Author Topic: Tell me your house hacking story  (Read 10445 times)

jooles

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Tell me your house hacking story
« on: April 06, 2016, 12:04:40 PM »
I am interested in all versions of house hacking.  Tell me about your house hack.

I am currently living rent free/mortgage free in a house that my husband and I are renovating.  The house was purchased with cash.  It is both a low cost (month over month) living and a money making adventure.  We wanted to answer the question - can we be real estate investors?  This is a low risk method.  It's not the most profitable, nor the fastest way to make $$, but it's what we're doing this year.


Enough

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Re: Tell me your house hacking story
« Reply #1 on: April 06, 2016, 06:52:21 PM »
Like yourself, I bought my house with cash a year ago, fixed it up, and just recently opened up a HELOC to use the equity in that house to purchase a triplex.

clarkfan1979

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Re: Tell me your house hacking story
« Reply #2 on: April 14, 2016, 05:15:22 PM »
I bought a 4 bed/2 bath house in May 2007 and had 3 roommates while in grad school. House cost 182K. I had 20% down and 10K in rehab. Mortgage was $950 including taxes and insurance. I collected $950/month in rent from three separate roommates. I did this for 4 years. The market value of rent did go up during that time. However, I really liked my roommates, so I didn't raise the rent on them. The house currently rents for $1900/month. Lease for next year will be $2000/month. The year after that it will be $2300-$2500/month because they will be finishing up with a new college football stadium that will heavily impact neighborhood rents. Vacancy has been 0% since I bought it in 2007.

sol

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Re: Tell me your house hacking story
« Reply #3 on: April 14, 2016, 05:22:19 PM »
I bought a 3/2 SFR with 20% down, and it promptly lost 25% of it's value over the following year.   I am a bad hacker.

That was 7 years ago.  The house still isn't worth what I paid for it.  On the bright side, it's rented out now and someone else is paying down the mortgage for me.

Papa bear

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Re: Tell me your house hacking story
« Reply #4 on: April 14, 2016, 06:23:28 PM »
Bought a house in 2010.  2 unit with one side vacant. Short sale and I moved into the vacant side.  Bought the house FHA for 3.5% down and was eligible for first time homeowners credit.  Paid 7.5k down, got deposit, rent, and pro-rated taxes back and an 8k tax credit.  Total payments were completely paid by the tenants in the other half. Fixed up my side, refinanced after a new appraisal and got rid of PMI in under 1 year.

Net effect, got paid to buy a house and lived for free for three years. Then rented it out and pays for my retirement =)


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CynthiaL

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Re: Tell me your house hacking story
« Reply #5 on: April 17, 2016, 06:09:06 PM »
I have a 2 bed/ 1.5 bath condo and have had a roommate for the majority of the time.  The roommate is paying me enough to cover my mortgage payment (including RE taxes) plus half the association fee.  It would be awesome if her rent covered everything, but I'm paying about $100 association fees and 1/2 the electric bill which is pretty good.  In the next year, I plan to buy a 2-3 unit place, rent the other units and rent the other bedroom in the unit I'll live in. The expectation is that I'd live for free at that point.  The condo I'll keep as a rental.

forummm

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Re: Tell me your house hacking story
« Reply #6 on: April 20, 2016, 10:51:21 AM »
During the foreclosure crisis I bought 2 cheap foreclosures--one to live in and one to rent out. The rental was about $60k, which was too low an amount to get a mortgage for. And my idea was to fix it up some (needed new carpet and A/C) and renovate a little (add 2 bedrooms by finishing the huge attic). I expected it to be worth a lot more with the renovation. So I borrowed from my 401k, took out a personal loan, mortgaged my car, and cashed in some index funds. I also opened a 0% interest credit card to put building supplies on.

Long story short, I learned a bunch of useful lessons. I spent a crazy amount of time planning and conducting the renovations. And it was a very stressful and distracting experience. I learned that I'm not temperamentally suited for business. I also learned that I didn't want to be a landlord. I ended up selling the house and breaking even, all expenses included. I chalked up my labor and stress as the cost of learning.

