Happy Thursday, Hard Knocks community 💰 

Today we are trying something new. This weeks class is gonna be a little shorter than usual but is filled with gems on how you can build wealth in real estate with less money than you think, as well as actionable steps to take action. Reply to this newsletter if you like this format!

Today’s Schedule

• House Hack To Millions: An Uncommon Way To Build Your Wealth With Real Estate

• From the Hard Knocks Library: The Psychology of Money by Morgan Housel

• In Case You Missed It: We Went Around Atlanta, Georgia and Interviewed The Top Entrepreneurs in The City

Lets Dive in!🔥

House Hack To Millions

In August of 2023 we met a gentleman named Nick Lamaison. He shared his path on how he became successful with us. He didn’t share the typical real estate advice that most people share, he was talking about a wealth building strategy that is not talked about very often.. House Hacking.

What exactly is house hacking and how does it work?

Like most people, Nick doesn’t come from a wealthy family or have a nest egg of money to invest but he did have a day job that paid him a salary of about $60k a year. So what he did was saved up money to buy a house, and utilized something called a FHA loan. With an FHA loan, the minimum required down payment to buy a house can go as low as 3.5% of the purchase price of the property. For instance if the purchase price of the property is $200,000 you would only need to put down $7k.

So using the FHA loan, Nick bought a 3bed, 2 bathroom home in Texas. This is where house hacking comes in..

As a single guy, Nick only needed to use one of the bedrooms to sleep in at night. So what he did was, he contacted some friends and used an app called “roomster” to fill up the other 2 bedrooms. With the addition of the 2 new roommates paying rent, Nicks monthly payment on the house was now only $400. This allowed him to save money to purchase another property or to invest more money into the overall house mortgage.

But here’s the catch. If you use an FHA loan, you have to live in the house for at least a year because it is an "owner-occupied mortgage". The reason for this requirement is that these types of loans usually offer more favorable terms and lower down payments compared to investment property loans. Lenders want to ensure that borrowers are genuinely using the property as their primary residence and not just purchasing it as an investment.

By living in the property for at least a year, borrowers demonstrate their intention to fulfill the terms of the loan and comply with occupancy requirements. After the required period, they may choose to continue living there or move out and rent the unit they were occupying while still benefiting from the favorable financing terms.

So how does this build wealth?

After living in the property for a year you are able to get a new FHA loan on another property and rent out your current room at the first property. That is exactly what Nick did. He used his roommates rent to cover most of his payments and save money for the next property.

This is where the monopoly starts - At his second property he now has a lower monthly mortgage payment because he has roommates paying rent, is also receiving cashflow from renting out all the rooms in the first property, and still has a day job giving him earned income.

Nick has repeated this process multiple times and now own 6 real estate properties and is a millionaire.

You can connect with Nick on Instagram at @nicklamaison

Watch the full interview here.

Words of Wisdom

From the Hard Knocks Library

In Case You Missed It

We dropped a new video today where we went all over Atlanta, Georgia and interviewed some of the most successful entrepreneurs in the state. This weeks episode is full of inspirational gems that will help you level up🔥

Let Us Hear From You

Enjoyed this shorter version of the newsletter? Please reply back with your thoughts or things you would like us to include in future newsletters and we may just cover that story in our next weeks episode!