Room Rental House Hacking with Tiffany Alexy
Tiffany Alexy was a senior in college in Raleigh, North Carolina. She worked at Starbucks, Chick-Fil-A, and other part-time jobs to help her get through college. After realizing her income was mostly going towards paying for rent every month, she came across the best idea a college student could have: house hacking. Now, she has done three different house hacks, runs a successful real estate brokerage, and owns multiple properties. Starting from scratch, Tiffany explains her road to success for house hacking.
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Introduction: 00:03 Across the world. People have their housing costs taking 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: 00:30 With the average person spending over a third of their budget on a place to live in some individuals and high cost to live in areas like New York and San Francisco spending up to half of their budget on housing. It makes it incredibly hard to get ahead financially, so whether you’re looking to just have some extra fun money in your budget, you want to save for your kid’s college tuition, you want to have money to travel the world, or perhaps you want to dip your toe into real estate investing, or maybe you want to pursue financial independence- there’s no better place to get started than with house hacking. The podcast series is all about helping you reduce or completely eliminate your housing costs. The show will highlight folks from a wide range of backgrounds and situations who actually reduced or completely eliminated their housing costs via house hacking. In addition, we’ll have on industry experts to explain the different parts of house hacking ranging everything from working with a realtor to get financing for your house hack all the way to covering the best practices for managing your property and your tenants.
Andrew Kerr: 01:28 So today I’m really excited. I have Tiffany Alexy coming on the show. Tiffany is someone I consider a friend. She was just down visiting me and my wife here in New Orleans. She has been my go to realtor in North Carolina. She’s helped me sell and buy multiple properties. Tiffany first started getting into house hacking back in 2011 since then, she’s actually built her own real estate brokerage firm. Her team has experience with buying, selling property management, flipping homes, investing in rental properties. She’s up to eight rental properties herself. She’s done private lending and even real estate developing. She is what you call a power woman who is absolutely killing it and I’m really excited to have her on the show. So Tiffany, welcome and thanks for coming on.
Tiffany Alexy: 02:15 Thanks for having me, Andrew.
Andrew Kerr: 02:17 Great. So where are you at today in a, you’re, you still back in North Carolina, is that right?
Tiffany Alexy: 02:22 Yes, yes, I’m in Raleigh.
Andrew Kerr: 02:24 Awesome. Well thank you for taking the time this morning to talk with us and share a little bit about your house hacking experience. So a great place to start is can you just give us this sort of high level summary of your house hacking experience when it was, how old you were, what your situation was at the time?
Tiffany Alexy: 02:41 Sure. So I actually started house hacking in college. It was my senior year of college and I bought a four bedroom, four bath condo near NC state and ended up just living in one bedroom and renting the other three bedrooms out to local students.
Andrew Kerr: 02:54 Awesome. And you were in your senior year of college, so what, 21? 22?
Tiffany Alexy: 02:57 Yes I was 21.
Andrew Kerr: 03:01 Awesome. So let’s actually start digging into that. I’m really excited about this idea of house hacking. You know, I’ve done three house hacks myself. I’m working on my fourth one. Where’d you actually come up with this idea of house hacking or where’d you first hear about it?
Tiffany Alexy: 03:14 So it was something that my mom kind of put into my head and at the time it wasn’t really called house hacking. Um, not many people knew about it, but her idea was essentially to purchase a place near a college so that I could live there for four years and pay her rent. And then my brother who was four years younger than me, could live there for the next four years and pay her rent. So she would have tenants for eight years and then after that she would either rent out the property or just sell it. Um, so that’s kind of where I came up with the idea. It was really from her and I just took that idea and did it in Raleigh versus Chapel Hill where I went to undergrad.
Andrew Kerr: 03:52 Oh, that’s right. Because you did your undergrad at UNC and then your masters at NC state?
Tiffany Alexy: 03:56 Correct. Yeah, so I did it for grad school.
Andrew Kerr: 03:59 Okay. So why’d you end up picking the place that you ended up at?
Tiffany Alexy: 04:04 So it was kind of just a fluke. Honestly, once I had the idea in my head and I knew I was going to be in Raleigh for grad school the next couple of years, um, at that point I was like, well I know I’m going to be here. There’s no point in paying any rent for a couple of years and that could be building equity. So I honestly just went on Craigslist and was just looking at listings and I saw one, it was listed for like $ 112,000 at the time. And I was like, okay, well that makes sense. And I knew that if I had extra bedrooms I could just rent them out to help with the mortgage payment. So it was honestly, I bought the first property that I saw and didn’t know much about running the numbers or anything like that. It just made sense at the time. So I’ve definitely learned a lot more since then.
Andrew Kerr: 04:47 So at the time, it was, were you working at all or you were really a full time student?
Tiffany Alexy: 04:52 I was a full time student. I was working a little bit here and there at Chick-Fil-A, Starbucks, just a couple part time jobs and like tutoring, but, um, for the most part I was a student.
