From Renter to Owner: Sam Wegert’s Journey into Co-Living

Mike Hambright (00:00.646)
Hey everybody, welcome back to the show. This is gonna be exciting episode. We’re gonna talk about something that I’ve been really interested in. It’s called co-living. And so it’s exactly as you imagine. Instead of renting your house to one person or one family, you rent the bedrooms to multiple people. And it’s a way to effectively make more money on each bedroom, if you will. In fact, I’ve done this before. When I was in college, by the way, I lived in a four bedroom apartment and we had four leases. Like we all had individual leases and they just kind of.

placed us. It just hit me that I’ve actually done this before. Before it was as popular as, or getting as popular as it was now. anyway, I’m here with Sam and Sam is a co-living expert. So Sam, what’s up, buddy?

Sam Wegert (00:40.783)
Thanks Mike for having me the show. Appreciate it. I’m doing good man. Excited to chat about this and dive in a little bit.

Mike Hambright (00:42.664)
Yeah, yeah, yeah, because you know, at end of the day, I was just talking about this on another recent show. I don’t know if you know Isabel Garino, but we were talking about, they do residential assisted living, which is assisted living for the aging population that kind of needs help, right? And we were just talking about the idea of this generally, like, how do you make, you got a box, right, which is your house, like, how do you squeeze more money out of that house? And so,

Sam Wegert (00:56.973)
Yeah.

Mike Hambright (01:11.408)
Some people are always trying to do more units to grow, and some people are like, how can I make more money from the house I already have? And so, you know, it’s harder and harder to get, it’s harder and harder to be a volume player. And so how do you kind of squeeze more juice out of that piece of fruit you’ve already got in your hand? so co-living might be one of those ways,

Sam Wegert (01:17.528)
Yeah, yeah.

Sam Wegert (01:28.654)
I think it definitely is. mean, imagine being able to hit your financial freedom numbers with maybe three homes, four homes, you know. We do a seminar once a month and I’ll bring people onto this challenge and one of things I’ll teach them is I’ll show them what the cash flow on a clothing home can be if they do the model correctly. And then on day three of this, we do this five day challenge, on day three of this challenge, I’ll ask them, how many homes, based on what we’ve shown you, how many homes do you need to hit your first level of financial freedom?

And out of 150 people, it’s usually like one, two, three. I mean, the chat just blows up and rarely do I ever see a number above five homes that people would need to achieve their first level, not like flying private jets, whatever level, but like a first level of financial freedom. So it’s a powerful strategy indeed, for sure.

Mike Hambright (02:07.964)
Right.

Mike Hambright (02:11.794)
Yeah. Well, let’s dive into it. Before we get started, know you didn’t, this isn’t exactly where you started. tell us a little bit about how you got started in the real estate space and then how you found your way into co-living. And then we’ll kind of jump into what even co-living even is. So tell us about you first.

Sam Wegert (02:31.598)
Yeah, mean, my story starts, I guess, coming from a non-traditional family that decided to homeschool other kids before homeschooling was cool. my parents were always kind of these limit pushers and they were just very creative. were like doing crazy things. Like they were hippies before being a hippie was cool. They were juicing, they were eating buckwheat and millet and quinoa and all this crazy stuff. were like health nuts. So we just kind of got, I got it very naturally to be a little different and to try to be different. My parents were definitely different.

Mike Hambright (02:47.005)
Hahaha.

Sam Wegert (03:01.245)
homeschooled, kids, big family raised in the country. And so growing up, they put me in martial arts really young and I had this really unique opportunity, call it Providence, God, whatever you wanna call it. I got the opportunity to buy the martial arts school I was training in at the age of 16. Which every time I say this on a podcast, something like this, still blows my mind. My parents loaned me $15,000. And my parents were not wealthy, like $15,000, that was a lot of money for them.

Mike Hambright (03:29.714)
Yeah. That’s a lot of money for hippies.

Sam Wegert (03:29.89)
but somehow they loaned that to their 16 year old to buy the school. It’s a lot of money for everything. Exactly. And my parents, my dad signed a five year commercial lease on the building too, because obviously I couldn’t sign, I was underage. Anyway, crazy story. I decided to prove to my parents that I could be successful and everybody else in my world that thought I was a nobody, you know? And so I went out and I built this chain of martial arts schools, long story short, over a decade. So from 16 to basically 30.

So I got a decade and a half, I built chain of martial arts schools across Virginia, South Carolina, North Carolina, and exited that business two years ago. But that gave me the foundation for entrepreneurship for sure. And some hiring skills and some mentorships and the importance of being a part of communities like I know you run Mike and like things like that are just so important. so, and then along the way I was in a mastermind at the time and my mentors just kind of pulled me aside and said, Sam,

your business is doing well. And this was, this was 2012, 2015, maybe 2015. They were like, Hey, your business is doing well, but you need to skim money off. Like don’t, don’t do it all traditional small business owners do, which is they put their money back in the business, quote unquote. So they don’t have a lot to show for it. Right. They said, skim it off the top and buy real estate. And I was like, okay, I’ll do that. Well, then COVID comes and like shuts our whole business down. We take a huge hit with COVID because we’re

Mike Hambright (04:44.4)
Right.

