Real Estate Underground

Solving Affordable Housing Through Co-Living with Sam Wegert

• Ed Mathews • Season 4 • Episode 174

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Website: scaleyourrealestate.com
Instagram: @samwegert

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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, 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 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 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 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 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 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 - Clark St Capital

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