One of the reasons we chose this home is because we knew we could live here for free.
You're probably thinking, "What?!?!"
I'm talking about House Hacking.
House Hacking is essentially using your house to make extra money & live nearly free.
I'll share some about the "living nearly free" part in this post.
When we were looking for a house, we knew we wanted to find a place that had a detached garage or storage building that we could convert into habitable space to use as a short-term rental.
We also wanted to make sure it was located in an area where people would be looking for a place to rent, like near a university.
The house we found was a historic house built around 1920 (my wife loves historic homes). It had a detached single-car garage in the back and it was one block from a major university.
We knew that over time we could convert the garage, and through a service like Airbnb, begin to host guests & make extra money each month. This extra income would cover all of our primary housing costs (property taxes & insurance) and even some of our utility payments as well. For many people, those primary costs would also include a mortgage. This didn't apply for us as we paid off our mortgage years ago through the first part of the House Hacking definition above ("using your house to make extra money").
Once we were ready to begin the project, we asked for multiple bids from reputable contractors in our area. Unfortunately, I'm not handy enough to do any of the work myself - ha!
It was a big project. We had to submit drawings to the city for permitting & run it past a historical committee (since it's in a historic district & the design has to be approved). We had to run sewer, water, gas & electric to the garage in order to convert it. We also had to shore up the walls & the floor as they were not in good condition. Then we added a bedroom, bathroom & little kitchenette to complete this 250 sq ft studio.
We expect to make between $1,500-$2,000/mo renting it out.
Our primary housing costs are:
- $425/mo in property taxes
- $200/mo in homeowners insurance
- = $625/mo total
Our secondary property costs are:
- $50/mo in natural gas
- $250/mo in electric, water, trash
- = ~$300/mo total (varies by month but this is average)
Grand Total: ~$925/mo
As you can see, we'll have plenty of additional money to give, pay taxes, and even pay for other monthly costs.
Even if you have a mortgage, you can see how this would drastically reduce your monthly housing costs enabling you to live for free or nearly free.
I'll share some pictures below.
