Are you ready to discover the life-changing benefits of house hacking? In this eye-opening episode, Neil Henderson and Clint Harris reveal insider tips and strategies to help you master house hacking and unlock your financial freedom. Whether you're a seasoned investor or just starting, you won't want to miss this informative deep dive into the world of house hacking.

Key Takeaways

• House hacking is a powerful strategy for building wealth and achieving financial freedom by living in one part of a property while renting out the rest, effectively reducing or eliminating your mortgage payment.
• To get started, identify the right property for house hacking by considering its location, amenities, and proximity to hospitals, universities, or event venues, which can attract both short-term and long-term renters.
• Networking with local real estate investor groups, realtors, and mortgage brokers can help you find the best properties and resources for successful house hacking.
• Evaluate potential properties by running the numbers for both long-term and short-term rentals, using websites like Rentometer and Airdna to determine rental projections and compare the highest and best use of the property.
• House hacking is not limited to vacation destinations; it can also be successful near airports, hospitals, military bases, and other areas with a consistent demand for accommodations.
• Successfully implementing house hacking can not only cover your mortgage payment but also generate extra income, which can be invested in truly passive income streams, further growing your wealth.
• House hacking involves some lifestyle adjustments, but the financial benefits can be significant, making it a powerful lever to pull for those seeking financial freedom through real estate investing.

Time Stamps

[00:00] Intro

[01:12] Definition of house hacking

[02:45] How house hacking works at a high level

[04:02] Benefits of house hacking

[05:15] Various house hacking ideas

[08:30] Risks and challenges of house hacking

[11:17] How to get started with house hacking

[14:25] Using websites like Rentometer and Airdna for rental projections

[18:05] Local networking for finding properties and resources

[21:42] Evaluating properties for long-term and short-term rentals

[25:52] Growing wealth through investing extra income from house hacking

[30:07] House hacking as a lifestyle choice

[37:38] Conclusion and importance of house hacking in achieving financial freedom

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Mentioned in this episode:

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Are you struggling to find a way to maximize your

income and achieve financial freedom?

In today's episode, Clint Harris and I are talking about house hacking, a

unique solution to help you skyrocket your journey to financial independence.

We'll dive deep into the world of house hacking, revealing powerful

tips and strategies to help you achieve your financial goals.

Stay tuned to learn how to overcome the challenges and risks.

Find the perfect property and unlock the life-changing benefits of house hacking.

Don't miss this opportunity to transform your financial future.

Let's get started.

Welcome to the Truly Passive Income Podcast.

I'm Neil.

And I'm Clint.

On today's episode of the Truly Passive Income Podcast, we're gonna talk about the

benefits and challenges of house hacking.

Before we do, I wanna give you a definition, but right before that, I wanna

let you know that house hacking, although it's something that's very near and dear

to my heart, is not a passive strategy.

It's very much an active strategy.

And that may not be what the focus of our podcast is, but it's something that if

you learn early, Can get you to a point where you really reduce your housing

expense, that creates income that can turn into passive investment funds for you.

So that's the focus of today's episode and it's a big stepping

stone that Neil and I both took in our own personal investing lives.

The definition of house hacking and its origins.

House hacking is a way to leverage the power of real estate to

eliminate or substantially diminish your personal housing expense.

That can be done in multiple ways.

The most common are renting out rooms to roommates that cover the mortgage,

living in one unit of a duplex or triplex, and renting the extra units

either as short-term rental or long-term.

Or purchasing a house with an accessory dwelling unit using the

rents from one to allow the owner to live for free in the other.

And that covers the expenses of the property.

Often a young investor's first house.

The first house hack may be a duplex and that can continue to scale forward

with a duplex eventually turning from a house hack where one unit is used

as a rental and the owner lives in the other that can turn into two rental.

As the housing needs increase for the investor, and in short, you live for

free because someone else pays for your living expenses as you move forward.

It's a great definition, Clint, and I thank you for bringing up the

point that this is not a passive strategy.

it is an act of strategy, but to me it's the ground level investing strategy for

someone getting started in real estate.

I have so many friends and relatives that, I try to encourage to house hack.

I try to show them the benefit it's had for me.

and it's, not everyone is willing to do it and I think more people should.

And I think that what you should take away from that is that in order to

live a life like no one else, you need to live a life like no one else.

and I think house hacking is one of the keys to doing that.

Alright, I'm gonna do a quick high level overview of how house hacking works.

