NEW BOOK—House Hack Your Way to Financial Freedom!

85 Replies

@Craig Curelop This book came out at the perfect time. I am moving and looking to do my first house hack. Since I have a family I will be on he easier side of the comfort continuum. The way I have been analyzing properties is first to see what it would cost for me to live in the property. I include utilities so I can see about what it would cost a month in total to live there. Then I run the numbers a second time to see what the ROI would be when we move out. Then adjust my offer to make around 10-12% ROI. After hearing you on the podcast I started thinking differently. Do you think I should be more flexible when making an offer due to the possibility to refinancing and loan pay down a year later? Thanks for the book!!!

@Craig Curelop I’m having trouble with this idea in general for single family homes. In my market I located a large sfh that an owner occupied fha loan strategy would be great for so I called the township zoning office.

First thing Is they told I can’t rent home because it’s zoned single family which leads me to two questions.

Are people doing this without zoning consideration?

And

If you get an owner occupied fha loan, live for a year and leave, and it’s a sfh, can you rent out your old space or is it disallowed because it’s considered a duplex?

@Craig Curelop

I have about $10000, but live in the king county/pierce county are in Washington (about 40 mins south of Seattle). I want to house hack, and being married makes it considerably harder. My level of comfort would be a single family home where I live in the basement and rent out the top. In order to make this work I would need at least a 3 bedroom house with 2 bathrooms with at least a room, bathroom, and kitchen downstairs. A house like this that you can just straight up move into in this area costs about $350k minimum. If you were to buy it and it needed some bad rehab work it would cost about $290k. I am pre approved for up to about $290-300k, but would still need construction funds, even if I did the work myself (and I absolutely can and am willing to). My monthly payment would be about $1750 with 3% down for a 30yr fixed for a 290k house. I would then have to live in it, rehab it for about 3 months....then what? Rent out the top 2bed 1bath for $1300/month? Then I’m paying $450 for rent, which is definitely better than the $1450+utilities and electricity I was paying at a 1br apartment. How does my reasoning sound? Is there a better option for me?

Originally posted by @Jennie W. :

@Ben Leybovich do you have a second home/unit on your property?

Yes, I have a Casita in my house. Separate entrance, and doesn't share any walls with the living space in the main house, so very private all around. I've written about it on the blog.

 

Originally posted by @Ben Leybovich :
Originally posted by @Jennie W.:

@Ben Leybovich do you have a second home/unit on your property?

Yes, I have a Casita in my house. Separate entrance, and doesn't share any walls with the living space in the main house, so very private all around. I've written about it on the blog.

 

this is going to be big the Casita or ADU as they are also called. WE are not going ot spec build them on the 90 home project I just broke ground on .. but we are going to have the plans available and will build to suit.. in Lake Oswego here I have a great lot and the city does not charge SDC's if you use the ADU for extended family which if your paying for extended family's rent anyway is a money saver.. but ADU's in this area will rent for 1500 to 2k or more.. in the desert they are quite prevalent.. the other thing we see in new construction is two living areas for extended family.. so we will have that plan available as well for build to suit.

For all those starting out and ESPECIALLY in high priced markets house hack a duplex to 4 plex is by far the best thing one could do for themselves if your goal is to own rentals or just have a place to live.. Keep your job.. own it the year refinanced the FHA loan do it again and do that for 10 years or so and say build up to 20 to 40 doors.. and then you have something.. of course you have to be willing to move all the time.. its like new construction builders will and I have done over the years we stay about 2 to 5 years and once we have that 500k equity we sell get the equity TAX free.. so on my 8th home.. :) when you have large run ups or build from ground up and have instant 100 to 200k equity it makes a ton of difference in your life.. you don't really need as much trailing income.

 

@Craig Curelop

Love the house hacking strategy and just finished your episode. Your book is next!

I have two daughters so my wife and I were very picky when we were searching for a property. We were fortunate to find two separate houses on one lot and it’s been a great investment for us. We want to do it again!

What would you say is the best strategy for repeating this? We currently have an fha loan on this property and we know you can only have one at a time. Is it best to refi to a conventional loan first then get another fha loan?

Would love to hear your thoughts...

@Malik Eleby Owner occupied no, investment properties yes. I do this for asset protection, it's easier to track expenses, bank account activity, provides privacy (LLC name on the lease, not my name) and is more professional in the eyes of the IRS.

@Sean Tippens - It will be available on Audible on October 17th. 

@Jeremy Corporan - I do not know much about the NJ market. You'll have to run the numbers... I know NJ is tough because the taxes are so high. You want to make sure that the house works when it is rented by the room as well as a full unit. 

It can work anywhere. Regardless of the age of the town. 

@Mindy Jensen Can house hacking be good for someone trying to build as much equity as possible to sell in a 5-7 year time frame ? I’m looking into buying a home with a detached garage. Is it possible to house hack by me just living in the garage and renting out the house? Or is a rent by room more effective?

@Mindy Jensen

House hacking is the way to go.

Bought a SFH, 3 bedroom 2 bath at 22 years old. Had 2 buddies who needed a place to live. Charged them significantly less than they were paying in rent at their previous places. I now live completely for free and am building equity every month.

I’m looking to house hack a duplex now with my girlfriend.

Bought the home with a 3% conventional. Going with a FHA for the next property!

Anyone can do it and at any age!

For those of you using FHA loans. . . does an FHA loan with 3% down require PMI and if so does that extra cost still make it worth only having to come in with 3% down? Please share your thoughts. Thanks!

