Income Suite House Hacking with Amanda
After spending a year traveling the world, Amanda and her partner decided to move to Seattle. But when they got there, they realized how expensive housing was in the area. She decided to buy a house that had a potential income suite to help offset the mortgage. In this episode, we hear Amanda go from traveling the world, buying an income-producing home, to living on a boat so they could massively crush their debt, to traveling across the country for a new job, living in a camping trailer, and back to buying another house hack. Amanda explains the ups and downs of her house hacking experience. And the episode is filled with tons of great tips, tricks, and fun takeaways, so be sure to tune in.
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How to get in touch with today’s guest:
Transcript of the show:
Intro: 00:03 Across the world. People have their housing costs taken away as much as half of their income. Have you ever thought of trying to change that? The good news is there is a way house hacking is real and we are here to show you how other people just like you have made it happen. Welcome to the house hacking podcast and here is your host house hacking expert. Andrew Kerr.
Andrew Kerr: 00:29 Amanda, thank you so much for being on the show. I’m really excited about hearing about your story and your house hacking journey. I mean how you doing and where are you calling in from?
Amanda M: 00:38 Yeah, I am doing fantastic. I’m calling in from beautiful Lake Tahoe, California, so no complaints here.
Andrew Kerr: 00:48 Awesome. So I don’t remember it, but I was actually born in California and my parents were big skiers. They have this picture from like the mid 80’s of me skiing in Lake Tahoe, but it was actually me skiing between their legs, like holding onto the little pole so that, that’s my little connection to Lake Tahoe.
Amanda M: 01:07 Yeah, it’s uh, the best place ever. We lived here about 12 years ago for about seven years and have finally made it back through some interesting decisions. But now we’re back in what we think is our dream place.
Andrew Kerr: 01:22 Awesome. Well let’s, for everyone that’s listening, can you give us this sort of high level overview of the type of house hack that you’ve done and sort of that experience and time period that you did it in?
Amanda M: 01:33 Yeah. Um, we started our house hacking journey when we moved to Seattle from Lake Tahoe. So we had taken a year off, a year off to travel the world and came back poor and so lived in a condo and decided we wanted to buy a house in Seattle, super expensive. So we knew that we needed to find a house hacking solution, bought a home that had potential, renovated the basement to turn it into an apartment. And then most recently we’ve moved to Lake Tahoe and took one of these larger vacation rental style homes and kind of split it into two areas and host J-1 employees, um, for a portion of this each season, summer, winter. So that’s kind of big picture with some sailboats, camping, other things mixed in between.
Andrew Kerr: 02:25 Awesome. Well let’s man, there’s so much there. Uh, I first question, so tell me about this year that’s traveling and this is really unrelated, the podcast, but me and my wife are huge travel buffs. So you spent a year traveling and you said you came back poor. Was this just sort of a round the world trip or where’d you go?
Amanda M: 02:41 Yeah, we had been living and working in South Lake Tahoe and uh, stuff like Tahoe doesn’t lend itself to many career roles. So my partner and I had been serving tables saved up and decided that we were headed out. So yeah, it took a year, lived in Australia, did a little bit of New Zealand, Southeast Asia, um, Japan, Central America before coming back and deciding to apply our degrees and put this, keep on life away for a little bit.
Andrew Kerr: 03:11 Okay. For a little bit. Awesome. And you settled in Seattle. So when you started looking for houses, did you know what house hacking was or did you want, you wanted some sort of income producing property or like how this whole crazy idea come up?
Amanda M: 03:27 Well, my grandparents had always owned apartments and I didn’t know we had owned them. I literally thought we were the janitors of them. I was always the oven cleaner, refrigerator cleaner, and I would make $3 an hour. And I was so excited I could go to Jack in the Box. Like that was dreams. And then when I got older, um, I stumbled upon the bigger, Bigger Pockets podcast after Mr. Money Mustache. So it was kind of working this job I hated living in a condo with my partner and wondering what in the heck are we doing? So we had, I had have some money saved and we decided together that the only way we could afford a house in Seattle was if we had some way to produce income. And so we were looking for duplexes, but that was just out of our price range. So we knew we needed a unicorn and to make it be willing to make it our own.
Andrew Kerr: 04:23 Awesome. So we’re both you and your husband on board or was it, you know, he had to convince you or was this your idea and you had to convince him? I mean, I always find that the relationship dynamics are really interesting.
Amanda M: 04:35 Yeah. So we actually are getting married next year, so he, uh, he’s a saint and tolerate a lot of this. I’m always onto the new idea, o babe, but I listen to this thing or check this out and he’s like, “If you send me one more article during my work, I’m going to put you on mute.” So yeah, I’m always, I was gung-ho and he is the person who’s willing to learn everything and get on board and have the grit to see a project through while I’m onto the next thing. So it’s kind of the perfect team in that way that he really holds me accountable once we’ve come up in both agreed to it to make it come into fruition.
Andrew Kerr: 05:15 Yeah. That, that’s awesome. Alright, so you had the crazy idea. You pulled him along into it. He was being a super supportive partner and you’re out looking for this unicorn in this high cost of living area of Seattle. How long did you actually have to look for before you found your unicorn of a home?
Amanda M: 05:32 Yeah, so he called it Groundhog’s day. Um, every weekend was spent looking at home. So it took us 10 months and 10 offers. Um, it was a grueling process and when we found our home, we were literally ready to hang up for about, we were, we knew we had exhausted all of our options and resources and we weren’t willing to compromise and get ourselves in any kind of position that was beyond our budget. And this was already at the max of our budget. So when this house came along, um, we, it was one day past the review date. So this is the Seattle timeframe where everything is on the market for, about four to five days. And then they review all of their offers and take the highest and best. So you pre-inspect every home, you do a sewer scope on every home before you even have an offer accepted. That’s your buyer responsibility. So every home that you’d put an offer in costs you, you know, 500 to a thousand dollars just to compete.
Andrew Kerr: 06:29 Oh my goodness. And that’s before the offer that, yeah, that’s a lot of work. And so you, did you have to do that whole process 10 different times?
Amanda M: 06:38 Yes.
