Landlording & Rental Properties

Why You Shouldn’t House Hack to Get Started in Real Estate

Expertise: Real Estate Investing Basics, Personal Development, Landlording & Rental Properties, Real Estate News & Commentary, Business Management, Flipping Houses, Real Estate Deal Analysis & Advice, Personal Finance, Real Estate Marketing
235 Articles Written
A handsome young businessman tries to call the boss over the phone while sitting with his colleague in front of a laptop.

Let’s talk about why you shouldn’t house hack. In my opinion, it is a big cop out. People are lazy, and people want something for nothing.

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“Oh yeah, I’m going to put down a $50,000 down payment, I’m going to buy a duplex, I’m going to live in one side and rent out the other, the property is going to appreciate in value, and there’s going to be fairy floss and mermaids coming out of the ocean.”

Seriously? Come on, guys. Nothing comes easy.

It Takes Money to Make Money

For instance, I rent. You know why I rent? Because all of my money is out there making more money for me. I don’t want to own because why would I? When you own, you are anchored to one particular location when you put a down payment on a duplex or a big property with 17 bedrooms so you can rent it to stupid college kids or whatever it may be.

Guys, money makes money. It takes sacrifice to achieve success, to achieve financial freedom, to get to where you need to be.

Related: 7 Steps I Took to Land My First House Hack (& Rent it Out) With Ease

I moved to this country with $15,000. I absolutely worked my butt off to be where I am today. I’m up at 5:00 a.m. every morning, and I do not stop until 7:00 p.m. Instead of house hacking, get out there, work two jobs, save hardcore, be frugal, and rent a bedroom or a crappy little apartment.

Don’t anchor yourself down to a particular location. Adapt, be mobile, and move.

If you’re now saying, “But I can’t find great deals” in San Diego or New York or wherever, know that neither could I in Australia, so I moved to Toledo, Ohio out of all the places. It’s not the most glamorous, but the numbers make sense, and it’s a great real estate investment market. That is what you have to do.

Stop Taking the Easy Way Out

I think house hacking is an easy way out. It’s like everyone jumping on the bitcoin bandwagon. I’ve got no freaking clue what bitcoin is. I don’t understand it.

House hacking I more so understand, but I still think you should rent, be mobile, and keep overheads at a minimum. You do not want to have any expenses associated with your house hack property that you’ve put a down payment on to where you have to put your hand in your pocket to cover all kinds of stuff.

You’re better off investing money in buy, fix, and flips. You’re better off wholesaling once you have enough capital to cover the contingency of the times you don’t have someone to close on that contract. Buy, fix, and flip a few times over—and then hold so that your cash flow will be able to support your rental expenses.

Don’t buy and own, and don’t house hack. Money makes money. Invest in real estate, and once you can make enough capital and comfortably afford to buy and hold, then buy and hold.

Related: Why I’m Not House Hacking (& the Strategy That Will Cover More of My Rent)

Here’s another tip for you. When less than 10 percent of your net wealth buys you your dream property, that is when you should pull the trigger. For example, my dream property is a $5 million penthouse condo in Manhattan. So my net wealth needs to be at $50 million. I’m not quite there yet, but I’m getting there. 

Guys, that’s my opinion. Take it or leave it.

Comment below.

Engelo Rumora, a.k.a."the Real Estate Dingo," quit school at the age of 14 and played professional soccer at the age of 18. From there, he began to invest in real estate. He now owns real estate all over the world and has bought, renovated, and sold over 500 properties. He runs runs Ohio Cashflow, a turnkey real estate investment company in the country (Inc 5000 2017 & 2018) and is currently in the process of launching a real estate brokerage called List’n Sell Realty. He is also known for giving houses away to people in need and his crazy videos on YouTube. His mission in life is to be remembered as someone that gave it his all and gave it all away.