Today, both houses are worth a lot more. But so is the stock market. If I'd kept the rental and mortgaged it I would have made some OK money, but not enough to retire on. I'm OK with my decision to move on.

Jon Bon

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Re: Tell me your house hacking story
« Reply #7 on: April 22, 2016, 05:45:17 AM »
1. Buy less then desirable house in nice neighborhood with good schools.
2. Move in
3. Buy tools and redo kitchen and bath. Apply a fresh coat of paint.
4.sell after 2 years
5. List with a flat fee  listing, pay no taxes keep all profit
6.repeat



ketchup

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Re: Tell me your house hacking story
« Reply #8 on: April 22, 2016, 08:44:54 AM »
I got my first non-minimum-wage job ($12.50/hr part time) while living at home at age 19 in 2011.  Saved around 90%.

Bought a (very) small house with my girlfriend (we were 20 and 19 at the time) at the bottom of the market in 2012 for $18,500.  Put $3,500 down on 5-year owner financing at 5%.  Monthly payment PITI was just over $400.  Two roommates moved in with us (her sister and sister's boyfriend) to split costs and live dirt cheap.  We put about a grand into some new paint, floors, and other small basic stuff.  Lived there about a year.

Rented it out after that for about enough to break even with zero cashflow when all costs considered (vacancy, repairs, etc).  Still at this point now.

After a shitty tenant left last year, my girlfriend's sister and sister's boyfriend moved back in by themselves this time.  And they're awesome.

I still owe about $3,000 on it, and it'll be paid-off next March.  Market value is probably about $25,000 now conservatively.  Might sell when current tenants leave.

My girlfriend and I bought another house last May.  This one is more of a "real" house, bought with a real 30-year bank loan too.  It's a "cosmetic fixer-upper" meaning everything works, but plenty of the house is "outdated," last updated in the early 80s.  We bought it about $10k undervalued, and are putting enough work into it slowly to probably sell in spring 2018 for about a $20K all-in profit.  Or, depending on situations and goals, it could be rented out for positive cashflow.

So the first house was the cheap-living-turned-cashflow-neutral-asset-builder brand of house-hacking, and the second is more of a live-in slow flip.

I did get pretty lucky with the first house.  I did plenty wrong.  I now know that I almost assuredly could have gotten the house for less.  The way we split costs while living there was dumb.  I had a bit too much vacancy after we moved out.  I screened tenants badly.  I was too lax about collecting rent (until I wasn't).  Luckily, I bought it right enough that even with all my screwups, I can't help but make money on it.

I know a few people that got burned attempting such things.  A guy I work with bought a house for $240,000 in early 2008 with the plan to flip it over the next year.  Yeah... that didn't happen. He lived in it until selling it last year as a short sale for $140,000.

Shit happens.  Have an exit plan.  Have a Plan B.  Have a Plan C.  Pad all your numbers conservatively because everything will cost more, take longer, and make you less income than you think.

TheInsuranceMan

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Re: Tell me your house hacking story
« Reply #9 on: April 22, 2016, 11:46:39 AM »
Bought an acreage in 2013 for 82.5k, sold it this year for 119k.  On top of that, I had $51k in equity when selling the house....which paid our down payment on our new house (plus some saved cash...) and paid off all my high interest student loans...which cut my SL debt from 47k to 17k
Bought new house for 30.5k, did the updates needed, worth 45-50k now. 


BlueHouse

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Re: Tell me your house hacking story
« Reply #10 on: April 22, 2016, 09:33:17 PM »

The rental was about $60k, which was too low an amount to get a mortgage for.
Do banks have a minimum loan amount for mortgage loans?  My first house was $60k and I had a mortgage. AND I had PMI on it because I didn't put 20% down either.

mdperry

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Re: Tell me your house hacking story
« Reply #11 on: April 26, 2016, 05:35:08 PM »
I'm a 3rd year carpentry apprentice who used my skills to live rent free!!!!

