House Hacking: The Foundation of Financial Freedom

Hello everyone, 

I wanted to share my experience house-hacking as it's been quite literally life-changing for me and is one of the best/easiest things a new investor can do. 

Last year (when I first moved to CO Springs), I was looking to purchase an owner-occupied fourplex to live in one unit and rent out the others. I was approved for the loan and had saved the money for a down payment but (after searching for weeks and looking at numerous properties) my lender informed me that she had made a mistake and recent Fannie/Freddie changes would not allow me another owner-occupied loan (I already had one on a duplex in OH) on a multifamily property.

At that point, I was left with the option of purchasing a single-family home and house-hacking so I began my search for a property that was best suited to having roommates. 

I found a 4/3 Split-level on a dead end street with a park behind it not far from the side of town where many of the new development projects are going in. The layout of the house was perfect for house-hacking as it had 4 levels, two living rooms, and a (relatively) large backyard/deck which offered lots of private space for everyone. The house was listed for $285,000 and I offered $270,000. We ended up settling on $275,000. 

Fast forward nearly a year and I rent the basement as it's own suite as it has a living room/fireplace/separate entrance/bathroom/bedroom for $900/month and both extra bedrooms upstairs for $700/month for a total of $2,300/month. PITI is $1,761/month so rents cover the utilities, my food bill, and gas bill each month. Of course I will have to pay taxes and there will be repairs/maintenance and capital expenditures over time, but all the major items (Roof, AC, Furnace, Etc.) were replaced within the last two years before I purchased the home so these should be minimal in the near future. 

So I am now living (and owning) a nice home in a great neighborhood in one of the hottest markets in the country for virtually free (and then some). This has put me in a fantastic financial position where I can save the majority of my income while owning an appreciating asset. 

This is also a great situation for my renters as they are living very cheaply relative to traditional rentals and they get to enjoy the benefits of the house as well. It's a win-win situation which (in my opinion) is the best way to do business! 

For anyone reading this that may be interested in house-hacking, I can tell you it has been a phenomenal experience for me thus far and I highly recommend it! I know some people who want to rent out their bedrooms but are afraid of having "strangers" in their house. This problem is solved by performing proper due diligence and screening your tenants thoroughly! I've found all of my tenants through Craigslist and have had no issues at all because I ran their backgrounds, called their previous landlords, and verified their income. 

For those looking to be financially independent, house-hacking provides a significant head start and a solid foundation to build your wealth on! Even if you aren't yet able to qualify for a loan to buy a house, could you rent out part of your apartment? Or Air bnb an extra room? Or if none of these options are available, you could even rent a room from someone else who is house-hacking so your housing expense is cheaper then a traditional rental, allowing you to save more towards buying your first home to house-hack? Regardless of your situation, with a little creativity and effort (using real estate) you can always find ways to increase your income and decrease your living expense to lay the foundation for solid financial future!