    Alex Adair
    Replied about 2 years ago
    Unless owning a home is cheaper than renting, which is the case in many areas. You can buy a house that’s below your means, still save money and get equity.
    Justin C
    Replied about 2 years ago
    Exactly. House hacking can be cheaper than renting. In which case, you get all the benefits the author describes, plus owning the place you live in. Do the math. If it works, it works.
    Tushar Prasad
    Replied 4 days ago
    Unless you are blissfully oblivious to the opportunity cost, buying can never be cheaper than renting. With the opportunity cost included, buying will be cheaper than renting only if the annual rent is more than ~5% of the house cost. For example, buying will be cheaper than renting only if the monthly rent is less than $2k for a $500k property, or less than $1250 for a $300k property, or less than $425 for a $100k property. Get it?
    Darius Ogloza
    Replied 3 days ago
    Not sure exactly the specific nature of the opportunity cost you have in mind. This is interesting. Please elaborate. In southern/central Marin county, the prevailing rent for 3/2 house in OK to good condition is $4,000 to $7,500 depending on location and amenities, of course.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Alex, In my opinion you can scale quicker by renting and investing rather then owning. Personally, I can turn $50,000 into $100,000 in a couple of months. $50,000 on a downpayment will take years and years of appreciation before a significant return on investment is visible Thanks again
    Account Closed Investor from Bradenton, Florida
    Replied 3 days ago
    50 k down? Who does that on a house hack? I used a fha loan put 3.5 % down on a duplex then 2 years later put 5% down on a house that I airbnb. Both down payments were 5k.
    George J Anderson Jr Contractor from Spokane Wa
    Replied about 1 year ago
    Thank you for your input. Very insightful. This won’t work for you but those of us who are starting out decided long ago this is the way to go. I’m using my VA to buy a duplex. I’m also a maintenance/contractor for a 600 unit apartment complex. I know the ins and outs of the multi family scene. This is the best start for myself and many others. My strategy is buy and hold. May flip here and there but I like the passive income. It’s appealing to me. This does not make us lazy. It means we are involved. I’m new to the forums. I can say you are way past this start up phase therefor you won’t agree with it. You sound like a go getter. I’m not familiar with whom you are but I read your profile and thank you for all that you are doing in this world.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 1 year ago
    Thanks for your kind words George, Don’t get “sucked in” to what the masses are doing. Be different. Work hard. I wish you much success
    Zachary Stoll from Albuquerque, NM
    Replied almost 2 years ago
    Do you recommend this if you work 50-60 hours a week in a separate job?Seems like flipping is time consuming.
    Anthony Mai
    Replied 9 months ago
    How so. Don’t know anyone outside of private wealth fund level individuals that can double their money in a month. Unless you’re talking about gambling or bitcoin lol. If you’re able to double your money every month you must have unlocked some amazing secret
    Glen Frailey from Malibu, CA
    Replied about 2 years ago
    I’m so sick of the term “hack”! Everybody and everything is using it. What the hell does that mean as it relates to this article?
    Lloyd Cook from Leona Valley, California
    Replied about 2 years ago
    House Hacking is generally when you purchase a property and you live in while you also rent out part of the property. Say you have a duplex you’ve purchased, while you are still fixing it up, you rent out part of it. Copied from Bigger Pockets. I didn’t know what this was until I looked it up. Thanks for asking about it,
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    It’s a catchy term made up by Bigger Pockets that all the wannabe investors have jumped on as it’s an easy way to call yourself a “real estate investor”. Thanks
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied about 2 years ago
    Thanks for asking Glen. I’d never heard the term and had no idea, either, what it means.
    Craig Curelop Rental Property Investor from Denver, CO
    Replied about 2 years ago
    Hey Engelo, I love your energy. I saw your presentation at the Real Estate summit in Oakland last year (2016) and you killed it. I was just starting to learn about REI at the time and you were the first person to make me truly understand what, “figuring out your why” meant. Anyway, I must say, I do not agree with you here. I am house hacking to the extreme right now. I live in the bottom unit of an up/down duplex and rent out the bedrooms in my duplex while living behind a few curtains in the living room. I’m up at 4:30am and am pretty much non-stop until 9:30pm-10pm at night. I would say I am living well below my means and I would certainly not consider myself “lazy.” As for the numbers, I cash flow on average $500 a month after expenses. After closing costs, I was all in for just shy of $18k. That’s a 33% CoC annual return. I don’t know where I could get those returns with limited changes to my life elsewhere.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks for your kind words Craig. What market are you based in? Will $500 per month give you financial freedom? You should have used your $18,000 to buy, fix and flip a D Class property in a run down market. Rinse and repeat until you can buy and hold. I just don’t believe in tying up money and waiting. “Money makes money” so stay liquid and stay active. Much success
    Darius Ogloza
    Replied 3 days ago
    At $500/month in SF Bay area you can't buy a space on the sidewalk in the Tenderloin and $18,000 is a down-payment on a quarter of a down payment. These considerations are market specific, as always. Engelo, I know Toledo pretty well (not great but not a novice) and have not seen the kind of opportunities you describe. Are you in LaGrange type neighborhoods? Oregon/South Toledo types? or Westgate/Ottawa Hills/Old Orchard types? You do flips? The rents always seem low to me (circling $300-$350/bedroom in good areas).
    Brandon Hall CPA from Raleigh, NC
    Replied about 2 years ago
    I have a similar experience. I was living in a DC apt renting at ~$1600/mo including parking. I bought a three-unit in Baltimore (where my fiance was living/working) and lived in the first unit. My overhead went from $1600 per month to a positive $400/mo. This was critical for me as I was transitioning out of the W2 world and into my business, so reducing my overhead was extremely important. I now live in Raleigh NC, so I don’t think house hacking really burdens you to any particlar location. But even if it did, getting paid to live isn’t a bad deal. Additionally, I was able to uber leverage my three-unit (5% down) which may not be advisable to all based on risk tolerances. For me, I’m not confident that interest rates will be this low over the next 5-10 years. The ability to leverage at such low rates is what beats renting imo. But, I also side with Engelo on the “first investment” idea. The Baltimore 3-unit was my second rental property. I bought my first rental while I was renting in DC and did not live in it. It taught me a ton about investing and what to look for/expect and helped me understand how to structure my Baltimore 3-unit. Six in one, half dozen in the other.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Brandon, $1,600 per month is very pricey. Even to this day my rent is $600pm and I’m still eating S#@%. “Live today like others won’t so you can live tomorrow like others can’t” Much success
    Chris Connery Rental Property Investor from Cherry Hill, NJ
    Replied about 2 years ago
    Did grant cardone hack your account?
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    I like Uncle G but not his stance on only investing in multifamily Thanks
    David Goossens Investor from San Jose, California
    Replied about 2 years ago
    House Hacking is a very straightforward and realistic way for the average-joe to start down the path to financial freedom. You don’t need a large amount of cash to get started, and with a couple of properties, one could live for “free”, and no longer be tied to a JOB. House hacking might be a cop out if you want a $5mil penthouse in NY, but if all you are after is more time with your family and more time to enjoy hobbies, house hacking can get you there in a relatively short amount of time.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks David and you nailed it. It sure is for average Joe and to be honest, I’m not sure how House Hacking can deliver financial freedom. Maybe it can if you move your entire family into the basement Much success
    Jack P. from Columbus, Georgia
    Replied about 2 years ago
