Landlording & Rental Properties

House Hack No. 2: Guess How Much I’ve Added to My Net Worth?!

Expertise: Personal Finance, Personal Development, Real Estate Investing Basics, Landlording & Rental Properties
47 Articles Written
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Can you believe it? It’s already halfway through 2019. It feels like just yesterday we were popping champagne and ringing in the new year.

The calendar doesn’t lie though; we are quickly approaching the second half of 2019. With the summer upon us, that means that I have officially fulfilled my one-year obligation to live in my primary residence, and it is time to start looking for my next house hack.

This article is not about that though. It is about my current house hack. It has been one year, which means my first round of annual financial results are in. I measure the quality of a deal based on a metric that I coined “net worth return on investment.” This is not a term approved by the SEC, but it’s a calculation that tells you how much your net worth has increased based on your initial investment into a deal.

The formula takes the three main wealth generators—cash flow, appreciation, and loan paydown—adds them up, and divides the sum by the initial investment. I exclude the tax advantages, because they will be different for everyone.

With that being said, let’s see how I did in terms of generating wealth from my second house hack. The house hacking strategy I used on this one was renting by the room.

Denver is an extremely competitive market. The traditional strategy where you purchase a duplex, triplex, or quad does not necessarily work here due to the high price points. Since the market took away that option, I decided to go with the more lucrative rent-by-the-room strategy.

I purchased a 5-bed/2-bath single family residence just outside of the city. I lived in one room and rented out the others.

Let’s dive in to see how it worked out for me.

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House Hack by the Numbers

Initial Payments

As I mentioned above, I purchased a 5-bed/2-bath single family residence just outside of Denver (about 15 minutes from downtown). The purchase price on the property was $343,000, and I financed it with a 5 percent down, owner-occupied loan. My down payment was $17,150. After closing costs, I was purchasing the property for a total of $20,000 and a mortgage payment of just over $2,000.

While overall the property was in good shape, it did need some rehab. I hired a contractor to do a variety of small updates, including installing exhaust fans in the bathrooms, replacing tiled ceiling with drywall, running electricity, and adding a closet to the fifth bedroom. These repairs, coupled with furnishing all of the common areas, ran me roughly $10,000.

After purchasing the property, I had $30,000 invested into the deal initially. Reading numbers in paragraph format can be confusing, so let’s recap real quick in an easier format.

Purchase Price: $343,000

Down Payment: $17,150

Closing Costs: $2,850

Rehab: $10,000

Total Invested: $30,000

Cash Flow

Now it was time to get renters! There were four rooms I needed to fill. Two of the rooms were standard, no-frills bedrooms with a closet. One had a master bathroom, and the other had a garage attached with a private entrance. The one I was living in was (of course) a no-frills bedroom, as well. Below is my pricing breakdown for each room.

No-Frills Room 1: $700

No Frills Room 2: $750 (includes carport)

Private Entrance Room: $800

Private Bathroom Room: $850

Total Rent: $3,100

Related: The 7 Drawbacks of House Hacking (& How to Overcome Them!)

With a mortgage payment of $2,000 and total rent of $3,100, I was making $1,100 over my mortgage—more than enough to satisfy my criteria. I set aside $400 per month for reserves. This includes vacancy, capital expenditures, and maintenance and brings monthly cash flow to $700 per month or $8,400 per year. So far, so good.

Below is a recap that’s easier on the eyes.

Total Rent: $3,100 per month

Mortgage Payment (PITI): $2,000 per month

Reserves: $400 per month

Cash Flow: $700 per month

Annualized Cash Flow: $700 x 12 = $8,400


Appreciation & Loan Paydown

The appraisal at the time of purchase came in at $367,000 (even though the purchase price was just $343,000). Do you know what that means? It means that immediately as I signed the contract to purchase the property, my net worth increased by $367,000 – $343,000 = $24,000.

Now, I also added a fifth bedroom and made various other updates. Conservatively, after the updates and one year of appreciation, I would say the property is worth about $380,000. Therefore, total appreciation on the property is $37,000.

Purchase Price: $343,000

Appraisal: $367,000

Estimated Value After Repairs: $380,000

Total Appreciation: $37,000

In addition to the value of the property increasing shortly after purchase, I added value as the year went along. I was also paying down the mortgage. (Well, my tenants/roommates were paying down the mortgage.)

At the end of the first year, my loan amount went from $325,000 to $320,000—or a decrease of $5,000. With an additional $5,000 of debt paid off, that is another $5,000 added to my net worth.

