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

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

Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes

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?

7Reply
102 views

Most Popular Reply

Logan AllecBusiness Member
Accountant · Los Angeles, CA · Member since 2014 · 1k+ posts · 980 votes
10y

@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.

Clarita CPA Group516 Reviews
See this reply in the discussion

56 Replies

Jump to latestLatest
  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    10y
    Originally posted by @Matt Motil:

    If I was single with no kids, I would totally be all for house hacking. This is exactly how I got started. Once I got married and had a few kids and they got old enough to pay around the neighborhood, there felt like a definite need for separation between them and my tenants. 

     Totally - I'll say it again, @Scott Trench, there is no shame in being young. But, the inherent to life reality is that this particular condition doesn't last :)

  • Anthony GaydenPro Member
    Rental Property Investor · Omaha, NE · Member since 2014 · 2k+ posts · 3k+ votes
    10y

    One thing I notice is that people assume that a duplex is some ghetto crap hole. I currently am looking in one of the nicest neighborhoods in my area for a higher end duplex that will attract A class tenants.

  • Investor · Thousand Oaks, CA · Member since 2017 · 302 posts · 123 votes
    9y

    I did this for 15 years its a great way to live for free and pay down your mortgage but it gets old dealing with other peoples drama. Eventually you get married have kids and don't want roommates and will accept the loss of not renting out rooms for your own life and privacy.

  • Boca Raton, FL · Member since 2015 · 249 posts · 52 votes
    9y

    I wanted to house hack from 1992, but my husband from then until 2015 refused to be a lanord or even reside in a attached community.

  • Boca Raton, FL · Member since 2015 · 249 posts · 52 votes
    9y

    He deceased in 2016, and it reallu hurts, but I can now decide for myself.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.