Andrew Kerr: 05:02 So you really just found the place and dived in right? Right away?
Tiffany Alexy: 05:05 Yes, yes. I honestly had no idea what I was doing, but I just kind of pulled the trigger and I was like, I’ll just learn as I go.
Andrew Kerr: 05:12 That’s awesome. And I love the fact that your mom actually originally had the idea, and you were like, “Oh this is great. I’m actually going to go ahead and run with this.” So that, that first place, you said it was a condo, is that right?
Tiffany Alexy: 05:23 Yes, yes. It was four bedroom, four bath. So each bedroom had an attached bathroom to it. Kind of set up like a university, like dorm style, a shared living room, shared kitchen, shared washer and dryer and then kind of like a little dining room.
Andrew Kerr: 05:38 Okay. And then did each individual bedroom, could you lock it or what? What was this separation between you and the tenants?
Tiffany Alexy: 05:46 Yeah, so each individual room could lock. Um, so if a tenant, you know, didn’t want the other roommates doing anything in their room, they could lock the door when they left.
Andrew Kerr: 05:54 So when you bought the place, how’d you actually end up financing that? Did your mom buy it? Did you buy it? Did you go out and get a loan for that?
Tiffany Alexy: 06:02 Yeah, so basically all of the above. Um, so they had required, I put, I had to put 25% down because I was a student and also because these condos were non warrantable at the time. Um, which essentially means the investor concentration was too high that they couldn’t repackage the loan to Fannie or Freddie. Um, cause it’s something like 99% investor owned in this neighborhood. So I had to put down a larger down payment, which was fine. And because I was a student, I really didn’t have much income to show for it. So my mom co-signed on a loan for me.
Andrew Kerr: 06:37 Ah, okay. So your mom co-signed on the loan and this was a normal, like you went to your loan officer at the bank or did you find someone online? How’d you find the loan officer?
Tiffany Alexy: 06:48 Yeah, so it was actually because my mom was in real estate as well. She has a bunch of loan officer contacts and so I just reached out to one of them. It was with BB&T and spoke with her and just kind of got the ball rolling from there.
Andrew Kerr: 07:01 Oh, that’s awesome. So, your mom was in real estate a bit, but at the time had you really, you hadn’t had your real estate license at this point?
Tiffany Alexy: 07:08 No, this was in 2011. Um, and so I bought this property first and it wasn’t until 2013 that I got my real estate license.
Andrew Kerr: 07:15 Okay, great. So you bought the property, you put 25% down, you know where that 25% down actually come from?
Tiffany Alexy: 07:22 Yeah. So my mom had actually set aside money for my college and I was fortunate enough that she had kind of the foresight to do that. But because I worked so much in college, I didn’t end up using the money for school. So I was able to get through school, paying my own way, just working. I worked during the summers, I worked essentially weekday nights and weekends.
Andrew Kerr: 07:46 It sounds like you basically hustled nonstop during school.
Tiffany Alexy: 07:48 I hustled. I like, I didn’t really have much of the college experience, but I was okay with that because I knew that I want to set myself up for the future. So yeah, I think at one point I had like six different jobs. Um, it was fun. It was a lot of fun. So I was able to kind of keep that money that she set aside for me, um, separate and that’s the money that I used for the down payment.
Andrew Kerr: 08:12 So did you actually have to convince your mom, of say, “Hey, you know, you put this money aside for me for college, I’m actually paying for college. Can we put this as a down payment for a house?” Did that take some convincing or was she on board right away?
Tiffany Alexy: 08:26 She was totally on board. You know, I just told her that that’s what I wanted to do and she said, you know, that’s a great idea. That makes total sense. And she supported me 100% on that.
Andrew Kerr: 08:35 I mean you had just mentioned like hustling nonstop through college, working multiple jobs, up to six different jobs at a time. Like where did that work ethic come from?
Tiffany Alexy: 08:45 Honestly, I ask myself that sometimes because I have no idea. It’s kind of like this manic drive. I think part of it is from my mom because she, she’s an immigrant, you know?She moved to the US when she was in her early twenties and she kind of had to work her way up. So I know some of it is just in my blood and I don’t, I honestly don’t know where the rest of it comes from. It’s just something that I find interesting and fulfilling. I enjoy working so, and I knew that my early years were for building so that, you know, once I get into my thirties and forties I could kind of kick back and relax a little bit more and not have to worry as much about, you know, paying bills.
Andrew Kerr: 09:25 Yeah. I wish I did that. I, at 20 years old, I was making enough money to buy my first house and I specifically remember my commission check that month that I closed on my house after taxes was 12 grand. I spent all 12 grand and that was basically most of my twenties. And then I had to work really hard in my late twenties and early thirties. So now life can get a little bit easier. But I wish I had that mentality that you had when you were younger. So when you were basically going through school, where were you actually living before you bought this house hack, this four bedroom condo?
