Real Estate Underground

Solving Affordable Housing Through Co-Living with Sam Wegert

• Ed Mathews • Season 4 • Episode 175

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Co-Living: The New Asset Class

Ed Mathews

Greetings and salutations , Real Estate Undergrounders . It is Ed Mathews with Real Estate Underground . you so much for joining us today . I'm really grateful for you making us a part of your day . With me today is Sam Wegert , and Sam has a lot going on , but we're going to talk about one really interesting segment of his set of businesses . I'm going to let him tell the story . So first , welcome to the show , Sam , and I can't wait to talk about Life Door . Yeah , man .

Sam Wegert

Thanks for having me on , Ed . I'm super excited to be on and I love the name of the show . By the way , I didn't tell you that before we got on , but the Real Estate Undergrounders is a cool name . There's always cool new asset classes coming up in real estate and I know we're going to talk about one of . I'm excited for that .

Ed Mathews

Absolutely . Yeah , you and I speak the same language because this is a multifamily play , so I understand the words coming out of your mouth , and so will our audience , but it's a fascinating play . I'm going to let you tell the story and then I'm going to tell you about my friend Deirdre . So for those folks who haven't found you online yet or don't know you already , why don't you tell us a little bit about who you are and about your company ?

Sam Wegert

Yeah , what we're going to focus on today in this episode is you mentioned multifamily . So this is an asset class that's new , up and coming . It's not that people haven't been sharing houses for a long time , because they have been for decades for as long as humans have existed , but the way to do it in a scalable way that investors can get cash flow from is new , and that's called co-living . So we're going to talk today about co-living and I believe this asset class is where Airbnb was in 2011 , 2012 , when it was just up and coming and people were having this reaction to Airbnb . If you remember , wait , what is that ? Again , how do people not destroy homes ? So there's some nuances to it that I know we're going to discuss in this show , but really , this is I describe it to people as this is multifamily income , but on a single family debt , which is longer fixed debt , a lot of times , better terms and single family prices , and I'm excited to dive into that and chat about that today .

Ed Mathews

So my friend , Deirdre Vervo , does something similar , except with senior living . Right , yes , she is tremendously successful . She has bought beautiful homes in wonderful neighborhoods . The cost of senior health care and senior living assisted living is astronom . We're East Coast guys just living . Forget senior assisted living is extremely expensive here on the East Coast and elsewhere is also . But yeah , but it's to the point where you know good hardworking people can't afford to put a roof over their head in a town that they won't send their kids to school . So let's talk about your mission and let's talk about how you execute .

Sam Wegert

Yeah , the mission behind co-living . I'm all into co-living because it creates cashflow , but I would say there's a huge mission element to this asset class and it can help solve affordable housing . It can help solve we call it workforce housing I think it's the more technical term because it's for working professionals that couldn't afford . Just think about everybody that you go through your day , think about everybody that makes between 15 and like $25 an hour . So we're going to talk about everybody that works at Walmart that serves you , the people that you go to , the convenience workers and the people that put baggage on your like . They're making between 10 and 25 , 10 and 30 dollars an hour after taxes . That is just not enough to afford a studio apartment in a good area , plus live Right . And so there's a huge growing percentage of the population , especially in major cities , that are looking for something cheaper than a studio . But a studio is normally the cheapest thing on the market . So what's cheaper than a studio ? But a studio is normally the cheapest thing on the market . So what's cheaper than a studio is a room . And so , in essence , if someone can rent a room that has all utilities included , so they pay one price , the rent doesn't fluctuate , then that can help solve this issue of affordable and workforce housing . It's not just me saying that .

Sam Wegert

The US Department for Housing and Urban Development , otherwise known as HUD , has come out . They put out a notice that said hey , we believe co-living can solve affordable housing in America . Now I'm paraphrasing a little bit . They didn't say it in quite that explicit terms , but they believe co-living can help solve affordable housing in America . And they now allow housing choice vouchers to be used for rooms , not just apartments or houses or whatever . So that's a really cool development , that kind of HUD stamp of approval on co-living .

Sam Wegert

I think about anybody who decides that they want to be an investor of co-living homes . Because in essence , what we are doing , ed , is by doing co-living we are inventing a new price point that did not previously exist Studios , normally the cheapest thing in any city , and we are now putting that on the market in a clean , quiet , safe place for people to live . And we are now putting that on the market in a clean , quiet , safe place for people to live . That is 50 to 75% of what a studio apartment would go for . So we're undercutting the entire market , having the cheapest thing and doing it in a professional way , that's professionally managed , that's done , really cool . So it's not like a boarding home , it's not like a rooming home .

Sam Wegert

A lot of people think , oh Sam , what you're doing is a rooming home . We're doing something where if I could have your listeners , if your listeners are note takers , I encourage them to jot this sentence down the room is becoming the new apartment and that is how Europe thinks about co-living . By the way , so many people in Europe and so many people in other countries live in this manner . It's only becoming necessary in the United States because of inflation , because of rising cost of housing and living Everything going up because of inflation , because of rising cost of housing and living everything going up . That's a little bit about the mission behind it . It's cashflow . Of course , we can double , we can triple , we can quadruple the cashflow .