Andrew Kerr: 06:38 Oh my goodness.
Amanda M: 06:40 Yeah. So we would joke, I call it the bachelor because you go and you fall in love with this amazing home and you just hope it picks you and gives you the final rose and it never did. Number 10 did.
Andrew Kerr: 06:50 Number 10 did. Awesome. Alright.
Amanda M: 06:54 Finally, we found love.
Andrew Kerr: 06:56 Awesome. Alright. So what made this house then like the unicorn? Why did it fit? I mean obviously it took you the 10th one to get it, but why did you decide to make an offer on this one? Tell me about just like some of the character, characteristics of the house. Like why’d you feel like this was going to be good for doing some sort of house hack?
Amanda M: 07:15 Yeah. This house is, was very ugly with the 1912 home that had had renters in it for the better part of the last 20 years. So no real love to it. Just worn down drop ceiling with asbestos and um, funky layout because it was originally a one bedroom house that they just kept adding onto. And then as we walked down into the basement, the basement was unfinished with seven and a half foot ceilings. And I was like, okay, we’re putting in an offer. And everyone’s like, did you just see the upstairs? Um, so that’s what was pivotal for us and it had an exterior access to the downstairs basement. So in my ignorance I thought it would be, oh, this is super easy to just build out just for out some walls. I’ve watched HGTV three times.
Andrew Kerr: 08:05 Yeah, HGTV definitely makes it look easy. But so it was really this basement with its own access that sort of sold you on it as in this could be this income suite for you.
Amanda M: 08:16 Yeah, absolutely. And we had other parameters. We wanted to be within a $20 Uber of downtown. And now that I’m a little bit older, I realized how ridiculous that ask was. But I was like, we are still going out. We still have a good time. And then we wanted to be in a good school district and in the city we didn’t want to have to commute. So, um, that was huge. And so again, knew we were looking for a unicorn. It had to have house hacking potential and be in a good area.
Andrew Kerr: 08:40 Awesome. And do you remember roughly what you bought for the house back in 2016?
Amanda M: 08:46 Yup. Uh, we bought it at $550,000.
Andrew Kerr: 08:50 And did you, what type of loan did you end up doing for it?
Amanda M: 08:54 So we, our mortgage companies still doesn’t believe us. Um, well they do, but I mean we were the last FHA loan that they had dealt with even up until now they said, so we did a 3.5% down FHA loan.
Andrew Kerr: 09:07 Awesome. And then what did-
Amanda M: 09:09 Probably, yeah, and truly weren’t qualified to buy a home in Seattle. Like looking back and I’m sure we’ll unpack all the costs, but you’re like, what the hell are we thinking?
Andrew Kerr: 09:19 Yeah, I mean 50..$550,000 is definitely a pretty big purchase. I mean, obviously you had to figure out something to be able to have a home in the Seattle market, you know, after the three and a half percent down. What did your payment roughly come out to on that house?
Amanda M: 09:36 About $3,300 a month with PMI.
Andrew Kerr: 09:39 Okay. And that’s sort of taxes, insurance payment, the FHA mortgage insurance and everything.
Amanda M: 09:45 All of it. Yep.
Andrew Kerr: 09:47 All right. So I imagine most people that are listening are like $3,300. That’s crazy. That’s a lot of money. But it’s not that crazy when you look at it in New York or Seattle or San Francisco. I mean, you know, what were you paying before when you were just renting a place?
Amanda M: 10:04 So we had had a great deal and that what was almost prohibitive in us actually being willing to move on and take on a project. We were paying only $1,600 which was very under market. So we were looking at getting like a two bedroom or something, I had a washer and dryer in the unit and we’d be paying probably about 24 to $2,500 So, but still a huge jump. We lost, a lot of lost sleeps, thinking about if that was a realistic number for us.
Andrew Kerr: 10:31 Yeah. And I don’t think you’re alone in that. I mean most people have that scenario of I’m buying a place and it’s going to cost me more than what I’m renting, especially in these high cost of living areas. So you know, the house was originally, it’s the old ugly house. It was originally one bedroom. It expanded on it, it had the basement. So before you did any work on the basement, you know how many bedrooms and bathrooms was actually in the home?
Amanda M: 10:54 Yup. It was two bed, one bath upstairs, 980 square feet.
Andrew Kerr: 10:59 Wow. Yeah. Half a million dollars for, you know, an essentially a thousand square feet.
Amanda M: 11:04 Yes. Yeah. I am from Tucson, Arizona originally. And so Googling that price on Redfin or Zillow of what you could get there isn’t, it’s not a good game to play.
Andrew Kerr: 11:16 Yeah. Yeah. Alright. So you bought this house, you bought it because the basement was there. Did the upstairs really need any work right away or was your plan to let’s get in. We’re fine with the upstairs. Let’s focus on the downstairs. Like what, what was your original strategy once you actually closed on the house?
Amanda M: 11:34 Yeah, the upstairs needs and still needs a ton of work, but it’s livable and it’s a good rental unit. So we focused all of our energy and dollars to the downstairs and that was, that was our sole focus. Not even painting the upstairs. And we finally did and we’re like, why didn’t we just paint the yellow kitchen white when we first moved in? But I was just laser focused on getting the basement.
Andrew Kerr: 11:56 Well I think that’s a really good point that you mentioned. You know, if you’re buying a property, paint makes a huge difference. And it’s one of those sort of low cost things that you can do to really sort of dress up a property. So if you’re listening and you’re getting ready to buy a house and you don’t have money to maybe redo a kitchen, redo a bathroom, fresh coat of paint, painting the walls, the ceiling, the trim can really liven up a property. But alright, so you’re focusing on the basement. Did you decide to do this on your own or did you hire out a contractor?
Amanda M: 12:26 So the great thing about the Seattle high cost of living expensive contractors, building boom, is that you can think you’re going to hire a contractor, but no one’s going to show up. So we got bids and quotes and just kept running into the same thing. Our materials were a 10th of what the quote would be. And so we kept getting put on lists and pushed back and pushed out. And we just, Matt, my partner is a saint and really spearheaded this entire project. So we did all of the work ourselves, um, excluding drywall, you can not hang drywall together. That is hard no for us.
