What do Bogleheads think about House Hacking?

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tjhar
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What do Bogleheads think about House Hacking?

Post by tjhar » Tue Oct 22, 2019 1:25 am

Previously, I thought House Hacking was living out from a van... so I never really looked until this, until I read through an article.

It looks like most Housing Hacking is simply owning a home and renting out part of it. So own a single family house, rent out a room. Or own a duplex, rent out half of it.

Honestly, was kind of disappointed that this is "house hacking". How is this different from being a landlord and investing in real estate? The only "difference" is that you live next to your tenant.

I honestly don't understand how house hacking "is working", in the sense that if it really works, why isn't everyone doing it and living for "free" or greatly reduced rents. Also, on Bogleheads threads we discuss about the hidden costs of landlording, and usually it's better to invest in a diversified portfolio unless you happen to live in an area where mortgage payments are much much lower than rent, like in Arkansas for example. Am I missing something What are Bogleheads opinion of House Hacking?
Last edited by tjhar on Tue Oct 22, 2019 1:34 am, edited 1 time in total.

ivk5
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Re: What do Bogleheads think about House Hacking?

Post by ivk5 » Tue Oct 22, 2019 1:34 am

If you were in the clickbait business, you’d invent new terminology for old concepts too. (Edit: if you’re not the buyer, you’re the product...)

Like realtors renaming neighborhoods for better marketing...

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Tamarind
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Re: What do Bogleheads think about House Hacking?

Post by Tamarind » Tue Oct 22, 2019 4:13 am

Did it for a couple of years. There's nothing new or magical about the idea.

Just as with buying separate rental property, many people (including me) find that they don't love being landlords. It's a job like any other, except when they live in the house with you you're never off the clock.

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Re: What do Bogleheads think about House Hacking?

Post by RickBoglehead » Tue Oct 22, 2019 4:58 am

I think I am tired of terms like house hacking, side hustle, and such. :oops:
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Re: What do Bogleheads think about House Hacking?

Post by Mr. Rumples » Tue Oct 22, 2019 5:12 am

Some areas prohibit it. Where I reside, a house cannot be broken up into apartments and cannot have a dead bolt on an interior door. Neighbors called to complain about a house where some of it was being rented out. The county came to inspect for zoning violation, the owner denied it, but the owner was told to remove the dead bolt from the interior door. He ended up just renting to a relative with whom he felt safe. Don't know if he was fined.

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Re: What do Bogleheads think about House Hacking?

Post by mmmodem » Tue Oct 22, 2019 5:43 am

I also didn't realize this is what House Hacking is. You could say my parents are house hacking as they rent two rooms in their three bed home. They essentially don't have to pay mortgage.

Why doesn't everyone do it? Well, I wouldn't do it because I don't like living with strangers. The only additional cost I can think of is increased utility bills, maintenance and you have to get home insurance for rentals which costs a little more.

I think it's a great idea. My parents don't have to pay mortgage and they build equity in the home. It's better in some ways than renting a separate unit because if there is vacancy, you have to pay the mortgage on your home which one should be able to do anyway. This is in contrast to vacancies on a separate rental home forcing one to pay two mortgages. I'm sure there are pros and cons to either methods but house hacking seems to be lower financial risk.

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Re: What do Bogleheads think about House Hacking?

Post by Cubicle » Tue Oct 22, 2019 5:53 am

I can see how it may be financially attractive. But I value my privacy, peace, & quiet far more than what I'd take in rent wise. I've been told many times I should do it.

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Re: What do Bogleheads think about House Hacking?

Post by Grt2bOutdoors » Tue Oct 22, 2019 5:57 am

Cubicle wrote:
Tue Oct 22, 2019 5:53 am
I can see how it may be financially attractive. But I value my privacy, peace, & quiet far more than what I'd take in rent wise. I've been told many times I should do it.
Is safety included in Peace above? You are potentially inviting serious trouble into your home.
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Re: What do Bogleheads think about House Hacking?

Post by WJW » Tue Oct 22, 2019 7:02 am

We've been "house hacking" for years. Meaning we own a restored farm house which is a legal two-family in a desirable area of town and rent out a 2-bedroom apartment located on the 2nd floor. It works for us and we gross about $20k annually from it. It pays our taxes, insurance, lawn care, etc... I am a general contractor and repairs are not an issue for me. The tenants do not have access to the driveway, garage or rear yard which we utilize so there is no issue with privacy. I do do my due diligence when selecting tenants and I wouldn't even know they are there with the exception of the occasional party that they let me know of way in advance.