And I'll use myself as an example.

but first the traditional method that people think of when they think

of House Hacking if they have any experience with it, is where somebody

buys a multi-unit, a small multi-family like a duplex, triplex, or fourplex.

They live in one side and then they rent out the other units.

That's more of the traditional method.

We bought a house in Las Vegas.

You've heard us talk about this, that had an auxiliary

dwelling unit on the property.

Call it a granny flat, call it a guest house, whatever.

we had two options when we did that.

We could either rent that out long-term to someone, or we could

rent it out as a short-term rental.

We chose to rent it out as a short-term rental cuz it didn't

have a large, full kitchen.

It didn't have laundry facilities.

It just worked better as a short term rental.

There are people who, convert rooms, into auxiliary dwelling units.

That's what we did with our beach house.

in Carolina Beach.

We bought a five bedroom, four bath house that had a bottom

level with a separate entrance.

We did some renovations.

We converted that into an auxiliary dwelling unit, that can be locked off,

and we rent it out as a short term rental.

Some of the factors that you consider you should consider when you're

deciding to house hack, include your own skills, your own sort of lifestyle.

Obviously somebody who, has a family is probably not going to want roommates,

whereas somebody who's maybe a college student or just starting off, they're

cool with living in a five bedroom house that's got multiple roommates

that are each paying rent to them.

Or, you also need to consider local laws and regulations.

it's something that we ran into in Las Vegas where when we started doing

our short-term rental house hack, It was legal cuz nobody, like short-term

rentals weren't that big of a deal.

But as time went on, the local laws changed, the HOA changed and

we eventually did get shut down.

Clint, why don't you talk to us about a little bit more detail about some

of the benefits of house hacking.

So in talking about the benefits of house hacking, I

think that it actually goes deeper than a lot of people would think.

Obviously, the obvious is it's reducing or eliminating your housing expense.

The average American spends 30% of their income on their housing

expense for their family, and so obviously getting rid of that.

It's a huge jump forward.

If you can give yourself a 30% raise by not having a

mortgage or rent, that's huge.

But there's actually a lot more to it than that coming from my

perspective after having done it.

I did my first house hack as a young man when I bought a duplex.

I lived in one half and had a long-term tenant in the other half.

And lived there for free.

And I will tell you this, if you ever live without a mortgage payment,

especially as a young man, it's hard to ever go back to having one.

It changes your mindset.

And then I also did a house act recently, just a couple years ago when

my wife and I moved to Wilmington.

We bought a duplex, two blocks off the water at the beach, and we lived in a

three bed, two bath on one half, and the other half was another three bed, two bath

that we turned into an Airbnb property.

And that was not only covering our mortgage, taxes, and insurance,

it was paying us 1400 bucks a month to live at the beach.

And again, it was total game changer and changed the way that we think I would

argue that the benefits of house hacking are a lot more dynamic and deeper than

just eliminating, your housing cost.

There was a study done, it's been done for several decades now, talking about

what are some of the traits that the most successful business people, specifically

business entrepreneurs, as all the cream rises to the top of the people that are

very good at what they do, what are some of the most common traits that they have?

And for a long time, the most common trait among highly successful

people was emotional intelligence.

The ability to identify other people's motivating factors and their drives and

their needs, and look for opportunities to create win-win situations.

And having emotional intelligence to navigate, people, places and

circumstances is something that was really beneficial and created a lot of success.

There was some studies that showed recently that actually the same study

that over the last 10 to 15 years that started to have a significant

shift and the people that are having the highest levels of success.

Yes, emotional intelligence is an important part of that, but the highest

factor of the people that we're having the most success is adaptability.

And I would argue that it's because we live in a very rapidly changing world.

One of the things that I think is a fringe benefit of house hacking is that it causes

you to put other tools in your tool belt.

As a property owner, as a property manager, as a handyman need to be or

anything along those factors, it's creating a level of adaptability and

it's reframing your mindset and it's giving you financial incentive to

increase your skillset, and that's going to continue to have benefits that play

out across the rest of your career.

So to get to some of the actual benefits, yes.

Reducing or eliminating your housing costs, getting rid

of 30% of your fixed income.

You're giving yourself a 30% raise right off the bat.

On top of that, you're gaining flexibility.

the opportunity to potentially travel more or be location independent.

The new rich typically are people with mobile jobs, especially since

Covid in the last couple years.

People having the ability to move and if you've got your mortgage

covered, whether you're there or not, you potentially even can move

out and rent the other unit as well.

