Beyond-Househacking: 5X Your Cashflow & Expedite Your Rental Strategy!
Brandon Turner, one of the fantastic guys leading BiggerPockets, introduced a term to name and popularize a real estate investment strategy used successfully for years- "househacking". In this blog I will introduce you to househacking on steroids (beyond-househacking), as I have used it to 5x my returns and lower risk for myself and my investors.
"First...What Is Househacking?"
Househacking: a real estate investor occupies her rental-property (i.e. a house) for the first 12 months after purchase in order to get better mortgage terms (i.e. 3% down payment rather than 20%). This can be done with a house, duplex, triplex, or fourplex. For explanatory purposes, we'll focus on househacking a house. After she owns the house for 12 months, she moves out and rents out the house. Alternatively, during those first 12 months, she could rent out the spare bedrooms to pay the mortgage and hopefully make a profit. Then, after the first 12 months, she moves her and her roommates out and rents out the house. Either way, the househacking strategy scores her an investment property for about 1/4th to 1/7th the down payment. Incredible!
"Second...Then what is Beyond-Househacking?"
In a nutshell, Beyond-househacking grabs all the strengths of househacking; patches up its shortcomings; cranks up its profitability, and turns it into a low/no cost, 5X cash-flow, lowered-risk, longterm rental income machine. In even a smaller nutshell- it's the dream strategy for anyone with up to 500 rental properties or for those wanting to buy their first rental property.
Photo by Alfred Schrock
"You gave me the nutshell version. I'm intrigued but still clueless. Can you expand?"
Let's do this- get ready to have your mind-blown with the strategy you could use to actually make those rental property dreams come true! This is simple. This is easy. This is different. The brain tries to take something it hasn't heard about and turn it into something it has. My suggestion for you, don't let it. This is different, and it's beautiful, and it'll make you a lot of money and give you (like I have) a wait list of investors and renters.
The Never Before Heard Strategy of Beyond-Househacking...3 Key Concepts To Win!
KEY CONCEPT #1: What It's NOT!
We take a single family house, we rent out the rooms. Easy right? Of course it's easy- this has been done with college housing, boarding houses, seniors, sobriety groups, and living coops. What do all these have in common and what's unattractive from an investor side? High turnover and higher drama. Maybe you are fine with that, but I am not.
People live in the above mentioned rent-by-the-room houses because of a temporary need: college, fixed income, support, or a cause. All this adds to high turnover, higher drama, and beat-up houses. Me personally, I'm not interested in any of it. I could make more money with rent-by-the-room, but I don't want the drama, fighting, turn-over, and my houses damaged.
Don't let your brain trick you, none of this is Beyond-Househacking...not even close!
KEY CONCEPT #2: High-Quality, High-Demand Rent-By-The-Room Households
Beyond-Househacking creates households where people aren't forced to live with others due to lower-finances but because they WANT to live with others. These are prestigious, high-quality homes with waiting lists. On average, renters stay 5 years because they love it and they are proud of their house. Renters are engineers, chefs, architects, service industry, and those just starting out. Why? The answer- healthy households. For 18 years we have successfully used household-planting to create healthy households.
Photo by Daniel Hjalmarsson
KEY CONCEPT #3: Household-Planting (know it or perish)
Household means the shared understanding, standards, culture, rules, and attitude between those sharing a roof. Many households we grew up in are unhealthy. Households are powerful though, and Household-Planting enables us to harness this power to make more money with less money and less risk. Household-planting enables us to realize our dreams faster and better. The households that we plant are not hierarchical (no one is in charge and everyone is equal). We find renters do not want to live long term in a house where someone is in charge (or the owner). Renters, like us all, flock towards stability, flexibility, freedom, and equality. Household-planting creates all this.
For you that means you'll have long term renters, higher-quality renters, better maintained properties, 5X cash flow, less risk, and most importantly you have the money to actually live your dreams!
**Blog Post Main Picture: Photo by Tierra Mallorca**