Tiffany Alexy: 10:01 Yeah, so in college I essentially just rented rooms. I did like subleases from other students, which worked out well for me cause I could usually get a cheaper room. Um, in a good location because a lot of the time when students, you know, they’ll sign a 12 month lease and then something will happen – they’ll either decide to study abroad or you know, in one situation I had, I met a girl, um, and she had this really dope room, like on Franklin street, basically in Chapel Hill and she wanted to move in with her boyfriend.
Andrew Kerr: 10:33 Well, one quick side note, for folks that don’t know North Carolina and don’t know Chapel Hill, Franklin street is like the place to be restaurants, bars. Like anytime a school is in session, that is where you want to go to be seen and go out.
Tiffany Alexy: 10:49 Right. Yeah, exactly. It’s the perfect location. Um, so I found this room and she was wanting like $750 for the sublease and it was a shared bathroom and everything. And I knew that situation she was in and she wanted to get out because she wanted to move in with her boyfriend and it was very urgent on her part. So I said, look, you know the most that I can afford for this as $500 a month, you know, talk to your parents and let me know I can take it tomorrow basically. And so she wanted out enough that her parents covered the rest of it every month. So I paid basically the same that I would have been paying like off campus, you know, living 30 minute walk away to live on Franklin street, which is pretty awesome.
Andrew Kerr: 11:29 Look at you doing some strong negotiating already so young even before you did what most people think of the normal house hacking, you are already sort of hacking your housing by saying like, I’m not just going to normally rent an apartment or rent a room. Like I’m going to target these subleases because folks are in a situation where they just want to move, go onto their next phase of the life, and you can come in and you’re getting places below market. That’s awesome.
Tiffany Alexy: 11:53 Right? Yeah, yeah. I took advantage of the situation and I helped them out too by filling the room and, and they weren’t having to pay the whole 750 in rent for a room that she wasn’t using. So it’s kind of a win win.
Andrew Kerr: 12:07 Awesome. That’s fantastic. So over the time you were in college, were you usually averaging about $500 a month for housing?
Tiffany Alexy: 12:15 Yeah, yeah, that’s, that’s about right. Um, I never went above 550.
Andrew Kerr: 12:20 Okay, that’s great. So if you’re spending 5 or 550 a month on housing, now you bought this four bedroom condo over by North Carolina State in Raleigh. What was, and it was $112,000 purchase. You put 25% down. What was your actual payment, your taxes, your insurance and everything on the property?
Tiffany Alexy: 12:39 Yeah, so my PITI on that was like 492 per month and then the HOA was another 200 at the time. So all in I was right around $700 a month.
Andrew Kerr: 12:51 Okay, so for folks that don’t know, what is PITI?
Tiffany Alexy: 12:54 So it’s principal, interest, taxes, and insurance. So it’s essentially your full mortgage payment every month.
Andrew Kerr: 12:58 Great. And then on that mortgage, did they require you to escrow your taxes and insurance, or?
Tiffany Alexy: 13:04 Yes, they did.
Andrew Kerr: 13:04 Okay, great. And then you said HOA. So for folks that don’t know what an HOA is, what is that?
Tiffany Alexy: 13:11 It’s the homeowners association. So because this was a condo, they have an HOA, a homeowners association, that takes care of most of the exterior maintenance. This one, the buildings were actually metered so that it was just one water meter. So the water was actually included in the HOA dues. So, it just includes landscaping, you know, parking lot maintenance, um, the roof siding, anything exterior that needs to be repaired.
Andrew Kerr: 13:41 That actually sounds like a pretty good situation with, I know a lot of folks don’t like a homeowners association, but if you’re young and you’re in college and you don’t know how to do maintenance, you don’t want to cut a yard, you don’t want to have to worry about landscaping- it’s sort of nice to have all of that taken care of for you.
Tiffany Alexy: 13:56 Yeah, I made it super easy because all I had to really worry about was, you know, if the appliances broke, I had to replace that. Or if anything inside, you know, paint carpet needed to be done. But other than that, it was pretty low maintenance.
Andrew Kerr: 14:08 Okay. So you know, you’re around $700 a month for your principal, interest, taxes, and insurance, your homeowners association, the HOA is actually paying the water. So what about utilities? Did you have electric and like cable internet and did you pay that all yourself or did you split that up with the other tenants?
Tiffany Alexy: 14:28 Yeah, so when I first started doing it, um, I essentially took the electricity bill and then we split it four ways. So whatever the bill was, it was usually between a hundred to 150 bucks. And I would just tell them every month, Hey, add, you know, $25, $35 onto your rent for electricity and internet as well. So we didn’t have cable because we mostly just streamed like Hulu, Netflix. So I would just take those two bills and add them up and divide by four and just text everybody and say, “Hey, this month utilities are X, you know, please add that on top of your monthly rent.” So they would just write me a check for the whole amount.
Andrew Kerr: 15:06 So when you bought it, were there existing tenants in there or was it completely empty and then you had to find tenants? What, what was this sort of situation with that?