It creates flexibility there as well.

It's also giving you an introduction into property management,

whether you like it or not.

Your house hacking is training wheels for people that are aspiring to be

active investors, active landlords and active property managers.

it's also gonna force you to take a look at long-term rentals versus short-term

rentals and get exposure there and learn, "Ok, what's the highest and

best use of the space that I have and the dollars that I have to invest?"

Eventually for many people, that's your first introduction into growing

wealth through passive investing.

They take the money that you're not spending.

If you're house hacking and you don't have a mortgage payment, if you just

take that money and you turn around and spend it, you're missing the point.

That can help but you're hitting the ceiling there.

The idea is, Take that and invest it into something else that you

don't have to trade your time for.

And for many people, that's their first foray into passive investing.

the other is that you're building equity in your property and that

somebody else is paying for.

So it's continuing to build equity that someone else is paying down.

and those are just a few of the benefits, and I'm sure that there's more along with

that, it helps you mitigate risk in case you lose your job or something like that.

Something else is subsidizing your monthly income, but you still need to be aware

of the risk of, zoning restrictions, regulations, and things like that, that

come along with that lender restrictions and your ability to rent out other

units, homeowners associations, making sure your insurance covers rentals and

things like that and also making sure that you're prepared for the CapEx, the

capital expenditures that come along with wear and tear on a rental property,

five to 10% being set aside for capital expenditures or AC unit or roofs or,

vacancy, 5% set aside every year just because people are moving in and out.

those are just a few of the benefits and risks that come along with it.

Okay.

Neil, anything to add there?

Yeah, I wanna add, you said some great things

and I want to interject a couple of personal experiences.

One, the whole idea of reducing or eliminating your housing costs.

And like Clint said, once you do it, it is really hard, it's addictive.

it's hard to go back to, funneling out $2,000 a month or $3,000 a

month for, rent or mortgage without having someone else cover that.

we experienced that in Vegas.

it helped my wife, she was able to, be a stay-at-home mom, early

in our son's life because we had that extra income coming in.

When she went back to work, we were able to funnel a large amount of

money into paying down our mortgage.

Now knowing what I know now, I probably wouldn't have done that

given how low our mortgage rate was.

I would've probably put that aside and used it to invest in other passive assets.

But that is, that's one thing that you con consider doing, but that.

Those actions allowed us to build a huge nest egg, to then roll

into another house hack in North Carolina, where we're literally

across the street from the beach.

You're making a really good point there.

You just said it, you just said your house hack in Vegas.

And yeah, you may say that I wish we had a lower rate which I hadn't put as

much money into paying that house down, but the market continued to appreciate

and when you sold that property, you still had all that equity come back

out and that helped you roll right into the next house hack where you are

here and you're getting paid to live across the street from the beach with a

beautiful ocean view on all three levels.

I might add, one of the things is that I think you make a great

point in that house hacking.

It doesn't have to be mutually exclusive for your next goal or the

next house that you're going after.

For instance, the first house hack that my wife and I had here at the beach, we were

getting paid to live in that property.

And frankly, it was one of the reasons why I didn't wanna leave for the long time.

My wife came home and said, Hey honey, here, sign this paper.

We're building a brand new house.

And know, if you want to come, you're more than welcome, but that's

where me and your son will be.

And I love being married.

So we did that and we moved into our new house a couple months ago.

But what happened was we still own that duplex and the downstairs from that

duplex pays the mortgage taxes, insurance, and about 1400 bucks a month on top.

The top, which we just finished renovating pays for the new house.

So it's a continued house hack.

It continues to pay forward.

And we built a house that's bigger and nicer than anything I would ever

think that we would be able to afford.

And the reality is we're still getting paid to live here and we don't have

a mortgage payment because that house hack continues to move forward.

So a lot of times, if you're thinking about getting into house hacking,

and that's the next thing we're gonna talk about is how to get started.

Keep in mind it's not always about that property.

It can be about the property after that or the property after that, and eventually

setting yourself up for they can start generating income for you and also freeing

your personal income that you can turn around and take to invest into truly

passive strategies that you don't have to be active in that are going to get you to

the point of not trading time for money.

Neil, why don't you tell us about some of the ways to get started and some of

the ways that you got started with yours.

Sure.

so some of the top house hacking ideas that you may or may not be aware of.

Obviously, we talked about the most common, which is people buying, a

small multi-family like a duplex, triplex, or fourplex and living in it.

