Christian Hall from Detroit shares his room rental style house hacking strategy today.
House Hacking Case Study
As a sales manager, Christian first entered the real estate market through a house hack. Since then, he has been able to build a profitable real estate portfolio. Prior to house hacking, Christian spent a year living in his parents’ basement as a recent college grad. He paid $250 per month to live there. But once he heard about the idea of house hacking, he decided to give it a try.
When he moved out of his parents’ house, they returned all of the money that he had paid in rent. It was a welcome surprise!
The House Hack
Christian bought a single-family home in Detriot in 2016. When he bought the place, he spent some time making minor repairs to the property. Overall, the home was in great condition. The only major issue was a rat infestation in the crawl space. Christian decided to take care of that problem himself because none of the contractors in his area would work in the space.
The house had an upstairs bedroom and two downstairs bedrooms. Christian moved into the upstairs unit and rented out the other two bedrooms. He stayed in the house for two years. But decided to buy a new home with his wife when he got married in 2017. Since then, they have kept the property as a profitable rental.
Christian rented out one of the bedrooms to a friend. But the second bedroom was filled with a tenant he found on Craigslist. Before allowing them to move in, he ran a credit and background check. Overall, the living situation with his tenants worked out very well.
In order to easily manage his tenants, he uses Excel spreadsheets, Google Drive, and Canva.com.
The Numbers of the Deal
It’s time to find out exactly how profitable this house hacking strategy was!
For the single-family home, Christian used a conventional loan to put down 3.0%. The total price of the home was $57,500 which lead to a down payment of $1,725. With that, he had a monthly mortgage payment of $424.35 which included principal, interest, taxes, and insurance.
The two spare bedrooms were rented for $350.00 per month each. That led to a total of $700.00 in rental income per month.
- Monthly housing expenses before house hacking: $250
- Gross Rent: $700
- Mortgage payment: $424.35
- Cashflow before maintenance and vacancies: $275.65
- Housing savings: $525.65
The overall cash flow of the property was positive while Christian lived there. After moving out, the rental house has become even more profitable!
The Learning Curve
Christian is happy that house hacking has been able to help him venture further into real estate investing.
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The Bottom Line
Christian not only eliminated his housing expenses, but also enjoyed a positive cash flow while house hacking. What if you could do the same?
If you are interested in creating your own house hacking story, then check out our ultimate guide, listen to our house hacking podcast, or read more case studies for inspiration. You never know how dramatically your life can change through this one choice!
If you choose to pursue a house hack of your own, then please share your story with us! We would love to showcase your success.