My House Hacking Story

[Greg Szymbor]

This is my house hacking story that will go into a little depth of how I got into real estate, live for free, and show some rough numbers of my first rental property. This is my first “blog/forum” and this will help me achieve my goal of sharing more experiences and information through blogging. Hope you enjoy!

Roughly 5 years ago I purchased my first 4-unit using a FHA first-time home buyers loan. It required 3.5% down, had a low interest rate, and allowed me to finance my closing costs. The purchase price was $140,000 and I was able to finance the closing costs to make my total out of pocket investment around $5,500 after inspections, fees, and down payment. I moved into a one bedroom apartment that required some TLC and updating. The other three units were in turn-key/rental condition. I did the work on the one bedroom myself while living there and racked up a construction bill of $4,000.

Total Out of Pocket Expenses: $9,500

The PITI (principle, interest, taxes, insurance) plus MIP (mortgage insurance premium) is around $1150. The average cost of expenses for this property over the last 5 years has been $550 a month.

Total Monthly Expenses: $1700

The three remaining units rented out for an average of $2100 a month over the last 5 years. Vacancy rate on this property has been extremely low at 2%.

This gave me an average cash flow of $400 a month. Now, I realize this isn’t a true ‘cash flow’ number. I do factor in a property management fee, long-term repair budget, and vacancy budget. However to make things easier for my first blog I will keep things simple. Over 5 years this piled up in my bank account and is now at $18,000 (includes some vendors not included in the monthly expenses)

I recently got the building appraised at $190,000! Subtract my mortgage which is at $135,000 for a total equity of $55,000! Not bad considering other people have been paying ALL my living expenses.

So over the last 5 years I have earned my initial investment of $9,500 back, earned an extra $18,000, built up equity of $55,000, and lived rent free all off one property! This has allowed me to invest in other rental properties and create a decent sized portfolio!

There are multiple types of loans home owners can get on 2-4 unit properties as long as it is their primary residency. I recommend talking to a loan professional to determine which option is right for you! I strongly recommend jumping into real estate this way. I have zero regrets on my first property because it has allowed me to continue investing in real estate by creating a “live free” environment.

Thanks for reading and I hope this story helps someone! Feel free to leave feedback and constructive criticism is always welcomed!