Sam Wegert (04:58.36)
brick and mortar, you know, very tactile sport. Like we’re touching, we’re in a room touching people, throwing them to the ground, wrestling them like not good for a couple of years of COVID. So gosh, I mean, that was what kind of first hit me with like, maybe I should be doing something else. So I moved into, you know, we, built the business back. We did good. Obviously government gave us literally hundreds and hundreds of thousands of dollars to just, to just stay open and to pay our staff. And so it really, it turned out to not be too bad, but I moved.

Mike Hambright (05:05.179)
Right.

Sam Wegert (05:28.238)
you know, very strongly into real estate at that time. Brandon Turner is a good friend of mine and he at the time was still the host of Bigger Pockets and he said, Hey, why don’t you come on to Bigger Pockets? And I didn’t listen to Bigger Pockets before I was on. And then I didn’t, realized they have just a massive, massive reach. And so we got a lot of people reaching out to us saying, what’s this co-living thing? Cause I was just renting homes by the room and we just decided to try to help people do what we’ve been doing for the last decade. I had been investing in my first co-living home was 2011 and kind of been doing it on a small scale. know we’re going to dive into that, but

That’s a little bit about my story. It kind of gets me to today where now I build color buildings, teach coloring, and just start and just spread the word about color. I I’m an evangelist for coloring.

Mike Hambright (06:07.912)
Yeah, yeah. So what is co-living? I could take a shot at it. I know it’s renting, to multiple people, but I know it’s also more than that. So what is co-living?

Sam Wegert (06:20.13)
Yeah, when I’m on stage talking about this, I’ll usually just ask people if they’ve ever had a roommate, which you just talked about having a roommate before. And I’m like, cool guys, that’s it. Thanks for coming to the speech. Like it’s having a roommate. That’s really what it is. And it really truly is that it’s renting out rooms to homes. think it’s renting out rooms and homes instead of the whole home to a family. So you’re renting out each individual room. They’re sharing a common space in a kitchen. They have their own private lock on their door. it kind of feels, here’s the phrase that I want people to wrap their head around. As inflation continues and things get more expensive in America,

Mike Hambright (06:27.395)
All right.

Sam Wegert (06:49.612)
which with tariffs and not having as many illegal immigrants here, I see no world in which that doesn’t get a little bit more expensive. But as that happens, people need more affordable housing and the room is the new apartment. And this phrase didn’t come from me. This phrase actually came from a guy who called to make fun of me from Europe. He lives in Berlin and he heard my episode on Bigger Pockets and he says, Sam, you’re talking about this strategy called co-living as if it’s new. He said, it’s not new, man.

He goes, we’ve been living this way in Europe for decades. He goes in Berlin, nobody rents an apartment in Berlin. It’s so freaking expensive to live in Berlin. He goes, everybody rents a room, like especially millennials, like everybody rent a room. And he tells me this crazy story about how he built a software company. And the only way he could get software engineers to come work for them is if he included their housing. Cause even though he was paying them a huge salary, once they looked at the cost of Berlin to live, none of them would move there. And he wanted to have like an in-person team. So he started building co-living buildings from the ground up.

and offering the room as part of the salary package. That’s the only way he could build a software company. So anyway, he’s crazy kind of story. And so that is really co-living is, you know, it’s a, we’ve been, we’ve been, we’ve been having roommates for decades, but what I think is new is the fact that we can now do it at scale professionally and professionally managed with systems in place that are designed to reduce conflict and increase the income of these homes.

So I that’s the difference. It’s the professional level that we’re doing it at.

Mike Hambright (08:14.44)
Yeah. Yeah. And I honestly, I don’t think I’ve ever talked about this on a podcast before, but I am a GP in a bunch of multifamily and, honestly, more than half of our multifamily, I mean, hundreds of millions of dollars in properties and more than half of our multifamily right now is student housing. there, and, and, and some of them we converted to that because you get more, uh, and rent as a total by leasing out three or four bedrooms. And so one of the benefits of that, of course, you know, we’ve had some bumps too, when COVID happened.

Sam Wegert (08:31.531)
wow.

Sam Wegert (08:35.886)
Interesting.

Mike Hambright (08:44.444)
like you know student enrollment is down. I think college enrollment is generally down these days for the past few years because a lot of people are you know for a lot of reasons we don’t have to get into but yeah that’s right there’s there’s a lot of ways to make money and it doesn’t necessarily have to include you know formal education and there’s a lot of ways to get education these days that isn’t like going off to university right but we could have a whole other show about that but but the reality is some of the benefits are

Sam Wegert (08:56.302)
They’re waking up.