    I would disagree. “Hacking” (I am not a fan of the term, but since it’s become common parlance, I’ll use it here) is a great way to get your foot in the door to building wealth. Instead of the traditional 20-25% down payment for an investment property, a house in which you live only requires minimal down payment. So, if you buy a $100k duplex, you may only need $3k down on the property (FHA loan), which is only slightly more than rent and deposit would cost you anyway. After that, your tenant in the other unit probably pays for the majority of your mortgage, thereby limiting your monthly housing expenses, which was your point by renting a crappy little apartment in the first place. My first investment property was a 4-plex that I bought for $0 down using a VA loan. My three other tenants more than covered all expenses, and actually gave me positive cash flow. In effect, I was getting paid to live where I did. I understand your point about hard work and making sacrifices, but sometimes what you need is that first deal to get your feet off the ground.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Jack, “That first deal” should come when you have more than $3,000 to invest. Anyone looking to invest with only $3,000 is looking to make “something for nothing” Work hard and save money, Then pick a strategy and start investing. I don’t like shooting around the bush call it as it is. All good things take hard work and sacrifice and “House Hackers” don’t seem to like the idea of Hard Work. Just my opinion off course. Thanks again
    Ryan Hightower from Orem, Utah
    Replied about 2 years ago
    Sorry, but your opinion is completely off base. If you really want to call it like it is, then say what it really is- lazy people equal lazy people. House hackers don’t equal lazy people. Brandon Turner is the perfect example of what a house hacker really looks like. He’s a go-getter, do-it-yourself-er, super hard working kind of guy. To make blanket statements like “house hackers don’t like to work” is just wrong. Just my opinion, of course.
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied about 2 years ago
    Engelo: I strongly disagree with your comment that ‘investing in general is not for minimizing taxes. The more in taxes you pay means, the more income you are earning.” When you stop paying the 30% per year (or whatever your tax bracket) to Uncle Sam, that is a HUGE raise in income, especially when you get into the high 6 and even 7 figure incomes. Real estate is the greatest tax break offered in this country. Many of the uber wealthy in real estate pay nothing in taxes due to write offs (take our President, for example). And avoiding taxes is one of the main reasons high wealth individuals invest in real estate.
    Cindy Larsen Rental Property Investor from Lakewood, WA
    Replied about 2 years ago
    Work smarter, not just harder. Do what makes the numbers work. A small multifamily (1-4 units) that you live in can be a great way to start out, and the numbers should work out to BETTER than the numbers do for renting an equivalent half of a duplex, or an equivalent apartment. If they don’t, dont buy the property. House hacking gets you: * lower interest rates on your loan because you live in the property * lower downpayment on your loan because you live in the property * rental income that receives great tax breaks (deductions from rental income, before it is taxed): – depreciation on the part of the property you are renting out – expenses on the portion of the property you are renting out: repairs, maintenance, property taxes, mortgage interest, insurance, etc The rental income that ends up getting taxed after all those deductions is a relatively small portion of the total rental income, and, it gets taxed at a lower tax rate than w-2 income, since there is no FICA tax, etc, on rental income. With high enough leverage, your rental income may actually result in a paper loss, because deperciation is figured based on the purchase price, not the downpayment. That paper loss can be used to reduce the taxes from your W2 income (up to $25,000 of loss, I believe). That potential loss is not a real loss, because depreciation is not a real out-of-pocket expense. Depreciation on a property is 1/27.5 of the purchase price, every year. This is about 3.63%. If you buy a 4 plex, and live in one unit, the depreciation is 3/4 of that, or about 2.7% of the purchase price. On a $400,000 property, this is $10,909/year of the rental income that you are NOT getting taxed on. If your marginal tax bracket is 25%, this is a tax savings of $2,727/year for an expense that cost you $0, zip, nothing. All the real expenses, are also deducted from the rental income: Basically 3/4 of everything the property costs you. On top of that, you get to deduct the remaining 1/4 of the mortgage interest and property tax for the 1/4 of the property you are living in. And, since your ran the numbers assuming that the rent for each unit covers its expenses, including 1/4 of the mortgage payment, you get a bonus: whatever the principal portion of the mortgage payment is, 3/4 of that is being paid by those renters. So, your rental income is increasing the equity of your property every month by four times the principal you are personally paying for. Unless your landlord is an idiot, when you are renting, your rent is HIGHER than all of those expenses that he is deducting from your rent: otherwise the property does not have positive cash flow. Renting also does not let you deduct the part of your rent that the landlord is paying toward mortgage interest: he gets that deduction. And he gets to build equity. You don’t. Also, you can reduce or eliminate the property management expenses on the property because you can self manage it, which is easy and does not take much time (certainly less that self managing the property from the rental you live in across town). Since a property management company would charge you around 8% of the monthly rent for each unit, For a 4 plex, this adds up to 24% of the rent on your unit, if you were renting it. As property manager get to pick your neighbors based on their good credit history, and lack of criminal background. You get to write the lease, and put in any terms that you want: don’t want a barking dog next door? No problem, only allow cats, or no pets at all. If you run the numbers on a miltifamily property with positive cash flow, you should find that it costs you a lot less to live in a property you own, than to rent that same apartment or duplex unit from somebody else. Sorry, Engelo, but I strongly disagree with you about house hacking. I hate the term house hacking, but I love the money it brings in. Also I’d never buy one of those D class properties you recommend. The property management cost for D class tenants is much higher. B class properties attract tenants that pay their rent on time, don’t have to be evicted, have lower vacancy rates, and don’t trash your property. But, to each their own. There are a lot of different paths to wealth through real estate. House hacking is a great path, expecially for begining investors. But it’s not just for beginners: by the end of next year, I will own several profitable leveraged multifamily properties: at least 20 units. And I’ll still be living in one of my units, because it will cost me much less than renting, or than living in a SFH that is not part of a multifamily property. And I can feel good about being a landlord, because I treat my tenants fairly and maintain my properties so they are properties I would want to live in, in areas I would not be scared to live in. Also, investors, if your family needs or wants to live in a SFH (instead if an apartment or a duplex) it is possible to find properties with more than one house on the same property, and end up paying less to live than you would for that same SFH if it was all alone on it’s parcel. Just run the numbers, and do what makes sense. Whatever you do, never pay more for a property than you would if it was a rental with positive cash flow. That way, if you loose your job, and can’t make the house payments, you can rent it out, and not loose the house, while you live someplace cheaper for a while. And please, Engelo, quit discouraging people from getting started in real estate. CJ
    Darius Ogloza
    Replied 3 days ago
    A strategy that works great in the Seattle/Tacoma area may not make sense in parts of Toledo, Ohio where appreciation is nil, the winters are brutal (and thus more costly to homeowners), property taxes are on the high side, the economy turned sour in the 1980's and has not recovered, and there is a ton of available, cheap housing (and thus it is hard to exit from homeownership). The reverse of course is also true.
    Karen Coffelt Real Estate Professional from Mesa, Arizona
    Replied about 2 years ago
    I wholeheartedly agree with you, Cindy! I see nothing wrong with what people are calling house hacking if it means that you can live in your own home for free, or better yet, get paid to live there. The beauty of that is that you don’t have to work as many hours at a conventional job, thus freeing up much of your time to look for more deals. Or you can continue to work full time and stash away all that money that you’re saving on rent towards down payment on your next investment. What’s wrong with that? Nothing!
