Why Co-Living Creates More Cash Flow for Investors and Lower Rent for Tenants | Sam Wegert

Sam Wegert (00:00)
Yeah, my main focus is all on co-living real estate investing. And if someone doesn’t know what that is, it’s really a, it’s a model where you take a single family home and instead of renting it out to a whole family, you, you convert it to a room rental type property and it does exactly what you just shared. It helps solve affordable housing. There’s nuance to it. I think we’ll talk about a few of those that you have to understand. Otherwise it can be hell.

Micah Johnson (01:52)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Micah Johnson. And today I’m joined by Sam Wegert, who’s making some serious moves in real estate investing now for the last 15 years. Sam, welcome in man, glad to have you.

Sam Wegert (02:04)
brother. you so much, Micah, for having me. I’m super pumped for the show and ⁓ just excited to share. Yeah, thanks for having me on.

Micah Johnson (02:09)
excited,

man. I haven’t had this particular conversation yet that we’re getting ready to. It’s a unique niche that is starting to come alive. More more people are finding out about it. And it deals with a lot of stuff like housing issues that we deal with in America. There’s all kinds of factors that it solves. I’m really pumped to dig into it because there’s a good side and there’s this other side to it you need to pay attention to. And I’m pumped you’re going to kind of pull that sheet back for them. So for folks that are listening in who aren’t quite familiar with you yet, you know, tell us a little more about yourself and

Sam Wegert (02:13)
nice.

Micah Johnson (02:38)
what your main focus is right now.

Sam Wegert (02:41)
Yeah, my main focus is all on co-living real estate investing. And if someone doesn’t know what that is, it’s really a, it’s a model where you take a single family home and instead of renting it out to a whole family, you, you convert it to a room rental type property and it does exactly what you just shared. It helps solve affordable housing. There’s nuance to it. I think we’ll talk about a few of those that you have to understand. Otherwise it can be hell.

But if it’s done correctly, you it’s really one of the biggest investments that I’ve seen in a long time that I feel like is truly a win-win. You win as the investor, you’re getting more cashflow and you’re the people that are renting them get a more affordable place to stay that’s clean, that’s quiet and that’s safe.

Micah Johnson (03:07)
What?

Love that man. it’s one thing I enjoy about real estate is how often you create those win-wins. There are ways in this industry where all sides move together in a ⁓ upward rising direction, man. And it’s powerful. So take us back. What led you to where you are today? How’d you end up getting into this co-living space?

Sam Wegert (03:22)
Yes.

bought a property in 2011 that was a three bedroom, three bath property right outside of right outside of University of Virginia in Charlottesville, Virginia. And I didn’t think much of it. I just lived in one room and I was single at the time I was building a complete other business in the martial arts space at the time. And I just started renting out rooms and it was it was really a kind of a combination of three things I realized I was renting out rooms I realized I was living for cheap because these these housemates were helping me pay my mortgage.

Two, I realized I was providing cheap housing to people who actually needed cheap housing, right? Because I was renting a room and they were living in it and it was half the price of a studio apartment in the city. And the third thing is I realized I was having fun. I realized I was like, I had built in community in my house. And this experience of living with housemates was so profound for me. I lived in co-living houses from that age. I mean, was 19, 20 at the time. lived in, well, I guess I’d been living in them before that, but overall I lived in co-living houses for 14 years.

Micah Johnson (04:06)
Mm.

Wow.

Sam Wegert (04:31)
And

it was a really beautiful experience. And so when I met my wife, she I had six roommates and she was like, what the heck is going on here? Like this can’t we’re gonna get married like this camera, but it was really fun cool experience and so I’m so bullish on this model because you know, the surgeon general recently came out of United States and said that ⁓ it’s 60 % of young adults report serious and chronic loneliness and then they went on to say that the Health effects of that are equal to smoking up to 15 cigarettes a day

So

we have a loneliness challenge that nobody’s really talking about. Everybody knows we have an affordable housing challenge. Everybody knows we have a homeless problem. There’s 750,000 people tonight that will be homeless in America. about the city. ⁓ If that were a city, that’s city the size of Charlotte, North Carolina, approximately. And so we have these issues. And I just think that colonization is like this beautiful way where we all remember to share. We have to share a house. We’re sharing common areas. We’re sharing a kitchen. But to do it from a standpoint of an investor,

Micah Johnson (06:08)
Mmm.

Sam Wegert (06:14)
It just solves really some of these big issues in a really powerful, cool way. That’s why I love it.

