Holistic Money Podcast

The wealth building strategy that made me a millionaire at 35

• Whitney Morrison • Episode 37

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In today's episode,I'm going to tell you exactly what my husband Craig and I did over the past five years that has resulted in not only a seven figure net worth, but also six figures in passive income off of the investments that we've made through our house hacking and house hopping strategy.

Even if you don't think house hopping or house hacking can work for you and your current financial situation today, I highly suggest you listen to this episode because not only are you going to hear the strategy that I use that helped me get to a million in net worth, but you're also going to hear my mindset and how I thought about  the wealth building strategy that I use  to actually help me accelerate my wealth building in such a short amount of time.  

Key Highlights

[00:00:00] Holistic Money Podcast intro

[00:02:10] Introduction to today’s topic: The Wealth-Building Strategy That Made Me A Millionaire At 35

[00:03:20] Ways one can approach wealth-building strategy

[00:06:12]  Straightforward approach to begin real estate investing

[00:08:04] Turning the primary bedroom to generate a new income stream 

[00:10:04] Converting a single-family home into a duplex

[00:11:02] Benefits of house splitting for real estate investors

[00:12:56] Unseen Opportunities: A key to real estate success

[00:15:20] What it takes to generate this passive income as a real estate investor

[00:17:23] Enhancing decisions with an investor mindset

[00:19:14] Holistic Money Podcast outro

Notable Quotes

  • The simplest way to start real estate investing was to buy a primary residence I lived in for a year. We ended up living there for a year and a half. And then turning it into a rental. One of the main reasons why I love this strategy is because whenever you buy a primary residence that you live in. you can get a mortgage that allows you to put as little as 3% down if you get an FHA loan or 5% down if you get a conventional mortgage.
  • Here's what I'll tell you about house hacking. So many of you believe that if you house hack, it will be a miserable experience. What I found is the way that we chose to house hack was we actually closed off the door that allowed you to get into the primary bedroom from our house, and we put an entrance on the backside of our house.
  • When somebody rents your place for an Airbnb or a midterm rental, they're not looking for the perfect luxury property. They're simply looking for an affordable place that they can stay for a short amount of time for them to be able to either explore the city or have a place to live temporarily for their work assignment.
  • A lot of you have the goal and the idea of how nice it sounds. To generate this passive income and become a real estate investor, you're not willing to do the work and make the sacrifices required to get you there. It takes real strategy and decision-making to actually bring this to life. It's just not magically going to show up on your doorstep.
  • Sometimes we can have limiting beliefs about what is possible and what we can do because of our current life situation. And you have to be willing to get creative, see past