Now, one of the amazing things about buying a small multi-family is that

you can use a residential mortgage.

It's not a commercial property, so you're using residential mortgage,

which means you can often we'll get into some of the benefits there.

But that's one of the key things about it.

You can rent out a spare room, as we've talked about this, it's not for everyone.

I've got a good friend of mine in Las Vegas named Spencer Cornelia, who has

made a killing, buying large homes.

We're talking 4, 5, 6 bedroom homes in Las Vegas, Nevada, and renting them out by

the room, sometimes furnished, sometimes not partially furnished, whatever.

Now, you gotta be careful there with some of the legal zoning laws around

occupancy and non-family members.

But if you're willing to tread that line like Spencer is, he's being paid to live,

in his house and he's building equity.

it's especially great for, people who live near colleges.

you can rent out rooms to students.

a lot of people, think, oh my God, I wouldn't wanna enter to with a student.

They're gonna destroy my property.

typically that's why, you deal with mom and dad and you get a deposit from mom

and dad and if they trash the place, then you get to keep their deposit.

If you've got, an extra structure on your property.

Our friend, that we work with, Drake.

Drake Massa just bought a house he's got currently, he's got a garage, in the back.

It's like a carriage house that's got a top level.

our partner Erik Hemingway, converted his old carriage house, kept the

garage, but he added a second floor to it that has a dwelling on it.

He can either use it as a short-term rental or he can,

just host family and friends.

He could do it a long-term rental.

you could do a live-in flip.

That's another version of house hacking.

Our friend, Mindy Jensen and Carl Jensen, they have made so much of their wealth

from live-in flips and things like that.

You can rent your place out as a vacation home.

If you have a mobile job, that allows you to go someplace and you

live in a place that's got highly seasonal vacation traffic and you are

willing to, depersonalize your house.

And go somewhere else for a period of time that's got a lower cost

of living and rent out that place.

you could potentially pay your entire mortgage for the

year in a three month period.

and then it's also, we won't get into this much detail cause I don't

have a whole lot of experience doing, participating in home sharing platforms.

there are people who travel the world just home sharing, jump around,

go someplace for a period of time.

You wanna go and live in Europe, for three months.

Go do it.

They're home sharing platforms that can do that.

Clint, why don't you talk about some of the risks and challenges that

you might face with house hacking.

Yeah, so the number one thing, let's say

you've got the space, right?

you find a way either through, let's say an FHA loan or a VA loan.

My first duplex, I was 24, 25 years old, I believe.

I bought with a 203K FHA loan where I put 3.5% down, and it gave

me money to do some renovation.

So I fixed the property up with very little money down.

Let's say whatever it takes for you to get into your first property that's

got an accessory dwelling unit, a finished basement, a duplex, whatever

it may be, let's say you're there.

So the question is, what's the highest and best use of the space that you have?

How do you run the numbers to determine what's the best way to use it?

And a lot of times the best way to use it is gonna determine it's

gonna be based upon what market you're in and where you are.

The two ways that, and I would recommend doing that is number one,

look at the space that you have.

Does it have a kitchen?

Is it face long term livable space, things like that.

If so, then you should go to rentometer.com.

That's a great place where you can put in the address, put in the number of bedrooms

and bathrooms, and what it's gonna do is it's gonna look at around a three to five

mile radius around your property as to what other properties are renting for.

You put in two bedroom, one bath, three bedroom, two bath, may,

whatever it may be, and it's gonna spit out a median projection of,

let's say, $1,250 a month in rent.

And you can see what the 25th percentile is, the 75th percentile is.

And you can say, okay, my property has granite countertops or laminate

countertops, or carpet or LVP or whatever.

That's gonna give you a really good.

Of what you should rent that property for as a long-term rental 12 month lease.

And then potentially you can look at, maybe do a six month lease and increase

the monthly rent cuz people are willing to pay more to get a shorter lease.

So that's something you can do.

And you take that number and then you look at your mortgage

and see where's the break even?

Is that gonna cover it?

If it's not, how much, how close is it gonna be?

The other thing you should look at is, maybe there's another use of the

property that's a higher and better use, and that would probably be as

an Airbnb and don't be confused.

This is not just next to Disney World or next to the beach or Nashville or Vegas.

Short-term rentals work everywhere.

Especially some of the things that have really jumped off the map is around

military bases that have a graduation of graduating class of soldiers.