Tiffany Alexy: 15:15 It was completely empty so I moved in and I had to find the other three tenants to live with me.
Andrew Kerr: 15:20 So, but before you found the tenants, did the property need any work or was it essentially move in ready condition or did you have to paint, or flooring, carpeting, any of that sort of stuff?
Tiffany Alexy: 15:29 It was essentially move-in ready. At that point, I think I got like a $2,000 carpet allowance to replace the carpet. So that’s something that I did before I moved in. But I don’t remember it like being in bad shape at all. I just needed very, very minor things.
Andrew Kerr: 15:46 Okay. With that carpet allowance, is that something you negotiated in the contract when you were buying the property or is it something that they offered? If you know you buy it at this price, the carpet allowance is included?
Tiffany Alexy: 15:57 Yes, it was something I negotiated in. So at the end of the day it was listed for 112. And I got it, our contract price was 103,000 and then it had the $2,000 carpet allowance. So essentially it was 101,000
Andrew Kerr: 16:10 And then what about closing costs? When you bought that, did you cover the closing costs on top of the 25% down payment or did you have those included in the loan?
Tiffany Alexy: 16:20 So I covered the closing costs. The $2,000 like carpet allowance was considered technically a closing cost credit. All the other closing costs I covered.
Andrew Kerr: 16:29 Okay. All right. So you bought this place, just needed a little minor work, some carpet, little things here or there. You put the 25% down, you pay the closing costs. It was completely empty. You had to go out and find the tenants. How’d you actually find the tenants?
Tiffany Alexy: 16:44 So I got lucky. One girl actually knew from UNC and she was going to grad school at NC State and we had been in like an Italian club together. And so I knew her and you know, there’s always that risk factor of living with a friend. But I knew her well enough to know she was pretty like drama free. So I said, “Hey, do you want to move in with me?” And she was looking for a place at the time, so it worked out really well. And the other two rooms I actually posted on Craigslist and I found tenants that way.
Andrew Kerr: 17:11 Okay. And what’d you do for the listing on Craigslist? I mean, how’d you word that? Or would you use the, basically wha- what would the Craiglist ad look like?
Tiffany Alexy: 17:22 Yeah, so I just said, you know, um, single room with attached bathroom available for rent in a four bedroom shared condo. You know, this is the monthly rent. Utilities get split four ways. Washer and dryer in unit. There’s parking included, you know, 10 minutes to downtown, 10 minutes to NC state, convenient location. Included some pictures to show that it was a nice place and that was essentially it. And I just kind of started fielding the inquiry from there.
Andrew Kerr: 17:49 So the two other roommates, did you, that you picked out, were they both a female, male? Did you have like a sort of a mixed coed setting in there? How’d you decide on the dynamic of what you’re looking for? So when people actually replied, how do you be like, “Oh no, this person, they are definitely going to be a creep. I don’t want them living in the same place as me,” or, “Hey this person sounds like they would be a good tenant.”
Tiffany Alexy: 18:12 Yeah. So essentially I started weeding out through email first and you can kind of tell, you know who’s being serious and who’s not. I was looking for um, like somebody who actually put thought in their response versus just saying like, “Hey, is the room so available?” And from there the people that I thought would be interesting, um, I actually met them for coffee and just said, “Hey, let’s meet up. Let’s get to know each other and see if this might be a good fit.” And that’s something that they could appreciate too because it would be going into a situation living with people that they didn’t know. So that point, that’s when I met Pat and Bailey. So Pat is a guy and Bailey’s a girl, so it was essentially one guy and three girls living in this four bedroom condo. Yeah. Funny story is, so Pat and Bailey are married now. And that’s how they met!
Andrew Kerr: 18:58 So you almost played a little matchmaker there as well. That’s a really cool story and I really liked the fact that you know, you sort of weeded people out. You sort of do this first filter of okay, they’re just sending a really quick response. These people are actually interested, they’re doing a more thoughtful response. Then the next step is move on. Let’s go meet out in a public place, have coffee so we can chat and we can just sort of see if there’s some sort of vibe. Especially with a room rental situation. You know, you don’t have to be best friends, but I think if you at least have some sort of connection, you’re like, “Okay, you seem a reasonable and I think we can get along.”
Tiffany Alexy: 19:32 Exactly. Yeah. It’s a good idea to do that. Just so you can kind of get on the same page about, you know, any pet peeves or any weird things that they do because living with somebody kind of takes it to a whole nother level, so you have to be aware of that knowing you know, even when you meet them for coffee, even if they seem nice, there’s still going to be stuff they do that annoys you. It’s just part of living with other people.
Andrew Kerr: 19:54 Yeah. Do they soak their dishes for like two days at a time or do they actually wash their dishes right away? I mean, luckily with the place you had, everyone had their own bathroom, so I feel like the two biggest messiest places back when I was younger and I had roommates, it was like the kitchen and then the bathroom. If you had that shared bathroom where if one person was a neat freak and one person was completely messy, that always clashed. But I like the fact that you had that four bedroom, four bathroom. So really you’re only sharing the common space and if you’re tired of folks you can just go in your room and shut the door and have your own peace and quiet.
