6 Things I've learned from House Hacking in Los Angeles

[Rick Albert]

Hello All,

I'm currently on my second house hack here in Los Angeles (I also own properties out of state). I'm one of the case studies in the BP book, The House Hacking Strategy. I thought about what makes managing a good house hack and thought I would share my experiences (and would love to hear yours).

1. Having general rules is so important. This includes (but not limited to):

-Quiet Hours

-What spaces can and cannot be used

-Guest policy (make sure to limit days in a row and in a month)

-Pet policy (even if you don't allow pets, if someone has an ESA animal, it would be good to have guidelines in the event they surprise you with one, otherwise you are SOL and of course take into consideration fair housing laws)

-How is trash put in the cans (in bags, not just thrown in) and when can trash cans be taken to the street and put back

-How is the late free structured (one time flat fee or a daily fee)

2. Living for very cheap/free takes time.

I'm at the point where if I rent out my main house, it will cash flow positive. Before, I lived in my ADU and had to wait to refinance before seeing real savings. If you are putting low money down and expect it to cash flow, that is likely not going to happen. If it cash flows at 3.5% down, why wouldn't an investor putting 20% just buy it?

3. The appreciation is where the value is.

- Because of appreciation, I have been using HELOCs and sold my last house hack in order to scale out of state. I never would have been able to do that if I had been renting this entire time.

4. I did the FHA 203(k) loan.

-It was extremely difficult to work with but I would do it again.

5. Start small, it doesn't have to last forever.

-My wife and I were broke with our second house hack. We moved into our studio ADU and lived there for two years before we moved into the main house. That was the best decision we ever made. It was a great experience and we saved a lot of money in the meantime.

6. Even with a house hack, think about experiences. 

- Our ADU has it's own backyard, washer/dyer, and a front patio. We designed it so no windows look into the main house. These are things tenants value and it doesn't cost much money to do it.

What are some things you add?

Thanks!