Craig tells us about his lifestyle of financially maximizing his own duplex and car. We’ll hear the pros and cons of house hacking on an extreme level. His role at BiggerPockets is to keep track of all of the finances, but he is also an investor. An interesting story that surely has value for all different levels of investors. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Craig Curelop Background:
-Financial Analyst at BiggerPockets full time
-Real Estate Investor, known as “Life Hacker” – Realizing maximum efficiencies on investments
-Closed on first property in June 2017, a duplex that he’s currently house hacking.
-Purchased a duplex, rents out the top and AirBnb my bedroom
-Would like to partner up with someone and purchase another multifamily property this year
-Say hi to him at www.biggerpockets.com
-Based in Denver, Colorado
-Best Ever Book: Never Split the Difference
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.
With us today, Craig Curelop. How are you doing, Craig?
Craig Curelop: Doing well, how are you?
Joe Fairless: I’m doing well, nice to have you on the show. A little bit about Craig – he is a financial analyst at a little-known website called Bigger Pockets. He is a real estate investor, he’s also known as a life hacker, and we’re gonna talk about that.
He has a duplex and he is maximizing the earning income potential of that duplex. We’re gonna talk about how he’s doing that. He’s based in Denver, Colorado; that’s where BP is headquartered. With that being said, Craig, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Craig Curelop: Yeah, absolutely. I’m relatively new at this real estate game. My first property I closed on in June, but I just started getting interested in real estate probably last year around July. I just did a bunch of research and all that stuff, and it just seemed to make a lot of sense. After about six months of doing research and all that stuff (BP was a huge help for that), I decided to kind of take the dive in and buy my first duplex here in Denver.
Joe Fairless: Tell us about the duplex.
Craig Curelop: It’s a top-bottom duplex, it’s about a mile and a half from my office. What I do is I rent out the top half conventionally (it’s actually a two-year lease) and I Airbnb my bedroom out… And I kind of made like a quasi-bedroom out of my living room. So basically it’s a [unintelligible [00:03:34].04] duplex, and I’m kind of trying to maximize the amount of cashflow I can get from this property at this time.
Joe Fairless: You rent out the top conventionally – that’s what, a 12-month lease?
Craig Curelop: Yeah, it’s a 24-month lease.
Joe Fairless: Does the rent increase after 12, or is it one amount for all months of 24?
Craig Curelop: I’m happy with the amount of rent I got. I always felt fine with just kind of guaranteeing those 24 months without having any vacancy in between, so I kept the same amount.
Joe Fairless: And what’s that amount?
Craig Curelop: It’s $1,750 for the top.
Joe Fairless: $1,750, okay, and you’ve got that on a 24-month lease, and you do Airbnb the bottom bedroom…
Craig Curelop: Correct.
Joe Fairless: How much is that on average?
Craig Curelop: So obviously that changes… In the summertime it’s probably around $1,500 or so, and then as the months get colder, so does the cashflow, and it’s probably about $1,000; that was the lowest month I’ve had thus far.
Joe Fairless: Okay. How much did you buy it for?
Craig Curelop: I bought it for 385k. The mortgage payment on that with — I used an FHA loan, so I’m gonna have the PMI and all that stuff; so the whole PITI mortgage payment at the end of the month is just shy of $2,300. With the top being $1,750 and the bottom just say average about $1,200-$1,300, I’m clearing the mortgage by about $1,750. I set aside $250/month for all the reserves and all that kind of stuff, and the rest is just cashflow that I just put back into my investment and it will help me buy my next property.
Joe Fairless: And I don’t want this to be passed over by me during our conversation… You also live at this duplex, right?
Craig Curelop: Yes, correct.
Joe Fairless: You live there… And you live in the living room?
Craig Curelop: Yeah. The way I look at it is — I know it’s probably not the most ideal situation for a lot of people, but I’m still relatively young and I feel like you kind of have to do things that other people aren’t willing to do to be successful later on. I’m thinking, “Okay, how can I hustle? How can I get the most out of this right now?” I made a nice — I have still a comfortable place to sleep, it’s just behind the curtain instead of behind the door.
People always make fun of me for it, but I really do enjoy it. I get to meet people from around the world, I talk to people every day, and the best part is that you have that roommate, so you have that person to talk to; then they leave in two or three days, so anything that annoys you is just out the window. So I really do enjoy it, and it’s really not much of a sacrifice to me.
Joe Fairless: Well, I love your approach, that’s for sure. I didn’t go as extreme as you… How old are you?
Craig Curelop: I just turned 25 last week.
Joe Fairless: Okay, happy belated birthday. I wasn’t as extreme as you’re doing when I was in New York City, but I always had a roommate. My friends made fun of me, they said I was living like a college kid; I had a dorm-style refrigerator, had literally no living room… But you’ve taken it to another level. If I had taken it to your level, the only way I could have done that is — since I didn’t have a living room, I could have maybe had two twin beds in my room, and I guess bunked up with a random stranger, where they have one twin bed, I have another…
Craig Curelop: Yeah, it is kind of difficult if you’re sharing a bedroom with someone… I don’t know.
