Mike Minutes Mastermind 06/27/2022 (House Hacking to Get a PAID FOR Shop Space)

Good morning, Augusta Nation. Hope you're all doing super well. Happy Monday. Let's go and jump in a couple announcements and then we're going to dive deep into finding a shop space and really revolving more around your personal residence and how to make sure that it makes a lot of sense. So I'm going to show you actual properties as well as show you a video of the property as well as I am making an offer on this property, hopefully buying it. So a couple updates. First though, your service area is due Wednesday this week. So a couple days from now, if you are changing your service area, changing you know where you want to service. If you need that changed, make sure you contact estimategustalawncareservices.com and let them know that changes. Jaden will reach out to you. That is due in the next couple days. So if there's any changes to service area, make sure that they know at command. Second thing is email update. They told me at Command center they're noticing a lot of people still do not have the updated workflow and email automation for their reviews. Online reviews that had not been set up. So in service auto part on our academy more training service autopilot, you're going to find that right here. Updated online review system 2022 and then same thing in super, there's part one and part two for that one. If you want more training zooper, it's going to be right.

Right here. Online review request form automatically. Okay, so really, really important that you do this. We are seeing like, like literally a tripling of the number of online reviews Google reviews coming from this new workflow compared to the old one. So highly recommend you do that. If you need a hand, Command center can do this for you. So just reach out to them if you need them to do it for you if you haven't done it. Because it is a massive, massive change in the number of reviews we are getting. It takes about 15 minutes to set up. You guys set up a Google form, go make sure it's sent to you. But those videos will walk you through step by step and if you don't want to do it, Command center can do that for you. All right, so let's go ahead and jump in. These really going to be dedicated to this idea of finding a property for you to work out of instead of doing storage, instead of having it out of your garage or instead of finding land like I talked about last week. Finding land only is sometimes difficult because it's very obvious you're using it for commercial. If all you do is gravel and put a bunch of trucks on it. And especially if it's in a more residential and neighborhood type of area, it can be very difficult to get away with that sometimes. So this is the alternative. And this one's really, really important, I feel, because it's actually the best. In my opinion, if you're growing your business about a million dollars in revenue is to use this method when you do multiple locations. A little more difficult to do this, but it's definitely for your first location. I would do this in a heartbeat, that is, own the place that you live and then have a shop on the property. But you'll need to do it in a place where you can get away with it in terms of having your trucks and stuff. So this one specifically is a location that's about 45 minutes south of me. And I'm going to buy this property, rent out the house, and make it work without making it my primary residence. But you can absolutely make it your primary residence. So I'm going to talk about some hacks in terms of making sure you cover the mortgage as well. All right, so let's go ahead and jump in. This is going to be a lot of fun, and hopefully you can learn something. So I'm going to jump over to Zillow, and this is the property right here that I'm going to be putting an offer on. Now, I know in a lot of places, people immediately start freaking out about the prices. I live in Washington State. Prices are high, comparatively, like to New York or California. This is cheap. So it's all very relative. Don't get too hung up on the numbers of that. So they were originally pricing this place at the original was 650. As I've been talking about, there's been a softening in the market. I'm going to be offering 5:40. So I feel like that's not a great deal. It's going to go lower than that. I actually am very aware that I can get this property under 500,000, in my opinion, in next six to 12 months. But I can't wait because we got to get this shop. We got shop space. So there's an acre in terms of size. Let's make sure you can see what I'm looking at. Good. It's an acre in size. And so as I scroll these pictures here, the house is pretty old. It's a 1925 build. However, the owners have completely gutted, remodeled this whole place. Like, it looks brand new inside. And the owners have lived here for 20 years. So everything is kind of over engineered and over improved. At the end of this video I'm going to show an actual video of the property. When I was on the property, I recorded something for you guys and you'll see like whenever you see people putting like hot and cold water on the exterior outlets of the water, things like that is the tell tall sign that this is the owner that lived there and just did everything possible. They weren't trying to cut any quarters. So a pretty funky layout. It's like kind of three stories. Like you got a second story, a middle story and then this basement. And it isn't a flood zone. So there's a sump pump. Actually I can't see it behind that freezer, the pump there. And it's actually had some flooding three times in the past 20 years. So it's actually like built to have floods. So that definitely needs some flood insurance. This is the outside, there's an acre inside. I'm going to show you a video at the end of this as well. So you can actually see the property live. But this is where I'd be creating a second driveway and then having the shop space in the back of the property. And again I'm going to show you a video of all this. So I'm just kind of speeding through these. This is the layout of the house. Basically There is theoretically three bedrooms and two, three baths. It's very funky layout. 