I do something called house hacking (see more info here). This is a strategy by which you minimize your housing expense through a variety of methods. I’ll list a few of the more popular here:
- Buying a multi-family property and living in one of the units. The most commonly cited is a duplex, but any 2-4 unit will work.
- Buying a house and having roommates.
- Buying a house and airBnBing (which is an awkward word) out the (spare, mostly) rooms.
- Buying a tiny/cheap house. Some might argue that this isn’t really house hacking, but I’m the one writing here, so what I say goes. So there!
- Living in a van (I shit you not).
I do the one where you live with roommates, and it’s a particularly awesome way to minimize your housing expense. I bought a 4 bedroom, 2 bath house in January of 2016 for $29,500 (I think – it’s been a while). I fixed it up, lived in it for a while with some roommates, and refinanced it for $36,000 in September of 2016. Since then (until this month) I’ve lived with one or two roomates, so let’s talk about why that’s amazeballs.
First, a summary of my typical housing expenses (numbers are averages because I said so):
- Mortgage: $375/mo. I escrow so this includes insurance and taxes. Because I live here, I also get to claim the owner-occupied property tax exemption.
- Power: $182/mo (this is annualized as the winter months are much, much more expensive)
- Water: $36/mo
- Trash: $16/mo
- Internet: $50/mo
- Sewer: $12.50/mo
- Housekeeper: $60/mo
So how does all this help? Quite a lot. I rent each room for $250/mo, so with one roommate my mortgage is $125/mo, with two I make $125/mo. That’s pretty awesome! Making money every month just on what’s normally an expense. The lease is written in such a way that we also split bills based on the number of people, so with one roommate we each pay 50%, with two we each pay 33%. Based on average bills of $344/mo (not including sewer as the property owner always needs to pay that, so it doesn’t get passed along to tenants) with one roommate my net bill amount is $172, with two roommates it’s $115.
This is a big deal. When accounting for all housing expense then, living with one roommate means a net monthly housing expense of $297, living with two roommates means a net monthly housing INCOME of $10. All while my monthly mortgage payments knock $171 off my principal balance toward my 10/01/2031 payoff date. Looking at the math it’s clearly worth dealing with the (mostly relatively) minor annoyances of living with a roommate for this outside benefit.
The bad news, however, is that my last roommate moved out effective 12/01, so I’m back to paying all my own expenses for the first time in two plus years. So…if you know anyone in Champaign looking for a place to live let me know.
