House Hacking Case Study 42
Today, Ayush Gupta shares his multi-family house hacking story from New Orleans, Louisiana. As a physician in New Orleans, Ayush was looking for a way to create passive income through monthly cash flow. When Ayush first heard about house hacking through podcasts, he knew it was an excellent opportunity. Without any dependents to worry about, he took the leap into house hacking quickly.
Download Our House Hacking Guide
The quick start guide helps you understand how to live for free.
House Hacking Case Study
As a physician in New Orleans, Ayush was looking for a way to create passive income through monthly cash flow. When Ayush first heard about house hacking through podcasts, he knew it was an excellent opportunity. Without any dependents to worry about, he took the leap into house hacking quickly.
The House Hack
After looking at potential properties through an MLS, Ayush closed on a small multi-family property with four units in October 2020. There are two upstairs units and two downstairs units. When he bought the property, each unit had two bedrooms and one bathroom. After some renovations, one of the downstairs units has two bathrooms.
Updating the Units
The four-unit property needed some repairs to the exterior. These included painting all of the wood on the outside, cleaning out the crawl space, and replacing the wooden porch. Additionally, two of the units needed more extensive interior renovations. Unit A needed a complete renovation of an existing bathroom, new paint, a kitchen renovation. Plus, Ayush added an additional bathroom to this unit for forced appreciation.
Unit B needed a new washer and dryer set up and a new toilet. Overall, Ayush has spent $28,000 on the renovations. But he plans to make more updates to the property after saving more.
The property came with tenants installed. With that, he hasn’t had to search for new tenants yet. Currently, he uses Hemlane for property management.
Unfortunately, he got off to a rocky start with his tenants after a bathroom ceiling fell down within his first week of ownership. In another unit, contractors accidentally broke a glass table that greatly upset the tenant. After the involvement of lawyers, everything was smoothed over. But Ayush decided to pass off tenant management to a property manager for now.
Housing hacking is a growing trend sweeping the nation and transforming finances everywhere. With house hacking, homeowners are able to live for free and dramatically reduce their cost of living. You can tap into this life-changing strategy for free! Grab a copy of our House Hacking Quick Start Guide to get started – it can save you thousands with information you won't find anywhere else.
Tip: How to Find Good Tenants
List your properties on Craigslist and check Rentometer to compare prices. If you price your unit right you’ll get a good tenant. Use Cozy.com for credit and background checks. You can have prospective tenants send their information to Cozy and pay the $40 fee.
The Numbers of the Deal
It’s time to find out exactly how profitable this house hacking strategy was!
Ayush used an FHA loan with 3.5% down to purchase the $690,000 home with a 2.265% interest rate. In total, Ayush’s monthly mortgage is $4,298, which includes principal, interest, taxes, and insurance.
House Hacking Rental Income
Currently, Ayush is bringing in a total of $4,425 in rent from his three tenants.
- Gross Rent: $4,425
- Mortgage payment: $4,298
- Cashflow before maintenance and vacancies: $127
- Housing costs before house hacking: $2,265
- Total housing savings: $2,392
The cash flow of the property is positive. After the costs of property management, he is essentially breaking even. Currently, he is saving for future renovations and CAPEX.
Want someone else to pay your mortgage? Dive into housing hacking with our House Hacking Quick Start Guide.
The Learning Curve
Although there were many bumps in the road, Ayush has learned a lot along the way. Even with leaks and major renovations, he has been able to solve most of the problems with the help of experienced contractors. Plus, the property has already been appraised for a higher price than the sale price.
Throughout the process, Ayush has worked with contractors to complete the necessary renovations. His relationship with the contractor was good for the most part. However, there was a slow down when the general contractor caught COVID and delayed completion of the project. Ayush recommends starting your research early, not rushing into a renovation, and setting realistic goals and expectations for the maintenance of the property amid renovations.
If you are on the fence about house hacking, Ayush encourages you to give it a try. He shares, “If I can do it, anyone else can. It can feel extremely overwhelming being a landlord, but with a good team, anything can be handled. A good team will build on the way. More people want to help than hurt you.”
If you are interested in creating your own house hacking story, then be sure to:
- Check out our Ultimate Guide to House Hacking
- Listen to The House Hacking Podcast
- 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.
Check Out Next Week's Case Study
Download Our FREE House Hacking Guide
Save THOUSANDS each year on your housing costs!
Get the House Hacking Quick Start Guide
Our free guide covers the six main steps of doing a house hack so you can learn to live for free!