Mike Hambright (09:14.234)
If the rent is late, it might be a quarter of the rent versus all the rent, right? Or if somebody like flakes out and breaks the lease, it might be a quarter of that lease instead of the whole thing effectively, right?

Sam Wegert (09:20.429)
Yeah.

Sam Wegert (09:24.929)
Yeah. Yeah, huge. We call it vacancy protection. We’re like, Hey, I’ve owned, I’ve owned co-living homes with up, you know, anywhere from four people sharing that home to, to 11 people sharing that home, big homes, 11 people. And none of that might sound crazy, but we’ve got the systems in place to do it. And I have never had a vacant home ever, like unless, like obviously at the beginning when I’m buying it, I’m converting it, but imagine, imagine being able look at your entire portfolio over a decade and a half and saying,

Mike Hambright (09:28.124)
Yeah.

Mike Hambright (09:48.476)
Sure, yeah.

Sam Wegert (09:53.558)
I have never had a co I’ve had four people leave out of eight bedrooms before, but that’s still half of the people paying you rent. Like that’s valuable.

Mike Hambright (09:58.854)
Right. Yeah.

Mike Hambright (10:03.09)
Yep, yep. So it provides, know, the biggest thing is it’s for, guess, the why is for the investor, it’s protection of against vacancies or full vacancies, higher rent overall, which I’d love to kind of hear you talk about like what the economics look like. And then it’s also providing affordable housing for people that can’t afford a whole house or a whole apartment that they don’t need the whole thing anyway, maybe, right?

Sam Wegert (10:13.272)
Yeah. Yeah.

Sam Wegert (10:28.526)
Yeah, yeah, let’s hit on the affordable housing for a second. mean, I get comments on my Facebook ads and things like that. Maybe I’m giving a tour of a 10 bedroom home and people are just, people just take a dump all over it, man. They’re just like, this is the worst thing ever. This is not the American dream. This is crazy. Why would it, you you’re packing people in there. And like my philosophy is like, there are 600,000 people that will be homeless tonight, tonight, February 18th, 2025 in America.

Mike Hambright (10:44.534)
the American dream.

Sam Wegert (10:55.106)
This is a clean, quiet, safe bedroom. You think that’s not better than like living underneath and you and I were just both in Vegas at a conference. Like, I don’t know if you’ve ever seen, like Vegas has all these tunnels underneath the like strip that are filled with homeless people. Like there’s some crazy YouTube documentaries on this of like thousands of people live under the strip on these tunnels that are actually designed to keep the flooding out. So these people like die when the floods come in. Like it’s crazy, right? And so that’s what we’re dealing with. People just don’t have, people have no perspective, right? And so it’s like, yes, I’m

Mike Hambright (11:06.536)
Yeah.

wow.

Mike Hambright (11:17.138)
jeez.

Mike Hambright (11:22.78)
Well, there’s haters on social media like that. Let’s say this, screw them. but anyway, everybody’s got an opinion. Everybody’s got a pin and an opinion. anyway.

Sam Wegert (11:24.824)
Yeah, for sure. Yeah, exactly.

That’s fair. That’s fair. But it does it does man It’s it’s not just me coming out and like being egotistical and saying that this can solve for well housing. That’s not it’s it’s it’s it’s proven The US Department for Housing and Urban Development has come out You can now use housing choice vouchers previously known as section 8 vouchers You can use those for a co-living room now so that you can get guaranteed government backed rent on a co-living home That’s pretty cool. They’ve come out and said like we believe we believe like this is a viable option to solve affordable housing I’m paraphrasing but like that’s just not that’s me. That’s that’s HUD

saying that, right? And so it’s huge and we have a housing crisis.

Mike Hambright (12:03.613)
Yeah.

Well, there’s not enough development going on to build more housing, right? So you got to find ways to get creative. And this truthfully, mean, I’m not planning to turn my house into a co-living space, but I can tell you like it’s my wife and I, and we have one son who’s 17. We’ve lived in the same house for 15 years. It’s big enough for a few families. mean, I don’t want to do, I’m not going to do that with my house, but we’ve got, there’s a lot of wasted space. I’m saying where people that, especially if people are on hard times, they might, I mean,

Sam Wegert (12:21.39)
Right, Yeah. That’s right.

Mike Hambright (12:33.158)
This might be a different model, they could rent, obviously, historically people rent out rooms in their own house, if possibly too, you know? Yeah, yeah. Yeah.

Sam Wegert (12:38.026)
Mm yeah, that’s yeah, for sure. I that happens all the time. That’s how I started my first six homes were me living in them, renting out the rooms and exactly. Yeah. The best way to get started.

Mike Hambright (12:44.656)
Yeah, it’s like it’s typically referred to as house hacking, right? So you you own the house and you’re renting out some of the bedrooms and actually there’s a guy that works for me that does it. How say he lived his kids are all out of the house and they came back after college or whatever and now he’s like, well, you got to pay me rent and all your buddy wants to live in there is like fine. He’s like so now he’s you know lives for free because he’s working on the bedroom. So yeah.