Micah Johnson (06:20)
Yeah, it’s, it’s real estate’s interesting because it’s always a math problem and a people problem. You can never get away from it. There’s the math problem part where, you know, is this actually investment? Can we make it turn? And then there’s that people part of the problem you’re actually solving, whether it’s a distressed homeowner, you know, you’re solving that problem in their world. And now what I love that you’re talking about here is, is it’s really how important home is and the byproducts of

Sam Wegert (06:21)
Thank

Hmm.

Micah Johnson (06:48)
the affordable housing crisis and the byproducts of the housing crisis limits in general. We’re looking at their real effects on the human. when the economy does this, the human being does this and they’re not the same thing, right? And it’s like, we can’t optimize ourselves to complete efficiency. That’s what capitalism does. It optimizes to efficiency, but humans aren’t that way. We can’t do that to ourselves everywhere or we just, we get wrecked. That’s not how we function the best.

Sam Wegert (07:01)
Right, Yeah.

So well said.

Micah Johnson (07:18)
And it’s, creating that space where I love the fact of that community. Cause it’s the same. Okay. You go live in a dorm room. We don’t think anything about it. You go live in these other areas. It’s like, it’s just for college. But now you’re saying, wait a second. Maybe not. Maybe not. That’s where not that doesn’t belong because people are staying single longer, right? All kinds of different things are happening longer and they just need a place, right? Where can they get access? And when you can, man, you solve loneliness, which is a huge one, especially in our day and age, the

Sam Wegert (07:27)
Yes.

Right.

Yeah.

Yeah.

Micah Johnson (07:48)
Phones disconnected us. I just turned 40 recently. I remember life without a cell phone. I remember that change and all of sudden I had this change someone could find me on all the freaking time and it’s only grown from there. And it disconnected us in a way. But the folks you live with, mm, dude, I love that. I love that mission that’s there because it, right.

Sam Wegert (07:53)
Happy birthday.

dead.

We need to bring back, yeah, we need to bring back family compounds. Like I think we do,

like I agree, like late. And there’s a difference between early stage capitalism and late, and like we are in a later stage of capitalism where things have been so optimized and everything is so that it is not, that system doesn’t work for everybody anymore.

And I think you’re totally right. forget about some of these human needs. It’s one of the reasons, Micah, I moved to Columbia. I’m living in Columbia, South America right now. I know it’s not really an American thing to say. kind of dead. And it’s not, I don’t hate the United States. I love the United States. It’s provided so much for me and my family. just, but I needed, and I know this is why you live in where you live. It’s like, I needed a slower pace. I needed something a little bit more human. And you’re right, optimizes for efficiency, for profit, and for production.

So sometimes when I go back to the States, if I’m being totally honest, I feel like I’m back in that hamster wheel again. I feel like I’m back in that grind. I see my friends have three jobs to help make ends meet. Another stat I recently read, because I’m doing a TEDx talk on this recently, is that two thirds of working age renters do not have enough money to pay rent. That rent, that rent. Do not have enough money to pay rent and whatever, and the rest of life, like basic needs. So picture three friends who rent, two of them, if they’re in this working age. ⁓

Two of them are deciding after rent day what doesn’t get paid. Is it gonna be health care? Are we gonna skip out on vacation? Are we gonna do this? What doesn’t get paid? And they’re doing it quietly, you know? And so that’s a little bit of where America is right now. For anybody that’s in one of these big cities and, you know, obviously the more rural areas, which I know a lot of some people are moving there, a little bit different, but I think we need to optimize for sharing. I think we need to optimize for being human again. And some of these countries that haven’t had the success of the United States are a little bit more optimized for fun and pleasure and enjoyment of life and slower pace.

Micah Johnson (09:56)
Right.

Right.

Sam Wegert (09:58)
⁓

which I’m really enjoying in this stage of my life right now.

Micah Johnson (10:36)
Well, it balances that out. Like it got thrown into this cute term of work-life balance and that got blown out into something, but it’s more about human balance. One of the coaches I’ve worked with and he’s worked with some high level folks the world knows, but what he preaches is calm is the optimum state for high level athletes or entrepreneurs.

Sam Wegert (10:42)
Yeah.

Hmm.

Micah Johnson (10:59)
There

are two stages you live in. One is called implementation. The other is receivership. If you don’t know how to sit down and be still, you’re never gonna get where you’re going. If you cannot literally rest because high level athletes, you gotta rest, man. You can’t push your body every day, every day for years and years and years. And this guy was an Olympian. So to hear the best say, slow down. He says the greatest word in a champion’s vocabulary is restraint.

