house hack

Andy's House Hacking Case Study 54

May 19, 2021 | Case Studies

Today Andy Kolodgie shares his roommate style house hacking story from Alexandria, Virginia. 

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Andy's House Hacking Case Study

As a software engineer for the Navy, Andy was interested in creating a second stream of income. Plus, he decided that he didn't want to pay rent anymore. Although he learned about the idea of house hacking in college, he decided to move forward in January 2020 to accomplish his financial goals.  

Since then, Andy has taken advantage of the financial opportunities that a house hack can provide and become a full-time real estate investor. But the house hack that started it all was a property he found on an MLS after searching for three months. 

When Andy closed on the property, it required some renovations. The entire renovation process took around 8 weeks and $17,500 to complete. But these renovations allowed Andy to add an extra bedroom and bathroom in the upstairs space, which turned the upstairs into a four bedroom – two bathroom. Although Andy hired out the work to contractors, he was living in the space during the process which is something he hopes to skip in the future. 

Since the completion of renovations, Andy has been able to rent out the rooms to tenants found on Facebook Marketplace. As someone who self-manages tenants, he is happy to have a reliable contractor nearby. Whenever something is wrong, he can have the maintenance issues resolved relatively quickly. 

House Hacking Rental Income

Now it's time to find out exactly how profitable this house hack was!

Andy used a conventional HomeReady loan to put down 5% on the home. With that, his monthly mortgage payment is $2,800 including taxes and insurance. But he has been able to rent out the rooms to create a positive cash flow of $1,200 per month. 

  • Gross rent: $4,000
  • Mortgage payment: $2,800
  • Cashflow before maintenance and vacancies: $1,200
  • Housing costs before house hacking: $850
  • Total housing savings: $2,050

Overall, Andy has been able to create significant savings through his house hacking experience. With the money he's saved, he has been able to invest in his business, The House Guys DC, and become a full-time real estate investor. 

Want someone else to pay your mortgage? Dive into housing hacking with our House Hacking Quick Start Guide. 

The Learning Curve: Andy's House Hack

Looking back, the major issues Andy encountered with house hacking were largely centered around the renovation process. If you are considering a major renovation, here are some things to consider:

  • Research permitting earlier.
  • Understand permitting codes.
  • Make sure your contractors know the code.
  • Don't feel rushed when writing the contract with the GC. Offer a bonus for completing before the scheduled date and a penalty for completing after.
  • Regularly scheduled inspections. In other words, don't wait until you need an inspection to schedule it– have it already lined up.
  • Start the contractor quoting as early as possible such as when the home inspection is happening, ideally before closing.
  • Don't live in the place while renovating. 

Even with some hiccups in the renovation process, Andy would absolutely house hack again. 

 

Tip: Prioritize Good Tenants

Take your time finding the right tenants, and don't be afraid to lower the rent to fill a room — a filled room at a lower price is better than a vacant room.

Additional Resources

If you are interested in creating your own house hacking story, then be sure to:

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