Real Estate Agent · Post Falls, ID · Member since 2016 · 1k+ posts · 1k+ votes
Hey everyone!
I am doing research for a house hacking project and need some stories of fellow house hackers. Could you please reply to this thread with your house hacking story?
Please include your location, strategy (rent by room, Airbnb, duplex/triplex, etc.), and numbers associated with the deal.
I was required to move from PA to NJ for a new job right out of college. After looking a places to rent, I quickly realized that renting a 2 bedroom apartment would be more expensive then a mortgage on a 4 bedroom house in the same area!
My first property was in Edgewater Park NJ, technically South Jersey. Its a large 2300 SF twin house. Bought for $30k cash (borrowed money from family), put about $20k into it (got a high interest personal loan)- all in for $50k... apprasied for $140k and I pulled out $115k.
After paying back the $30k I borrowed and the $20k private loan, I had $65,000 for another deal.
With the money I received my the cash refi, I was able to purchase the attached twin house that came up for sale. Bought with the $65,000, and also put $20k into this one. $85k all in. appraised for $150k, and did a refi for $115,000 again leaving some more $ back in my pocket.
I lived in the first house while fixing it up, and it was super convenient to fix up my first rental after my 9-5 job (since all I had to do was walk next door).
After completing the rental, I advertised, screened, and found great tenants for the property.
After paying off the mortgage, I was able to cash flow over $500/month.
Since I saw such great returns, I decided to move out and rent the side that I was living in as well.
Both properties currently bring me in over $1,100 a month in passive cash flow.
We just closed on a house hack last week 168,000 purchase price, we put 20% down, PITI is $965, the other side is currently being rented for $675 by a sweet older woman, but our appraisal said that it would easily would rent for $750 in current condition. We hope she stays after we raise rent! With renovations I am convinced we could get between $800-900 for it. We are going to renovate our side while living in it and already saving for our next house hack.
@Mark Hove we have a pretty similar story to yours just a few months behind you! Quick question for you. How have you been doing your finances? Did you open a separate bank account and credit card for your house hack? When you have been doing renovations on your unit has that been coming out of a personal account or a business account?
@Mark Hove we have a pretty similar story to yours just a few months behind you! Quick question for you. How have you been doing your finances? Did you open a separate bank account and credit card for your house hack? When you have been doing renovations on your unit has that been coming out of a personal account or a business account?
The house is in our name, used FHA loan so couldn't have done an LLC. Use personal funds to do the rehab work. We ended up using a personal credit card for the sake of getting points but then just paid it off. (I am not a lawyer so please don't rely on my legal input) I am not sure starting an LLC or opening a business account would have been beneficial. Even if the home was in the LLC's name it would likely be pierced because after all, you're living in it. So to answer your question, no. Home is in our names, funded our renovations through saved up cash. You'll never seen me in cc debt, don't think it is wise.
@Mark Hove We're in a similar situation however our loan is conventional and in my name only (so we can purchase more properties than if it was in both of our names). I figured there was also no point in creating an LLC now because we have very little assets to protect and we can still get the same tax deductions that an LLC would offer. I am talking more separate bank accounts for tax purposes. I was thinking of creating a separate checking (and potentially a credit card) that we would deposit rent checks in and then pay contractors or pay for repairs in the side that is being rented. It would technically be a personal account but we would only use it for conducting operations on the rented side. We would still use personal funds for our side.
I bought a single family house with a completely furnished basement including a second full kitchen. The basement was initially 2 bedrooms but I decided the living room was large enough I could put up a wall and have a 3 bedroom basement apartment. The mortgage on this property is $2400 and I am renting out each bedroom individually. I am collecting $2450 total from the 3 tenants and now my wife and I are living on the main floor, completely separate from the tenants, with our mortgage paid for.
My story takes place in Los Angeles, CA back in 2015. I bought my 2 bed/2 bath condo as a fixer (Seller had been there for over 30 years and was a heavy indoor smoker). I paid $225,000 and put in $18,000 to fix it up. I put 10% down, but then once fixed up, I refinanced a month later to remove the private mortgage insurance. Then, when Brexit happened, for one week interest rates dropped again. I paid $1,000 to lower my interest rate to 3.375%! There for my bills all in excluding utilities was just under $1,400/month. Best part? I was renting my second bedroom to a friend of mine for $800/month!