I think most people don't do it because legal multi-family properties tend to be in less desirable areas and/or they may not want to be a landlord. Here in Northern NJ with the high cost of homes and our ridiculous property taxes it has been a blessing for us.

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Re: What do Bogleheads think about House Hacking?

Post by jfn111 » Tue Oct 22, 2019 7:17 am

I bought my first house at 22 when I was single. I rented out 2 rooms to friends and they pretty much paid my mortgage. As life changes your needs change and after I got a job transfer to a different city and sold that house and moved into a new place with my then girlfriend who's now my wife of 36 years.

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Re: What do Bogleheads think about House Hacking?

Post by arsenalfan » Tue Oct 22, 2019 7:19 am

Wish I'd heard about it earlier, but don't think I would have done it. 7 years was longest I was in one place pre-kids, and we kind of wanted our own home during grad school days. But I think it's a neat way to reduce your housing cost. Overall, wish I'd known in my 20s that housing, cars, and food are the big $$$ items.

Going forward, in our 50s we plan to downsize and travel for 50% of the year, working in different locations. We may House Hack, getting a 30-year fixed on a duplex/triplex and renting the other units out/using our property manager, thus getting an invesment property in the portfolio. I suspect that we won't be wanting to "hustle" as much though by that point in our careers, as hopefully accumulation phase will be over.

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Re: What do Bogleheads think about House Hacking?

Post by Ron » Tue Oct 22, 2019 7:21 am

RickBoglehead wrote:
Tue Oct 22, 2019 4:58 am
I think I am tired of terms like house hacking, side hustle, and such. :oops:
:thumbsup

Now, get off my lawn...

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Re: What do Bogleheads think about House Hacking?

Post by CyclingDuo » Tue Oct 22, 2019 7:32 am

RickBoglehead wrote:
Tue Oct 22, 2019 4:58 am
I think I am tired of terms like house hacking, side hustle, and such. :oops:
"Taking on a boarder", "getting a second job" or "increasing your income" are terms that all still work from yesteryear as well.
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Re: What do Bogleheads think about House Hacking?

Post by ByThePond » Tue Oct 22, 2019 7:46 am

It can be a great idea, or it can be a headache. Financially it can give one a leg up, but at the expense of loss of privacy, as noted.
Growing up in an urban neighborhood, the norm was to live in a two-family house, either as owner or tenant. It wasn't thought of as a 'hack', just wise management, and it worked fine. Our first house was a two-family, and it enabled us to break into the realm of home ownership.
Nowadays our financial needs are less and we value our privacy more.

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Re: What do Bogleheads think about House Hacking?

Post by getthatmarshmallow » Tue Oct 22, 2019 7:49 am

It's not a new thing - although the term is new to me. It's becoming more common or at least more talked about for millennials and I think it makes sense. For a single person it's not strange to have a roommate; having a roommate when you also own the property makes a lot of sense. It wouldn't be right for me now, but if I'd had the capital at age 22, I would have.

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Re: What do Bogleheads think about House Hacking?

Post by sschoe2 » Tue Oct 22, 2019 7:52 am

It can be risky. If they don't pay or leave you are stuck trying to evict them and living in the same house with them at the same time. I've seen some real eviction horror stories.

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Re: What do Bogleheads think about House Hacking?

Post by JoeRetire » Tue Oct 22, 2019 7:56 am

tjhar wrote:
Tue Oct 22, 2019 1:25 am
Honestly, was kind of disappointed that this is "house hacking". How is this different from being a landlord and investing in real estate? The only "difference" is that you live next to your tenant.
It's just a new name for an old practice.

Kinda like "side hustle" is the new name for a second job.
Don't be a lemming.

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Re: What do Bogleheads think about House Hacking?

Post by 22twain » Tue Oct 22, 2019 8:22 am

RickBoglehead wrote:
Tue Oct 22, 2019 4:58 am
I think I am tired of terms like house hacking, side hustle, and such. :oops:
How about "house hustling"? :twisted:

According to the 1940 census records, my grandparents had someone boarding with them. This was after my mother and my aunt had each married and moved out.