Joe Fairless: It would get a little awkward.
Craig Curelop: It would, yeah.
Joe Fairless: So you live in a living room, you’ve got a curtain instead of a door, and you have the top rented out, you have the bottom as a revolving door, and you’re making maybe a couple hundred dollars a month; more importantly, you’re covering all of your expenses and you’re building equity in this property.
Craig Curelop: Yeah, absolutely. And to top it all off too, it’s also a mile and a half from where I work, so I can easily bike to work in the morning… So my transportation costs are next to nothing. I buy a tube every once in a while for my bike, and that’s pretty much it.
Joe Fairless: Do you bike to work when it snows?
Craig Curelop: Yeah. The only time I don’t bike to work is if I really need to do something after work that involves a car…
Joe Fairless: Do you have a car?
Craig Curelop: Yeah, so I do have a car; I’m not sure if you heard about…
Joe Fairless: Mr. Money Mustache?
Craig Curelop: Mr. Money Mustache, of course; one of the things he says is for every asset/liability that you have, you should have a form of income from that. That’s kind of how I view it, so I also rent out my car, too.
Joe Fairless: Oh, really? What service or app do you use?
Craig Curelop: It’s called Turo, and it’s basically just like Airbnb, but instead of renting an apartment, you rent a car. People rent it sometimes for a couple of weeks, sometimes it’s for a day… But it is [00:08:04].07] day, so it’s not like someone’s just gonna come for an hour, run an errand and then come back.
Joe Fairless: And how much do you make on that on average a month?
Craig Curelop: This is super volatile. In the summer months I was making $500, $600, $700/month after I set aside $100 for reserves for the car every month; now that it’s getting colder, I’m kind of just hitting that $100 of gross a month… So I put aside $100 and that’ll pay for some of my expenses as they come. I’ve got a Toyota Prius, so the expenses on that shouldn’t be too high.
Joe Fairless: Tell us an interesting story, and perhaps one that maybe will scare other people away from doing this, that way we really understand the downside of living in the downstairs with a curtain separating you from strangers coming in and out of your house every three days.
Craig Curelop: Honestly, the stories aren’t that scary. Sometimes you hear a little too much about what’s going on in the bedroom. That is probably one thing that you’re gonna have to get used to.
The other thing is that I actually had a couple from England come by, and I walk into the house and it’s like 85 degrees or something, and I’m like “What the hell — why is the heat so high?” He was like “Oh, sorry…” – they didn’t know Fahrenheit, so they just put it up as high as they felt like they could. I was like, “Oh… Whatever. I guess I can’t blame you for that.”
That’s kind of like the horror story, and it’s really not that often that I feel uncomfortable or there’s any bad situations happening. Usually, you have great conversations with the people that are coming in. I’m a traveler myself, and seeing people travel and talking to these travelers kind of satisfies my travel bug without having to go anywhere… So I think that’s really great, too.
Joe Fairless: Do you have a significant other?
Craig Curelop: I do not. In the event that I do get one, then I will question whether the Airbnb makes sense, or then I have the option of staying at her place, so… We’ll absolutely cross that bridge when we get there.
Joe Fairless: To me it’s pretty clear the pros grossly outweigh the cons. With the pros – you meet interesting people, you create new friendships and you have the financial upside for having this arrangement. And the cons – you come across sex noises and you have utilities that sometimes can be high because people don’t know the difference between Fahrenheit and Celsius.
Craig Curelop: Yeah, exactly.
Joe Fairless: It’s a pretty compelling case for doing this, but given your circumstances where you don’t have a significant other, it’s a lot easier to pull this off, compared to if you did, so… Props to you for doing this. I’m really grateful that you are sharing your story.
What’s the next deal? How does this evolve from here?
Craig Curelop: So I’m gonna continue working hard here at Bigger Pockets and I’m gonna continue saving as much as I can, and next year after I have completed the criteria for my FHA loan, which is living in a property for a year, I’m going to try to buy the next one. It’s either probably gonna be another multifamily and I’ll do something similar, or I might buy a single-family home, because I know you can do the 5% down conventional loan on a single-family and maybe renting out by the bedroom. Here in Denver, that seems to make a lot of sense, renting out by the bedroom, as long as you know the cons of that… You may be living with four or five different people, so it’s kind of just like a [unintelligible [00:11:22].03]
Joe Fairless: You’re okay with that, though; you won’t shy away from that.
Craig Curelop: No, no. I enjoy that, honestly. I kind of like living with people. I guess I’m an extrovert.
Joe Fairless: Well, we all have a need for community of connection, regardless if we’re introverts or extroverts; we all need human interaction and connection, it’s just different levels that we all need it, in my opinion.
Craig Curelop: 100%, yeah.
Joe Fairless: The title that you have at Bigger Pockets is financial analyst. I understand what that is, but what specifically do you do?
