Gabe joins the show to share how house hacking and minimalism helped him quit his day job at 24 years old.
At 21 years old, Gabe acquired his first house hack. The property was a triplex that needed renovations in one of the units. After closing on the property, he moved into the unit that needed renovations. When combined with extreme frugality, Gabe was able to save a lot while living for free in this first house hack.
After living in that property for two years, Gabe and his wife bought a second triplex to house hack in 2020. The second property required more extensive renovations but two of the units are being rented through Airbnb. Due to these two properties and a frugal lifestyle, Gabe was able to quit his job this year and rely solely on the rental income to cover his expenses. Now he is able to dedicate his time to passion projects, including his YouTube channel.
Why Gabe Tried House Hacking
At 18 years old, Gabe earned his real estate license instead of pursuing a college degree. After reading Rich Dad Poor Dad, he developed an interest in real estate investing. From there, he discovered house hacking and the idea of financial independence.
Gabe decided to pursue the multi-family properties because the numbers made sense. Plus, he moved into his first house hack the day he got married. With that, he and his wife were looking for a private unit for themselves.
The Numbers of Gabe's First House Hack
Gabe found the triplex through the MLS. He had been looking for a property for around six months and jumped on this property when it popped up. The triplex had two two-bedroom units and one one-bedroom unit. Although one of the units had some major issues due to a hoarder situation with the previous tenant, it was still a good deal.
They closed on the property for $195,000 with an FHA loan. He was able to qualify for the loan through his job as a manager at his dad's company. His total monthly mortgage costs for this property were $1,450.
When he moved into the property, the other units had tenants that paid $800 and $875. Since then, Gabe has bumped the rent to $850 and $920. Gabe allowed the third-floor tenant to pay $850, which is a below-market rate, because the apartment hasn't been updated since the 1980s and the tenant is very easy to work with. Plus, the garage was rented out for $80 per month. With that, he was able to live for free the entire time.
After moving out of their unit and renting the unit for $1,150, they were cashflow positive at this property.
Gabe's Second House Hack
After living at their first property for a year, they started looking for their next house hack. Their ultimate plan is to house hack a few more times to support their financial independence dreams.
The second triplex has two four-bedroom units and one two-bedroom unit. Gabe and his wife moved into one of the four-bedroom units because it needed renovations. Currently, they are renting out the second four-bedroom unit on Airbnb and it brings in $4,000 per month. The two-bedroom was occupied with the tenant paying $1,000 per month.
The couple closed on the property for $350,000 with a 5% down conventional loan. In total, the mortgage is $2,450 per month. The renovations cost around $20,000 and they spent around $2,000 outfitting the Airbnb unit with furniture. Right now, the Airbnb unit allowing them to bring in a bigger cashflow than a long-term rental. With this extra cashflow, Gabe was able to quit his job. Even with COVID, the unit has a 95% occupancy rate.
House Hacking with a Significant Other
Although Gabe is more interested in the finances, his wife is very supportive. Once he explained the financial upside of making these small sacrifices, she was happy to be supportive.
The Minimalist Mindset
For Gabe, he has always been frugal. But he has been shifting his mindset to minimalism instead. He views minimalism as a way to cut things and expenses out of his life that doesn't allow him to focus on what matters. He looks to include things in his life that will make a big difference in the future.
Since he really wanted to leave his job, he was able to streamline his life so that he could afford to leave his job.
The Famous Six
What is your favorite personal finance resource?
What is your favorite real estate resource?
What has been your favorite travel destination so far?
What is next on your travel list?
What is the biggest bucket list item you haven't accomplished yet?
He would like to travel slowly for months at a time.
What is your favorite life hack?
Listening to audiobooks while working.