During my first job after graduate school in the early 1980s, a temporary college-teaching position, I rented the ground floor of a two-story house across the street from campus. The owner lived upstairs. We shared the front door and hall, with lockable doors to each part of the house. We had separate bathrooms and kitchens.
Last edited by 22twain on Tue Oct 22, 2019 8:40 am, edited 3 times in total.
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Re: What do Bogleheads think about House Hacking?

Post by JoMoney » Tue Oct 22, 2019 8:24 am

Renting out a room has been a thing since ... forever ....
The idea of a inn/hotel probably came later, and probably as a result of the idea of renting out a room in a house.
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Re: What do Bogleheads think about House Hacking?

Post by renue74 » Tue Oct 22, 2019 8:36 am

The Boglehead community tends to skew to an older demographic...where they have already established a home, with children.

You'll get various comments about house hacking here, but it's really up to you. It's particularly a young endeavor where one tends to take more financial chances.

Personally, if I were in my early 20s and was trying to save $ and have the availability to do so, I would maybe do it. You lose privacy, but as an early 20s demographic, one would be coming off 4+ years of roommate relationships in college.

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Re: What do Bogleheads think about House Hacking?

Post by Grt2bOutdoors » Tue Oct 22, 2019 8:40 am

WJW wrote:
Tue Oct 22, 2019 7:02 am
We've been "house hacking" for years. Meaning we own a restored farm house which is a legal two-family in a desirable area of town and rent out a 2-bedroom apartment located on the 2nd floor. It works for us and we gross about $20k annually from it. It pays our taxes, insurance, lawn care, etc... I am a general contractor and repairs are not an issue for me. The tenants do not have access to the driveway, garage or rear yard which we utilize so there is no issue with privacy. I do do my due diligence when selecting tenants and I wouldn't even know they are there with the exception of the occasional party that they let me know of way in advance.

I think most people don't do it because legal multi-family properties tend to be in less desirable areas and/or they may not want to be a landlord. Here in Northern NJ with the high cost of homes and our ridiculous property taxes it has been a blessing for us.
A legal 2 family is a qualified rental, that’s not house hacking. House hacking is you renting a room or two is the same unit you are living in. Think of it as dividing the living space without it being documented as such on the deed and with the town of residence.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: What do Bogleheads think about House Hacking?

Post by Grt2bOutdoors » Tue Oct 22, 2019 8:45 am

ByThePond wrote:
Tue Oct 22, 2019 7:46 am
It can be a great idea, or it can be a headache. Financially it can give one a leg up, but at the expense of loss of privacy, as noted.
Growing up in an urban neighborhood, the norm was to live in a two-family house, either as owner or tenant. It wasn't thought of as a 'hack', just wise management, and it worked fine. Our first house was a two-family, and it enabled us to break into the realm of home ownership.
Nowadays our financial needs are less and we value our privacy more.
+1. Grew up in a multi family (more than 2 families) rental unit before my parents bought a 2 family house. We had our fair share of problem tenants including two evictions that requires the use of expensive attorneys, court order and the sheriff to physically remove them from the premises. That’s why I recommend investing in REITs if you aren’t up to going through headaches including threats of physical violence. There are some ugly people out there disguised as nice.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: What do Bogleheads think about House Hacking?

Post by stoptothink » Tue Oct 22, 2019 8:56 am

getthatmarshmallow wrote:
Tue Oct 22, 2019 7:49 am
It's not a new thing - although the term is new to me. It's becoming more common or at least more talked about for millennials and I think it makes sense. For a single person it's not strange to have a roommate; having a roommate when you also own the property makes a lot of sense. It wouldn't be right for me now, but if I'd had the capital at age 22, I would have.
I did it (as in, rented a room from someone who owned a home) in grad school and then after my divorce for 2yrs. It was a blast both times, became great friends with the owners and the 2nd time there was 5 of us (late 20's to early 30's bachelors) in a single home owned by one of the guys. One of the most fun times in my life. All 5 of us are still friends 7yrs later. Both times I was way more financially stable than the owners, so I often thought I should be doing it myself, but being unsure if I was staying in the area made it an easy decision. Well, I stayed in the area and real estate has exploded here the last 5yrs, so I really wish I would have done it.

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Re: What do Bogleheads think about House Hacking?

