How I Hacked a Half-Million Dollar House in LA as a Full-time Student & Violinist

In this article

My name is Wynton Grant. I’ve been a fan of BiggerPockets for years now, and after all this time listening and reading, last year I finally took the plunge into real estate investing by diving headfirst into the Los Angeles real estate market and buying my first property, a 4-bed/3-bath house hack. I’ve been out here for the past 12 months doing a variety of long-term renting and Airbnb in this property, and in short, it has changed my life! So, I’m writing this post to give back to the community a little bit, tell my story, and share what information I’ve learned about real estate and how to house hack. For those of you unfamiliar with the term, “house hacking” is when you buy a piece of investment real estate, live in one of the units (or, in my case, bedrooms), and rent out the others.

To give some background: I’m 25 now and am a professional violinist AND full-time graduate student (at USC) living in Los Angeles (more on that here). The main reason I mention these things is just to say: You can get into real estate at any time in life! In between my professional music career and being a full-time student for the past 7+ years, I found time to earn money and study up to make this happen.

Backstory

After graduating from the Yale School of Music last year, I needed to move out to Los Angeles for professional and academic reasons. And when I started looking at the rent prices in LA and how much money I had saved up, I figured that rather than burn through every dollar I had made by trying to rent in LA for a year or two, it made the most financial sense to try to turn whatever savings I had into something that would continue to pay me.

As soon as I decided LA was where I needed to be, I immediately drew up a list of qualities that I wanted in a house, started looking at Zillow/Redfin/etc., and reached out to some real estate agents. However, nobody would speak to me until I got prequalified for a loan. So…

Step #1: Get Financing

As with any real estate undertaking, one of the first—and biggest—steps is getting financing. And don’t be afraid to get creative and think outside the box with it. In my case, I’ve been a student and musician for most of my life, so truthfully I don’t make that much money in a year, and certainly not enough to qualify to buy a house in LA all on my own (average property value in this city is $608k!). But I had great credit (score of 795 at time of purchase), no debt (earned full scholarships to every institution I’ve ever attended, bought my car used for cash, etc.), down payment money saved up from working a variety of jobs (gigs, waiting tables, stage managing, teaching, etc.), gifts, and savings from good financial habits over 8+ years. I also knew my parents’ house was paid off. So I talked to my parents, showed them the numbers on the deal (my dad is an accountant), explained that I had multiple classmates graduating and moving out to LA with me who were interested in renting with/from me. After assuring them I would pay the down payment (they helped with some closing costs), I was able to get them to co-sign on the loan.

After getting prequalified (an arduous process; most major banks didn’t even want to talk to me because of my student/musician income, and we wound up going with the lender my agent suggested), I was finally able to start talking to agents, and they began to send me potential properties.

I should mention: I was still in Connecticut while doing all of this. I had never lived in LA nor spent more than three days there prior to moving out; I was a complete foreigner diving into the market. A large part of that process for me was constantly studying maps of LA, reading current and old newspaper/web articles about the real estate market, and actively calling anyone I knew who had ever lived in LA, just trying to get as much information as possible.

Step #2: Find an Agent and Start Viewing Properties

Once prequalified (I got pre-approved for up to a $500k 30-year FHA loan at 3.5% fixed-interest rate with 3.5% down!), I started reaching out to agents via Zillow. I chose my agent (shoutout to Brian Castillo!) because he was the most responsive, had the best reviews, and had lots of properties to show me.

When I first got in touch with him, I had a list of requirements that was pretty simple:

My Requirements

• Price below $425k (I was pre-approved up to $500k, but I really couldn’t afford more than 3.5% down on $425k)
• Needed to be 15 minutes or less from USC campus (researched this by looking up traffic times on Google maps from different locations around the city for a couple weeks, at different times of day, to calculate average commute times)
• Needed to have a minimum of 4 bedrooms (I used online mortgage calculators to arrive at approximately ~$2700/month as my payment, so with three renters at ~$900/month, it would work)

As you can see, I didn’t get very complicated! So, after looking at hundreds of properties online, my agent and I narrowed it down to around 30 and arranged a couple days in LA to meet (I was on a very strict time schedule and only had three days in the whole summer that I could visit). Although we viewed lots of properties, I actually wound up getting the very first property we visited on day one after making an offer that first day in LA (true story!).

Once my offer on the house was accepted, we began the process of closing escrow. Miraculously, the process worked out super quickly, and we closed in something like 32 days. (Again, I was still on the other side of the country for all of this! I actually had someone drive all of the closing documents to my remote location in Vermont so I could sign the final paperwork.)

House Purchase Details

• 4-bedroom, 3-bathroom house. 1644 sq. ft.
• Purchase price: $437,000.00
• Down payment (3.5% down): $15,295.00
• Closing costs (2%): $8,740.00
• Mortgage (30-year @ 3.5%): $2,797.76
• Principal: $695.24, interest: $1,231.54, taxes: $574.88, private mortgage insurance: $296.10
• Total: $24,035.00

Step #3: Become a Landlord

As luck would have it, my friends from school, the original tenants, all bailed on the plan as soon as I started closing on the house, and suddenly I was stuck needing to put three people in a property on the other side of the country that I had never lived in. Honestly, it was a little stressful for a couple days (during which I learned some valuable lessons about the rental market here in Los Angeles), but I wound up finding friends of friends to move into the place with me, and I showed up in LA two weeks after the first tenant moved in by himself. (Shoutout to my housemates, who have been amazing to live with this first year!) Two tenants pay $900/month, while the last pays $960 (largest bedroom, with private bath).

