Accessory Dwelling Unit House Hacking with Cami:
After doing some traveling with her husband, Cami and her then-boyfriend (now husband), decided they wanted to buy a home with house hacking potential. Listen in to hear how their accessory dwelling unit house hack in Durham, NC shaped their financial foundation and transitioned with them through several phases of life.
Links mentioned in the show:
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Southwest Airlines Companion Pass:
The Points Guy: https://thepointsguy.com/
Mommy Points: https://thepointsguy.com/news/meet-mommy-points/
How to get in touch with today’s guest:
Transcript of the show:
Intro: 00:03 Across the world. People have their housing costs taken away as much as half of their income. Have you ever thought of trying to change that? The good news is there is a way. House hacking is real and we are here to show you how other people just like you have made it happen. Welcome to the house hacking podcast and here is your host house hacking expert Andrew Kerr.
Andrew Kerr: 00:33 Alright, I’m really excited about today’s guest. Uh, Cami is a rock star serial entrepreneur. She got her start in advertising working in boutique firms in Raleigh, Miami, and then San Francisco. You know, she started the first gluten-free bakery in San Francisco way back in 2003 which was called Crave and she started that after discovering gluten was making her sick. Uh, she subsequently wrote a cookbook of the same name that still sells on Amazon and Apple books. She also started a marketing consulting company in Durham back in 2012 then she began her real estate investing and development career in around 2014 and she did that with starting her first house hacking project. And that’s also about the time we roughly met. We met at a real estate meetup and sort of became fast friends over the fast friends over the past several years. So Cami, thanks for coming on and your willingness to share your story. I’m excited to start talking with you.
Cami: 01:31 Hey Andrew, it’s great to talk with you.
Andrew Kerr: 01:34 So where are you actually calling in from today?
Cami: 01:38 I’m calling from Portland, Oregon, where I recently moved with my husband and daughter and two dogs. We’re doing great. We are loving the Portland life after years of being in the South. The summers are pretty dreamy here and the eighties, dry and no bugs, um, which is, which is different from the South. You know what I’m talking about. Um, and there’s really an outdoor culture here. Um, lots of parks and we’re enjoying getting outside a lot more here.
Andrew Kerr: 02:11 Cool. Yeah, no, we still got to come up and visit with you, so we’re definitely going to crash into your second room, uh, here in the near future. Yeah.
Cami: 02:18 Can’t wait, can’t wait
Andrew Kerr: 02:21 Talking about your house hacking experience like I know a lot of the story really well, but our listeners don’t. So could you actually just sort of start with this high-level summary of what you did for your house hack?
Cami: 02:32 Sure. So, um, my husband and I moved to Durham in 2012 and we bought a three-bedroom, two bathroom house with a two car garage and a workspace above the garage that was, there was nothing in that workspace. Uh, and I don’t even know what the previous owners were using it for, maybe storage. And we had it in our minds that eventually we were going to turn that workspace, uh, an apartment someday and rented out. And so we had spent, uh, over a year traveling around and staying in other people’s Airbnbs in our Barcelona and London, Costa Rica and East Coast and West Coast. And so when we moved to Durham, we decided that we wanted to start renting out our house on Airbnb too and just continue doing some of our traveling lifestyle. So it kind of morphed over time, but that’s, that’s how it originally started.
Andrew Kerr: 03:29 Cool. So let’s really dig in then. So when you bought the house, what, what year did you actually end up closing on this three bedroom, two bathroom house?
Cami: 03:36 So it was 2012 and so we, and then pretty much right away we started renting out our house on Airbnb. Really just, you know, waiting until we got kind of attempting offer. So like we would, if somebody wanted to rent for a week, uh, we would just go visit friends for a week through our dogs in the back of the car and basically almost make enough to pay our mortgage for the month. So that’s kind of how it started. And we did that for about a year. And so do you want to talk about the numbers?
Andrew Kerr: 04:09 Yeah. Well one question first though is, you know, I obviously know you and your husband well, but like at that time when you were looking at that house, were you specifically thinking we’re buying this house to do Airbnb or was it we liked this area, it’s really a house for us and we can also just put it on Airbnb as sort of this side thing.
Cami: 04:28 Um, we loved the house, so the house itself was so charming. It was in an old established neighborhood with huge trees. The house was built in 1927, and it just had a beautiful open flow to the way the just, the space was laid out. And so the house itself was really beautiful. The property was a third of an acre and then it was, it’s pretty unusual in that area to have such a big garage. But the previous owners had built this massive garage, two car garage, which we only had one car. Um, so it was like a huge amount of space. Um, so yes, we, we bought it thinking, in fact when we bought it, we got a couple of quotes from builders just to get the sense of what it would cost to build, build out the apartment inside. Of course, the quotes that we got were much less than it ended up costing us down the line. But we were just using that as a gauge to think about, okay, well what would it cost if we do do this eventually? And yeah, thinking down the road, but we, I mean, so that was 2012 we didn’t do anything about it until 2014. Um, but yes, that was, that was sort of in the back of our minds. Like eventually someday, um, this might make sense to do when we can afford to do it. Um, I mean, we spent all of our money buying the house to start. So
Andrew Kerr: 05:49 That’s usually the way most people do, right, is you spend most of your money buying the house, but you bought it because you really loved it. Do you remember back in 2012 you know, that’s sort of just as the real estate market was really just starting to creep up. I mean, do you remember roughly what you paid for it and what type of loan did you actually get?