How I did it:

1) find a mortgage broker  (they know what to say to the banks and how to say it if you financial situation does not fit the "mould")

2) purchase a house with two suites plus 2 car garage  or something that can be converted into two suites (make sure to purchase in an easy going neighbourhood)

3) rent out both suites 10% below market value (this will allow to choose your tenants and they feel like they got a deal so they look after you places with care trust me on this I am a landlord with 4 rental properties) you need your tenants to be respectable 

4) take a trip to ikea and get some ideas on suites that are under 500 sqft

5) Convert the 2 car garage into a suite and live in it!! 
-insulate  the walls by  drilling 4 inch round holes between the studs and use rented insulator to blow insulation in-between wall studs
-insulate floors by using insulated subfloor tiles (home depots has these for 2-3$ sqft
-take down garage door ceiling tracks but leave garage door in place put an insulated false wall up about 2' away from garage door with assess door

plumbing (most garages have a laundry room near by but if this is not the case (as with me) use a saniflo for the bathroom and kitchen they work really well  plus reliable

electrical: use armoured cable for everything save time and money and looks kinda hipster (electrical box is right there easy to do this)

venting: most garages have attic space above take advantage of this and install skylights that open ($350 each with flashings) also the bathroom and kitchen will need venting (I used a booster fan 250 cfms for both which I got of usedvictoria for $20 each)

Let ikea inspire you for the rest!

anyway the whole thing cost me 14,000 to renovate and looks absolutely amazing and big enough for my girlfriend and I plus our son (designed really well again see ikea example suites can be done).

So with both suites rented (upstairs 1650/month 3 bed 2 bath and downstairs suite 2 bed 1 bath 1200/month) I get paid 325 to live!!! also we have an amazing outdoor space so the 500 sqft feels even bigger. We plan to live here for a very longtime.

House hack in Victoria!!! This is not illegal to do in my area as long as you get necessary permits and don't install an oven in the "3rd suite" (the rules here say that a suite is a suite when it has an oven) you can get around this by getting an induction hotplate and counter top induction oven. we are only allowed 2 suite for a single family residence so the garage is just viewed as a room with bathroom and kitchenette. you should not have a problem if you have respectable tenants so that neighbours don't complain.

background I live in Victoria, BC
house cost $645,000 plus 28,000 overall renovations

sun and sand

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Re: Tell me your house hacking story
« Reply #12 on: April 26, 2016, 07:53:19 PM »

mdperry, you are so right about getting 'an easy going neighbourhood'.  In my last house I had language students to bring in extra money and the neighbours were all talking about me. One even said to me, "Just HOW MANY students do you have in your house???" (had 3)   I moved to a less expensive area of Toronto and no one says anything, even though I do not see anyone else doing it.

ilyeana

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Re: Tell me your house hacking story
« Reply #13 on: May 19, 2016, 03:03:24 PM »
Way late to this comment thread, as I just came back to this forum after years away.

My partner and I purchased a duplex as our first house rather than a single family home. Our tenants cover about 2/3 of the full carrying cost of the property (including water/utilities and such), which allowed us to save more aggressively. That, in turn, allowed us to put a 25% down payment (~$45K) on an investment duplex, which generates about $1K/month in profits, which we have also saved, and now we're looking at being ready to turn around and do it again next spring. We're thinking about continuing to do this every two to three years until we've got enough profits coming in from our rentals that we don't need to work. Our apartment in our duplex is not as large as a single family home, obviously, but it's classy (it was built in 1917) and we don't feel like we're sacrificing at all by living here.

We are of pretty average means - we each make between $40K and 50K/year. We don't have kids, which helps. But it's been very enlightening to see how what we're doing is putting us on the fast track to early retirement. We don't make the kinds of salaries that enabled MMM to retire so quickly, but this way, we have leveraged what would have been our down payment on a single family home and used it to decrease our living expenses/increase our monthly income right away, and allowed those effects to cascade by not spending the difference.

Aloysius_Poutine

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Re: Tell me your house hacking story
« Reply #14 on: May 20, 2016, 03:41:07 AM »
mdperry, are you me??
I live in victoria, just bought a house almost exactly the same price, with a 3 bed unit up, 2 bed suite down, and a garage I am in the process of converting to an airbnb/bachelor/guest suite. only difference is: we will be living in the 3 bdrm up, so it will be costing me about $350 + util to be living in the house.

the crazy things we do to afford living in this town! but it could be worse... we could be in vancouver.

