The College Housing Hack: Transform Your Childs Future with Real Estate

Stephen Schmidt (00:03.072)
Welcome to the show where we interview the nation’s leading real estate entrepreneurs. It’s your host Stephen Schmidt and I’m back at it like a bad habit We’re gonna get into a great conversation today. I got a special treat in the studio for you. got Alex Saenger in the house He’s a seasoned real estate professional at the old Keller Williams and He is actually based out of Rockville, Maryland in the metro DC area and he’s got over two decades of experience in the business

One unique thing about his business is he’s also 100 % only referral and he has a specialty in helping investors find properties with a high capital appreciation as well as major cash flow. And he’s also an expert at what we would call the college house hacking method. And so we’re going to get into a little bit of that today, maybe some tips, tricks, and things for you to consider in your own investing journey. But before we do that, just remember here at investor fuel, we help real estate investors.

Alex Saenger (00:47.726)
And thanks for you to consider in your own investing journey. So before we do that, just remember here at Investing Bill, we help real estate investors, service providers, and real estate entrepreneurs to decide their businesses so they can build the businesses they’ve always wanted. And because of their lives, they can always bring wealth. That being said, Alex, welcome to the show, Justin. Thank you, Steven. Glad to have you here, my friend. Do you prefer Steven or Steve? You know, that’s a great question. Very few people ask. Usually they ask if it’s investment or Steven.

Stephen Schmidt (00:54.228)
service providers and real estate entrepreneurs, two to five X their businesses so they can build the businesses they’ve always wanted in order to the lives they’ve always dreamed of. That being said, Alex, welcome to the show this afternoon.

Glad to have you here, my friend. Had a great, you know, that’s a great question. Very few people ask. Usually they ask if it’s Stefan or Steven, but what I tell folks is I respond to both, but my wife calls me Steven and my mama calls me Steven and they both kind of look at people a little sideways when they call me Steve. So I say, whatever you prefer. But Alex, let’s,

Let’s kind of frame the conversation here a little bit so that way our folks have some context on you. I know I gave you bio and a little synopsis of what you got going on here in the real estate world, but how did you get started in real estate back in the day and how things evolved to where you’ve gotten to where you’re at today?

Alex Saenger (01:31.278)
What’s gonna frame the conversation here a little bit? that there are folks having contact on when I did your bio and a little synopsis of what you got going on here in the real estate world. How did you get started in real estate back in the day? And how things evolved to where you got to where you’re at today?

Stephen Schmidt (01:52.256)
Cliff notes, right?

Alex Saenger (02:01.292)
applied mathematics, my master’s information management. So you think, you know, go down the IT road and do all that. And what happened was I did a technology startup that we wound up selling to real networks and I didn’t want to move to Seattle back in the day. That was back around 2000. And basically I started doing some other work for some other startups and they weren’t successful. And

Stephen Schmidt (02:16.447)
Hmm.

Alex Saenger (02:30.338)
you know, looked at it and said, well, what can I control? And I realized I could control my mortgage. And when I looked at that, I said to my wife, we got to sell this McMansion that we’re living in and, you know, like reduce our mortgage payment. And so that’s what we did. And at the time I had more, you know, more ability and more time than I had money. So this is back in the days when

Stephen Schmidt (02:34.943)
Hmm.

Stephen Schmidt (02:44.031)
Big match.

Alex Saenger (02:57.838)
you know, when you wanted to put a picture online, you actually had to go and take a photograph, go print it, and then scan it on the scanner. And then now you had a digital image and put it up. So I did that with my house. I went around, took all these pictures, and I actually put it up online. And I wound up selling my house to, on my own, to a doctor from California who found it on the website. Again, this is 20 plus years ago, 25 years ago. And.

I wound up picking up four real estate agents as clients. And through that process, I started to learn the business and wound up actually working for one of them predominantly, about 80 % of my time. So it was like a full-time job, but I was still doing other stuff on the side. And then eventually I wound up not working with him because I was too expensive for him and wound up starting a virtual tour business.