They don’t take the field until they’re ready. And it’s so counterintuitive of what we came, we all came out of the gate with this idea that you got to hustle forever and don’t stop. And we watched our parents that take longer and longer and longer. And all of a sudden it sets in of, what are we doing? Like, what are we really actually doing here? And then getting to work with someone like that showed me, hey, wait a second, adjust that lifestyle, get good at being human. That’s my goal.

Sam Wegert (11:36)
Yes. Yes. Yes.

Micah Johnson (11:53)
Right? You want to be a good human being, get good at being human. There’s a skill set to it. And we don’t operate well alone. That is the number one thing. And we’re one of the only species in the world that can work in groups larger than 200. And that little fact right there is why we’ve created the societies we have. Every other primate species breaks down. They have to create a new troop. And there was a Harvard debate captain. used to open every debate this way.

Sam Wegert (11:55)
that.

Yeah, that’s exactly right.

Wow.

Micah Johnson (12:21)
I’m going to begin with saying that we all have far more in common than we do different and then would present his arguments. And I loved it because when you get there, now you’re looking at the world from a helpful way. When you solve those problems and I look at co-living from that space and I spent a little time homeless with a couch to live on, nothing but other people let me stay with them in my early twenties. I know how important home feels, the security to it, the safety to it. It’s a lot.

It means a lot, especially early on. mean, all the time for sure, but early on, man. that, that mission is powerful.

Sam Wegert (12:57)
And people are,

people are waking up to this and to bring this back around to co-living, people are waking up to this. And this is kind of what co-living addresses why I think it’s becoming more popular now. It’s like, okay, I can live with other people and that can actually be a good experience. And then you have people willing, being willing to open their homes and share their homes because they have, you know, they have empty rooms. We have enough, we have enough rooms. There’s 32 million extra and unused bedrooms in the United States. That’s an estimate. Obviously I haven’t counted all of them, but a lot of the stats.

That’s like, we’re somewhere between 30 and 32 million. Well, like that’s enough to solve our homelessness issue. That’s enough to solve our housing issue and they’re extra and they’re unused. And so this idea of bringing sharing back, bringing community back, like just the idea of renting a room is less costly than renting anything else in any city. That’s just the truth. And it can still be a clean and a quiet and a safe room. A lot of these rooms have private bathrooms. So you can still have your space.

But now imagine spending half of what you would normally spend on housing, which is normally people’s largest expense. Guess what you get to do? You get to spend the rest of that money on being like you’re saying. You get to spend it on being human. You get to go take your friends out. You get to go travel. You get to go and you get to go enjoy life. I think so I do think there’s this there’s this catch. At least definitely. And I think in our generation, there’s people that are like, wait, wait, I don’t want to do what my parents did and just grind for 56. mean, my parents have been grinding for 45, 50 years now, and they’re still going. They’re there, you know.

Micah Johnson (14:23)
Right?

Sam Wegert (14:24)
So it’s like, I don’t know if I wanna do that. know, and so, okay, what is a more human way to live that’s a little bit more enjoyable? And some of these other cultures, this is why it’s great for, I think, always encourage people to travel outside of the States. Because you travel outside the States, you realize two things. Number one, not all cultures prioritize the hustle that Americans do. And number two, living is extremely popular, every single other culture but the United States. Very popular in South America, very popular in Asia, extremely popular in Europe.

Actually, when I first was on a big, I was on a big podcast a couple of years back talking about co-living, some guy called me from Berlin. He’s like, Sam, you’re talking about this like it’s new. He’s like in Berlin, Germany, it’s so expensive to live

No millennials even think about owning or renting a whole place. Like it doesn’t even enter their mind. They all rent a room. And he goes on to tell me how he’s building these co-living buildings with the ground up and they have whole building codes dedicated to co-living. it’s, you know, getting out of that bubble and realizing there’s other ways to live that are more human.

I’m using that term, I kind of like that term that you mentioned, more human, more sharing, more connected, more in touch with other people, less, I have to make all this money to survive in this way. I think it’s really what I’m starting to see with lot of my friends and kind of in the groups that I’m in.

Micah Johnson (16:15)
And it’s only going to take fire more because of being able to work wherever you want. Virtual work, because we used to meet like, look y’all work was, is the replacement of high school ⁓ and more ways than one after we get out. But we met where we meet all our friends, where we spend all our time, where do you your friends, where you spend all your time. But if when you’re spending your all your time at home alone, working, doing your thing.

