Building The Rental Property Snowball with Jordan Moorhead

Jordan Moorhead: [0:00] So I've been able to save as much as like 50 plus percent of my income the whole time. And when you do that over a long period of time, and when you're also trying to increase your active income on the one hand, but keeping your expenses super low.

Mike DeHaan: [0:15] Right here.

Jordan Moorhead: [0:15] You can just keep plowing that in and compound it. So we bought 36 houses in like eighteen months. Wow. That's awesome.

Speaker 3: [0:24] Welcome to the Collecting Keys Real Estate Investing Podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [0:46] What's going on, guys? In this episode of the collecting keys real estate investing podcast, we have Jordan Moorhead, who is an agent and house hacking expert out of the Austin area. And he is an absolute wealth of knowledge on the concept of house hacking and live in flips. And he has tons of great information on sort of how to go about house hacking, how to find deals, the different nuances of sort of investing that way, and why it's something that pretty much anyone's looking to get started investing should consider. One of things I love about him is, you know, he's not only is knowledgeable on the topic, but he like, has lived it himself, he still does, even though he's done very, very well. You know, Dan and I, we know Jordan from GoBundance. And getting to GoBundance, you have to have a 7 figure network, that type of business. This guy's literally a millionaire, and he's still living the house hacking lifestyle. You know, that is something that you don't hear super often. So that he really practices what he preaches. And, you know, you don't find a lot of people that do that these days. So he is has tons of great stuff to say about that. His team down in Austin also focuses on helping people find house hacks. So if that's something that you're interested in, you should absolutely reach out to him. He drops his contact information at the end of the show.

Mike DeHaan: [1:58] And I spent some time working with his team down there back when I was trying to find an Airbnb down in the area. They're super great. The only reason I ended up not buying that property, about buying a property with them was for

Dan Austin: [2:08] my own reasons. But I had a

Mike DeHaan: [2:09] great time working with their team. So don't be afraid to reach out to them because you got a great little operation going on. Anyways, guys, go ahead and share this show with anyone who has any interest in real estate finance or, you know, just wants to grow wealth through real estate because this is a great strategy to start doing it. And leave us a five star review. It's a really, really helps us grow the show. And we are putting a lot into this thing and we wanna get in front of as many people as possible. So sharing it, leaving a review are really small ways you can help us out. Anyways, guys, really enjoyed it with Jordan. So enjoy this interview. Alright, we are here with Jordan Moorhead out of Austin, Jordan, man, super excited to have you on the show. I recently had a really great experience working with one of your agents down there in Austin. So he had high things say about you. And if he's a reflection of who you are, I'm sure that it's a, you know, that there's some good stuff going on there. So people who don't know who you are, why don't you give us a breakdown kind of of your background, what you're working on and all the things that you do in real estate.

Jordan Moorhead: [3:09] Awesome. No, thanks, Mike. And and yeah, Devin, who you you worked with is awesome here and hopefully he had good things to say about me, you know, least not talking trash behind my back.

Mike DeHaan: [3:19] I mean, told me to tell you that, like he's slipping some money, so he's trying to get some bonus points here.

Jordan Moorhead: [3:24] Oh, okay. Okay, no, that's understandable. Awesome, so yeah, I am a realtor and a real estate investor here in Austin, Texas. I run a team here in Austin and we mostly focus on real estate investors and house hackers. So I got to Austin by way of Minneapolis, Minnesota. I actually started investing in real estate up there, but I only bought one property in Minneapolis and started buying most of my investments in Louisville, Kentucky. This is actually where I'm originally from. My father's a realtor there, he has been for, I don't know, eighteen, twenty years now. Totally could be wrong there too, so don't hold me to that. But he was a realtor there, he started sending me deals after I bought my first house hack in Minnesota, I started buying there. I got tired of being cold in Minnesota, moved down to Austin. Before that, before the move, I had sold my prior business, and I know that sounds sexy, but I sold it for essentially the amount of debt I had on it. So I got out of my prior business, started working as a realtor, started a team in Minnesota that also mostly worked with house hackers, and we still sell some real estate up there too, but obviously I'm not working with any buyers there. Moved down here to Austin, continued to house hack and continued to invest in other markets where the numbers made more sense, but just loved the house hacking strategy and just finally gave it up actually. So did that for six years, and we just bought a house to do a live in flip in and moved in this weekend.

Mike DeHaan: [4:59] Nice, that's sweet. So when, how long did you

Jordan Moorhead: [5:02] move down to Austin? So I actually moved down here first in 2016, right before I started investing in real estate, I didn't have any money, I didn't do it right, and I got towards the end of my money and said, Hey, I've been learning about real estate for years and said, I want to get started investing in real estate. I have a business that's still running in Minnesota that I've been filing tax returns on for years. I'm gonna go back up there and buy my first rental property or buy my first house hack. Actually did that, took me four months or so to find my first deal. Saw like a 100 properties, my realtor hated me. Every morning, because I worked as a personal trainer, I would start working at five, I would stop working at eight, I would have an hour or two break, but every morning we would go and we'd look at properties. So I really ran this guy through the ringer, found a great deal there. Again, lived there until 2018, moved back down here. The second day I was in Austin, I got in a really bad motorcycle wreck. Oh yeah. So I bought my next house hack in Austin, I hauled all my stuff in by myself on like a Thursday. Friday morning, I ended up in the hospital. No. And then I went back up to Minnesota, came back down here in 2020, like coincidentally right when the pandemic started.

