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House Hacking My DREAM Home | Financial Minimalist

Published on: December 4 2022 by Hayden Bowles

House Hacking My DREAM Home | Financial Minimalist

House Hacking My DREAM Home | Financial Minimalist

now the idea of house hacking is always
toked about
widely spread but how do you actually do
it without putting
13 people in a little studio apartment
each paying a small piece of the
mortgage
to house hack properly how can you do
this and still live comfortably what i
want to do today in this video for you
is break down how my 6 200 square foot
home which i don't classify as a mansion
at all
but zillow classifies 5 000 square feet
to 8 000 square feet as a mansion
and anything above that as a mcmansion
which sounds pretty cool
they classify that as that type of home
i want to explain how i bought this home
and how i'm currently house hacking it
to actually live here for less money
while owning this property
than i normally would be spending on
rent in a condo so that's exactly what
we're going to tok about today i'm
going to be fully transparent with not
only the purchase price
and i've never gone through all these
numbers before but things like the
mortgage the insurance the property tax
everything from the pool the hoa the
yard fees literally every
detail is going to be revealed to you in
this video so if you're excited for it
make sure to smash the like down below
and if you want to see any more real
estate videos
let me know what that is or what your
questions might be in the comment
section below so what i'm going to do is
go through these numbers
line by line and then explain each one
so the cost of my home right now by the
way here's an aerial shot photo of the
house
this house i picked up in june of this
year 2020 so not too long ago
for 890 000 i will get into the value of
the home here in a moment
the mortgage on this property is about 4
000 and
one dollar every single month now if you
want to break down the actual mortgage
cost
roughly 1800 of that is principal pay
down
which means it doesn't go to the
interest of the loan that basically
comes back
to me it's like a very separate savings
account that i can't touch right now
it's kind of how i see it
now the interest on that is roughly two
thousand
two hundred and one dollars every single
month we'll get into all the write-offs
and things like that in a second my
insurance comes out to 210 dollars a
month taxes which are not fun 740
a month and then here i listed some
additional expenses the hoa is very
expensive but they do a great job of
upkeeping the neighborhood
200 bucks there the yard the pool the
wi-fi utilities which are really high
just because it's a large home
stuff like that now let's get into each
of these and how it's all
impacted so to start off the interest
and this is what gets absolutely crazy
the interest alone is a write-off so
every single year
just on this property i'm getting
roughly 25
000 a year that i can write off from the
interest so there's
huge tax benefits to doing certain
things in real estate that's why you see
a lot of very wealthy people always
toking about real estate
they never really pay tax and it usually
upsets people this is one way that you
can avoid doing that
and a lot of people do investments where
they delay and basically defer their
taxes
through what's known as a 1031 exchange
that is beyond the point of this video
but let's keep going insurance 210 a
month that's just an expense that i have
to pay
taxes 740 a month that's a
full write-off i can write off the
property tax on not only this property
but my other four investment properties
as well so that's an additional
write-off now hang on
all of these expenses that i'm listing
to you are things that are
overall overhead expenses now i live in
a home right now like i mentioned
6200 square feet there's six bedrooms
now i don't live with six people in fact
i don't even live with two people i just
have
one friend living here so we each have
roughly 3 000
square feet of home space which in my
opinion is more than double what you
need and this home is a lot larger than
i personally would have liked
but nonetheless i'll explain the
investment component to it in a moment
this property here only the one friend
living there
he pays me we're going to go through all
this 2 000 a month in rent
now could i have each of these bedrooms
rented i could have four people living
here
each paying like 1500 and i would be
making money every single month
yes you could and that is house hacking
at its finest and you can do a great job
of doing that
however i work from home especially with
all the pandemic stuff i got rid of my
office
nobody can go there so there wasn't
really a point of having that expense
i work right here in my home and so i
really value my environment so i would
rather
not bring in that extra money but have a
much better
clean simple quieter place to live and
work
because that's important to me and i
value it so that's my choice
this home would do excellent if you
tried to rent out all of the rooms and
i'm gonna explain i'm actually renting
out the house in a moment
we just signed the lease yesterday and
got all the deposit uh but let's go
through this
so the additional expenses h08 200 a
month
that is split 50 50 with my roommate the
yard
320 a month that's split 50 50 the pool
50 50. wi-fi
is a write-off because that's a business
tool we work from home
but that's also write-off that is split
50-50 and then the utilities
is 50-50 the only thing that's not 50-50
are
taxes insurance obviously the mortgage
he just has a flat rate rent
as well as any repairs you know like a
pool pump or needing to redo the ac line