From there, again, every time I would go on an appointment, I would ask, so how’d you meet Kevin? How’d you meet Steve? How’d you meet Bob? How’d you meet Mary? And they would tell me. And so I learned the business from the inside out. And then I remember one time an agent was really upset. And I’m like, why are you so upset? He’s like, I just did my taxes, and I only made $250,000 last year. And I of went, oh.

and I’m like, I’m clearly on the wrong side of this equation. And I had already gotten my license when I worked with the real estate agent. So I was like, you know what? Flick the switch. And I started to sell houses. And the first year, I think I made $10,000 in commissions. And the next year was 20. And the next year was 40. And the next year was 80. And it just kind of boom, boom, boom, boom, boom, boom, boom. And all of a sudden, I was like, let’s just push this virtual tour thing off to the side. And let’s just focus on selling houses. And

you know, used referral based systems that I learned from various different sources and built my database and, you know, put regular systems in place. And, know, when you communicate with people on a regular basis and you actually spend time talking to them about what they want and you actually take care of them and don’t just try to sell them a house, but you’re listening to them. And I mean, I remember one time

Alex Saenger (05:20.366)
I told the client, know what, you should not sell your house until you’re ready for X, Y, and Z. And they pulled the trigger and just decided to stay where they were. And then a couple of months later, they said, you know what, after listening to you, we evaluated everything and now we’re going to sell our house. They lived with their parents for a year and then they wound up buying the house they actually wanted. So like, I’m going through it very quickly, but the point is, that like, to me, it’s not about

whether or not somebody’s gonna buy a house, it’s about the relationship. And if you take the relationship at heart, then, and you take care of people, then they have a great experience and then they are your sales force. They wound up going out to the world and they wind up telling the world how great you are. And so here I am 20 years later from all of that stuff. I got my license in 2003 in Maryland and then I got my license a year or later in DC.

And I’ve been doing business here in the DC metro area, Maryland suburbs ever since. You know, putting three kids through college, henceforth the college housing hack and doing that whole thing.

Stephen Schmidt (06:34.559)
There’s so much in that story that I want to pull out. First of all, that realization when the agent said to you, I only made 250 grand, what immediately sparked in my mind was that opening scene from The Wolf of Wall Street where he’s like, I made $51 million the year I was 25 or whatever. And that really made me mad because that was a million shy, was a million shy of a million a week or whatever. So that’s hilarious. But also a realization moment for you.

Alex Saenger (06:35.31)
There’s so much in that story that I want to pull out. of all, that realization when the agent said to you, I only made 250 grand, what immediately sparked in my mind was that opening scene from The World for Wall Street. I made 51 million dollars the year I was 25 or whatever, and that really made me mad because I was a million shy of a million a week or whatever. Yeah, yeah, yeah.

That’s hilarious. But also a realization moment, please. Now, also, I wanted to find what exactly is a mixed mansion? I mean, it’s a term that we use around the area. It’s going to be a house that’s

Stephen Schmidt (07:03.783)
Now also, I wanted to find what exactly is a McMansion to you.

Alex Saenger (07:14.958)
you know, bigger than five, six thousand square feet, but it’s not ten thousand square feet. Right. So it told brothers is one of the builders that builds what we call what I call McMansions. I wasn’t sure if that was like the McMansion because of how expensive it is, even though it’s not that big or if it’s actually like that kind of like. No, it’s it’s it’s the size of it because it’s not, you know, it’s not a big Mac. It’s more like the ham double cheese.

Stephen Schmidt (07:19.583)
Okay. Yeah, yeah, yeah, sure.

Stephen Schmidt (07:26.907)
Okay, cool. I wasn’t sure if that was like it’s a McMansion because of how expensive it is even though it’s not that big or if it’s actually like in that kind of like 5000 plus range, but not a true

Stephen Schmidt (07:40.263)
Yeah, it’s a double cheese. I love it. So yeah, exactly.

Alex Saenger (07:45.543)
or the daily double you know like you know get the two patties but you don’t get the extra bun so

Stephen Schmidt (07:50.751)
Yes, exactly. So, or the special sauce, right? Yes, that is, well, of course. So who doesn’t get the taxes, right? So in that whole process, obviously you said, you know, put three kids through college, the college housing hack method. What exactly is the college housing hack method and what do you like about teaching other people to utilize that in order to…

Alex Saenger (07:53.39)
or the special costs. Or the special costs. You do get the taxes. comes with it. That’s… Well, of course. Who doesn’t get the taxes? Yeah. So, in that whole process, obviously…

Stephen Schmidt (08:18.108)
I’m assuming most people probably aren’t, that’s not their like complete niche in the investing world, rather people that want to play the game a little bit, have a little appreciation, maybe some cashflow over time. But what exactly is that and how did you decide that’s what you were going to do with your kids?

