Debt Free Climb

One Millennials journey from debt to debt free

My 2019 House Hacking Review

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As 2019 comes to an end, I wanted to take the time to review my House Hacking results for 2019. I bought my house in late 2018 with the plan to rent out my spare bedrooms to offset the cost of owning a home. My goal was to reduce my most significant expense (housing) to be able to invest more and buy another house hack or rental property in the coming years.

By sharing my experience, I hope this gives other potential house hackers a better idea of what to expect and see if house hacking is right for them. Let’s get started.

Related Posts:  My first renters / Preparing for my first house hack

 

My House Hacking Setup

After searching the Austin housing market for many months in 2018, we (my fiancee and I) landed on purchasing a new build home north of Austin near many professional tech companies (Dell, Samsung, Apple, etc.). We picked this location and a new build home to attract young working professionals to rent out rooms in our house.

Our house has three bedrooms and is ~1600 sq feet in size. The first two rooms are located in the front of the house, and the master bedroom (our room) is in the back. The house is a functional floor plan for living with others. We ended up furnishing the first bedroom with the plan to rent it out via Airbnb and left the second room empty for a renter to move their stuff in.

debt free climb house hack
House Layout

 

Our Platform for Renting

We used Airbnb to rent out the first bedroom but had little success overall because the location of our house didn’t have much demand compared to other Airbnbs closer to downtown. Most Airbnb guests wanted to be closer to the city vs. in North Austin. The exception to this was during the annual music, movie, and tech festival “SXSW” in March. (Due to high demand during this time, we were able to rent our first bedroom on Airbnb for about a week at an above-average rate.)

We also used Facebook housing groups and Craigslist to market our 2nd bedroom. We were able to find our second tenet via a “Girls new to Austin” group my fiancee was a member of.

House Hacking Financial Results

Airbnb

 $331.16 (6 nights for SXSW and one additional 1-night stay)

Room Rental

Our first renters were co-workers with my Fiancee. They just stayed one month in February because they were in between leases.

$964.28

Our 2nd renter took over the 2nd bedroom in March – December (found from the facebook group I mentioned above). She filled out an application, and we met her in person at a Starbucks before signing a lease. I also had her pay for a background and a credit check through Cozy.co.

The renter paid $600 per month, and my fiancee paid $600 for a period of time. I reduced my fiancee’s rent to $300 in the back half of the year with the effort to focus more on her Student Loans.

We split utilities three ways.

$10,444 

Total Earned from House Hacking in 2019

$11,739.44

Keep in mind this amount was the total gross revenue earned. I will still have to pay taxes on this amount.

Overall I am happy with my first year of house hacking. I didn’t fully accomplish my goal of eliminating my housing expenses, but I was able to save over $11k that I used for my wedding and saving/investing.

My total mortgage payments (including PITI and HOA) were over $21k this year. So I saved about 54% of that by House Hacking. Not too bad for living with one other person for the year.

Lessons Learned

 

  • I thought I would be able to have my full-time renter in the 2nd bedroom and continue with Airbnb in the first bedroom at the same time.

This plan turned out to be a big fail. I told the renter that I was still planning on doing Airbnb before she signed her lease. However, she would have to share her bathroom with random Airbnb guests, and I decided I didn’t want to do that. I could foresee issues on both sides, and I didn’t want to deal with it. Besides, having to live with four people and a dog was going to be more stress than it would be worth, in my opinion. I like the idea of Airbnb for the front room out when nobody is occupying the 2nd bedroom.

 

  • The personality and cleanliness of the renter is a big deal

Our first renters were great, but they only stayed for one month. Overall I was pleased with our 2nd renter – she paid her rent on time and generally cleaned up after herself. However, we didn’t have much in common with her, and we only made small talk with her to avoid awkwardness when we encountered her in the kitchen or living room. We also had a few issues with keeping the common areas clean.

Having a clean renter with things in common is a huge plus. Nobody is perfect, but there is some improvement to be made for our next renter.

 

  • I didn’t account for all renters “guest(s)” scenarios in my lease

This part was the most significant pain point of the whole experience of house hacking for us. We had a few issues with the renter having guests over for long periods of time and having business clients over without our knowledge. 

Going forward, I will make sure the guest policies are more defined to make sure these scenarios don’t happen again. Having open communication and trust with a renter you are sharing a roof with is very important for your sanity while house hacking.

 

  • Renter signed a 3-month lease to start, and I didn’t make her sign another after the first three months past

I liked the idea of doing a 3-month lease to begin with a new renter, as its a good way to feel out if it will be a good fit. The first three months past and everything was going great. Instead of making her sign another three or 6-month lease, I just left it as is, and she continued paying month to month. Not having a lease with updated dates caused some confusion on both sides.  Going forward, I need to make sure the renter is always on some lease with valid start and end dates. After the end dates pass, then a new contract should be in effect.

 

Next Steps

As hinted above, our 2nd renter put in her 30-day notice in mid-November and left right before Christmas. We left on good terms, but both knew the situation wasn’t going to work long term.

My Fiancee and I  are not going to be House Hacking next month because of our upcoming wedding and many people visiting from out of town. It simply isn’t worth having someone over during this time. However, when we finish with wedding/honeymoon stuff, we are planning on resuming house hacking in February. I will most likely immediately start Airbnb up again while on the search for a new renter. I will be focusing on making sure the renter is a good fit before rushing into getting someone renting right off the bat.

2019 was a solid first year for us in the house hacking. There were definitely some challenges along the way, but to have the ability to make over $11k this year is fantastic. My fiancee is still on board with house hacking for the next few years, which I know I am very fortunate to have her on board.  

 

Question for You!

Any tips on how to market to new potential renters?

Do you have any advice or tips on how to improve my experience next year?

 

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Comments

  1. Eric Didier says

    I’m glad it figured out for you. I feel two of the most important fears people for house-hacking are an enormous ticket item like HVAC breaking and being sued by tenants. Tenant falling down the steps. Of course, these incidents don’t happen all the time. But I’ve found thoughts wondering that far. That said, I don’t mind living with someone to scale back expenses.