ITF 37 | House Hacking


We cannot stress this enough: Money is made over time in real estate—so get started today! Take it from our guest, Jacob Lapp. He started a house painting business, got his real estate license, and through house hacks, he’s achieved financial independence—and he’s only 24!

In this episode, Jacob looks back on his transition from vocational school to real estate investing. He also talks about his properties, how he found them, what renovations he made, and the mistakes that he learned from as a landlord.

From lowering the purchase price through different methods to dealing with difficult tenants, tune in for some really helpful tips especially if you’re just starting out.

Listen to the podcast here


Not Your Typical Technical School Trajectory With Jacob Lapp

I’m here with Zeona. Z, how are you doing?

I’m doing good.

What’s new with your life, Z? Anything big?

After many years, I had my worst tenant ever. I hope that this is the plateau and then I never have to do this again, but I have this tenant that moved out and we’re racking up the bill. I think it’s going to be $13,000 of damage, lost rents and losses on the time that we could’ve had more rent. It’s a real nightmare, but it happens to everybody at some point.

How much did that house make you over the years?

We made $100,000 in equity and appreciation. It’s fine in the long run, but it’s weird. I don’t know if this happens to you, probably not because you don’t do Airbnb, but I’ve gotten a little attached. Sometimes they become your little babies and then you’re like, “How could you do that to my child?” It’s sad.

I try not to get too emotional about it, but it can sometimes happen with the house hacks and stuff too because you live there for a year and that was your home. We had some tenants move out and it was the most disgusting thing my cleaners have ever seen. They were like, “We were there for twelve hours with machinery to get all the dirt and grime and stuff out.” It’s tough, but you zoom out and you see how much wealth those things take you. The pains in the butts are worth it.

Speaking of pains in the butts and being worth it, we’ve got a cool guest. Jacob, he’s not a pain in the butt. He’s got a cool story. He is a young house hacker and already financially independent in the lean sense. He got a couple of house hacks and made it happen. It’s quite an inspiring story and if you’re starting out, getting ready to do your first loan or even got your first or your second one, this one’s got some good nuggets for you.

Make sure to read the where he has a pain in the butt tenant and it turns out to be okay.

Let’s get to the show.

Jacob Lapp, welcome to the show. How you doing?

I’m doing good. I’m happy to be here.

We are happy to have you. We met when I was on your podcast and it was a fun time. It was good going back and forward with you and Caleb. Now, the tables have turned. We want to learn a little bit more about your story. How did you hear about financial independence? When did that happen for you?

Growing up, I didn’t have a lot of role models. There weren’t wealthy people in my circle. That was never a goal. I always wanted to be rich. I always had aspirations for more. I went to a school and it’s a unique school. I wasn’t ever planning on going to college or anything like that. I went to a trade school for HVAC and plumbing in high school. A college came to my tech school and they were like, “We don’t have any girls here. You can’t drink. You have to wear a suit and tie. You have to shave your face every morning.” It’s a very strict school with tons of rules, but they’re like, “We take poor kids and we take 100 kids a year. You get in if you take the ASVAB.”

They take your parents’ income into account. If you fall below a certain threshold and you score above on ASVAB, you have a chance of getting in. It’s a three-year program. My first choice was Power Plant Technology, but my second was Paint and Coatings. I wanted to learn about infrastructure, work in the refineries, work on bridges and stuff like that because good money was there. I wouldn’t want to go to school otherwise. I was like, “I’ll do that.” That was my second choice and I got in for that. I went there for three years and all that stuff that I wanted to learn about, I didn’t learn too much about it.

We did 10%, but I learned residential house painting. In my second year there, I started a business because going into school, I had a couple of thousand dollars saved up and I was going to school for free. I wasn’t worried about money because everyone around me was going into all this debt. I was like, “I’ll be fine. I’m not going to come out with debt.” That year I got a girlfriend, on the weekends, spending money on my car and things like that.

When you own your own business, you can't clock out. You could make more money doing your own business. Click To Tweet

It was like, “I got to find a way to make money here.” I started a business painting, power washing and gutter cleaning. I went door to door and gave out business cards. I got a solicitor’s permit and it turned into a whole business, working at night for the next two years with 2 to 6 guys working with me every night.

What is ASVAB? Is that a standardized test for the vocational stuff?

It’s the military entrance exam. Anyone joining the military, take the ASVAB. It’s like the SATs for the military, but you can’t study for it. It’s all practical knowledge, quick with numbers or can you analyze paragraphs in a certain way. I scored high on that. Military people were trying to recruit me for the scores that I was getting on that.