Andrew Kerr: 13:10 Alright, so let’s really dig into this. So you know, my first question is, you told me the basement has seven and a half foot ceilings and if you’re trying to put in plumbing, that’s not a lot of room to build up the floor. So I’m guessing you had to dig down, is that right?
Amanda M: 13:26 Yeah. So, um, our date nights consists of Home Depot and renting tools. And so we dug down, um, we used a concrete rock saw and took out our foundation after three YouTube videos and dug down like four or five feet to put in the sewage ejector and run the sewage ejector into the sewer stack.
Andrew Kerr: 13:49 Wait, I just gotta stop you right there. Wait, so you guys actually, did that work yourselves too?
Amanda M: 13:55 Yeah, and I got to preface this with, my partner is a chemist, so he does molecular engineering. So I think he can do anything. In my mind. It was just another lab experiment, right? You just put in tubes together and it’s not the case. But, um, I ignorantly thought, well of course I can do this on, like look at this YouTube video.
Andrew Kerr: 14:18 YouTube and we got this. And then you actually went and rented the tools from Home Depot. So if anyone’s that’s listening, Home Depot actually has really cool and heavy duty construction tools that you can rent by the day. And so you went out and actually rented it. All this equipment that you didn’t have,
Amanda M: 14:37 Correct and even a step further Seattle has a really cool program. They have tool libraries. So we remember is that about three different libraries within 10 miles of us. So if one tool library didn’t have a tool, we’d go to the next one. And so you pay $40 to $50 for the year and you can rent or check out all the tools that you may need for a week or two weeks. So otherwise we couldn’t afford all of the tools and there was no way. So that really took away a huge hurdle in order to be able to do some of these projects that had such specialized tools that you needed.
Andrew Kerr: 15:11 I mean that’s a pretty cool frugal win of like, you know, free tool resources plus renting some at Home Depot. So I definitely give you some credit for that one.
Amanda M: 15:20 Yeah, it would be interesting cause you’re like, Oh the oscillating tools checked out for two weeks. We’ll put that project on hold. But cheap tool fall in some ways when you’re like, wait, that tool only cost $100.
Andrew Kerr: 15:32 Yeah. Yeah. All right. So here you are, your date nights are in the basement getting super dirty, grimy, doing work. I mean, how long did you actually spend renovating the basement and what were you trying to transform this space into? Was it, how many bedrooms, bathroom, full kitchen, kitchenette. Like just sort of describe what your goal was and how long it took you to get there.
Amanda M: 15:56 Yeah, we decided to only take on about half of the basements. We’ll make about a 550 square foot, one bedroom, um, apartment with a kitchenette, and no stove, just a simple under the counter, fridge, sink, um, bathroom and bedroom with a nice size master closet. So very simple, but with a little bit of character to make it interesting. So we expose the beams, left concrete floors, and we really repurposed a ton of materials from the used building supply store. So it has interesting, 1920s Porcelain sink and marble countertops that we picked up and found along the way. Simple city, modern city apartment that had some character.
Andrew Kerr: 16:47 And was it, was the goal to have it actually be this small studio one bedroom style apartment for like a long-term tenant or was your goal, Oh we can put this on like Airbnb or VRBO?
Amanda M: 16:58 Yeah, so Airbnb was our initial plan or we would live in it and rent out the upstairs. So that was the initial thought. And then eventually if that was to be our forever home, it would serve as a master suite and connect into the upper part of the home.
Andrew Kerr: 17:14 Okay. So you finished the renovation downstairs. I mean, how did dynamic play out in the relationship? I remember when I was building my affordable housing portfolio, I didn’t have a ton of money. So I put in a ton of sweat equity and I dragged along my then girlfriend to help me out with stuff and it didn’t always work out too well. She, she ended up mad at me a lot of the times and frustrating trying to work together to hang cabinets or do tile work and stuff like that.
Amanda M: 17:41 Yeah, so I ignorantly thought this would be a three month project. I love HGTV and that only takes three months right? So it ended up taking us about a year and a half realistically, start to finish. We finished by June after about a year and a half and it was a ton of work on our relationship. We literally started going in couples therapy and I love it because it just is to have one person who’s science-minded and detail orientated and one person who’s like, we’re going to make it pretty, this is fun onto the next thing. We really had to establish a good sense of communication and realistic timelines, which I don’t have.
Andrew Kerr: 18:27 I think that’s a great tip. The fact that, I mean, especially when you have two people working on it, whether it’s a romantic partnership or even a business partnership, you know, each person brings a different skill set together and then some folks have those big visionary ideas or really drawn to the cosmetic standpoint. And that’s what my wife and I, we figured out, you know, I’ll make sure the work’s done, negotiate with the contractors. I tell her, here’s the paint we need, here’s the type of tile, you know, flooring, you go take care of all of that. Or I need shingles for a roof. You go pick out the design. Like she loves that side of it. And as soon as we figured out that dynamic, we still have the occasional fights about real estate projects. But you know, I, I, I’m really glad you mentioned that because I think if anyone’s getting ready to venture on a house hack, figure out that dynamic of who’s good at what and then that’ll help save you a lot of arguments. And clearly you got through it because there’s a wedding next year that you mentioned, so.
Amanda M: 19:20 Yes, there is. And, um, no, it was a, now it’s been great because you can walk into a house or a property and be like, Oh, you know, and the panel needs to be updated or this isn’t to code or just all of the things that seems so daunting and overwhelming. When we were first looking at a home, we can actually look at it and put a number to it instead of just assuming everything is $10,000 or $5,000. So that’s been the biggest win in that. And we learned how to sail in the process.
Andrew Kerr: 19:51 All right, so you’re, you finished renovating this one. You did, you still live upstairs and then you rented the downstairs. You also mentioned a boat came into play at some point. Like, so you know, you’ve got this $3,300 a month mortgage payment you sort of suffered through for the year and a half while you did the work downstairs. Now, now what’s the game plan? How’d you run it out? Sort of talk us through all of that.