Dan Austin: [6:26] Okay, mean Austin just really does not like you.

Mike DeHaan: [6:29] You're still there,

Dan Austin: [6:30] trying to move down there and you just keep getting bounced Yeah. Yeah,

Jordan Moorhead: [6:34] no, really, I mean that, there was a time after I got in that motorcycle wreck where I said, Hey, I'm done. I'll put up with the cold, I'll buy a condo in a high rise with heated parking, I'll get an SUV to deal with the snow, whatever I got to do, I'll just stay up here because I had a good business going up there and still do, but I was really jaded on Austin for about a year or

Dan Austin: [6:57] two there.

Mike DeHaan: [6:57] That's funny.

Dan Austin: [6:58] So is that your business up there is a real estate brokerage as well?

Jordan Moorhead: [7:01] So yeah, I've got a real estate team in Austin, we also work in San Antonio now, and then we also do some work in Minneapolis St. Paul.

Mike DeHaan: [7:10] Oh, you do up there, okay. I mean, gotta say though, man, you you kinda jinxed Austin. They tried to scare you away with a motorcycle accident, you brought all the cold down, because now they've had what, five once in a lifetime cold snaps in the last like six years?

Dan Austin: [7:22] You brought it with you.

Mike DeHaan: [7:24] Yeah. Brought it with you, man. No. That's cool, though. So so what brought you down to Austin at that point? Because that's before it was, like, the hottest area that everyone was moving to. Like, it was definitely on the map. But I mean, Tesla wasn't moving there yet at that point. It wasn't somewhere that was the up and coming tech bubble that it is now.

Jordan Moorhead: [7:44] Yeah. I've always loved Austin, so I came here first in 2015. I had been I had been doing the tour of all the up and coming cities in 2015, trying to figure out where to live. You know, went to Tampa, went to Charleston, South Carolina, Nashville, Atlanta, all the areas that everybody's talking about in the Southeast and came to Austin and said, wow, this is just amazing. And then I started to learn about the economics of the city and how fast it was growing and all the great benefits of living in the state here, like no taxes. And they said, hey, this is for me. But like as soon as I drove into Austin, this is where I wanna be. There's so many more reasons why we were at a wedding this weekend and my girlfriend said, the only way he's leaving is in a casket. So like there's so many more reasons why It's I don't ever wanna leave just a great place to be, it's a great place to be in business, and it's a great place to build wealth. But there's also just great weather and great climate in general, and there's all sorts of stuff to do, it's the size of a country.

Dan Austin: [8:51] Sure.

Mike DeHaan: [8:51] Yeah. I've been down there a handful of times. I really, really enjoy Austin a lot. But I, you know, I can see why it's become popular, especially because, like, the sort of cultural scene of it with, the food and the nightlife and like, the fitness, all sorts of things. Kinda reminds me of the Northwest. Mhmm. But it's also from my other experiences in Texas. It's very unique to Austin. It's like that. The other parts of Texas that I've been into are more of, what people think of with Texas. And Austin doesn't like isn't like that, you know, it has a little I don't know, like small town feel to it, even though it's like a really big city.

Jordan Moorhead: [9:25] And then there's just the community too, like there's such a difference of people here versus people in Louisville where I'm from. Everybody's looking to do better, they're looking to learn, they're looking to grow, and then if you're in GoBundance, like there's just a ton of GoBundance people down here, and that's just a huge network, and that was such an easy way to get started for me, but every week I meet somebody new and cool that's doing big stuff, they've got a podcast, they've got a business they're growing, or maybe they're syndicating real estate, whatever it is, and you're like, man, I never met any of these people in Louisville. People were happy, they just bought their nice house and their nice neighborhood, they're coming Right,

Mike DeHaan: [10:04] really.

Jordan Moorhead: [10:04] I don't like that.

Dan Austin: [10:05] It is an interesting thing about Austin because it's grown rapidly, but it's not for one single industry, so I think you do get that. Like, you know, there is tech industry there, but it's not like Silicon Valley where at at its heyday, that's all you're gonna run into is Silicon Valley people, and if you weren't in that, then you weren't gonna be able to do business or be part of that industry. Where in Texas in particular, there's so much so many different industries from the energy industry, tech industry, just everything's coming together and so you're right, I bet it's pretty easy to run into people looking to do things. Yeah.