You went and you took this ASVAB thing with the intention of going to this vocational school to learn plumbing and HVAC. It sounds like you went into that school but then started this side business of painting houses and started your entrepreneurial venture that way.

I went to high school for HVAC and then I went to college for painting. I took that, created a business, and I got out of school. On the other end, where most kids had $40,000, $60,000 in debt leaving college, I had $40,000, $60,000 saved up. I got out and I was like, “I don’t know what to do with this. I had no idea.” I looked at a Tesla. I was like, “Maybe I’ll buy a Tesla. That’d be cool.” I went and test drove and everything. It was awesome. I was like, “I don’t think this is the right thing to do.”

I looked into houses. I’m like, “Maybe I could buy a house.” I saw what a mortgage payment was. I was like, “I’ve rented my whole life. That’s less than the rent.” I wanted to learn more about it, so I got my real estate license. I still didn’t find BiggerPockets. I didn’t know anything about investing. I got my real estate license to learn and that’s where I found out that 2, 3, 4 units were all the same.

It sounds like you had this light bulb moment of realizing that homes are not that expensive if you’ve got a mortgage, but it depends on where you live. Can you give us a little context of where you were looking and where you live?

I am in the suburbs of Philadelphia. Houses are a little more expensive, but I had the down payment and I went to my mortgage guy. I was like, “I need 20%.” He is like, “No, you don’t.” I was like, “Okay.” He put me in that range of what things I could do if I wanted to put this much down and have this much passive income.

At this point, you’ve never had a W-2. Did you go right from owning your own business?

No. The business was going great. Graduation came and I had the clients, but where I was going to school was maybe an hour away from where I was living at the time. That’s where all my clients were. I was like, “I could keep the business, clients and drive an hour every day.” For me, owning my own business at that point was so much because it was 24/7 when you own your own business. You can’t clock out. I knew I could make more money doing my own business.

We had this one job, this lady. She was like, “I need the ceiling painted.” She had a wood ceiling. We were painting it white. I was like, “It’s probably going to need another coat. This is how much it’s going to cost for the rest of the house.” She was like, “It’s okay.” We got done the job and she was like, “It needs another coat. I can still see through.” I was like, “I know. I told you.” She was so unhappy. I was like, “I don’t know if running a business is right,” because I still think about that. It hurt me.

To go and do that full-time, more stuff like that would happen. I was like, “I’m going to play the safe route.” I got some certifications while I was in school. I had a bunch of offers in a niche industry of oil and gas doing cathodic protection surveying. My job was to hike through mountains and cities and travel all over the country and do this. Getting my real estate license was a year after, while I was working my W-2, traveling the country, working a lot of overtime and stuff like that and still painting on the side.

A lot of people don’t know this, but maybe you were using this. It’s that if you go to school for a certain vocation, even if it’s a regular college and then you get out and you use that same degree for a job in the field, you can use that time in school as time in the “workplace.” Generally, they want to see two years in a field, but it can be included with your college. Were you using that instead of working for two years?

I did that while I was in school. There’s a certification that costs $2,000. I was like, “If I go get this because I did an internship with this company.” I went and I got the certification that my base starting rate increased by $6 to $10 an hour from that $2,000 investment. That was a no-brainer. I was gung-ho. I was like, “No matter what my first year out of college,” because I went to trade school, I went to college for painting houses.

I had a chip on my shoulder and I was like, “I’m going to make $100,000 my first year out, no matter what.” With this company, I was able to get pretty close to that, working crazy overtime, per diem and all this stuff, and I was painting on the side. I was like, “No matter what, I’m going to hit this goal,” and I was able to.

Let’s fast forward to this house. It sounded like you had your own real estate license by the time that you were getting the first house. Usually, that means that you’re not using an agent. How did you find a property when I’m assuming you didn’t know too much about investing in homes?

ITF 37 | House Hacking
House Hacking: You can’t really count the first year of living there with your cash on cash when you’re comparing it to 25% that other investors are putting down.


I got my real estate license. I was asking the instructor of the course, “If you were 21 years old and you had this much money, what exactly would you do? Would you buy a duplex? Would you buy this house?” He’s like, “I would read Rich Dad Poor Dad, if I was you.” I was like, “What the heck, dude? That’s not at all what I wanted to hear. That wasn’t helpful at all.” I read it and I was like, “Holy crap.” It totally changed my mindset. You hear it 1 million times, but it did.

