54: Living Practically Free: The Power of House Hacking with Jacob Reeves

[00:00:00] What is your favorite part of being an Airbnb host?

[00:00:04] That would have to be the adrenaline rush I still get a year later whenever we get new bookings.

[00:00:12] Airbnb will send you a notification, a text, it's, you know, congratulations so and so just booked for however many nights, however many hundred of dollars.

[00:00:23] That adrenaline rush is just so hard to beat.

[00:00:27] Welcome to Work It, Live It, Own It, a show that explores how to upgrade your lifestyle through life lessons, real estate and entrepreneurship.

[00:00:34] Here's your hostess, SaCola Lehr.

[00:00:42] Everyone and welcome back to another episode of Work It, Live It, Own It.

[00:00:47] I'm your hostess, SaCola Lehr, and today we have an exciting guest, Jacob Reeves, who is revolutionizing the way people think about home ownership and passive income.

[00:00:59] Jacob Reeves, along with his wife, strategically bought their first home with a goal of living for free.

[00:01:08] You heard that right, living for free by renting out a portion on Airbnb.

[00:01:15] Now, they do just that and they help others achieve the same thing.

[00:01:22] So, Jacob, welcome to the show.

[00:01:24] I'm happy to have you here.

[00:01:26] Thank you.

[00:01:27] Thank you for having me.

[00:01:29] Awesome.

[00:01:30] So let's dive right in.

[00:01:31] You reached out to me and you mentioned something about house hacking.

[00:01:36] So can you briefly describe to us, Jacob, what house hacking is and what inspired you and your wife to start this journey?

[00:01:45] Sure.

[00:01:46] Yeah.

[00:01:47] Um, house hacking, it can take on a few different definitions.

[00:01:51] Um, and that's one of the cool things about it, um, is you can really kind of customize it and personalize it to your specific goals.

[00:01:59] Um, but kind of the general definition is where you buy a home or rent a space and you live in part of it and rent out the other part of it, uh, and use that income to cover your living expense, whether that's your mortgage or your rent.

[00:02:15] Um, and, uh, for us, we were renting, um, my wife is a nurse and she works at a hospital in downtown Nashville.

[00:02:25] We are living about 35 or 40 minutes away from her work.

[00:02:30] And so we really wanted to be a little closer.

[00:02:33] Um, we knew we wanted to buy a house, but as we were looking to buy closer to Nashville, um, we realized that a mortgage payment was basically going to double our rent.

[00:02:45] Um, and we just weren't really wanting to do that.

[00:02:50] Um, so I had known about house hacking, uh, but that's really whenever I saw the benefit of it, um, seeing the potential to be able to buy a home, but cut down significantly, uh, was the idea on our, our mortgage.

[00:03:06] Um, so that's kind of how we got to, um, the stage where we were like, okay, let's try this house hacking thing.

[00:03:13] I like the idea that you didn't get deterred by the fact that you wanted to own a home, but you just looked at it in a different creative aspect.

[00:03:23] Because a lot of people are saying now that rent is somewhat lower in certain areas of the United States, then paying for a mortgage.

[00:03:33] But you guys looked at it and said, Hey, we still want to own a home, but we want to do this strategically and smartly.

[00:03:39] So that's pretty fascinating.

[00:03:41] Now for our listeners who might be interested in doing something similar, what are the key steps and tips for setting up a space on Airbnb for new, new hosts?

[00:03:56] Yeah. Yeah. Um, really what we did to, to set up our space is we got on Airbnb and we just looked at the other spaces around us, um, that were live, that were doing well.

[00:04:12] You know, you can look at their calendars and see how many dates they have booked, what their price is.

[00:04:17] So we kind of found like our optimal competitors, if you will. Um, and we looked at kind of what they were doing.

[00:04:24] Um, and we saw, you know, in Nashville, bachelorette trips are a huge thing.

[00:04:30] Um, you know, there's a lot of girls trips and stuff like that.

[00:04:33] So we kind of tried to, uh, to gear our space a little bit more towards that demographic.

[00:04:39] Um, and my wife is, she has a super talented knack for interior design and kind of decorating.

[00:04:46] So I can't really take any of the credit for that.

