I Became a Landlord Through ‘House Hacking’ — How I Got Rich From Real Estate Investing
Written by
Andrew Lisa
Edited by
Somnia Keesey
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Renting out part of your primary residence can offset or even eliminate mortgage payments and get you into a property or neighborhood that you otherwise couldn’t afford.
It’s called “house hacking,” and it adds a whole new layer of variables and considerations to the homebuying process — so it’s not for everybody. But those who pull it off can eventually move out, move a new tenant into their former space and collect passive income as a multi-unit landlord — all with much less upfront capital than you’d need to buy an investment property the old-fashioned way.
Find Out: 15 Cities Where Houses Are Best Bargains Right Now
More: How To Build Your Savings From Scratch
GOBankingRates heard from two people who house-hacked their way to becoming successful landlords earning considerable passive rental income. One was a newbie pursuing the traditional route of living in one unit of a multi-family home. The other is a more seasoned veteran who found a path to real estate wealth by converting a single-family home.
Both proved that with determination, patience and a little creativity, there is more than one path to success.
The Traditional Route: A Multi-Family Home and a Whole Lot of Work
Mark Joseph is the founder of Parental Queries, a site dedicated to helping parents deal with everything from the day-to-day challenges of raising kids to major life experiences like pregnancy — and he’s also a landlord who successfully hacked a multi-family house.
“After living in the home for a few years, I moved out and made it a full rental property,” said Joseph. “It was a long process of hard work, but worth it. I encountered a few challenges along the way, such as finding reliable tenants and getting the necessary permits to run the business. But I was able to make it work and am now making a decent income from my rental property.”
Preparing a Property You Live in Proved Easier Said Than Done
Joseph’s investment property is now a steady passive income stream, but it didn’t come easy.
“Getting the property ready to be rented took a lot of work,” said Joseph. “I had to renovate the interior, install a carbon monoxide alarm, get liability insurance, and do necessary repairs and improvements. I also had to ensure that the property met all of my local city codes and regulations for rental properties. It took about six months of hard work and dedication to get the property ready to rent.”
Eventually, Joseph was able to transition from a live-in landlord to the owner of two rental units.
“It took me around six months to completely move out and make the property a full rental,” he said. “During that time, I had to do renovations, repairs, get permits, find tenants and ensure that everything was compliant with my local laws and regulations.”
There Was No Shortage of Challenges, but the Work Paid Off
Rent checks coming in count as passive income — but being a landlord is anything but.
“My biggest challenge was finding reliable tenants to rent the property,” said Joseph. “Being a landlord can be difficult, so it is important to find tenants willing to pay their rent on time and take good care of your property. I faced other challenges, such as getting the permits necessary to run a rental business, completing all of the renovations and repairs on my own, and ensuring that I complied with all of my local laws.”
The payoff was hard-earned cash that keeps coming.
“I make a good amount of money from my rental property,” said Joseph. “After all the expenses, such as taxes and insurance, I make a net income of about $1,500 monthly. This is a great way to supplement your income and can really help to build wealth over the long term. Overall, it was a great experience and I’m glad I invested in becoming a landlord. It’s been a challenging but rewarding journey.”
Take Our Poll: Are You Planning To Buy or Sell a House This Year?
I’m a Self-Made Millionaire: These Are the 6 Investments Everyone Should Make During an Economic Downturn
Paint and Plywood: One Unit, No Problem.
Cara Berkeley is the founder of Penny Polly, a site dedicated to money-making and entrepreneurialism. Unlike Joseph, she went into her house-hacking journey with a wealth of experience. She’s a seasoned real estate investor who has been featured on Realtor.com, Apartment Therapy and other top sites.
But that’s not the only way she’s different from Joseph — Berkeley took the unusual route of house-hacking a single-family home.
“I was living in a home with a master suite located on one side of the home, off by itself and just past the kitchen,” she said. “That side of the house had its own entry door to the outside.”
To create separation between her area and that of her future tenant, she placed a keycode lock on the master suite’s entry door and created a false wall by nailing plywood over the kitchen opening into the joining hallway. Then, she dressed it up by covering the plywood with chalkboard paint.
Finally, she listed the master suite on Airbnb and Vrbo.
“Guests had their own suite and no one was in the home with me due to the make-shift wall I put up,” said Berkeley. “I made anywhere from $2,000-$2,500 a month. My entire mortgage was paid, so I lived in a beautiful home for free.”
More From GOBankingRates
