The anonymous blogger, TheYoungRetireeBy33, is a director of operational excellence by day. They have taken their skillset for optimization and found an extremely profitable house hacking situation. Today we'll learn more about their roommate style house hacking success in Orlando.
Want to try house hacking for yourself? 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.
House Hacking Case Study
TheYoungRetireeBy33 first heard about the idea of house hacking in 2016. The initial thought came from the idea that they did not want to continue wasting money on rent. At the time, they were throwing $1,200 towards rent each month for a one-bedroom.
With that driving factor, they decided to purchase a home. Shortly after that, a friend that was new to town asked to come to stay with at their house for a few months. That living situation evolved into a successful house hacking experience.
The House Hack
First, TheYoungRetireeBy33 purchased a single-family home in Orlando, Florida. The first tenant to move in was a friend that needed a place to stay for a few months. After realizing that house hacking was a viable option, TheYoungRetireeBy33 soon had two people living in their home.
In order to take things one step farther, TheYoungRetireeBy33 chose to invest $600 in updating an old office space to convert it into a bedroom. The total cost of adding a door and wall to the space was $600. They were able to start renting out that additional bedroom for $650 per month immediately.
At first, the tenants arrived organically as friends needed a place to stay. But eventually, they had to look beyond their friends for tenants. Currently, TheYoungRetireeBy33 takes advantage of resources like Facebook Marketplace, Zillow Rent Manager, and Airbnb to find tenants.
After finding the tenants, TheYoungRetireeBy33 manages the tenants themselves.
The Numbers of the Deal
It's time to find out exactly how profitable this house hacking strategy was!
On this single-family home, TheYoungRetireeBy33 used a conventional loan and put 5% down. At the time, they scored an interest rate of 3.75%. That led to a monthly mortgage cost of $1,756 with taxes and insurance included.
Beyond their mortgage, this property only needed minor updates of $600 to increase its rental income prospects.
While living on-site, TheYoungRetireeBy33 enjoyed the master suite. The other three bedrooms rented for $800, $900, and $650 each. In total, the rental income came to $2,350.
Let's take a closer look at these numbers:
- Monthly housing expenses before house hacking: $1,200
- Gross Rent: $2,350
- Mortgage payment: $1,756 + some HOA fees and utilities
- Cashflow before maintenance and vacancies: $100 -$200 profit each month
- Housing savings: $1,300
The house hacking experience was profitable while TheYoungRetireeBy33 enjoyed a free housing arrangement.
Want someone else to pay your mortgage? Dive into housing hacking with our House Hacking Quick Start Guide.
The Learning Curve
In the beginning, TheYoungRetireeBy33 did not have their tenants sign actual lease agreements. Looking back, they wish they had those lease agreements in place to protect against unexpected vacancies.
If you are looking into house hacking, then take the time to research lease agreements that will work for your situation.
Now that TheYoungRetireeBy33 has successfully hacked a single-family home, they have decided to move into a second house hack. This time, they have purchased a triplex with two one-bedroom units and one two-bedroom unit. Their plan is to live in the one-bedroom unit, rent out the other one-bedroom on Airbnb, and find a long-term tenant for the two-bedroom unit. The goal is to continue living without a housing expense while enjoying the privacy of their own one-bedroom apartment.
Get In Touch
If you'd like to learn more about this story, then check out The Young Retiree by 33. They share updates about their experience there. Plus, you can follow them on Twitter and Instagram @TheYoungRetireeBy33.
The Bottom Line
TheYoungRetireeBy33 shows that it is possible to build significant wealth through house hacking. Their advice to anyone that is interested in house hacking is to take action as soon as possible. This single strategy could change your finances for the better!
Be sure to check out next week's case study with Nadia.
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.
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