Jordan Moorhead: [10:34] Yeah. And we're kind of a manufacturing of like for newer technologies here in Austin, whether it be chips or electric cars or batteries, whatever it is. Austin's really blowing up on the manufacturing side too, and I think it's gonna be really exciting next couple Yeah, of decades down

Mike DeHaan: [10:52] Absolutely. Cool. So let's jump into house hacking. Because I know that is something that you're super big on, and sort of getting started with residential real estate, which is I feel like something that honestly people kind of shit on a little bit these days. Everyone's always like, I'm just going straight to multifamily. You know, I'm gonna start buying mobile home parks even though I've never done a deal in my life. But you can't you shouldn't discount residential real estate because it's literally everywhere. And as we know, and as you know, there's huge opportunities there. And not only that, but with the way it's structured with you being able to buy it for your home, the barrier to entry is significantly lower than a lot of these other ways. Not only just like in, like, financially, but also with, like, what the system kind of allows you to do, like the banking institution.

Jordan Moorhead: [11:38] Yeah, really.

Mike DeHaan: [11:39] So what's your take on on house hacking? Let's go into sort of why you started that way and and how you use that in your business.

Jordan Moorhead: [11:46] Yeah. And I love that your explanation there where there is some maybe better or more efficient ways to build a real estate portfolio, but I'm not gonna invest with you if you haven't done your own deals with your own money. Right. And I frankly don't think it's a good idea to start just straight at commercial and start raising money. I think those days are kind of done, or at least for a while, who knows? I'm sure there's some guy out there that just picked up a syndication book and we'll get one done next month. I wouldn't feel comfortable investing with that person. Why I love residential real estate and why I especially love house hacking, you barely need any money to get into it, and it's extremely difficult to mess it up. I've really only seen it messed up a few times and it was only when people just didn't do anything, like they didn't take any action or they didn't ask any questions, the simplest thing you can do, so my first rental property was a duplex that I bought for $182,000 I put down roughly $6,000 to buy it of which I did not have all the money. So I borrowed the majority of that down payment from my IRA that I'd been putting money in for years, a couple years, borrowed almost all the IRA at the time.

Jordan Moorhead: [13:00] Once I closed on the property, I borrowed $3,000 from my dad to rehab it, paid him back pretty quickly, but didn't have any money. And I got into this property that after doing all that, spending $9,000 was making me $500 a month to live in it. I was really uncomfortable with it or creative with it, whatever you want to call it. I had a three bedroom unit on the downstairs part of this duplex that I lived in. Two of those rooms were also rented out. Right. Then I had a unit upstairs that was fully rented and I cash flowed off living in that property and I live with people I like to live with. So I had a good time. We would go out on weekends, we'd party, and we basically lived with the same schedule. So I got up way earlier than some of my roommates did, but it didn't bother anybody. So had a good time, did what I was gonna be doing at that age anyway, which was having a good time and living with buddies. And I sold that duplex a couple years later for $327,000

Dan Austin: [14:01] That's awesome. Wow, that's great.

Jordan Moorhead: [14:03] I put about another six or eight into it over the years and I lucked out because there was a hailstorm that rolled through and I was able to get all the siding replaced. Nice. So after I remodeled the whole thing, I was probably in it for around $15, but I was able to pull out whatever 140 something thousand and use that to buy more real estate investments. And that was when my head really clicked and I said, hey, this is, I gotta do this house hacking thing as many times as possible. So while living in the first house hack, I was able to save enough money that I bought the next property with just cash I had saved and more money that I had put away because I was, I got the bug and I was saving tons of money when I was in it. Within six months, I bought my second rental property. The next house hack I bought, bought that in 2018. Again, I actually did a big rehab on that. I put it all on credit cards. I'm not recommending anybody do that, but I knew that I had the money to pay it back rather quickly because I had grown my business to a good point. Where I was making, you know, $10.15000 a month and I could pay down those, that $65,000 credit card bill I ran up and I would obviously would pay it off and run it up again and pay it off. Heck yeah. I got a bunch of SkyMiles off it and I bought that thing for $2.50, put 65 in it. Two years later, sold it for $4.30 and took that money and started buying single families with the business partner. So it's all come from house hacking is kind of what I'm trying to get at here.

Jordan Moorhead: [15:44] Like back to the beginning of my story, I had no money.

Dan Austin: [15:48] Mhmm. Yep,

Jordan Moorhead: [15:48] I had no money at all. Yeah. And I had no experience.

Mike DeHaan: [15:51] Yeah, and let's say I've been to that. The reason you were able to buy it with so little money is because you're living in it, so you use, you know, an FHA loan.

Dan Austin: [15:58] It'd be like a 3% down. Is it? Get into it

Mike DeHaan: [16:00] for 3% down, which is pretty much nothing. Mhmm. Then, you know, I have a little you know, mortgage insurance, all that sort of stuff, whatever, that's fine. Then you go and you sell that property, and not only are you making this huge gain on it, but because it was your primary residence, you're also getting all that money tax free, which I think is an important detail that a lot of people tend to overlook when you look at homeownership is that gain that you have, it's not like you're flipping a house. Because if you'd flip that house, you would have been paying capital gains, short term capital gains would have been 30%. Instead you pay zero, and that gives us so much more.

