I have done a house hack that has worked well for me. Success in my opinion is ending up in a better financial situation than you would be renting, plus the benefits of mortgage paydown, etc.

Put simply, if the down payment on the house saves hundreds a month vs. renting and the cash on cash makes seems like a no brainer for those comfortable house hacking or interested in this strategy.

I would be curious as to what others think. Thanks for sharing.

Jonathan Dempsey

HomeSmart Realty Advisors

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Sam B.

Rental Property Investor
Houston, TX

Sam B.

Rental Property Investor
Houston, TX

Replied February 23, 2019 12:43

Good idea for a thread @Jonathan Dempsey

I did a budget DYI house hack a couple years ago that was both a miserable failure yet still a win all the same. Incredible learning experience, to say the least.

Purchase price: $80k

Rehab budget: $10k

Actual spent: $24k

All-in: $104k

The story...

This was a Hudhomestore.com home that was a super heavy cosmetic rehab (see before/after photos below). Starting the project in late March of 2017, I got it barely in livable condition by late May.

I lucked out and was able to airbnb my apartment (was locked into a lease through 31-July) for the duration of the lease to a traveling nurse at $1800/mo (rent was $1k including all utilities) – win!

I was roughing it (see my bedroom below) but I was pretty excited to be in the house and even more motivated to complete it.

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About a week after moving-in to my house project, the home was burglarized and I lost all tools, clothes, personal possessions, electronics, passport, SS cards, etc…everything. Fortunately, I had left some items in my apartment storage out of pure laziness. But nonetheless, ouch. I’ve been involved with a lot of renovations and have never had a break-in before. Police and neighbors were equally surprised – break-ins were unheard of in the neighborhood.

I took a four week hiatus before getting back into gear, going and buying tools again and getting started. Continued flooring installation myself which was the bulk of the outstanding work.

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Took on my first roommate in mid-July, a good friend who I’ve worked with on several projects around the world and best yet, a top notch handyman. Updated the bathrooms with his help as well as got some feedback on additional exterior cosmetic updates to add to the scope.

Mid-August I was burglarized for a second time and this time they got everything that I had left as well as my roommates gear. Again, same this never happens story from the police and the neighbors. This event had me considering quitting the project for a couple of days as I was pretty deflated/over it.

But about a week later, Hurricane Harvey hit and I had little time to sulk. The house is in Southeast Texas, the heart of the hardest hit areas during Harvey. I didn’t leave the house as Harvey came on and soon after I was stranded along with my roommate and a girl I had been seeing for a couple weeks (lol). We made it for six days, the last three which included no power, intermittent water supply (no toilets/showers) and rising anxiety. The good part is that the house stayed dry. The bad news is that the rain never stopped.

Picture taken from my garage on day 3, looking out into the street

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On day six, we got a break in the weather and were able to escape - barely making it out on the only lane open East or West on I-10, bound for New Orleans. Seven days later we were able to return (no power until the next day), fortunate enough to a house that had not been broken into for a 3rd time – although there really wasn’t much left to steal!

Picture of that last open lane on I-10. It closed about 2hrs later - as you can see, water was coming over

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Flooded cars on I-10 on the way out

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A gas station had been flooded and for about 5 miles, the smell of fuel in the flooded water was nauseating. Note the flooded RV park in the background where only the tops of the RVs are visible.

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So where are we now? Early September. Ah! I received notice that I’d be moving back to an International project shortly (score) and with no tools left at the house, I actively began seeking out contractors to just get the house finished and done. But due to Harvey, even my best contractors were overloaded with fat margin work from insurance companies and non-investors from Houston to West Louisiana - I was SOL and on the search for a new crew.

Lucked out a couple weeks later and was able to assemble a small crew to help with all the finishing bits and pieces. My roommate and I pitched in and we were able to get the house 99% done by mid-Oct – this included a 6’ secure fence along with a new secured sliding door, the old one being a serious weak point during the 2nd burglary.

I went ahead and installed a new roof on the place as it was badly needed and with me leaving the country, I didn’t want to have to worry about it. Paid a heavy premium on that, again, due to Harvey but it’s done. Also put in some nice recessed interior lighting as well as exterior lighting, both a security and cosmetic improvement.

New fence (there was nothing previously)

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My new secure, patio sliding door - an earlier security weak point

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The plus side (if there was such a thing) to Harvey is that I was able to get the other two bedrooms rented out as coworkers had become homeless (their apartments had flooded). In addition, non-flooded homes in my area jumped 10-15% in both values and monthly rents due to demand.

This was a house-hacking extreme as all of the (3) bedrooms were rented out and I setup a studio apartment in the living room to sleep on a futon for the last few weeks I was in town. As of early Dec, I’ve mobilized down to a project in Mexico and my roommates are all dry, happy and safe in Southeast Texas.

My "free" living room studio below...

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Final numbers – renovation ran $24k + 80k purchase price = $104k all-in.

Rented for $1500/mo.

Appraisal came back in Nov 2017 at $130k.

**Reappraised in Jan-2019 at $150k. Still rented out.

Final numbers/budget break-down are shown in excel below.

Final Renovation Budget Dec 2017

Key lessons learned

>Incorporate security into renovation plans
>>Allocate budget for fencing, securing perceived weak points and window coverings
>>Time is money – I could have subcontracted a lot of this work out very early on and finished the house in <4wks vs letting it stretch out over seven months, two break-ins and a hurricane, not to mention lost rental income (could have rented the bedrooms out starting in late April vs mid-July)

Stuff I can do now that I couldn’t before

>Install flooring and baseboard (market rate is $2-3 sq ft for labor)
>Remove a toilet, floor a bathroom and install a new toilet in <90minutes
>Remove/Install sinks
>Repair exterior housing
>Backsplash tiling

Now for the before & after photos

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LIVINGBEFOREAFTER

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