Every weekend, any unit within five to 10 miles of there is going to be

rented out every weekend of the year that they have a graduation, which

most of them is 52 weekends a year.

there are properties that used to rent out long term for a thousand dollars a month

and now you can get $800 per weekend.

it's a three x over what people were traditionally getting.

obviously if you're near event venues and things like that, but also if it's

anywhere where people are traveling for work or film or anything else.

Don't be surprised if it works in a place that you may not

think it originally would.

And the best way to check the numbers on that is go to a website called airdna.co.

not dot com, but airdna.co.

On the left side of the screen, there's a button that says Invest.

If you click on that, there's a tab called the rentalizer tab.

You can click on the rentalizer, you can put in the address of your property,

put in the number of bedrooms, and.

That is going to give you a projection of what that property

would've done as a short-term rental over the previous 365 days.

That's a data scraping website that scrapes the data from Airbnb, VRBO,

HomeAway and booking.com for the previous 365 days to give you a projection

of what your property would do.

Now, once you get that number, that's a gross rental analysis.

Be aware that the cleaning fees and the linen costs are lumped

in there as well, so you need to back that out on most properties.

It depends on if you're doing the cleaning, if you're doing the linens,

but let's say that you're not and you're paying somebody else, it's usually gonna

cost you between 15 to 22, 23%, depending on the size of the property and the size

of the bed formation for your linens.

That's usually what you're gonna spend on cleanings.

But you might find out that as a long-term rental, your property is

worth $1,200 a month, but as an Airbnb it might be worth $2,500 a month.

it's pretty often that we find that in our market.

So it just depends on what you are.

So that's the next thing, is learning how to run the numbers.

Look at what's the property worth as a long-term rental, what's it worth as

a short-term rental, and then knowing to factor in, money for expenses.

So now that I've given you some of the basic

versions of the different types of house hacking, let's talk about

some of the risks and challenges.

It's not all sunshine and rainbows.

So the first thing is that you are a managing tenants and, you are a

landlord, you are a property manager, and you're going to have to be dealing

with that and if you hate people, Maybe not for you or you're going

to be handing off some of that work to somebody as quickly as possible.

We had to be short term rental managers with, a guest house that

was right outside our property.

the biggest issue that we had to deal with was, the laundry.

We did the laundry ourselves, and every day we'd have to, anytime

there was a turnover, we'd have to bring in the laundry and.

you gotta realize that is now your job.

you gotta have, keep in mind to pick a desirable area.

You can't just go, Ooh, small multifamily, duplex, I'm gonna buy that.

I'm gonna live in one side and I'm gonna rent it out to other people.

if you're buying a duplex in a place that requires you to gun, to collect

rent, you're not gonna enjoy life very.

You need to really keep that, keep that in mind.

You're picking an area that's desirable for tenants, whether

they be long-term or short-term.

you need to make sure that you're in compliance with local law commissions.

As I said, when we started our short-term rental house hack in

Las Vegas, it was legal because nobody knew anything about it.

as time went on, the local laws changed and eventually.

They caught us and they shut us down.

first thing you should do is Google, if you're planning on doing short-term

rental, Google short-term rental ordinances with the city name of

where you're looking at going.

you also need to look at the zoning laws.

Become an expert in zoning laws, call the zoning department.

Or look for a real estate agent who has experience, with small

multi-family and things like that.

there are areas that don't allow you to have any kind of multi-family at all.

If you're looking to build or add units to your existing property,

that's why you should become familiar with local building codes.

They may restrict a conversion of a single unit into multiple units.

they may restrict a number of units you can stick on a plot of.

And they may restrict the building of additional units.

As I said, when we converted our downstairs space at our beach house to

an auxiliary dwelling unit, you know what, if we hadn't done our research

and talked to the county, they could've come in and said, no, you can't do that.

That's not allowed here.

So you really want to find out what that is.

You wanna find out what the lender restrictions are.

Clint, when, in a moment he is gonna.

Talking to the lenders and you need to be upfront with a lender about

what you're planning to do because there are some, there are some loan

products that are not gonna work if you are doing short-term rentals.

if you've got tenants, if it's an investment property, you really need to

be upfront and honest with your lender.

if you're buying in an area that has a homeowner's association, they

may have restrictions on having long-term rentals, they may have

restrictions on short-term rentals.

You gotta talk to them and find out what's allowed.

You gotta look into what sort of insurance coverage you may need.

Once you have tenants, that's not just a straight homeowner's policy.

You need to talk to your insurance company about what sort of coverages

you're gonna need for a long-term tenant or short-term tenants.