Original Loan Value: $325,000

Loan Value After Year 1: $320,000

Total Loan Paydown: $5,000

Related: House Hackers—Want Great Tenants? Screen Like This

Net Worth Return on Investment

Alright, so those are the three wealth generators of house hacking—cash flow, appreciation, loan paydown. Again, exclude the tax wealth generator, because it differs for everyone.

I feel as though I did well in all three departments. Let’s add them up to figure out what my total net worth return on investment was.

Cash Flow: $8,400

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Appreciation: $37,000

Loan Paydown: $5,000

Total Net Worth Increase: $50,400

Total Amount Invested: $30,000

Net Worth Return on Investment: $50,400 / $30,000 = 168%

There you have it! My net worth return on investment or how much my net worth increased based on my initial investment was 168%. I invested $30,000 and was able to generate $50,400 of net worth in one year.

Do you see why house hacking is so powerful now? I have yet to find a method of investing where you can see 100 percent-plus returns consistently without creating a second full-time job for yourself.

If there is one I’m unaware of, please let me know!

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What’s Next?

So, what now? Between the savings from my first two house hacks, I was able to pay off my student loans and am now in search of house hack number three. In fact, I have one under contract as we speak. It’s a 6-bed/3-bath house that is just a couple miles south of house hack number two.

This one has two kitchens and two washer/dryer areas; therefore, it can essentially be a duplex. However, it is not zoned as a duplex, so I will pursue the same strategy I’ve been using—renting by the room.

The property is under contract for $390,000, and the monthly payment will likely be around $2,100. Rents will probably amount to $3,500 total, so I’ll be making $1,400 over my mortgage while also living for free. I will set aside $400 for reserves and truly be cash flowing $1,000.

Who is going to manage my second house hack? I could… but I really don’t want to. For that reason, I have negotiated a deal with my most responsible roommate/tenant.

The deal is that I will reduce his rent by $100 per month if he does all of the house maintenance. This includes mowing the lawn, shoveling the driveway, replacing the air filters, and fixing any small things that come up. He took the deal without much hesitation. The only thing I plan to do is fill vacancies.


Overall, I’m satisfied with my second house hack, and it should continue to perform even better when I move out and into property number three. Being able to rent my room out will add $600 to my cash flow, while I am only paying $100 in property management fees to my roommate—a net gain of $500 per month.

I have said this before, and I will say it again: I do not think there is a better risk/reward/work tradeoff than house hacking.

For the majority of the time, you are going about living your life like you would anyway. Occasionally, you need to get something fixed, fill a vacancy, etc. But this additional work is all for 100 percent-plus returns and putting yourself in a phenomenal financial position—one where you can likely achieve financial independence in five to 10 years.

I don’t know about you, but I am certainly okay with putting the extra hours in now so I can save years of work later. Wouldn’t you?

Are you considering house hacking? Can I answer any questions for you? 

Ask me in the comment section below!


Craig Curelop, aka thefiguy is an aggressive pursuer of financial independence. Starting with a net worth of negative $30K in 2016, he has aggressively saved and invested to become financially independent in 2019. From sleeping on the couch and renting out his car, he was able to invest in two house hacks in Denver and a BRRRR in Jacksonville. He plans to continue to investing in both Denver and Jacksonville for the years to come. Craig's story has caught the attention of several media outlets, including the Denver Post, BBC, and many other real estate/personal finance podcasts. He hopes to inspire the masses to grab hold of their finances and achieve financial independence. Follow his story on Instagram @thefiguy!

