I'm curious. I have written extensively about how I "House-Hack" and live in one part of a duplex and have tenants rent out the other portion of that. They pay down the mortgage and allow me to live for free. For everyone that has not lived in their home for 10+ years (I can see you being fairly entrenched at that point), why wouldn't you consider doing this? It seems to me that you have MORE flexibility than as a renter (when I moved out, I could do so at any time, as I didn't have a lease with myself - I could have moved anywhere in the country and enjoyed some rental income with very low effort) AND more flexibility than the homeowner (when I moved out, I could simply put another tenant in my side to cover the mortgage and make me a little money every month - a homeowner might lose money doing that and have to sell right away, even if it wasn't a great time to sell). You could also stay in the property forever and live for free forever. There are many parts of town here in Denver, many excellent, where you can buy a duplex and use this strategy to live for free or for significantly less than buying a home. I can't think of a single part of town where this would not be a more advantageous way to live, at very low life impact. The advantages of this are fairly immediate and last forever if you keep the property, and you can literally do this for a year or two, and use the rental income to then pay for the bigger nicer house you want to live in permanently or raise a family in. In fact, many people raise excellent families in duplexes, townhomes, etc, so there's no reason you couldn't raise a family quite nicely in my former home while getting rather rich rather quickly. In fact, you actually get to CHOOSE your neighbors, so you are at less risk of having bad neighbors than the folks who just buy a home or rent! Why WOULDN'T you do this? I'm curious to the folks out there not doing this currently (people who have lived in their current home many years are excluded). What do you see as the downsides? Even though I've been doing this for years, with highly positive results, I feel that no one else I know is doing this and am beginning to get frustrated because I see such incredibly obvious, easy, ridiculously high value rewards to doing this for such a low effort! What do people that are smarter than I see here that I don't? What is the drawback that keeps people working $50,000 per year jobs for 40+ hours per week, but still refuse to move, then do the 5 extra hours per week to make $20,000 + per year and live for free!? I feel like most people would move across the country for a $20,000 per year raise. So, why do they refuse to move across town for the same financial benefit? What are some valid reasons for not doing this? Can someone that prioritizes their financial freedom, makes between $50,000-$100,000 per year, has no rental properties, and a net worth below $100,000 explain to me why they would even begin thinking about other ways to build wealth and not immediately move towards this objective? What are other options that they believe to be more impactful to their financial positions, and less impactful to their lives, than house-hacking? How would that person propose to save or earn to build a comparable amount of wealth with less effort?

@Scott Trench, I don't get it either! I preach the House Hack Gospel to all of my friends, but the thought simply doesn't appeal to them. They would rather pay through the nose in rent simply for the benefit of being able to walk to Whole Foods and blow the rest of their paycheck there. Think about it, young'uns: if you’re in your 20s and currently unattached to children, house hacking is a no-brainer. If you do nothing else in real estate, you will have succeeded by getting into a fourplex as a young man or woman with only 3.5% down. Assuming the rents cover your expenses, in 30 years when you’re in your 50s and the mortgage is paid off, and you’ve done the smart thing by raising the rents over the years, you will be sitting on a multi-million-dollar asset that cash flows thousands of dollars per month at the cost of a measly $20k or so out-of-pocket when you were 20-something. I can’t think of any better way for young people with limited resources to prepare for their future so early on in life with so little cash out-of-pocket. Run the numbers and see for yourself.

@Scott Trench if I could travel back and talk to my 22 year old self, I would tell myself to buy a duplex or fourplex. Twenty years later, I have a family and a very nice home in an amazing neighborhood. Living in a neighborhood where average house values are $450K costs more money in taxes, but the money is worth it. No rentals in my neighborhood. Great schools close by. No registered sex offenders and very few crime reports. I don't want someone living on the other side of the wall. I like living in a dandelion free neighborhood where people mow their grass and care for their homes. My child is surrounded by other great two-parent families with kids her age. I do have a good paying day job. I could sell my home, move into a small duplex and retire. Why don't I? Mainly because of my family and neighborhood. Also, I love my job and don't see the need to retire. So you asked what smarter people see? Don't assume smarter people make better decisions and also don't assume that what you value is what other people value. House hacking is not ideal for families because moving every two years creates instability. You will understand when/if you have kids some day. Some people love their career and have no interest in being landlords. We are all different. I think you are on a great path, but I doubt over the next 30 years that you will move 15 times. At some point you are going to settle down. When that time comes, it is ok. You are just embracing a different phase of your life.

This is why a majority of people aren't moving beyond the paycheck-to-paycheck lifestyle. They want what they want now and are not willing to make any sacrifices for future financial freedom and/or wealth. For a few years, I rented out 1 or 2 extra bedrooms in my personal home. That is even more "invasive" than sharing a multi-unit property where you at least have your own space! But it worked out great and paid for half of the mortgage during those years. It was a great way to start, and also learn a bit about landlording before I jumped in and purchased rental properties.