Alright, so like I said, you're gonna wanna research understand the local

zoning laws, building codes, and other restrictions before committing.

And then you may want to engage a local zoning attorney or real estate

agent to provide guidance on how you can navigate those restrictions.

The other issue the you may be dealing with is that now that part

of your housing is dependent on other people paying your mortgage.

So you need to keep in mind that you may have vacancies.

you can't just spend every dollar that you earn from this venture.

You need to be putting money away for reserves.

now some lenders may require this.

if you don't take the landlord and managing, jobs seriously,

you're not gonna be a place that people are gonna wanna live Very.

You're gonna have a lot of problems with the tenants.

You're gonna hate it.

and you're gonna abandon it pretty quickly.

So you really need to recognize that this is a side hustle.

It's probably one of the best paying side hustles you will ever do,

but you need to take it seriously.

and then finally, not setting tenant boundaries.

this is one of the oldest mistakes that, new landlords.

you need to have, a lease in place.

You need to have exactly what hap what happens if they're late on their payment.

And you need to stick to it.

You can't become friends with your tenant.

I know Brandon Turner talked about when he was a landlord for, His little

small multifamily, he often didn't tell people that he was the owner.

He would tell them that he was the property manager, and if there was

any kind of problem, he would say, oh, I need to talk to the owner.

And he would get back to them and tell them, and that allowed him to create a

little bit of extra distance for himself.

So Clint, why don't you walk us through some of the first steps if you decide,

all right, hey, all this sounds great.

How do I get.

the first question you've gotta do is

figure out what you can afford.

So if you're trying to be a property owner, if either you already own a home

or you're looking to buy all, the first step is always to talk to a lender.

You've gotta talk to a bank.

I would suggest talking to multiple banks, often your local

bank is a good place to start.

credit Union is a good place to look.

Also, mortgage broker.

That can look across multiple different platforms to shop around,

depending on what your needs are.

But that's gonna be the step number one is asking the question and getting

the answer of what can I afford?

Now, in terms of buying a property, even a multifamily property,

you have a lot of options.

You can use a conventional mortgage on anything that's four units or

less, but you also have options of using an FHA loan which is a

federally backed loan that allows you to put three and half percent down.

If you got a military background when you're a veteran, you can use a VA

loan, which sometimes is up to 0% down.

even if you find a property.

My first property that I didn't have a lot of money in the property

needed renovation, so I used what's called a 2 0 3 K F H A O.

That's where it's a federally backed loan.

I put down three and a half percent and it allowed.

To finance some of the money that I needed for renovation, for

new flooring and kitchen and a bathroom, and things like that.

So the stipulations of that are gonna depend on your income

level and where the property is and how much work the property.

But those are some cheap and easy ways to get into a property that

may be up to four units or have a finished basement or accessory

dwelling unit or something like that.

So the number one thing is find out what can I afford and then

what's the best product to help

me get there.

Which wanna add that there is a new, because house

acting is becoming so popular.

There is a new program through, I believe it's through Fannie Mae,

and we will have to, we'll have to do some research on this, but they.

Include, allow you to include the income that you would potentially make

on, those auxiliary dwelling units or additional units in the, in factoring

in how much property you can afford.

so like I said, talk to a lender.

That's the first step.

That's a huge deal, especially if you don't make enough

money to qualify for the loan.

If you can show that part of the property is gonna continue to bring

in additional revenue, that may be enough to get you qualified.

It's certainly something to look into.

The next thing is, okay, you figured out how much you can afford.

and how, what loan product you can use to go after it.

Then you've gotta find the right property, right?

and there's a lot of things you have to look at.

If you already have a job, then obviously it's gonna be a

certain geographical location.

I think most people are probably tied down to a location before they stumble

around to learning about house hacking.

But if not, then obviously you can get online and do a lot of exploration

for a lot of different areas.

but the idea is you, if you're looking for the.

Don't find the cutest property that you like in the best area of town

that you, where you really wanna live.

Your job is to on your market and ask the question that a real estate

investor would ask of what's the highest and best use of every dollar

that I have to spend in this market?

Where can I spend it that's gonna give me the highest return?

And it might not be on the street that you like or in the neighborhood that

you like, but if it's going to keep you from spending 30% of your income on your

housing, And allow you to take that and invest at other places in the law run.

You will get out of that neighborhood and onto bigger and better things,

even faster than you would.

If you lived on the street where you wanted to be.

So it's a means to an end.

