With prices going up, house hacking is becoming more popular to keep prices manageable. Today there are tons of options such as rentals, AirBnBs/Vrbos, getting roommates, ways to hack your own house, and lately, some new opportunities are coming up for single moms. HOWEVER, each of these options have their own pros and cons and David is going to separate the good hacks from the bad hacks.
Here are some topics from today’s conversation:
- Pros and cons of rental properties
- Pros and cons of Airbnbs
- House hacking with your own house
- House hacking for single moms
[01:28] Buying Rentals
Here’s the deal with investing in rental properties. It CAN work. The ROI on rentals is insane when everything works out. Many many people reach out to David and say, “Well, I can’t afford a mortgage in my area because it’s too expensive, but I can buy a cheap home in a cheap area and make $500 a month!” Okay, great. If you can work out the financials for buying a cheap home in a cheap neighborhood, you can most likely work out the financials to buy your OWN home first. Here’s the deal: you are almost always better off buying your own home than buying a bunch of rentals first. Then, rent out the house you bought and then buy another one.
[08:50] The Ups and Downs of Airbnbs
Short-term rentals sound like an amazing idea UNTIL you consider the vacancy rates. And you need to consider the vacancy rates. Oftentimes, Airbnbs will be vacant for the equivalent of one or two weeks out of the month. Also, there’s a ton of problems with these short-term rentals with local municipalities who are pressured by the hotels to impose regulations and taxes that could make them less cost-effective overall.
[16:41] Some Great House Hacks to Consider
David recalls his college days for this house hack. Think about frat houses: it’s a bunch of folks living in one house who could all pay rent. Here’s the situation: you get some money together for a down payment, you buy a house, then you get together with some friends or siblings or whoever and they pay you rent to help you with the mortgage. So, you’re the homeowner with paying roommates. They have a place to live and you own your house. Win-win.