I'm a 3rd year carpentry apprentice who used my skills to live rent free!!!!

How I did it:

1) find a mortgage broker  (they know what to say to the banks and how to say it if you financial situation does not fit the "mould")

2) purchase a house with two suites plus 2 car garage  or something that can be converted into two suites (make sure to purchase in an easy going neighbourhood)

3) rent out both suites 10% below market value (this will allow to choose your tenants and they feel like they got a deal so they look after you places with care trust me on this I am a landlord with 4 rental properties) you need your tenants to be respectable 

4) take a trip to ikea and get some ideas on suites that are under 500 sqft

5) Convert the 2 car garage into a suite and live in it!! 
-insulate  the walls by  drilling 4 inch round holes between the studs and use rented insulator to blow insulation in-between wall studs
-insulate floors by using insulated subfloor tiles (home depots has these for 2-3$ sqft
-take down garage door ceiling tracks but leave garage door in place put an insulated false wall up about 2' away from garage door with assess door

plumbing (most garages have a laundry room near by but if this is not the case (as with me) use a saniflo for the bathroom and kitchen they work really well  plus reliable

electrical: use armoured cable for everything save time and money and looks kinda hipster (electrical box is right there easy to do this)

venting: most garages have attic space above take advantage of this and install skylights that open ($350 each with flashings) also the bathroom and kitchen will need venting (I used a booster fan 250 cfms for both which I got of usedvictoria for $20 each)

Let ikea inspire you for the rest!

anyway the whole thing cost me 14,000 to renovate and looks absolutely amazing and big enough for my girlfriend and I plus our son (designed really well again see ikea example suites can be done).

So with both suites rented (upstairs 1650/month 3 bed 2 bath and downstairs suite 2 bed 1 bath 1200/month) I get paid 325 to live!!! also we have an amazing outdoor space so the 500 sqft feels even bigger. We plan to live here for a very longtime.

House hack in Victoria!!! This is not illegal to do in my area as long as you get necessary permits and don't install an oven in the "3rd suite" (the rules here say that a suite is a suite when it has an oven) you can get around this by getting an induction hotplate and counter top induction oven. we are only allowed 2 suite for a single family residence so the garage is just viewed as a room with bathroom and kitchenette. you should not have a problem if you have respectable tenants so that neighbours don't complain.

background I live in Victoria, BC
house cost $645,000 plus 28,000 overall renovations

SimplyMarvie

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Re: Tell me your house hacking story
« Reply #15 on: May 20, 2016, 03:05:54 PM »
Get free housing and utilities through my job.

Upside? Literally no housing costs. I even get most of my furniture provided.

Downside? Absolutely no control over where and how I live. We currently have the Eastern European version of a McMansion, and are the first people living in it after it was built... which has meant that a wall fell in from a bad plumbing leak, we've had to be evacuated due to gas problems, the water heater constantly turns off, and there's sewer gas build up in my four year old's bathroom.

Sometimes, it's worth what you pay for it.

LordSquidworth

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Re: Tell me your house hacking story
« Reply #16 on: May 23, 2016, 08:18:02 PM »
Bought Aug 2011 for $335,000, $20,000 down 15 yr 3%. Property taxes and mortgage payment $2500/mo. Was a junior in college, mother cosigned.

Had 4 bedrooms, added two more for total of 6 in the house. Lived in one, rented the other 5 out. Started at $500/mo per bedroom. Currently $700/mo per bedroom (but scaling back, tired of living with that many, down to 3 and started a couple businesses out of the extra space). Also rented out space above the garage for the same as a room.

Planning on building two houses on the property before I'm done with it. Has the last two buildable lots in the neighborhood. They'd be homes in the $220k-$240k range.

Goal is a profit of $400,000+ easily when I'm all done, assuming leaving in the next couple years. If business works as projected I'll be here longer, maintaining the main structure as my residence/work space and build the two other houses and rent them out until I leave. In which case, I'd embark on a pretty large renovation of the interior of the house. Retain it's character but modernize it. New kitchen, new bathrooms, new electrical, and redo the master suite. I think I can get a nice walk-in closet in if I redid the masters floor plan.