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Hello and welcome to the Holistic Money Podcast. I'm your host, certified financial planner and money mindset coach, Whitney Morrison. Over the past seven years, I've taken myself from credit card debt and no savings to a seven figure net worth. I did this without a budget or a restrictive money plan, but instead smart, sustainable wealth building strategies combined with changing my relationship with money. In this podcast, you'll learn the ins and outs of my no budget philosophy, practical wealth building strategies, and key mindset shifts to make it happen. There is no shortage of information out there to tell you what to do with money, but teaching you how to think and feel about money, that's my secret sauce. If you've been waiting for a podcast that gives you actionable strategies to not only build wealth, but also feel really good while you're doing it, then you're in the right place. Let's get started. Hello, and welcome back to the Holistic Money Podcast. This is a very special week in our household because my husband Craig has been training for a hundred mile ultra marathon for the past two years. And we're now about a week and a half out from the day of the big race. So this Friday, We're going to be traveling to Leadville, Colorado, which is where he will run this 100 mile ultra marathon. He plans to start at 4:00 AM. on Saturday morning and we'll finish around 10:00 AM to noon. On Sunday. Yes. You heard that right? We're talking like 30 hours of running. I am so proud of my husband. This has been a goal of his for a long time. And this race is right around the corner. I can't wait to watch him cross that finish line. So everyone be thinking about my insane, but also very dedicated and committed husband. Who is going to be running this ultra marathon. He constantly. Is challenging me and helping me grow and inspiring me. And so I'm so proud of all that he has worked through and now is about to accomplish this huge goal that he's had for such a long time. So that brings me to today's episode where I'm going to be talking about the wealth building strategy that I used that resulted in me becoming a millionaire by age 35, which is house hacking and house hopping. Now, most of you may be familiar with house hacking, But you may not be as familiar with house hopping. So in this episode, I'm going to tell you exactly what my husband Craig and I did over the past five years that has resulted in not only a seven figure net worth, but also six figures in passive income that comes in every single year off of the investments that we've made through our house hacking and house hopping strategy. Even if you don't think house hopping or house hacking can work for you and your current financial situation today, I highly suggest you stick around and listen to this episode because not only are you going to hear the strategy that I use that helped me get to a million in net worth, but you're also going to hear my mindset. And I think that that is one of those valuable components of this episode for you to start to listen to how I thought about the wealth building strategy that I use to actually help me accelerate my wealth building in such a short amount of time. So without further ado, let's dive in. There are so many ways that you can approach your wealth building strategy. I knew that I wanted to use real estate as a tool to get there I had always been someone who was renting out my apartments on Airbnb. And I loved the passive income I would get from those rentals whenever I was traveling. So I knew that this was a strategy that I wanted to use in my life to start building wealth. So the first thing that I did is I started to look at all the different ways that you actually can get into real estate investing. I started to look at buying a real estate investment property outright, which felt a little bit more daunting to me simply because you had to have a 20 to 25% down payment ready to put down on a home. And frankly, at that point in my life, I was just getting out of credit card debt I was working to pay off student loans My husband and I were really at a very different financial situation than we were now So in order for us to save 20 to 25 percent For an investment property, it was going to take us a long time to get there. Plus, we didn't own a home ourselves. We were already paying rent on an apartment, so it didn't necessarily make sense financially for us to start with just buying an investment property outright. The second thing that we looked at was actually buying a home that we could live in. And then turning that into an investment property in the future. To me, this made a lot of sense, although I didn't love it at the time. And I didn't love it at the time just because it was my first house. Craig and I were just getting together and just starting to shop together for our first home. And I wanted it to be everything that I wanted it to be. I didn't want to have to prioritize an investment property, but I knew that this was a wealth building strategy that had worked for so many people. And so I really kept in mind when I was going through the house shopping process that, Hey, this is a home that I'm going to live in temporarily. And eventually I want it to be a great investment property later. The third way that I found that I could get involved into real estate investing was to find a partner. Find someone that did have the cash to be able to start doing some of these real estate investing projects. But the issue for me with that strategy I had zero experience in real estate investing. And so in order to find a partner with cash, I felt like I needed to come to the table with my own set of skills. Like how to manage a property, and how to market and sell a property, and how to list a property. And since I didn't have any of those skills to offer, I wasn't necessarily ready to do a partnership and I didn't feel confident and comfortable in that strategy. So the simplest way to get started in real estate investing was simply to buy a primary residence that I lived in for a year. We ended up living there for a year and a half. And then turning it into a rental. One of the main reasons why I love this strategy was because whenever you buy a primary residence that you live in. you can get a mortgage that allows you to put as little as 3% down. If you get an