Tiffany Alexy: 20:24 Yeah, that was definitely something that I looked for in my house hacks. Um, I knew that, you know, once college was over I was like, I am done sharing bathrooms with people. I’m just kind of in a different phase of life. Um, and I don’t want to be sharing that space with anybody, especially if they’re messy. So you know, you can still house hack and have your own bathroom. I usually just take the master bedroom and then have the other roommates or tenants share a bathroom.
Andrew Kerr: 20:49 Awesome. All right, so you found the three tenants. One was a friend. Two you found on Craigslist. It was three women, one guy. What were you charging them for rent?
Tiffany Alexy: 20:59 So they each paid 350 for base rent. And then utilities would just get added on top of that. So it usually ended up just under $400 a month per person.
Andrew Kerr: 21:08 That’s not too bad. So total rent, you’re collecting 1,050 and then you’re splitting the utility. So you know what you’re bringing in 1,050 and you said all in with your HOA and your mortgage payment was about $700 a month,
Tiffany Alexy: 21:25 Right. Yeah, exactly.
Andrew Kerr: 21:26 Wait, so you were actually making money. Not only did you like reduce your housing costs or eliminate them, you are actually pocketing money every single month.
Tiffany Alexy: 21:35 Yes, I was and I was living for free.
Andrew Kerr: 21:37 That is awesome. That is so cool. So my next question then is, you know, you’re saving you, you were basically paying five, 550 a month. So you wipe that out of your budget and now you’re pocketing, you know, three, 350 a month or so. You’re using that to help cover your quarter of the utilities. So you’re actually walking away with a couple hundred dollars a month. That is awesome. Did you set any of that money aside specifically for maintenance or bigger improvements or vacancy? Like, well at that time, what was sort of your, your mindset was that $300 that you went to go out and have Starbucks every day or you know, what’d you do with that money? What was your sort of thought process at the time?
Tiffany Alexy: 22:22 Yeah, no, I back then I lived very, very frugally even after college. Um, so yes, I liked the Starbucks and I liked, you know, all that stuff, but I figured out a way to kind of engineer my life so that, you know, things that I enjoyed, I also could get a discount on. So that’s why I ended up working at Starbucks, honestly, is so I could get free drinks and free pastries like anytime I wanted. But with that extra money, yeah, I definitely set it aside. So I would typically try to set aside a couple hundred dollars a month for repairs. And once I decided, you know, I was about a year into it and I was like, you know what? I think I’m going to continue with this real estate investing thing. I just took that money and kept setting it aside because I knew that I would be, you know, need another down payment if I wanted to do it again.
Andrew Kerr: 23:08 When you originally bought it, you didn’t, did you have any of this sort of like grand ideas of becoming a big real estate investor? It was or was it just this, you know, I want to find a cheap place to live or have a place to live that’s free.
Tiffany Alexy: 23:21 Yeah. So when I initially bought it, I had no idea what I was doing and I had no plans to become a real estate investor. That wasn’t something that I really decided that I wanted until a couple of years after that first purchase.
Andrew Kerr: 23:35 So how long did you end up living in that place?
Tiffany Alexy: 23:39 Um, I was there for about three years
Andrew Kerr: 23:42 And when you bought it, did you have any sort of exit in mind or was this, you know, I’m buying and I’m going to live in here and that was sort of all all you had in your mind at the time?
Tiffany Alexy: 23:51 Yeah, so I didn’t really have an exit strategy. I knew that because of the way that it was set up, the four bedroom, four bath style, that it would make a really great rental. So it was something that I just planned to keep until I decided to sell it. But I didn’t have a certain exit strategy or I didn’t say, you know, in three years or in five years I’m gonna sell it. I just kind of rented it and then just waited to see what would happen.
Andrew Kerr: 24:14 Awesome. I mean, you’re already making money with just you living in one of the rooms and renting the three others. So when you moved out and rented that fourth room, I mean that’s an extra 350 or 400 a month you’re bringing in on top of the profit that you already had.
Tiffany Alexy: 24:27 Yeah. So once I moved out, that property turned into a cash cow essentially.
Andrew Kerr: 24:31 Awesome. All right, so you bought that one, you lived in there about three years. It sounds like there’s another house hack that happened after this.
Tiffany Alexy: 24:39 Oh yeah. Um, so I actually bought another condo unit across the street and it was a three bedroom, two bath. And in between that I had kind of, I’d moved to Charlotte to kind of explore a career opportunity that didn’t work out. So I moved back to Raleigh and at that point I had already rented my room out in the first property, so it was fully rented and I moved in with my mom for a month and I couldn’t take it anymore. So at that point I was like, okay, I need to buy something else and do it again. And that’s when I found this condo in Trailwood Heights, which is literally like across the street from U Woods. Um, where my first condo was. So I just did the same exact thing. It was a three bedroom, two bath. So I lived in the master bedroom and then I rented out the other two bedrooms to two roommates.