Something to keep in mind there.

I think what you're getting at is that you need to have, you

can't just have a homeowner's mindset.

You need to have a little bit of a homeowner's plus an investor's mindset.

and that's something that's really key.

okay.

So what are some of the things that an investor looks at, that's

gonna be job market in an area, it's gonna be population growth.

It's gonna be potential for appreciation.

it's gonna be is are there any zoning changes coming along, things like that.

There's a lot of different things that you're gonna look at outside of whether or

not you like the backsplash to determine whether or not it's a property that.

That might be a good fit for you.

And a lot of times that's gonna be proximity to local amenities if it's

close to a hospital where you might have nurses or a university that might have

grad students or something like that.

And then on top of that, if you don't know.

This is a who not how situation.

You don't have to know how to find the best properties for house hacking.

What you need to do is find out who is the person that will know

how to find those properties.

The best way to do that is to reach out to a local real estate agent.

I would also argue, that one of the things that's really.

people don't talk about enough and it may not be undervalued, but I think

people don't fully appreciate the value that can come from it is networking

your local real estate investor groups, networking and talking to other people

that are house hacking or that are doing short-term rentals or long-term

rentals or that know the mortgage brokers or that know the realtors.

It's a classic scenario where you can feel overwhelmed trying

to find the lender product.

Overwhelmed trying to find the right product, trying to

find the right part of town.

You don't have to know how to do that.

Your job is to figure out who does know how to do that, and networking

is one of the best ways to do that.

in terms of finding the local amenity properties or real estate agents, that's

something I would highly recommend.

Alright, so why don't you talk to us about some of the

types of properties that you might be telling a real estate agent to look for

you that would work as a house hack.

So it's gonna be anything that has multiple units.

Your idea is, what you're trying to go for is where you have a difference in

the ratio between sets of fixed overhead on the property and rental units.

What I mean by that is you have one mortgage, one set of taxes, usually

one set of utilities or utilities all lumped together, but you have two rental.

One that you can live in and the other that you can rent out, or

three, or an accessory dwelling unit.

And maybe it's not a true duplex, but maybe it's a unit that has a kitchenette

and it, somebody may want not wanna live there full-time, but somebody may

wanna stay there for a long weekend and use it as a short-term rental.

So anything where you have multiple livable spaces with a single set

of fixed overhead, that's your key.

So the buzzword.

Duplex, triplex, quadplex, finished basement, granny suite, mother-in-law

suite, additional flat room over the garage, apartment over the garage,

attached living space, anything like that.

That's what you're looking for.

And then even after you have that's not the end.

You have to determine what's the highest and best use of that space.

All right.

Why don't you run us, walk us through some of running the numbers obviously, a lender

is gonna be your first step, but then once you've got an idea of what you can afford,

you're gonna need to sit down and analyze this like an investor, you're gonna

need to run the numbers and there's two situations we're gonna talk about here.

One, which is running the numbers for a long-term rental and running

the numbers for a short-term rental.

So why don't you walk us through some of that, Clint.

So the best thing to do is you want to just know what

the property's gonna bring in.

You gotta start with brass tacks right before you look at

your principal interest, taxes, and insurance, and utilities.

You need to know what that is when you buy the property.

But the real question is, What's it gonna bring in as a long-term?

And the best way to determine that is to go to a website called rentometer.com.

You can go to rentometer.com, you can plug in your address and your number of

bedrooms and bathrooms, and it's gonna look at the data of around a three mile.

Radius around that property based upon the amenities that you put in terms of

the number of bedrooms and bathrooms.

And it's gonna give you a median projection of what a 12 month

lease looks like in that area.

So it's gonna spit out 50th percentile, might be say 1250 a month, but it's

gonna show you what 75th percentile is.

The 25th percentile, and you can judge for yourself, okay, I've got stainless

steel appliances, I've got granite countertops, I've got laminate, I've

got LVP I've got carpet, whatever it.

It's gonna give you a real good idea of what the projection in that market is.

and that's the first place you're gonna go to get a number of, of where you stand.

And the question is, what's your mortgage?

and is that gonna cover your mortgage?

How close is it gonna be?

even if you're, you only have to pay a couple hundred bucks

a month, that's fantastic.

But the.

Question is, is that the highest and best use of the property?

And what I would encourage everyone to do is to compare.

You can get on Craigslist.

In fact, I would encourage you to get on Craigslist and look at

houses for rent and switch from the gallery view to the map view.