Sam Wegert (13:05.226)
Yeah, yeah, that’s a great way to get started. My brother’s a great example of that. He just bought a house a little while ago and now he does co-living in it and it nets him. I mean, it more than pays for everything that he has. It nets him 1,500 bucks a month off one house and that’s with him only putting three or 5 % down. So he’s got, you know, he’s mortgaging 95 % of that property and it’s a little bit of money down and so yeah, 100%.

Mike Hambright (13:18.824)
It’s awesome.

Mike Hambright (13:26.694)
So people could house hack and live there and rent it out, but what you mainly are talking about is as a business, right? So I have a whole rental portfolio, like how do I rent out? How could I turn that into co-living instead of individual lease as possible? So let’s just talk about like who is the avatar for this? Is it just individuals? Like you’re not necessarily renting out to multiple families, right? Or am I wrong?

Sam Wegert (13:32.684)
That’s right. That’s right.

Sam Wegert (13:49.748)
Mostly, you know, if a, let’s say there’s seven rooms in a home and one of those rooms has a private entrance and you have enough parking at that home, sometimes we will allow like a significant, you know, a couple to rent a room, but most of the time it’s single room occupancy. So if a family wants to rent it or a couple wants to rent it, they’re gonna have to get two rooms. That’s normally our model. Now some of that is changing and I think we will start allowing more, maybe, you know, someone, cause again, if the room is the new apartment, then I need to be able to, that room is my apartment and I wanna be able to share that with someone that I love.

Mike Hambright (14:08.369)
Okay.

Mike Hambright (14:17.33)
Right.

Sam Wegert (14:19.118)
You might have to charge extra for different people based on utilities and things like that. that model is slowly changing. We’re starting to see some co-living companies kind of open up and actually allow kids in the homes with their model. Whereas that was very strictly prohibitive in three years ago. this model is evolving. It’s evolving fast and it’s really coming along fast. But most of the time, yes, it’s going to be people that are in between 19 years old and 30 that are kind of up and going and getting on their feet and they want to save money. And then we also have a population that’s 50 years old.

Mike Hambright (14:36.006)
Yep.

Sam Wegert (14:48.91)
and older that maybe went through a divorce or, you know, significant other passed away or they’re just, they’re on social security or they’re on some sort of disability and they’re on a little bit more of a fixed income and things have just gotten too expensive. They can’t afford it anymore. So, but really what you want to look at is who in the, who in that city makes between, you know, 10 to $25 an hour, you who in that city makes 20 to $40,000 a year. And in every city and every major city in the United States, there are hundreds of thousands of people that make

Mike Hambright (14:59.57)
Yeah. Yeah, yeah.

Sam Wegert (15:16.792)
that level of income. They could work for an airport. They could work for an Amazon distribution center. They could work for a hospital. They could work for a university, right? See, there’s major employers. They could work for a Target distribution center, Walmart distribution center, Walmart. It’s Walmart in general. It’s thousands and thousands of maybe tens of thousands of employees per Walmart, you count part-timers. So you, you know, we want to be within a commute’s distance. It could be a bus drive distance, a walking distance of those employers. I just recently put a house under contract for one of my Inner Circle Platinum students with this Done4U program where we

find the houses for them and we found this home that’s within walking distance of an Amazon distribution center. And I was like, dude, this is probably gonna rent in a day. Like, they literally walk, get the room. So that type of stuff you need to really, really, really be thinking about. And that’s who’s here. It’s really workforce housing. That’s what we’re trying to solve. It’s just easy, simple workforce housing. And it’s taking off. The governor of Colorado just came out.

Mike Hambright (15:56.816)
Yeah, yeah.

Sam Wegert (16:08.95)
and said, I am so tired of cities trying to regulate how many people can live in a home. So he made a state bill, statewide bill that said it’s illegal for any local jurisdiction, like a county or a city, to regulate the number of unrelated people that live in a home. Because he’s like, guys, if eight adults want to get together and live in a home together, like that’s not the government’s business. So there’s all these states that are just really paving the way because they realize that this is an affordable housing solve. It’s not the only solution, but it is a big solution.

Mike Hambright (16:34.802)
Yeah.

Mike Hambright (16:38.288)
Right. So how do you, as the property owner or a manager, deal with, I mean, not everybody listening to this will resonate with this, but I’ve had some crappy roommates before. And these are people that I chose to live with. Like these are my friends. And so in this instance, you’re getting roommates that you didn’t necessarily choose to live with, but how do you deal with like, one of them like always leaves their damn dishes in the sink? Like pets, maybe you just don’t allow them. Like how do you deal with people like,

that make the common areas, you know, like undesirable and you’re like, I hate living here. So how do you maintain that? Cause obviously you don’t want them to be so transient that it’s like, if you don’t like it here, you can move out and you you want people to kind of stay, right? So how do you deal with like common areas? I’m curious.