You don’t really go out much. All of sudden, next thing you know, you’re out. And like you’re saying, you’re alone. You’re in that environment where what you’re talking about here, again, it solves that. It puts you in a place where you’re building a community on purpose. And if it’s run well by good operators, that’s where the safety factors come in. That’s where this can actually be a really beneficial thing for you because you have no idea the relationships it’s going to create.

Right. We’re, if we’re going to constantly say you are the five people you surround yourself with, well, what ways can you surround yourself with good people? Again, you’re solving those kinds of problems and you’re right, man. America, we get behind the ball on some things where we, we, this, we think of something, ⁓ it’s new, but it’s not a lot of folks been doing it a long time.

And you mentioned this earlier, bringing the family compounds back and things like that. And that’s a big subject that still ties around this. What we’re experiencing, there’s a story and I love listening to, and she talks about about the late seventies, early eighties, this idea of rugged individualism swept America, like the cowboy mentality. You’re your own thing. You don’t need anybody. We don’t need the government for nothing. Like this whole concept swept and we were raised by parents.

Sam Wegert (17:39)
version of it.

Micah Johnson (18:00)
who were really bought into this idea, but it’s not real at all. There is no, like we can’t do anything big alone, right? We just can’t. If you want roads, like you want to get around and stuff, like this idea of rugged individualism has just drove us to a point where we lost that ability to connect, where now that’s where our generation has realized you don’t do this on your own.

Sam Wegert (18:14)
Yeah.

Wow.

Micah Johnson (18:26)
And there’s no threat to working with people doing the same thing. They’re not my competition. That’s what I love about real estate is how much abundance mindset exists. Because all you got to do is show up. If you’re going to put in the reps, you’ll get your deals. I ain’t worried about you. Don’t be worried about me. Okay. I’m not taking yours, not taking mine. Are you going to show up? Cause I’m show up. Like that’s the only, that’s the thing, right? That’s what creates it. So as long as you’re doing the actions, man, there’s plenty for all of us to go around and

Sam Wegert (18:40)
Yes.

Beautiful.

Beautiful.

Micah Johnson (18:54)
starting to curb society that way where I’m trying to convince my in-laws and people to build a family compound. I’m very big on that. Families didn’t, like if you study a history, families didn’t break up and you can fly wherever you want. get it. I’m okay with people moving away, but when hard times hit, the reason why they didn’t move away is because now you have support. Nothing, you can’t, you only fall off a curb, not a canyon. And that’s something we experienced constantly where

Sam Wegert (19:00)
That’s cool.

Micah Johnson (19:22)
when you’re alone and hard hits, like it’s always going to hit, there could be a position in your life where it’s not necessarily your fault, but it hits and you fall a long way simply because you’re alone. I didn’t have this, I didn’t have that. So I love it, man. I know we kind of wandered around in there, but it ties to so many things.

Sam Wegert (19:36)
Wow.

No, I love-

A lot of times when I get on the podcast or whatever and I’ll talk about co-living, know, people are going right to the money. Okay. How much more money does this make? How much talk about it from the investor standpoint? Okay. You can triple your cash flow. can quadruple your cash flow. All of that is true. A home can make you a thousand, 2000. One of my students just launched a home that does $3,000 net one home, one simple home. Why not even early expensive home? Because you, know, but I, anyway, I’m saying all that, but I love that this conversation is more followed. Like what does co-living solve from a social standpoint? Because the truth is like, that’s why it’s taking off.

It’s not just taking off because it makes more money. It’s taking off because people are now willing to live in these homes. That’s the truth. So the investor side is almost a byproduct of these things that these issues we’re talking about. People are now more open than ever to live with other people. Right. Whereas the American dream for years and years and years and years was like my own home, white picket fence, nobody in there, big house locked gate gated communities even better. More isolation is better. We’re kind of we’re kind of making this full circle of like no let’s let’s bring some togetherness to this and let’s bring some like let’s live a little cheaper.

Micah Johnson (20:15)
All

Sam Wegert (20:40)
Let’s experience life a little bit more and not spend all of it on this box. That traditionally in America has been a huge status symbol. That’s why we’ve all gone after buying our own home and the bigger the better and the more prestigious the neighborhood the better. So yeah, man, this is brilliant. I hope people listening to this are really taking away. This is a model that the more people invest in it, so if there’s investors listening to this and they want to get into it and they want to invest in it.