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Hi Cindy, I appreciate your detailed comment. Some of the things you mention don’t sit well with my strategy and I wouldn’t advice others on it either. Using leverage to start investing and saving on taxes. Most average folks can’t even manage their credit card statements so “house hacking” with high leverage could be a recipe for disaster for them. Also, investing in general is about making as much money as possible and not for minimizing taxes. The more in taxes you pay means, the more income you are earning. If folks get discouraged by reading an article written by an unknown individual like myself. Then that in itself is a huge warning sign and they should seriously re-consider any kind of real estate strategy. My blogs go against the grain and I’m not looking to make friends with them. if I help just one person stop and think before making a mistake and doing something that isn’t right for them or their long terms goals. I would consider that an accomplishment Much success
    Sean Haardt Rental Property Investor from Boonsboro, MD
    Replied over 1 year ago
    Thank you for this post. This is not only a thorough response to Engelo’s tunnel vision, but has a lot of great information that stands alone.
    Derek
    Replied about 2 years ago
    Take it or leave it, you say? I say, “Leave it.” I house hacked twice in the past three years, and still own them both. Both of them are doing extremely well. One has great equity AND Cashflow, and the other will have good Cashflow when we move out. The income that we show the bank will increase the appraised value. Both I got in for under $20k, and had renters paying the vast majority of the mortgages while I used my income to fix them up, which I, and 95% of the population couldn’t do if I saved up 20% in cash plus capital expenditure… instead I used FHA loans with 3.5% down since I lived in them. I also cash-out refinanced to get all my down payment money back, and my fix it money for the first unit giving me an infinite return. Why would I put my money in the stock market now when it is at all time highs? Why would I buy precious metals when they are at all time highs? Why would I buy speculative bitcoins when they are at all time highs? Why would I flip properties when I pay at least 20% in taxes on each sale? House hacking is definitely a legit option for investors if you buy them at the right price, and have a solid exit strategy. I hear definite deficiencies in the author’s understanding of how the tax system works, and fundamentals of investing. Readers beware.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Derek, You only did 2 deals in 3 years? You borrow a tonne of money and don’t like paying taxes? Look how many numbers you’re throwing out: 3.5%, 20%, 95%, etc… It’s too complicated. My strategy is simple: Buy, fix, flip and make money. The more in taxes I pay means I’m making money. It also seems like you should be an accountant and not a real estate investor. Much success
    Cindy Larsen Rental Property Investor from Lakewood, WA
    Replied about 2 years ago
    Engelo, Really. Please quit insisting that your path is the only path. So you are making money flipping properties. Great. I am making money as a buy and hold investor. I made money as a BRRR investor. I would hate the stress of flipping multiple houses/year. have you considered that if you rented your properties for a while, so you hold them for at least a year after buying them, you could pay 15% capital gains tax instead of 20%? You could have multiple properties in the pipeline, and have higher profits in each of them. My point is that there us more than one way to invest in real estate. Your path is not the best one for everybody. And, you seem to not understand the merits of the other paths, or you would not be disparaging them. Telling people about the merits your path is great. Telling them that their perfectly vaild, profitable path is bad just annoys those of us who know from experience that house hacking, or BRRR, or buy and hold can all be very profitable. Worse still, you are misinforming people who think you are an expert. You may be an expert house flipper, but you don’t seem to be an expert at other kinds of real estate investing. Perhaps you should investigate the other paths more before mistakenly telling the world that those are not good paths. Because, you are flat out wrong.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Cindy, Please feel free to read through the variety of articles I have written for Bigger Pockets over the last 4 years. I believe there is almost 150 of them and they all offer advice on different real estate investment strategies. And off-course there are many different ways to succeed in real estate 🙂 You also might find out a little bit more about my style and it will enable you to understand things better regarding my raw approach. I stress my beliefs passionately and will continue doing so. Thanks again and much success
    Javier Blanco from Atlanta, Georgia
    Replied about 1 year ago
    Engelo, How come the more in taxes you pay the more money you make? That’s ridiculous. If you know anything about building wealth you know that you have to find different sources of income (not coming from a W-2 job) so you get that deductions. Look at Donald Trump and other billionaires in the world. Its all about minimizing your taxes so you can invest that money somewhere else. I am a CPA and I’m telling you this. Makes no sense how you say the more taxes you pay the more income you are earning. That just means you don’t know where to invest your money. That’s is exactly why the majority of people in the United States get stuck in middle class. They get used to their corporate job making 60k-100k and paying 25%-33% in taxes instead of diversifying their income by investing in real estate, stocks, etc; So they can get that breaks.
    Susan Maneck Investor from Jackson, Mississippi
    Replied about 2 years ago
    If renting were really cheaper than owning, we’d all be out of business. People who make money off of house hacking are quite mobile, because they move from one hack to another. Hacking is for people who don’t have money, not for those with 50K down. The way you make it work is you buy a small multifamily, no bigger than a four-plex with an FHA loan and 3% down. You hack it for a few years then buy another multifamily the same way, with an owner-occupied loan. Which means you have to live in it for at least a couple of years. Then you repeat. Actually, by that time you can probably afford your own nice SFR, living off your rents. Hacking is best when you are young, especially college students. The mobile life gets to be a drag the older you get. Trust me, I’m 61.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Susan, Why not just buy a multifamily, fix, tenant and stabilize and then sell? Make a profit and re-invest in another deal and keep going. It took me a few years to “retire” 2-3 years of “House Hacking” is a long time in my opinion. Much success
    Ryan Hightower from Orem, Utah
    Replied about 2 years ago
    Except you’re still not admitting that a house hack doesn’t have to be your only deal. While you’re living in your “hacked” unit, you can still be working on other deals if you want to be a full time investor.
    Natalia
    Replied almost 2 years ago
    When I was in college I didn’t know anyone who had the money to buy a place….most people were just trying to make their rent and tuition payments. They say house hacking is for people who aren’t wealthy…but I’m not wealthy and I still don’t have money for this kind of thing..am I missing something?
    Susan Maneck Investor from Jackson, Mississippi
    Replied about 2 years ago
    That’s fine if you got the money. But who starts out with enough money for a multi-family unit? House-hacking is for people who are just starting out and IMO it is a great place to get started. Generally speaking you only need to spend two years living in the property not three if you get an owner-occupied FHA loan. But the truth is, nobody checks so you could get by with less. I house-hacked a property while I was in grad school. It was a two bedroom house with a small studio in the back. At first I lived in the studio and rented out the main house. After I got married I lived in the front house and rented out the studio. I stayed in that house until I finished the course work for my PhD. As a result I saved a lot in rent.
    Greg Shpunder Investor from La Fargeville, New York
    Replied about 2 years ago
    I used a 0% down VA loan for my first 4-Plex. It was required that I live in it. 4 years later i have 22 units. I think house hacking was the best way for me, as a frequently deployed military member, to get into the buy and hold game.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Congratulations Greg and it seems you have really well. Continued success
    Jonah Freedman Rental Property Investor from Ithaca, NY
    Replied about 2 years ago
    Thank you for the article. I always love to hear different opinions. That being said I strongly disagree. First of all you say it is the easy way out and I would agree with you. It is the easiest way to get started in real estate that is why I think most new investors should start this way. Also I find it is cheaper to buy a multi unit and live in part of it then just rent. This is how I started as well as many successful investors that I know. As far as being trapped your not,because if you want to move you just get up and move and keep your property as a rental. Cheers JOnah