I got my license and I signed up with a team for Keller Williams. I shopped around a bunch of different brokers and stuff like that. I gravitated towards this guy. He’s a nice guy. He’s not an investor, but he got me set up on his MLS. I was able to send myself the alerts for multifamily because I knew that’s what I wanted. I was looking before I got my license, but then I was looking after I got my license for probably two months and this deal came up that I couldn’t pass up.

I wanted to get a quick time frame to get a gauge. Where are we right now?

I graduated in June of 2018. I worked for the rest of that year until February of 2019, when I started getting my real estate license and then I had it by May or June. I’ve thought about it in February and then I had it in June of 2019. It’s right around there that this property came into play. A year after, I got out of school and I’m 22 at this point.

You’re 22, it is the summer of 2019, and you are looking for your property. How did you find it? What was it for? All the good juicy stuff.

This is such an awesome deal. It’s a fun story. There are a lot of things that come into it. It came onto the MLS to the multifamily section. It’s a triplex. There’s a single-family house in the front and a duplex in the back of the same property. It’s two separate buildings. It was fifteen minutes away from where I was living at the time and the town was starting to be up and coming. Growing up, it wasn’t the greatest town. You heard funny stories about this town, but more stores and more things were coming to town. It became more desirable. A new hospital came in and all this other stuff.

I liked the area. It came on the market. I looked into it and it says that it had been listed for six months as a single-family house for $395,000. The listing agent screwed the pooch on this one because anyone who’s looking at a single-family house in that price range does not want that. They brought it when they changed the MLS listing to multifamily. They dropped the price to $330,000.

At this point, I’m already pretty close with my lender. I’ve been talking to him about what this will cost, what my down payment will be on this property, or what my monthly payments are going to be on this property. I had a good idea of what I could afford. I called the listing agent the second it came on the market. It came on. I saw it. I called her. She’s like, “I’m here with the seller right now if you want to come by.” I was like, “I’ll be there in fifteen minutes.”

I met them there and it’s an older man. He built the duplex in the back and used to live in the front house. He has some other properties and I started telling him a little bit about my story and what I was trying to do. He was like, “Do you want to live in the house and rent the other units?” I was like, “No, I want to live in the cheapest unit and rent the house.” He was like, “This is the perfect place for you.” I was like, “I know. Are you flexible on your asking price?”

He originally had at $395,000. Now it’s $330,000. I asked him, “Are you flexible?” It’s been up for six months and he’s feeling a little motivated. He’s like, “Send me an offer.” I had read Never Split the Difference by Chris Voss. I listened to it three times. He does like the extreme anchors and he talks about his specific numbers. I came back to him and I was like, “I ran some numbers and I’d to offer $268,750.” I’m sure he laughed a little bit with this particular number.

At the same time, I’m talking to my lender and I’m like, “What’s the most I could pay for this house with 5% down and have my monthly payments be under $2,000?” He said, “$290,000.” It’s the most I could pay, putting 5% down and my mortgage payment to be less than $2,000. The reason I wanted my mortgage payment to be less than $2,000 was because if I rented the other two units, I knew I could cover $2,000 for sure, and live at the other one for free.

He told me $290,00. I had offered $268,750. He countered at $300,000. We met at $280,000 and $3,000 sellers assist. It was $28,000 out of pocket to get into this place. It didn’t need any work. I added a half bathroom to the single-family house and a lot of cosmetic stuff. I added ceiling fans and things here and there, but I had it all rented within three days of settlement. The settlement was August 28th, 2019 and then I had them all rented by September 1st.

You had your real estate license at this point and you had not even done a real estate transaction with anybody. Did you go through this on your own? Did you take a commission on your real estate license? How did that work?

I was working with the team and the guy who I was under was very helpful with learning the systems and doing everything, but I did everything. He told me if I had questions, he was there to answer them. He guided me through the process, but I was my own agent. I took the commission back. Keller Williams and their splits, especially if you’re on a team. It was not a lot, not like eXp. We’re both with eXp. It makes so much more sense now, but at that point, it was still a couple of thousand dollars that was helpful in the sale.

I’m thinking about that because I bought a place and it was the first time I did it myself and I’m like, “I shouldn’t have taken the commission. I should have gotten a lower sales price because you’re paying taxes on the income.” That’s what Craig’s asking.

That makes a lot of sense and I didn’t think of that.