Ed Mathews

We get from a normal place , but it is also affordable housing and workforce housing Fascinating . And it's also similar to medical professional housing . Right , I know that's right . I've got a handful of friends that buy houses . They'll fix them up and they will rent them out to traveling nurses or traveling doctors . Yes , Because obviously that's a big challenge in that space as well , and a little bit different in that you know they're paying . Those residents are paying through a stipend that they get , so the money is different . Right , it's a lot more actually , but the fact is that the concept here is solving a major problem . I live in Connecticut . I believe you live in North Carolina . We have a major workman's housing issue in Connecticut . We're tens of thousands of units behind schedule and I know that's a problem all across the country .

Sam Wegert

Yeah , those are like those , the niche you mentioned . You mentioned two really cool niches , by the way . You mentioned the kind of senior assisted living or residential assisted living , I think they call it . And then you mentioned the medical professionals . Thank you , the medical professionals Drew a blank there for a second . Those are all in my mind . Those are all like niches within the niche of co-living , because they in essence , rent out rooms to individuals , and so there's all kinds of these little niches . I focus on my company . What I think will fill your investment , what will fill your co-living house the fastest , is definitely marketing to the broad , like working professionals and other niches that are in there are like seeing you mentioned so veterans .

Sam Wegert

Veterans is another one . Some of my students are creating homes and they only let veterans stay in those homes . It's a home for nursing professionals . You mentioned sober living is another one . That's the same similar concept . You're renting out rooms , but it's to a specific niche seniors in general , not necessarily people that need assisted living , but just like 55 plus , we're seeing that take off because a lot of people are on some sort of fixed income could have been an old pension or a social security and they're like the cost is going up . I don't mind making this sacrifice , I don't mind living with other people , but I want my own private room , my own private space . So we see a lot of that like 55 plus happening . So I love the way you're thinking about it . Those are all little niches within the overall co-living niche that all can work .

Ed Mathews

I category of anybody who fits into needing a cheaper place to live . Here's the kicker , and I want I'm going to validate this with you because it occurred to me before we hit the record button something that I have done in the past and I'm curious if it's applicable here . I think it is . I flip houses as well , Right , and so the one kind of negative of flipping houses is taxes . Right , you sell a house , you want it for six months , you sell it and you got to pay capital gains because it's short-term and it's short-term capital gains . So ouch , it hurts . However , if you take that house and you rent it and you hold it for a period of time , talk to your financial advisors . You can then , when you go to sell that house , one , two , five , 10 , 15 years from now

The Mission Behind Co-Living

Ed Mathews

, you can 1031 exchange that money out and put it into something else of like kind of investment . I'm curious if you had any thoughts about that .

Sam Wegert

Yeah , we do a lot of 1031 exchanges whenever I go to sell a house , for sure , if that's what you're specifically asking about . I haven't sold a lot of properties until about two and a half years ago and I started selling off . My wife and I owned 12 Airbnbs in the Asheville area . I saw the writing on the wall . When it came to Airbnbs I said , okay , if we hit inflation , that's going to mean people have less disposable income , so vacations are going to become and I am grateful that I was kind of thinking ahead , because I really did feel like I got ahead of the game . Like I sold a couple of our properties , like some big , nice properties at what I would consider like the peak , and I would not be able to get that today , even if I sold it a year later , two years later , because Asheville is just the market's kind of steady .

Sam Wegert

But yeah , all those properties I would not pay taxes on the income by 1031 exchange and into more co-living properties , which is what I'm all in on , because I truly believe the next 10 years is going to be one that's focused on affordable housing . I just don't see any way around . The United States doesn't have to put a huge amount of focus . Would you agree with that ? I know you're building affordable housing too .

Ed Mathews

I 100% agree with that . It is a monumentally large problem that very few people are talking about , and it is beyond critical because the fact is that in 2008 , not only did that whole financial crisis wipe out a whole bunch of people who were homeowners that whole financial crisis wipe out a whole bunch of people who were homeowners it also wiped out the general contractor class . It took out about 50% , that's 5-0 folks percent of the general contractors who were building new housing every year , and they never came back . So one of the major reasons we're behind is because all those GCs stopped building houses , and that's a huge part of why housing has continued to get more and more expensive , both rental properties and single family residential ownership type scenarios where we're just not building enough . So the supply is way down and the demand hasn't changed . It's continuing to grow .

Ed Mathews

People keep making babies , people keep graduating from college and don't live with mom and dad . People keep immigrating into this country . None of it's stopping . It's all continuing . In fact , it's all growing . That means there are not enough roofs for the heads of all the people walking around in this country , and so hats off to you .

Sam Wegert

You are solving a major problem and yeah and so on . That note like what every city is trying to do right now is increase density in the city . A great example of this is Charlotte . Charlotte just came out with and said you could build a duplex , triplex , quadplex on 80 lot on any previously single family lot in the city of Charlotte , minus , like certain zones that they X out . But what they're trying to do is increase density . They also slashed parking requirements for a bunch of multiband . Charlotte and all major cities are like , okay , we've got to build more density and we've got to somehow bring the cost per unit down as well . So that's what they're trying to do , right , what we do as co-living investors .