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks for your comment jonah, I like going against the grain and kicking folks up the A$$ sometimes. I’m not trying to upset folks and I’m sorry for turning some of them into keyboard cowboys lol There is nothing easy about real estate investing. You’re in for a rude awakening even if you think house hacking is easy. Work long and hard. I wish you much success
    Ewa Reza from Los Angeles, California
    Replied about 2 years ago
    So you’re calling house hackers lazy? Really? Coz it took me a lot of time, planning and effort to buy my first triplex. The best thing I did! And certainly for many people who are single (one income to qualify) and live in big city like Los Angeles, it is the only option to get into a decent neighborhood and investing game.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Ewa, If I was you, I would have never invested in LA as it’s too expensive. There are many other cheaper markets in CA where you could have flipped for profit. Flipping is a much quicker path to financial freedom. You chose the “waiting for appreciation” strategy. Nothing wrong with that but it’s not how I invest. Have a great day
    John Glaze from Ellijay, Georgia
    Replied about 2 years ago
    I’m very new to all of this only been researching and hunting for a year now but house hacking is exactly how I plan to get into real estate investing. I’m driving for dollars locally but having zero luck and now I need to find a better market than north west Georgia.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks John, Look harder. There are many deals out there Much success
    Keoni
    Replied about 2 years ago
    Like Bitcoin just because you don’t understand it doesn’t make it a bad investment or compared to as one … simply because someone lacks knowledge on it. Bitcoin is not the easy way out just like real estate is not the easy way out. to educate yourself and being aware on what is going around you in the economy and not be singular minded on only one source of income opens a lot of opportunities. FYI In Texas an entire Real Estate transaction happened with bitcoin, yes a property was bought only using Bitcoin …. how cool is that! Everyone has to mitigate their own risk temperatures and even in real estate you have to do whats good for you although I always suggest going a little more outside of your comfort zone each time to reap the benefits. If you want to see bigger results then like you said the House Hack is not going to take you that far …stretch beyond the borders of your comfort zone and you will see much larger profits like the buy, fix and flips especially with a good team.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Keoni, Our company offers properties for sale via Cryptocurrencies and we are in process of doing an ICO for a tech platform we are developing. Bitcoin is a risky play while Blockchain is not going away in my opinion. It will be like the Dotcom bust. Amazon and EBay survived while many others went bust. Will Bitcoin survive the crypto bust? Time will tell. House hacking is a very long “waiting” game to financial freedom. I don’t recommend it and would advise folks to stay busy and super active. Hustle hard and reach your goals quicker. Thanks
    Matt Fitzgerald from Boston, Massachusetts
    Replied about 2 years ago
    Where is your data? There are no concrete examples of why this is working for you and no real numbers as to why house hacking doesn’t work. Stop taking the easy way out with this article by just pontificating. Do the hard work to analyze your data and present it to prove that your strategy is sound and profitable. I “house hacked” buying a duplex, which allowed me to save money to buy the duplex next door the following year. I lived rent/mortgage free that allowed me to save money for my next investment 5 years later. My next investment was a dream beach house that I rent out in the off-season and use in the summer with my family. I guess that’s sort of a house hack too! Oh and by the way my duplex’s have doubled in value in 6 years. I still live in one of my duplex’s and am mortgage/rent free. “House Hacking” definitely works in my area (Boston) and it was the only way I could get started. It wasn’t easy and still isn’t easy, but the hard work is paying off. My strategy may not work for everyone because real estate is local and it depends on what the local market will bear and if it will support one’s strategy. Good luck out there.
    Engelo Rumora Specialist from Toledo, OH
    Replied about 2 years ago
    Thanks Matt, I don’t do data. The only data I like doing is buy, fix, flip, make money and repeat. 5 years of saving is a long time mate. I’ve flipped 450+ properties over the last 5 years. I’m not trying to sound like a pompous A$$ here but even if the average folks just flip 10 properties in 5 years, they will be much further ahead than house hacking 2 properties over that time. You took the easy way out in my opinion but well done on your success. Keep the dream alive
    Nicholas Wood Real Estate Agent from West Virginia
    Replied 4 days ago
    “I don’t do data.” LMAO. Stopped reading here. Thanks for the tomfoolery, Engelo!
    Jonah Freedman Rental Property Investor from Ithaca, NY
    Replied about 2 years ago
    Hi Engolo, Why do you believe that flipping 10 properties over 5 years will better set you up financially then a two house hacks? Flipping houses is great I do 1 or 2 a year but it is job. You know what has giving me financial freedom. 3 house hacks in a row. Cheers Jonah
    Brett Holton Investor from Louisville, KY
    Replied about 2 years ago
    I must disagree with your article, a lot of times house hacking is cheaper than renting. I went from paying $450 per month plus utilities to have a small bedroom in a friend’s house to now living rent free and having the majority of my rent paid. I still set aside the $450 per month for expenses that may come along and that is the “cash flow” for the property. From time to time I will be able to use this money towards other investments, although it almost always will be making at least some return for me in the form of some sort of liquid investment. Seems like a good deal to me. I only needed 3.5% down via FHA financing and will be able to use it as a rental property once the 1 year residency requirement is up, assuming I want to be mobile. I am in college so I am tied down to the area for the time period anyway. The property will cash flow fine even with property management. Oh and in the meantime I will be paying down a $210,000 duplex in a thriving and fast appreciating area. There may be some overhype about “house hacking” but as a real estate investor, renting a house when you have the means to have this kind of arrangement is akin to throwing away your money.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied about 2 years ago
    I’m interested in continuing to see the comments here. One thing that I don’t understand is how house-hacking could preclude one from doing exactly what Engelo is doing in his fix and flip business. I house hack and it occupies almost zero of my time, and I’m able to do it in the relative luxury that I desire, while still keeping nearly all of my wealth deployed in other investments and all of my time occupied in productively working towards my goals. As for lifestyle, if I choose to live in a basement to maximize my return, great for me. If instead, I choose a luxury townhome and simply subsidize the cost a bit with the other homes in the duplex/triplex/quadplex, that’s great too. It seems to me, Engelo, that you could in the next year purchase a property as a house-hack, eliminate your $600 per month in rent expense, AND continue to run your business with basically no interruption, save for one additional closing and one move. This would require a very tiny amount of cash (3-5% down payment) and allow you to carry on with your business as usual, except now you’ve eliminated your rent expense, helping you accelerate towards financial freedom or huge wealth even faster. If I find a $100 bill on the ground, it may be the “easy way” but I’ll bend over and pick it up.
    Michael Brown
    Replied 4 days ago
    Wow Engelo, even the President of Bigger Pockets disagrees with you...I think it's time to wave the white flag and admit that there is nothing wrong with house hacking. Like others have said you can house hack, and flip houses all at the same time if you wish. One doesn't have to be mutually exclusive of the other. It just seems like you have some sort of personal vendetta against house hackers, and you're letting your emotions instead of raw data and logic blind you.
    Nicholas Wood Real Estate Agent from West Virginia
    Replied 4 days ago
    Get em, Scott!
    Cindy Larsen Rental Property Investor from Lakewood, WA
    Replied about 2 years ago
    Scott, I completely agree, and I couldn’t have put it better myself. But, as Engelo himself said above, he “doesn’t do data” so he probably won’t listen to you. If so, his loss. CJ
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied about 2 years ago
    So well said, Scott. I also couldn’t find the negative to “house hacking” even in Engelo’s examples. You can do EXACTLY what he’s doing while renting out part of the property you live in. Thanks for your comment.
    Joseph M. from Saint Paul, Minnesota
    Replied about 2 years ago