that was a hundred dollars and little
things like that
that naturally come up with home
ownership now you might be asking
yourself the big question hayden the top
of this list
has eight hundred and ninety thousand
dollars on it how are you gonna ignore
that now obviously i did not purchase
this home in cash because there is a
mortgage
nonetheless i had to come out of pocket
nearly 200 000
to purchase this home and so you might
ask yourself well
where'd you get the money that's that's
a topic for another day that's just my
personal income
however that money could have been
invested somewhere else
which would make money and here's the
kicker i wasn't looking to buy a home
for myself because this is my total
dream home
i wasn't looking to buy a house for
myself this year i didn't care if i was
still renting
because that money was supposed to go
into a rental property however
i was struggling to find a deal and then
this deal popped up and it was a great
investment so i took it
again we're going to tok about that so
there is that mortgage there are all
those expenses
now here's what the income from the
property actually looks like and what my
overhead is
in comparison to what it would be with
renting the total cost kind of the base
fixed cost every single month with
everything
7 three hundred and fifty two dollars
now that's money that comes out of my
bank that's not out of my friend's bank
account that is purely withdrawn out of
my account right i'm the homeowner then
i collect from him
with anything else so here's what it
actually comes down to the income split
two thousand dollars in rent which
pretty much just covers the interest
everything that i'm paying is basically
the principal plus
his split of the utilities the pool
whatever that is it varies a little bit
every month
about thirteen hundred dollars so i
bring in roughly thirty three hundred
dollars a month which brings my
out of pocket living cost to four
thousand dollars
give or take right there could be
expenses it could be higher it could be
lower one month
here's the number you have to factor in
a lot of people when they run their
numbers on house hacking
they don't factor in their natural
living expense
so if i didn't own this home i would
have to live somewhere right i can't
just like live under the bridge or
something i work from home
i need some space so i would have to be
renting another place like i've done for
the previous three years
my rent just off the top my head from
the previous spots 4 500
27.50 6 000 it's like
so it's it's all over the place now i've
lived with roommates two of my places i
didn't have
roommates i really don't want to live
with a lot of people um it just kind of
gets messy and annoying there's a lot of
issues
so like i mentioned i really value
having a good environment
but my normal out of pocket rent cost
would be about
3 000 a month minimum that was the least
expensive place i've ever lived
was two thousand seven hundred fifty
dollars and after wi-fi and utilities
it's above three grand right
but there's no issues with ownership
there's no repairs there's no
maintenance which is great
but you're also just getting rid of that
money every single month now i did have
an office in that condo so i was able to
write off a little bit of it
but out of pocket yes this property is
more
but what i'm actually spending a lot of
it is going directly
towards the principal pay down on the
mortgage which is really a number that
i mean i only ever learned from watching
a youtube video breaking down what a
mortgage is this wasn't stuff i was
taught in school
i was never explained kind of how money
works or a loan works or a mortgage or
any of that stuff
so once i understood that this slowly
started to make more sense and i hope
it's clicking with you as well
because my goal with this video is not
just like tok a bunch of numbers my
goal is to show that you can really do
this with any class of house
i know people who do this with three
million dollar homes and that's where
just
you know everybody has their own
situation and maybe they have multiple
people living with them
i don't want that i almost bought a
property just being honest
for 2.4 million dollars it had three
separate structures it was basically
three houses
it was crazy and i could have had four
or five people live with me
it would have been the same type of deal
as here just bigger and i didn't want
that headache
i didn't want that stress or that
overhead so i was something a little bit
more comfortable
with just myself and one friend and that
was my decision so when you really
break this down the principal pay down
alone on the mortgage
it makes up the difference for what i
would have been spending in rent so that
already makes this a better deal
now you have to factor in a couple of
variables
if i was renting a normal place for
three thousand dollars
it wouldn't be a place like this you
wouldn't get it for three grand
so you have to factor in your
environment i really just love the space
i love the yard i really like being
outside and in nature
so i really value this property it's one
of the coolest places i've ever been in
my life and i truly love it
but at the same time you also have to
factor in the unknown value
of the appreciation this is all
speculative but just to be open and
honest
i could sell this house right now for
above 950 000
however there would be closing costs on
that of probably 30 000 roughly
which would leave me with a net profit
of 30 000 before tax i would have to pay
capital gains tax
which is 22 so maybe i'd be left with 22
000
which is a nice little gain but that's
that's not why i'm here i'm not here
just to like make a little 22 000 real
