House Hacking Blueprint Series: The Best Way to Live
Eric Beise | Realtor
Many of us have chosen our homes for all sorts of reasons. Often, it’s for factors like location, appearance, size, yard space, price, commitment – or lack thereof. These are all great things to consider. At the core of each concern listed above, there’s a fundamental question that’s guiding us: “How can my housing move me closer to my ideal lifestyle?”
The answer is what we call, “House Hacking.”
House hacking in its essence is subsidizing (or eliminating) your living costs by renting out a portion of where you live. It can be as simple as renting out a room of your single-family house to an Airbnb guest or long term renter, or living in a 2, 3, or 4 unit building and renting out the other units.
There’s a spectrum of how lucrative this can be. Worst case scenario, this helps pay a portion of the mortgage, allowing you to either live cheaper or in a place you would otherwise not be able to afford. In the best-case scenario, it not only pays the entire mortgage and all expenses, but it creates passive income every month!
You might be thinking, “That sounds like a lot of work. Plus, I don’t like living with people! I thought you said house hacking moves me closer to MY ideal lifestyle!” Okay, I’ve never had anyone say that to me directly, though the general sentiment is a common response.
I get it. After a long workday, the last thing many people want to do is come home to another “job.” The idea of having to collect rent from someone or sharing space with them when you just want to be alone and decompress isn’t for everyone…this is why house hacking is so awesome. It doesn’t have to be any of those things.
Let’s take a look at two of the most common and oftentimes competing pathways when it comes to house hacking: profitability and lifestyle.
Scenario 1: Profitability
One of the most thrilling aspects of the profitability route is customizability. An extreme case would be that you rent out all the extra rooms in your single-family house. Then you realize that you could rent out YOUR room on Airbnb, so you sleep on the couch. Then it hits you that you could rent out the couch, so you sleep in your garage. Enamored by the profits you’re bringing in, a friend mentions how they are paying storage space, so you decide to rent out your garage and sleep in a tent in your backyard. It probably isn’t the lifestyle you want forever, but numbers don’t lie and you’re making some serious cold hard cash every month.
Within a few months, you really start noticing the extra income. A couple of your friends invite you on a trip you have been dreaming about for the past couple of years and finally, you have the extra money to go! After traveling for two weeks and not checking your bank account, you expect to have to tighten the belt on your budget when you get back. Much to your surprise, you actually made money while you were gone! Everyone paid their rent for the month straight into your bank account. Sleeping in that tent in your backyard is feeling pretty good.
You decide to buy another property and do something very similar. The best part? It takes you half as long to save for that down payment because of the money your first property is making, in addition to your day job.
Scenario 2: Lifestyle
You come home to total separation from any renter. Your aim is to come in your front door, open up the fridge, grab something to drink and head out to the patio with a few of your friends you invited over for dinner, uninterrupted. This may mean less money in the bank but can enable you to have an amazing lifestyle.
While you were enjoying the evening, a couple was moving into the apartment above your garage. Earlier that week they came and toured it, signed a lease, and sent in their rent and security deposit to the property manager you hired. While they toured, they noticed that the toilet was leaking a little bit, so they mentioned it to the leasing agent. He handled the request gracefully, passed it along to the property manager who lined up the handyman to come out in the morning.
The couple finished moving in and you didn’t notice because the apartment entrance is on the alley side of your backyard fence. You still pay the majority of your mortgage and have to shell out some profit to the Property Manager, but you live in your favorite part of town in a home you love. Without those renters, there is no way you could afford such an awesome place.
The best part of house hacking is that no matter where you fall on the spectrum, you have chosen to use your housing to move you closer to your ideal lifestyle. It allows you to do things you otherwise wouldn’t have been able to do. You are living differently so that you can live differently. Welcome to the movement.
This isn’t a get rich quick scheme. It will take patience, persistence, and dedication to achieve this lifestyle. The question isn’t, “can I get there?”, it is, “what am I willing to compromise to get there?” As for the how-to, we’ve got you covered. Subscribe to this blog to get new articles that detail out the guide on how to make this a reality in the Twin Cities. Happy House Hacking!
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