Alex Saenger (08:34.587)
So, you know, as a real estate agent, we have an unfair advantage when it comes to real estate. We’re usually the first to know what’s coming.

Stephen Schmidt (08:41.16)
For sure.

Alex Saenger (08:47.532)
We are educated, or we should be educated. We should be educating ourselves on what’s a good deal and what are the good areas. And again, from an investment perspective, what’s a good capital appreciation? What’s a good rental rate on a monthly basis, cash flow? If I have all of this training, I am a fool to not leverage that training when it comes time for my kid to live somewhere where I’m not living.

And so the college housing hack is affectionately this. You as a parent, right? So don’t just look at it as a real estate agent, but you as a parent are going to send your kid to school. The first year they have to live in the dorm in most cases, right? And especially if it’s not like where you live, they’re not living at home. They’re going to be living away from home. So first year they live in the dorm, the second, third and fourth year, assuming they’re going for an undergrad bachelor’s degree, they’re going to have to rent an apartment, right? And they’re probably going to get roommates unless you’re super wealthy and they use.

buy them, get them their own place. But even if you’re super wealthy, like this still matters, right? Rich people stay rich because they do smart things with their money. And this is one of the ways you can do smart things with your money. So if you took that second, third, and fourth year, let’s just say you spent $1,000 a month on rent. That’s $36,000. Now, instead of spending it every month, $1,000, you take that money collectively, you put it up front, and you use that money to buy a house that your child can then live in. I have daughters. I have three daughters.

And so my daughter wound up being the buyer for the property with an FHA loan. It becomes her primary residence. And oh, by the way, in some states that will then get her in-state tuition. In other states, it does not. So you kind of need to know where you’re going and need to do some investigation. There’s work involved in it. But the idea is like, so for example, in our case, we spent $25,000 to buy a half million dollar house, right?

Stephen Schmidt (10:36.594)
Hmm.

Alex Saenger (10:44.558)
I went over the ass price. said no inspection contingency, like, cause I knew the market, right? And I knew that the money that I would have to spend to fix it up. Well, guess what? That was five years ago that my oldest one went through college. And then my, my second one is now living in that same house. The Delta between when I bought the house and what now with, especially with both of them going through this is at least $150,000 in the money that I saved on rent, right?

Stephen Schmidt (11:11.795)
Mm.

Alex Saenger (11:13.976)
the month and then the capital appreciation of the property that I bought so the value has gone up it’s a college town right there’s always a need for housing so the objective is your child then lives in the best bedroom usually the primary bedroom right they get the best bedroom sometimes they get a private bathroom and then you rent out the rest of the rooms in the house according to the local regulations to their friends

right? So they always go, I want to live with so and so, right? And they bring so and so and so and so and lives to live with them. And you can put anywhere from two to four other people living in there. And then that money that comes from the rent pays for the mortgage, pays for the utilities, water, gas, electric, lawn care, cleaning between semesters, pest control. Yes, you need that. All that kind of stuff. And so

understanding what’s involved in it really matters. One of the key things when you’re doing a college housing hack is actually parking. People don’t think about parking, but if you’re going to have five people living in the house, you need to get five cars off the street. How are you going to do that? so the idea is have your child be the primary buyer. You as a parent or co-parents, fund

Stephen Schmidt (12:34.75)
you

Alex Saenger (12:36.974)
finance the purchase of the property because it’s their primary residence. You want to put the least amount down three and a half percent with an FHA mortgage, right? So you’re putting as little as possible down, saving a little bit of that cash to maybe make some renovations, fix up the place a little bit. And then you move a bunch of college students in and, um, and there’s lots that I, mean, we could do five shows on just this topic, but that’s affectionately what the college housing hack is. And it’s one of the things that I help my clients.

kind of evaluate because it is a lot to kind of look into it and make sure that you know it makes sense and if you’re going to the University of Maryland you should give this guy a call Alex Sanger with Keller Williams because I can help you find a great college housing hack house in the college park.

