Blog Post #6 – House Hacking: The Strategy

House Hacking: The Strategy

How can you cut down your living expenses without strangling your budget for every penny and cutting out your daily coffee? Let me introduce House Hacking.

This is not a new term, but it was coined by Brandon Turner from Bigger Pockets and quickly gained a lot of attention. I personally don’t love acronyms but it definitely gets people’s attention. House Hacking is simply cutting down your mortgage/rent by renting out part of or all of your home.  I currently do this with my 2 bedroom 1 bathroom house and rent my second room out for $750 a month. This cuts my mortgage over 50% and allows me to only pay $450 per month.

Let’s say you have a $5 coffee every morning which over the year adds up to $1,825. That’s a lot but we’re not judging here. But if you were to House Hack and rent your second room out for $600/month (using a low number here), this adds up to $7,200 for the whole year. Over a $5,000 difference!! Here is it below:

The No Fun Coffee Strategy

$5 x 365 days = $1,825

The House Hacking Strategy

$600 x 12 months = $7,200

You can easily see the difference here and you can easily charge more than $600. This strategy gets even better with the more rooms you have, or if you have more than one unit like a duplex. More units allow you to cut down almost all of your mortgage cost and maybe even cash flow!

The whole point of this is to show how you can be saving much more on your housing expense, which is typically your biggest expense per month, instead of nickel and diming your way to financial freedom. This strategy is how many people first get into financial independence and real estate investing. This has helped me to start my journey and many others as well. There’s plenty more steps which we will eventually dive into like how to analyze a property, finding a good tenant, and how to buy the house. 

Here are a few books to get you started:

• The House Hacking Strategy
• Set For Life
• The Book on Rental Property Investing