    Peter McDonough Rental Property Investor from Huntsville, AL
    Replied 3 months ago
    $100/ month to mow the lawn and shovel the driveway AND do all the other minor maintenance? That’s a steal of a deal right there.
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 3 months ago
    Yup! If something does break, I will pay for the parts and labor. He has to just coordinate it. And we live in Colorado so the grass only grows for maybe 2 months a year and the snow melts right away. So it’s not a huge ask over here 🙂
    Peter Plourde
    Replied 3 months ago
    I loved this!!
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 3 months ago
    Thanks Peter!
    Rey Orinion Investor from Renton, Washington
    Replied 3 months ago
    Enjoyed reading it. Good job!
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 3 months ago
    Thanks Rey! Glad you liked it.
    Deanna Opgenort Rental Property Investor from San Diego, CA
    Replied 3 months ago
    $1,200 dollars/year to do the stuff a home-owner does? Win-win if they enjoy DIY!
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 3 months ago
    Yup! I love creating win-win scenarios. It’s just minor maintenance. But yep! It’s a good deal.
    Brendan Shane from Atlanta, GA
    Replied 3 months ago
    Great article! Where do you primarily find tenants who want to rent by the room?
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 3 months ago
    Hey Brendan – I have had the most success on Facebook Marketplace and this app called Roomster.
    Brendan Shane from Atlanta, GA
    Replied 3 months ago
    Awesome! Thanks for the feedback Craig. Best of luck!
    Javon Jacobs from Orange, NJ
    Replied 3 months ago
    Great post!!
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 3 months ago
    Thanks man!
    Simmie Annandale Real Estate Agent from Cincinnati
    Replied 3 months ago
    Question about your mortgages: Will it not matter to your lender if you already have an owner-occupied loan? Or, how does that work?
    Craig Curelop Rental Property Investor from Denver, CO
    Replied 3 months ago
    Hey Simmie – So if you get an owner-occupied loan you are required to live there for one year. After that year, you can go on and get another owner-occupied loan. What I think you are thinking of is that you can only have one FHA loan out at a time. However, there conventional, owner-occupied loans which is what I have been going with.
    David Palos
    Replied 3 months ago
    I think giving someone a place to live and a job that pays well would be a smart thing to do. I’m working on doing this with my employees now
    Rodney Harris Rental Property Investor from Kansas City, KS
    Replied 3 months ago
    The $100 compared to the $3100 rent is 3% for your “property manager”. A lot of other resedential investors pay an upwards of 8-12%! Thats genius! That’s a win! More so for you as the landlord! It’s a win for the tenant as well but you got the better end of the deal ? !!! Great job man!!!!
    Dan Sheeks Rental Property Investor from Denver, CO
    Replied 3 months ago
    Nice work, Craig! You have the house hacking thing down! Excited to hear how #3 goes.
    Jen Narciso Investor from Montclair, NJ
    Replied 3 months ago
    Thanks for posting! Great article! I love this strategy and my husband and I have done this 2x too. We are looking for our third as well. Question, how are you renting out each room? Is it considered a boarding house in Denver? I’m in Nj and have thought about buying a sf owner occupied for our next and then when we move out rent to college kids. However, you need one lease in the towns I’m looking at or it’s considered a boarder house. I’m curious if you have dealt with this issue and if so, how you’ve worked around it? Thanks!
    Caleb Webster Developer from Portland, OR
    Replied 3 months ago
    Do you have your tenants sign lease agreements? If so, for how long? I’m house hacking a 5/3 in Portland right now and I’m just curious how other people are running their ops.
    JL LaVergne from Northridge, California
    Replied 3 months ago
    Good moves Craig. How are the “tenant rights” issues in Denver? I have a friend who did a similar thing and the eviction of non-paying tenants is costing him a fortune in lost rent, lawyers and court costs here in San Jose CA.
    Amina Sanders from Philadelphia, PA
    Replied 3 months ago
    Hi Craig! Thanks for sharing! My husband and I live in a sfh house hack in Philly. We rent out one room and Airbnb the another. Once the other tenant leaves we’re thinking of Airbnb the second room as well. We’re also in the process of shopping for our next investment, but as you mentioned multi families can be really expensive especially as you get closer to the city center. I’m wondering if buying another sfh in the city would be a good idea. Are you living in your house hacks for a year before buy the next one?
    Deanna Opgenort Rental Property Investor from San Diego, CA
    Replied 3 months ago
    After re-reading this post, I realized that there are a couple numbers missing. Are you accounting for vacancy and refresh costs? You’ll need to repaint the bedrooms every few years to keep them marketable, and budget for repairing appliances as they wear out. BTW – 3 fridges for a 6 person household — best investment EVER! Yes it takes up space, but saves SOOO much conflict! We got all of ours used.
    Arya Jackson from San Francisco, Bay Area
    Replied about 2 months ago
    Thanks for that detailed article on how you were able to house hack, I am now very much inspired! I wish you all the luck with your future endeavors. It seems like you're investments will be growing rapidly due to your smart tactics with house hacking, I am a fairly new landlord that uses Tellus app to help manage my property. I only suggest you look into using this service because its free, so you're still saving money there and it'll help your tenant/roommate who is managing your property to communicate easily with the other tenants and you as well if there's any work orders or anything else regarding the rentals. It can also help get your rooms filled. Good luck with everything!