Sam Wegert (17:09.742)
Yeah, messier.

Sam Wegert (17:25.602)
Yeah, yeah man, there’s probably three big ways that we handle like that challenge of common areas and also just tension in general, right? One is setting clear expectations from the beginning. So we have a whole onboarding process where they have to initial a set of house rules as silly as that might sound. have to, we’re very clear about what is gonna happen in this. And one of those rules is like absolutely zero personal items in the common space unless you’re actively using it.

And we even have, we have cleaners that come in, they’ll clean the common spaces once or twice a month. And if they see a cop, if they see something in the common area, their SOP is to take it, put it in a bin. They leave a nice little note that says, don’t forget this is a co-living space. Your item is in the bin. If it’s here next week, we’re throwing it away. So if it’s a laptop, we’re throwing it like, and that’s all set from an expectation standpoint, right?

Mike Hambright (18:08.476)
Yeah. Okay.

Sam Wegert (18:10.966)
So I say all that to say like, there’s systems and things you’ve got to kind of figure out. And that’s, that’s why people are getting insane levels of cashflow right now from this asset classes, because there’s nuances that not everybody’s willing to take on and life is a risk reward, man. Right? Life is a work reward. So we’re getting, you gotta be willing to do hard things in order to do this. So of course it’s not going to be the easiest thing in the world and you’re cash flowing thousands of dollars a month per home. It’s just not going to happen. Right? So there’s nuances, but I mean, look, we’ve been doing this a decade and a half. And so the second way is just having a system and an SOP for every little thing that could come up and that can give you things you wouldn’t even think about.

Mike Hambright (18:22.47)
Yeah, gotta be willing to do hard things.

Sam Wegert (18:40.366)
Man, someone’s got a heater in the room and we don’t allow that without previous permission, right? Someone’s got an AC. don’t want it. We can’t put too much. Um, someone’s someone’s playing their TV too late at night. Someone is leaving things in the common area. Like you mentioned someone’s smoking when they shouldn’t be. Someone is being too loud. Someone has an overnight guest that’s staying over. Like, like there’s an ink. I’m kind of saying this because like, look, I don’t mind if people get scared away from this asset class. I know what it can cashflow. That’s why we have over 200, you know, these doors that we rent and uh,

And so like, hey, the longer, the longer other people stay out, the more cash flow there is for me for a long time. I say that somewhat playfully. Obviously that’s not my mindset on it. I want, that’s why I’m on here is to share the word, but it’s not for everybody.

Mike Hambright (19:13.992)
Well, it’s not for everybody. I mean, not everybody, not everybody wants, you know, I, I would say most of my rentals are kind of C plus B minus type houses. And there’s people that I talked to, you know, over the years of like trying to figure out what are you looking at? Cause I also,

wholesale a lot of deals too. So I’m like, what are you looking for? And they’re like, I was like, you like like C class properties? And then one guy said, we like F. He was like, I was like, nobody’s ever said that out loud before. But anyway, there’s something for everyone. Of course, there’s people that only like A class properties too, which the reality is, is they don’t really cash flow that well, typically. But you know, this isn’t, this show isn’t for everyone. But if you’re looking to make money, it is a way.

Sam Wegert (19:37.57)
Hahaha!

Sam Wegert (19:42.498)
Only for everybody.

Sam Wegert (19:46.862)
Yeah. Yeah.

Sam Wegert (19:51.694)
That’s funny. Yeah, and where I was going with that was imagine all those issues that we’ve dealt with. We know what the issues are going to be and then just we create a little mini SOP for every issue. And usually the general theme of that SOP is we warn them. We have some sort of more intense warning that threatens termination of their membership agreement. And then we actually terminate their membership. Or it could be a warning and then a fine if it’s a cleanliness issue. A lot of times it’ll be a warning and then a fine and then termination if it becomes worse like

You know, there is all of these little things. And so it’s as simple as like our virtual assistants actually handle the complaints. Like they can go in and be like, this is this issue. Here’s the script we’re sending them one. Here’s the second time it comes up and here’s the third. And we’ve got even a whole system for people reporting things in the home that was designed by a conflict resolution expert. He designed a system where when they’re reporting their issue, it kind of asked them simple, stupid questions like, have you talked with Johnny about this? What was the outcome of that? Like things that…

Mike Hambright (20:31.442)
Right.

Mike Hambright (20:45.082)
All right.

Sam Wegert (20:46.446)
just long enough to make them fill it out where if it’s not a big issue, they won’t fill it out. But if it is an issue, they will get to the end and they will fill it out. And then we hear about it. And then our team handles it from there. So you’ve got to have stuff like that. If you don’t have stuff like that yet, this is going to be the nightmare asset class that you’re going to hate Mike and Sam for even bringing to your attention. If you go try to do it, there are things you gotta, you gotta have in place. But once you have those in place and once you get it done, now you’ve got, now you’ve got what I believe is the highest cash flowing asset, maybe with the exception of an,

Mike Hambright (21:04.198)
Yeah.