The map view will allow you to search your area of town, look around for other

properties that are for rent, right around there, and click through the

pictures and look and see what they're offering and look and see what they're.

That combined with Rentometer.com is gonna give you a real good idea of what

you can charge and what are some of the amenities that seem to be popular.

On top of that, don't just think that Airbnb or short-term rental

properties only work at the beach.

That's not the case at all.

They work a lot of places you would never expect.

Close to airports, close to hospitals, close to event venues.

travel nursing, anywhere where there's film industry, things like.

Anywhere near a military base that has graduating a class of soldiers, every

weekend fort, Jackson and Columbia, South Carolina is an area that exploded

because it's one of the biggest military training bases in the country, and

they graduate the class of soldiers every weekend and the houses, the

little small ranch houses around that.

They used to rent for a thousand dollars a month.

Now we're going for 800 to a thousand dollars per weekend because there's

a family coming in every weekend for a soldier's graduation, and it's a

three to four x what the traditional rents were for that type of property.

So don't think that it just has to be a vacation rental in a vacation spot.

That's not the case.

So one thing I would encourage you to do after you think you found

the property or you're researching.

Go to airdna.co, not.com.

It's dot co.

On the left half of the screen, we'll see a button that says Invest.

If you click on that and there's a feature that you can click

old called the rentalizer

The rentalizer allows you just rentometer to put in.

The address and the number of bedrooms and bathrooms, and it's a data scraping site.

It's gonna pull the listings from the previous 365 days of any transaction that

occurred across Airbnb, V R B O, HomeAway, or booking.com, and it's gonna give you

a gross rental projection of what that property would do as a short-term rental.

Now it's gonna lump into cleaning fees.

That's usually gonna be between 15 to 23% of that gross.

That's gonna be the money that goes towards cleaning fees and linen costs.

But especially if you're house hacking, you're doing the cleaning yourself, or

you're doing the lineage yourself, that's money that can stay in your pocket.

Now it's a very active strategy.

Neil said, this is very active side hustle and it, and you're

creating a job for yourself.

It can immediately be a 30, 40% raise to your income if it completely

gets away with your housing expense.

In fact, a lot of times, and especially in our case, you get paid

to live there and someone else is paying your equity down for you.

So those are two ways that I encourage you to run the numbers to look after

you found the property or you found the people that know how to find the property.

You need to look at the numbers and ask yourself the question, what's the

highest and best use of the property?

And keep in mind that to put the long-term rental, you're just gonna rent it out.

But if it's an Airbnb or even a mid-term rental on furnishedfinder.com, and

you're looking at travel nurses, if your local hospital utilizes travel nurses,

you're gonna have to pay to furnish it.

But just look at what that cost is going to be.

And at the end of the day, figure out how much of my mortgages is gonna cover.

Is it gonna cover all of it?

And if it does, what am I gonna do with the.

Your job is not to live off that money.

Your job is to take that money and find a way to save it and eventually invest

it into truly passive income streams.

And that's obviously why you're listening to this podcast.

The point is you take that money and you find ways to passively invest it

in asset classes that are gonna stop you from trading your time for money.

One of the best ways to do that is through education, which is why

you're listening to this podcast.

I commend you for that.

But also on top of that, again, local networking.

The people in your local group are gonna help you learn how to operate a long-term

rental or a short-term rental, or they're gonna point you in the direction of

people that you need to find a property that's gonna be the perfect house hack.

To break free that income that you can invest in a truly passive investment.

Alright, so that's our high level overview of house hacking.

on this episode, we covered, our definition of house hacking.

We talked about how house hacking works at a high level.

we talked about some of the benefits of house hacking.

We gave you some various house hacking ideas.

We talked about some of the risks and challenges of house hacking, and

we talked about how to get started.

So I encourage you if this is something that you think you could do, make this

priority one, short of making sure you, you're, you've got your budget handled.

If you've got your budget, your emergency expenses handled.

This is a huge lever that you can pull.

Clint, and I can't emphasize enough the power of house hacking and

what it can do for you if you are willing to go down that lifestyle.

Cuz it is a lifestyle choice.

but it's a huge one.

Alright, so thanks for listening.

Thank you so much for listening to this episode of the Truly

Passive Income Podcast.

If you liked this show, if you think it would be useful for someone else,

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If you have any questions, don't hesitate to let us know on Twitter.

@TrulyPassive and remember, with truly passive income comes freedom

of time, place, and the freedom to pursue your higher purpose.