Cami: 06:07 Yup, yup. We paid 315,000 and it, it actually had sat on the market. We saw it when we were still living in San Francisco and I said, Oh my God, I love that place. I want to buy it right now. But um, fortunately, they had overpriced it and so it actually sat on the market for about six months. Um, and this was really before the boom in Durham too. So we kind of got in right before things exploded there. So we, yeah, 315,000 was what we paid for the house. It was a 30 year loan. And what was your other question? It was a fixed, fixed rate.
Andrew Kerr: 06:41 30 year fixed rate. And did you do like an FHA loan or did you do just a normal conventional loan where you had to put down 10 or 20%, okay?
Cami: 06:49 Conventional, conventional. And we put down 20%.
Andrew Kerr: 06:52 And do you remember roughly what your mortgage was at that time?
Cami: 06:57 Um, you know, I think it was $,1400 and something and it’s gone up over time to $1,500 and something I believe so it was compared to what we were paying and the other places we were living, I mean we were moving from San Francisco.
Andrew Kerr: 07:13 Oh yeah I can only imagine how much you were paying in San Francisco, and now you’re like, “Mortgage 1400 bucks. This is pretty awesome.”
Cami: 07:16 I think that my husband, was paying for his apartment. I think he had been paying about $1,200 for his apartment in San Francisco, so $1,400 and at, which was like a one bedroom apartment and, I think I was paying like a thousand at mine. So yeah, I mean obviously is much more affordable to be in Durham.
Andrew Kerr: 07:39 That $1,400 was that with the taxes and insurance or was that separate?
Cami: 07:43 Yes.
Andrew Kerr: 07:43 Okay. That’s why went up to the $1,500 as insurance and the taxes increased over the year that the payments crept up to that 1500
Cami: 07:51 Exactly. I don’t think the insurance has changed, but I know the taxes did.
Andrew Kerr: 07:55 Okay. All right. So you’re in the house. You love this place, you’re already saving money coming from San Francisco, now you been using Airbnb all over the world and now you’re like, Hey, let’s actually do Airbnb. Was this your idea, your husband’s idea? Was there some convincing back and forth that had to happen?
Cami: 08:15 Um, you know what, I think it might’ve been more my idea. Uh, I’m kind of as, as you mentioned at the beginning, a serial entrepreneur. So, and my husband was on board with it. I mean, I, I did most of the work for it. I did, you know, all of the communication with the, with the guests and kind of all of the coordination before and after. So he was, he was down for it. I mean, I, you know, for a certain period of time, and we’ll get into that part later. But yeah, I think we did it for maybe a little over a year. And it’s a lot when it’s in your own space.
Andrew Kerr: 08:50 Yeah, so you were literally just, you get someone that want to stay for a week and then you’d be like, now we’ve got to figure out where we want to travel or find someone else to go stay with for the week.
Cami: 08:59 Yeah, pretty much. And I mean it’s not like it would be, you know, it usually would be well planned out. Like you know, somebody would want to stay in the spring and so we would then decide we want to visit our friends in California or you know, something like that. So it wouldn’t usually be like, Oh, we got a request, we got to leave tomorrow.
Andrew Kerr: 09:18 Okay. So you could really just plan for it.
Cami: 09:20 We could plan it out much further in advance. So it was a fairly comfortable scenario. As comfortable as it is for someone to be staying in your house.
Andrew Kerr: 09:28 Absolutely. Absolutely. All right, so you’re doing this for the year, you’re planning out ahead. I mean it’s sort of a cool way though if you’re like, Hey, I know let’s advertise for bookings in the spring. If we’re in the fall and then we’ll just plan our life around it several months down. And most people want to do a vacation visit, family visit friends, do a Disney World or travel to another country. And if you know you have that longer booking, then just build your traveling around it. So I mean, to me, it makes a lot of sense. So you know, do you roughly remember over that first year what you were making per month from Airbnb or maybe over that first year. So you know, if your mortgage is 1400 ish or what, like 18 grand a year total in your housing costs, do you know what you were bringing in roughly from Airbnb?
Cami: 10:10 That’s a good question. I mean, I, I think it was probably somewhere around $15,000 because again, we were still living in the house, so, um, and we weren’t, we probably weren’t renting it out for more than a week per month. Yeah. So we were close to making, you know, making what we needed for our mortgage, but not, but not quite. No, it’s great. Yeah.