It’s important to work with a team that you can trust. It will be helpful learning the systems and doing everything when you have people through the process. Click To Tweet

There are multiple ways to go about it. Lowering the purchase price is great, but at the end of the day, it doesn’t provide you that much value because it’s $20 or something on your mortgage by decreasing it by $10,000. It’s nothing. What we used to do and what I advise people to do, if you’re an agent and you’re buying your own deal, you ask the lender if you can buy down points. You buy down your interest rate by 50 basis points.

If you’re at 3%, you can buy them at 2.5%. That will increase your closing costs and then you have your seller pay your closing costs instead of your commission, so there’s no net difference to the seller. That way, you’re not paying taxes. You’re getting a wicked low-interest rate for 30 years and that’s the way it works out. I’ve done it every way to get it wrong before I finally figured this out.

I don’t agree, Craig. I’m not about interest rates. Some people are so crazy about them and refinancing for a cheaper interest rate is a scam if you’re paying for it. Paying points for that, I don’t think I would do that.

It’s not a refi.

I understand that you’re buying down points for the rate. I don’t feel fully sold.

If you’re saving 1%, that’s what it’s normally worth. You’re paying $6,000 to $8,000 to do the refinance and if you’re saving 1% on your interest rate. That’s what you’re saying, Craig, right?

Yeah. I’m saying you have to pay the closing cost. It’s going to be $5,000 or $6,000. That comes out of your commission. You’ve got closing costs for free. If you’re making a $10,000 commission, rather than take that $5,000 and apply to the purchase price, that’s not going to do anything for you. If you lower the interest rate, that will do much more for you in the long-term and you don’t have to pay taxes on it.

I would’ve applied my commission to the purchase of the house to save on the down payment costs, but it takes 1 week or 2 weeks after settlement to clear that check. “Are you talking to the title company and the lender? How do you do that in the process?”

The title company, seller and lender, you’ve got to work it in. In your contract, you say, “I’m a realtor in the State of Pennsylvania. Please apply my commission towards the closing costs.” That’s what I do. Z and I clearly disagree with that on that front and that’s okay. For everyone reading and Jake, do your research on both and see what makes the most sense for you because both ways are beneficial. The downside to that, though, is that if you’re a full-time agent and you need that income to qualify for your next rental property for next year, that $10,000 could make a big difference for you. You need that income. You’ll pay taxes on it, but there’s always that balance of the pros and cons.

For me, it would have been harder to say, “Give me $10,000 more off,” when I was already asking for a low price than getting the commission. For some reason, this may be a mental trick, but the seller gets so attached to the property price that they don’t realize they’re also paying you on the commission side. It would have been harder to pull that part off, but Craig is saying something different, but I’m saying that’s why it didn’t go that route. What did you end up renting it out for?

While I was looking at deals, I had a friend who’s renting pretty far away from where he was working and I was like, “I’ll give you a little bit cheaper rent. If you come live in one of my units, be the property manager or shovel snow whenever I get one of these places and take care of the grass. If the other tenants have issues, they call you. You’re the buffer in between us.” He’s like, “Yes. That sounds great.”

At this point in time, I thought that the two units in the duplex would rent for maybe $1,100 a month. He’s paying $950. The single-family house, I put it up for $1,300 and then a lot of people called me and then I raised it to $1,400 and then someone came and they were like, “I’ll pay the year in cash.” I was like, “Winner.” This guy got it. I didn’t do a background check. I didn’t do any of the stuff that I put in place for myself and this is what I should be doing.

I wasn’t listening to BiggerPockets at this point. I didn’t have a lot of those resources. I was like, “Cash for the year? For the first purchase and that insecurity, if those checks are going to come in every month, that big shiny wad of money.” I was like, “For sure this guy’s got it.” I gave him a little bit of a discount for paying the year in advance. He ended up paying $1,333 a month. My buddy was paying $950, so that’s $2,200.

My mortgage payments, taxes, insurance, everything was $1,945 a month. We’re living in the one-unit positive, $300 month and all the utilities were separate water, sewer and electric. They didn’t have gas. It was those three. It was electric baseboard heat and then window air conditioning units. The tenants all paid for everything themselves. I didn’t see how much of a blessing that was at the time. I didn’t understand the value of that, but that’s huge. My only running expense at that property is paying the trash, which is $33 a month. All in, around $2,000 every month and expenses.

We were able to live there for free and make some money. That guy who paid cash eight months into his year lease went back to jail and left his daughter and her baby in the house. It was this whole thing, but it ended up all working out because he’d been to jail multiple times, but he paid for the year. I let his daughter and her baby stay until the end of the year. They didn’t have the money to keep renting it. When their year lease was up, I helped them find a new place and move with my truck to help them out, but that was my first mistake.