I'm now working on a house where we are converting the garage and will be renting it out.
Hope this helps. Happy to answer any questions you have.
Everyone likes to tell their story, right? Nice idea for the thread...
We were already in an SFR that we liked, but my wife found this property on 4 acres in the middle of the Olympia metro area. I went to check it out with great skepticism. It had a barn on it so my wife thought it was charming. I didn't. We bought it.
It was $290k. It needed lots of work, but good bones. The main house is about 2,800 sq ft, including the 600 sq ft apartment in the basement (with separate driveway, carport, etc). We also have a 400sq ft cottage, and since it was once a larger property before it was divided, it has a 7,000 sq ft covered horse arena, which is a huge boon so close to the city.
Long story short, we run AirBnB out of the basement an on average gross about $1,600/mo. The cottage is rented for $300 (we could increase this by 50% easily but it's not very nice, and we like the guy. He only uses it for the day and once he retires we'll turn it into a garage). The horse arena rents for $900/mo. So the total is around $2,800/mo in income, but it varies depending on the AirBnB. We put in about $80k to remodel OUR portion of the house, but even with the improvements our mortage (incl. tax/ins) is $2,500, so we live in our large, remodeled house on acreage for free :) The property is worth about $550k now and will only increase with it's proximity to town. It's looking like very soon the property will be zoned commercial (nothing I had anything to do with) so that's interesting too.
@Sam B. Your story is amazing! What an assortment of trials you had to deal with. Most people would have quit there and you just chalk it up to an educational experience and keep moving. I think your're going to do well in this business.
I love this thread, it's so helpful! To add to it, I was curious if anyone had any house hacking financial mistakes? Ex: Overextending yourself and purchasing a SFH at a price that worked out on paper, but not so much in reality? Or struggling to find roommates? Not to be a negative Nancy, but I feel we can learn just as much from the bad as the good!
My first house hack was done by accident before I started getting into RE. Purchased it with all closing costs covered by the seller and no money down with a VA loan. Purchase price was 228k in Jacksonville, FL. I lived there for 4 years and planned to live there longer but got orders out of state after I had just rehabbed the entire downstairs with wood look tile, painted all the cabinets white and redid the backsplash. Total rehab was about 10k. It isn't the 1% rule but I have long term tenants in place, it rents for 2k per month and I self manage (it is from a distance but I make frequent business trips to the area). Mortgage payment is 1425 per month, HOA is 500/year, and insurance is 800/year.
I will keep this short and sweet! I sold a house I inherited and bought a 4/3 in town, rented out 2 bedrooms for 650 each and mortgage including insurance and taxes was only 1075 so I am making 225 profit plus paying mortgage two weeks early each month.
Thanks to the knowledge and confidence from BP - I purchased my first home August 2018.
I was looking for a fixer upper and found the gem I was looking for; a duplex that was smoked in for years and outdated on both sides. The worst condition side is a 1/1 and required a full gut of the kitchen, bathroom, living and bedroom. The "better" condition side is a 3/1 and required new paint, flooring, countertops, cabinet refinish, light fixtures, and ceilings.
I did all of the labor myself except installing sheetrock on ceilings and carpet on stairs (everything else is LVP). Before this project, I had no experience doing any home repair. My renovation of each side took 2 months, 4 months total for the project. Next time, I'd probably extend my timeline and/ or contract out more work. 4 months of 16 hour days wasn't ideal.
In the future on my side, I plan to install a half bath with stacked washer/ dryer from the laundry room to convert the side to a 4/2. There's also a couple various projects such as slowly replacing old windows, adding attic insulation, etc.
Purchase price - $123k
1/1 rehab costs - $11k
3/1 rehab costs - $7k
Mortgage - $775
1/1 rent - $750
3/1 living in with roommate - $500, estimated rent $1200 when I move out
Estimated ARV $190k+
Knowledge and confidence gain - priceless
Current cash flow is $74
-7% vacancy, 10% Maint, 15% CapEx, 0% property mgmt. (totals $400/mo into the cookie jar)
-$750 rent in 1/1 and $1200 rent in 3/1, could be up to $1500+ if I convert to 4/2
This project has changed my financial future and my life. This elimination of my living expense is allowing me to save up for deal #2 this year. Huge thanks to all contributors of BP!
