- 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.
Finding the Right Location to Start House Hacking
I know I’m a broken record when I say this, but when you’re house hacking, you’re buying a future rental property. When Chris and Jesteny first started looking at houses, Jesteny wanted the white picket fence, picture perfect house. Chris reminded her that this is just a stepping stone, not their forever home.
Instead, they looked at different areas that weren’t particularly trendy but had a lot to offer. They settled on a house near a huge medical complex that Jesteny works at, and is in a centralized area near the airport. They expected to get a lot of visitors wanting proximity to the hospital, but most of their guests are visiting family or just vacationing in Colorado.
Looking at the Property
They own a four bedroom/two bathroom home, which includes a one bedroom/one bathroom basement suite they use for Airbnb. It was important to Jestony to have separation between their living area and the Airbnb because her schedule as a nurse means she works at all hours. The suite brings in $2K per month in income, allowing them to live for free.
The suite has a spacious bedroom, while the kitchen comes with a fridge and stove. It’s topped off with a living area with a large TV. Jesteny took the time to meticulously decorate the space and make it appealing to everyone, particularly women who feel more comfortable knowing another woman is nearby.
The Three S’s: Speed, Simplicity and Sweet Spot
To get their Airbnb up and running, Jesteny and Chris focused on the three S’s: speed, simplicity, and the sweet spot.
When they closed on the property, their goal was to list the suite on Airbnb within one month. To accomplish this, Chris made a to-do list with simple steps they could tackle one by one. They systematically added everything they needed to purchase to their Amazon cart and were able to buy everything at once. By breaking down the process, they were able to hit their deadline.
While having a perfect space is nice, they realized it was more important to start bringing in revenue. They identified the bare number of projects needed to be able to host guests and focused on those. The projects consisted of painting the countertops, applying stick-on backsplash to the kitchen, and painting the baseboards white. They kept it simple while still making a big impact on the overall feel of the space.
Finally, they figured out their sweet spot over time. At first, they started with one month stays, then switched to short term rentals. They settled on one to two week stays and are happy with the results. There’s no right or wrong way to house hack, just find the right strategy for the market conditions and your goals.
Must-Have Mindset for an Entrepreneur: Don’t Take It Personally
Jesteny and Chris know they’re running a business, so they don’t take things personally. They get a lot of feedback from their guests, sometimes helpful and sometimes not. Their first review that was less than 5 stars stung, but they took it in stride and remembered it’s part of doing business.
Being open to feedback is huge: constructive criticism can help you improve. And when people give you rude and useless feedback, learning how to roll with it will help you move forward.
Evaluating Their House Hack Stack
This property is their first house hack. While living there, they’ve taken a lot of steps to increase their income while reducing their living expenses. Right now, they’re living for free.
They bought the house for $350K with an interest rate of 3.875%, making their monthly payment $1950. Six months later, interest rates dropped and they refinanced down an entire point to 2.875%. That move saved them $250 a month!
Recently, they took out a HELOC of $65K they can use to buy more assets.
Don’t Be Afraid of PMI
Chris and Jesteny made a down payment of 5% when they bought the house. Because the down payment was so low, they were required to pay Private Mortgage Insurance (PMI) of $150 a month. A lot of people are afraid of PMI, but you don’t need to be. PMI is just an insurance policy the lender makes you buy if you put down less than 20%.
Even though you’re paying extra each month, consider the alternative. In Jesteny and Chris’s case, their 5% down payment came to $17,500. If they wanted to avoid PMI and put down 20%, they’d have to pay $70,000. Which is easier to save up: $17K or $70K?
And remember: PMI is temporary. Theirs dropped off after a year, costing them just $1200 overall.
Start Building Your House Hack Stack
Even though this is their first house hack, Jesteny and Chris are doing everything right. They’re taking advantage of all the opportunities in front of them, putting themselves in a position to succeed over the long term.
If their story resonates with you, reach out to them on Instagram:
To get started building your own house hack stack, reach out to us for a free investment consultation.