Stephen Schmidt (13:23.634)
There you go, folks. So let me ask you this, because you’ve got three daughters, right? And girls generally in that college phase are a little more tame. I’m not yet. That’s because I’m I knew you were going to say that.

Alex Saenger (13:31.438)
and will generally in that college days are going to go to the? No. Wrong. Clearly you’re not a parent of a college days daughter. Uh-uh. Okay, but let’s with your presumption. Go right ahead because you’re wrong, but go ahead. Because I do need to say that.

Stephen Schmidt (13:52.54)
But in terms of the throwing parties and everything else, what are some of the risks that you should be considering with your kids if that’s something that you’re gonna do, especially putting them as the primary owner of the house and things along those lines? I do have four kids, but they’re not college age yet, so yeah.

Alex Saenger (14:06.366)
Yeah, so they’re not that ready yet. So the answer to that question is we allow get-togethers but not big parties. Right? in the case, by the way, I have another house in Pennsylvania, Penn State. So we have one at University of Maryland, one at Penn State. And in the University of Maryland, they have a regulation on how many people can be outside of your house. Yes.

Stephen Schmidt (14:16.093)
Hmm.

Stephen Schmidt (14:33.553)
Really?

Alex Saenger (14:35.25)
And so that’s actually in the lease that I have with the tenants to let them know, right? Like this is a conversation I have with them before they come is that if you’re going to have a good together, you can’t have more than 10 people outside. And by the way, if they come by and find us, the entire house has to pay the fine. And by the way, if it happens more than once, you’re all gone. We’ll replace you like immediately. Termination of lease.

So there’s definitely a little bit of the fear of God in them. it happens once. You call their parents, and guess what? Their parents go, what are you doing? We don’t have anywhere else for you to live right now. We can’t do that in the middle of the school season or whatever. So it hasn’t happened.

Stephen Schmidt (15:12.093)
You

Stephen Schmidt (15:16.497)
Right. So I think my question was tailored more towards like what happens if it’s your own daughter who owns the property?

Alex Saenger (15:24.11)
Well, I think you should have a good enough relationship with your own kid, where if you tell them this is what you expect, that they actually listen. So I have not had that issue. One has already gone through and graduated. The second one is in. The third one is in. they also don’t want their house trashed. They don’t want to live in that environment. So they’ll have a party or a get together, but it’s small.

Stephen Schmidt (15:46.301)
Sure.

Alex Saenger (15:52.621)
It’s not 200 people. It might be 20 people, 10 inside, 10 outside, or 20 inside. It’s winter.

Stephen Schmidt (15:52.86)
Yeah.

Yeah, I that makes sense.

Stephen Schmidt (16:01.438)
That totally makes sense. And you know, on that note, what I love about what you said there is it’s about having that relationship with your own kid. You know, I heard something recently where it’s really like our job as parents, like we can’t completely determine who our child’s gonna be in terms of their personality, their traits, et cetera, but it is our responsibility as parents to raise a child that we actually enjoy spending time with.

Alex Saenger (16:26.958)
Yeah, I mean, I would also argue that, you know, 50 % is nurture, 50 % is nature, right? So they are part of who they are is how you raise them. Part of who they are is just who they are. And then because you have, you have four kids, they’re not identical. They all have different personalities. They all do different things. Well, you’re raising them the same way. Why are they different? Well, 50 % is nature, right? The other side of it is as a parent, you know, our job is to help them make good decisions.

Stephen Schmidt (16:37.95)
Mm-hmm.

Alex Saenger (16:57.358)
because that’s all we can do. Once they’re outside of your sight, once they’re an adult, right over the age of 18, they can do whatever they want. You cannot control what they’re going to do. But if you’ve built enough respect with them, if you taught them how to make good decisions, then hopefully you don’t get that call in the middle of the night going, can you come pick me up?

Stephen Schmidt (17:12.904)
sure.