24, 2400 square feet. And theoretically you can make this, this bottom basement into an ADU accessory dwelling unit because there's a separate entry. You definitely do that. But I'll talk about why I'm not going to probably do that. So this is the house from the front main road and this is the gist of it. So this house is going for 575,000. I'm trying to get for 540. The monthly payment if I get for 540 is probably around three grand a month. With interest rates going up as much as they are right now, you're lucky to get 6, 7%. Now. It's ridiculous just in the past few months how much it's gone up. If they would have sold this house six months ago, this would have gone for 65670 pretty easily. So we're already seeing a pretty substantial softening in the market, but it's going to continue. So I already know I'm going to be overpaying for this somewhat. So now it's a matter of okay, how do we make sense of this financially? Well, the thing is, first and foremost, if I look at the, if you look at the video here, you're going to see. Let me see if I can go take an aerial shot of this. Oh, here we go. So let me take this address. This is kind of what I'm doing, taking this address. Drop it in here. Okay, so this is the street view. So you can see here there's these two random residential houses, but other than that there's just a bunch of dairy land and a whole bunch of massive trucks coming in and out of here. There's a big, big dairy farm. Like no one's bothering me. Okay. Over here I got a whole bunch of farm here. So like this is the land, this is the property here. I got lots of space. So my thought process is, okay, have a separate gravel driveway install in here and the back area I can have my gravel parking area for the shop. Okay. And this entrance here, I'm actually going to. This is kind of like the thing I want to talk about today is I am going. My plan is to put an Airbnb, a tiny home in the back of this property and then be able to rent that out. So I'll talk more about in just a second. But again, they over improved this place. They put this really nice concrete around the edges. They did all sorts of things as owners because they lived there for so long, they raised their kids there and everything. They're priced, outgrowing the house. So nice little property. Okay, great, let's go ahead and look at. So first and foremost, the thing I'm looking for is can I get away with running something semi commercial out of this and have a shop space in the back and all the rest of it. And the answer to that is I can, I don't know if you can see here, let me go to the pictures, but there is a garage space. What my plan is for this bad boy is actually turn this into kind of the shop for the, for like the, you know, workbench, sharpening blades, etc. And then obviously over here is where we would have all the trucks, trailers, etc. Now this is the thing. When you come to a property like this, you're looking at around $3,000 a month in the mortgage. Now again, not too long ago that would have been 2400. So just interest rates are going up. But this is what I'm going to do to make sense of this. First of all, I know I can rent this house easily for $3,000. I could probably do 2,500 and then rent the bot them as an ADU for another thousand and try to like squeeze this up to 3,500amonth in rent. But I don't really want to deal with two tenants and then them sharing the house. I'd rather just have one tenant in here, have a nice family that is going to want to raise their kids here and pay $3,000 a month in rent that's going to barely cover the mortgage. But I don't really care about that because I just need to be able to have someone that is going to take care of the property, take care of this house. I don't care this house at all. Okay. If it can just cover the mortgage. And that basically would allow me to have my shop here for free, quote, unquote, because the mortgage will be paid off every month. So that's cool. But then I also got to realize that I'm going to save about 800 to $1,000 a month in shop space. I have seven trucks at this location. I need a couple spaces for storage containers, et cetera. So I'm just saving at least $1,000 considering if I just went and gotten blank land versus like no office space, anything like that. So the fact that I'm gonna have that garage, I'm probably saving fifteen hundred dollars a month in our market by having this space. So 1500, $3000 rent. So it's now worth 4500 to me. Now, to really tip this over, what I'm going to do, my plan is at least at the very back of this property. Let me go to here and see if I can get some pictures for you. At the very back of this property, at the end of that driveway, I should say, there's this space that I want to put a tiny home. And I'm going to show you the tiny home that I've seen on Facebook that I want to get at least to give you an idea of what I want to do. So right back here is the end of the driveway. I want to make this into where a tiny home goes here. And then they have a kind of like a gated area to kind of just relax. And this would do really, really well on Airbnb because it's unique. It's in a farm area. And behind here is a whole bunch of goats you're going to see in the video. I shot this in the video for you guys. So my plan is to do that. I genuinely believe I can get 150 to $200 a night at a tiny home at location and it's. And it's unique enough to where people are going to come travel for it. So let me show you the tiny home. This is the tiny home. It's in Bellingham. This one's brand new. It was built last year locally in Bellingham. It's 90,000, which is expensive for a tiny home. I think I get it for 70 grand, and then I'm assuming it's going to cost me about another 20 grand to move