Post by Shallowpockets » Tue Oct 22, 2019 8:58 am

I believe this was more common in the past. After WWII cities passed ordinances that prohibited various arrangements that were meant to clean up the cities and address tenements and slums, which was what they used as terminology. No rooming houses. No unrelated tenents. This had the effect of putting people into position of buying a home.Home ownership then became the norm. At least then, homes were affordable. Now we are into bubble homes, free money and the explosion of wealth among the wealthy. Affordability for a place to live is not within the means of many. Even apartments. Thus, homelessness.
In essence over the years these rules have come full circle to bite us. It was OK while all was rosy and now not so rosy to those wanting to live indoors but unable due to availability and pricing.
Perhaps an examination of these past practices will give us an understanding of how we may change some ordinances back to earlier and partially solve the problem. Expectations by people like BHs who have money and own their home have changed, We are not so inclined to allow such practices, NIMBY. Expectations of people who cannot afford a home or an apartment are probably more in tune with their needs, which is a roof over their heads. Any roof, any abode. Just let me have a safe place to lay my head.

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Re: What do Bogleheads think about House Hacking?

Post by WJW » Tue Oct 22, 2019 9:04 am

Grt2bOutdoors wrote:
Tue Oct 22, 2019 8:40 am
WJW wrote:
Tue Oct 22, 2019 7:02 am
We've been "house hacking" for years. Meaning we own a restored farm house which is a legal two-family in a desirable area of town and rent out a 2-bedroom apartment located on the 2nd floor. It works for us and we gross about $20k annually from it. It pays our taxes, insurance, lawn care, etc... I am a general contractor and repairs are not an issue for me. The tenants do not have access to the driveway, garage or rear yard which we utilize so there is no issue with privacy. I do do my due diligence when selecting tenants and I wouldn't even know they are there with the exception of the occasional party that they let me know of way in advance.

I think most people don't do it because legal multi-family properties tend to be in less desirable areas and/or they may not want to be a landlord. Here in Northern NJ with the high cost of homes and our ridiculous property taxes it has been a blessing for us.
A legal 2 family is a qualified rental, that’s not house hacking. House hacking is you renting a room or two is the same unit you are living in. Think of it as dividing the living space without it being documented as such on the deed and with the town of residence.
Oh like a roommate, no thank you.

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Re: What do Bogleheads think about House Hacking?

Post by Meg77 » Tue Oct 22, 2019 9:28 am

House hacking is different from owning a rental property in a couple of ways. It's a "hack" because it's something most people could be doing that don't consider it. But you're right, it's not that complicated.

The biggest difference from owning a rental property outright is that It's much more easily accessible especially to young people and those with fewer financial resources because you can borrow to buy a primary residence with as little as 0% down. To finance a rental property purchase, most lenders require a minimum of 20% down. So "house hacking" enables people to get a foot in the real estate market sooner and accumulate rental properties long before most can afford to save big down payments. Buy a duplex with 0-3% down, rent out half, stay there for a few months or a year while you save up a bit more, then lease out the unit you live in and repeat. Or simply stay there while a tenant/roommate pays your mortgage

"Everyone" or very many people could be doing it and effectively living for free in theory. But most Americans choose to spend more than they have to on housing and also choose to forego many additional income opportunities such as renting out part of their homes. But particularly for single people or those without kids who are comfortable with a roommate or nearby tenant, house hacking can 1) enable you to buy RE sooner, 2), own a nicer/larger property than you otherwise could afford, and/or 3) dramatically speed up the timeline to FIRE by offsetting some or all of your biggest fixed expense (mortgage/housing) with rental income.
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Re: What do Bogleheads think about House Hacking?

Post by Bobby206 » Tue Oct 22, 2019 9:36 am

Call it what you want but it's a great way for a young person, or someone on limited income, to buy a house and easily afford it. I had two roommates for several years, in my first house, and their rent basically paid the entire mortgage. I paid the utilities, taxes, ins. They got to live in a nice house. It was a win-win. Plus, I have to say we became good friends, had parties together, and it was really a great arrangement for all of us. I don't think you need to be a biggerpockets person, or a boglehead, or a whatever. I also don't think it matters if you call it house hacking or "having roommates" it's a great way to buy a house. It's not complex and probably not worthy of this long of a thread. The question is: do you like having roommates or not!? If you don't mind roommates then it's a homerun!