• Mortgage: $2,797.76
• Rent collected per month: $2,760.00
• Yearly out-of-pocket expense: $453.12 ($37.76/month)

(Side note: I had initially planned on renting exclusively to long-term renters, but when one of my housemates moved out several months early, I started Airbnb-ing his room. Interestingly, I’m able to get around $1.500/month for the room from Airbnb, with 97% occupancy. I’ve made several thousand dollars this year off of that room alone. However, Airbnb is a whole different topic—more to come later.)

To get started landlording, I read lots of articles, looked over dozens of real-world example leases, and studied up on landlord/tenants rights laws in CA. In the end, I wound up writing my own 3,500-word leases, and I’m happy to say that they’ve worked out beautifully thus far.

I’m planning a whole separate post with some more detailed explanations for specific tips that I’ve gathered about landlording, but just a couple quick things:

1. Document everything! And keep a digital record. Take pictures of repair receipts, screenshots of conversations with tenants, monthly bills, etc.
2. Understand that, as landlord, YOU are in charge of addressing problems when they arise (from plumbing to interpersonal).
3. Find good repair people, and maintain those relationships.
4. Good tenants are crucial! Especially since you’ll be living with these people, make sure everyone understands the expectations. My tenants have been amazing this year, and my life has been made immeasurably easier as a result.
5. SPARE KEYS! Multiple copies, multiple locations. Don’t question, just do.
6. Think outside the box/be creative.
7. Believe in yourself!

The last one is a little cheesy, but I really stand by it. None of this would have been possible if I hadn’t believed in myself and my ability to make it happen—and then done everything in my power to turn that belief into a reality.

Bonus: Free Solar Panels (aka Free $$$)

A perfect example of the benefits of thinking outside the box: After getting a rather large utility bill two months into living here, I did a quick Google search for ways to reduce our monthly utilities. While searching, I stumbled upon an organization, Grid Alternatives, that provides 100 percent no-cost installation and ownership of solar systems for people whose income is below a certain level (~$32,000/year)!

Since the average cost for a home solar system in the United States is around $20,000, by getting those for free (plus 20 years of free maintenance and repairs!), it automatically adds around $20,000 of value to the property. And, because the system is so powerful, it actually generates more than enough energy to totally wipe out our electrical energy bill, so I’m hoping to get a refund check at the end of the year for selling excess energy back to the state (another year over year value-add). And all this from a random Google search. Think outside the box!

Summary

This past year has really been amazing. From turning the key and stepping into the house for the first time to locking myself out of my bedroom (and from my keys!) while naked 30 minutes before having Airbnb guests arrive, there have been countless memorable opportunities for me to learn and grow. I remember last year I was so nervous and worried about taking on the responsibility of property ownership and management, but now, 365+ days later, I can say house hacking this property was unquestionably the smartest and best financial decision of my life.

I love getting paid to live in LA. As a professional musician, the relative financial flexibility and freedom purchasing this property has given me has been absolutely life-changing. Now, if I need to leave town for a couple weeks to go on tour, I don’t worry about having the rent for an apartment every month eating into my paychecks by paying for a space I’m not even living in or finding subletters. And although work has been consistent since I’ve been in LA, if there are ever slow downs, I’m not ever worried about being able to handle my necessary monthly expenses (which are already relatively low).

And finally, when I pull up the Zillow listing and see my house estimated to be valued at $471,000 (that’s $34,000 of appreciation without even considering the value-add of the solar panels!) or think about how I’m saving at least $10,346.88 ($900/month x 12 months – $453.12 mortgage) a year by living here (without even considering all the other tax benefits due to depreciation, etc.) or even consider the additional thousands of dollars of income made by Airbnb, it’s a no-brainer. The list of benefits could go on, but in short, the situation is exceptionally ideal. And I don’t regret a thing.

If anyone is considering jumping into real estate in any way, I would say, do it! Experience is the best teacher, and the lessons I’ve learned this past year could not have been taught in any classroom (and certainly wouldn’t have made me money!). A lot of people recommend starting with a house hack, and I would strongly advocate the same. And I am actually really happy and proud to say that I have two close friends here in LA who are in the process of buying their first home/rental property, to do exactly as I did this past year, inspired by me. The results speak for themselves.

I have more posts to come later (I’m planning to do a “by-the-numbers” post, talking exclusively about the financial side of the property, as well as more in-depth posts specifically about landlording and Airbnb). In the meantime, I’m going to go practice violin and will probably have a beer later tonight with a lime from the lime trees in the front yard.

Happy investing to all, and thanks for reading! Feel free to ask any questions you have about house hacking or real estate, I’ll try to answer as best as I can.

I’m also open to suggestions about future posts!

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.