Jorge took his room rental house hacking strategy to an extreme in Dallas, Texas. Let's find out how his big choice paid off!
House hacking just might change your life. Before we open Pandora’s box, I highly encourage you to grab a copy of our House Hacking Quick Start Guide (free) as you read along. Not only will it deepen your learning, but it also includes a cost-saving tip most house hackers miss. You could save thousands and you won’t find it anywhere on this site.
House Hacking Case Study
Jorge, an accountant and Uber driver, took a big leap when deciding to house hack. With the goal of house hacking single-family homes in a room rental house hacking style, he chose to move from Los Angeles to Dallas to break into the real estate market.
As a big saver, he jumped at the idea of house hacking. Once he heard about the concept, he read a few books and started his journey quickly.
The House Hack
In August 2019, Jorge closed on a single-family home in Dallas. He describes this room rental style house hack as an extreme form of minimalism and a private-less experience. When he closed on the home, Jorge moved into the dining room and set up curtains. He rented out the other rooms to tenants.
Overall, he had almost no privacy. But he was able to completely eliminate his housing cost and enjoy a cash flow positive situation. Plus, he was able to learn how to become a better landlord.
Updating the Units
The single-family home needed almost no updates. Jorge was able to move tenants in immediately. But after ten months, he decided to add doors to the dining room to create a more private living situation. Adding the doors cost $1,400 but created a completely different living experience for Jorge.
Jorge found tenants to fill his room rental house hack on Facebook Marketplace. After they moved in, Jorge has continued to self manage the property. He has a very positive relationship with his tenants. When a problem arises, the tenants notify Jorge and he works to resolve it as soon as possible. After all, happy tenants lead to a happy life according to Jorge.
The Numbers of the Deal
It’s time to find out exactly how profitable this house hacking strategy was!
For the single-family home, Jorge put down 5% on a conventional loan. The upfront cost to purchase this home was approximately $15,000 after seller credits and concessions. With that, his total monthly mortgage payment including principal, interest, taxes, and insurance is $1,490 on this home.
Jorge was able to charge his tenants $650 per month. With two bedrooms, he was slightly cash flow negative.
- Gross Rent: $1,300
- Mortgage payment: $1,490
- Cashflow before maintenance and vacancies: – $190
The overall cash flow of the property was slightly negative! Although Jorge had to live with minimal privacy for several months, the long-term gain was worth it to him.
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The Learning Curve
Since starting his house hacking journey, Jorge has amassed a total of three properties. Looking back, he would seek out a first home purchase that wasn't on a busy corner. But the entire experience has allowed him to eliminate his housing costs and work to build a real estate portfolio.
Jorge says, “for anyone who is on the fence of house hacking, take a risk on yourself. Give it a try, and if it isn’t for you, you can always hold the home as a rental property. It’s a very conservative method to begin investing in real estate with very little capital down and you get to learn how to be a landlord in the process. I advise this to anyone who wants to expedite their journey to financial stability.”
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The Bottom Line
Jorge shows that with hard work and determination, you can make house hacking a reality for you. He moved halfway across the country to slash his housing expenses and it is paying off in a big way. But you might be able to find a house hacking opportunity in your local area.
Discover how Kameron slashed his housing costs by house hacking!
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!
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