Three unit purchase with the original intention to live in one and rent the other two that would cover mortgage, taxes and insurance with rent payments and its worked beautifully!
I wrote a BP blog for you guys in the member section about my 203k four family story, it's titled How to Live for Free (And then Some). Combination of airbnb and renting two units plus and extra bed. Good deal. It's all there though so I don't need to repeat.
I'm getting into an even better one though that I'm blogging about outside of here, themoneydummy.com, first post title God Help Me. That's a deal (and very well written ;)
I'll probably post content on BP as I move through it.
I love this idea for a post and enjoyed reading everyone else's posts.
I bought a 2-unit at age 22 in 2006, in Allentown, PA. I didn't know much of anything just that I had read Rich Dad Poor Dad and didn't want to make anyone else rich with my rent money. I bought at the height for $135k and got a no doc mortgage (no income verification lol) put 5% down and used seller assist, so was able to buy with about 7k in cash I had saved.
One unit was vacant, which I moved into and got a roommate. The other unit was occupied by a long term tenant (who ended up staying another 10 years). My tenant and roommate covered more that my mortgage payment. I was kinda double house hacking lol, but that term didn't exist yet.
Of course soon after the market crashed, and I couldn't refi as my property was now appraising at half of what I bought it for and I no longer could qualify for a loan. It was quite disappointing but mortgage was covered by rents and I had a nice place to live so I stuck with it. 10+ years later it did finally appraise for well over what I bought it for and I was able to pull some cash out of it. We recently purchased another 2-unit and moved into it. So now my first is fully rented and cash flows nearly 500/mo.
For a while I thought I had made a terrible error buying it, but now it's a great cash flowing property and I'm able to leverage it to make other purchases. I figure no matter what it was certainly better than paying rent to someone else all those years.
I house hacked after I went through my divorce. Me and my then 3 year old twins moved into half of a duplex that I owned. I had a long-term tenant on the other side. Her $475 rent paid for the majority of the mortgage ($600). This was a blessing because I had also decided to go back to an accelerated pharmacy school program and could not work. Fast-forward to 2018 and I had moved out of my side, had been practicing as a pharmacist for several years. I still had my same long-term tenant on the one side and I took the side I was living in and turned it into an AirBNB. It makes roughly $1000/month. My long term tenant now pays $600/month. We are in Louisville, KY
My wife and I are starting our journey to financial freedom as we speak. Our 3 bed 1 bath SFH is on the market . We have about 15k equity into it after 5 years at a purchase price of 155k. I am sick of paying on a mortgage and it draining all of our income along with other bills. We are living in the rat race and I am not a fan. We have an accepted offer on a duplex, conventional loan. About 45k will be financed. One side is a 2bd 1ba and is currently rented by a long term tenant for under market value rent (which will be increased upon my ownership). The other side is a vacant 3bed 2ba and is just as big if not bigger than our current house! We will upgrade some cosmetics here and there. The plan is for the tenants rent to cover the mortgage which it does as is without the increase. All utilities are separated and paid for individually. So we will "live for free" until all of our debt is paid off ie. student loans, credit cards etc. Upon our departure from the property it will rent for 7-800 a month, expecting a 400-500 cash flow property! I cant wait for my house to sell! I also just passed my real estate exams for PA and am currently waiting for my license to be approved by the state and returned to me, so I am super excited and looking forward to this year.
Once I finish grad school I decided that I wanted to be responsible and purchased my first property . once I had found a job and relocated to the Washington DC area I decided to purchase a condo. The condo was set up perfectly because it was two bedrooms two bath one kitchen one living room. I had a roommate prior to me purchasing this property and asked him if he wanted to move in with me in the new residence, he agreed and I charged him $500 a month to include utilities. I saved the money until I was able to purchase my first rental property. I also worked 3 jobs during this timeframe. Since day one I knew I wanted to be involved in real estate because for me that was going to be the path to some type of financial freedom and that is my house packing story