Welcome to my hell hack! Oops…I mean house hack. In episode three of our House Hackerz show with BiggerPockets, I’m taking you inside my unconventional house hack and showing you why this is a great setup for my family and me. We built out a mother-in-law suite for my wife’s mother, which has improved everyone’s quality of life and allowed me to buy three rental properties so far. Some people may think of it as a hell hack, but for me, it’s an awesome hack.
- Watch the YouTube video (at the bottom.)
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the video.
Thinking Outside the Box
I’m in a unique situation—I’m 40 years old and just learned the power of house hacking 5 years ago through BiggerPockets. I was completely sold on the idea, but my wife said absolutely not.
Instead, we focused on how to create a win-win situation for our family. We bought our house four years ago and it came with a giant, unfinished basement. We spent about $100K to renovate it into a completely separate apartment.
When we originally ran the numbers, we figured out how much we would save by having my mother-in-law live with us. We calculated how much we wouldn’t need to spend on daycare and car mileage, which was easily $2K-$3K per month.
However, the reality ended up being very different.
That’s why I always say that house hacking is half science and half art. When you actually live in the property, life tends to stray away from your assumptions.
Adapting to Changes
So, what happened? As our daughters got older, my wife and I realized we wanted our kids to be more socialized and have a structured educational system. We decided to enroll them in daycare anyway.
Instead of just focusing on the lost savings, I started to see the nonfinancial perks of having my mother-in-law so close. We get about five home cooked meals a week, which she cooks in her private kitchen. When it’s time to eat, she brings the food upstairs and we have a nice family dinner.
Plus, it’s great to have an extra adult on hand. When covid forced us into constantly shifting schedules, having her nearby meant that nine times out of then, she was able to watch the kids.
I’ve learned that it’s important to find a compromise between the numbers and our actual needs.
Things didn’t go according to our original plan, but that’s fine. Always be prepared for your plans to change and adapt as they do.
Making the Setup Work for Everyone
Since we gave up our basement to build the mother-in-law suite, we realized we needed to create another space for the kids. We converted our garage into a rec room and home gym, which has been a lifesaver. Our mindset is all about finding the win-win, and once we opened ourselves up to it, we had an easier time finding the wins.
I get asked all the time how we make this setup work. In American culture, the idea of living with your parents or spouse’s parents is crazy, but when I look at how much it’s helped my family, I see it as a huge positive.
My biggest tip is to over-communicate in order to prevent future problems. Between my wife, mother-in-law, and me, there are a lot of needs, wants, feelings, and quirks. We don’t want those things to fester until they become big problems. Instead, we share our thoughts preemptively to find a solution.
Creating My House Hack Stack
The way I’ve utilized my house hack is very different from the other house hacks in our series. Most people buy a house, live in it for a year, then move out and buy another rental property. But I’ve got a wife, kids, dogs, and a lot of stuff. I’m not interested in moving every year and my wife definitely isn’t, either.
Instead, I’m utilizing the equity in my house to go out and buy rental properties. So far, I’ve purchased three and there are more to come.
I bought this house in 2018, put $100K of work into it, and realized I had a lot of equity in my real estate piggy bank. In 2019, I did my first cash out refi and took out $106K while lowering my interest rate. I bought two condos for $200K each, putting me at $110K all in.
When interest rates tanked in March 2020, I did another refi to just lower my rate, which saved me a couple hundred bucks a month.
In 2021, I put a Home Equity Line of Credit (HELOC) on the house to take out $80K to buy a single family home with an Accessory Dwelling Unit (ADU).
I’ve found that the cheapest way to borrow money is through equity. I don’t mind the high leverage on my primary residence, though I know it’s not for everyone. It’s more important for me to take advantage of opportunities in the market.
In all, I have a combined value of $1MM in rental properties and cash flow over $1K a month. To achieve this, I didn’t have to move or do any crazy strategies. I found what worked in my life that would allow me to buy properties.
What Do You Think?
Obviously, this is a very unique situation. When I tell people about it, I get two main reactions: Your mother in law lives with you! And, your house has high leverage!
This strategy works for me, my lifestyle, and my investing criteria. But, it isn’t for everyone. That’s why we’re walking all types of properties and learning about other house hackers’ strategies. Our goal is for you to be able to figure out what strategy works best for your lifestyle and goals.
If you need help refining that strategy, reach out to us for a free consultation.
Let me know: Do you think I’m hell hacking or house hacking? Send me your thoughts on LinkedIn or Instagram!