Coming from someone who makes less than the national average income, in one of the most expensive places to live in the nation, house hacking either a duplex, tri, our quad is the technique that is taking most of my free time. I understand that most people don't want to live anywhere near their tenants and possibly have families to take care of, but in my current position, buying a SFH at my current income would not only be impractical, it would close to impossible. On the other hand, when I am in a position to utilize this technique in the right are, on a great piece of property, it takes that impossible goal, and turns it into a tough yet attainable goal. Like everybody has stated before, living with their tenants isn't ideal, but my goal is to achieve a sense of financial freedom, take control of my life and my expenses sooner than my siblings (I'm the youngest),and finally, build a business upon which I will be proud to claim as my own. If dealing with a broken toilet or two, or hearing some footsteps above my head are the small challenges I have to deal with to climb to the top of an everlasting empire, then I'll put some gloves on, and sleep with ear plugs in if I have to. For the rest of you, make sure you have your priorities straight, and your goals in line, and your life path will fall into alignment soon enough.

@Scott Trench I don't see why people don't buy 2-4 units home as well. I currently resides in a duplex and have been sharing with my colleagues at work to consider buying a 2-4 units home so that tenants can pay down the mortgage, insurance, and have some cash left over for rainy day. People prefer SFH because that's all they know. They've been drinking the Kool-Aid and believe that's what they're suppose to do. Currently my wife and I decided to rent when we move to Florida as oppose to buying a home and being CHAINED to the house for 30 years. I like my freedom. We're buying apartments to cover our expenses and lifestyle. I believe in Living where you want to live and invest where the numbers make sense.

"Make of thy dwelling a profitable investment" --George Samuel Clason, The Richest Man in Babylon

Wait until you encounter your first crazy tenant. You will wish they don't know where you live. People seem nice when you rent to them, but I have had a couple that turned ugly and one I became fearful of. I do everything I can to distance my family from tenants. You could tell your tenants you are just the manager, but be careful to not out right lie to them. That can come back to bite you and ultimately if you expect your tenants to be honest, you should be honest too. You could say that ABC Properties owns this property and I a manage it. If your are doing business as ABC Properties, then that is not a lie. I tell people I need to check with my partner who is co-owner. The partner is my wife, but I never tell them that unless they ask. I know this may be splitting hairs, but changing the wording a little can make a difference.

@Stephanie Bureau hahaha! Yours is the best reason yet. Totally agree - house-hacking is probably not ideal for you. @Pete Perez I think your point is my favorite - I truly don't understand. People are willing to make modest sacrifices for huge rent reductions all the time! Why don't they see that yes, it is slightly less ideal to live with the tenants next door, but it takes you to free for living! Surely, a tiny amount of discomfort and a few hours per year of effort are worth living for FREE! @Trevor Ewen Living in NYC is a choice. Same with San Fran. If you have financial goals, there is no reason you can't move to one of the perfectly acceptably hundreds of U.S. cities with jobs that pay almost as much, but allow you to build wealth at 2,3, or 10X the rate and have comparable amounts of run. Here's a graph of A typical American's expenses: See that piece of the pie that is a THIRD of the typical American's budget? I have a big goose egg there. Actually, I make money there. I redirect those savings into more fun in the tiny chunk of the pie called "entertainment" and I have a larger than average "cash contributions" piece as well. Who has more comfort in this scenario?

Why Would Someone that Is Financially Savvy NOT House-Hack?

Abigail Hollar

Little Rock, AR · Member since 2016 · 26 posts · 24 votes

10y

Lifestyle and cost. I work in a wealthy area, and I hate commuting to work by car more than about anything in life. I can rent with a roommate for a total (including shared utilities) of about $650 per month, with a commute of about 7 minutes. Nearby homes start at about $125-140K retail, and I don't want to buy and expensive house with an expensive mortgage (for my area). If I do a house hack with a duplex, I have to live in the duplex-ville section of town, which is higher-crime than my area and much further away from work. Instead, with housing costs so low, I can save more money for real estate investing by renting for cheap, save time with a short drive to work, enjoy a great lifestyle.

Option 1. House Hack 2 Bedroom Condo
Property Price	$ 450,000
Down Pmt	20%
Term	30
Rate	4.00%
Down Pmt	$ 90,000
Closing	$ 3,000
Total Initial Inv.	$ 93,000
Monthly Expenses
Mortgage	$ 1,719
Amrt	$ (600)
Int. Deduction	$ (60.00)
Prop. Tax	$ 487.50
Maint.	$ 57.50
Insurance	$ 70
HOA	$ 400
Utilities	$ 100
Internet	$ 80.00
Total Exp.	$ 2,254
Rental Income	$ 1,200
Total Monthly Expenses	$ 1,054

Option 2. Rent
Total Initial Inv.	800
Rent	1200

Why Would Someone that Is Financially Savvy NOT House-Hack?

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