quick and
flip a big house now the reason i know
this for certain
is because right now i'm actually about
to be moving out of this house and
that's a long story for another video
but i've mentioned how i'm moving to
puerto rico i have a place down there
i don't need a house this big sitting
here and still being out of pocket this
much money
even though yes i would have had to pay
that much in rent but since now i'm
gonna have multiple places
i don't need a house this big if i'm
only here a few months out of the year
so i'm downsizing i bought myself
another place
that's going to be even more house
hacked and make even more sense
because i just need a place to put my
stuff put my cars i'm not going to be
here
so i know for certain that this could
sell because every single person all
five or six people now who have toured
this house and wanted to rent it because
i'm gonna rent it out
each of them wanted to buy it and each
of the time my property management's
like hey
they want to buy i'm like they can
submit an offer they can make a verbal
offer i will
entertain the offer but there's no
chance i'm selling there's
unless it's a ridiculous number there's
no way i would sell
so i just signed someone and this again
will be a topic breaking out all the
numbers for another video
a two-year lease at six thousand five
hundred dollars a month
so yeah this property will make me money
because when you factor in the expenses
you might be like well hayden
6500 the overhead here is 7 300
but you're not factoring in almost 2 000
of that is things like utilities and
wi-fi
so what's kind of funny is the cash flow
from this house
will actually cover my difference on my
new place
because i will also be collecting rent
on that so again that'll be a topic for
another video my goal here was just to
explain to you how you can house hack a
larger home
and make sense of it again you might not
be able to make sense of the exact
scenario that i did
you might need two people in this home
to make sense right you and two more
people
now if i put another person in here i've
already had a multiple friends who
wanted to move in and pay like
eighteen hundred dollars that would
basically completely cover my mortgage
and at that point my out-of-pocket
expense would be like because they would
also be splitting utilities then three
ways
my out-of-pocket expense every month
would be less than two thousand dollars
which would be absolutely phenomenal but
i just really value my own space right
now so i didn't want to do that
so it's super cool because i think a lot
of people just don't look at the numbers
on a property they don't look at the
numbers and they constantly just say
hey well i guess i'm gonna have to live
somewhere let me just rent this
one-bedroom apartment for 1300.
but that out-of-pocket expense and the
fact that it goes to nothing
is it there could be a better use for it
and yes if you want to buy a property in
typical fashion you're going to have to
actually bring the money to the table to
be able to afford the down payment
but there's other things you can do
there's fha loans if you're in the
in the army or the service in any way
there's different loans through the va's
that i think go down to zero percent
down
as well as their simple five percent
down and ten percent down personal loans
on your first property
assuming that you qualify so there's a
lot of different options you just have
to look into it i'm not here to promote
something or recommend you buy a home or
don't
or oh my gosh multifamily is so much
better i own multi-family properties too
i mean they're all great
it just depends on your situation and at
the end of the day you need a place to
live i've seen a lot of people house
hack a duplex where they live in one
side and rent out the other
that can be a really cool option you
just have to run the numbers
for yourself and figure out what makes
the most sense so
i hope you enjoyed this video i always
try to be as transparent as possible
with you guys
not only when it comes to business
toking about money examples
but also something like this where it
toks about my real estate investments
now this property just for a quick
summary here i do plan on holding for
multiple years i think i will sell this
property for a couple hundred thousand
dollar gain
and if i hold it for over two years i
will be avoiding capital gains
tax so that is my plan here that's why i
purchased it like i mentioned i didn't
want a home this big i didn't expect to
buy a home this big
in fact i didn't even expect to buy a
home that was this expensive
but when a deal pops up i was prepared
to take the opportunity and i did it so
it makes sense
and that's the goal at the end of the
day is really just to put yourself in
that position where you can take
advantage of an opportunity so
hope you enjoyed this video i hope you
got some value out of it if you did make
sure to drop a like down below
if you have any questions at all leave
it in the comment section be sure to
reference some of the resources
linked in the description we're doing a
lot of really cool sales right now for
our ecommerce program as well as the
custom-built shopify stores
that we offer if you want to get started
in e-commerce which if you're not
familiar with this channel is the
primary thing we tok about
and that's the business that not only
covers my living expenses but also
allows me to invest in real estate which
is something i have a huge passion for
so again hope you enjoyed the video hope
you learned something uh with that being
said hope you enjoy the rest of your
month or whenever you're watching this
video
and with that being said i'll be seeing
you in the next video peace