this, like, transport it big a pad for it, bring in the electricity and the water and the sewer off of the house to this area, about 100ft off of the house. So you can see it's pretty nice. It has, like a loft upstairs. You could easily get two beds in here. So, like four people occupancy easily. I know on Airbnb, I could get 150 to $200 a night, no problem. Now, conservatively, I could easily get $3,000 a month on Airbnb having this there at least. Like, very, very conservative. I think it's more like 4,500, but let's just say three grand. So now I've got $1,500 a month I'm saving in shop space. I'm $3,000 in rent of that house, and I'm going to make at least $3,000 on having this tiny house. Okay. So all in, I'm going to be literally doing, having $7,500 of implied value in the form of rents, as well as the fact that I'm going to have my shop space there and saving 1500. So now if you were living, if you wanted to live, this is, this is the cool thing. If you were, if you were like, hey, I need a space to live because I'm not going to live here. You could either a live in the tiny home and then rent out the space, the house, or if you have a family, you could have the. Have the house to yourself. Things like 2,400 square feet. You'd easily have three or four kids here. And then rent out the. The air, the Airbnb, the tiny house while having the shop space in the back that's graveled. So all in, I'm looking at. Basically, let me just jump back in here. I'm looking at about $70,000. I'm going to try to get that tiny home for $20,000 to install the power and the water and get the pad ready for that. So about 90,000 all in. And then I'm looking for about another 20 or 30, conservatively to bring in a gravel driveway. Gravel, like about a quarter acre in the back here, get it all graded out. So I'm looking about 120, $130,000. Plus I've got to put money down in the mortgage. Now, if you were getting this as an FHA loan, this is the beauty of it. If you're getting this as an FHA loan and you're putting down 540,000 as the offer, you would need to come with 5% of that. So you need about 26, $27,000 to actually do this deal. Now, if you're going to put that much down, your payments might be a little bit more. But again, you can make that work by having the Airbnb, your shop space here and not only basically rent for free and have your shop space for free, but also make more, make more money, like make cash flow on top of your mortgage. So an FHA loan right now, 5% down, you're probably looking at, you know, $3,200 a month in your mortgage. If you can rent out either the house or the Airbnb, again, you're looking at covering that, then you got your shop space. And so this is, this is a really good hack. And that is my, in my opinion, is trying to do an Airbnb like a secondary home or ADU on a dwelling space that's out in the country. Cause I could not bring a tiny home in, bring us another driveway in here in like the middle of city, but I can in the middle of this dairy farm. Now, the thing is, when I look at this on a map, it's only about five minutes away from the core of where all my business is, which is Mount Vernon here. So it's just a, you know, two mile probably drive here into downtown. And that's where most of my customers are at. So kind of saves me in terms of the fact that it is way out in farmland, but it's nowhere near where people are going to report me. And across the street is literally a massive dairy farm. So feeling pretty good about this one. I'll let you guys know how it goes in the long run. But this is kind of what you're looking for. I'll go ahead and put the video at the end of this one, actually showing the property outside what my plans are for it. But this is a way to hack getting your shop space. And that is how can you get a secondary dwelling from an air like and rent it out on Airbnb, whether the house, like, for example, you could actually make this where I live downstairs and then rent out the top space and still cover my mortgage even if I didn't have the Airbnb. So how do you house hack and by using a house hack, be able to rent out a portion of the house or the property on Airbnb and then still have your shop space here? This is a really, really great deal and I'm really excited about it because not only going to cover the mortgage, it's going to give free shop space and probably cash flow, two to $3,000 a month if I can get the Airbnb on the property. So just another way to look at this, if you have any questions about Airbnb stuff, buying houses and trying to make sense of making a shop space like this work, if you can live here, you can have an FHA loan and FHA loans, you need 5, 10% down. So we're literally talking about 25 to $50,000 you would need down on this property to get started. And again, if you're just you and your wife, you could live downstairs in that basement part, has a separate entry and everything, and rent out the top for probably 2500. And literally you have your shop space there, you live there and you only 5, 10% down. It's a great way to get started in my opinion. But the, the hack here is the Airbnb. You're able to make such a good amount on that. If you can make a secondary dwelling, split the house somehow, build a wall and have like a couple rooms or a bathroom and a bedroom, or bring a tiny house in, I can do that. Because I'm out in the middle of nowhere. They're not gonna have an issue with it. So really looking forward to this one. I really hope the offer goes through. I'm gonna offer 540. So it's still like 6% less than what they're, they're currently having on the market. But I think I'll get it. I don't think there's a whole lot of stuff moving on the real estate market right now, and it's turning more into a buyer's market as we start to see inflation wreak its havoc on interest rates. So let's go ahead and play the video though of the actual property. I was there this morning and wanted to shoot that video for you guys. Here we go.