Andrew Kerr: 25:25 Do you remember roughly what you bought that that one for?
Tiffany Alexy: 25:28 I want to say it was like $95,000
Andrew Kerr: 25:32 Oh, okay. So with that one, did you also have to put down a larger down payment because of the investor concentration that was in there?
Tiffany Alexy: 25:41 Yes. Yes I did. I want to say it was like something like 25% again.
Andrew Kerr: 25:45 Okay, awesome. All right, so your three bedroom, two bathroom, you’re living in the master, you’re making the two other roommates sharing it. What was your down, you had to do the 25% down payment, but what was your actual mortgage insurance or taxes, or payment on that one?
Tiffany Alexy: 26:01 Gosh, I want to say it was close to what I was paying for the first one. So it was something like maybe five or $600 a month.
Andrew Kerr: 26:09 And did that one also have a homeowners association dues that you had to pay every month?
Tiffany Alexy: 26:13 Yes, those were 200 as well and they’d gone up since then. So that was back when I was living there, it was 200. they included water and included basic cable. There was a pool, so it did have some amenities.
Andrew Kerr: 26:26 Nice. All right, so that one, you’re six, $700 a month or so. Total payment, homeowner’s association. What were you renting the other two rooms for?
Tiffany Alexy: 26:35 So I charge them 450 each for base rent. And then it was the same situation again where electric and internet were split between the three of us. So it usually ended up being a little bit less than 500 a month for each of them.
Andrew Kerr: 26:48 So really you’re paying a third of your basic utilities that aren’t already covered by the HOA. You got a $700 a month or so payment. And you know if you’re charging $450 each, what you’re $900 a month, so it didn’t, you’re already making money and you’ve got the other one you moved out of that now has four tenants in there for the different rooms and you’re bringing in that one and have that cash cow going as well.
Tiffany Alexy: 27:12 Exactly. Yeah. So it definitely started snowballing.
Andrew Kerr: 27:16 Talk about a way to set yourself up financially when you’re in college and just coming out of college, if you can eliminate all those housing costs for that big chunk of your 20s just really gives you a big step up.
Tiffany Alexy: 27:29 Absolutely.
Andrew Kerr: 27:30 So with that, so you’re, you’re making some money on this other one you’re saving money on, on your new three bedroom place and actually making a little bit of money. What was the next step after this point? Was this again, you’re starting to save and thinking like, Hey, I’m going to do some more real estate, or did you start putting money in a retirement account? Like what was your mindset and your thought process at that point?
Tiffany Alexy: 27:52 Yeah, so at that point, career-wise, I didn’t really have an idea of what I was doing yet. Um, cause I had just basically gotten out of grad school. I’d explore some career opportunities that didn’t work out. And so I, that’s shortly after I got my real estate license. So I was exploring going into real estate full time as a broker. Um, and so that’s something, you know, having that house hack really helped me lower my monthly cost so that I could take more risks in business. I could start my own business because I knew I would have enough money at the end of the month to eat. So it really helped me be more flexible with my career choices too already.
Andrew Kerr: 28:32 Yeah. I mean if you don’t have to worry about having a place to sleep, you know, if you have that roof over your head and it’s not costing you any money at all, I mean, it’s a pretty strong place to go and start a business or be like, you know what? I really don’t like this job. I don’t like this boss or this. I thought this career is for me. Nope, I’m going to make a change. It’s so much easier to do that when you’ve got that freedom. And not only did you have that, but then you had the cash coming in from the other property. So it’s, you have the place to sleep and you knew you could always have some money to eat.
Tiffany Alexy: 29:00 Exactly. Yeah. And so that’s really what helped me get jump started into real estate because it does take time to make money as a real estate agent, usually a couple of years to build up your pipeline. And so there were some months where I didn’t have commissions coming in. You know, the first six to nine months I didn’t have commissions. And so that rental income is really what pushed me through. And of course I had, you know, the part time like side hustles and side gigs that I did just to kind of have some spending money. But it was really that strategy that helped me kind of get started in my career.
Andrew Kerr: 29:33 That is awesome. Well I think that sort of wraps up most of the big questions and going through your house hacking experience, you know, I’ve got a couple of last couple questions for you. You know, obviously what would you say was your major success or your major win with your sort of house hacking experience there?
Tiffany Alexy: 29:51 Gosh, it was really a low barrier to entry to get started in my real estate investing career. And what really helped was being able to live in my property. So I got to know the property, you know, cause every property has its own little nuances, its own little quirks. And so by living in them I knew what those quirks were and when I ended up renting them out, I kind of had an idea of what the property was like before, you know, having it rented out by other tenants.
Andrew Kerr: 30:19 Absolutely no better way to get experience with real estate investing. You know, instead of going and buying like a four unit, a five unit or apartment building, you’re saying I’m going to actually house hack. And that gave you the experience to get ready for doing bigger real estate investing deals.