Stephen Schmidt (17:23.228)
Yeah, totally. You know, and it’s interesting because I’m going through that transitional period of you’re now, it’s okay for you to still be a kid, but there are real or consequences to these decisions. I’ve got a 10 year old boy who’s,

He’s my second oldest, but he’s the oldest that’s still cognitively there. Our oldest is mentally and physically handicapped. And so he’ll always be under our care. But my 10 year old now, we’re starting to get into those things of like, dude, your actions are going to be held accountable because if you become an adult and you make these types of decisions in a way that is translative to adult decisions, like they’re going to have real world consequences that I can’t save you from now. So

Alex Saenger (17:49.102)
But my thinking role now is we’re starting to get into those things of like your actions are going to be held accountable because if you become an adult and you make these types of decisions in a way that is transitive to adult decisions, they’re going to have real world consequences that I can’t save you. So ultimately it’s about being responsible enough to be trusted to do the things that you’re going to do.

Stephen Schmidt (18:10.733)
Ultimately, it’s about being responsible enough to be trusted to be left alone to do the things that you say you’re gonna do and to be honest when you make mistakes and as long as you do those things like you’re gonna be fine So we’re going through that transitional period of like childhood is starting to end for you, dude It’s time to become a little man, you know, so now

Alex Saenger (18:29.125)
Yeah, well it’s it’s I guess adolescence is really though, right? That’s the

transition and so I mean another thing we haven’t talked about I also I coach volleyball girls 15 volleyball so think freshmen in high school I usually get a gaggle of kids every season and have them come because my kids played volleyball when my youngest said I’m not playing anymore I’m like well then I’m gonna coach and so that’s one of the ways that I players asked me one time she goes coach how do you get back to the

Stephen Schmidt (18:46.841)
man.

Stephen Schmidt (18:56.86)
Yeah.

Alex Saenger (19:04.302)
I’m doing it right now. I’m coaching you doing this. Like I could be doing a ton of other things, but no, do that anyway. you know, it’s so I’ve carried and when my kids were younger, I was involved in Girl Scouts. I was a Girl Scout leader and all that stuff. So I’m very much into creating female leaders, right? So, but a lot of what you just talked about is stuff that

Stephen Schmidt (19:26.437)
Hmm.

Alex Saenger (19:30.862)
even at 15, even though they’re not my kids, they’re my team. I treat them with respect and I also try to educate them on things that they shouldn’t do as well. yeah, but that’s a separate thing. I want to say a few things about you because I know you’re not just doing business with one person. No. That’s a very small part of my business. Very small part of my business. Yeah. you’re doing federalized.

Stephen Schmidt (19:43.047)
Totally.

Stephen Schmidt (19:47.164)
I want to transition a little bit too because I know you’re not just doing just this one niche, right? Like you own a total of six properties. Totally. And so, because you own several other properties, but you’re also working.

With a client who has a real estate investment fund for the people obviously that want the upside of real estate gains without the hassle of being the landlord. So like how much would you say of your business is based on other forms of investing or working with investors versus traditional like working with someone that’s looking to just sell their home retail or buy a home as a first-time buyer or second, third, fourth.

Alex Saenger (20:26.094)
Yeah, I mean, I definitely would say that 70 or 80 % of my business is still traditional real estate sales. So people that I know or people that I know that they know, you know what I mean, that follow that path now, where they refer them to me.

Stephen Schmidt (20:40.775)
Sure.

Alex Saenger (20:43.906)
And at the same time, I don’t go out seeking rentals. But what winds up happening is because I work with investors. They talk to their friends, and their friends want to buy house, and then they want to rent it. And I’ll find them a tenant. I have a very streamlined process for that, which not everybody does. But it’s important to have that. So.

I would say, you know, yes, and by the way, the investment fund, you know, that’s a situation where 10 years ago, I met this gentleman, and we wound up buying properties, helping him invest in properties, making sure that not only was the

you know, the return there from a capital perspective, also I’m sorry, from a cash flow perspective, but also from a capital appreciation perspective. And the great thing about a relationship that’s that long is that you can literally tell them, yes, that one has good cash flow, but the capital appreciation isn’t going to be quite as good as this one over here. And they can invest in both and they can see the difference. And then they can see that what you told them

Alex Saenger (21:57.885)
the capital appreciation is where the real money is. Substantially higher over here I’d rather come over here again- and so the good news is that the longer I work with an investor the more properties that we-

you opportunity to to, you know, attack. They start to understand that my understanding of my local market dictates like what things that I would myself invest in, right? So like my own investment, my own investment properties, they’re generating about a 20 % return on investment every year, which is way better than you’re going to get in the stock market, which is way better than you’re to get in

Stephen Schmidt (22:40.252)
Totally.