Amanda M: 20:16 So by the time we had finished, we had maxed out our credit cards and that was extremely stressful for me. I knew we could pay it off over the long-term, but I just lost sleep at night thinking about the interest in every day that went by how much more it was costing us. Again, I don’t think I was the wisest when it came to running all the numbers and understanding what the true costs of something like this would be. So, um, my office I worked at, I had a slip in front of it that was really inexpensive and I had idea that, Hey, if we just lived on a sailboat, we could run out the entire house and pay off all this renovation. So I, in the middle of the day, found this sailboat Craigslist and I have zero sailing experience or boat experience. And I decided that I was going to go buy it. And I called Matthew and he said, you’re okay. Go ahead. You know, if you think it’s a good deal.
Andrew Kerr: 21:12 Talk about a keeper. He’s just like, you come up with this crazy idea. And he’s like, okay babe, go for it.
Amanda M: 21:18 Honestly, he’s insane, I don’t know what knew what he’s signing up for, but we found this boat, it was $1,900 and I had done some research on fiberglass boats briefly and I was like, all right, this seems legitimate and bought this boat, learn how to sail by bringing it home. We motored it through the Juan de Fuca and the Puget Sound and it in its slip and it had no water or electricity. And we decided for, until we paid off all of our credit card debt that we would live on the sailboat. I had no water or electricity. You’re showering at work gyms and stealing the wifi from my office and essentially illegally camping on it while we Airbnb the upstairs and downstairs.
Andrew Kerr: 21:58 Uh, talk about a journey.
Amanda M: 22:01 Yeah. That is not the most glamorous part of our lives. And all of our friends legitimately thought we were insane. We lived in the city, would still be normal city things and go back to a sail boat and light a candle to go, ready to go to bed.
Andrew Kerr: 22:17 Oh my goodness. All right. So, I mean, you, you bought it for $1,900 bucks, so now there’s no housing cost per se other than the slip rental, right? Correct. Okay. So now how are you renting out your house? Is it Airbnb, long-term tenants? You’ve got the upstairs downstairs, let’s talk about that and some of those numbers.
Amanda M: 22:36 Yeah. So we rented out the upstairs, which is a two bed, one bath and the downstairs, which ended up being a one bed, one bath. And we also, so we had a listing for both of those spaces and then a listing for the entire space. Um, so we ended up with the upstairs with in the summer high months, we’d see about 4,000 gross in the upstairs and about 2,400 gross in the downstairs.
Andrew Kerr: 23:04 So it was all Airbnb, VRBO that, that sort of thing. No, no. Longterm tenants.
Amanda M: 23:10 Well, we, we have transitioned to, um, short term, longer term tenants now, but yeah, at that time to really get the, everything paid off. We were the cleaning people. So we just did whatever it took to get people in there and um, keep it on Airbnb where we could charge a more premium rate.
Andrew Kerr: 23:29 Yeah. So basically you were hustling, doing all the work, living on the sailboat. I mean, during the peak months it looks like you’re bringing in $6,400 a month and here you are, you know, having your mortgage costs all in at $3,300. So you know, you’re making like three grand a month. That’s pretty awesome.
Amanda M: 23:45 Yeah, it was, I was very fortunate that those numbers actually did work out as I had forecasted them. So we were, we were really happy to have all of that weight and debt off of our shoulders and be able to pay that off by, we moved onto the boat in June and we had paid everything off by October.
Andrew Kerr: 24:05 Oh wow. So I mean like you really tackled all that debt in the credit card bills. You ran up paying for the expenses to, to renovate the place.
Amanda M: 24:13 Yup. We did
Andrew Kerr: 24:13 That’s awesome. So before you decided on Airbnb, I mean, how’d you figure out what to actually rent the units for? I mean, how’d you decide on what a nightly rent is and how to price it and figure out that side of things?
Amanda M: 24:27 Yeah, just looking at all of the other rentals in our neighborhood and there are, trying to guess what their occupancy rates were. There’s a website called Air DNA. It’s a pay, it’s a paid tool, but they have some transparency into some of their data. So looking at that, looking at other rentals in the area, and honestly I think a huge leg up is if you decorate it, take the time to give it character and an aesthetic and not make it look like it just came from Ikea. You, so many people want that Instagram worthy accommodation. And I hate to say that and admit it, but I really think that’s what set our units apart. Um, so I really took the time to make sure it was furnished. It has the extra toiletries and amenities and we had a very beautiful backyard and a really walkable neighborhood. So those things really help set us apart. But yeah, just looking at the other rentals in the neighborhood and we started low to get all of that, those reviews so we could get five star reviews, but then it got to a point that you know, you don’t want somebody to price it so low that somebody is going to not care for your home and way you would. So you were happy to not get those bookings if the competition was below us.
Andrew Kerr: 25:37 Awesome. So yeah, I’ll, for anyone that’s listening, I’ll put Air DNA in the show notes. I’ve actually used it for the, the guest house that we rent out here in New Orleans that we have. It’s an awesome resource when you’re trying to figure it out, that initial pricing. And we did the same strategy as you, you know, we used Air DNA that said, here’s what you should market it at. We did a little bit lower to get started and get the first couple of reviews and then we moved it up to that. And then we actually went a little bit higher than what it suggested, just because we wanted to attract a little higher end of a clientele. Um, yeah. So awesome stuff. So how, how long did you actually end up living in the boat?
Amanda M: 26:15 June till October. Yeah. It gets cold and rainy in Seattle.
Andrew Kerr: 26:20 Okay. So you, you only live there for, you know, four, four months, five months or so?
Amanda M: 26:26 Yup. Only, but let me caveat that this boat was only 27 feet long, so yeah. And Matthew’s a little over 6’1″. So he was always crouched. Yeah. So, um, not a crazy amount of time, but long enough to really challenge our relationship and ourselves. Yeah. Yeah.
Andrew Kerr: 26:51 All right. So did you, did you end up selling the boat? You still have the boat? I mean,
Amanda M: 26:55 We actually just sold the boat, so I am following that. Um, took a position that brought me back to Lake Tahoe. So we knew we were going to transition back to Lake Tahoe. It’s always been our dream to figure out how to make it work here and an opportunity kind of fell into our lap. So we decided, okay, I’ll go. And I moved here in April and Matthew is still in Seattle, living in the basement of our Seattle house and we just sold the boat for $2,500!