Andrew Kerr: 10:33 You’re over here in San Francisco, separate apartments, higher cost to rent. Now you’re in Durham, North Carolina. You got this beautiful three bedroom, two bathroom home, giant garage, third of an acre, and you’re doing Airbnb on average a week a month, and you at every step it’s like high cost of living, more savings, lower cost of housing, and now you know, you’re cutting out 70% of your, your housing cost. So I mean, that right there is a pretty fantastic win.
Cami: 10:59 Yeah, it was, it was a really good way to start things out for sure.
Andrew Kerr: 11:04 So what should actually change then? So you said, yeah, this was great for a while until it wasn’t, so it sounds like some sort of changed?
Cami: 11:11 Well, I mean we didn’t have any horrible experiences by any means, but I think it just got kind of taxing, uh, leaving, and getting the house prepared each time and doing the communication before, during, and after. And I mean, just doing that over and over again. Um, I mean, we had great ratings. People loved our house. In fact, we even had film crews rent our house out for commercials. So we had, it was, it was overall a good experience, but I think we just started thinking like, you know, maybe now is like, we don’t want to do this for the long term. This is pretty taxing. Like we both also worked full time. So on top of doing this Airbnb thing, we were, um, both, both also working full time. Granted we worked remotely, but, um, I mean it was still a lot, so it wasn’t really a sustainable thing. It wasn’t gonna it wasn’t something we were going to do forever. So that’s kind of when we started thinking like, okay, now it’s probably the time when we can, and because we were putting money away, um, start thinking about doing our apartment project above the garage, which we, we then started in 2013 so.
Andrew Kerr: 12:21 okay, so you’re, it worked well for a year. It started getting old, you saved some of that money over that time and now you’re like, alright, let’s actually do this apartment thing, outback above the garage. And was the garage detached or was it an attached to the, the main building?
Cami: 12:37 The garage was detached. So, um, our, our goal was and why we thought it would work well is that we could actually create a separate private entrance, um, a separate the apartment faced away from the house and um, you could kind of create even like a separate little yard for the apartment so that it would be very, it would actually feel like a separate property. Um, so that was our goal. And so, yeah, in 2013 we started talking to GCs and you know, as I mentioned when we looked at the house to begin with and we’re going through the purchasing process, we had gotten a couple of quotes from GCs, well now that it’s two years, you know, almost close to two years later, um, and the housing market is booming and Durham, GCs have become a bit more expensive.
Cami: 13:30 And, uh, we started getting quotes and getting referrals from people. Um, and we ended up finding some architects who were friends of friends and then a GC referral through, through them. Again, working with them in 2013. Um, and the space above the apartment or the space above the garage rather was about 550 square feet. So it wasn’t huge, but it was, it was big enough for, uh, to, to become a one bedroom apartment. And we originally looked at maybe at being a studio, but we thought one bedroom would kind of give, um, more value to it and just more flexibility for whoever lived there.
Andrew Kerr: 14:08 Okay, cool. So you found some good architects, you found some contractors. Roughly what did it cost you to actually expand this space, in unfinished space and turn it into a one bedroom apartment and then how long did that process roughly take?
Cami: 14:26 So I believe it took, um, so of course originally it was supposed to only take maybe three or four months. I think it probably took quite close to twice that long. Part of the reason is because once we got into the process of the build, we both got really interested in it. We spent a lot of time making the space super efficient, uh, because it was so small and just doing a lot of research about how to, how to do small spaces well. Just chose really nice, just really nice fixtures and made it really, really nice, like nicer than our own house. So, so far part of what happened is that we spent more than we originally were going to because we were having fun with it. And in that process, and I would say maybe three quarters of the way through the process, we were like, I think we’re building this for ourselves. So we kind of finish it off and, and, and sort of plans changed along the way. And we decided like, I think we can maybe just live in this ourselves for a little while.
Andrew Kerr: 15:32 So you, you were like built building it, picking out finishes, picking out stuff that was really your taste. And then all of a sudden you realize like, Hey, we’re actually going to live in this. And so now you’re thinking we’re going to give up the three bedroom, two bathroom main house and go live in the tiny house.
Cami: 15:48 We’re going to go live in the tiny house where we were going to try it for a year because we knew we could make, you know, a lot more money on our three bedroom, two bathroom house as we’d already figured out from doing Airbnb. So that cost us, so what we originally thought was going to be about 60, um, 60,000 costs us about 80,000. Yeah. And that took a, yeah, I mean I’d say it took somewhere between seven and nine months, something like that.
Andrew Kerr: 16:16 And then did you just have savings for that or how’d you end up covering some of those costs to actually cover that?
Cami: 16:24 So we did have some savings, um, just from having rented the house out and working and living in a place where the cost of living was lower. So we’d been able to save some for the last, you know, the past year and a half. But we also had a home equity line of credit, a HELOC. And, um, I think we had, I want to say 50 or $60,000 in that. And so we did use that, that whole line of credit. And then we used our savings for the rest of, um, whatever the line of credit didn’t cover and, and then, you know, pay that down, pay that line of credit down over the next three years, um, from the rent that we were making on, on the house and the apartments.