Sam Wegert

We go into a single family home . We increase density right , we make it from . This would be only be a normal . This could serve one family . Now it can serve four , five , six , seven , eight , nine , eight people can share this home . And we're doing that without any cost to the government , without any subsidies . We're providing a cheaper option in a nicer area , increasing density . So it is really this win-win . Politicians are getting on board with this because they're realizing , like , wait a second , this solves an issue in my city or state . No subsidies and no government money to build this stuff . How is that not a win ? Great example of this is the governor of Colorado . A lot of cities and towns will have these restrictions . They'll say you can only allow up to four unrelated people to live in a home , or something crazy like that , meaning I could live there with 45 of my cousins , 16 of my aunts and uncles . It was a place to find cousin . Exactly how far back are we going in the family tree ?

Sam Wegert

At some point . All of our family tree is virgin , exactly Dude . It's so crazy to think about some of the old zoning laws that come out In Atlanta . There's this one county , up to five unrelated , unlimited number of related and an unlimited number of domestic servants . You can just imagine what time period that was written in and a lot of these rules and laws just haven't been updated . Yeah , but my point in sharing this is I have a whole thing on how I believe that sounds constitutional .

Sam Wegert

There's definitely some strong parties out there that are fighting like hey , you can't regulate this one . But the state of Colorado , the governor of Colorado , just came out this was back in July of last year , so I guess it's been about a year now and he said I'm making it illegal for any local jurisdiction to regulate the number of people in any home . So he just literally said if 15 adults want to get together and they're adults and they want to share a house together , why is that our business ? That's their consenting adults . They get to share a house together . That's on them , and so that was a huge win . And you're seeing states like this like Oregon did something similar , washington did something similar where they're just like hey , we get it . Columbia can help . We're removing any barriers . Now we have to get a little more creative . In some of these states we're seeing kind of the gates open as politicians start to understand what we're trying to do .

Ed Mathews

Yeah , and I hear you on those laws because , like here in my general area , new England , a lot of municipalities will have similar regulations and laws , and it's fighting airbnbs and it's fighting college kids living together , because in rhode island , for instance , near university of rhode island , narragansett , which is a beach town beautiful beach town is 40 , 50 , 60 000 people . Now in august , in three months , it will be a ghost town because a huge portion of the properties are beach homes , and so what those folks did was they would rent out their houses to University of Rhode Island kids , and so the kids would come in and do something similar a co-living situation where they're living in a six bedroom house and none of them are related . And so the problem was then the neighbors that did remain didn't like the fact that they were living next to a college kid house , and obvious reasons . So that's why towns like Massachusetts , connecticut , rhode Island , new York have passed similar laws to what you're talking about . I agree with you . I'm not an attorney , but I'm pretty sure they're unconstitutional .

Sam Wegert

I think there's a big distinction too , ed , between okay , these laws were originally designed . A lot of them were originally designed to keep out college housing , like fraternity houses , prostitution houses and undocumented immigrant houses . That was the original intent a lot of times behind these , and a lot of them were colleges , like you said . But what we do doesn't really fall in those boxes . We're not college housing . Out of the 450 tenants we have here in Charlotte that I either own or manage , we have maybe four , five college kids . Like out of all of that , they're all working professionals . So it's just , we're so different than that and we're professionally managed . No-transcript .

Sam Wegert

A home that's two things . One , large we look at nothing less than 2,000 square feet . If it's 2,500 or 3,000 square feet , that's like even better because I can get more bedrooms out of that . I'm looking for a home that's large and I'm also looking for a home and I'm going to use a term here we call it being it's boxy , meaning it's not that open concept floor plan that everybody still desires today . So we're looking for one with a lot of walls and maybe built in the 80s or the 90s or early 2000s . This boxy living room was separate , the dining room was separate . The kitchen was a separate room , because

Converting Homes for Maximum Value

Sam Wegert

that makes it easier for us to convert those rooms to extra bedrooms , and so what's great about this model is that those homes don't fly off the shelves anywhere .

Sam Wegert

People see them as a little not desirable . We get to take homes that are older , larger and maybe not super desirable and we get to turn them into something . I can't tell you how many co-living homes I've bought that have been on the market for 100 days , 120 days , 150 days , couldn't move . And then I come in and I look at it . I'm like , oh , actually , actually it's perfect for co-living because , look , it's got all these little rooms and it's broken up really weird . Terrible for a single family , but perfect for co-living .

Ed Mathews

And that's the homes we get to snag off the market , which is really great , which is awesome . Less competition when you're acquiring is a beautiful thing , yeah exactly that's the other thing .

Sam Wegert

Like , as the investor , I get a cheaper deal because I'm yeah , I to give my low ball off Right on your approach ?

Ed Mathews

How do you approach a deal ? You find a 2,000 square foot ranch . Right , that's all boxed up , no great room . It's a kitchen , living room , dining room , the usual setup . How do you approach that project and what are you doing to make this a co-living ?

Sam Wegert

property . It's really a simple process . I'll outline it from a very high level view . First , we're looking for a few things in the home . I've already mentioned some of those . Is it boxy ?

