Discover the transformative journey of house hacking in this insightful video, where I share my firsthand experience, starting with renting out my basement and progressing to financial freedom through real estate investing. Dive into the pros and cons of house hacking, its scalability challenges, and how to leverage its benefits for long-term success. Whether you’re a seasoned investor or just starting out, my advice and actionable tips offer invaluable guidance to turn your home into a powerful asset. Don’t miss this engaging look at how one simple decision can lay the groundwork for a thriving real estate portfolio.
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Video Transcript:
House hacking, house hacking pros and cons, that is what we’re going to dive into today. I’m so excited to share this with you. House hacking is what got me into real estate investing at the beginning. I’ll share a little bit about my journey there, and then I’ll share the pros and cons that I have now as a seasoned investor about house hacking and give you some advice about where, if house hacking should fit into your real estate investing scheme, and if so, how.
Now let’s dive into my story with house hacking. You can get some frame of reference of where I’m coming from with house hacking. House hacking was my start with real estate investing, so I have some fond feelings about it from that. What it was, guys is my husband and I lived in Northern Virginia, and we bought our dream house that we thought we were going to live in forever, and this house was big. I mean, for the two of us and three dogs, it was a five-bedroom, three-and-a-half-bath house.
I think it was like 3,600 square feet, and so it was huge. After a few months, we realized we weren’t using the whole thing. We moved in in August, and in October, we were on a little weekend road trip driving back, and we were like, you know, we haven’t really used this whole house. What can we do? How can we use this asset for our benefit?
The basement, we hadn’t stepped foot in much at all. It was a walkout basement, so it had its own door, some windows, a full bathroom, a full bedroom, plus a common area. The prior owners had plumbed it to have a wet bar down there, but they never actually built it out. It had the drainage, the water supplies, and things like that. We thought that’s a pretty big area they had for the wet bar. I bet we could build out a kitchenette down there and rent out that basement.
On the way back from a weekend trip, we swung by IKEA, which was normally an hour from our house. It was right off the drive we had, so we thought, I know people get kitchens and all that stuff from IKEA, let’s go check it out. We went to IKEA, and in the kitchen section, we looked at what we’d need to build out this kitchenette in the basement. One of the people there helped us; they had these computer systems where you could mock out what you had, and we did that. We bought everything we needed right then and there.
We had a big pickup truck at the time, so we thought we could throw everything in the truck to drive it home. Well, when you’re buying enough for a kitchenette, it’s more than one pickup truck’s load. We loaded up what we could, kept the rest at IKEA, drove home, unloaded it, and my poor husband had to turn around, drive right back to IKEA, load it up again, and drive it back. That was our very spontaneous start into real estate investing, and I’m so glad we did it.
If you’re stuck in analysis paralysis, just do it. Real estate is such a great investment. You don’t need to overanalyze it for it to be a win. Over the next couple of weeks, we built out the kitchen ourselves. We had an electrician run the wiring for an oven and stove. We got it all set up and listed it for rent.
Back then, Craigslist was the main source for rentals, so we listed it there. Within a couple of weeks, we rented it to a young family for $1,000 a month. We lived in that house and rented out that basement for seven years, starting at $1,000 a month and going up to around $1,575 by the time we moved on. It was easy money for us, and we had a positive attitude about it.
We could have had a different attitude, thinking it’s only $1,000 a month and we’re losing privacy, but instead, we took action. Your first step in investing is often a baby step. You won’t know how to take the big, transformational steps until you’ve started small. I’m so glad we took that first step, renting out our basement. It showed us the benefits of real estate investing and helped us test being landlords in a low-commitment environment.
We weren’t buying another place or making another down payment; we were just renting out our basement with a year-long commitment. It was low-risk, low-effort, and taught us that most tenants are great and the process is simple. That first step opened the door to the financial freedom we enjoy now.
House hacking, if you’re not familiar, is when you take your primary residence and rent out a portion of it. It can be long-term or short-term. It could be a space with a separate entrance or even just a bedroom.
The pros of house hacking include getting started with no extra money and saving faster for other investments. It lets you offset your housing costs or even make a profit. However, house hacking isn’t scalable. You can only house hack one primary residence at a time.
My advice is to use the savings from house hacking to buy more investment properties. House hacking is a great tool, but it should be part of a larger real estate strategy. Use it to save and invest in scalable opportunities like rentals, syndications, or hard money lending.
Take the money you save from house hacking and invest it in scalable real estate ventures. That’s where the magic happens.