Andrew Kerr: 17:06 Awesome. So did it take any convincing for your husband to live in this tiny space? Or was this his idea or like, I mean, I know if I were to tell my wife we’re going from a three bedroom place to 500 square feet, I wouldn’t be living anymore.
Cami: 17:20 Hmm. Um, it was more his idea and he had to convince me.
Andrew Kerr: 17:27 So here you are first convincing him to do the Airbnb and now he’s convincing you like role reversal, like, Oh, let’s go live in this tiny space.
Cami: 17:35 Yeah. You know, well, uh, I mean, as long as I’ve known him, he’s been obsessed with tiny houses. So, you know, we actually got to experience living in a tiny house together. And you know, fortunately the way that we laid out that space, it was a one bedroom so there could be some separation. And he, uh, was working, he was, he now had an, uh, remote working office in downtown Durham that he was going to daily. So we weren’t both working from a tiny little house together. I think that would’ve, that would’ve killed it. But, um, no, I think, uh, it, it, it came along at the right time. So yes, he had to convince me and I agreed to do it, um, sort of as an experiment and to make more money for a year because it was a really nice apartment. And so yeah, that’s, that’s what we, we, we tried it out for a year and it went well and then we did it for a second year. So we lived in it for two years total.
Andrew Kerr: 18:33 Awesome. So you moved out of the big house into the small tiny house above the garage and then you, what’d you do with the main house? Did you keep doing Airbnb for the main house or did you put in a long-term tenant?
Cami: 18:47 Yeah, I think we, after, I’m pretty sure that after we moved into the apartment, we went straight into long-term tenants cause we had, we had had quite a bit of experience with Airbnb at that point and we just, we kind of just wanted to cruise for a while. So actually what happened was the house was still up on Airbnb and so we had somebody reach out to us who was from the Midwest who was, um, wanting to, to live in Durham for six months. So over the winter, uh, because his, their son and daughter in law lived in Durham. And so they wanted to get another house that was close to them, not living with them for that period of time, but they found us on Airbnb. And then we, uh, we kind of did an off Airbnb deal, some of it through Airbnb and some of it not. And so that ended up working out really well because they still found us through Airbnb, but we weren’t actually doing, you know, the high traffic Airbnb situation that we were doing before. And we really liked that and we ended up being pretty good friends with them. They were, they were an older couple, probably late sixties, early seventies, but they were awesome. We had a great time with them, really happy that we did that was a really good first experience and to having longterm renters in the house. Um, and then I think from there we might’ve done a few months of Airbnb in between and then we had another set of longterm renters for nine or 10 months after that. So, um, yeah, two years of almost the whole time, long-term renters, maybe a tiny bit of Airbnb to kind of fill in the holes.
Andrew Kerr: 20:16 So when you didn’t have those sort of filling in the holes with the Airbnb, I know you found that first tenant from Airbnb, where did you actually find the other tenants? How’d you actually market it for rent?
Cami: 20:27 I think it was Airbnb again, but I also had it up on Craigslist and I have done, I’ve had really good luck with Craigslist and Zillow rental manager since then. So that’s, that’s the two. That’s really the only two places that I post it, Zillow, rental manager ends up posting it, multiple different places like HotPads and Trulia and some other, I can’t even remember now. But, um, so really I just ended up posting it on Craigslist and Zillow rental manager when it comes to long-term rentals. But I have found that Airbnb still works okay for putting it out there for a longterm rental to like, sometimes you find somebody, I mean, what kills you on Airbnb for a long-term is the fees. Yeah. Um, yeah. I mean it’s for a long term rental, it just doesn’t make sense to do it over through Airbnb because you’re paying these fees on a monthly basis, but you’re not really getting any service from Airbnb. You’re still just paying for that initial find. Yeah. So, um, so yeah,
Andrew Kerr: 21:29 If you weren’t using them through Airbnb, how’d you actually go about collecting rent? Was it just drop off a check and some cash or did you use any sort of software or was it just, you know, shoot me money via PayPal or Venmo and then,
Cami: 21:42 So yeah, go ahead.
Andrew Kerr: 21:44 I just was going to say did you also do any leases, cause I know like through Airbnb there’s sort of some terms and conditions that they’re agreeing to where when you’re offline did you do leases with folks or was it just sort of on a handshake as well?
Cami: 21:56 Yeah, that’s right. I think the first uh, those, those tenants that we had, the first longterm tenants that we had from the Midwest, I believe we just did everything through Airbnb that first go round just cause we didn’t really know what we were doing by the time we got to our second set of longterm tenants in the, in the big house we did have a lease at that point and I think I found a North Carolina lease online and then I just kind of tweaked it based on just experiences that I’d had using Airbnb. Like things to look out for, things that you have to mention and bring up in a lease and make really crystal clear. So I think that the second long-term tenant that we had, um, we did have them sign a lease and they were actually coming from overseas. So that was a little, a little trickier, but we just did everything. We just, we just pass the document back and forth online and signed it that way. And um, they sent us money, I think they sent us, you know, their deposit through PayPal or something like that. So, but yeah, I, that’s, I definitely recommend getting, you know, a solid lease as, as time goes on and just kind of adding to it as you learn things really is what I is what I’ve done over the years.