You bought this place for $280,000. You put $30,000 down and $300 a month of cashflow. That’s about $3,600 a year. Your cash-on-cash return is over 10%, which is amazing that doesn’t include that you bought the property for undervalue and all those kinds of things. You made your $28,000 investment back in that first year with no issue, plus living for free. That might be $28,000 right there.

ITF 37 | House Hacking
House Hacking: The first purchase still had that kind of insecurity. If those checks are going to come in every month, that big shiny wad of money.


I’ve run the cash-on-cash because I don’t think you can count the first year of living there with your cash-on-cash when you’re comparing it to 25% that other investors are putting down because of the value that I’m getting living there is still value. If I wasn’t living there, it’d be somewhere else. You have to add that rent for the cash-on-cash. That other tenant left when we moved out, so now I’m running it for $1,400 and my buddy is still there. He’s paying $950 and then we were able to rent our apartment for $1,300. We’re positive $1,600 a month off that property.

You can see that impact right there. The power of house hacking is the low down payment and the low money invested. You see it here on BiggerPockets all the time like, “Do this big rehab, value-add.” You don’t need that when your house hack. It’s like, “Get in. Get your rent paid for and move on.” I want to dig in a little bit into this mistake you made.

It sounds sexy, but if it’s too good to be true, it is. You dropped your background check. It was a shiny object. You didn’t know about BiggerPockets, you didn’t hear about don’t accept cash, don’t accept things planned in advance. If someone’s willing to do that, there’s probably an issue. You’re covered, but there’s probably a huge headache on the back end of it.

That was my biggest mistake. As I said, it was so appealing that I didn’t even think to question it. I was like, “They sold their house and they have all this cash.” That’s what he told me that that’s what happened. They went through a divorce. He sold his house and now he had a bunch of cash. I was like, “That makes sense.” On my end, it’s checking out.

As time went on, it didn’t. If I would have run his background, I would have seen all of his felonies and stuff. As I said, there was nothing lost in that whole process. They didn’t trash the place. There was no real issue that came out of it. They left when the lease was up. Nothing had to go to court. I got paid and that was that.

You got a little bit lucky with that. It could be pretty much worse. It sounds like you at least learned your lesson, even though it was absolutely a good miss. This property is good. You move out. It’s making $1,600 a month. You still have that property. Let’s talk about number two.

You need to claim the year of residency. I’m like, “I’m going to do this every year now for the next four years.” That was set in stone when I bought the first one. That was part of my plan. Now, at this point, I had found BiggerPockets.

Jake, let’s move on to property number two. What does that look like?

At this point, from having some random landlord questions, I had found BiggerPockets. I got my systems better in place. I had a better idea of my goals and things that I wanted to do going forward. You need to claim residency for a year. I was like, “I’m going to put our apartment on Facebook Marketplace and get a great pool of tenants.” I either have to buy a new place or move back in with my girlfriend’s parents. I made that happen for myself. I had a deadline and I had to get the next property. I ended up finding another good one.

It’s a duplex in the same town where I grew up. It was fifteen minutes away from the triplex. This is now July of 2020. I found a duplex and they had it listed for $240,000. It had been up for 2 or 3 months and this is hot real estate season. Things are clearing up. People are buying houses. We’re like 45 minutes outside of the city. We had so much traffic leaving the city and buying houses in the suburbs.

For this house that had been sitting for two months, it was crazy. I went and checked it out. It needed work. There was a knob and tube wiring. There was an old galvanized water main coming in, the front porch, and the deck was sagging. It was a decent amount of work. I went to the open house and I met the tenants. It was open, but I went upstairs in the one unit. The one was vacant, the one was occupied and I went into the occupied one and it was friends of mine that I grew up with, the kids I knew from when I was younger who were renting.

I call my buddy. I get some insider info about the house, like how things are. He’s like, “This house is a dump. The landlord never did anything. I’m sure you could fix it up, but he offered to sell it to us for $190,000.” I did the same thing with my lender. I was like, “What’s the most that I could pay?” I was putting 15% down claiming residency. I couldn’t do the 5% anymore and I didn’t want to use my FHA yet.

I put 15% down because it was a little cheaper and I wanted my mortgage payment below $1,200 because I knew the one unit would at least rent for $1,200. He said, “$210,000 is the most you can pay.” We negotiated. We got $204,000 for the purchase price and then a $9,000 seller’s assist, which ended up putting us exactly the same amount that we put down for the triplex in Quakertown. It was like $28,000 again. We go through this place and do a lot more work than the Quakertown one.

