have less than a 30-minute commute to work, or maybe you're thinking of, " I'm sick of living here. I want to move. I want to go closer to the beach or the mountains." Or whatever, just ensure you're including those factors that will really make you happy. Start building your team now. You can do this on your own, but you'll be a whole lot less successful if you do it on your own.

[00:10:26] I am a real estate agent, but I'm working with a real estate agent that's in the locality that we're looking to buy. They're investor friendly. They're amazing. So they're super helpful. Work with someone like me that can help coach you through the process. Work with someone like you that's a financial advisor that can help ensure that your numbers are good before we even start this process. Get all your ducks in a row. Start building your network of trades professionals; by getting referrals from family and friends. I think just starting to have the conversations with people and professionals solidifies this idea as a goal versus just a thought. Once you're starting to pull in members of your team to help build your real estate investing business, because let's be honest, that's what it is.

[00:11:06] Cynthia Meyer: Real estate is a business, right?

[00:11:08] Lauren Bellis: It is. Yeah. 

[00:11:09] Even if it is just a two-family housing unit, your tenants are your customers. You should really treat it as such; it is a business. So take it just as seriously. But I think on day one, start looking at listings; start learning the market.

[00:11:22] You want to do your research independently and embed it with the professionals you're working with. If you want to buy a two-family house within the Dallas-Fort Worth area, you're starting to look at those properties, then start to learn the rent in those areas.

[00:11:35] You can even just go to websites like Rentometer or there's niche.com is another one. All these websites that help you learn about rent and different qualities of neighborhoods. You can go to the websites to look at apartments, see how much they're listed at and kind of find out what the average monthly rent is in that area.

[00:11:51] Do the research to just learn that market inside and out. If you do this for weeks and months, and you get a really better good idea of what average prices are for the market price, for the list price for a home, and what the average rent is- you'll identify a deal right away. Ooh, that's a two-unit, three bedrooms each, and the rents are much higher in that neighborhood. That's the one! So once you really start to learn those numbers, you'll be able to find that deal that works best for you and your agent is already ready to go.

[00:12:19] So you can pick up the phone and say, "Hey Lauren, I see this house. Let's put in an offer." I feel like that's how you can be most successful is just doing the homework and having your team in place, and then the ball just rolls on its own once you're there. 

[00:12:30] Cynthia Meyer: I think that's great guidance. The one thing that I would tag onto that, which I know that you do, Lauren, is I cannot emphasize enough how important it is to run the numbers before you make an offer. And running the numbers, not just in a best case scenario, but try and run them for a worst case scenario. How long is it going to take to build cash reserves for the property? What is that overage on estimated renovation costs? Like you should always plan for contingencies. How will you be building cash reserves? What's your insurance deductible going to be? 

[00:12:59] As a house hacker, you're a homeowner. So, you're going to be paying all those bills if for some reason your other unit or units aren't rented.

[00:13:07] Lauren Bellis: Exactly. Yeah. And I think that's a great way of thinking of it too, is looking at that worst-case scenario. There are so many elements involved, right? Oftentimes, the apartment will rent at once the work is done if it needs work. Maybe you'll have to get tenants in one of your units before the work is done just to help be able to afford it. Unrenovated, that rental will likely be substantially lower than the market will be. So when you're running the numbers, be mindful of that and have that built into the worst-case scenario; have a vacancy rate built into the worst-case scenario. That's essentially saying there won't be a tenant in the apartment for three months, or six months; making sure that your numbers are reflective of that as well. So that's great advice.

[00:13:44] Cynthia Meyer: That is so interesting. I was talking to somebody the other day, who was closing on a duplex in a less expensive state in the south and there were two 3 bedroom, two bathroom units. Pretty interesting. They were thinking, they would renovate in October and get these things rented in January. Quite possibly no one's going to move in January because the people that are going to move into them have kids and they're not going to move their kids in the middle of the school year. So thinking through all those issues and these folks actually eventually said, "Oh, maybe we'll continue the rent with the existing tenants for a while, and then we'll renovate after their leases are up." 

[00:14:21] Lauren Bellis: And knowing again, doing that homework and knowing the market in the Boston area, it is very university driven. So a lot of the leases have a 9/1 start date for that reason. Even if your plan is not to rent to students, if a student moves out at 8/31, the apartment's available 9/1, if a young professional moves in 9/1, it continues; use that cycle.

[00:14:43] So everyone knows it's just moving truck season. So everyone knows around that time...

[00:14:48] Cynthia Meyer: I can recall a time I was actually stuck in traffic in Boston during that season. 

[00:14:53] Lauren Bellis: It's pretty, it is a little crazy. People know to stay off there. The locals know to stay off there. 

[00:14:57] Cynthia Meyer: I didn't. That's okay. 

[00:14:59] Lauren Bellis: But yeah, so, even for us and we're outside of the city. We're 20 miles or so outside of the city, but it's still that same kind of trend falls out here. We try our best to be ready for 9/1, but you know, the house that we're hoping to purchase fell through and we're pushing 10/1, maybe even 11/1, depending on the timing of everything. And then there's, always think outside the box and make sure your local ordinances, the regulations, and again, that homework role is so important to make sure you're doing your due diligence; to ensure that the laws as a landlord, you have to do certain things. 

[00:15:29] But if you're able to, do a less than one-year lease so that you can sync up that end date to 8/31. Someone moved in a couple months before 9/1. So we did a month-to-month with the promise of keeping the rent the same for a one-year lease from starting 9/1. Starting all those little things that you might not think about that will help drive the long-term success of your business.

[00:15:49] Cynthia Meyer: That's an excellent point, Lauren, because for those people who are just getting started as house hackers, you're not just real estate investors and homeowners, but you're landlords. You have to follow all the laws of your local jurisdiction as well as the federal fair housing laws and get really smart about that. Great resources. Even if you're just getting started and learning, Nolo Press, in particular, has some good blogs and a couple of inexpensive books to buy for first-time landlords. I would definitely recommend that people read and process before they sign their first lease.

[00:16:19] Lauren Bellis: Yeah, and go to your state website. Oftentimes, they'll have a guide to being a landlord and outlines those...

[00:16:26] Cynthia Meyer: In a particular area. 

[00:16:27] Lauren Bellis: Exactly. Yeah. So just knowing that information is really important. 

[00:16:31] Cynthia Meyer: So Lauren, where can people find you online? 

[00:16:33] Lauren Bellis: Yeah, so, my brand, Urban Castle Properties is my best platform to find me. Our website is urbancastle.co. Not .com; co. And then the same thing on all social media platforms; Urban Castle @urbancastleboston. I would love to connect with you. I'd be happy to help. If you need a referral for a real estate agent, I'd happy to help you with that as well. Yeah, I think it's really important to think of this as a team effort, right? And that the idea of as you're becoming successful, bring your friends and family along with you and share the knowledge that we're gaining through this process. I'm just so happy to share what I've gone through and that to share those tough times too so that you don't have to relive all the mistakes that I've made.

[00:17:12] I think sharing the good stuff is good. I make mistakes! I'm happy to let you know what I did wrong so you don't have to go through it too. 

[00:17:18] Cynthia Meyer: Lauren Bellis, it has been so interesting to talk to you today and to hear about how you've built your house hacking business and how you are helping to mentor others who are just getting started as house hackers.

[00:17:30] So thanks very much. 

[00:17:32] Lauren Bellis: Thank you so much. It's been an absolute pleasure.

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