Andrew Kerr: 23:09 I know, I feel like that’s the way it works for a lot of us is we’re like, Oh, you know, we feel like this is common sense. And then attendant does something and you’re like, well, I got to now add that as a clause in the lease. Like, don’t do this.
Cami: 23:20 It’s not common sense.
Andrew Kerr: 23:25 Alright, so you’re, you’ve been living in the small uh, apartment tiny house above the garage renting the big house to longer term tenants. You know, what were you actually averaging per month in rent that you’re getting when you rented out the big house?
Cami: 23:38 So we were getting between, um, so when it was longterm tenants, it’s less of course between 22 and $2,500 a month. And then when we were doing Airbnb, those times, those gaps in between, we were sometimes making over $3,000 a month with, but you know, it’s a lot more work. You have to pay more for the cleaners. There’s just, there’s a lot more time that goes into it. So you know, after, after a while I kind of realized that my time was better spent doing other things and just getting sort of that lump sum without having to do the high touch work of Airbnb.
Andrew Kerr: 24:17 Absolutely.
Cami: 24:17 Yeah.
Andrew Kerr: 24:20 I just want to make sure I got this right. You are long term tenants now getting 22 to 2,500 a month and your mortgage was that $1,400 a month. Do you remember what your equity line payment was?
Cami: 24:31 Let’s see. Well 60,000 divided by 36 months, something like that. I think we were trying to pay it off in three years, so I don’t know. Let’s do the math. Yeah, we were, yeah. So we were putting about $,1600 bucks a month, probably back into the home equity line to pay it off quickly. I think
Andrew Kerr: 24:51 Your, your minimum payment was probably a whole, whole lot less.
Cami: 24:54 Oh yes, absolutely. We just really wanted to pay it down and we could so, and the home equity line, the, the rate wasn’t crazy, but it wasn’t amazing either. I mean, I think it was somewhere around, um, it started low. That’s kind of how they get you sometimes. Like they, it starts really low for the first 12 months and then it goes up. So I think it was maybe somewhere around 6%. So it was something that we wanted to pay off quickly if we could.
Andrew Kerr: 25:21 Yeah. All right. So your first mortgage was $1,400. You probably had a small couple hundred dollars a month minimum payment for the equity line. And I know some folks like or don’t mind having debt as leverage for real estate and then other folks like to pay it down. It sounds like you took that approach, but even on your minimum payment, you’re maybe 17, $1800 a month and you guys are bringing in 22 to $2,500 a month in rent. I mean you, you’re literally with like high cost of living area, San Francisco, cheaper housing costs in Durham to now having, you know, 70 or 80% of it covered that first year when you’re Airbnb, you finish building out the small apartment above the garage and now all your housing costs are getting covered and you’re having extra to rapidly pay down this equity line. I mean that’s pretty phenomenal. The fact that you know, just over the short several years you can really change your financial position of going from high cost of living area to now having all your housing costs completely covered.
Cami: 26:20 Totally. Yeah. It totally changed our lives. Absolutely. Yeah. It was a, it wasn’t a 180 cause we were doing okay before, but I mean it was, it really did. It just accelerated our kind of financial well being, really.
Andrew Kerr: 26:36 Yup. All right. So you lived in, I know you alluded to that you lived in the tiny apartment for about two years. So it sounds like there’s a change that happened around this point. Tell me a little bit about that change.
Cami: 26:50 Well, the change was that I got pregnant in 2016 and we decided that we couldn’t live with three people and two dogs and 550 square feet. I mean, people will do it, but we are, we have this really nice 1800 square foot, three bedroom, two bathroom house. And you know, after you have a kid, people want to come visit you. It’s very hard for people to come and visit you when you’re living in a one bedroom apartment. So, so anyway, we decided when I was, I don’t know, probably I was probably three or four months pregnant when we, you know, it was like, yeah, we’re definitely gonna move back into the house when, um, you know, before, before I gave birth. And so, so yeah, when I was eight months pregnant and the long-term renters were leaving overseas, long-term renters were leaving then we, yeah, we moved, we’ve moved back to the house when I was eight months pregnant. So just in time, um, and kinda got the house sorted out again and got everything ready for the baby. And then, um, yeah, you know, speaking of like how, how, you know, how like this, uh, new financial stability could help change our lives. My husband was actually able to take his 90 days of maternity leave off and his company unfortunately gives zero pay for fathers, which is crazy, but they are required to give him his 90 days off. So, um, that was something that we are able to do. He was able to take 90 days unpaid because, um, because of the, really, because of this, the house hack that we did.
Andrew Kerr: 28:26 Amazing that, that, that gave you that opportunity to say like, you know, while I just gave birth, the husband is able to stay home for 90 days not getting paid and we know we’re in a good place because we just had this really great period of time with the house hack. So you left the tiny apartment, you’re in the big house, you now got a young baby. Did you rent the garage apartment?