    Doing a ton of flips is fine strategy if you do flips full time. I’ve already got a job, so house hacking fits my strategy perfectly. Good on you that you are willing to bust ass, have no ties to any place, and do a lot of flips. I’d say though to consider the fact that 2012-2017 has been the strongest bull market in the history of real estate and people starting now will almost certainly have to approach the problem differently than when you could buy up foreclosures off the MLS.
    Diego Ortega Investor from Ferndale, Michigan
    Replied about 2 years ago
    I agree that flipping is a faster way to make money in some cases, but I disagree about your opinion on “house hacking”. I do both and I will tell you house hacking is less stressful once you’re setup and is very passive. My gf and I own a duplex and got a new great tenant after thorough screening. Our mortgage is $1280 and the rent for the unit we rented out is $1500. So that covers our utilities as well. Its a big sized place and we learn to be landlords in the process. It has set us up perfectly to move toward financial freedom. I will continue to do some flips along with getting rental properties and think I can achieve financial freedom in just a couple of years. Eventually I can stop flipping properties too and grow my rentals. But calling it easy to house hack and lazy makes it seem like you are upset that people found a shortcut to reach financial freedom and start their real estate investing, no matter which path they choose. Not everyone wants another job, which is what house flipping is, on top of their current job.
    Cindy Larsen Rental Property Investor from Lakewood, WA
    Replied about 2 years ago
    Well put Diego. I think you are on a great path to financial freedom. Congratulations.
    Diego Ortega Investor from Ferndale, Michigan
    Replied about 2 years ago
    Thanks! You too!
    Mary White Rental Property Investor from Klamath Falls, OR
    Replied about 2 years ago
    I’m not interested in House Hacking either, but we own a nice house in a great neighborhood that we bought as a deep foreclosure in 2011. The payment on it is lower than I rent my 2-bedroom units for so we essentially do live for free, but we get to live in a SFH. If we sold our primary today we’d walk away with over $100,000 profit and that’s with paying $3000 down on a FHA Work Forced Relocation Loan. My current project is a BRRRR 4-Plex (purchased with cash for $116,500, $40,000 in repairs, ARV $325,000). I’ll hold the property and have $240,000 in my pocket once my financing goes through. Why not work multiple strategies at once. I’m doing this all as a Stay at Home Mom and used Ebay profits to start the whole thing. Different strokes for different folks, my friend.
    Karen Rittenhouse Flipper/Rehabber from Greensboro, NC
    Replied about 2 years ago
    I’m so opposed to renting and I don’t recommend it to anyone. We even own our office spaces, pay less in mortgage than the tenants renting in the same office condo building, and have write offs and added equity every year since we’ve been there. If we’d been renting, we’d have none of the advantages. And the house we live in we simply took over the mortgage 4 days before the scheduled foreclosure auction. My husband was able to offer the bank a work out. They told us to move in and keep making the payments as scheduled (they did NOT want to lose a jumbo loan). We got a much better house than we could have on our own, no money down – nothing – and we get all the tremendous benefits owning allows, including amazing appreciation. If you buy a house and want to move around, rent it out, add it to your portfolio. There are so many ways to buy without the large down payment you talk about. Perhaps buying creatively is not your strength? But, please, don’t discourage others.
    Calvin
    Replied almost 2 years ago
    5 a.m/7p.m. , two jobs …Seems a good way to have a shit life until you are too old to have fun and maybe rich !
    Engelo Rumora Specialist from Toledo, OH
    Replied almost 2 years ago
    Nothing comes without hard work. Make a sacrifice and work hard for 3-4 years. Make good moves and you can have a great life.
    Craig Tingey from Salt Lake City, Utah (UT)
    Replied about 1 year ago
    That was my thought exactly. I don’t think most people in this blog care to live in a 5 mil penthouse in Manhattan either
    Tyler Lukey from West Palm Beach, Florida
    Replied almost 2 years ago
    All I got from this is: renting is good and owning is bad, $4m apt in Manhattan is dream home and he doesn’t understand bitcoin. I think this is about as far opposite from me that you can possibly get, so house hacking it is. I love tech and finance too much to not learn and understand it. My dream home would be a small humble house in the woods and I think owning things in life is way more important than leasing them and receiving nothing.
    Bryce Wong Rental Property Investor from Rochester Hills, MI
    Replied over 1 year ago
    Don’t forget that a good economy doesn’t last forever. Recessions are part of a natural economic cycle. Flippers will find it hard pressed to sell their properties while buy and hold renters and house hackers on the other hand, are making stable and good income on their investments.
    Engelo Rumora Specialist from Toledo, OH
    Replied over 1 year ago
    Thanks Bryce, There will always be a “buyer” and there will always be a “seller” If you’re flexible and can follow “where the market is”, I don’t see an issues I’ve flipped properties all over the world. Fun times Thanks again
    Rob Massopust from Garden Grove, California
    Replied over 1 year ago
    Hey Enolo I used to try to flip quick, and when you add up all the short term capital gains tax its a huge amount. Slowing it down and extending the hold time you will make so much more profit. Flipping only works when the market is going up. When it goes down, and it most likely will, you need to buy and be able to reasonably cash flow. Or that property will quickly eat you alive. I initially house hacked into a 4 unit and really did well. Every property I sold I now wish I kept. Appreciation is a massive multiplier. It is hard to find, finance, buy and flip in any reasonable manner in So Cal. So my strategy is to buy, fix, rent and sell or exchange after 1 or 2 years. I am going to read your articles on how to find properties and where. Thanks for the posts
    J.I. Huang
    Replied about 1 year ago
    You can live in slow lane all you want.
    Jacob Karasch from Greenville, South Carolina
    Replied about 1 year ago
    I understand your points and I respect that you are choosing the route that works best for you, but everybody has their own situation/motivation/skills. House hacking worked great for me. Quick numbers: I was paying $850/month for a 1 bedroom apartment. I bought a 3bed/2bath with a monthly PITI of $700/month with only $7k. Then I got 2 roommates paying $410/month each. That’s a net change of $970/month. I completely got my money back in 7 months with almost no effort. I’m not suggesting house hacking is going to make you rich, but it is a fantastic strategy for a first purchase when you have low money and no experience.
    Jennifer Nicole Lapinsky Rental Property Investor from Dover, DE
    Replied about 1 year ago
    I get what you’re saying about sinking $50k into a down payment, but blanketing everyone who chooses to buy a duplex and living in one side/renting the other as less-than seems a bit extreme. I’ve never heard of house hacking, but I’m familiar with the strategy you mentioned. I also haven’t been able to try it since I had a family to take care of from a very young age. However, I see nothing wrong with it, especially for people who can take advantage of VA or USDA financing. In those cases, there is no giant down payment, and it seems like a good stepping stone, especially for those who want to work the BRRR strategy. Not everyone has to invest just as you did to be successful. There are plenty of successful people whose “I started off with $X in my pocket and look at me now…” stories that don’t follow the same path you did. Why dissuade people who are just trying to make their own way?
    Jonah Freedman Rental Property Investor from Ithaca, NY
    Replied about 1 year ago
    Thanks for sharing. I like how you like to post controversial topics. Honestly I think your advice is really dangerous for new investors. There is no better way to get started than to buy a house that you can live in and rent part of it out and cover your cost. You don;t have to put down as large a downpayment. This is the easiest way to save more money to invest and it is far from lazy and you are not attached to the property. If you buy right you can always move it out and keep it as a rental. Cheers Jonah
    Engelo Rumora Specialist from Toledo, OH
    Replied 9 months ago
    Hi Jonah, Thanks for your comment and kind words. I want to get people to stop and think and not just follow the herd. If my blogs and content are dangerous for investors, then I pity those that can succumbed so easily to an opinion that they have read or heard online. I’ve got nothing for sale and my content is just an opinion based on my experiences. Content provided by many others has a hidden agenda and is sales orientated. Investors need to be smart enough to work through the maze of information and make final decisions on what they want to do and how they want to do it. They should never be swayed by someone’s opinion. I’m always happy to offer mine tho 🙂 Thanks again and much success ps. I still think house hacking is just an excuse for saying that “you’re a real estate investor” Folks should work harder than that if they want to succeed
