Today Matthew shares his single family style house hacking story from Vista, California.
House Hacking Case Study
After reading Set for Life by Scott Trench, Matthew was very interested in the concept of house hacking. When the right property came along, he was ready to move forward. As a pipefitter, Matthew had a unique advantage when it came to remodeling a home to maximize its house hacking potential. He was able to convert a sunroom into a liveable studio with a bathroom, kitchen, and laundry area.
The House Hack
In July 2020, Matthew closed on a single-family home in Vista, California. The home was a single-family home with an attached sunroom. After closing on the property, Matthew converted the sunroom into a separate studio apartment. With that, he is able to rent out the studio in addition to the extra rooms in the home.
Updating the Units
The major renovation expense for this home was converting the sunroom into a liveable studio space. The process took a lot of effort but came out very great. The total cost of converting this space was $17,000 which included the material, appliances, fixtures, and paint.
In addition to converting the sunroom, Matthew also made some minor renovations throughout the main house. He repainted the interior, updated the bathrooms, and added new door hardware. The main house renovations cost around $5,000. With that, he spent a total of $22,000 in renovations to make the home ready for house hacking.
Matthew is using Craigslist and Zillow to find tenants for his house hacking adventure. He plans to use TransUnion SmartMove to screen potential tenants and Zelle for rent collection.
The Numbers of the Deal
It’s time to find out exactly how profitable this house hacking strategy was!
Matthew used an FHA loan to purchase the house with a $17,000 down payment. With a 3.25% interest rate, the total monthly mortgage comes to $3,100. That includes principal, interest, taxes, and insurance.
Matthew is able to charge his tenants a total of $3,100.
- Previous housing costs: $650
- Gross Rent: $3,100
- Mortgage payment: $3,100
- Cashflow before maintenance and vacancies: $0
- Total housing savings: $650
The cash flow of the property is cashflow neutral. That allows Matthew to live for free in a comfortable living situation. With this success, Matthew says he’d be willing to house hack again in a heartbeat!
The Learning Curve
Matthew has successfully created a way to live for free. Although things have turned out great, he would consider bumping up the rents higher. But he says he will do that when the next lease term rolls around. But even without higher rents, he has been able to reach a 70% savings rate that is allowing him to stack up his savings. In the next year, he hopes to purchase another real estate investment property.
If you are considering house hacking, Matthew says, “Just dive in! I was was so scared to buy a house but once I realized I was thinking with emotion instead of like a business owner everything was easy. As a matter of fact, every decision you need to make through the entire process becomes a million times easier if you learn to separate your emotions from the equation and ask yourself ‘how will this benefit my business?'” Matthew continues, “another piece of advice I have is to make your loan officer’s job easy by being organized and providing all necessary information and documents in a timely manner.”
The Bottom Line
Matthew was able to completely eliminate housing expenses from his life. Imagine 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.