How I Househacked 3 Properties in 3 Years

Let me premise this post with this: I am still a newbie to this whole real estate thing, and I’m simply sharing my story with you. This is in no way a “how-to” post and it is not me telling you that I know everything. And it’s not intended to give you advice on what you should do.

With all this being said, one thing is for sure. I believe there is no magical secret to all this. I worked hard, saved, and got a little creative!

In early 2017, I found Biggerpockets. This is when I learned about the whole concept of househacking. Later that year, my wife and I got married. And right away, we bought a 2 bedroom, 1.5 bathroom condo with a low-interest government (not FHA) loan that was available at that time. 

Sorry, I forgot what it was called. 

I was only required to put 1% down and on the day of closing, which amounted to only about $5000 dollars, if I remember correctly. Luckily, we had $5000 dollars saved in the bank.

Our mortgage was only ~$500 bucks. However, our HOA fees were ridiculously high at ~$900 bucks. We also had to pay for parking, which was ~$130 bucks a month.

In retrospect, I can’t believe how much I was paying a month to live there. But, high HOA fees were very typical of the area. The condo was located along the lake in a very desirable area of Chicago. And so, my wife and I were paying close to $1600 dollars a month to live in a less than 1,000 sq ft condo.

We realized very quickly that we needed to figure out a way to reduce our housing costs and entertained the idea of househacking. Soon after, we listed our 2nd bedroom on Airbnb. And it brought in ~$700 dollars a month almost reducing our housing costs by half. And then, we caught the bug!

In mid-2018, we decided to sell our condo and buy a duplex so we could take househacking to the next level. I found a duplex in a suburb of Chicago called Niles. It needed extensive work (new electrical, A/C units, water heater, furnace, etc.). I decided to purchase the property using the FHA 203K loan, which is a renovation loan that allows borrowers to put only 3.5% down and also includes the rehab costs into the loan. All in all, I brought only about $15K to closing to purchase a $385K property. For financing, we had to get creative. We used a combination of savings and 401k funds to come up with the down payment. What’s nice is that my 401k account allows me to borrow against in which I will repay back myself with interest.

Per FHA guidelines, all of the big renovations were taken care of by the contractors. After the loan closed, my wife and I took on different rehab projects not done by the contractors. We renovated the kitchen and bath and laid new flooring throughout. We took care of minor electrical and plumbing issues. We did some drywalling, mudding, taping, and painting.

In mid-2019, all of the renovations were done.

After doing some research, we realized that we could bring in more income by renting by the room instead of the entire unit on our 2nd unit. We got all 3 bedrooms rented to long-term tenants at $700 dollars a month. In our unit, we lived in one room and rented out our other 2 bedrooms on Airbnb which brings in about $1200-$1400 dollars a month. In total, the property brings in about $3300-$3500 dollars a month. My monthly mortgage (PITI) is about $2800 dollars. Soon, we will move and rent out our current room as well, which will bring in an additional $700 dollars a month. Not bad!

And this year, we are closing on our 3rd househack. As of this writing, we are under contract on a duplex with a fully finished basement. My plan is to live on the 1st unit, rent the bedrooms to long-term tenants on the 2nd floor, and Airbnb the bedrooms in the basement. For financing, we are tapping into my wife’s 401k account where she will borrow against herself and then pay herself back as I did. Also, for closing costs, we are negotiating a way for the sellers to cover them. This way, we are only responsible for the down payment. More of this to come in a later post. I’m projecting my monthly income to be somewhere around ~$3500 on a $3000 mortgage. Again, not bad!

As I stated earlier, there is no magical secret. we worked incredibly hard for the past 3 years. On many days, we would work our regular 9-5s and then from 6pm-midnight, spend the time rehabbing, furnishing, analyzing properties, and studying real estate. I don’t remember a weekend when we actually had a day off. Even on vacation, we’re always thinking about and discussing possible real estate deals or rehab projects.

Also, we had to get creative. We had to Airbnb a bedroom in our small condo. We then had to rent by the room and Airbnb other rooms in our current property. And we will do something similar for our next property. We had to get creative with the financing as well.

Sure, househacking isn’t always easy. Sharing spaces with others isn’t always comfortable. Constantly cleaning and turning over bedrooms for our next Airbnb guests isn’t always fun.

However, it’s really not THAT bad! It’s fulfilling to see tenants and guests enjoy the space that we have created for them. It’s satisfying to see the rent checks come in every month and the Airbnb direct deposits hit our bank accounts.

But, more importantly, my wife and I have a vision. We believe it’s a vision given to us from God. We believe that real estate will give us more freedom and time to pursue more meaningful tasks in the future. And we are willing to sacrifice our comfort now, so we can have the life we want later!