550: How My Home Makes Me an Extra $1,400/Month (EVEN In an Expensive Market)

BiggerPockets Money Podcast

BiggerPockets

Investing, Education, Business

4.6 • 2.9K Ratings

🗓️ 30 July 2024

⏱️ 59 minutes

🔗️ Recording | iTunes | RSS

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Summary

Wouldn’t it be nice if your home paid for itself? Every month, you throw a substantial sum of money towards your rent or mortgage payment, but what if you could live mortgage-free? With ADU investments, it’s more than possible. Michael Russell used an ADU (accessory dwelling unit) to make an extra $1,400/month off of his pricey California home. Combined with a bit of house hacking, Michael was getting PAID to live in one of the nation’s most expensive states. And he did it all on an average salary! So, how do YOU use ADUs to lower your cost of living and turn your home into a cash-flowing investment? Today, Michael walks us through exactly how he did it, how much it cost, how long it took, and how much money he ended up making. With high interest rates, will the ADU investing strategy still work in today’s market? How hard is it to build an ADU? And what’s the one mistake Michael wishes he hadn’t made before he built his ADU? We’re answering all these questions in this episode and showing you how to slash your mortgage payment, even if you live in a costly housing market! In This Episode We Cover ADU investing explained and how much it costs to build an accessory dwelling unit Why more local and state governments WANT homeowners to build ADUs How to get paid to live (even in a high-cost-of-living area) with ADUs and house hacking The one mistake that cost Michael months of time (and rent) that you can’t afford to repeat Finding homes with ADU potential and the investor-friendly agent you NEED to spot these opportunities And So Much More! Links from the Show BiggerPockets Money Facebook Group Network with Other Investors on The Path to FIRE Through the BiggerPockets Forums Finance Review Guest Onboarding Join BiggerPockets for FREE Mindy on BiggerPockets Scott on BiggePockets Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Find an Investor-Friendly Agent in Your Area Find Investor-Friendly Lenders Property Manager Finder Work with Michael BiggerPockets Real Estate 356 - 30+ Rentals (in a Pricy Market) Through BRRRR and Section 8 with Joe Asamoah BiggerPockets Real Estate 575 - Killer Cash Flow with This “Tenant-First” Section 8 Rental Strategy w/Joe Asamoah BiggerPockets Money 37 - Paying Off Student Loan Debt with a Median Income and Two Kids in Northern California with Kyle Renke 00:00 Intro 01:19 Money Snapshot 04:17 Home Run House Hack 06:01 Smart Money Moves Early On 10:47 Surviving on $36K/Year 12:40 Building the ADU 22:12 How Long Did it Take? 24:55 ADU Investing with High Rates 33:37 Starting ADU Side Hustles 37:40 The Right Type of Agent 45:58 Connect with Michael! 46:59 The Housing Solution? Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-550 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected] Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	ADU garage conversions may be the path to turning even California single family homes into cash flowing rental property investments.
0:09.0	Our guest today, Mike just completed one of those and is contemplating his second in Mantica, California, which is about an hour or so east of San Francisco.
0:17.8	Hello, hello, hello, and welcome to the BiggerPockets Money Podcast.
0:20.8	My name is Mindy Jensen and with me as always is my flipping amazing co-host Scott Trench.
0:26.8	I'll permit that intro. I'll permit it. Bigger Pockets has a goal of creating 1 million
0:32.1	millionaires. You are in the right place if you want to get your financial house in order because we truly believe financial freedom is attainable for everyone no matter when or where you're starting as long as you have a garage. In a recent episode,
0:44.1	number 547, bigger pockets money, we interviewed that ADU guy, Derek
0:49.0	Charelle, a firefighter who reached a different type of fire through ADU investing.
0:54.4	He has a mission to help average people make real estate investing possible
0:57.8	and to increase housing stock in this country by hoping people use ADUs to build wealth.
1:03.4	Today's guest is Mike Russell, who's investing in Northern California.
1:07.4	He sought the Council of ADU expert Derek to help build his own ADU and put him on the path to financial
1:14.8	independence even while earning a very modest salary. Mike, welcome to the
1:20.4	BiggerPockets Money Podcast. I am so excited to talk to you today.
1:24.5	Thanks so much.
1:25.2	I'm happy to be here.
1:25.9	All right, Mike, before we hear about the power of the ADU
1:29.2	and how you have harnessed it
1:30.9	and how it has impacted your money journey let's establish a
1:34.6	snapshot of what life is like currently yeah sure so right now I'm 26 years old I
1:40.6	work in Southern California at a church and I help out in their music program.
1:44.0	I make around $52,000 right now and that W-2 income.
	...

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