All right, so we're out at the property here. This is the property here. This is the neighbors over the left hand side. But what's really cool, you can see here, we're out kind of in Farm, country, country. So across the street they all sort of trucks, tractors. Ain't no some no trucks gonna bother them. Got a whole bunch of property. They poured this new. It's kind of nice. They definitely remodeled this whole thing. Even though it was 1925. The whole place is remodeled. We got hardy plank on the siding and everything. But this is all part of the property. It's an acre.

Right.

So what I'm thinking is doing a driveway, gravel back there to where then we would have the trucks and the back area. This actually looks really nice, this newly poured area. But this is all part of the residence.

And then looks they had some sort of like a playground here with the wood chips. It's really nice back here, actually.

Then this is the second entrance down to the downstairs. The third kind of story downstairs is that where you could do an ADU accessory dwelling unit.

You got the.

Garage here. What I'm thinking is building a wall down the middle of this garage, having the left one being for the, you know, shop space and then letting the tenant have the one on the right hand side or just keeping the whole thing for the shop space and then the tenant not getting any garage. But we'll see. And then what we would do is back here, this is perfect because you have parking area here and this is where the Airbnb would actually sit. They have a garden area back here, which is cool, but most tenants aren't going to have gardens. So I'd probably end up doing is putting the Airbnb here, a tiny house in this spot right here. And then they'd have kind of an oasis to go back here into this gated area where there's goats and everything behind it, which is kind of cool.

So yeah, it'd be pretty cool. Got some tomatoes and raspberries it looks like. But this is from the back of the property. So over there you can see they've already started. That's where they dumped their clippings already. So that whole area would be for dumping clippings. I would put a 20 foot container going this direction, this direction against that fence. That fence is our proper line.

But this whole area I would do.

Gravel is where we could park all.

The trucks, the trailers be far enough away from the road, there's not going.

To be any sort of like, I don't have to worry about people stealing anything back here. I do not know what this is probably like a playground. Honestly, when I looked at the past images on Google, it looked like this is a playground. So I don't know If I could use this for something.

But honestly, you probably just make this all gravel, this whole thing, gravel in the back, and then have a separate entrance of gravel along that side of the property, along that fence line, just so that way all the trucks, trailers can go out of here and the residents can be separate. The goal would be kind of make to make probably this sort of, hey, this is the residence, this is the business. So everything on this side would be for the business. And as we grow and expand, right now there's only like six, seven trucks. But as we grow and expand, this whole area up front could become gravel and could become come trucks parking. But then this would all be maintained by the tenant and would be part of the residence. So there you have it.

The realtor hasn't got here yet, but I can tell by little things like this that there, this is the owner that lived here. When you put hot and cold water on the outside of the building, you know that's the owner's feature.

Same thing with the AC unit here.

This is not going to add a whole lot of value for renters in terms of your rent value, but it's one of those things that you can tell that owner lived here, which is usually means it in better condition and.

They do all those little extra features.