Jordan Moorhead: [16:32] So I'd actually moved out of that first one too. So I'd moved out of it, I was a roommate in somebody else's house. So I'd been planning to move to Austin for a few years again, and I sold that and did a ten thirty one on, yeah, so the two out of five rules kind of what you're referring in it two out of five years, don't pay taxes. I didn't do that with the first one, did a ten thirty one. On the second one, I actually paid the taxes. Right. I don't think that's always the worst thing.

Mike DeHaan: [17:04] Yeah. I mean, think you just gotta look at the big picture. I mean, when I when I started working with Devin, the agent on your team down in Austin, I was planning to do a 10:31. Is it? And people who've listened to show, they've heard me talk about this. That's when I do a ten thirty one. And then I kind of ran the numbers. And with what the interest rates and the loan costs, everything looked like at the time when I was looking to buy the property, essentially, the cost to get the loan was almost the same as if I just paid the taxes. Right. So it's like, do I want to buy property and lock myself into Bad some bad debt. Yeah. High interest rate debt pretty much with potential issues of the property that's at, like, a distance and all these sort of things, or should I just pay a little bit more money, cover my taxes, and then have complete unencumbered access to my $200,000

Dan Austin: [17:46] That's pretty sweet to have. Yeah.

Mike DeHaan: [17:47] Oh yeah. That's like very easy option.

Jordan Moorhead: [17:50] Yep. Well, and that's what I did with the second one. I mean, there was part of me that said I wanted to do ten thirty one, but I found the package of seven houses with my business partner in Louisville, Kentucky, and we reached Brangh in half, so we booked roughly $70 a piece, but I had about 130 of gain. So I was gonna have to pay taxes on some of it and you know, I didn't actually find that package of seven houses until after I had started the sales process. So it just made sense to pay the taxes and move on and Yep. You know, with depreciation and with other tax tools we have, it's not always the worst thing in

Dan Austin: [18:32] the world. Yeah, that's a great point. The thing I like hearing too about this story is, I think everybody's journey into real estate can and should be a little different. I've talked to people who house hack, know, they'll do like, I think they've, you know, 10 times, And that's just their thing, they love to live and flip, or they love like to live in, renovate it, and then two years later move out and that becomes a rental property, they do that for a long time. What I'm hearing when, what you're saying is you're doing it and you built a pretty good chunk of money that you can now go in and invest. You can still house hack if you want, but that's really the root of being in real estate, the way you scale is to have lots of money, so you don't run out of it, so you can buy more because And you also said you have a business partner, and a lot of times people ask, well, why do you have a partner? Well, sometimes it's buying power, because you have more access to deals if you have more money. That's just the bottom line. It's a lot easier to transact, And so doing this house hacking so that you can have large sums of money is so helpful that, you know, if you're just trying to save up 20% every time you wanna buy a house, I found out really quickly, you run out of money fast because that's what I was trying to do when I first started out. I didn't even know what house hacking was when I first started Oh

Jordan Moorhead: [19:40] yeah. Mhmm. Would have been exponentially longer and I love your point there, Daniel. Again, I had no money when I started house hacking, but then I really got hooked and I started trying to make as much money as I can, but I never, for the last six years, I've never paid more than $700 a month to live in a property. So I've been able to save as much as like 50 plus percent of my income the whole time. And when you do that over a long period of time, and when you're also trying to increase your active income on the one hand, but keeping your expenses super low, you can just keep plowing that in and compound it. Like first house hack sold, second house hack sold, third house hack that was actually my girlfriend, she sold that. I didn't get any piece of that unfortunately. The fourth one I kept, I have it cash flowing really well here in Austin as a medium term rental. The fifth one also cash flowing really well here in Austin as a medium term rental, but you talked about the business partner. Yeah, I wouldn't have had the ability to do that both for the capital requirements, but also because with us together, we make such a better team. So we bought 36 houses in like eighteen months. Wow,

Mike DeHaan: [20:59] that's awesome. Is this in Austin? No, I wish.

Dan Austin: [21:03] Yeah. No,

Jordan Moorhead: [21:04] that's, I mean, that's kind of the magic of it too. So I found a business partner who is a really good operator, and he's great at being the boots on the ground. And we just cranked and bought 35 houses in Louisville and one in San Antonio in eighteen months. And we the biggest package we bought was seven and the next biggest package we bought was four or five. So a lot of these were like singles and doubles. And we a lot of times, we're buying multiple a month.

Dan Austin: [21:34] Mhmm. It's pretty good. Sweet.

Mike DeHaan: [21:36] Yeah. That's awesome. So to go into house hacking, someone's listening to this, they wanna get into house hacking. Where's like the best place to start? I mean, obviously, people need to understand kind of the concept, the loans, all those things, bigger picture, the real estate side, what kind of properties should they be looking for for this? Like, what are kind of the options, the strategies that you use with your company when someone comes to you and says, wanna buy a house hack. What kind of properties are you bringing that way?

