How I House Hacked My Way To $1,000,000 in 6 years
I thought today I’d share an abbreviated story of how I house hacked my way to $1,000,000 using what I call the seesaw method. Before I get into it I think it’s important to provide some context.
I am a fake engineer. That’s right, I have an engineering degree that I never actually used. It’s a certificate on my wall that basically serves to remind me that I can do hard things.
I’ve never made 6 figures from my day job. I don’t have rich family members. There’s nothing in my financial history that would make me any more prone to success than the average person. In fact, if you had $10,000 in 2016 you could be right where I am. Everything I’ve done is repeatable. If you could see my shoes from 2016, you would know that you could fill them financially speaking. I say all this to encourage you…if you are average, you CAN do this. There’s no fairy dust to it. You may just have to get a little scrappy.
That said…here goes.
2016 I buy my first house in partnership with my brother. He has $5k, I have $10k. We buy the house for $295k with 5% down. Seller covers closing costs. We are off and running.
2016-2018 we live there together paying into the mortgage as much as we can. Building equity the hard way.
I discover bigger pockets. I listen to hundreds of episodes on the podcast. I read the forum relentlessly. Over and over again I hear stories of people who’ve done the work, were no smarter or dumber than me, and still came out on top.
Mid 2018 I put my house up for rent with no plan for what comes next. I need to force myself to take action. This is my solution. I find a renter, lock in a 4 year lease $100 below market rate. We move our stuff into storage and rent a VRBO for 3 months.
Late 2018 my brother buys a condo for $245k with 5% down. We move in there together splitting the mortgage 50/50.
Early 2019 I get my real estate license to collect commission on everything we by in the future. I get under contract on a new build for $375k with 5% down that will take a year to build.
Early 2020 we put my brother’s house up for rent. We move into the newly built house. We split the mortgage 50/50
Early 2021 we put my house up for rent. My brother buys a condo for $246k with 5% down. We move in there together splitting the mortgage 50/50.
Late 2021 I get under contract for $660k with 5% down on a new build home that will take 1 year to build. I also get under contract on an new build investment property for $355k with 20% down that will take 1 year to build.
Feb 2022 we cash out refinance all available equity from our existing properties to pad our reserves, complete these new purchases and shift to a more liquid position.
March 2022 we put my brother’s condo up for rent. My brother buys his 3rd condo for $460k with 5% down. We move in there and split the mortgage 50/50.
June 2022 we've reached $800k in equity & $250k cash reserves. All of our properties are at 75% or better LTV. When we close on both new build properties in July 2022 it will bring our total portfolio value to $3.5M.
All the financial stunts I pulled along the way:
Borrowed against my 401k, took out a HELOC, pulled lines of credit, flipped a Toyota Tacoma for $4k, bought and rented out a fleet of 4 cars to Uber drivers, charged lime scooters, sold my dream truck, bought a clubwagon van to store things in to save on having to pay for a storage unit, bought a 2006 Honda Civic as my main car, borrowed from private lenders, slept on friends couches and even ran up credit cards.
Every Biggerpockets rule I broke:
The 1% rule. I broke this on every single deal. Every one.
The 2% rule. I broke this on every deal as well.
The 50% rule. In my experience this does not apply to newer homes, or class A rentals for that matter. At least not in my market of Phoenix.
Now don’t get me wrong…I recognize that being in the #1 real estate market in the country for the last 2 years fueled my progress. I also recognize that I took on more leverage than most might be comfortable with. It was a full on appreciation play. There were massive risks, and I fully admit that. I had a stack of contingency plans a mile high. In this game you often think about what you’ll do if it all goes wrong…we never talk about what happens if it ALL GOES RIGHT.
We seesawed our way to financial freedom by alternating who undertook leverage and relying on the number one tool in the game, the house hack. You could say I am a one trick pony in that regard. Now that I’ve got something to protect my investment strategy will be much more conservative…but I wouldn’t trade the wild ride we’ve been on for the world.
I absolutely owe the BP community a huge debt. I would never have had the courage to take that first step without hearing those podcasts of people succeeding over and over again. For those who took the time to read this, just know that you can do exactly as I have done here. Your mileage may vary, but the principles are the same no matter how you slice it.
Best of luck!!