Andrew Kerr: 27:28 Oh, so you actually made some money on the boat?
Amanda M: 27:30 Yes, there’s silver lining.
Andrew Kerr: 27:33 All right, so he’s living in the downstairs. Are you still running the upstairs Airbnb or you mentioned you transitioned to shorter, longer term tenants?
Amanda M: 27:43 Yeah, so Seattle has um, the number one trauma or trauma one, there’s some sort of trauma center in the region for um, hospitals. So that brings a lot of travel nurses to the area. So we rent the upstairs now to travel nurses because we leave it completely furnished.
Andrew Kerr: 28:04 Awesome. And are you making as much as you were with Airbnb or is it a little bit less? I mean, talk to me about that.
Amanda M: 28:11 It’s definitely less, but there is no turnover. You don’t have the same kind of wear and tear or the responsibility for check-ins or those types of things that we’re not having to communicate with the guest all of the time because we were doing all of that end to end. Has been helpful knowing that we’re moving away. So we’re hopeful to keep that model in both the upstairs and downstairs. Typically travel nurses prefer to live near the other travel nurses so they have that community. So that’s our goal is to have both travel nurses in the up and downstairs.
Andrew Kerr: 28:44 And is that the Seattle house right now? Is it sort of cost neutral or is it costing you a little bit of money with Matthew living in the downstairs? Or are you actually making a little bit of money over your mortgage cost?
Amanda M: 28:55 So our upstairs travel nurses pay about $2,700 a month inclusive of all utilities. So, um, we’re not making any money. And when we have a downstairs tenant, I think we’ll be about neutral because we do include all of the utilities just to keep it simple. So we, we hope to continue that model. And just as long as it pays for ourself, that itself, that’s a win for us.
Andrew Kerr: 29:20 Yeah. But I mean, even then though with Matthew still living in a high cost of living place like Seattle and for only six, $700 a month in a place that was just renovated, decorated really nice. I mean, that’s phenomenal. So yeah, that, that right there, I count that as a win.
Amanda M: 29:35 It’s really cute. He had the dream little bachelor pad in my opinion. I mean he worked his buns off for it. But yeah, it’s been, it’s been really nice to, and it has allowed us to, you know, take this next crazy journey.
Andrew Kerr: 29:48 All right, so he’s wrapping up in Seattle. You moved ahead to Lake Tahoe and you alluded to doing some sort of house hacking experience there. So did you immediately buy a place in Seattle or in Lake Tahoe or did you know you wanted to buy a place or like how’d you sort of stumble into this whole thing?
Amanda M: 30:08 Um, well, so I decided to take this role in Lake Tahoe, which again, is a dream location. And housing is really tough for long-term tenants. Affordable housing is tough. Most of the units up here are geared towards, um, vacation rental homes or second homeowners. So they’re really large and they’re not really in line with the median income of the local market here. So knowing that I actually wasn’t able to get a rental here and I, my friend had, here we go. My friend had a camper trailer that I stayed in for a couple of months until we found our house on Lake Tahoe. We have a dog and that really took us out of the running for all rentals. Even with great credit, great income. I could not lock down housing that was under $2,000 a month for myself. So yeah, I was actually really taken aback that it was so expensive. I, I had thought that by the time I had gotten here that that couldn’t be true and that was the truth. So, um, we were looking for a house we didn’t want to do as big of a fixer upper. And on one of his visits here, we found a dump in a great area that was walkable to like Tahoe. And he came up with a layout for it and decided we’re buying another fixer upper or so.
Andrew Kerr: 31:33 I like how you said we’re not going to buy a place that’s so much work. And then we found a dump and wanted to buy it.
Amanda M: 31:39 It was, yup. You know, here garages are gold, so it had a two car garage, walkable to the Lake, on a flat road, which is a big deal when it gets icy and snowy. So we thought about it for a month before we even offered on it. It’s been on the market for 200 days, a completely different scenario than our last. And we offered about a hundred grand under their asking price.
Andrew Kerr: 32:05 But you ended up getting it.
Amanda M: 32:07 We ended up getting it. So we went back and forth and it was nice because we had a walkaway number cause we didn’t like it. You liked it. It made sense. It had good bones, but we knew the work that would take it was a lot easier to kind of keep it at an arm’s length and say if it works out, it works out and not get that emotional attachment that you get after looking for 10 months and feeling like we have to get something now.
Andrew Kerr: 32:30 I think that’s a really good feeling to go though. I mean once you realize like that first time you buy a house, it’s so easy to get emotionally attached and then you sort of like, well, Hey, I’ve been through before. Like you want it, here’s my number, I’m not going above it and I’ll walk away if I want to walk away. It’s a strong position to be in negotiating for our property.
Amanda M: 32:49 Yeah, and it was a first for us and it was still, you know, that lump in your throat that, okay, we’re going to take on another mortgage on top of another mortgage and I still, you know, have issues with that. Even though we’ve done this little, the amount we should save in a piggy bank and incase for emergency funds, it still just feels like at any moment, you know, you’re overextended or what if somebody got hurt or those kinds of concerns that I more homework. I do. I think everybody has those. It’s okay. As long as you’ve done your diligence to save and work out the numbers unlike first time.
Andrew Kerr: 33:23 Absolutely. I think everyone, like you mentioned, has that, that fear, that little sort of voice in the back of their head of like what if, and you just do your due diligence. You run your numbers right. You double check, come, and then you push through. All right, so you found the dump. How much did you end up buying it for and what type of mortgage did you use? Cause you have the FHA on the other property, so you couldn’t use an FHA again on this one, right?
Amanda M: 33:47 Correct. Um, this property ended up, so it was listed at 599 we offered 505 and landed at 531. So another huge mortgage. It’s about 2100 square feet, a three bedroom, three bath. It’s a really funky layout. So there’s an entire base and not really a basement, but the garage has a living room area and walkout slider. And then the upstairs is three bedroom, two bath and lofted space. So we bought this house, we put 5% down using a HELOC from our last house, which we wish we could have saved up more. But given what we’re, we know we’re about to do with Matthew transitioning out of work, we needed to lock in a mortgage while we both had the incomes to support mortgages, we didn’t want to up all of our cash reserves knowing that we were gonna do a lot of work on this property. So our long-term plan is that we do the work and refinance. And you have a few other exit strategies should that not play out.