We fixed all that bad stuff that I was saying earlier. We jacked up the front porch, re-supported everything, replaced all the knob and tube wiring, redid the plumbing, moved to the plumbing and put trim up. We made the house nicer. The bathroom is 3-square feet of floor space. I took the wall out and added three more square feet. We doubled the size of the bathroom, but it is still tiny.

I put a decent amount of work in. All-in was less than $5,000 for the rehab, which I did everything myself with friends and stuff like that. That’s been helpful, especially this property. We get in here we’re claiming residency and then the tenants what I thought they were paying was $1,150 a month and what they were paying was $850 a month. That was pretty crazy.

I take that you guys did not pull permits for that, but it sounds like you should have electrical and plumbing and all of that, but what made you decide not to?

It's so important to just be okay with delayed gratification because it's going to be better later. Click To Tweet

Honest fact, I don’t plan on selling any of my properties which is when the permits become a lot more necessary. I know for safety and stuff, but I’m living there and I’m doing it the safest way possible. I know electrical and plumbing very well. I’m pretty fluent in that stuff and to pay the township a bunch of money for them to be like, “Good job.” It didn’t make sense to me.

To remind everybody, you went to school for these things. You’re very well-versed and trained and I figured that was why, but I wanted to make sure. That sounds like a $10,000, $15,000 project and doing it yourself, it’s only $5,000.

The front porch itself to have an engineer come in and re-support it. We lifted the columns and the whole roof of the front porch. That by itself could have been $10,000, $15,000.

You were saving tons of money that way. $1,150 is what you thought and they’re only paying $850 and these are your buddies.

When I went to the open houses, there were two duplexes and townhomes on the same street that were both for sale. They’re identical, the same floor plan and everything. The one second-floor unit that we saw, they were paying $1,150. In my head, I was like, “They’re paying $1,150,” and they weren’t. I messaged them the day that the agreement got finalized. It was a month before settlement. I was like, “I know you are paying $1,150. Starting next month, I was hoping to increase to $1,200. If you need me to do anything, I’ll put new floors in. I’ll paint. Anything you want. I want to earn it from you.”

Not like, “Give me more money because they’re friends.” They responded, “Jake, we’re paying $850 a month.” I was like, “Sugar.” That was a real bummer. I had to put my landlord pants on. It was friends to the point that I wasn’t trying to screw them over and they knew that. I was like, “The least amount I can do is $1,150.” They were like, “That’s fine. Can we stay on a month-to-month because we’re looking to buy a house soon?” I was like, “Absolutely.” I helped them find a house.

I ended up not being their agent, but I was helpful in getting the ball rolling with what they needed to do and stuff and realizing what they could do. They bought a house two months later and now that’s rented for $1,300 a month, we’re living for free. Our mortgage payment is $1,110 a month. I also paid for the water, sewer, and a house electrical, which is a third breaker for the common areas. All those things together, we’re at $1,250. We’re living for free and making $50 a month to live here. Now, we’re seeing the passive income from the triplex, this we’re living for free and when we move out of our unit, we’ll probably rent for $1,100 or $1,000.

It sounds like you got two successful traditional house hacks in your area. That price point that you’re at, that $100,000, $200,000, maybe even $300,000 price point, I’ve seen triplexes, quads, duplexes work in that, but if you’re reading this and you’re in a more expensive area like the Denver, the Boulder or wherever you’re at. You probably aren’t going to be able to find a duplex or triplex and cashflow it like you are and live in it for free. That’s where other strategies come into play. I want to set the stage there.

Shawn McEnteer has been on your show and on my show. He’s the one that introduced us. When he told me about your show, I listened to the first one and you broke down your first deal and our numbers were very similar with the cashflow, the purchase price, but you took it a different way and did buy the room Airbnb stuff, so that was cool. It was the same thing working in these different environments, producing the same results.

You got to figure out what works best in your area. You didn’t go to college. You proved the point that you don’t need to go to college. You did the vocational stuff that helped you in your first house hack. At 22 or 23, you bought your first one, and at 23 or 24, you bought your second one. You now have two house hacks. You’ve got about $2,000 or so of passive income. There is a whole bunch of equity baked into these properties. You’re on the right track. Is there anything else you want to say before we head off to the final part of the show?

My fiancée has been a huge help with everything as well. She’s out with the numbers and stuff like that. She has made both of our homes incredible. It’s more desirable when people are coming in to see them. That first in the triplex, I thought we could get $1,100 for the one unit. We got $1,300 because we had so many people interested.