Sam Wegert

The more bathrooms it has , the better , because I always want to keep a three to one bedroom to bathroom ratio , meaning I never have more than three people sharing one bathroom . Perfect world , two people sharing one bathroom . Or , in a perfect world , one person only having a private , everybody having a private bath would be perfect , but obviously that's adding a lot of bathrooms . So you've got those things I look for . I'm also going to look for non-HOA . I'm going to look for kind of a B minus or B plus neighborhood , something that kind of fits blue collar neighborhood , where people aren't going to be super pissed off if there's an extra car in the parking lot or someone's parking on the street I'm looking for . That's . The other thing I look for is no-transcript , and so I'm looking for those things . And then when we go in we just basically say and 2,000 square foot or bigger , and then from that point , if it checks all those boxes , we buy it and then we just convert every square inch of the space , except for the kitchen and one small common area to a bedroom . So you might say , well , are you serious ? What about the dining room ? Yep , that becomes a bedroom . What about the living room ? What if there's a second living room downstairs ? What if there's a full basement ? I'm taking that three or four rooms . The way I think about it is , if we're in an affordability housing crisis and tonight in America , by the way , there are 600,000 people , think of how many stadiums 600,000 people would fill up . That's how many homeless people will be in America tonight , and so if we have a crisis to that level , you better bet I'm using unused space for a bedroom because we need it , and so there's a huge demand , huge need , but I am going to leave the kitchen , obviously , because that's a shared area , and I'm going to leave a common area , because that's a shared area as well , where people can eat . I'll put some desks in there for people to do co-working . That'll be a cool kind of community space .

Sam Wegert

Every square inch , though , becomes either a bedroom or a bathroom . What about a garage , sam ? Yeah , garage too . We always convert garages either into two rooms , two bedrooms , or we're going to convert it into the common space so that I can use more space in the house that's already obviously better heated and cooled for rooms , so rooms . So that's in essence what I do Now . A lot of times , if I have a 2,500 or 3,000 square feet , that means I can get nine or 10 rooms out of that , and to some people that might sound crazy like 10 people . How do they not kill each other ? There's a lot of nuances on the management side of things that we have to think . You have to keep this thing clean . You've got to keep it quiet .

Ed Mathews

You have to keep it safe , but that's a general overview of how we make this happen . Okay , so you mentioned management , because that was actually one of the questions I was going to ask . How do you smash six , eight , 10 people who don't know each other into the same house where they're sharing a common area ?

Sam Wegert

How do you manage that ? I would say . The answer to that question is the number one reason . Everybody first sees co-living for the cash flows . Whoa , I can make a thousand dollars , $2,000 net on a single family house . That would normally negative cashflow . Oh my gosh , that's amazing . So , for example , one of my eight bedroom homes recently when I did the rent appraisal , they said , hey , it'll probably rent for 2,200 bucks . We ended up renting out for 8,500 . And it's just like that's . Actually that was a 10 bedroom house . So we're , you know now , granted , we pay utilities , we have different management costs , more maintenance .

Sam Wegert

There's what people see on the front end , but let me pull back the curtain and show you the back end . The back end is it's hard . It's hard to manage these things . There is a lot of systems . I've been doing this for a decade and a half , believe it or not . There's a lot of little tweaks and systems and things that have to be in place and I'll share some of those .

Sam Wegert

Like right now , there's three things you have to do . One has to be clean and if it's not consistently clean , people won't want to stay there . So what does that mean ? That means that people have to contribute to the cleaning . It means you have to have cameras in the common area to ensure people

Clean, Quiet, Safe: Management Essentials

Sam Wegert

do their dishes like simple things like do their dishes after they put them in . There has to be some accountability around that . There have to be some fines if they don't do it . And there's professional cleaners that come in twice a month to clean the common areas twice a month to clean the common areas . There's some little systems and rules and things they have to sign off on that just make this asset class nuanced . Everybody would be doing it if it was super easy , but there's some codes you have to crack so that's clean .

Sam Wegert

Quiet is the next thing . You have to have some quiet hours . People have to go to headphones after a certain hour in the night . Otherwise , people who work first shift or second shift are just going to go crazy , have certain noise restrictions similar to , like an airbnb , we might have quiet hours after 10 or something like . You have to have that .

Sam Wegert

And then the third thing is you have to make it safe . If it's not safe , people won't stay there . So you have to have rules , like you can't have weapons in the house , right , you have to and you have to be able to enforce those . You have to be able to kick people out if they break a house rule . You have to have cameras on the front . We put cameras in the common area of these homes . We have to be able to have those accountability things . We have to have individual door locks on all the doors so they feel okay , this is my little private space that I can lock and I can get in and out . And then , obviously , just how you vet your members is just so crucial . Are you doing background checks ? Are you ensuring they've had some experience with shared loving before ? Not that we wouldn't accept someone who's brand new , but setting the correct expectations from the beginning is definitely the number one thing that sets them up for success in the backend .

Ed Mathews

Right on , and you mentioned something about if they break a rule they lose their membership . Does that fall under eviction laws or is there a different ? Because I've been paying attention to your language . You don't call them tenants or residents , you call them members . So walk me through the nuance that you're dancing .

Sam Wegert

Yeah , there is a fine line and I'll just pull back . I don't mind being totally transparent , Thank you . I used to use leases and I now exclusively use something called a membership agreement . It's similar to think of like you join a fraternity club and you have a membership with them , or you join a country club and you have a membership with them and you pay dues . That's basically how this works , and so what that allows me to do is , if you set it up correctly , you are able to step outside of normal tenant landlord relationship . Now , I'm not a lawyer . I'm not giving your listeners legal advice that this is how . I'm just sharing what we do . That does allow you to use private security to kick someone out and I've done this before to remove their if they don't exit when you terminate their membership . So you can do that . Now here's what we found . We're a little bit at scale Now . We're not at . My community would probably 2,500 of these 12-in-a-door In my community . My wife and I own 250 or so , and then we manage a few other hundreds , Depending on the state .