Jordan Moorhead: [22:04] You know, so I think my favorite is the duplex property. I think that's just the best way to go for a lot of reasons because the quality of life is really good. Like you can live in one on your own and still live cheap, but also single family properties can work really, really well. I mean, you mentioned Devin earlier and Devin made money to live in his own house, the first house he bought. A lot of people can do that, or you can find a single family with an ADU. The general premise of it is, is you're buying a property that has extra space that you can rent out while you live there for a reduced rate. And you can do that anywhere. We've had people do it with condos, single family, single family with ADU, duplex, fourplex, that's kind of your limit. People say, well, I'm gonna buy an eight unit and do it. Unfortunately, the bank won't allow you. So what you have to do, and all you have to do is figure out what general area are you comfortable living in.

Mike DeHaan: [23:02] I hear.

Jordan Moorhead: [23:02] And it can't be like, hey, I only want to live in this neighborhood, that's gonna make it pretty difficult, although you can't do it. But it could be, hey, I want to be on the North Side Of Austin within thirty minutes of downtown. Like, that's no prop, we can do that. Okay, well, what kind of property sounds good to you? Well, you know, I really want to live in a single family neighborhood because I want a yard and I want this, this, and that. Okay, that can work. But a duplex too, like a lot of times people say, well, I don't want to share a wall. I've never heard anything from my other unit. Very rarely did you hear like somebody dragging heavy furniture across the floor. It just doesn't happen.

Dan Austin: [23:41] Yeah, and this could be in bougie if you don't wanna share a wall, come on.

Mike DeHaan: [23:44] I know. It's always so funny when people say stuff like that. Well, like, what's your alternative? Are gonna go live in an apartment complex? You're gonna share a lot of walls. Exactly. And I I think a key point there is people get so tied up, and this that was kinda like a loaded question. I was curious to hear what you said because you can house hack like anything. Right? It all depends on your comfort level and what you wanna live like. Dan, who was the guest that we had that talked about house hacking a studio apartment? Oh. Where he literally he rented out the broom closet to some tech guy.

Dan Austin: [24:12] Yeah. Was that Brad? Was that Brad? No. That was somebody else.

Mike DeHaan: [24:16] No. I can't remember who it was. Yeah. We literally had someone on this show though who talked about house hacking a single bedroom apartment. Oh, yeah. And they lend they rented out like a 150 square foot part to somebody who like was like as a coder, yeah, computer programmer and just wanted a closet to sleep in and have a laptop, you know, and they were cool with that, like, so in each other's space, but like, that gave him so much financial freedom. And I think the biggest thing that a lot of people lose sight of, especially when they're young, they have independence. It is such a short term thing for such incredible long term reward and upside. You can suck it up for two years, and it will change your entire financial future forever.

Jordan Moorhead: [24:59] Yep. You've gotta learn how to manage your money. Like people, they say, Oh, well, I'm gonna get into commercial real estate. It's like, Hey, if you don't have any idea how to manage your money and manage a property, or just generally the basics of finding and funding a deal, you're gonna have a really tough time and it's so easy, it's like training wheels for real estate investing.

Mike DeHaan: [25:22] Mhmm.

Dan Austin: [25:23] Yep, yeah, that's a great point too, because I always think about that when like you're selling a house to somebody that can barely afford it, and I always think like, well, can you afford to maintain this? Maintenance of your property is a big thing. So, moving into house hacking, you have these aspirations to be a real estate investor, that's such a great time though, because you do have to maintain a house and learn what it actually costs to have a property, learn how to do some of these things, and learn what you'd rather pay somebody else to do, you know, whether that's changing a toilet out, or painting the walls, all these little things you can do to improve your property, increase the value, especially if it's a live and flip. I think that's just understated the value in that. Then it just makes you become a better investor later on down the road. Yeah.

Mike DeHaan: [26:07] And then you're also learning, you know, how to deal with tenants, how to screen people, like the nuances of having tenants, right, which is there's can never imagine some of the things that happen with tenants. Right? So, yeah, like that. That's a great way to put it though. It's the, you know, training wheels for for real estate investing, and it's it's significantly lower risk than going out and buying like a single family home because that's not gonna be a liability on your lifestyle. It's literally your home. Mhmm. Worst case scenario, you have to pay your mortgage Right. Anyway, which like, there's no real issue there. Whereas if you have a single family home rental that goes sideways, now you have that on top of your own.

Jordan Moorhead: [26:44] Yep. Yep. Yeah, and then that's such a good point. Like people get so caught up in the risks and there's really not a lot of risks. I mean, like you just said, Mike, the biggest risk is you have to pay your own mortgage. Occasionally, maybe, maybe never.

Mike DeHaan: [27:01] Yeah, exactly.

Jordan Moorhead: [27:02] And that's, it's no problem. You know, you were qualified to pay the mortgage anyway, it's not a huge risk.

Dan Austin: [27:08] Exactly. So what about, so this is typically what you hear is people, doing this when they're younger and they, you know, have all the freedom in the world even though they may not know it. I think they say like youth is wasted on the young kind of situation for most people. What about people, you know, like myself, I have a family, how would you suggest, like, what is the best way? Say you have a young family, but you wanna be a real estate investor, you found out, hey, it's my time to do this. Do you see that, or do you have clients of yours that are families that are doing this?