Craig Curelop: I just kind of call myself a finance guy here. At the end of the day, Bigger Pockets is a business, and it’s really a tech business, so my main thing is to kind of keep track of all the finances, put together the financial model, make sure where our revenue stands, if we’re making money on a month-over-month basis; if metrics are down, figure out why they’re down, and kind of share that information in with Josh and Scott and all those guys.
That’s kind of like the core of what I do, and then I’m also out there exploring new revenue opportunities as well. One of the things we’re launching over the next few months is we’re launching out some state-specific landlord forms… So we’ve basically gathered a fleet of lawyers from each state and had them look over and review landlord forms and we plan to give access to these forms to our users, so that they can be protected without paying thousands of dollars to have a lawyer look them over.
Joe Fairless: Wow, that’s outstanding. Will they be available for everyone, or do you have to have a certain membership level?
Craig Curelop: It will be available to everyone, but they will be for purchase, so I think it’s gonna be like $100 or $99 to purchase the whole set of landlord forms. It’s still at least a tenth or a twentieth of the cost of actually getting this done yourself, so we feel like we’re providing value, as well.
Joe Fairless: Very cool. Based on your experience with your duplex and being a thrifty and resourceful guy, what is your best real estate investing advice ever?
Craig Curelop: My best advice is just to — don’t be afraid to be uncomfortable. I think being uncomfortable allows you to grow and it allows you to kind of live a life that no one else is really going to live. It’s all uncomfortable, right? Making an offer on that first deal – it’s not comfortable doing it, but you have to do it. So once you kind of get comfortable being uncomfortable, that I would say is the best ever advice that I received, that I kind of try to carry on each day.
Joe Fairless: Normally, I ask “Can you give an example of how you’ve applied that in your life?”, but we’ve been talking about the entire example of how you apply it in your life, so thank you for that. It certainly reinforces our conversation.
Are you ready for the Best Ever Lightning Round?
Craig Curelop: Let’s do it.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Break: [00:14:08].13] to [00:14:58].15]
Joe Fairless: Okay, Craig, best ever book you’ve read?
Craig Curelop: Never Split the Difference by Chris Voss.
Joe Fairless: What’s the reason why we shouldn’t split the difference?
Craig Curelop: The reason why we shouldn’t split the difference? That book is just a great book; basically, it’s a negotiation book and what Chris does is — he used to be hostage negotiator, so it’s an extremely entertaining kind of like sit on the edge of your seat type book; he also then takes it and then applies it to real-life situations. Some of the advice in that book — I think I paid ten bucks for that book, and the book probably has made me (or saved me) over $20,000. So I would just go out and buy the book right now.
Joe Fairless: Done. Alright, I’m buying it as soon as we get done talking. What’s a mistake you’ve made on your duplex?
Craig Curelop: I made the mistake of allowing a pet. For the up and down duplex, the noise – it’s not very sound-proof, so you can always hear the dog walking and jumping off the couch or whatever it is. Even the tenants told me that the dog doesn’t bark, which is stupid–
Joe Fairless: All dogs bark.
Craig Curelop: Yeah, yeah. It’s like saying a human doesn’t talk, you know? [laughter] So I believed him… And when they’re home — the dog actually doesn’t bark when they’re home, but when they’re away from home, the dog pretty much just constantly barks. These guys are bartenders, and so they’re not home until 3, 4 in the morning, so that’s kind of a mistake I’ve made, allowing a pet in a property before understanding the sound and all the acoustics of the place.
Joe Fairless: Do the two people who live upstairs have to go through the living room and pass your curtain whenever they get home at four in the morning from bartending?
Craig Curelop: No, it’s different units, different doors.
Joe Fairless: Best ever way you like to give back?
Craig Curelop: I love to write for the blog; basically, anytime I get information – I like to do a bunch of research and then I like to kind of share that with the world. I write for the Bigger Pockets blog and I try to share that with as many people as possible. I do try to donate a couple hundred bucks a month to various charities. I’m not (I guess) loyal to anyone, but usually I see friends that are raising money for something and I’ll always put in $100 here and $100 there for them.
Joe Fairless: How can the Best Ever listeners get in touch with you?
Craig Curelop: You can find me on Bigger Pockets, you can find me on Facebook or LinkedIn; you can follow me on Twitter, but I never tweet and I’m rarely on there, so I would say Facebook or LinkedIn or Bigger Pockets are the three best ways.
Joe Fairless: Okay, noted. Well, Craig, thank you for being on the show and talking about how you’re making it happen on your first deal, and you really are maximizing the earning potential and the human experience to go along with it. You’re living a full life through this duplex, that’s for sure, from getting to meet all sorts of interesting people, making new friends and enjoying the financial rewards that come with owning a duplex and renting out the top and bottom.
Thanks for being on the show and sharing this with us, as well as some of the miscellaneous things you talked about, about other ways you are able to maximize your bottom line. I hope you have a best ever day, my friend, and we’ll talk to you soon.
Craig Curelop: Awesome, thank you. You too.