Cami: 28:48 Yes. So I had had that lined up, um, while we still had our long-term tenants in the big house. And um, so yeah, basically like the day we moved out of the apartment, we had somebody else moving in and that, and that tenant actually was there for three years, which was amazing.
Andrew Kerr: 29:06 Yeah. I mean if you can get any tenant for three years, that is really, really good. It keeps your, your turnover costs really low.
Cami: 29:13 Yes.
Andrew Kerr: 29:13 What was she actually paying for rent when she was in that sort of tiny apartment?
Cami: 29:18 So she was paying, the way that we had it, had it set up, she was paying $1,375 and that covered all of her utilities and also we provided once a month cleaning professional cleaning. So when we were going through the build of the apartment, we were given the option of um, separating the meters and it was going to be over $5,000 for the separate water meter, which means just we never would have made back. Um, I mean maybe if we were in the house for like decades, but it just didn’t make sense to install that, especially since we are building a brand new apartment and everything was really energy efficient. So we just decided not to do that. So anyway, the, the end result was that all of our utilities were tied together between the house and, and the apartment. And so we just paid for her utilities and we just rolled that into the cost of the rent. But to make it more attractive, I mean it’s kind of like when people see $1,375 for a one bedroom apartment, you know, they might all get that number. But if, um, since we, I think we listed it at 1175 was the rent and then we said, you know, $200, um, is for utilities and cleaning. So because of that, it made, it made, it kind of seem like the rent was lower or feel like the rent was lower. In actuality, it’s just, we just kind of presented it in a different way. So, um, so that’s what she, yeah, that’s what she was paying. And I think we, we just, we increased it every year, I think by $25.
Andrew Kerr: 30:48 Yeah. Why, why try to, you know, raise it so much and scare off a really good tenant if, you know, I do the same thing. I like the tenants, they pay on time, they’re good, they don’t cause problems, just do a minor increase and then, you know, it’s, it’s better to keep a good tenant than it is to-
Cami: 31:05 Exactly. So yeah, we just went up by 25 bucks a month and she was fine with that. So, and that was fine. That was still, you know, that’s still almost paid for our mortgage. So it was still a great deal.
Andrew Kerr: 31:18 You’d use your savings paid off that uh, savings that you had when you were renting out the big house, rapidly pay off that equity line. So now you’re back in the big house and this is almost covering your mortgage. I mean, this is a really cool house hacking experience like this property essentially grew with you, with you as you went on in life. It was like, Oh, we’re younger, we don’t mind, you know, moving out for Airbnb, we’ll do that. Then it was like, ah, you know, our, we’re getting a little further along in our careers. We don’t want that hassle. So now let’s do, you know, the small apartment. We can try that out. We’ll rent the big house, you know, now we’re, we’re, we’re having our first child, let’s go back to the big house and switch it around and rent that other one. And like, I’m almost speechless. This is a really, really cool story how it’s like changed with you through these different periods of life.
Cami: 32:08 Yeah. It really was. I mean, it was a really interesting journey and it really did it. Yeah, it really did grow with us and it really did it. We were able to have that flexibility because of the type of property that we bought to begin with. You know, that it already had some of these existing things, but that we were able to add to it. Yeah, it was, it was, it was a great, great situation. It really was. I mean, it was, it was, um, something, if I could replicate again, I would.
Andrew Kerr: 32:35 Yeah. Yeah. So you obviously mentioned you’re in the Pacific Northwest. This property is back in Durham, North Carolina. So what’s this transition period here? Did you end up selling the house? Are you still keeping it, turn it into a full rental? What, what’s the current situation now?
Cami: 32:51 Yeah, so we’re, we’re, we are renting it. So we, we got another tenant for the apartment. Our tent for three years finally moved out. She was going to go buy her own house, which I, you know, I totally understand and applaud her for. So we got another tenant for the apartment and then we got actually a family from San Francisco moved in to the main house. And so they’re, they’re there right now. And we did that because we, we moved to Portland. I mean this was just like a leap of faith that we took that we were going to love Portland. And so our, our idea was that we were just going to rent out the house and the apartment for a year and see how we felt about Portland and um, either, you know, have it as an option to come back to Durham if we wanted to, but also like rent is more expensive here. So this covers, we’re basically in the exact same financial situation we were in, in Durham, out in Portland because we’re now renting the house out to. So it’s basically like the, you know, the same situation.
Andrew Kerr: 33:47 It’s funny, even one step further, like all these different life periods and now it’s helping you live in the future. Oh my goodness. Yeah. Talk about awesome experience. I don’t think there’s a better case study example for like how a house hack can work and carry you through all these positions, that, that’s so awesome. It’s true.