Tiffany Alexy: 30:34 Right. Yeah. And a side benefit of what happened was, you know, yes, the rent, their rental income was amazing, but I also bought at a time, luckily enough that the market was growing. Um, so I bought kind of near the low end of the market in 2011 where there wasn’t really much moving. Um, I think the first place that I bought was on the market for a month, probably a couple months. So that’s how I was able to negotiate a lower price. But you know, since then it’s been eight, seven, eight years and they’ve appreciated significantly. Um, so I actually sold, I bought another unit in U Woods that I didn’t live in. Um, but I sold both earlier this year.
Andrew Kerr: 31:16 Yeah. And something I didn’t mention earlier, but actually my second house hacking experience was one of those four bedroom, four bathroom condos over by NC State. I did the same thing, moved into it for a year, had the three tenants after my year was up to meet the, uh, satisfy the loan requirement. I moved out and I had that cash cow. So I, I’m very familiar with those, uh, condos over there. All right.
Tiffany Alexy: 31:37 That’s the way to do it.
Andrew Kerr: 31:38 So, you know, thinking back through your house hacking experience, what was your sort of biggest failure or your biggest challenge?
Tiffany Alexy: 31:45 I would say the biggest challenge is living with your tenants. So there is kind of that power dynamic sometimes when they know that you’re the landlord and you’re also living there. I’m pretty laid back when it comes to you know, living arrangements. Just because I’ve studied abroad, I’ve lived with so many different people that it doesn’t really phase me unless it’s, you know, you do something extreme, but there’s still that little annoyances. You know when you wake up and there are dishes in the sink or if you know, if you’ve taken out the trash the last five or six times and nobody else has. So little things like that, it can get kind of under your skin sometimes, especially if you’re the landlord and you’re like, well you know, these are my tenants and I’m living with them. But it’s just a matter of like open communication and making sure that everybody is on the same page. And usually, you know, if you approach them nicely and politely about it without, you know, attacking them, it goes a lot smoother.
Andrew Kerr: 32:40 And then my third question is, would you do it again? And clearly the first one worked well and you did a second one. Have you done any other house hacks then? Or would you ever do one again in the future?
Tiffany Alexy: 32:49 I’m actually house hacking right now. So yeah, um, so I have a three bedroom town home and I’ve got two tenants, you know, renting the other two bedrooms and I’m in the master.
Andrew Kerr: 33:01 Awesome. So clearly house hacking is the way to go for you. That’s really cool.
Tiffany Alexy: 33:05 Yeah. You know, it’s not something that I, I don’t know if I’ll do it forever. Um, hopefully not. But right now, you know, when I’m single and you know, it’s, it just makes it easy. So there’s no better way to own a house in my opinion, then you have tenants paying down your mortgage for you.
Andrew Kerr: 33:24 Yeah, absolutely. Absolutely. All right. So before the show ends, we had these final six questions that I like to ask every single guest in the rapid fire questions. So we’ll just ask them, give us your quick top of your head. What comes to mind when we go through them. You’re ready for it?
Tiffany Alexy: 33:40 Yes.
Andrew Kerr: 33:46 All right. So what is your favorite personal finance blog or book that you’ve read recently?
Tiffany Alexy: 33:52 Mr. Money Mustache. That’s how I got into essentially the whole FIRE movement. Um, and choose FI was finding Mr. Money Mustache, his blog.
Andrew Kerr: 34:02 Awesome. Awesome. So for folks that are listening that don’t know a FIRE is financial independence retirement extreme or sort of choose FI is another big blog that’s out there, they’ve got a fantastic podcast. It’s all about choosing to pursue financial independence. All right, so second question. What’s the favorite real estate related book or blog that you’ve ever read?
Tiffany Alexy: 34:24 Bigger Pockets. Um, so that’s essentially like hands down the best real estate resource that’s out there. There’s a forum, there’s blog posts, there’s podcasts as well. And it’s just all about real estate and real estate investing.
Andrew Kerr: 34:37 Yeah, I really love some of their webinars that they do, especially for new folks wanting to get into real estate investing. They do a great job with them. Uh, earlier in my real estate investing career. I love listening to all of those. Alright, so third up, what is your favorite travel destination you’ve been to so far?
Tiffany Alexy: 34:55 Um, so far I would say Spain. I studied abroad there in 2010 in Seville and it was just like a transformative for me. That’s somewhere that holds a special place in my heart.
Andrew Kerr: 35:07 Yeah. We’re a big travelers ourselves. I think now I’ve been up to like 34, 35 different countries and every year we try to go to a couple Spain’s on our list that the problem is I just fall in love with places and I need to keep going back and can’t knock the new ones off.
Tiffany Alexy: 35:21 Yeah, yeah. That’s the debate. I always have to.