    Renée Volny Darko
    Replied 5 months ago
    Thanks for the article. I’m truly new at this, so I’m really asking for a point of clarification. If I understand the article correctly, you describe that you are living in someone else’s rental (which is probably paying their mortgage) instead of hacking one house of your own (where others would essentially be paying your mortgage and other expenses). I guess I don’t understand how living for free in a house hack with a small one-time downpayment (FHA is about 3.5%) is not better than spending the same or more money in annual rent to pay off someone else’s mortgage. For example… Let’s say on one hand you house hack a $100K 4-unit multiplex in Toledo (which apparently is possible according to the house hunting sites) with a 3.5% FHA one time down payment of $3500, then let’s assume other costs might total up to $10K to complete the sale and you live for free with the other 3 units rented at $600/mo ($1800/mo). On the other hand, you pay someone else $600/mo rent which is $7200 on a yearly basis, which after 18mo of renting would exceed the one time $10K that you invested to house hack. I don’t understand how spending money yearly on rent frees up more cash for you to flip houses than living in your own house for free. I agree with you that “money makes money,” so… Wouldn’t having $7200 yearly in your pocket be more desirable so that you could use that money to make money in flips instead of paying someone else rent which makes them money? Wouldn’t that get you to your goal faster? Again, I’m new at this, so please school me! Thanks!
    Account Closed
    Replied 4 months ago
    Not sure why everyone's giving such bad reviews. Had gotten pre-approvals many times. I did my due diligence and built up my credit to get into the range of their "minimum requirement". with the assistance of a credit expert which I contact (captainspyhacker2 @gmailCOM or +1502-378-7817) to helped me fixed my credit. He helped me pay off my CC debt and improved my scores to 780 in a couple of days Applied, got approved, Took less than a week for the whole process, with funds directly sent to my checking. I had benefited a lot from Captain spy service as I'm presently writing this message in my new house at Texas Thanks Captain!
    Joshua Springman
    Replied 4 days ago
    I don't think this was an article that needed to be written. From the sounds of it, you don't have a lot of experience house hacking, and therefore should've written an article focused specifically on your strategy, without the unnecessary bashing. If you look around this community, house hacking is obviously an effective strategy for a lot of people; for myself personally, it's the best way to get into real estate while still holding a full-time job. The passive income, plus experience as a landlord is great. Maybe just stop telling people that they're "following the herd" by using a strategy that works.
    Austin Montgomery Rental Property Investor from Enterprise, AL
    Replied 4 days ago
    Hey, I believe house hacking may not have been right in your situation, but for many people, it is. I believe house hacking is a great way to start out. I bought a 3/2 with a VA loan next to a military base and rent out the other two rooms. With 0% down, I have $0 living expenses. My PITI is $520/month, and the rent from the other two roomates including utilities is around $1060/month. It would have cost me $500/month to rent a place + utilities. I understand it takes money to make money, but for people starting out that don't have much capital to put down on a "buy, fix, flip" or have a full time job and don't have as much time to flip quickly, house hacking is a great way to quickly build up capital. My house hack has allowed me to save at least an additional $1000/month. I am also flipping and buying other places, but the house hack was the biggest factor that has contributed to me being able to get started. When I move out next month, I will rent the additional bedroom and up the rent to $1400/month. That cashflow allows me build capital for other projects - like the 10 other units I have been able to purchase this year because of it. I wouldn't recommend putting 50k down on a house either, but if you can house hack with little out of your pocket with a VA or FHA loan, I see no downside.
    Nicole Vascianna
    Replied 4 days ago
    It's called working smarter. Nothing lazy about that.
    Larry Alar
    Replied 4 days ago
    Agreed. There are other ways to house hack rather than putting $50,000 down on a duplex, as well. I'm glad I read the comments to get further insight, because this article did not do much for me.
    Dominick Marschall
    Replied 4 days ago
    Whats wrong with taking the easy way out? Especially if you are starting out. Its a way to start out with minimal risk.
    John Elliott Investor from Oakland, CA
    Replied 4 days ago
    If you make so much money that you think you you are saving by renting in....Ohio of all places, then that leads me to believe you aren't really balling like you say you are. I'm in the top tax bracket and a high net worth individual and I own my home and invest in real estate and I live in a very high cost of living area and throwing money down the drain on rent is the last thing I would do. In fact, one of the main reasons I am in the financial position I am in is due to the fact that I got on the 'property ladder' with my first primary residence which led to many other positive financial things for me. Renting is foolish when the tax benefits to owning ( particularly after 3 years when the gain is completely tax free ) and equity buildup are essentially like living for free if you sell. I understand that you write click bait articles to get the comments and attention but you also give generally bad advice and I think most people see that hopefully
    Jiri Vetyska Investor from Normandy Park, Washington
    Replied 4 days ago
    This is really foolish advice for most folks! If you are starting out, it is much much better to house hack, get the feel for the business and grow from there. Those that live anywhere but midwest would also greatly benefit from owning and having the ability to get tax free loan against their equity while enjoying the tax write off on interest. Those in midwest would benefit from owning, because properties are so cheap and rents so high. So starting out renting is shooting yourself in your foot. There are certainly cases where renting is the way to go - if you have bad credit, you really just want to flip and don't want the responsibility of owning, or don't trust your own work that you would never live in the property you have just rehabbed. There are lots of folks that are in this flipping biz just for a quick buck. There are many approaches, there is no only one way to do things.
    Tom Fisher Rental Property Investor from Charlottesville, VA
    Replied 4 days ago
    House hacking was a great way to get my first couple of properties up and running, build some equity, build confidence in the game, get some practice at land-lording and have some creative fun. Different strokes I think. But power on Engelo. I'd be toast if I jumped into the game at your level too soon.
    Brent Crosby Rental Property Investor from Farmington, UT
    Replied 4 days ago
    Why does house hacking mean being anchored? Living in a place for one year so you can get in the game sounds just as good to me, if not better, than renting and saving (saving much more money because you won’t be occupying). I doubt you’ll be doing much moving in one years time if you are ultra focused on saving up to invest.
    Steven May Rental Property Investor from Kansas City, MO
    Replied 4 days ago
    Haha what a terrible article. I currently house hack. Have lived for free for a year now with only 3% down. I work full time as a nurse and am under contract for another home and work as a bird dog for investors. Renters are losers every time. Statistics show that. No matter “how many extra jobs or hours” I would work would I be able to do what I do now which is I put 3,500$ down on a 115k home and have lived for free while updating the place through small improvements. If you’re thinking about getting started by house hacking or any other method — don’t take the advice as this article. Sincerely, A 23 year told currently house hacking with no living expenses
    Andrew T. Rental Property Investor from Montreal, QC
    Replied 4 days ago
    New to BP and welcome solid advice, but I had hoped that this blog post was more substance, fact, and numbers based rather than a silly opinion piece with no obvious merit.
    Randall Marshall
    Replied 4 days ago
    That's basically $6000 down the drain instead of building equity - even in Toledo. You know the saying, "You can't live in your 401k..." I rented for a decade, and it ranks among my top 5 worst life decisions.
    Forrest Lennhoff Rental Property Investor from Lowell, MA
    Replied 4 days ago
    Troll
    Nicholas Wood Real Estate Agent from West Virginia
    Replied 4 days ago
    Yup lol