Cami: 34:04 It’s true. It’s true. So yeah, we’ll do that for this year and we’ll kind of see. But yeah, certainly it’s a lot more expensive to be out in Portland and Pacific Northwest in general than it is to be in Durham. Although, because you know we kind of moved there before Durham exploded. Our house has appreciated a lot. So speaking of how it can continue to help us when we do sell our house has appreciated a lot and we will use that to put a nice down payment on something here, which you know, would be, I mean it’s the price points here are for what we have there are, you know, we’re looking at more like if we were to buy a house like what we have in Durham in Portland, it would probably cost us between eight and nine, $900,000. Yeah.
Andrew Kerr: 34:49 That’s just crazy high prices.
Cami: 34:52 Yeah.
Andrew Kerr: 34:52 So do you think you’ll sell, cause you know, I know you’re really savvy, but are you familiar if you have lived in it for two of the past five years, you can still sell it and not have to pay any capital gains tax on that appreciation. So is that sort of your thought process of try out Portland and then if we’re going to stay, make sure we sell under that window so we don’t have to pay capital gains?
Cami: 35:13 Exactly. Yeah. So yes, it would be within three years that we would sell it if we were going to sell. Although, you know, I looked at our specific numbers and I mean the capital gains for this, this sale wouldn’t be huge. I think it’s something like $30,000. So it’s not like a game changer. Um, but it is, you know, it’s definitely something to consider. So yes, if want to avoid that, we’d be selling within three years.
Andrew Kerr: 35:39 Really. Cool. So if you sort of think back through this whole house hack experience, what do you feel like your major sort of success was or your biggest win was out of this period of time?
Cami: 35:49 I mean, I’d say like, you know, the experience of doing it. I mean this was my first project like this and the experience of doing it and also just creating this, just this ongoing financial stability for us was huge. I’d say that, you know, we went on to do other real estate projects after that, but I’d say this one was probably the one that had the most positive impact on our lives, like directly. So yeah, I mean I think it was a great first experience, but also like, you know, nothing since then has been as good. I don’t think it’s a high bar, it’s a high bar. So yeah, definitely, definitely a great experience.
Andrew Kerr: 36:34 Alright, so what, while you’re still thinking back over this period, what do you think your biggest challenge was? Or if there’s something you could go back and change and do differently, what that might, what, what could that actually be?
Cami: 36:46 I mean, I think the biggest, biggest challenge was learning to work with contractors and subcontractors for the first time. Having never done that before. I mean, the process is this sort of hurry up and wait scenario over and over again where we would have to make these major decisions on the fly with no warning. Um, this is just so different than any other industry and just like shockingly inefficient. So, uh, but this is, these are just like industry standards for construction and just to have to learn that. And I mean, you can try to change. We really did our best to try to work around that and change that whenever we could. Meaning, you know, we would have conversations with our GC about like, okay, well what’s next? What information can we give you? We want to be prepared. We’re planning ahead. What do you need? And even though we did that over and over again, you know, there were things that he couldn’t foresee either because he’s working with subcontractors who don’t give him any warning. Um, so anyway, it was just that, it was, that experience was, uh, a huge challenge for my husband and I who we are both self-proclaimed planners. So to not be able to plan really was, um, was pretty, was pretty frustrating. But then, you know, once we sort of knew that we knew for our next project like, well this is normal. This is just kind of the way it is unfortunately. But it was, that’s, that’s what it is. And we learned that through the process.
Andrew Kerr: 38:16 Well, and would you actually do another house hack again?
Cami: 38:21 Um, if it’s the right scenario. So, you know, as I mentioned before, one of the reasons that our house hack works so well for us is because the apartment really felt separate from our property with its own private entrance, you know, facing away from our house. It’s own little yard essentially. I mean, yeah, if we could find something like that. It’s interesting because we’ve been looking at stuff here in Portland and a lot of, a lot of people do, um, accessory dwelling units here ADUs for short. They do them all the time here because it really helps, you know, it really, it really does help your housing costs. So they’ve like, you know, they, they were hip to that a long time before we were, so a lot of these houses have someone using the basement, which like that, you know, that is not a very appealing scenario to us because somebody living right underneath you that is kind of hearing a lot of what’s going on upstairs.
Andrew Kerr: 39:15 Especially with the young child running around and playing.
Cami: 39:20 Totally, and two dogs and you know, so anyway, it’s just a lot. That’s a lot more intimate than we would prefer it to be. So if it just depends, if it’s the right scenario, we’d love to do it again. So we’ll just have to see if we can, if we can find that.
Andrew Kerr: 39:34 Very cool. Well hopefully you’ll find that right. A scenario there. Now, before we let our guests go, we like to ask all of them a set of final six questions that we like to call the fast six. So six questions, rapid fire succession. Are you ready for it?
Cami: 39:49 I’m ready!
Andrew Kerr: 39:49 Awesome. What’s your favorite personal finance blog book or podcast that you’ve read or listened to recently?
Cami: 40:03 Um, okay. Well I am not done reading it yet, so I have to be honest about that, but I’m almost done reading it and I really like it so far. The book Invested, um, by Danielle Town. And it’s about learning how to invest in companies that align with your values. Well, understanding the mistakes that most people make while interacting with the stock market. And you know, she’s, she’s our age and the tone of the book is very approachable and I think it’s, it’s been a fun read and an easy read and um, really just like accessible as far as understanding stock.