FHA loan or 5% down, if you get a conventional mortgage and that is exactly what we did. We found a home for 300, 000.. We ended up putting 5% down, which was 15, 000 in cash. So split between my husband and I. We each had to come up with 7, 500 in cash to get into our first house. And just spoil alert this house now makes us 15, 000 a year in passive income plus has appreciated almost 100%. So you can see within five years of deciding to make this investment in a home that I didn't necessarily want to live in at the time now has been one of the best financial decisions that I've made simply because of the appreciation and the passive income that we make off of it. And this my friends is why I love real estate investing because it is an accessible and normalized entry point to start to leverage other people's money, bank's money, hard money lenders, your mom, wherever you can get money borrowed from in order to invest and get a higher return then the interest that you're actually paying on the loan. And so this is the strategic leverage strategy that so many of us have to learn how to do in order to start to accelerate our wealth building journey. And I think real estate is a really accessible and normalized way to start to take advantage of this strategy. So that's why I love real estate investing. That's why I believe that it is one of the most lucrative and accessible wealth building strategies out there. So after we bought this house, the next thing we started focusing on was saving for a down payment for our next property. And we wanted to make sure that we could do this within about a year to a year and a half. Our goal was to save 50, 000 and we knew that based off of our joint incomes and our savings rate that we weren't going to be able to get there in that timeframe. Unless we started to create another income stream for ourself since we had bought this house. It was a three, two, it was just my husband and I at the time and two dogs. We decided that we are going to turn the primary bedroom into its own rental unit. And I just want to let you know that we went back and forth on this for a very long time. It felt like such a sacrifice in my mind when I was considering the option. Of turning this primary bedroom into its own unit simply because I thought to myself, Oh, we're going to have to live in this two one. We're going to have someone in the back of the house. That's going to be so inconvenient. But y'all, the moment that we made this decision and we just turned the primary bedroom into an investment unit. I was so happy with our decision and here's what I'll tell you about house hacking. So many of you believe that if you house hack, it's going to be a miserable experience. What I found is the way that we chose to house hack was we actually closed off the door that allowed you to get into the primary bedroom from our house and we put a entrance on the backside of our house. So that the unit was completely private it had its own bathroom we ended up turning the closet into a little kitchenette and we rented this on Airbnb and very quickly started making 1500 to 2, 000 per month off of this unit without us having to do much work on our own Except for flip the unit whenever we had new people come in and this significantly helped us accelerate our savings timeline so that we could buy our next home. Another thing that I did that I think was so valuable, I didn't even have the foresight to see it at the time. but what it actually did is It actually changed this house from a single family home into a duplex. So when we moved into our next property, instead of having only one unit to rent out, we had already done the work to make it a multi family property. We kept the primary bedroom as its own rental unit. It's an efficiency. We still rent it today on Furnish Finder, and we turned the front half of the property a two one into its own unit as well. So now we rent those two units separately. Again, we had a lot of mindset drama about this because we had the belief that nobody was going to rinse it out if it was configured this way and that it didn't make sense. that was all our own limiting beliefs about what was happening. And I see this a lot with my clients. Is that They don't believe that they can make these changes to their homes in order to create rental situations for people. But here's what I'll tell you. When somebody is renting your place for an Airbnb or a midterm rental, they're not looking for the perfect luxury property. They're simply looking for an affordable place that they can stay for a short amount of time for them to be able to either explore the city that they're in I have found that making this decision to split the house not only helps us make more money, but it's also been wonderful for our tenants because we've been able to charge lower rates for each of the units separately versus having a more expensive 3 2, which I find has been a bit more difficult to rent versus smaller units. that actually are less expensive and allow people to rent for a short amount of time. After we had about 50, 000 saved up, we started to look for our next home. And once again, we made the same decision that we knew we wanted this to be a temporary home that we were going to live in until we could turn it into an investment property. So given that we had successfully done this with our first home, we had a little bit more experience under our belt on what kind of home we were looking for. And we actually started to analyze properties and the potential cash flow that we could get off of those properties before we made the purchase of our second home. If you haven't already, make sure to check out my episode, How to Get Started Buying Your First Rental Property. I go over the very simple calculator that I use to help me analyze deals and help me understand whether or not an investment is going to make sense or not. So, we decided that we really wanted to prioritize a home that had a front house and a back house. We found a home that had a 2 1 in the front and a casita, a 1 1 in the back, which was a pretty unique configuration simply because a lot of families that kind of set up what it worked for. So we were one of the only people that made an offer on this home because we had an investor mindset and we saw something different than most people that were looking at that home actually saw. This is what you're