Andrew Kerr: 34:50 And then what, what’s your mortgage running right now on this property in Lake Tahoe?
Amanda M: 34:55 $3,700 a month. California taxes. And you know what’s interesting about up here is a homeowner’s insurance. Unfortunately with all of the fires, getting to coverage is a very difficult task. So the second that you enter escrow, you need to find somebody who’s going to insure your property. And there’s only about two insurers up here currently. Um, so it’s really difficult to find an insurer. Um, and that, that was a huge hurdle I wasn’t prepared for that kind of took us by surprise.
Andrew Kerr: 35:26 Oh my goodness. Yeah. So this is a pretty hefty mortgage payment. Obviously you’ve got good credit, you make good income, you can qualify for it, but even being able to qualify it for that can be a little bit scary. So, you know, did you want to do work right away or you know, you alluded to the J-1 visa workers coming in. Like, let’s just dig into that. Like what, what was your plan and why did you say like $3,700 a month mortgage is scary, but like, we’ve got this covered, we know how to hack, hack the place.
Amanda M: 35:56 Yeah. So the day, so we were, um, in Lake Tahoe, finding employees is a difficult task. But you know, we have so many large resorts, hotels, restaurants, and we swell up to doing about, I would say in 12 weeks, most of the businesses up here do about 80% of their revenue outside of the ski resorts. So that is a huge amount of business and volume that happens in the community up here. And we don’t have the workforce to accommodate that. So they bring in J-1 visas from Eastern European countries, Romania, Lithuania. Um, so a lot of them cannot find housing. And since I work in the hospitality industry, as we were deciding on this house, um, one of the managers brought it up in a meeting that, Hey, we have 10 employees that can’t find housing, is anyone know, reach out to people. And curiosity kicks in. And I’m like, Oh, you know what? What did they pay? Oh, on average between 4 to $500 a person. I was like, Oh wow.
Andrew Kerr: 36:58 Light bulb just went off.
Amanda M: 37:00 Yeah, you know, we were still in negotiations for this house. And I was like, okay, that makes things like that takes all of the stress off my shoulders. Here we go, like, Oh, let’s do this. So once we had, um, gotten past our contingency removal and it was clear that we were going to move forward, I reached out to a group of, um, J1 visa workers who needed housing. Explained the situation that, Hey, buying this house, here’s kind of the look and feel, you know, would 10 people want to share three bedroom, two bath? Because that’s not a realistic roommate count for me. But they were just happy to have housing. Um, so I, we closed on, we were supposed to close on June 4th. We closed on June 12th. They arrived at June 10th, so I had to put them up in hotels for a couple of days. Immediately got the keys boarded up the stairs to the lower basement-ish level. And that’s where I lived with the one bathroom. And so moved in three sets of bunk beds and a few queen beds, and got some couches and they lived here for the last three months.
Andrew Kerr: 38:13 Oh wow. So you had the 10 folks and they’re all, what? They ended up paying $4 or $500 a month or so.
Amanda M: 38:19 We had $450 a person inclusive of all utility.
Andrew Kerr: 38:23 So you’re bringing in $4,500 a month and here you are with your mortgage at $3,700
Amanda M: 38:28 Living with 10 Romanians who are between 21 and 23
Andrew Kerr: 38:35 That is definitely a fun experience. I can only imagine sharing the wall with a bunch of young guys.
Amanda M: 38:41 Yeah, it was, it was an, it was an interesting summer, but at the end of the day it was, you know, the bigger picture was we wanted to live in Tahoe and that took away a lot of the hurdles and made it so we could get into this home and still have our nest egg and not overextend ourselves.
Andrew Kerr: 38:56 Yeah. So you’re, you’re essentially breaking even pocketing a little bit of money here and now the winter season is coming up. Are you gonna do something again? I mean, I imagine more folks are coming into work for the ski season. I mean, what’s your plan sort of going forward?
Amanda M: 39:11 Yeah. So we, the lower level’s about 750 square feet with a bathroom and walk out area, washer, dryer. So we’re, I’ve since moved into the lap of luxury and moved upstairs and we will have four South Americans share the downstairs for the winter. So there’s an employee housing program up here because again, finding housing is a really, really, really tough. So with sharing everything that the space was and know it is not luxury by any means, but they’re excited to have housing and have the opportunity to come to the US and work for, I think it’s a 90 day period and get to explore all of our winters. So it’s kind of an exchange.
Andrew Kerr: 39:58 Awesome. And so then the four folks that will be living in the basement rental unit, what, what are you expecting to get for rent from the four of them?
Amanda M: 40:07 They’re going to pay $400 a person, including their utilities.
Andrew Kerr: 40:11 Okay, awesome. So you’re bringing in $1,600 so now you’re upstairs lap of luxury and it’s only costing you 2000 a month to be in another high cost of living area. So, I mean you almost cut your housing costs in half by running out that, that downstairs space.
Amanda M: 40:25 Yeah. And we could do more, but we are going to start renovations in January and we’re knocking out all of the kitchen and the bathroom and a bedroom to change out to change the layout in this property. So we knew that we were taking a more of a hit on the house hacking income in order to start our renovation process.
Andrew Kerr: 40:47 And what are your future plans then for the property for, for renovating and are you, are you going to gear it towards the sort of seasonal workers or a vacation home or are you still are going to keep the out roughly the same?
Amanda M: 40:59 We’re changing the layout a little bit, but our goal is to always so, and even in our Seattle property, we did this where you could combine the spaces. So we had a fake library looking book case in the Seattle house. And behind the shelves were double doors to the other side of the basement, but they’re completely locked and dead bolted on both sides. And with this property, with the stairs going down, we want to have a door that could be closed off and look like book case type thing or have it open and it could be one large vacation rental or you know, depending on how good our work is, maybe we’ll sell it. We don’t, we have three different ideas coming out of this property because it’s just such a different market.