[00:04:49] Um, but, uh, she kind of had a vision and, uh, we used mainly Facebook marketplace actually.

[00:04:56] Um, whenever we were in the closing process, we really were going crazy.

[00:05:01] My wife would send me basically every day, Hey, here's a chair, here's a table, here's a whatever.

[00:05:07] Um, and after I'd get done with work, I'd go drive and pick it up.

[00:05:10] Um, but you really just want to find kind of your target demographic.

[00:05:14] Again, for us, it was kind of the more female gaze bachelorette trips.

[00:05:19] Um, so, you know, we have some curtains hanging everywhere, some nice drapes, some nice artwork, all those things.

[00:05:27] Um, and that's kind of what we, what we went with.

[00:05:30] We also found, um, you can kind of look at other listings and see, okay, they have a, a mini fridge, a coffee maker, you know, all those things, um, that you might not think of.

[00:05:41] It's really helpful to just look at other listings of what they have and kind of use that for your listing.

[00:05:46] Great advice because research is so key.

[00:05:50] Now, yes, Nashville, I'm, I have family in that area and it is that bachelorette party destination.

[00:05:59] So how did you find that out?

[00:06:01] Did you guys live in Nashville, grow up in Nashville and you just kind of knew that that is your target market?

[00:06:07] Or how did you go about researching and finding, Hey, this is the audience that we want to cater to?

[00:06:13] Yeah. Yeah.

[00:06:14] Well, uh, my wife is from here originally.

[00:06:17] I'm from a smaller town about an hour and a half away.

[00:06:20] Um, but we were both familiar with it.

[00:06:22] Um, really the, the biggest tip I can give, um, for kind of researching how successful an Airbnb or short-term rental could be in a certain location is a site called air DNA.co.

[00:06:37] And, uh, what they allow you to do is you have to create an account, but it's free.

[00:06:42] You can type in any address and it'll take all the data from the surrounding Airbnbs and short-term rentals, um, and give you an estimate on what that space could earn.

[00:06:54] So you would enter for us, for example, uh, we have a studio, so you just enter studio.

[00:06:59] It can sleep for, it's got one bathroom and it'll spit out.

[00:07:03] Here's your projected revenue.

[00:07:05] Um, so that's really a powerful tool that you can use in any market to see if you could earn more on Airbnb or if you're in like a more rural market, maybe short-term rental isn't your best option.

[00:07:19] Um, we've used a tool called rentometer.com, uh, and it's essentially the same thing, but it'll tell you what a long-term rent.

[00:07:27] I'm sure you're familiar with that.

[00:07:28] Um, what your long-term rent could be.

[00:07:31] So I always recommend compare both and see what you could potentially profit more from, and then go from there.

[00:07:39] Well, that is great because you mentioned air dna.co and I am familiar with rent meter.com.

[00:07:47] Um, and that's usually typically for, if you want to do those long-term rentals, the rent-o meter.

[00:07:53] Yeah.

[00:07:53] But I did not know about air dna.co.

[00:07:56] So great because again, finding the right property is crucial.

[00:08:01] Yeah.

[00:08:03] Yeah.

[00:08:03] Yeah.

[00:08:03] And, and deciding what type of property you want for house hacking.

[00:08:06] So great.

[00:08:07] Yeah.

[00:08:07] Now I can imagine that the journey wasn't without its challenges.

[00:08:13] So what were some initial challenges that you faced?

[00:08:19] Yeah.

[00:08:20] Um, initially when we were looking for homes, it was just finding, um, a setup.

[00:08:28] We, we were very, um, adamant that we did not want to share space.

[00:08:33] You know, some people will rent out rooms, um, or things like that, but we really wanted to have a kind of our own space.

[00:08:40] Um, and our guests have their own space.

[00:08:43] And so finding a property where that could kind of work, um, was probably the initial challenge.

[00:08:48] Um, the property we ended up finding our house is kind of on a hill.

[00:08:53] Um, and so our basement has a completely separate entrance and, uh, we can kind of go upstairs and have our space.

[00:09:02] There is a stairway inside that goes downstairs, but there's a door that stays locked.

[00:09:07] Um, but it's really just finding that ideal setup for you.

