Ep 20: Earn While You Learn With Jon Farber
Our guest for today’s show is house-hacker and Chris’s childhood friend, Jon Farber. After getting a marketing degree and moving to Raleigh for work, Jon started learning about real estate through reading books and interacting on Facebook, LinkedIn, and BiggerPockets. He stumbled upon house-hacking only six months after graduating and decided it was a great side hustle. Four years later and Jon had already acquired the same amount of properties. Today Jon dives deep into the world of house-hacking, covering what it is, how to fund it through bank loans, and his strategies of renting to friends and co-workers. He talks about his worst-case scenario mentality, meaning if he got no rent for a month, his earnings from the bank loans still meant he lost less money than if he were renting a place himself.
We also have a great conversation about different approaches that people have toward the money they earn and how these are contingent on their influences. Some like to spend as they earn, others save by cutting costs or by thinking about how to earn more, and Jon won’t buy anything that depreciates. We round off by bouncing around some of the different emerging strategies in the real estate game and how they correspond to the nomadic tendencies of millennials. Jon breaks down his new rental arbitrage strategy which acts as a middleman between landlords and Airbnb guests and throws in a few other new models too. Jon is a sharp guy with a keen eye for growing trends so if you’re planning a segue into real estate you don’t want to miss this one.
Key Points From This Episode:
What house-hacking is and how Jon segued into real estate in Raleigh.
The specifics of the FHA/Owner-occupied financing loophole that Jon discovered.
How long it took Jon to get into house-hacking after college: 6 months!
Jon’s use of the worst-case scenario rationale in approaching new investments.
Timelines, strategies, and rationales in Jon’s experience of house-hacking.
Perspectives on why people might not get into real estate: fear of things going wrong.
How Jon got past the issue of renting to his friends: vetting and not expecting high yields.
The strategies Jon could have used if his friends didn’t pay their rent.
Buffers to Jon’s risk such as his high salary and reliable tenants/friends.
Thoughts on the Quit Like a Millionaire mentality that teaches living like you earn less.
Different ways of attaining financial freedom: ‘save more’ vs ‘make more’ approaches.
How one’s approach to financial freedom is contingent on one’s influences.
Difficulties of saving money especially when it comes to food delivery apps.
Perspectives on tendencies people have of spending their money rather than investing it.
A good method to learn new things involving leveraging urgency to create motivation.
How termite and flooding have taught John and Chris to learn from their mistakes.
What rental arbitrage is and why Jon is pursuing it as a new strategy.
Why the millennial generation’s transience makes rental arbitrage a good investment.
Thoughts on why the lease model and real estate, in general, is antiquated.
The rise of fluidity and transience as they relate to the workplace and millennials.
A smart strategy involving partnering with landlords and managing their properties.
Benefits of owning properties rather than leveraging short term rentals: equity.
Contrary benefits of the arbitrage model: being able to give the keys back, and more.
A final tip from Jon about the value of the real estate groups on Facebook.
“If you take the idea that you have a growth mindset, and you’re smart enough to figure out things as you go, and you’re not making the worst decisions, house-hacking will probably work itself out or you can course-correct.” — Jon Farber [0:09:27]
“Why am I buying anything that depreciates? After I read Kiyosaki I was like, ‘The next 500 bucks I’m only spending on laundromats or gumball machines.’ Why would I buy those shoes?” — Jon Farber [0:29:41]
“I had no idea how collaborative the groups on Facebook for real estate were. I used to think Facebook was dead and no young people were on it. The activity in these groups is amazing. So I find myself on there often doing tons of networking with operators.” — Jon Farber [1:44:55]
Links Mentioned in Today’s Episode:
Jonathan Farber on LinkedIn — https://www.linkedin.com/in/jonathanfarber1/
Jonathan Farber on Bigger Pockets — https://www.biggerpockets.com/users/jonathanf29
Jonathan Farber’s Podcast — https://open.spotify.com/show/3VxyqVyRN86OA3GMIwMBr2
Jonathan Farber on Facebook — https://www.facebook.com/jonathan.farber.9
Hofstra — https://www.hofstra.edu/
Rich Dad Poor Dad on Amazon — https://www.amazon.com/Rich-Dad-Poor-Teach-Middle/dp/1543626610
How To Win Friends and Influence People on Amazon — https://www.amazon.com/-/es/dp/B0006IU7JK
David Green — https://www.forbes.com/profile/david-green/
Brandon Turner — https://www.entrepreneur.com/author/brandon-turner
Quit Like a Millionaire on Amazon — https://www.amazon.com/Quit-Like-Millionaire-Gimmicks-Required/dp/0525538690
Grant Cardone — https://grantcardone.com/
Gary Vaynerchuk — https://www.garyvaynerchuk.com/
Robert Kiyosaki on Twitter — https://twitter.com/theRealKiyosaki
The ONE Thing on Amazon — https://www.amazon.com/ONE-Thing-Surprisingly-Extraordinary-Results/dp/1885167776
Ramit Sethi — https://www.iwillteachyoutoberich.com/
Seamless — https://www.seamless.com/
DoorDash — https://www.doordash.com/
Profit First on Amazon — https://www.amazon.com/Profit-First-Transform-Cash-Eating-Money-Making-ebook/dp/B01HCGYTH4
Mint — https://www.mint.com/
Dave Ramsey — https://www.daveramsey.com/
WeWork — https://www.wework.com/en-ZA
Jon Cohen on LinkedIn — https://www.linkedin.com/in/john-cohen-56847314/
Chris Grenzig on LinkedIn — https://www.linkedin.com/in/chris-grenzig/
JC Property Group — http://www.jcpropertygroupinc.com/
Toro Real Estate Partners — http://tororep.com/
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