Sam Wegert

We found that you can also go through the normal eviction process . So in North Carolina , 95% of the time we're going to go through the normal eviction process . There might be some situations where we forcibly remove someone from the room and we have the ability to do that with the legal agreements . It's not hard , it's actually a very easy process . We're a very landlord-friendly state . It costs a couple hundred bucks . So , okay , we're going to just go through that , but you do have the ability to do that . That's why we call them members . We have this membership agreement . The membership agreement also helps us in some of these jurisdictions that have these restrictions . Technically , the way that this works is I'm only leasing my house . I'm leasing my house to one other company , and that company then has hundreds of membership agreements . If someone were to say , Sam , how many leases do you have in your house ? The answer would be I have one lease on my house and that's it .

Ed Mathews

Now , who holds that lease , though ?

Sam Wegert

Another company that I also maybe own , and that company is a membership company

Membership vs. Tenancy: Legal Framework

Sam Wegert

and it's the one leasing the house on behalf of all these members . A few documents that are needed to set this up and that are needed to set this up . And we pay lawyers lots of money to get creative in this space . But that's what's great about America we can get creative right . That's literally how new stuff is formed in America . All the time is lawyers get together and go . Why don't we do it this way and this way ? And we still follow the raw law , but we're creative .

Ed Mathews

Yeah , and let's all keep in mind you're solving a major problem for folks in a whole lot of trouble . If you don't exist , right , that's okay . So talk to me about do you take outside investors , or is this done in-house , or how does that work ? Are you the case joint ventures ?

Sam Wegert

I've seen it done lots of ways and I can speak to all those ways because I coach on all those ways . But if someone asks me hey , sam , what do you do , I tell them I'm all done on co-living , and I build , I teach and I manage . So we are in the process of developing our first two co-living buildings that are duplexes that are built for this model . So a lot of bedrooms , a lot of bathrooms . We manage , meaning we have a management company , but unfortunately right now I only manage for my students , just because the management is so heavy . And then I teach and so I run the largest masterminding course that teaches people to get into this in a way where they don't lose a ton of money and they know the nuances going into it and they do it profitably from the very beginning . There's a recipe to follow , so that's what I do . And then , of course , my wife and I buy these all the time .

Sam Wegert

I don't take outside investors . Right now We've just used our own capital and my wife was my biggest investor . So he watched me do it for a few years and then said I've got some money , let's buy some more property . So we just always kept it a little bit in-house that way , but I have some students that are doing some syndications . I have some students that are raising capital . I have seen people do it every single way right now . What's great about this model maybe as a little comparison to multifamily is you can actually keep this in-house , meaning a single family home . You can get a 10% down vacation on , you can move into it and hack it for a minute and do house hacking and put only 5% down . I mean this is great for people who , like I , can keep this in and that can go up in value . That's how we've done it and I like it for that reason . It's easy to get into . It's a lower barrier to entry than , say , buying a multifamily deal .

Ed Mathews

Absolutely , I know I get it , but it's interesting because I'm thinking like you're talking about some of the loan products that are out there . I'm thinking VA loans , right , where I did 3% down payment . You can live there , you can convert that house into a co-living house and then move out and do another VA loan for your next property . It's a nice way to grow your own portfolio as you go along . I'm sure students do .

Sam Wegert

It gets even better than that . You can , if you want , hack other people's loans . So here's how some of my students have done it and I've been so impressed with them . You can go to someone and say , hey , you have a job and you can get a primary residence loan which is 3% down , or a VA loan sometimes it's 0% down and you can say , look , I'll give you free rent in a home for a year , but I'd like to use that loan , and so they would move in and you would . I mean , there's some nuances from the legal title side of things of this , but that can be worked out . There are some strategies for that . But in essence , you can hack someone else's loan because you're only allowed one a year . But I can go to and I've gone to my like I have a bunch of siblings . I'll give you 10% of this house plus , or I'll just pay them . I'll give you 10 grand , but you've got to move into this home and then the home's going to be mine , but you get free rent for a year , and so there's some fun strategies Right , there's always into your first one or two .

Sam Wegert

But here's what's great about the strategy . Let's say , you get a home and it's not uncommon . For one of these homes A thousand dollars a month net is the bottom line . We won't even look at it unless it spits out of a thousand and I'd say there's some crazy examples I could give you of one home , 14 bedroom home in Houston , doing $5,000 a month net , but it's very rare . They put a lot down , but one to three . So let's take an average person in thousands of dollars one to $3,000 a month in net income . That's the range of what we're seeing in different cities around the United States . So what I'm saying is you don't need a hundred if you're a normal American and you need 6K a month , which is $72,000 a year , and that covers a lot of your basic expenses . That's two or three homes , not the first ones you maybe see . You find you research . You say no to a bunch but , like I'm saying , that's the power of this strategy if applied and done correctly applied and done correctly , thank you .