Andrew Kerr: 41:43 Well I think that’s really smart. The fact that you’re saying like it could be, you’re basically creating multiple exit strategies and multiple uses for the property, which to me that gives you a lot of security for what you want to do with the property in the future. So I think that’s brilliant. The fact that you’re saying let’s divide it but make it so it can actually be used as a single shared space.
Amanda M: 42:03 Right? And that’s the goal. So we’re hoping we’ll keep a kitchenette downstairs, keep a kitchen up here. Again, I see myself moving downstairs so we can rent or Airbnb the upstairs and those seasons. We even talked about, you know, maybe we get a camper van now and we leave on holiday weekends and rent out our house because Tahoe has that kind of draw from neighboring communities. So we’d have a few different plans, none yet. And um, Matthew will be moving down in the next month. So I’m trying to give him a chance to catch his breath and actually decide what he wants to do before I’ve planned it all out.
Andrew Kerr: 42:41 Awesome. Awesome. All right, so God, I mean this is, blows me away. The different experiences that you had from high cost of living area to living on a boat to camper van, camper trailer to now another high cost of living area and I mean longterm tenants, traveling nurses, Airbnb, J-1 visa workers. I mean sort of you sort of thinking back through this house hacking period, I mean, what do you feel like your biggest success was or like a major win?
Amanda M: 43:10 Being flexible. I honestly, again, we live a very normal lifestyle outside of our housing. And I, and for me now it’s completely normal. And so many of our other friends who’ve been curious who have now gone into duplexes or other type of interesting properties are renting out spaces. But I think not feeling like entitled that we deserve all of this space or we deserve to have this or that has been, I don’t want to say our success because we’re still in it and who knows if it’s all these wins. But being, being different has definitely afforded us different opportunities and not feeling like we deserve to have a washer and dryer at every space or a dishwasher. Like those simple amenities that so many people are like, I can’t live without that. You know? Well, we’ve lived without them and most of the places we’ve lived and it’s allowed these other opportunities. So just staying flexible and not feeling entitled to 2000, the 2000s modern day.
Andrew Kerr: 44:19 Yeah. Do you think the year you spent traveling actually help get you ready for this experience?
Amanda M: 44:25 I mean, I think so because when you’re in a hostile or you know you’ve been on an overnight bus and some of those things, you’re like a bed? Wow. Hot water? Treat yourself! So I think some of that does help. And you know, coming out of living in South Lake Tahoe originally when you have a bazillion roommates, because all you guys want to do is ski. You’re kind of used to that lifestyle. So our lifestyle in place never crept. It’s all just gone into homes or projects or for me and Matthew traveling. Like if we’re not spending money on a renovation project, we want to go somewhere. So that’s been a huge goal for us.
Andrew Kerr: 45:07 Yeah. And that’s the thing I love about how hacking, like if you just reduce this biggest expense that most people have, it lets you do so many different things. Whether that’s, if you want to save, save, if you want to pay down debt, pay down debt. If travel’s your passion, then take that savings to help travel. So yeah, that’s really awesome. I mean, again, thinking back through this whole experience, what do you feel like your biggest challenge was? Or if you could actually go back and change something or do something differently, what that might, what might that be?
Amanda M: 45:37 The biggest challenge has been for me to have a realistic timeline. That’s been huge. Um, and not pushing my partners so far. I mean he is at a biotech startup where he works eight to eight. So coming home and every day and every weekend we’d be in the basement. That wasn’t realistic. We didn’t come up for air. And so much of our challenges were the fact that we, I had unrealistic timelines and we weren’t enjoying ourselves during the process. So with this property, he’s actually going to quit his job and take on the remodel and we have it broken down into phases. This time he’s going to quit his job and take on, this will be his job for the next three to six months, also while skiing in the mornings and kind of finding that balance again.
Andrew Kerr: 46:30 Yeah, spend time on the relationship. Actually have fun and get the renovation done. So I know you just said three to six months and you mentioned one of your faults was being too optimistic. It, is it actually gonna be three months or is it going to be closer to six months?
Amanda M: 46:45 It’ll probably be closer to nine months. Let’s be honest. I feel like there’s that part of me that feels like if I just give in to the nine months now, then it’s going to creep to 12 months. So if I say six months, maybe nine months is realistic.
Andrew Kerr: 46:57 Okay. I like that attitude. Three to six months and if you go over to nine. Okay, gotcha. All right, so obviously you’re right in the middle of a new house hack, but I mean, have you thought about, would you actually do another house hack again? If you were ever to leave, you know, the Lake Tahoe area?
Amanda M: 47:14 I love house hacks, I think they are such a great vehicle to make other things come into fruition. I mean, investing in real estate is not the same as it was for my grandparents when he put 18,000 down for eight duplexes. I still just, that baffles me. So this is one of those ways. And especially with different FHA programs or, um, I think FHA allows you to buy four properties for your first, um, multifamily. You know, there’s just so many other tools available. You’re willing to have, fix a leaky faucet, paint a few walls. So I, I would love to buy, uh, a traditional multifamily for our next property, but I don’t know. I, this market is so interesting. It already makes me nervous that we bought in at the time that we did. And, but I know with how hacking it kind of doesn’t matter because you can just take on more roommates and figure it out.
Andrew Kerr: 48:17 Yeah. In the short term, if the market does pull back and the value drops, you’re going to be fine because you figured out how to generate income with your housing.
Amanda M: 48:25 Yeah. So, yeah, I hope to keep on doing it until we get to 10, but I know that in our future we plan on having kids in a family. So I’m eager to hear from your, other, um, interviewees how they balance that out and tackle it. Because for me, I would love to keep going, but I can only imagine with kids how you upped the ante a little bit and have to be a little bit more realistic with time being and yeah, so.
Andrew Kerr: 48:52 Awesome. Well, thank you so much for being on and sort of sharing your experience, but before we let you go, we like to ask all of our guests a set of final six questions that we like to call the fast six, six questions, somewhat rapid fire succession. Are you ready for the first one?
Amanda M: 49:07 Hit me!