Highly doubt I could repeat this process, was totally a luck of the draw. It's a gorgeous old home and I used to joke I could fill the 6 rooms in 6 days. Only ever had to do three rooms in three days, but close enough. Only unwanted vacancy since I purchased it was one room for one month (february are awful months for new tenants).

I have another place 20 miles south of the above. Bought it as a foreclosure for a winter project recently. Completely gutted it, new siding/windows/roof, everything. Paid about $58,000 to purchase it. Be finished shortly and should have about $40,000 in equity (assumes sales commissions if sold) with a value of $155,000. Haven't decided if I'll keep it as a rental or sell it.

ketchup

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Re: Tell me your house hacking story
« Reply #17 on: May 23, 2016, 08:20:12 PM »
Bought Aug 2011 for $335,000, $20,000 down 15 yr 3%. Property taxes and mortgage payment $2500/mo. Was a junior in college, mother cosigned.

Had 4 bedrooms, added two more for total of 6 in the house. Lived in one, rented the other 5 out. Started at $500/mo per bedroom. Currently $700/mo per bedroom (but scaling back, tired of living with that many, down to 3 and started a couple businesses out of the extra space). Also rented out space above the garage for the same as a room.

Planning on building two houses on the property before I'm done with it. Has the last two buildable lots in the neighborhood. They'd be homes in the $220k-$240k range.

Goal is a profit of $400,000+ easily when I'm all done, assuming leaving in the next couple years. If business works as projected I'll be here longer, maintaining the main structure as my residence/work space and build the two other houses and rent them out until I leave. In which case, I'd embark on a pretty large renovation of the interior of the house. Retain it's character but modernize it. New kitchen, new bathrooms, new electrical, and redo the master suite. I think I can get a nice walk-in closet in if I redid the masters floor plan.

Highly doubt I could repeat this process, was totally a luck of the draw. It's a gorgeous old home and I used to joke I could fill the 6 rooms in 6 days. Only ever had to do three rooms in three days, but close enough. Only unwanted vacancy since I purchased it was one room for one month (february are awful months for new tenants).

I have another place 20 miles south of the above. Bought it as a foreclosure for a winter project recently. Completely gutted it, new siding/windows/roof, everything. Paid about $58,000 to purchase it. Be finished shortly and should have about $40,000 in equity (assumes sales commissions if sold) with a value of $155,000. Haven't decided if I'll keep it as a rental or sell it.
Hot damn!  Good for you!  Now that's a house hack.
« Last Edit: May 23, 2016, 08:21:46 PM by ketchup »

SwordGuy

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Re: Tell me your house hacking story
« Reply #18 on: May 23, 2016, 08:52:27 PM »
I bought a 3/2 SFR with 20% down, and it promptly lost 25% of it's value over the following year.   I am a bad hacker.

That was 7 years ago.  The house still isn't worth what I paid for it.  On the bright side, it's rented out now and someone else is paying down the mortgage for me.

That depends.

If your strategy was to "hold it and rent it", you should be happy the value is "down".  That means your property taxes should become lower.

If your strategy was to "flip it", then, well, life isn't so rosy.  Doesn't mean you're a bad flipper, though.   (Although I'm a bit more conservative so I would want 40% equity after fixing it up.)

Jeremy E.

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Re: Tell me your house hacking story
« Reply #19 on: May 23, 2016, 09:02:09 PM »
Bought a double wide manufactured home on a foundation, with 3 lots, 50'x145' each for a total lot area of 150'x145', for $74,000. The existing house is sitting on 2 lots, I bought another double wide manufactured home for $8,000, moved it onto the 3rd lot, spent way more time and money than expected to get it all done, ($25,000 and 2 years). I ended up putting a full basement underneath it, with a garage door on one end. It's on somewhat of a hill side, so on one end the garage is at ground level and on the other end the 2nd story is at ground level. Just finishing it up now and am going to rent out the 2nd house with basement for $1,000 and live in the original house(mortgage is $750/month, 15 year loan with 12 years left). I assume the rent will cancel out my mortgage after maintenance(which I'll do myself) and vacancies, although it could do worse.