Micah Johnson (20:44)
Right?

Sam Wegert (21:06)
They’re helping solve more social issues. And that’s why I think that’s the number one reason I think people should invest in it, not because of the money.

Micah Johnson (21:12)
I love that man. Well, I say this a lot of times on the show. There are a lot of things that’ll pay your financial paycheck, but you can do them long enough and they’ll drive you crazy. But there are some things that’ll pay your emotional paycheck. And when you can line up one pays your emotional paycheck and your financial paycheck. Now you’re living right. That’s getting good at being human. Now you’re actually solving that. And it’s one of reasons on this show, I like to focus on the side you talked about because here’s the reality of real estate investing. If you don’t actually care, it won’t work. That’s the secret.

Sam Wegert (21:19)
Yeah.

Yeah

That’s awesome. Yeah.

Micah Johnson (21:41)
You got to care. You got to actually care about some part of it. And especially when you start drifting through niches, because we talked about it, you used to be an Airbnb at first you cared and now you don’t care. And now you don’t service that customer because they won’t get the experience they need because you won’t care. You could have hired somebody that did care or pivot up to you, like which one. And that’s where if you’re listening to this out there watching this and what we’re talking about, like hits that button for you.

Sam Wegert (21:51)
Yeah.

Micah Johnson (22:09)
and you’re interested in how much money that can make, like Sam, like you’ve said, you can go find another podcast where Sam has explained that clearly. Other than that, Sam, what’s a good way for somebody to find you to dig in more on this? know you got your education stuff. You got a lot going on around this arena. How can someone get plugged in?

Sam Wegert (22:28)
Yeah, my mission is to teach through me and my students to hit a million rooms. We’re 7.3 million affordable housing units short and a million feels like a dent in that. It’s not everything, but it’s a dent. We’re 2,500. So we’re a little ways away. So we need some help. We need some massive help. We’re just getting started though. We’re just getting started. So yeah, if anything about this sparks some interest in you, I do an educational.

I call it a five day challenge. It’s live, it’s free, it’s five days where I pull, and it’s not a big sales pitch. is truly, we do live Q and A. We answer every question on there. We pull back how to find these properties, how to fund them, how to keep them clean, quiet and safe, how to manage them. Cause they do, have five, six, 79, 10 people sharing one home. It’s the model. It’s a shared housing model. So if you’re interested and you want to deep dive into it, go to scaleyourrealestate.com, www.scaleyourrealestate.com and just register, get on the waiting list for the next challenge that we have. We we do a few times a year. So yeah, thank you.

Micah Johnson (23:21)
Excellent.

Thank you for sharing that. you’re listening and watching in, check the show notes, you’ll find all Sam’s links there. Like you hear me say constantly on here, it’s not random folks we’re talking to. These are professionals in their field that are living, eating and breathing what they’re talking about because that’s who you go learn from. You don’t learn from people that used to do it or wanna do it or did a deal and now think they can sell the course better than do real estate. No, it’s folks that are living it, eating it, breathing it, track records of success because your success matters.

You can be successful in this industry. It is for anybody that’s willing to get in, do the work, ask the questions. And hopefully like you learned today, there are niches out there just like co-living, especially this one where you can really make that difference too. So check out or click that link, get into that class, learn if this really hits with you. Sam, again, thanks for being here today, man. I really appreciate your time. I think we need more folks out there like yourself doing it the way you do it, man.

Sam Wegert (24:15)
brother. You too, right back at you brother. can sense your heart is your heart is in this for the right reasons. And I love that man. It’s great to great to connect with you. Thanks for the opportunity.

Micah Johnson (24:24)
I appreciate

it, man. I appreciate it. I just like humans. I think our best times are ahead. it’s, ⁓ if we all start doing this on purpose, we’re gonna get somewhere. And I think that’s what I get excited about. Like I’ve never seen more humans growing at one time on purpose. And that has, if that doesn’t stop, time works its magic and we got some really, really cool times ahead. So I get pumped, But thank you everybody out there for joining in with us too.

Sam Wegert (24:28)
I heard it’s caro.

Love it, brother.

Micah Johnson (24:50)
Hey, if you got value out of today’s episode, please like this episode, share it with someone else you think could get value out of it. And if you’re not a subscriber yet, you know what to do. Click that button, follow along with us. We’ve got more conversations coming up with operators just like Sam. People out there building real businesses in the industry that also make a difference. Thanks again for being with us. We’ll see you on the next episode.