going to have to do too. In the event that you decide to take this strategy of using real estate to build wealth and build passive income, you're going to have to see opportunities that a lot of other people don't see simply because you're looking at it through an investor lens versus a, this is my home that I'm going to live in for the next 20 years lens So what we did is we lived in the front house, the two, one, and. immediately we started renting out that back house, which we rented out for 2, 500 a month. And again, that helped us put money towards the mortgage that we had for that current property, which was about 3, 500. So really it reduced our mortgage liability to about a grand a month, which even in Austin at that time, you couldn't get a one bedroom and apartment that was charging that. With the one grand. Mortgage, we had some space to start to save for our next property, the land that we live on now. So we followed the exact same strategy in the second house that we did in our first house, which is we bought a home that eventually was going to be an investment property. And we house hacked in the meantime to make sure we could save up enough money to save for our next property. So we had the house hacking. strategy going on again. After about six months, we decided we were ready to start looking for our next property. We found 10 acres out in Wimberley, Texas. We found a home for about 450, 000 on 10 acres. We put 10% down again. Moved into this property and the reason why we wanted land was for many of the reasons that I've described earlier in this episode Number one we wanted to make sure that we could have a multi unit property and what we loved about this idea of having 10 acres is that we could build rental properties and have animals and have a place where people could come visit and we could start to raise our family. another really cool thing about this property is that the house was divided perfectly for a rental situation. So there's a 2 1 and attached to it is a 1 1 efficiency. It's like a little mother in law suite that we thought at some point we could rent that out as a rental unit. And the vision for this property for us was yet again, we want to live here. We want to house hack. We want to build multiple units so that we can create enough passive income so that I don't have to go to work every day and so that my husband doesn't have to go to work every day. And a lot of you have the goal and the idea of how nice it sounds in order to generate this passive income and become a real estate investor, but you're not willing to actually do the work and make the sacrifices that are required to actually get you there. it takes real strategy and decision making to actually bring this to life. It's just not magically going to show up on your doorstep. You have to be willing to take the steps to actually get there, make the right investments, live in certain situations. In order to make this happen and I will tell you, as we've made every single step along the way, there isn't one point that I thought to myself, Oh, poor me, this is so terrible. I hate having to live this way. I always kept my mind on the end goal, the end result, which is the fact that we want to have at least six figures of passive income coming in, which we have accomplished within five years of using this strategy. After two years of living on this land, we did end up turning that mother in law unit, the one one into a rental property. It makes about 2, 000 a month for us. And we ended up building a yurt, which is like a glamping tent. It's really nicely done. And that unit brings about three to 4, 000 a month in for us. Last month on our rental units alone on our property here in Wimberley, Texas, we made over 7, 000. So this land has not only been a great place for us to live in the meantime but it's also been a place where we can start to build Separate units and start to create multiple income streams and for those of you that are interested in doing something like this I absolutely suggest you start watching my videos because I'm going to talk more and more about how we've turned our property out here and how we plan to expand our property out here to have five units. then how we plan to use that income that we're making off of the five units to actually fully fund our dream house that we're going to build at the top of this land, which is a bit out of the rentals, which are at the bottom of my land. For those of you that are looking at what I've done and saying to yourself, well, it only worked because you and your husband didn't have any kids or because you were partnered or because you were young or whatever reason that you come up with. I just want to let you know that here I am at age 37 making the same decisions Because I have the same investor mindset that is driving my actions and that is creating six figures in passive income. I am seven and a half months pregnant as well. So we fully plan to have children out here and expand our lives and our family while we are building wealth and creating passive income streams. Sometimes we can have limiting beliefs about what is actually possible and what we can actually do because of our current life situation. And you have to be willing to get creative, see past that. Focus on the end goal for yourself, which is building wealth and passive income streams. that is how over the past five years, my husband and I have created over six figures in passive income and have grown our net worth to over seven figures. You can see that a lot of this was done through strategic leverage through. Great decision making on the homes that we were buying through turning single family properties into multi units and creating unique rental experiences for people. And those are all the things that I have done in my life to get to where I am today in such a short amount of time. And I promise you with the right mindset, this is something that you can a hundred percent absolutely do too. All right, y'all. I hope you have a great week. If you enjoyed this episode, please leave me a review below. I love hearing from you. I like hearing what you liked about it, what you didn't like about it. If you have any questions, you can also comment and I will get back to you as soon as I can. Okay. Have a great week and I will see you in the next episode.

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