[00:09:13] Um, again, some people don't even want to have a, you know, basement and upstairs set up.

[00:09:18] They'd rather have like a more traditional duplex that's side by side.

[00:09:22] Um, some people would rather have like a detached unit, you know, a pool house, or you can put a camper in your yard or anything like that, you know?

[00:09:31] Um, and that kind of goes back to whatever your specific goals are.

[00:09:37] You can find a setup that can help you reach those revenue goals while also having your lifestyle goals, um, kind of coincide.

[00:09:47] I like that.

[00:09:48] So that's a great important lesson that you and your wife have learned along the way.

[00:09:53] You knew right off the bat, look, I, we're not trying to rent out a room.

[00:09:57] And so you have to think about some of those things.

[00:10:00] Are there any other important lessons you've, you and your wife have learned along the way?

[00:10:05] Yeah.

[00:10:07] Um, I mean, kind of going back to that initial process and we were deciding to do this and, and kind of stepping out to, to do it, um, was, you know, this house was actually $1 less than our maximum approved loan amount.

[00:10:25] So it was at the very tip top of our budget, um, which made us nervous because, you know, you have all those kinds of doubts of like, okay, if this doesn't work and we're stuck paying this mortgage payment, you know, what, what then, you know?

[00:10:42] And you kind of have those doubts and you have those worries.

[00:10:44] Um, but it was really for us being able to sit down and run our own numbers, um, and trust, you know, we've run the numbers, we've done the research, we've done everything and the numbers check out.

[00:10:57] So it's really just kind of trusting your research.

[00:11:00] Um, and that is one thing that really helped me was being able to run the numbers because when it's all kind of hypotheticals, it can get pretty overwhelming and you're just kind of guessing and you don't want to make a decision of this magnitude.

[00:11:12] Off of just guessing or mental math, you know?

[00:11:16] Um, so I actually have a spreadsheet that I use that helped me type in the interest rate that our lender gave us, type in the numbers I found on AirDNA.

[00:11:25] Um, and it would kind of give you like, here's your mortgage payment.

[00:11:28] Here's your expected income from Airbnb.

[00:11:31] Here's what you can kind of be left with.

[00:11:33] Um, and of course it's not concrete numbers, but it was so helpful to kind of see that, um, and help us make that decision based on the internet.

[00:11:42] And we're going to be based on those numbers.

[00:11:43] Good to know.

[00:11:45] It's not based solely off of emotion or like you said, the mental math, you actually take the time to create a spreadsheet.

[00:11:53] Look at those numbers, break them down.

[00:11:55] Um, now did you and your wife have any issues with getting financing?

[00:12:01] Because even though this was going to be your primary residence, did any lenders push back on you and say, no, you can't rent out a portion of your home or was it just smooth sailing for you guys?

[00:12:13] No, it was pretty, uh, we were pretty fortunate that it was just smooth sailing.

[00:12:17] Um, I had actually, I kind of going back to how we started this whole thing is I found a YouTube video of a realtor in Nashville talking about house hacking.

[00:12:28] Um, he had house hacked himself, uh, him and his wife had actually done it twice.

[00:12:34] So, you know, you can house hack for a year and then they would use that initial house to be a rental.

[00:12:39] You go do it again.

[00:12:40] Uh, and a lot of people I know kind of build a portfolio that way.

[00:12:44] Um, but anyway, I found his YouTube video, uh, and then I found the guy, uh, in one of my small groups from church who was a mortgage lender.

[00:12:53] Um, turns out that they actually knew each other.

[00:12:56] So the lender introduced me to the YouTube video that I'd watched and he became our realtor and he became our lender.

[00:13:03] Um, and they've actually kind of specialized in helping people house hack in Nashville.

[00:13:08] Um, so it was a super smooth process for us, which again, we're super fortunate.

[00:13:15] Yes, you were.

[00:13:16] I like, uh, Kim Coleman calls that the proximity principle by reaching out and talking to people that you know, and also goes along with that adage that closed mouths don't get fed.

[00:13:27] If you don't ask, you'll never know.

[00:13:28] So, and it's important to have that team of a good realtor and a lender who makes specialized in exactly what you or your wife are looking for to make that transition a little bit easier for you guys.

