The Househack Hardship they Don't tell you about.

[Michael West]

Hey everyone, I figured I would do a follow up to my last post about my initial mistakes when I began my real estate journey in trying to buy a property and now talk about the next few learning experiences and successes in landlording a househack. Again, it's a long one, so I appreciate anyone who takes the time to read it all.

I was 20 years old when I bought my primary residence in 2009 near Detroit for 85k (now valued at 165k). I didn't know anything about REI, and never even heard of the term Househacking, or that it was considered a form of investing at the time. However, I've always had a bit of the mindset of an investor without really realizing it. I bought my house during the crash, so the market was great for buyers. While looking for a house to buy, I was targeting something that needed work that I could put in over time to make it worth much more in the future. I wanted one that was in a great neighborhood, but near the bottom of the market. So, looking back, I was definitely thinking in the right direction for investing even though the word wasn't on my mind: "investing" . The next thing I did after closing is what I hear about all the time nowadays... I househacked.

I was young, only a couple years out of High School, and only two years into my Carpenter Apprenticeship, so as expected... I had a few friends looking to move out of their parents place. I decided to rent out a couple rooms of my 3 bedroom house to make a little cash to help pay off the mortgage. My first two tenants were very rough.

My girlfriend at the time and one of my close friends moved in and each took over a separate bedroom the day after I closed, and we had a hell of a paint and small repair party. My mortgage was $850 a month and each tenant agreed to pay $300, so I only had to pay $250 out of pocket for the mortgage.

This particular situation, however, didn't work so well and I had my first hard experience with an "eviction". Evictions aren't easy in general, and can be even harder to do when you are close to the tenant. To all of those that are just getting into this and think that house hacking is great, just be aware that no matter how well you know someone, it's always different when you live in the same house or even in a conjoining property. Neither of my tenants got along and I constantly had to be the middle man to disputes and find ways to come to compromises or setting new rules to follow. It weighed heavily on my relationship with my girlfriend and was part of the reason for us splitting up. She moved out, and only a few months later I found myself having to evict my friend/other tenant for lack of payment and various other reasons (too much partying/noise, lack of cleanliness, etc.). It was not an easy thing to do, at all, and to this day we barely talk.

About two months later, I got myself a new tenant. This was another friend, but one that was much more focused on his profession than anything else. We set up an agreement with direct deposit payments, so we never even had to discuss money. He lived there for just over 4 years and was a great tenant that I was able to confidently refer to the next landlord when he moved into his next place.

During these 4 years, I also managed to rent out the other room for a few months at a time to a variety of other guests, including an exchange student from Italy for a short time. At one point, I was even able to rent out the basement to another tenant for approximately 9 months while the other rooms were filled. I was bringing in a total of $900+ a month renting out rooms in my house and living for essentially for free during most of that time.

Overall, this was a great experience. Financially, I was doing great. I was able to use the money I saved to buy a new vehicle, purchase the materials for the rehabs I wanted to do on the property, and use towards my first buy and hold rental property, which I bought after my last tenant moved out.

By being up close and personal with each of these tenants, I got to experience a lot about how many different people live and conduct themselves at home more than what many landlords do living at a separate residence. I was forced to learn the hard way about renting to friends/family, how some people will not hold back on taking advantage of your kindness, and how others will greatly appreciate some of your smallest efforts in making things comfortable for them.

My advice from all of this experience would be: If you're going to jump into house hacking, be prepared to be uncomfortable at times. Whether your tenants rent a room inside your home or half of your multifamily, you're going to experience a bit of their lifestyle that may not be what you're comfortable with. You will have to be a problem solver/mediator at times. You will be actively involved in the day to day maintenance and held to a higher standard of your own living style. Househacking sounds great on paper and definitely financially, but it can take a different toll on your mind. There were many days I would dread coming home from work, because I knew there would be no peace when I got there. Other times, I had a blast being around new and different people, getting to know them better and sharing stories.

All in all, I would most definitely do it again. I would suggest to others to do it as well, just prepare and steel your mind. It can often be difficult to separate business from compassion when you're so close with other people and you may become an easy target to be taken advantage of.