Jordan Moorhead: [27:38] Yeah, and there's such a spectrum, I think that Craig Kerlop puts it really good in his book of just the comfortability spectrum, and I'd say Craig's on the far end now, so Craig's a good friend. He's living in a house, they think they're renting out the basement on Airbnb, but it has separate entrance.

Mike DeHaan: [27:55] Yeah. He's up where we're at, up in this up in this area. He lives about twenty minutes from us.

Dan Austin: [27:59] Yep. Yeah. He was just telling me the story Oh, really? So I'm fact checking you, you're accurate. Yeah.

Jordan Moorhead: [28:05] If I get it wrong, don't blame me. But there's the entry level like I did, and Craig actually did when he got started, you're living in a duplex and you're renting out the other unit, you're renting out every space you can in your unit. I didn't take it as far as Craig. I actually had a bedroom.

Dan Austin: [28:20] It's a little extreme.

Jordan Moorhead: [28:22] Craig did not. So you can do that, but like if you, let's say you've got a family, but you do want to get into real estate investing, you just don't have the money to put down 25% on a down payment, buy a single family with an ADU, rent out the ADU, buy a single family you can fix up and sell later. Like I think that's a way of house hacking. I know that house hacking is renting out a part of your property, but a live and flip is just as good as a house hack in my opinion, because two years later, maybe you made a $100. Now you've got the money to put 25 percent up.

Dan Austin: [28:56] Yeah, and I've met several people, to your point on that one, that do have families or start a family while they're doing this, and their whole goal is to buy distressed properties, pick some up, sell them for a profit, and move to their next one, and really they're doing it just so that they can finally afford their dream home, but really they're house hacking all the way up till they get to that point because they're adding all that sweat equity into their property. Right. And I think about me, I'm at a point where I don't have to house hack, would I benefit from it? Maybe. But I think about like, if I was to move to a new city, I might think about something like that. Mhmm. You know, buy a property that I know I can convert into a rental, or buy something that needs a little bit of work because I know I can get the work done, something like that as I'm venturing into a new part of, you know, like I said, new city or something like that. That's probably where I would most likely do it, as somebody that, a, doesn't need to, just financially, and B, somebody that like could still benefit from it. Yeah.

Mike DeHaan: [29:48] And something else too on the live and flip spectrum is, you don't even necessarily have to move into like a real dumpy property. So so my wife and I, we we accidentally almost did like a live and flip when we bought our first property here in Spokane. We bought a new construction split level. Okay? And we basically were going through the numbers and the cost to finish the lower level of the house was like an extra $60,000 on the house on the purchase price. And I was like, that seems like way too much for what they're doing. And so we bought it for, you know, dollars 60,000 cheaper. And we went and spent the next year, like literally watching YouTube videos, Dan came helping him drywall back in the day.

Jordan Moorhead: [30:31] I remember that.

Mike DeHaan: [30:31] Just like learning how to put the stuff together. We did drywall, we did flooring, we did paint, finished it out. Then we went to refinance our house, we've now added 1,000 square feet to our brand new house. And the thing appraised at that point, the market had gone up for like $85,000 more than we bought it for.

Dan Austin: [30:48] So we

Mike DeHaan: [30:48] pulled out a huge amount of cash, right, basically, you know, saved $50, it costs us like $10 to do the whole thing doing the work ourselves, saved all that money, pulled it all out, and that was like kind of our part of our nest egg to start investing in real estate. Mhmm. So there's so many different ways you can approach it you just kinda have to think outside the box a little bit.

Jordan Moorhead: [31:09] Yeah. And I think there's so many different ways you can do it and it does become kind of addicting. So I got to the point where I'm a realtor, I'm putting three to 5% down on a property by property. Coincidentally, the real estate commissions in Texas are 3% most of the time. So I bought my last two house hacks in Austin for zero money Actually got paid at closing. And that was really hard for me to give up, but I'm at the point where I don't need to do it anymore. And a strategy, we did our goal setting for the year 2022, a strategy like live and flip got us closer to our goals than buying another house hack. So it was really hard to kind of break the habit of house hacking because it's worked so well, but you can do other strategies like the live and flip and quit. Our goal in the long run is to buy a really nice property in the area we want to be in, in Austin, which is not cheap, Okay. To buy a property with an ADU, so we can then subsidize that for you. I love

Dan Austin: [32:12] that strategy. There you go.

Mike DeHaan: [32:13] And it's almost like the stack strategy, you hear Brian Turner talk about where you know, you buy like one property, you buy two, then you buy four. You kind of just do it on like grades, right? So you kind of start with like the lower quality duplex that you live in, you make that money, then you can live in like a little bit of a nicer one that you house hacked, you buy the live in flip, and

Dan Austin: [32:32] then you

Mike DeHaan: [32:32] sort of move up to like the nicer live in flip. Because, I mean, you could theoretically do a live and flip in like a million dollar property just fine. Absolutely. You know, you just have to get it for the right price point and just understand the differences in renovation that you're gonna need to do. Right.