That is super huge in getting your significant other on board. I put the offer in when I bought the triplex without ever talking to her. It went from her feeling out of the loop to becoming super involved. She has been very helpful sense and helpful in the second one. I’m willing to live the lifestyle that we’re living, saving our money and living way cheaper than we could.

We could do a lot more cool stuff with both of our incomes. We’ve been very frugal and that frugality is something you got to keep railing into everyone. It’s so important to be okay with the delayed gratification of, “It’s going to be better later. Trust me, you don’t need that new car.” That’s all I would add. There is so much more to talk about, but we’re on a timeframe.

ITF 37 | House Hacking
House Hacking: You need to spend a year when you claim residency.


Frugality is the staple’s financial independence and you got to be frugal for those first few years. Z, is there anything you’d like to add?

The only thing is that what you think you’re going to do with your properties at 24 might not be the same at 35 or 34. That’s the only thing I would caution you about the permits, but I get why you did that. I thought that too, when I bought places, when I first got started, I was like, “I’m holding this forever,” and then I sold one last year. Things change.

I can see that as well.

Let’s head into the final four.

Our first question for you is, what are you reading?

I’m reading Tools of Titans by Tim Ferriss. I haven’t read a book since middle school. I listen to everything.

Rich Dad Poor Dad?

I didn’t read that either. I listened to it. I listen to books very often, but I don’t put them in front of me and read them, but I’ve read The Four-Hour Work Week and Tribe of Mentors by Tim Ferriss. This was one that I wanted to get and it’s been a cool book so far. I’m only a quarter of the way through, but it’s good for your ego.

The book starts out with a quote from Arnold Schwarzenegger. He’s self-made. He’s a lot of investors and stuff. I was self-made. I came from nothing. I was poor. I could relate to that. I always had that chip on my shoulder. He’s like, “I’ve had all these people around me the whole time, contributing. I’m a product of my environment.” That’s been a cool take from that book and worth the read.

What is the best piece of advice you’ve ever received?

For me, it was from my dad. Learn to trade. No one can ever take that skill from you. People on BiggerPockets are always like, “Do I need to get my real estate license to invest in real estate?” “No, you don’t need to be a plumber either. You don’t need to be an electrician to be a real estate investor, but each one of those things that you personally know how to do is going to save you so much money.” I’ve been able to treat it that way. My whole life, I have been learning more skills about more things that are going to help me along the path.

Where you’re at now, that makes total sense. Where you’ll be in 3 to 5 years, it’s not going to be worth your time.

At the same time, I’m about to put a roof on one of the houses. It’s not because it needs to. I have the money and it’s nice out. It needs to get done. I’m going to do it myself, not because I couldn’t pay someone to do it, because I had that ego that I want to be able to know how to do everything so that if things ever got super tight and it’s always a backup plan. If I’ve got 30 properties later on, but things start to fall apart or money gets tight for some odd reason and I can’t afford a contractor to come out and do something, I can. To me, it gives me greater security and real estate investing all around to be able to do everything.

If it doesn’t need a roof and you’ve got a couple of years, I’m all about deferred maintenance. If it’s leaking, change it because water damage is the worst thing you can get, but if you don’t need to do it this summer, you could wait two more summers.

On the contractor end, then to respond to that, if it does leak, when you go to fix it, now you have to fix more because it leaked. It’s going to cost you more money because it leaked as opposed to being proactive. I like being proactive and not deferring all my maintenance, but there are certain things that I’ll try to let slide. I’m not trying to do everything forever, but I like being handy if that is the case. I like doing manual labor. A landlord has a good job for me because I enjoy doing it.

Set a deadline on when you’re going to get the next property and you will end up finding another good one. Click To Tweet

Let’s go to question number three. What is your why for pursuing this lifestyle?

As with everyone, it’s financial independence. Not having to show up to work, two more years at my W-2, and I’m pretty much fine now based on my spending and stuff. The goal that I want to be at is I’ll be there in the next two years. I’ll be able to quit my job and either pursue real estate sales with investors. I’ve transitioned my license towards working with investors and not just the day-to-day buyers because it’s what’s interesting to me. Honestly, being able to pursue whatever I want. I know you’re in Maui. We spent a week in Maui a few years back. We’re coming after our honeymoon. We’re coming for two weeks to Kauai and I love it out there. I love surfing and just having the freedom to do what we want to do. That’s it.

What is that goal? Do you have a cashflow goal?

