🏘️ Mansion collecting as a side hustle?

Hey Side Hustler,

This week we have one of the best side hustles I’ve ever seen outside of car washes. It checks all my boxes:

• Killer appreciation

• Tax-nuking benefits

• Cash flow

But instead of collecting crappy car washes you collect mega houses in crazy locations. Oh - and you get to live like a billionaire.

Let’s dig in. This one comes from my good friend John Samuelson (@SamuelsonTweets).

He and his wife have high-income tech-consulting and SAAS businesses. They generate nice mid to upper 6 figure incomes every year.

So they have the ultimate ‘problem’: they pay too much in taxes.

What to do? They buy STRs, or short-term rentals to us normies. Now I know what you’re thinking “duh dude, this isn’t new or even interesting, so what?” - trust me there’s a whole different spin on this side hustle.

So their first move is targeting an area with high-volume STR demand. The kind of demand that will never go away or be threatened by angry locals worried about housing costs.

It also can’t be too close to a major city center, where people just like him will be driving up the costs on these houses.

Their target: Eastern Tennessee. Wait - why?

Well, you probably don’t know (I certainly didn’t) but there several massive tourist destinations all within a short drive of each other. Dollywood, Gatlinburg, and Pigeon Forge create a Mecca for country music fans and southern folks in general. It’s centrally located right in the beautiful Smoky Mountains and an easy drive for 75% of the US population.

So, they bought an incredible property, complete with indoor pool, with room to sleep 14.

Cost? $2.1M - they put down just 10%!!!

Now it should cash flow just $50k this year, which isn’t great. But on a $210k down payment that’s not bad at all.

But with appreciation for nightly rates, and some operating efficiencies, they could be cash flowing much more soon. And… just look at this place:

But John doesn’t care too much about cash flow, because this house completely nuked their tax bill - for TWO years. Gone, whammo, zip. No tax bill, when they would have owed mid-six figures each year.

So they’re ahead by hundreds of thousands of dollars already. See the tax code allows for bonus depreciation if the average rental period is less than 7 days. And it deems this income ACTIVE, so you don’t have to be a real estate professional to take it. You just need active income to deduct the BD against.

So that’s two year’s taxes - nuked.

What about year 3? Of course you buy another one, friend. The plan is to buy one every year or two and collect these things over time. When you have 3-4 units in the same market, management becomes much easier too. You’ll have a local team to take care of everything (they live in Colorado).

So they’ve nuked multiple years taxes, and are building a portfolio of houses that will eventually fund an amazing retirement. Their goal is to have $15M worth of houses in the next 10 years. Pretty good goal, eh?

But that’s still not the best part!

The best part comes from a little site called https://www.thirdhome.com/. This is the place where the uber rich play. But John’s not uber rich (yet).

See this is a site for home swaps, for ultra-unique properties in areas where other folks can use your house for practically free - and you can use theirs.

They put their Tennessee house in the pool for 2 weeks, they get two weeks at other mansions all around the world.

The fee? $800. So $800 for a palace in Washington state - that sleeps 30! THIRTY PEOPLE.

They took their extended families to this incredible property for Thanksgiving for a couple weeks. Again, it cost $800. This place would easily rent for $5000-$10,000 per night.

So they have nuked their tax bill, have a plan to gather incredibly valuable properties over the long haul, and (maybe most importantly) feel like they're living like a truly wealthy family.

Check out the place they're renting in Orlando this summer:

$800 for the week.

My brother in-law is doing something similar with STRs in kite-surfing destinations. That way he has a place to stay when he wants to kite-surf and big income and tax deduction benefits.

The downside? You have to manage STR’s yourself until it makes economic sense to hire a management company. And you have to have that down payment. Or several of them. John has it dialed though and says it’s no big deal.

Still, I’ll be honest this blueprint had me considering ditching the whole car wash plan and going all in mansion collecting.

But I’m sticking to the car wash plan and taking a big exit when it comes around. Then I’ll buy a trophy property, throw it on ThirdHome, and travel the world like a billionaire.

So what do you think? Would you do this? Have you done it? Hit me up in the replies…

Kriss Berg