[00:13:42] Excellent.

[00:13:43] Great advice.

[00:13:44] Now, of course, you know, managing a rental property, it must have its ups and downs, right?

[00:13:52] So how has house hacking impacted your finances?

[00:13:57] And how do you balance managing a rental property with your personal life?

[00:14:05] Yeah, yeah.

[00:14:07] Um, like you said, there are definitely some, some drawbacks.

[00:14:11] I mean, at the end of the day, you are, at least in our situation, we're still sharing a space, you know, there are people right below us.

[00:14:18] Um, so there's a bit of a noise transfer sometimes.

[00:14:21] Um, a lot of people, most of our guests are super respectful and we have no issues.

[00:14:26] Um, but you know, there are occasionally people come back from, uh, from the bars and they're a little loud and we're trying to sleep and work the next day.

[00:14:35] You know, um, there are things like that, that, uh, took a little bit of adjustment.

[00:14:40] Um, again, it's not all the time, but it's occasionally.

[00:14:44] Um, and then, like you said, kind of managing, we self-manage.

[00:14:48] So we, we clean ourselves.

[00:14:51] We go back and forth with the guests, uh, communicate with them ourselves.

[00:14:55] Um, so I work from home, which makes it a lot easier because I can just kind of pop down and clean, um, as needed.

[00:15:03] Uh, you know, if you don't have that flexibility, you'd have to hire a cleaner, um, and kind of manage it that way.

[00:15:11] Um, but for us, it's really been the biggest thing has been kind of sharing that space, the noise transfer planning.

[00:15:20] If we're going out of town on who's going to clean, um, our, luckily my mother-in-law lives about 30 minutes away.

[00:15:27] And so she, a lot of times will help us clean when we're out of town, but I have some backup cleaners on speed dial that if I need them, um, I've kind of made those relationships and they can come clean if we need.

[00:15:38] Um, but it's, it's really, it hasn't been super overwhelming from the management point of view.

[00:15:45] I mean, you send them check-in info, you send, here's your, your code, you know, here's the wifi password, everything you need.

[00:15:52] Um, and most people are pretty much set.

[00:15:55] And, uh, that's, that's kind of been our experience.

[00:15:59] Good to know.

[00:16:00] Now, how long have you and your wife been doing this?

[00:16:06] We bought our house last May.

[00:16:10] Um, so just over a year now.

[00:16:14] Okay.

[00:16:15] And have you seen a positive effect as far as paying down your mortgage faster or what has been some of the biggest advantages for you and your wifi house hacking?

[00:16:27] Yeah.

[00:16:27] Yeah.

[00:16:28] Well, it's really allowed us, um, you know, our initial goal when we were doing this in, in our heads was our rent was we were paying 1800 a month for a two bedroom, um, apartment.

[00:16:41] And so our goal was after our income from the house hack to be paying 1800 a month or less, because that would essentially be the same, but we'd have all the benefits of living closer to Nashville, you know, all the benefits of owning real estate.

[00:16:55] Um, and so that was kind of our, our initial goal.

[00:17:00] Um, and going from that, um, sorry, I just lost my train of thought.

[00:17:08] What was that initial question?

[00:17:09] I was asking what has been some of the advantages have you been able to write, right, right, right.

[00:17:15] Like say for example, paying down your mortgage quicker or paying off more debt.

[00:17:20] What, what has been some of the advantages for you and your wife?

[00:17:24] Yeah.

[00:17:25] Right, right.

[00:17:25] Well, we've been able to cover our mortgage completely a lot of months in the summer months, the income allows us to live totally for free, actually get paid.

[00:17:35] Um, I think that was my, the point I was getting at is we have that goal of paying 1800 or less, but we actually live for free most months.

[00:17:43] Um, and so that's a huge goal, which allows us to save more, invest more, travel more, um, do all of those things, you know?

[00:17:53] Um, so the financial goals are the primary thing, um, paying down our mortgage faster.

[00:18:00] Um, yeah, the benefits of owning real estate, gaining equity in our home, um, all those factors contribute.

[00:18:09] Nice.

[00:18:11] Now I have two rapid fire questions for you, Jacob.