Jordan Moorhead: [32:44] Brandon himself still lives at a triplex, I believe

Mike DeHaan: [32:47] Yeah. But in Maui. He lives in a complex, it's not really a triplex. Have you seen the photos? That place is sick.

Dan Austin: [32:54] I've seen them, yeah, they look pretty legit.

Jordan Moorhead: [32:55] But that's the point, like you can do this in any just like you said, Mike, like we want to buy a really nice property in a really nice area, we wanna buy a really nice property, or sorry, a nice property in a nice area, but we wanna buy a property that's extremely distressed. If we can spend a 100 or 200,000 on and add 4 to 500,000 of equity and then get that ADU that pays down the mortgage for us.

Dan Austin: [33:20] Think the thing that, the real point to be made here is back to my comment earlier about needing money to invest in real estate, at the end of the day, especially when you're young or you don't have a large net worth, like, or you're in growth phase I should say that, because net worth can be relative to people, when you're in growth phase, like you've got, every dollar has to get stretched to its max, know, your ROI on that dollar. So if you were to go and buy that, you know, really nice home you want, and you've required $300,000 $400,000 in a down payment, it's kind of locked in there, you're in your forever home, maybe you're not really gonna produce income with it, that same 3 or $400,000 might buy you a dozen properties in Louisville, producing enough cash flow to pay for that mortgage, you know, down the road. And so it's really this balance and making sure that you understand where you're at in your phase of life. And if you're in growth phase, it's so tough to not, for me anyways, it's really tough to not invest everything that you have because otherwise it's like inefficient.

Mike DeHaan: [34:18] Mhmm.

Jordan Moorhead: [34:19] Yeah. No, if you understand compounding, you're like, this is a complete waste of money.

Mike DeHaan: [34:23] Right.

Jordan Moorhead: [34:24] I'm locking it up in this thing that's not gonna make me any money for a long period of time. And I think that's the biggest mistake or sin that people make is they say, Oh, I made it, I'm gonna buy my first house and it's gonna be a 350,000 or $400,000 house, but they can barely make that payment. It's like, okay, you just set yourself back a decades compared to if you bought a duplex or two and then bought that house. I mean, we just bought our first single family live in flip. I'm not paying the mortgage payment. The passive income from those house hacks is actually paying the mortgage payment. So I don't have to worry about things like that and I can go do whatever I wanna do or I could stop selling houses tomorrow, I'm not going to, but I could and I'd be okay and they wouldn't be stuck doing something I didn't wanna do. Exactly.

Mike DeHaan: [35:17] Awesome. Well, good stuff, Jordan. I I really like the insight on this. This is a it's a unique conversation that we haven't had yet on the show, And I love the fact that you've done it for it's such like a wide range too. Because I'd like we've talked to people that are like, oh, I did like a house hack once and then I decided I don't wanna do that anymore. And that's cool. That's a great way to get started. But you're actually truly walking the walk, and now you're creating that into how you run your business too. Yeah.

Dan Austin: [35:40] Well, I recognize that it's not the only strategy, right? Because Exactly. Yeah. House hacking is not the only strategy, and you know, people get stuck into that. Or Mike and I know people, we were talking about it earlier actually, like why is this guy house hacking? That's why he's wasting his time and his money because he's I know. Very wealthy, he doesn't need to do that, he should be putting it somewhere else and using his very high active income salary to keep reinvesting.

Jordan Moorhead: [36:03] Yeah. Yeah, it's addicting. Yeah. I got there, I got to the point where it wasn't really getting us close to our goals, but I think, you know, like both you guys just said, it's a tool in the toolbox and there's a million ways to do something, but there's also a million ways to house hack. If you don't have a high net worth or you don't think that you can do it, I know there's a way you can do it. People wanna reach out, I would love to talk to them about that and I'm always interested in finding what strategy might work for you.

Mike DeHaan: [36:33] Cool. Awesome. And we'll get your contact information here in just a minute too, because I'm sure there's people that would wanna reach out on that. Absolutely. Perfect. Awesome. Well, while we start to wind down the show here, we have our three questions that we ask every guest that come on the show. So the first question, which is always the group favorite is, what is your craziest real estate investing story? And this can be a big win, it can be a crazy tenant, it can be a crazy closing, whatever you got. The only rule is you're not allowed to talk about finding a corpse in a property because we had like five of those in a row a long time ago and it just got really depressing really fast.

Jordan Moorhead: [37:08] I bought a property that didn't have a proper foundation. Oh. And I went through a couple of years of buying real estate just very aggressively and not always taking the advice of the inspector. Right. So I bought a property and the inspector said, hey, something's wrong with the floor. I have no idea what it is. I can't see through the floor. And I said, oh, whatever, we'll figure it out. Turns out they had built it with just slab on grade, which is the beams on the dirt. And yeah, I sold it in the hottest market ever and said, Hey, it's slab on grade, but I would not buy that property again. I wish I would have held it for another year, but I wouldn't buy that property again. Same thing. I just gotta say like, listen to your inspectors, listen to the experts, they're there for a reason.