Ed Mathews

That's why I love it . It's like I said before we started recording . This is a situation , a problem that I'm grateful that you and other people that are doing what you do are solving . I'm also really grateful that you're teaching other people how to do it , because that's the fastest way to get to scale and solve this problem . In total and you've mentioned a couple of times and I'm going to make you talk about it is your school , so tell me about the training you provide and how does that work .

Sam Wegert

So we run a program that is two aspects it's a course and it's a mastermind , and what that means is there's an initial course to get you from zero co-living homes , even if you've done a bunch of real estate before . Obviously this asset , just like industrial , is different than multifamily , it's different than single family , co-living is different from all of those . So there's a course that gets you from zero co-living homes to one co-living home and it's a step-by-step guide that walks you through to get to one . After that , two is easier , three is easier , four is easier , everyone gets easier after that . And then we have an ongoing mastermind that just supports you . So that's calls live to scale . Yes , yeah , we've got some scaling programs as well .

Sam Wegert

One of my students recently joined our program , less than a year ago , and him and his partner now . Granted , he found a partner in our program and he just texted me the other day and said we're at 180 units and I was like less than a year co-living units and I was like , dude , that is insane . Granted , he came in with a decent amount of capital . He had sold some stuff , so he had a chunk of change that he was ready to go . But that's what's possible in our program if you fly yourself , and so I love doing it . I've got a bunch of coaches that help me out with it . I'm really passionate about it . We're always improving it and making it better and just super excited for that . Awesome Congratulations .

Sam Wegert

Yeah , if someone's interested , we do give a free resource . If someone wants , we do a five day challenge , which is a deep dive into this strategy . It's completely free . We don't charge a dime for it . There's an offer on the end , but it's not a hard pitch at all . It's just like hey , if you guys want to continue here , it is , but it's a scale your real estatecom . So if anybody's interested , scale your real estatecom , they can just go there and get on our next one . I do one a month . They're live , so I'm there interacting with you guys and connecting

Investment Strategies and Scaling Up

Sam Wegert

and it's let's get into the final five .

Ed Mathews

I appreciate and I've learned a lot in this 37-minute masterclass that you've provided , so thank you . But I want to know more about you individually . You wake up on Monday morning and the mortgage is paid , the kids are taken care of , college is handled , no car payments , all the things that a husband and wife need to do , or a couple need to do in order to be good , right , that's all taken care of , and yet you still go out , get out of bed and I suspect you're that guy and yet you get out of bed on Monday morning and go headfirst , diving right back into the office to continue to build your business and help your students and all that I call that purpose .

Sam Wegert

What gets you out of bed ? What's your yeah , man ? I think it's an interesting question and I might give a nontraditional answer to it , because this has been something I've been diving into my life recently . I'm not going to lie . I've been in a season of life where I've been asking myself that same question . I'm like , what is my purpose ? Why am I here ? What do I really want to do ?

Sam Wegert

And I started working when I was 13 years old . I started working 60 , 70 hour weeks when I was 13 years old , so I'm in a place where and I've gone I'm 34 now , so I've been 13 to 34 . I'm like I've been going ham crazy , Didn't go to college . Hard work , and so I'm in past and I'm just going to be really honest is necessity and I don't necessarily mean financial necessity and I think there's some value to what I'm going to say for people who are listening , because I don't think I'd be here today if there weren't a lot of other people that relied on me . For example , I would love to quit right now , Like I'd literally love to turn it down .

Sam Wegert

I fantasized about it for the last two years . I told my wife I just want to go to Mexico , this little town in Mexico , Mizzou , that I love and I want to go . I have people that rely on me and they keep me going and so I do it because there are people who need me care and that I care about enough that I have to keep going , and that's what gets me up is those people , and I think that's valuable , because I think if anybody wants to get somewhere in life , it is not going to be . You need external resources to push you , Like we will only do so much just for ourselves Purpose . I'd love to tell you I have some big purpose to solve affordable housing , and sometimes I do think we will actually completely solve affordable housing with this method and that's fun and that does get me up in the morning .

Ed Mathews

But if I had to give you the real answer , man , I would say it's taking care of the people that rely on me , taking care of the people that have paid me , taking care of the people that have entrusted me with their lives , their financial future , and I need to show up for them . I need to show up for my wife and my dog , who's laying next to me a little pissed off . Thank you for that . I agree with you on multiple levels there . With regard to mentorship , you've mentioned that people have helped you along the way , and so I'm curious about the best advice you ever got and who gave it to you man , I'll give you a piece of advice .

Sam Wegert

That may seem out there , but it's something I've just been preaching my team . I'm a big Tony Robbins like guy and Tony Robbins is all about raising your standards . But one of my mentors pulled me aside one time and he said Sam , stop trying to be Tony Robbins , you are killing yourself . You are trying to be excellent all the time . You're . Basically , he was like you're trying to be too good all the time . I was like what the heck do you mean ? Man ? He goes . I need you to lower your standard . I was like what the heck are you talking about ? That's not me . I'm Tony Robbins . I'm raise your standard . He goes . I'm going to teach you something that will be very valuable .