[00:18:14] You ready?

[00:18:16] Okay.

[00:18:17] I'm ready.

[00:18:18] What is your favorite part of being an Airbnb host?

[00:18:25] That would have to be the adrenaline rush.

[00:18:28] I still get a year later, whenever we get new bookings, Airbnb will send you a notification text.

[00:18:35] Uh, it's, you know, congratulations.

[00:18:38] So, and so just booked for however many nights, however many hundred of dollars.

[00:18:43] Um, that adrenaline rush is just so hard to beat.

[00:18:47] All right.

[00:18:48] And you know what?

[00:18:49] Right now, wedding season is upon us.

[00:18:52] We are already in it.

[00:18:54] So, yeah.

[00:18:56] I guess you guys, Jacob, you're going to leave me your contact information or where they can

[00:19:01] actually, you know, rent out a space or for those who are looking to travel to Nashville

[00:19:07] and have never been, you might want to check out Airbnbs as well.

[00:19:11] Absolutely.

[00:19:12] Another rapid fire question for you, Jacob.

[00:19:15] If you could give one piece of advice to someone starting to house hack or who has a desire to house hack today, what would it be?

[00:19:26] Yeah.

[00:19:28] Yeah.

[00:19:28] Um, again, so much of this being successful for us was that research and work we did on the front end to understand our market, to run the numbers, to look at our competitors, all of those things.

[00:19:46] So it would really, my emphasis would be on educate yourself.

[00:19:51] You know, there are books out there, there are courses, there are coaches, everything.

[00:19:55] Um, learn what goes into this to make it successful.

[00:20:00] Um, because that is really where the income is made, uh, is on that front end when you're making that buying decision, running the numbers.

[00:20:11] Um, so I think that would be my, my biggest piece of advice.

[00:20:14] Yeah.

[00:20:14] You got to do the research guys, you know, it doesn't matter business, real estate, owning a home, investment properties.

[00:20:22] You got to do that research because not every community wants Airbnb.

[00:20:26] So you got to know your locations.

[00:20:28] You got to know, okay, which communities or locations can we actually do Airbnbs?

[00:20:33] So what Jacob is saying is true.

[00:20:35] You got to do your research because the rewards will pay off.

[00:20:38] The dividends will be there, but you've got to put in that work.

[00:20:42] And if you don't know how to do this and you're looking for guidance, Jacob is on a mission along with his wife to help others learn how to house hack.

[00:20:54] And also make sure that home ownership is a reality, but doing it the smart way.

[00:20:59] So Jacob, where can we stay in touch with you or how can we learn more or be guided by you as a trusted advisor to house hack smartly?

[00:21:11] Yeah, yeah, absolutely.

[00:21:13] The biggest thing I can give you is I mentioned that spreadsheet that I made as we were going through this process.

[00:21:20] I can give you access to that plus a training on how to use it for yourself.

[00:21:25] And you can get that on my website.

[00:21:27] It's start house hacking.com.

[00:21:31] And you can opt in and it'll be in your inbox in a few minutes.

[00:21:34] Excellent.

[00:21:35] So thank you, Jacob, for sharing your incredible journey and valuable insights with us today.

[00:21:42] It's been a pleasure having you on the show.

[00:21:45] And again, guys, you might want to check out his website that he has.

[00:21:50] You'll get that spreadsheet that he was talking about in the show and also self-guided tutorials, right?

[00:21:57] On how to house hack smartly.

[00:22:00] Most importantly, guys, I want to thank all of our listeners for tuning into the Work It Live It Own It podcast.

[00:22:05] And this episode today, if you have found today's episode inspiring and impact with actionable tips, make sure that you subscribe and never miss out on an episode.

[00:22:15] We have more amazing guests and empowering stories on the way coming your way.

[00:22:22] And don't forget to share this episode with your friends and family and anyone who could use a dose of motivation and practical advice in business, life or real estate.

[00:22:32] Together, let's keep working, living, owning it in our everyday lives.

[00:22:36] And until next time, stay inspired.

[00:22:39] Keep striving for your dreams, just like Jacob Reeves and his wife are currently doing.

[00:22:43] Thank you all and take care.