My first goal was the $5,000. You literally put it on your show. You were saying yours was $2,000 and I went over all my spending and tracked with my income and then took my job’s income away and where would I be? It’s like, “I’d be okay right now.” My goal in the next two years is a $5,000 a month in passive income and more would be better.

I’m sure I’m going to keep going, but I don’t think we’re going to continue house hacking after that fourth one. Our goal is to take a year and I’ll quit my job. My fiancée’s a nurse, so she can get a job wherever if she wants it. Take a year, travel, come back, start a family and then, at that point, not be house hacking. We’ll see where life takes us from there, but that’s the goal.

We have similar plans. Once you hit that lean FI number, you start being able to take more risks and then your passive income ends up growing a lot faster. It’s like, “How much is enough, enough?” $5,000 is enough, but you don’t want to be frugal forever. You want to take that vacation or buy that Tesla.

I don’t think I’ll ever buy a new car. I made the decision, even if I’m very wealthy, but that’s awesome.

The first five years is where all the depreciation comes out of and cars. If you get a five-year-old car, that’s where it starts being a good breakeven. That’s the FI thing on cars. I’ll let Craig do this crazy question. It’s number four.

If all of the United States was represented by food, what food would Virginia be?



I don’t know. I was quick. I didn’t want to think about too much. I haven’t been to Virginia too much. They’ve got a decent amount of corn.

How can people find out more about you?

Me and my buddy Caleb started a show, The Young Slumlord Podcast. We talk about the same stuff we’re talking about here. We have a lot of different guests on. We have guys who do stocks, who do crypto, and who are successful in this and motivational in this. Preaching the frugality, trying to expand within our sphere of influence, have more of our friends talking about this, doing the same thing.

ITF 37 | House Hacking
House Hacking: Continue learning more skills.


We came from not a lot and it’s having the guys around us elevating, start texting us and asking us questions and starting to think this way has been huge. The Young Slumlord Podcast or wherever podcasts are YouTube, Spotify, Apple, Facebook, and then Instagram @The_Young_Slumlord_Podcast, and all that stuff. Feel free to reach out. I love to talk to anyone.

Thanks for coming on the show. We are looking forward to seeing your journey and where you go next.

I appreciate you guys having me.

That was Jacob Lapp. Z, what do you think?

Jake is young and scrappy. I see the 20s versus 30s thing where I’m like, “He thinks he knows so many things about how his life is going to be.” A lot of it will change and that’s also what’s beautiful about being an investor over the long-term because even for myself, who I’m going to be as an investor in my 40s, is different than how I am now. It’s so cool to have these stories recorded that we can go back to and read to in years to come. I’m excited to hear how his story progresses.

He’s on the right track. He’s setting himself up for success regardless of which way he goes. You could hold those things forever and do great, but he also has the ability to sell them in ten years, 1031 them into apartment complexes or whatever he wants it to be. I see where you’re coming from, where you’ll get to a point where $500 and $700 a month is not moving the needle for you and you’d rather put that money to work somewhere else.

It’s so cool to see someone who was set out to have a life as a plumber turn into a real estate investor and how much of a game-changer that is. Plumbers still make good money, maybe $80, $90 an hour, but then being able to be financially independent, which probably most plumbers never dream of. It is cool to see how his life took a big turn.

It’s all because of that one realtor who gave him that poor advice to read Rich Dad Poor Dad. Any parting words of wisdom before we head off, Z?

Nothing’s coming to mind. The thing I always tell people is to get started. Maybe you’re sitting on the sidelines now and you’re like, “I’m going to wait for the market to change or I’m going to wait for something in my life to be different.” Money is made over time and real estate. You don’t get rich off the first house and you got to get in sometimes. You’re going to make some mistakes and that’s how we all learn, so get going.

You’ll never be fully ready. It’s like having a baby or getting married. It’s an inconvenience in your life at first and then it becomes a part of your life. Get started. We are going to leave you for this time. If you could, please leave us a review or rating. Let us know how we’re doing and how we can be better. We’ll see you all next time.


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About Jacob Lapp

ITF 37 | House HackingTwo years ago, today I made the best financial decision of my life. Bought this triplex as an owner-occupied first-time home buyer. With a 5% down conventional loan!

We lived in one unit and cash flowed around $300 a month! Now this place is fully rented out and bringing in $1650 over the PITI every month!

Crazy how in 2 years and 3 house hacks how much our lives have changed.

Most people spend around 1/3 of their income on living expenses monthly. Whether on a mortgage or a rent. This first one eliminated that expense for us and our savings rate has just increased since.

You won’t regret buying the first one!