totoro

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Re: Tell me your house hacking story
« Reply #20 on: May 23, 2016, 09:31:23 PM »

House hack in Victoria!!! This is not illegal to do in my area as long as you get necessary permits and don't install an oven in the "3rd suite" (the rules here say that a suite is a suite when it has an oven) you can get around this by getting an induction hotplate and counter top induction oven. we are only allowed 2 suite for a single family residence so the garage is just viewed as a room with bathroom and kitchenette.

background I live in Victoria, BC
house cost $645,000 plus 28,000 overall renovations

Unless your home was a duplex to start with and built between 1931 and 1969 you can't add a third suite in Victoria.  My understanding is that it doesn't matter whether you have an oven or not.  The test seems to be whether it meets the definition of "multiple dwelling" - a building containing three or more self-contained dwelling units.  A self-contained dwelling unit means "a suite of rooms in a building designed for occupancy of one family which has a separate entrance, and kitchen and bathroom facilities".  There is no definition of kitchen. http://www.victoria.ca/EN/main/departments/planning-development/development-services/zoning.html

That said, I don't think you will have a problem unless a neighbour complains and it sounds like you are in a situation that works well for your family.

k-vette

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Re: Tell me your house hacking story
« Reply #21 on: May 23, 2016, 09:38:35 PM »
Bought 3.5 years ago at $158k.  Interest rate is 3.5%.  Just had a realtor come by who could sell it as is for $250k easy.  $275k is doable if we do some minor landscaping and curb appeal.  Just luck of the time of purchase.

mdperry

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Re: Tell me your house hacking story
« Reply #22 on: June 03, 2016, 07:12:11 PM »

House hack in Victoria!!! This is not illegal to do in my area as long as you get necessary permits and don't install an oven in the "3rd suite" (the rules here say that a suite is a suite when it has an oven) you can get around this by getting an induction hotplate and counter top induction oven. we are only allowed 2 suite for a single family residence so the garage is just viewed as a room with bathroom and kitchenette.

background I live in Victoria, BC
house cost $645,000 plus 28,000 overall renovations

Unless your home was a duplex to start with and built between 1931 and 1969 you can't add a third suite in Victoria.  My understanding is that it doesn't matter whether you have an oven or not.  The test seems to be whether it meets the definition of "multiple dwelling" - a building containing three or more self-contained dwelling units.  A self-contained dwelling unit means "a suite of rooms in a building designed for occupancy of one family which has a separate entrance, and kitchen and bathroom facilities".  There is no definition of kitchen. http://www.victoria.ca/EN/main/departments/planning-development/development-services/zoning.html

That said, I don't think you will have a problem unless a neighbour complains and it sounds like you are in a situation that works well for your family.

So true... once you live in it its consisted a 3rd suite... but to get the permits to do all of the work I wasn't allowed to put in an oven... I live on the northern peninsula so not quite Victoria but a 20 min drive or so...more relaxed on the rules out here.. plus our property backs on to farm land and the one neighbor that would complain also has an illegal suite so that is why I invested so much money into an illegal suite as the return is high and risk is low. I just want to stress that enough that anybody considering to do what I have done is to look at the risk. 

DoubleDown

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Re: Tell me your house hacking story
« Reply #23 on: June 07, 2016, 12:10:11 PM »
This is not a big hack or anything, but whenever I purchase a house and once the lowest price I can get is verbally negotiated, I ask for another 2-3% off because I don't bring a buyer's agent to the process. If you're comfortable operating without an agent, it's a decent amount of money to save. In our HCOL area, 2-3% represents $10,000 - 20,000 for a very average SFH.

Also, I'm pleased to discover that the Realtor monopoly is finally being broken. I sold my last rental house with a full service agent that charged only 3% + $500 TOTAL for the sale, versus the typical 5-6%. He still gave 2.5% to the buyer's agent, so there were no concerns about not getting enough buyer interest. He had a professional real estate photographer, massive exposure on all the internet home buying sites, sign out front, etc., and I sold within one week very close to my list price. I'm convinced this will be the wave of the future.