Sam Wegert

He said which you hit your standard and you have , in an essence , raised your standard and he goes consistently good , always outperforms occasionally great , and he goes , Sam , you're trying so hard , You're showing up occasionally great and you just need to be consistently good . And it was a juxtaposition to my entire life , which is like Tony Robbins go , explode , explode . And I just dude . I've just been preaching this to my team Cause like , for example , my team built out this whole flow for member concerns that we get from these members . I was like guys , ain't nobody going to do it , it's too big , it's too beefy , it's too this . I said we need them to watch one video , not 20 videos , and they lower the standard . We raise the consistency with which we hit the standard and we've , in essence , raised our standard , and that's frankly what I'm trying to do in my life , because I'm the type of guy that wants to make everything perfect , everything amazing , everything great . It's like you can't do it , it's not possible , it's not human .

Ed Mathews

Chill me . What is , professionally , a mistake or a decision you'd love to have back ? What did you do about it ? My list is very long .

Sam Wegert

I'll give two , because one's very relevant , one's like a bigger picture . I like to move forward fast , so sometimes when these wholesalers come to me with deals , I'll buy a home sight unseen and I've done that a lot of my career actually . But I will never buy another house sight unseen just because there is a difference between Google earth and Google maps , and the video that the guy sends me I'd seen it in person . So I just bought a house recently . I was just like why ?

Ed Mathews

didn't I buy this house .

Sam Wegert

I already paid cash for the entire house . It was a wholesale deal . So I was like and then I did this and I was about to buy a second house , sight unseen , because I just trusted my team and I was like , no , I'm going to just quickly zip out there and see it . I did I . It's different . I didn't like it . That's like a quick little lesson that I think even for experienced investors is important . And then the second lesson I would say mistake is there's a great book that I recommend everybody read . It's called who Moved my Cheese and it is a book about when markets change . People hold on to what they know and they need to update , and so for me that was .

Sam Wegert

I was in the martial arts industry . I built a chain of martial arts schools for 15 years . I hung onto it because it was certain and it literally took an act of God . Like dude . My brother , who was like my right hand guy in that business , literally had to go to jail because get on drugs and do all this crazy stuff . That happened , and a friend had to literally come down and be like you must sell this business for me to then transition to full-time real estate , and I just feel like I held onto it about five years too long , and in life things move . Asset classes change . What was good two years ago is not good . There are just things that adjust and I wish people would be like okay , I'm moving on to the next thing , and sometimes that's just what has to happen . And so if anybody struggles with that , like I did , who moved my cheese , a great book to be like , the cheese has moved Rewards and the spoils are not where they used to be we got to move on to something else Right on .

Ed Mathews

And so you mentioned a book , so let's talk about that . How do you sharpen the saw , so to speak ? What are you reading these days ? Or , if you don't read , how do you take in information and who are you paying attention to these days ?

Sam Wegert

Yeah , man , I'll be honest , Tony Robbins for sure . And just in terms of resources and books , I just recently read a book called a hundred million dollar leads . I haven't finished it yet , but a hundred million dollar offers , those are two great ones . Who else am I paying attention to ? I'm always in a mastermind . I'm always in a group . I pay attention to Pace Morby's group and kind of what he's doing with the sub two community , cause I have a season of my life where I listened to every single person that I possibly could . And I told you before I quit , a mastermind I'd been in for 14 years , not because I thought it was bad , but because I just needed to hear my own voice . I needed to hear what Sam wanted and thinks . This season of my life right now is actually less about reading . I'm journaling for an hour to two hours a day . I'm journaling about my relationship and it's been . Really , if no one has ever , and if you've never journaled and I know I'm going to get some haters for saying this , but if you've- never journaled to .

Sam Wegert

ChatGPT . You should Just know that it could come up in a court case . They can subpoena this stuff . So be careful what you tell it or delete it . I love old school too , ed . I've got a notebook in front of me , but ChatGPT has been fed millions and millions of transcripts from actual counselors and coaches and all this stuff .

Sam Wegert

So it does have a good format , it knows coaching and so , yeah , you can just go to Chachibiti and be like I want you to be a coach , I want you to be a counselor . I want you to reflect this back to me . What am I missing ? What am I not seeing ? Talk about anything .

Sam Wegert

And keep in mind I'm a guy who hired a Tony Robbins coach at age 14 or 15 . So I've been in the coaching world for a long time and some of the things that ChachiBT will spit back to me and be like hey , I think you should think about this and this , I'm like it's deep and it is good . Surprisingly look over my shoulders . Good , and it's instant . I don't have to get on a call . I can just feel like here's an emotion I'm feeling today , like I'm feeling this and this and I really don't want to do this and it'll be like no , you need to stick to your commitment because of this and this , and here's what you could do . But if you do , this is who you would become , and this is no like done , got it , I'm going to do . It's amazing . So I've been journaling a lot to it . I just a lot of my friends have too , and they were just experienced really great results .

Ed Mathews

So I know some people have some weirdness about AI , but I would highly established a board of advisors on my chat GPT account project that's set up . And basically I said we've got Car Street Academy and we're trying to launch this

Purpose, Mentorship and Life Lessons

Ed Mathews

and I need Russell Brunson , alex Hormozy , ann Hadley , frank Kern to walk me through a launch strategy so that we can add the most value and all the things we want to accomplish . And it gave me that's awesome launch strategy so that we can add the most value and all the things we want to accomplish . And it gave me that's awesome , and I'm going back to it now . Hey , this is what I'm seeing in the market .

