How This Investor Still Lives for Free
How This Investor Still Lives for Free
Jeff White joins us to analyze his 7th house hack—just one away from his ultimate goal of owning 8 properties! He explains why he prefers properties with two separate houses, and how he plans to use different strategies to maximize cash flow. Find out how he’s making $200 a month to live there despite a 6.875% interest rate.

This is an under contract deal I’m currently working on as I type this. It is a main house with a backyard carriage house located right near Swedish Medical Center in Englewood. The front house is laid out like an up/down duplex, and there’s a tiny carriage house in the back.

This deal is part of our recent House Hacking webinar. To get all of the details, check out podcast episode #424 or check out the YouTube video.

Three Learning Options!
  1. Listen to the podcast “#424: Yes, House Hackers Can Still Cash Flow in Today’s Market” Denver Real Estate Investing Podcast
  2. Watch the YouTube video.
  3. Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.

Investor Profile

Since I started house hacking 2017, my wife and I have done every type of house hacking strategy. Our personal favorite is having two houses on one lot, since it gives the best of both worlds: full privacy with the ability to live in the main house or the back carriage house, and the best financing terms, too.  From a lender’s point of view, that property type is a single-family home.

Investing Goals

This is my seventh house hack, so I don’t need to maximize cash flow and live with a ton of roommates.  I’m trying to add to my house hack stack in order to get to my goal of owning eight properties.  Because interest rates are so high right now, any cash flow I get while living there is a plus.

Property Details

The property is a house with a backyard Accessory Dwelling Unit (ADU).  The main house is divided into an up/down duplex with two bedroom/one bathroom units.  The ADU in the backyard is a 400 sq ft structure built in 1918. 

Currently, the owner rents out the bottom unit on Airbnb and the upstairs unit to a long term tenant, while she lives in the back house. The property is approved for legal non-forming use by the city, which allows for multiple house hacking strategies.

The reason we love this deal is all of the options we have available to us. We will offer to purchase the furniture in the bottom unit, and rent out that unit to a travel nurse at Swedish Medical Center. Then, we’ll rent out the upstairs unit to a normal long term tenant while we live in the carriage house. My lovely wife even plans on paying me $1k per month for office space rent in the home to help with the cash flow.

Property Overview While Living There

I used the Rental Property Spreadsheet to run the numbers on this deal.

Spreadsheet Screenshot of Property Overview While Living There

We were able to negotiate $15K in seller credits because the inspection found a roof issue and part of the sewer line needs to be fixed.

While this deal is still under contract, I underwrite based on current rents and current rates; I don’t project out the future when I look at my numbers initially.  With both a long term tenant and a medium term tenant in the main house, plus rent for office space, I expect to get $4850 per month while living there.

Monthly Operating Expenses While Living There

Spreadsheet Screenshot of Monthly Operating Expenses While Living There

First Year Returns While Living There

Spreadsheet Screenshot of First Year Returns While Living There

Even at an interest rate at 6.875%, this deal still accomplishes our goal of living for free and getting full privacy in the tiny house.  We’ll actually make $200 a month while we live here.

First Year Returns After Moving Out

Spreadsheet Screenshot of First Year Returns After Moving Out

After we move out, we’ll get over $6K a year in cash flow.  I even have a tenant lined up to move into the carriage house at $1400 per month.  With these numbers, we’ll have the option to pay for property management and still cash flow for about $4K.

Key Takeaways

The day we move out, it is still a good cash flowing deal, and to me, that’s the most important part of any deal that I pursue. Appreciation is the cherry on top, but cash flow is what will help you grow and thrive as your portfolio expands.

Start Building Your House Hack Stack

There are still plenty of opportunities out there right now, and this is just one example.  If you want to learn more about this property or get more information on house hacking, reach out to me.

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Start analyzing your Colorado investment properties today
Rental Property Spreadsheet • House Hacking Spreadsheet BRRRR Calculator Spreadsheet • Fix and Flip Deal Analyzer Investing Maps • Rehab Pricing Estimator
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Jeff White
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