Andrew Kerr: 35:25 Yeah, go back to a place you love or try someplace new. And that’s actually brings me to the next question. What’s next on your travel vacation list?
Tiffany Alexy: 35:33 Honestly, I want to see more of the US I’ve traveled so much outside of the US that I realized, you know, a lot of the West Coast and like the Pacific Northwest, I haven’t been to and haven’t seen. So I’d like to go to Seattle, Portland, even to go back, so I was born in Arizona and haven’t really spent much time there. I would like to go back to Arizona, Vegas, you know, kind of do more of the West Coast thing since I’ve explored so much of the world but not, you know, my own country.
Andrew Kerr: 35:58 Yeah, I definitely understand that. I’m actually in the process of trying to convince my wife to do a little sabbatical, rent a giant RV and spend a year traveling around the US but she’s not sold on the idea yet. I still got to work on her a little bit more.
Tiffany Alexy: 36:12 That’s awesome!
Andrew Kerr: 36:13 All right, so our fifth question is, what is the biggest bucket list item that you haven’t accomplished yet? This could be travel, personal finance, sort of anything that’s sort of big out there that you’ve been wanting to do and you’re working towards.
Tiffany Alexy: 36:27 I guess. So there are a couple things. One would be travel related, so I want to see more of the world too. I want to see Greece. I think that’s probably number one on my list. It’s somewhere that I’ve always wanted to go, but then I’ve also put off, cause I’m like, no, I should see more of the US first. Um, I also weirdly enough want to go to, um, it’s Moraine Lake in Canada and it’s seems like super random, but I’ve been seeing more and more photos on social media and it’s, it means something to me because I had a house on Lake Moraine Place in Raleigh and I never knew like what that was, but I looked it up and I was like, Oh wow. It’s an actual place in Canada and it’s beautiful, so I want to go see it, cause that’s where I lived.
Andrew Kerr: 37:13 Yeah, up in Banff. I’ve been seeing all those photos all over Instagram recently. And oddly enough, when my wife and I were looking at getting married, we were actually looking at Banff and up in that area. Just the timing of the year, snow was already going to be coming down. So we ended up picking a place in Colorado instead. But yeah, that’s on one of my travel lists to get to as well. It’s looks so gorgeous from all the Instagram photos.
Tiffany Alexy: 37:36 Yeah, it does. It’s beautiful. And I would say my last one that’s kind of more like real estate related, was, would be an apartment complex. So that’s something that I’ve always wanted. Um, I’m kind of slowly building my way up to it and that’s still on my bucket list to achieve.
Andrew Kerr: 37:52 Awesome. I am definitely right there with you. I would love to take one down on my own or with a couple partners. Unfortunately, all the big apartment deals I’ve done has been investing in other people’s syndication, so yeah.
Tiffany Alexy: 38:05 Yeah, exactly. Yeah. Same here.
Andrew Kerr: 38:07 And then the last question is what is your favorite life hack?
Tiffany Alexy: 38:11 My favorite life hack? Well, I mean house hacking of course if that counts. Another one that I really, really enjoy and this is more of like a personal finance hack doing like bank bonus churning and credit card hacking. Yeah, it’s a lot of fun. And you know, when I know I have a big expense coming up, I’ll open a new credit card and get that signup bonus. And then you know, cause I, I honestly haven’t paid for a flight in probably three or four years by doing that.
Andrew Kerr: 38:42 I am right there with you. Every time we travel, we travel business class and we do it on points when we go overseas. And same thing, I think it’s one of the best things to pair with house hacking and real estate investing because you might have to buy a whole new set of appliances or you might have to repair, spend two grand on carpet, put that on the credit card and get the signup bonus immediately pay it off right away. But then you can use those points to actually help you travel around the world.
Tiffany Alexy: 39:06 Exactly. Yeah, yeah, yeah. And especially because there are business credit cards out there too. So if you set up your, your real estate investing empire correctly and set it up as an LLC, as a business, you can have access to those business credit cards too. And sometimes those rewards are even better than the consumer ones.
Andrew Kerr: 39:24 Yeah, right there with you. I’ve got two LLCs. I do business cards for both of those. I do personal cards in my name. We do personal cards in my wife’s name. We love it. I’m actually in the middle of writing a whole series on pairing credit card travel, hacking rewards with real estate investing in house hacking that we’ll have up on the website. Yeah. Well Tiffany, thank you again for being on the podcast. I think you had a fantastic story to share. Obviously next time you want to come down to New Orleans, our guest house is always open to you and thank you again so much for being on the show!
Tiffany Alexy: 39:55 Yeah, of course. Thanks so much for having me!
Outro: 40:00 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.fibyrei.com where your house hacking journey begins.
Be sure to check out our Ultimate Guide to House Hacking for a great overview of the different styles of house hacking and different types of tenant bases.
Check out the home page for “The House Hacking Podcast” here.
In 2018 FI by REI was created with the purpose of helping individuals that want a better life. We share articles on personal finance, house hacking & real estate investing, and more.