@Craig Curelop @Mindy Jensen - looking forward to buying and reading the book. What do you think about new enterprises like COMMON or WeLive or PODSHARE? COMMON says it controls 10,000 units or rooms. PODSHARE offers you a bunk in a 4-6 person room in the SF area for $1000/mo, kind of like the typical 8-20 people "coder houses" in San Francisco, and says it's looking to expand. When I think of house hacking, I think the typical house hack is a 2-4 unit purchase with ideally 3.5-5% downpayment, so you get paid to live in your own house from Day 1 (if you buy right) and can sell in 2 years with potentially any market gains as free capital gains (ask your accountant). In many areas such as Northern Virginia / Fairfax County 2-4 units aren't available to buy so about 10 years ago I purchased a "too large home" REO/foreclosure 5 bedrooms 3 bathrooms as a single professional and rented spare rooms to other professional people and was getting paid $500/mo to live in my own house (net rent and utilities free). (It was about 50k more than a 2BR 2BA condo, and has had much higher returns.) Having just come from that student environment (6 bedrooms share 2 bathrooms in a college suite), it didn't bother me any and many of the people who joined me were recent college graduates themselves. I report all my room rental income on a schedule E and deduct reasonable proportionate costs of repairs against that income.

What are your tips for house management in a shared house, especially billing someone against their security deposit or sending them a bill mid-rental? I heard of at least one student housing company doing quarterly inspections and billing the tenants and/or co-signer parents for excessive trash and damages as they went along. (I don't know if those tenants renewed.) Specifically, what do I do when someone on a year lease in a shared house is not contributing to upkeeping the common area, but also not offering to pay extra for cleaning services? I have new tenants/roommates sign a household upkeep duties list or agree to pay $50/mo towards a cleaner, but the slackers neither do the work nor pay the $50. I've now implemented a you shall be banned from the kitchen clause that people must sign, but it's not like I have internal house surveillance to know whose dishes they are. When it's your own apartment, you can keep it however you like, but when it's shared, that's not fair to leave dishes in the sink. Haha. The joys of profitable living in your own house. 

What are your thoughts about lobbying against "unfair" town code/zoning rules and changing these policies? Sometimes it's hard for owners to speak up because they don't want to draw attention. Towns say they want "green" but then they make rules against "green." In some places, I've seen rules that say no more than 1-2 people not your family. Meanwhile there are many very large families in the same area often belonging to first generation Americans. If another same-model house has 10 occupants between grandma, grandpa, mom, dad, 4 kids, brother + wife + 2 kids in the same 5-6 bedroom house, why would zoning go out of their way to pick on 4-6 single professionals earning probably 250k+ jointly and being very "green" through their low-carbon living that's kicking their student debt in the teeth? ($600-800/mo cost vs $1200-1500/mo single apartments). I'm talking about 4-6 people on a long term 12+ month lease, in a house with a nicely upkept exterior and with sufficient parking, not an AIRBNB with parties. Really minimal if any negative externalities. Thanks.

@Ben Leybovich I just got into my first property which is a luxurious house hack in Stockton, CA. We are currently trying to rent out the ADU/pool house in the back of the property and have a couple questions:

1. There are no hook ups for laundry in the ADU so what have you done in your luxurious house hacks that don't have laundry hook ups? The laundry is in the garage of our unit and I am not sure if I want to allow the tenant(s) to use our washer and dryer. It obviously depends on the tenant and my relationship with them, but I'm not sure how much of a deterrent it is for the unit to not have accessible laundry. Do you typically lean towards allowing tenants to use your washer and dryer, invest in hook ups for the back unit, or tell the tenant to suck it up and go to the laundromat?

2. Should I share my internet and cable with the back unit? My thoughts are that I could potentially lower my expenses over time by splitting the cost with them, but I would just need to purchase another cable box and wifi extender. 

3. Do you have any legal advice for what to do about the unit being right next to the pool? One side of the unit is within 15 feet of the pool since it was made to be a pool house, and I am mostly curious about injury/risk implications and time of use of the pool. I will definitely be taking any advice I receive to my attorney to confirm for my specific situation but I was wondering if you had any experience with this that I could use as a starter conversation with my attorney.

Thanks!

@Craig Curelop feel free to add your input too!

Originally posted by @Hobie Day :

@Ben Leybovich I just got into my first property which is a luxurious house hack in Stockton, CA. We are currently trying to rent out the ADU/pool house in the back of the property and have a couple questions:

1. There are no hook ups for laundry in the ADU so what have you done in your luxurious house hacks that don't have laundry hook ups? The laundry is in the garage of our unit and I am not sure if I want to allow the tenant(s) to use our washer and dryer. It obviously depends on the tenant and my relationship with them, but I'm not sure how much of a deterrent it is for the unit to not have accessible laundry. Do you typically lean towards allowing tenants to use your washer and dryer, invest in hook ups for the back unit, or tell the tenant to suck it up and go to the laundromat?

2. Should I share my internet and cable with the back unit? My thoughts are that I could potentially lower my expenses over time by splitting the cost with them, but I would just need to purchase another cable box and wifi extender. 

3. Do you have any legal advice for what to do about the unit being right next to the pool? One side of the unit is within 15 feet of the pool since it was made to be a pool house, and I am mostly curious about injury/risk implications and time of use of the pool. I will definitely be taking any advice I receive to my attorney to confirm for my specific situation but I was wondering if you had any experience with this that I could use as a starter conversation with my attorney.

Thanks!

@Craig Curelop feel free to add your input too!

1. I don't offer a washer/dryer to my guests. When I travel, I typically wouldn't need to use a W/D on a 7-10 day trip. One - you don't really want anyone in there for longer. And two - if someone does stay longer, they can make arrangements of their own. 

2. I have a separate sub-account for the ADU.

3. I can't offer legal advice, as I am not licensed to do so. 

Hope this helps.

 

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