Andrew Kerr: 49:13 Awesome. What is your favorite personal finance blog book or podcast that you’ve read or listened to recently?
Amanda M: 49:20 I’m addicted to Mr Money Mustache.
Andrew Kerr: 49:23 Awesome. I think so many folks, especially in that sort of early personal finance era found Mr Money Mustache. He was one of my original favorites that I listened to as well. All right, number two. What’s your favorite real estate related blog book or podcast?
Amanda M: 49:40 I love Bigger Pockets. Every time I’m chipping tile or a home project, I just stream it the entire time and think about how much money I’m saving it. It’s like having my own little cheerleader in my ears while you’re grouting or tiling.
Andrew Kerr: 49:53 Awesome. Awesome. I like pairing those together with, while you’re actually doing the real estate work, you’re listening to a real estate podcast.
Amanda M: 49:59 Yes. Yeah.
Andrew Kerr: 50:01 Awesome. And number three, what’s been your favorite travel destination you’ve been to so far?
Amanda M: 50:08 Oh, I’m going to say Ethiopia.
Andrew Kerr: 50:11 Ooh, that’s not the usual one. What? What made you like Ethiopia so much?
Amanda M: 50:17 I had the opportunity to go. We were with the company I worked with building a woman’s health hospital and quickly the women there don’t have modern amenities. They’re such more community and they raise all their own food and you know, you originally go thinking, Oh, we’re going to help them and you leave like wait, they have it figured out, so
Andrew Kerr: 50:38 Awesome. All right, number four. What is next on your travel vacation list?
Amanda M: 50:43 Well, we’ve decided to get married and we were going to do a backyard wedding and we’d vetoed that plan and are going to get married in a Villa in France. Yeah. So just show up with a dress and a suit and have a nice catered meal and call it.
Andrew Kerr: 51:00 All right. So was that your idea or was it his idea to?
Amanda M: 51:03 That was his idea. I wanted to have a simple backyard wedding and a new beautiful Lake Tahoe location. You can walk from the beach and that added up quickly. So we are frugal as can be and with all of our points and all of that are like, wait a second, we can get a Villa for how much and invite 30 of our closest friends and family and just make it a little beautiful intimate experience. So that’s, he decided that once we have to grade our backyard, and so we were watching YouTube grading videos and he’s like, so how’s that Villa looking?
Andrew Kerr: 51:37 Awesome. I love the fact that this one was his idea at worse, all the house hack stuff was like, Oh, we’re going to buy a boat and they live in it. We’re going to do this house hack.
Amanda M: 51:44 Yeah.
Andrew Kerr: 51:46 Cool. And then what’s number five is, what’s your biggest bucket list item that you haven’t accomplished yet?
Amanda M: 51:53 Becoming financially independent.
Andrew Kerr: 51:55 Very cool. I think that’s a big one for a lot of folks. Have you started to play with any of the online calculators yet and see sort of how far away you are from it?
Amanda M: 52:03 Yes and no. So I have a trouble figuring out realistically what our net worth is with the property and all the different things. And I keep feeling like we get to a place and then use our cash for the next home. So, um, I’m trying not to focus on that because after our long marathon, it feels like we just want to make sure we’re also having fun. And that’s kind of why we came back to Tahoe and getting outside while we can. And that’s the goal now because otherwise I become obsessive about that number and how to reach it and what we’re gonna do and who’s shoes we’re going to sell to make it happen.
Andrew Kerr: 52:41 I like that approach though. It’s, it’s a goal. We want to work towards it, but let’s not go overboard and focus on it and still enjoy life. And if it takes a year or two longer than it would, no big deal because we’re going to enjoy it as we go along.
Amanda M: 52:56 Yup. Yeah. I think we keep seeing many vacations or periods where we just pick up and leave for a year as the more realistic path.
Andrew Kerr: 53:05 Awesome. And then number six, what is your favorite life hack?
Amanda M: 53:12 Ooh, favorite life hack is probably not picking the destination but picking the cheapest flight. So I think Kayak Explorer, if you go on and just put, plug in a few of your airports you’re willing to leave from and see where you can go for how much. I think it’s taken us to some of the coolest destinations everywhere is amazing and as long as you don’t have it in mind where you want to go or what time you want to go, there’s so many cool places to go. Pretty inexpensive.
Andrew Kerr: 53:43 Yeah. That’s so funny that you mentioned that because I do that. And then my wife and I will also look at the Google Flight Search where you can just be like Europe, October through November and it’ll say like, you know, going here is five grand, but going here is a thousand you know, so you get to play and pick with it and yeah, we get to explore a lot that way as well. So yeah.
Amanda M: 54:01 Well that’s honestly how we pick the Villa in France because you’re like wait flights out of SFO are 400 bucks round trip right now? Great. That’s where we go.
Andrew Kerr: 54:09 Yeah. Awesome. Well Amanda, thank you so much for being on the show, being so open and sort of sharing your house hacking experience with you and your, your partner Matthew. I love it. I had so many cool notes, so many questions that you answered for us. I loved how you just sort of hustled and said like, we’re going to live on a boat so we can pay down the credit card debt. We ran up to fix up the place and you know, even as you get a little later in life, it’s like, well, I can’t figure out housing in Lake Tahoe, so I’m going to go live in a camper trailer while I figure it out. You’re sort of basically nonstop persistent and hustling and didn’t seem to take no for an answer and just said, Hey, we’re going to make it work. It was awesome. Thank you again for being on the show.
Amanda M: 54:51 Oh, thank you so much for having me. This has been great and I’m sure Matthew deserves a gold medal.
Andrew Kerr: 54:58 I definitely think he deserves a gold medal.
Amanda M: 55:01 Absolutely. Well, it’s cool that you’re sharing this with everyone else because it’s not as crazy as people think once you just dive in.
Andrew Kerr: 55:07 Yeah. Awesome. Wonderful. Thank you again for being on the show.
Outro: 55:13 Thank you for listening to the house hacking podcast. For more up to date information on house hacking to access links and resources mentioned in today’s show, and connect with the guest and host head over to www.fibyrei.com that’s www dot fib Y [inaudible] dot com where you are house hacking journey [inaudible].