Dan Austin: [38:03] Yeah. Man, that would not fly up here. I don't know. Well, I guess Mike and I did. We did buy that actually. Now that I'm thinking, we bought two cabins that were like that, that were like supposed to be proper homes.

Mike DeHaan: [38:12] No, dude. Those those were like Lowe's sheds that

Dan Austin: [38:15] had been outfitted with plumbing. But they were sold as full property. So I guess we we did mean, do

Mike DeHaan: [38:19] we sold them for $300.

Dan Austin: [38:21] I know. We did. But I'm thinking like that would not like it's just different markets. Like, you would people would freeze to death if that's how their homes were built up here.

Mike DeHaan: [38:28] Yeah. Mhmm. So what what was so kinda like the issue with that. Because I know that foundation issues are really common in Texas in general. So like, was that what happened with the house? Like, was there just tons of settling all the time? Were there like water issues? Like what went on

Jordan Moorhead: [38:41] with it? There wasn't any major issues that happened all the time. Shortly after I bought the house, I had to replace the floor because it had started to and get kind of rot out. And I remember I was, I actually made my way on to like one of those call in Bigger Pockets podcast in 2020 when we all thought the world was gonna end. This was actually towards the middle of twenty twenty. Jay Scott, I asked a question, Jay Scott said, Hey, now's the time to sell your losers or sell your weird properties. So it was just in my head, I was thinking, I don't know when this is gonna be a big problem again, And I know right now is a good time. So nothing horrible happened. I've had fairly good luck. We've had some just obviously stuff go wrong with properties, nothing crazy. And I said, I am gonna sell it while I've got the chance. And I'm glad I did.

Mike DeHaan: [39:35] Yeah. And especially 2021, that was a time to sell anything that you had that was weird. Yeah. Literally put a refrigerator box in the corner and sell that thing for a $100,000 back then. So true.

Jordan Moorhead: [39:47] I sold three six plexes at the beginning of twenty twenty two, actually closed in February before rates started going up and they were just a complete pain. They're class C properties. They are in terrible shape now and I'm so glad I sold them. There you go. Yeah. Get rid of

Dan Austin: [40:05] the docs. Yeah. Exactly. Yeah.

Mike DeHaan: [40:08] Yeah. Awesome. Alright. So second question. What is the number one tip you would give for either a new investor looking to get started or a small time investor looking at the business to the next level? I'm pretty sure I know the answer, but Well, for

Jordan Moorhead: [40:21] the new investor, get started, real estate's about time, you know, being in it for a long period of time, buying good deals that make sense. For the investors that already gotten started, You know, keep house hacking. If you're like, Hey, I bought my first house hack, ready to buy my first house. Resist that urge, go do it a couple more times until you're so far down the path, you're like, doesn't make any sense anymore. But then find a partner too and things will go faster.

Dan Austin: [40:48] Love it.

Mike DeHaan: [40:49] Yeah. Just keep doing that until you end up like Dan where he just has a wife that would absolutely kill him if he ever had to house I've hack tried.

Dan Austin: [40:55] I've got a big enough basement. I'm like, dude, we could tell it's got a second entrance and it's not gonna happen.

Mike DeHaan: [41:01] No way. Yeah. Awesome. Alright. So last question. Where can people find you, follow you, and reach out to you if you like them to do so?

Jordan Moorhead: [41:08] I'm on BiggerPockets quite a bit, but I think the best place just to reach out and follow me is on Instagram at jordanmoorhead, no e after the r, m o o r h e a d, and if you shoot me a message, will respond. Awesome.

Mike DeHaan: [41:24] And if you guys are down in the Austin area and you're looking to work with Jordan too, I can't recommend him enough. Even though I ended up not buying a property for my own reasons. I had a really great time working with his team down there. And like I said, Devin was a was a killer great to work with. Really knew what I was looking for and put a lot of time into it. So can't recommend you and your group enough. You guys do a really good job.

Jordan Moorhead: [41:43] Thank you so much. Cool. So

Mike DeHaan: [41:46] awesome, guys. Well, thanks for listening, everybody. If you have any interest in how house hacking at all, or real estate in general in the Austin market, or Louisville or Minneapolis, reach out to Jordan here. He has a wealth of knowledge. He's been around for a while and he knows what he's doing. And he would be more than happy to, you know, help you find deals or just to chat with you too as well. I'm sure. So thanks for listening, everybody. Please go and share this with anyone who might have any interest in real estate in general, or just like wants to live a better life where they have more money, which who doesn't want that? Do you have a friend that's like, always complaining about not having opportunities to, you know, be wealthy? Here you go. Give them the show. All you use $6 in a duplex. There's no price, but which Jordan can help you find. So do that and go to collectingkeyspodcast.com/free. Get your free five step guide to start finding off market leads, like Dan and I do every single day, and I can help you get started finding your own deals. Besides that, everybody, thanks so much. We'll talk to you all next week.

Speaker 3: [42:44] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts. And check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.