Alex Saenger (22:43.15)
It comes with a little bit of work, but I have a process for finding really good tenants.

Stephen Schmidt (22:51.196)
You know, I asked a guy recently on the show, what made you decide to pursue real estate after being in another totally different type of sales environment? And he had a conversation with someone that was actually, I think, his professor, business professor of sorts. And he goes, well,

Buddy, goes, if you go and buy $100,000 worth of stock, how much does it cost you? And he’s like, well, it’s hundred grand. goes, if you go buy a hundred grand worth of real estate, how much does it cost you? He goes, I don’t know. And he goes, it costs you about 10 grand. There you go. Yep, yep, 100%.

Alex Saenger (23:28.91)
It’s in the book. It’s in the book. That exact scenario is in the book. And actually, this is something that I teach, is how to become a millionaire real estate investor, and that you’re exactly right. It costs $100,000 to buy stock to get your 5 % return. But take the situation that I did with the college housing hack, use that example, 5 % down, $25,000 investment in a half million dollar house.

that half million dollar house has increased by at least $50,000. So that’s a 200 % return on my investment compared to what I would have done with that money in a mutual fund or a CD or a stock market. 200 % plus I saved money on the rent. And somebody else is paying down.

Stephen Schmidt (24:18.62)
100%. You have somebody else pay off the balance.

Alex Saenger (24:23.81)
the mortgage, and I’m making cash flow on top of that. So when you look at the number of dimensions that are involved in real estate investing, it’s just, right? So by the way, that 20 % I talked about, that doesn’t include capital curtailment, paying down your loan as the time goes by. But what you said is exactly right, which is the money that you have to invest in stocks, in mutual funds, in CDs.

You have to have the cash to make that return. Here, we’re leveraging the bank’s money. I want to double the bank’s money in 10 years. So if the property goes from $500,000 to a million in a year, and I only put $25,000 down, my $25,000 turned into a $500,000 return. That’s crazy, that kind of return.

Stephen Schmidt (25:20.604)
Well Alex, thanks so much for coming on the show. Do yourself a favor, give yourself a little plug. If these people want to connect with you for more, maybe they want to look at a property. If they’re coming out to college in Maryland, where should they go to connect with you for more and learn more about what you’re working on?

Alex Saenger (25:31.438)
college in Maryland where should they go to Connecticut? Yeah, for sure. We do a lot of fun things on social media. You can find me at Sanger group.com and Sanger spelled S-A-E-N-G-E-R. Sanger group.com is our website, Facebook, Instagram, and those types of platforms.

I’m here in the DC metro area, Washington DC and Maryland, all the Maryland suburbs, Montgomery County, Frederick County, Prince George’s Howard. Those are primarily my places where I work. I will list a house just about anywhere in Maryland. I’ve gone as far as Flintstone, Maryland, that’s as far west as Flintstone, Maryland. I’ve gone as far east as Ocean City, Maryland. So if you have a property you’re selling, give me a call. I have a great system that’s proven. My phone number 301-200-

123 to that’s my Google number and you can hit me up on that shoot me an email send me a text and Yeah, no, it’s not true

Stephen Schmidt (26:36.602)
There you go folks, well all million of our listeners are now gonna call you on your Google number. Send a text first folks. We do have a lot of listeners I will say, but I always drop that joke when folks give out their phone number, but we ask people to text first so you don’t blow them up. Haven’t heard of any issues yet, so.

Alex Saenger (26:58.412)
haven’t heard of any issues yet. Hopefully that’s a good sign. Thanks so much for listening folks. We appreciate Alex coming on and sharing some advice. We a great conversation and we look forward to seeing y’all. Thanks, Stephen. Thanks for a great show.

Stephen Schmidt (27:00.378)
Hopefully that’s a good sign in your favor. But thanks so much for listening folks. We appreciate Alex coming on and sharing some insights and had a great conversation. We’ll look forward to seeing y’all in the next episode. Thanks again, Alex.