Can Airbnb house hacking be the key to building wealth?

Question

I'm currently analyzing a theory that can help many people achieve financial freedom, but I need your feedback to validate it.

The idea is simple: purchase a property with a mortgage and put it on Airbnb as a short-term rental. Based on my calculations:

• If the property generates $2,500 monthly, and

• The monthly mortgage payment, management fees, bills, taxes, etc. are below $2,500

The property can pay for itself, and you can potentially buy a house with just the down payment.

However, I need your help. Have you or anyone you know tried this strategy? Can you share any records or experiences to support this theory?

Luke Carl · Answer

You buy a house you rent it out you buy another house you rent it out. Works for me!

Michael Baum · Answer

A lot of people are. It just isn't easy. It is much easier to work a W2 job and max out a 401k to retire on. Investing in real estate isn't a cakewalk. There is a lot of risk involved for inexperienced folks. Plus the anxiety of dropping 500k on an investment that might not work out is too much for a lot of people.House hacking in the traditional sense is a bit invasive if you have a family. Would you want to rent a bedroom to a single person when you have 3 kids running around? I don't think I would do it.Frankly if I was a single person who is looking to get ahead, getting an FHA loan on a tri plex or 4 plex. Live in one while renting the other units. Live for free plus making some profit, then refinance after a year or so, rent the final unit after buying another one with a new FHA loan and do it again. LTRs are the slow and steady fire to financial freedom in this model,

Nathan Gesner · Answer

Why don't people save money? Why do people finance a $60,000 truck for six years while living in an dumpster rental? Why don't people live within their means? Why don't they save up a personal emergency fund? Why do they complain about the high cost of living in [name your expensive City] instead of moving to a more affordable area until they are financially stable?I could play this game all day long. Even the poor in America are capable of increasing their earnings, reducing expenses, saving, and investing. The bad news is that it requires effort, maybe some sacrifice, and time. Some people would rather watch TV, vape, drive a fancy vehicle, wear $300 sneakers, and complain about how the man is keeping them down.

Brooklyn McCarty · Answer

House hacking is probably the #1 way to build wealth in real estate because you are living for free and someone else is paying for it all. Buy a duplex, triplex, quad if you can with a residential loan, live there a year and do it again! Great strategy

Nathan Gesner · Answer

Is this a serious question? This is the definition of real estate investing and it's what all of us are doing. It's described in every book, blog, YouTube video, news article, etc. Buy a property, rent it out for more than it costs each month, rinse and repeat.

Kenneth Garrett · Answer

Building wealth requires cashflow. Appreciation is a bonus. If the property rents for $2500/month and your all in expenses are $2000 that’s a $500 monthly cash flow. I tend to use cash on cash return as an important metric. How quickly can I get my down payment, closing costs and rehab if any back. Example down payment is 20K and closing cost are rolled in the loan, no rehab. That’s a 30% return on my money. In 3+ years I’ll will have all my cash back and I can repeat the process. That is how you build wealth amongst other investment strategies.

John Underwood · Answer

Absolutely people are doing this to at least offset their mortgage.Given the right property and location you could break even on the mortgage and utilities.

Michael Baum · Answer

Yeah @Mostafa Faghih, this isn't a new thing at all. It is what we are all doing here. This has been going on for decades. There is no theory here. It is a working model.Maybe I am not getting it. We bought a house with a mortgage, we rent it on VRBO and AirBNB and pay for it fully along with making a tidy profit. We do use it from time to time for family fun. That is it. House Hacking is generally living in the home while renting part of it or, if it multi family, the other unit. It allows you to live cheaper as your renter pays at least part of the cost to live there. This is usually done with a LTR. There are some STR folks doing it. Sometimes it is a duplex, triplex or and ADU on the property.So what are you trying to do?

Bruce Woodruff · Answer

It's been done before, hardly a new idea. But a good one.....

Leslie Anne Morris · Answer

Yep. People are doing it. 90% of all wealth is created out of real estate.