The FI Couple, Ali and Josh, join the show to share their experience of house hacking as newlyweds.
Meet The FI Couple
In 2018, Josh and Ali got married after a three-year engagement. The year before, in 2017, the couple started taking a closer look at their finances. The kickstart to looking at their finances was thanks to a car salesman who recommended Dave Ramsey's Total Money Makeover. Once they started looking at their finances more closely, they realized they had almost $100,000 of combined student loans.
With that, they started looking at the best options to help them eliminate this debt from their life. After some research, they discovered that house hacking could be the best option to help them pay down their debt quickly. Before stumbling into the idea of house hacking, the couple was living in a $1,200 one-bedroom apartment with no plans to buy a house.
Within a few months of the wedding, they closed on their first house hack. Two years later, they closed on their second house hack.
Deciding to House Hack as a Couple
Josh found the idea of house hacking through an article published by Brandon Turner. After reading more about the concept in Set for Life, he was ready to dive into house hacking. Ali wasn't originally open to the idea of house hacking at all. In fact, she was very opposed to the idea.
At first, Josh tried to convince Ali with spreadsheets and numbers. But the dollars and cents weren't that helpful. But then he decided to start speaking her language. He started talking about the time freedom that could come with changing their lifestyle. As an emotionally motivated person, Ali was able to hop on board when she could envision a new quality of life in the future.
If you are trying to convince a significant other, then make sure to speak their language.
Josh and Ali's First House Hack
After three months of searching, Josh and Ali found a property that worked for both of them. Their realtor found the property before it hit the market. The previous owners were a young couple that lived in the place. With the work done by the previous owners, Ali felt comfortable with the idea of living there. Plus, it was in a decent neighborhood that they could feel safe in.
The purchase price of the duplex was $160,000. The property had an upstairs and downstairs unit with three bedrooms and one bathroom. Josh and Ali moved into the downstairs unit which had a private fenced in yard and a one-car garage. Overall, it felt like a lifestyle upgrade for the couple.
The couple used a conventional loan with 5% down to close on the property. With that, the monthly payment was $1,384. When the couple moved in, they inherited a long-term tenant who was paying below market rate at $750. But they decided to keep him on because he was a quiet and respectful tenant. They were able to lower their living expenses by $500 a month. Eventually, the upstairs tenant has moved out and they have raised the rent to $925. When they moved out of the bottom unit, it rented for $1,350.
Josh and Ali were able to funnel the extra funds towards their student loan.
Josh and Ali's Second House Hack
After a year and a half in the first property, Josh wanted to pursue a second house hack. Thanks to their community involvement, they learned about someone in the neighborhood that wanted to sell their duplex.
They bought the second duplex for $150,000 without any realtors involved. Both units have three bedrooms and one bathroom with off-street parking. This time, they used an FHA loan to put down 3.5% on the property. With that, the monthly mortgage was $1,280.
When they closed, the top unit was occupied but the bottom tenants moved out. Josh and Ali moved into the bottom unit but had to put a lot of work into the unit to make it more livable. The upstairs tenant is currently paying $975, which brings their housing costs down to just $300.
Currently, they are replacing 13 windows on the new property. The cost is around $6,000 which they came into the property with extra money on hand to cover some upfront expenses, like replacing the windows.
Josh and Ali are self-managing both properties. Right now, they use Cozy for tenant screening and Avail for rent collection. Plus, they have built a network of contractors to handle the issues that pop up.
Ali is happy to say that they found two house hacks that allowed them to meet financial goals without sacrificing their quality of life.
The Famous Six
What is your favorite personal finance resource?
What is your favorite real estate resource?
Favorite episode – Go Small or Go Home
What has been your favorite travel destination so far?
What is next on your travel list?
National Parks in the Southwest
What is the biggest bucket list item you haven't accomplished yet?
Be able to travel for months at a time
What is your favorite life hack?
House hacking is an amazing opportunity and buying affordable cars in cash.