Sam Wegert (21:13.912)
good five-star luxury Airbnb, but then you’re running a hotel, right? And it’s like, well, do you want to take on that level of responsibility? Yeah, it has its own set of issues, exactly. And so…

Mike Hambright (21:17.938)
It has its own issues. Yeah.

Let’s talk about the economics. what are, mean, obviously it’s like, hey, this is, might be a little bit harder than a traditional rental, but what are the economics? So I’m sure it differs by market, but like if you were to say, hey, this is by itself, this house is a thousand dollars a month of rent or $2,000 a month. Like what’s the lift, I guess, by having individual rooms rented out.

Sam Wegert (21:43.918)
We won’t even really look at a home unless it three X’s the gross revenue from single family. So if it would normally rent for two grand, we need to be to rent it for six. And we have some crazy examples. I I’ll give like the vision vision of like, hey, we’ll take a home that will rent for two to 2,500 or into for $8,500. I mean, so there’s a huge delta in terms of what we’re able to get based on maximizing that space. And so those are some extreme examples. I’m not saying that that’s every case because it’s definitely not.

Mike Hambright (22:02.13)
Wow.

Sam Wegert (22:11.928)
But I mean, we won’t even really look at a house unless it’s a minimum of a thousand dollars net, net, net after you pay manager after cashflow, right? And then we see examples of 1500. I had a lady on my podcast the other day, beautiful lady with her family. She says she got one home in Houston. It’s 12 rooms. And I was like, tell me the net. She goes, Sam, over the last three months, I’ve netted $5,000 a month off of one home. And it’s like,

Granted she put like 30 % down on this house. She did the rehab for their own cash But still I mean the fact that a single-family home 12 people on on average I think paying like $900 a month So there you go You got almost 10k coming in on one single-family home and half that’s profit you have 5k for your expenses like these these numbers are like

Mike Hambright (22:49.981)
Yeah.

Mike Hambright (22:54.92)
Explain one thing I want you to explain though is you just said something that was took a little shift here a 12 bedroom home So like most of my rentals are three two twos. We probably have a couple of four to twos We got some three ones. So like are you converting space? Are you dividing bedroom? Like what what are you doing to get?

Sam Wegert (22:59.982)
Yeah. Yeah. Yeah. Yeah.

Mike Hambright (23:13.894)
that many bedrooms in a home? is that typical? Like if I said, I’ve got 50 rentals in Dallas and a bunch of them are three two-twos and stuff like, is there a way, of course it depends on the square footage of the house, but how do you subdivide these things to get more kind of bedrooms into houses?

Sam Wegert (23:25.07)
Square footage.

Sam Wegert (23:28.974)
Yeah, I’ll give you the exact formula, man. It’s like a 1500 square foot house is going to be four bedrooms. No matter. don’t care what the layout of that 1500 square foot houses. I can get four bedrooms out of that. Just I’ve looked at a thousand homes. You know, I’ve looked at a bunch of the thousands of thousand homes. Every 250 square feet you add to that 1500 is going to be an additional room according to our model. So you bring me a 1750 square foot house, five rooms, 2000 square foot house, six rooms, 2250, seven rooms and on and on and it goes. And we don’t look at any homes that are less than.

Mike Hambright (23:39.014)
Yeah.

Sam Wegert (23:54.67)
2000 square feet usually. Now, when I first started this, to be fair, when I first started this, I’d look at much smaller homes. I only thought three people could share. But I kind of went on this journey of like, man, like, is it possible for five people to live together? What about six? And I kind of went on this journey where I kind of upgraded, so to speak, the number of people sharing homes. And don’t be wrong, the homes got bigger as I went. But I had a bunch of just four-bedroom homes when I first started. But that’s the benefit of like having a mentor in the spaces. You kind of, you kind of, I have a good buddy lives in LA, lives in LA County.

Mike Hambright (23:55.74)
Yeah.

Sam Wegert (24:23.686)
and

Mike Hambright (24:40.338)
Wow.

Sam Wegert (24:49.902)
I’ve had him on my show a couple of times, because I’m just like, your story is crazy, And he doesn’t even live in the homes. It’s not house hacking for him. He lives on the beach. He lives closer to the water.

Mike Hambright (24:53.832)
Yeah.

Mike Hambright (24:58.332)
Yeah, yeah. So what are some common, I’m being selfish, I’m thinking of my own rentals, and I think a lot of people would resonate with me having traditional houses as rentals. What are some typical things you convert to bedrooms? it subdividing a large bedroom into two is probably one. Turning a formal dining room into a bedroom, probably. And then converting garages, is that a common? Okay, okay.