Andrew Kerr: 40:37 Oh, very cool. I’m going to have to add that to the reading, my reading list and I’ll throw that in the show notes for anyone that’s interested in learning more about it. Alright. So number two, what’s your favorite real estate related blog or book or podcast that you’ve read or listened to recently?
Cami: 40:53 So, um, I don’t listen to a lot of real estate podcasts, but I have listened to quite a few episodes of Jake and Gino. Um, and they, they have a multifamily. It’s, I think multifamily is in the title of their podcast, but honestly they, they hit all sorts of topics that have to do with real estate. And, um, I really, I’ve really found it useful, um, for other projects that we’ve done.
Andrew Kerr: 41:20 Very cool. Alright, so number three, what’s been your favorite travel destination so far?
Cami: 41:24 My favorite so far I think has been the North Island of New Zealand. Um, the whole country really prides itself on taking care of its natural beauty and the North Island is full of like all these geothermal wonders. So, you know, meeting like lots of hiking to hot springs in the middle of nowhere and they just have this incredible, yeah, just like an incredibly diverse landscape. So that was pretty awesome.
Andrew Kerr: 41:49 Well, I know you’re a big traveler, so this should be easy. What’s going to be next on your travel vacation list?
Cami: 41:56 Um, so we’re going to Maui in the winter. Um, we’re going to go see some friends. Yeah, we’re going to go see some friends who just moved there. But then we’re also going to have like a week on our own. Um, we’ve chosen to stay on a beach that turtles really like to hang out, which my daughter is going to just be super excited about. So, um, and it’s easier to get there. And now that we’re in Portland, I mean, it’s like a pretty, pretty quick flight, um, versus from the East coast. So we’ll need to have a nice sunshine break in the middle of the Portland winter.
Andrew Kerr: 42:29 All right, so number five, what is your biggest bucket list item that you haven’t accomplished yet?
Cami: 42:34 That I haven’t accomplished yet? Okay. Um, let’s see. So, um, I, you know, I began running trail running about a year ago and um, I’ve been running longer and longer distances. So my, I think my next bucket list item would be to find a half marathon race somewhere abroad and just plan a trip around that. And I’m still working on the race and what I’ll choose. But, um, that’s sort of my next adventure that I’m going to plan around.
Andrew Kerr: 43:03 Well, I like it. It’s not only do you want to run the half marathon, but you’re going to pick a different country to go do it. And so you get to do that hurdle and go see another country. Awesome. Yeah, that’s a good bucket list item. Alright. And number six, final question. What is your favorite life hack?
Cami: 43:19 Yeah, this is a good one. So, um, beginning in 2019, I started working towards the Companion Pass on Southwest airlines and uh, you know, since we have to pay for our daughter now that she’s over two years old, it’s a bit more expensive to travel these days. So, um, mid 2019 we receive, we received our Companion Pass so we now have it for the remainder of 2019 and 2020 and we’ve already gotten her four free flights, so it’s super valuable. And we did that through, um, through Chase. Um, and there’s actually another website that I can recommend around that that has given me really good tips on how to do that. It’s called The Points Guy and yeah, I mean that’s, that’s a good life hack that kinda, it’s like it keeps on giving. So we plan on doing it for 2021 if we can as well.
Andrew Kerr: 44:06 Awesome. Yeah, I actually love The Points Guy and I’ll, I’ll link to the website in the show notes. I follow it religiously but did you actually see earlier this year they bought out another website called Mommy Points where it’s specifically a woman that basically, you know, The Points Guy, it’s really expanded but it’s really more for that travel. I love, I mean I don’t have, it’s just me and my wife. We have no kids yet, but I love having hearing her perspective of here’s how we travel with the kids and here’s how we use all the rewards and stuff. So I thought it was really interesting that they sort of did this acquisition merger together. That’s awesome. No, I’m going to have to look that up. Well Cami, thank you so much for being on the show. I really appreciate your story. I mean, it was just phenomenal of how you had this really long house hack that shifted as you’d sort of changed and went through different parts of your life. I mean, I feel like it really is the perfect case study of how a house hack should work and does work if you do everything just right and have a little luck thrown in. So thank you again for being on the show.
Cami: 45:06 Well, thank you. It was super fun to share that story.
Andrew Kerr: 45:09 Awesome. Thank you again.
Outro: 45:13 Thank you for listening to the house hacking podcast. For more up to date information on house hacking to access links and resources mentioned in today’s show, and connect with the guest and host head over to www.fibyrei.com that’s www.fibyrei.com where your house hacking journey begins.
Be sure to check out our Ultimate Guide to House Hacking for a great overview of the different styles of house hacking and different types of tenant bases.
Check out the home page for “The House Hacking Podcast” here.
In 2018 FI by REI was created with the purpose of helping individuals that want a better life. We share articles on personal finance, house hacking & real estate investing, and more.