Ed Mathews

This didn't work . How should we react ? How should we handle this ? And boom more information . That worked . Okay , cool , that's resonating . I now have a world-class board of advisors living under the umbrella of ChatGPT . So I'm right there with you on that one , brother . That's amazing , dude . I love it . Let's talk about success , because I'm really interested to hear how you answer this In your own life , and I know you're in a specific season right now . How do you today define success ?

Sam Wegert

Yeah , I wish I had good , nice , canned answers for this , but I really don't . How do I define success ? It's definitely changed . I'll share something a little vulnerable that I just realized yesterday . It might be a little too early to share this , but I'd say the number one reason I chased money growing up was because I wanted to be loved by the people around me and I just somehow in my head I got connected . I was like , oh , if I could impress my friends I was part of this friend group that was like never really fully accepted me and if I could press my parents , I can press people . I would get more attention and love things I didn't think I did when I was a kid by having a ton of money and I accomplished the goal by all worldly measurements was the youngest person to join a millionaire group , built my company to multi millions , and so all this was like good check marks . But I think what happened is I recently woke up and was like dang , actually having more money means you should have more conflict , like fire people and hire people Like I went the wrong way if I'm looking for like love and acceptance in my life right , and so one of the things that I would say how I define success . Now it's slowly shifting .

Sam Wegert

For me Definitely used to be all by money measurement terms , even recently , even if you'd asked me this a year ago , I'd be like did I hit my net worth goal ? Did I hit my net income goal ? Did I hit my net income ? Net worth , that's all I would measure . I don't care about gross , I don't care how much money you're making , I don't care how much money you're taking home , that's all I care about . But recently it's just shifted a little bit more . I've had some health concerns . My sister just passed unexpectedly , very recently . She kind of rocked me to my core . I meant she was 36 , and she left a five-year-old kid behind and her husband . It was just so sad . I'm still reeling . Am I like having fun ? I have more money in the bank account than I've ever had in my entire life . Is that who I want to be ? I recently spent some time in Colombia , the country of Colombia , and in Colombia they don't care how much money you make , they care about social media .

Sam Wegert

Following it's a different culture , and just being around different cultures makes you realize it's actually a very American thing . It's a very specifically American thing to think I'm competing against you . I'm better than you in money . I have more success than you . Not everybody thinks that way . Most cultures actually don't think that way . I say all that to say , I think , just like enjoyment of my life , spending time with people that I love and that I care about has definitely started to infiltrate my version of success more than it ever has . I'm 34 . So , you know , I think it's a natural tendency of men , maybe young men especially to go through this like significance phase and then they're like , oh wait , is that all there is ? And I'm like , no , is that all there is ? And I'm sure I could learn a lot from you and that as well , but that's my journey right now , man . That's awesome .

Ed Mathews

That revelation for me hit about 31 , I think , so you're right on track . Wow , I've been working at this for so long to accomplish this and I just accomplished this . Is that all there is ? It'll happen multiple times in your life . I'm in my mid fifties . It's happened at least twice since then , and that's a good thing , that's growth .

Sam Wegert

What's the number one piece of advice you have for someone in that season ? Give yourself some grace .

Ed Mathews

Give yourself some grace . You are on a path and that path is your own . Don't compare it to anybody else , and if you're not where you thought you would be , that's okay . You can't do anything about yesterday . The only thing you can affect is right now and tomorrow . Give yourself some grace and be really as present as you possibly can . I relive them even really as present as you possibly can . I relived them even , and one of the things that did to me was it sabotaged things that I was working on because I was so fixated on things I got right , things I got wrong , and what happened was I'm sitting at a dining room table with my two daughters and my wife and they're having a great conversation , and I'm still thinking about the mistake I made and I'm not hearing any of it . And learning very late in life to give myself a little bit of grace has been revolutionary , and I'm talking in the last couple of years .

Sam Wegert

That'd be . That's brilliant . Thank you , I received that and that's very timely .

Ed Mathews

Thank you . So , sam , I've really enjoyed this conversation . When you're not talking about co-living and helping other people achieve their dreams . What do you like to do for fun , say ?

Sam Wegert

that last question one more time .

Ed Mathews

When you're not saving the world from not enough affordable housing and helping other people achieve their dreams , what do you like to do for fun ?

Sam Wegert

Yeah , I'm learning a lot about fun , but I love hiking . I love anything outdoors , man , anything in nature . So hiking , biking , camping , traveling , being on the water , a , a boat , just like anything with my friends and my family usually outdoor stuff is . My most pleasurable place is kind of my home skiing . I have a 20s deal right now so I'm not doing much of skiing or and it's killing me , but I'm working on that , so that's my go-to .

Ed Mathews

Yeah , fortunately it's august , so you got a little bit of time to kill , and if people want to learn more about you or your companies , what's the best way to get in ?

Sam Wegert

man , the best way , I would just say , is going to that website that I gave you , www . scaleyourrealestate . com . If someone's interested to learn more about co-living , or they can just follow me on Instagram at Sam Wegert W-E-G-E-R-T . And connect and follow me there .

Ed Mathews

Awesome , Sam . Thank you so much for your time today . I am blown away by you and your business . Congratulations and continued success . I wish you nothing but the best .

Sam Wegert

Thank you , Ed . Same to you , brother . Thanks for the opportunity to be on . I really appreciate it .

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Ed Mathews

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