    Jeffrey Allenczy
    Replied 4 days ago
    I understand the argument, and I see how this can be the case for those who house hack as a means to an end. If you just buy one duplex with a 3.5% down payment, and house hack the same place forever, I’d call that lazy. But I don’t think that’s the case if you plan to scale it. I also seriously disagree with the implication that being frugal and working two jobs are on a different coin than house hacking. My wife and I want to start investing and have around $200 to our name. Our plan is to build up a safety net by living frugally, busting my butt at work, and then purchasing a house hack. We’ll get in with a low down payment, stay for a year, then move out into another house hack while keeping the previous one as a rental and renting all the units. We plan to do this 5 times. Thus staying mortgage free for 5 years and accumulating multifamily rentals with putting low money down. It will require us move 5 times in 5 years, but we both work from home and have a desire to move around. I think if used as a springboard house hacking is extremely powerful and the most efficient way to get started.
    Mark Beeson Rental Property Investor from Wichita, KS
    Replied 4 days ago
    Engel- I get it. You HATE house hacking. Ok. So give me specifics. You bought your first property for $$$$$ ? Invested $$$$ to fix it up. Refied it for $$$$$. Made X $$$$$. Cash flowing X $$$$. With your profit you purchased a ? for X $$$$. Come on man! Show me house hacking is a sissy's game and BRRRR is for real real estate investors.
    Nicholas Wood Real Estate Agent from West Virginia
    Replied 4 days ago
    Who gave this guy permission to write blog posts? Not so good for selling BP books! Craig, Brandon, David Greene, WYA? What a poorly written article that spews nonsense and discouragement to the aspiring investor. So, so, so many benefits in simply taking action by purchasing multifamily real estate as early as possible. Yes, you need capital. But once you have just enough capital, you can make the ends meet and begin snowballing to long term success. Every investor I talk to has at least one regret— “I wish I had started sooner”.
    Kevin Sabatino
    Replied 4 days ago
    Hold on a sec, Have you heard of FHA Loans at 3.5%? Live in the house hack for ONE year then continue renting it out to others while you house hack another property ALLLL WHILE you can be BRRRRing with the money you make at your normal job and with all the savings you have because you’re living for FREE in your present househack... I did hear your video that you kinda get househack but kinda don’t. I don’t think you truly understand it. Just my opinion.
    James McLain
    Replied 4 days ago
    I agree. I don't think he gets it. I've been "house hacking" for several years with multiple properties. My tenant pays the majority of my mortgage while I rehab the property. I'm paying a net of $600/month to live in a place that would normally cost me $2700/month. As a result, I've been able to fully rehab my property out of pocket without pulling out any equity. To each his own I guess.
    Mike Staheli Real Estate Broker from Saint George, UT
    Replied 4 days ago
    Don't you have to put a down payment on a rental property that you own? And in most cases it is a BIGGER down payment. Other than not being tied down to your primary residence, this makes 0 sense to me. Also, where I live rent is more than an average mortgage payment.
    Angel Dejesus from Boston, Massachusetts
    Replied 4 days ago
    Great read great job Mr Dingo Following your advice I too want a penthouse in the sky. Thanks for your straightforward words. Refreshing
    Ben Tubergen
    Replied 4 days ago
    I couldn't disagree more. Maybe this varies by market...but I'm currently "house hacking" and being paid about $800/month to live in my own house/first rental property that I only had to put 5% down on. The returns are phenomenal and its reducing my overhead costs because I no longer have housing/rental costs to worry about making it easier to raise capital for my next investment. Appreciate your article...but I don't think you're seeing the whole picture here.
    Chad Setterbo from Brookfield, Wisconsin
    Replied 4 days ago
    after a flip which I labored on for a year and a half I used the 80k I made to put 3.5 down on a 3 unit townhouse building. I’ve been living in it while renovating and moving into each unit - now have finished and gone from an appraised 315k to 600k. “House hacking”, for lack of a better term, allowed me to live for free while saving all my day job income. I understand the type you are calling out but in the right instances it can be a great stepping stone.
    Karl B. Rental Property Investor from Los Angeles, CA
    Replied 3 days ago
    Just bought a duplex on a FHA-loan at 3.5% interest. After a year I can move out and cashflow $700 a month (zero utility bills as everything is submetered). But from the author's comments above, I'm a wannabe investor. lol. Despite the fact this is my first house hack and all my investment properties prior were done on either bank loans or by using private money. The author may hate house hacking but I just bought a 250K property for under 10K all-in. My renters will not only pay for it but as mentioned, I'll be cash-flowing. Well, he can hate it all he wants, I'm all for it.
    Wilson Churchill from Madison Heights, Michigan
    Replied 3 days ago
    If you never buy a "personal" residence, then you never get to take advantage of the Section 121 Exclusion: 250k per individual, 500k total for a married couple. You could apply your philosophy of being mobile by flipping your personal residence every two years, trading up into your dream home.
    Akua Sarhene
    Replied 3 days ago
    The article comes across super judgmental. I understand that this is not your preferred method, but to try to insinuate that people who house hack are lazy is a bit absurd. Managing units and more importantly people is no joke. At the end of the day, if the numbers make sense, then shouldn't that’s be all that matters!?!?!?!
    Keaton Nichols
    Replied 2 days ago
    I thought I read a previous article of yours a while back and it too was slamming the house hacking method. Just because you prefer other strategies doesn’t mean house hacking is without merit. So how do you explain the numerous people who have used the house hacking method successfully? It doesn’t take 50k out of pocket to house hack due to FHA loans. It’s a good way for beginners to get their feet wet in real estate considering flips are more of an advanced technique. I understand the desire to stay mobile but that’s not something that appeals to everyone. For people who are okay with being anchored it doesn’t make sense to burn money on rent. Stay humble big guy.
    Jacob Waddell
    Replied 1 day ago
    Look, I completely understand your reasoning. But I don't think you fully understand just how great of a deal house hacking can be for some people. I had 5k a couple years ago, but I was more focused on my emergency fund (which, in hindsight, was smarter, but I digress) and wish I had househacked earlier. It'd put me so much farther ahead. In my area, the median house price is 210k. I'd have to save 42k in order to get a 20% down on an investment property. At a 35k net salary (this year, was even less before due to being at a lower paying job) and renting a room for 500, this would put me at 29k. I need ~40/week on gas, 27k. Food ~200/mo, 24k. Assuming I spend *no* money on ANYTHING else, at all, this would take me 2 years to save up for an investment property. I'll be getting a raise next year for 20k net more, but I'd *still* need the 2 years since I'm not making the money this year. Instead, I'm buying a house I can rehab for 10-15k. Even if I only rent out 2 of the rooms (4 bed with a den that I could live in) I'll be living for free. This is utilities included. So, I'll be saving an additional 6k. 26k net compared to my previous statement. Hey look, now I have 6k for "fun" and I'll be in the same position as before! But wait, there's more. If I rent out the other 2 rooms, I can net ~1200/mo, if not more. Oh look, there's 20k. I just got the 40k necessary for an investment property, in half the time. I'll continue house hacking for the next 1-2 houses, since I can continuously be building wealth faster. Only after that will I look into renting/owning my own house. Being in the game one year earlier is a huge game changer. I'm 24, and this will allow me to retire in half the time. With this, plus the raise I'm getting next year (will net ~40k, up to 80k if I work overtime and get nights, which I prefer nights anyway), I'll be able to afford 2 investment properties, rather than 1. This is exponential. I'll be "ahead" 2 years in investments. I will be able to afford two ~400 cash flowing properties, if not more, next year. I dunno about you but retiring in 30 sounds significantly better than retiring at 40 and being miserable for an additional 3 years while I'm young. House hacking allows me more freedom, I can still be frugal, BUT I can also enjoy life for fun.
    Sulaiman Shah Real Estate Investor from Staten Island, New York
    Replied 1 day ago
    Smart strategy by telling other people NOT to house hack so they continue renting out and putting money in your pocket.