Sam Wegert (25:19.224)
Yeah, we can work garages to one or two rooms. Yeah, all the time. So you can convert garages, dining room. Really, it’s really, it’s like any extra space other than you leaving one common space for people to work. We’ll turn them, we’ll furnish them and turn them into little work spaces. So for people to work, connect, eat, cook their food. Like that’s what you need. You need the common space. Every other space is, is, and we’re just doing what cities are already trying to do all around the United States was increased density in their city so that they can have better and more cheaper and affordable housing. So we’re, but yes, you’re converting every extra.

Mike Hambright (25:36.38)
Yeah.

Mike Hambright (25:44.752)
Right. Yeah.

Sam Wegert (25:48.974)
The way we think about it is what’s if there’s 600,000 people are gonna be homeless tonight and we got to solve that if we have to solve the affordable housing crisis and there’s I mean depending on which economists you talk to we’re seven to eight to nine million affordable housing unit short in America. So we’re not talking like hundreds of thousands. Everybody asked me is co-living saturated. I’m like man there’s probably less than a hundred thousand co-living units in total in the United States. We’re million stores. We’re so far off from that. It’s not even funny. But you know for us we think of

Mike Hambright (26:13.372)
Yeah.

Sam Wegert (26:16.428)
you know, a concept that most people are familiar with in real estate is the highest and the best use. What’s the highest in this business use of a square foot that’s not being used? Well, to be used for a bedroom. If we need to solve affordable housing, then it needs to be used for housing. Right. And so we’re converting every bit of space. Yeah. Dining room. If there’s a basement that has, you know, an extra living room in it, great. We’re going to convert that. If there’s a basement that’s unfinished, we’re going to finish it and add three or four rooms, you know, make sure you have egresses for those rooms. But we’re going to do that. If there’s a, if there’s a garage, we don’t rent out garages. We’re going to convert it to one.

Mike Hambright (26:33.404)
Yeah, basements. Yeah, yeah.

Sam Wegert (26:44.128)
one big room or two rooms and add some mini splits, right? We’re gonna do what we need to do to solve affordable housing. And it may sound crazy to some people, but you know, the people that it sounds crazy to are probably living comfortable. They’re not on the street.

Mike Hambright (26:55.752)
Yeah. Well, so tell me this, like there are probably some cities that require so much square footage per bedroom and some of the things like that, but they do. So like, what are you up against? And you said some states are changing this because they’re trying to solve affordable housing, but what are the, what are the common kind of regulation issues that you have to navigate in this model?

Sam Wegert (27:05.622)
Every state does. Yeah, every state has a different requirement.

Sam Wegert (27:17.122)
Yeah, the biggest one is just how many unrelated people they say the city says should be allowed to live in a home. And so that’s the one you’ve got to navigate. Now we have a legal structure that’s built on the backs of some of the biggest tech companies in this space and it’s how they get around. I don’t wanna say I’ll get around, because it’s not about getting around, but it’s playing in what I call, like, it’s playing in the gray, it’s playing in a space that we think is like,

Mike Hambright (27:37.03)
Rules were meant to be broken, right?

Sam Wegert (27:43.21)
We’re not operating in a black area that’s obviously wrong. We’re operating in a space where we have good faith. This is a good faith legal argument of why we can do this. And that argument a lot of times has to do with multiple different things. So I’ll give kind of three big arguments that we make. Number one, we’re gonna make the argument that there’s something in the federal government has something called the equal access rule. And basically it’s the federal government stab at defining what a family is. And as you might imagine, Mike.

The federal government’s definition of a family is basically like, if you act like a family, you think like a family, you kind of are like a family, doesn’t matter if you’re the same, regardless of sex or religion or whatever, you’re a family. And so the federal government recognizes families in a very liberal, kind of open-ended way. And so we’re putting people together that are frankly acting like a family.

Right? is not, is, they’re, they’re sharing a common space. They’re sharing a kitchen. There’s, there’s, we’re doing pizza nights, you know, once a month or whatever for the, or once a quarter for these, for these people. And there’s things that we’re doing to bring these people together and create communities homes. That’s number one. Number two, you know, we have a legal strategy where these people actually don’t lease the home. They are buying into you’ve met a country club. They’re buying into a membership that, gives them access to the home. And so it’s, so really I’m actually technically leasing my home to only one other company.

Mike Hambright (28:50.664)
Okay.

Sam Wegert (28:55.956)
one of the corporation that corporation then has hundreds of members that get to come and go and so that it’s a little that legal structure which I’m not a lawyer and I’m not trying to be on your show giving legal advice but it gives us more flexibility in how we operate you know we are these are members and so that’s kind of the second

Mike Hambright (29:08.924)
Yeah.

probably makes it way easier to essentially evict people too, right?

Sam Wegert (29:14.538)
It is, you can just terminate their membership and get them out in 24 hours. You’re exactly right. So we’re kind of turning on the head, the normal landlord tenant relationship, and we have a really truly, a true membership organization that people join and get to have these benefits.

Mike Hambright (29:17.211)
Right.

Mike Hambright (29:23.964)
Yeah, that’s how they do. Airbnbs in Vegas too, is you basically become a member of an LLC, but the membership only lasts for the period you’re renting. mean, it is found ways to get around it, you know. God love entrepreneurs man. I mean we’re saving saving world problems solving world problems here. Yeah.

Sam Wegert (29:29.207)
Yeah.

Sam Wegert (29:35.342)
It is, it’s comp, yeah, and it’s, I’m not, you know, we spent tens of thousands of dollars. That’s right. We’re trying to be creative, man. And I don’t think we’re trying to be creative in a bad way. I think we’re trying to be creative to solve a problem. And then I think this brings me to my final point. The third kind of thing about the legalities is that when you start to look into why these unrelated regulations, these number of unrelated people were created, they were created post-World War II and they were specifically designed to keep certain races

Mike Hambright (29:47.175)
Yeah.

Sam Wegert (30:03.886)
and certain social economic groups out of certain neighborhoods. Like hands down, if you don’t believe me, you can go in and there’s a county in Georgia, this is how their zoning code reads. Unlimited number of related people can live in home. Up to five unrelated and an unlimited number of domestic servants. When do you think that was written? Like when do you think that was like, that’s not relevant? So a lot of these are very outdated, frankly, extremely discriminatory in how a lot of these zoning codes were written.

And they just need to be updated and they haven’t been updated for almost 100 years. And so it’s like, no, these were designed to keep out prostitution houses. A lot of times this is that’s not, you know, undocumented immigrants. This is not what we’re doing. We’re doing a professionally managed. Yeah, yeah. Warhouse version too. That’s right.

Mike Hambright (30:39.452)
We’re going to cover whore houses on the next episode of this podcast, by the way. So just kidding. Just kidding. I’m kidding. But yeah, that’s an interesting model as well. anyway,

Sam Wegert (30:48.334)
It is an interesting model. What’s funny about that is I got a buddy who he had one single family home in his entire life and the lady turned it into a strip club. And he said, I will never own a home that I cannot just walk into at any point in time to check on the home because she destroyed it and it cost him tens of thousands of dollars. And so that’s why.

Mike Hambright (30:57.686)
nice.

Mike Hambright (31:04.812)
wow. I’ve bought a few houses with stripper poles in them before, but that’s another story. Yeah.

Sam Wegert (31:09.166)
Well, that’s why he does co-living now. He does co-living because he’s like, I can walk into the common areas and I can check on this home at any time. I don’t have to give notice. The common areas are truly common areas. We can walk in any time. So there’s some benefits to that from a real estate, you know, checking on your asset kind of standpoint. But I get very passionate about the regulation side of things because I grew up in a 1900 square foot house with eight brothers and sisters, two parents homeschooled on a three bedroom septic. So like, I’m like 10 people and like, like, wait, wait, wait.

Mike Hambright (31:18.088)
There you

Mike Hambright (31:23.292)
Yeah.

Sam Wegert (31:35.95)
How is it not a very high level of discrimination to say, 40 people can live in a home if you happen to be related. but two people can’t, and by the way, two is a real, like, you go to Charlottesville, Virginia, the regulation says more than two people cannot live, more than two unrelated people cannot live in a That means if I’m living with my girlfriend that I’m not married to in a home, and I have a buddy, I’m technically breaking the zoning rules. It’s just, it’s so far and so crazy that we’re challenging that in a really cool way, and I think in a way that America needs right now.

Mike Hambright (32:00.284)
Yeah.

Mike Hambright (32:04.326)
Yeah, that’s awesome. Well, Sam, fascinating stuff. know you know a lot more about it. I you have a podcast. Like if folks want to learn more about what you’re doing, like where do they go?

Sam Wegert (32:14.062)
Yeah, man, our biggest way that we serve this community and people who want to learn how to solve affordable housing while at the same time doubling and tripling their cash flow is through a five day challenge where you come on, you join, and for an hour, an hour and a half a day, we do a deep dive. So we’re going to just pull the curtain back and share with you everything about how you can start and launch and get your first Colby home full from everything from acquiring it to managing it to filling it to regulations. We’ll deep dive into all of that. So that all people have to do to do that is go to www.scaleyourrealestate.com. Get on the waiting list for the next challenge.

And I look forward to seeing you guys live on a challenge. Yeah, man, it’s fun. We have a lot of fun.

Mike Hambright (32:47.368)
I’m gonna check that out myself. Scaley at realestate.com. Cool. Sam, thanks for joining us today. Everybody hope you got some good value from there. There’s a lot of ways to make money in real estate and a lot of ways to solve problems and build your own wealth and cashflow at the same time. And this is a fascinating way to consider it because I know a ton of real estate investors and I don’t know very many that are doing this yet, but.

Sam Wegert (32:53.976)
Dude, this was fun. Thanks, Mike. I appreciate you.

Mike Hambright (33:11.084)
I think it’s a movement that’s not gonna slow down, so you should go check it out. So everybody, hope you had a great day. Hope you got some good information here. We’ll see you on the next show.