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Re: What do Bogleheads think about House Hacking?

Post by MotoTrojan » Tue Oct 22, 2019 9:40 am

My coworker is making a disgusting amount of income by hacking his homes (one of which he lives in) and AirBnB'ing the properties (1 and 2 bedroom apartments essentially now, with no kitchen). $1M average home price and he is covering the mortgage plus bringing in thousands in profit.

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Re: What do Bogleheads think about House Hacking?

Post by JediMisty » Tue Oct 22, 2019 10:00 am

I have been doing this for two decades. After a break up, I had a big house. I choose housemates from nearby Rutgers and run it as a business. Tenants who are unruly won't rent with the landlady in residence. My room is actually a suite, with my own sitting room and master bath affording me privacy. I have two fridges. They get a nine month or one year lease with an option to renew at a grandfathered rent. I choose folks who have different schedules to help avoid conflict in the kitchen. Minimal extra maintenance. Minimal extra utilities. I gross about 25k per year. There are people at my home when I'm at work and on vacation. Only had one terrible tenant. He didn't attend Rutgers. I was in the process of evicting him when he moved out. These students are seldom a bother. Now step-kids, those were a nightmare!! It's not for everyone, that's true. I wouldn't do it if I wasn't around to do most of the maintenance myself. Generally, they don't even know how to replace batteries in the smoke alarms....

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Re: What do Bogleheads think about House Hacking?

Post by protagonist » Tue Oct 22, 2019 10:08 am

The older I get, the less inclined I am to make money that I don't need, just for the sake of having more money. Getting more money takes effort.
It's not that I have money to burn....I don't. But I figure I have enough, and more is not going to significantly (if at all) change my life style, whereas having people living with me, or being a landlord, would.
He who dies with the most toys does not necessarily win.

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Re: What do Bogleheads think about House Hacking?

Post by 22twain » Tue Oct 22, 2019 12:00 pm

JediMisty wrote:
Tue Oct 22, 2019 10:00 am
I have been doing this for two decades. After a break up, I had a big house. I choose housemates from nearby Rutgers and run it as a business. Tenants who are unruly won't rent with the landlady in residence.
Now that I think of it, my landlady's situation was similar, except that she was a widow. I think her late husband had worked at the college across the street, either as a professor or an administrator. She herself was a non-tenured but long-time instructor at a university in a nearby city.

I found out about her when I visited the town a couple of months before my new teaching job was to start, to look for an apartment. I stopped by the college's HR office to take care of some paperwork. It naturally came up that I was looking for an apartment, whereupon the HR person said something like, "Oh, I think Mrs. X has her flat next to campus available for next year. Would you like me to call her for you?" They were acting as an informal booking agency for her, presumably because of the connection by way of her late husband.
22twain wrote:
Tue Oct 22, 2019 8:22 am
During my first job after graduate school in the early 1980s, a temporary college-teaching position, I rented the ground floor of a two-story house across the street from campus. The owner lived upstairs. We shared the front door and hall, with lockable doors to each part of the house. We had separate bathrooms and kitchens.
My investing princiPLEs do not include absolutely preserving princiPAL.

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Re: What do Bogleheads think about House Hacking?

Post by shell921 » Tue Oct 22, 2019 12:28 pm

Lennar is a builder that is good and I love their "Next Gen" homes - with a smaller home within them!

https://www.youtube.com/watch?v=nWdJ5AZs75M

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Re: What do Bogleheads think about House Hacking?

Post by JediMisty » Tue Oct 22, 2019 4:17 pm

22twain wrote:
Tue Oct 22, 2019 12:00 pm
JediMisty wrote:
Tue Oct 22, 2019 10:00 am
I have been doing this for two decades. After a break up, I had a big house. I choose housemates from nearby Rutgers and run it as a business. Tenants who are unruly won't rent with the landlady in residence.
Now that I think of it, my landlady's situation was similar, except that she was a widow. I think her late husband had worked at the college across the street, either as a professor or an administrator. She herself was a non-tenured but long-time instructor at a university in a nearby city.

I found out about her when I visited the town a couple of months before my new teaching job was to start, to look for an apartment. I stopped by the college's HR office to take care of some paperwork. It naturally came up that I was looking for an apartment, whereupon the HR person said something like, "Oh, I think Mrs. X has her flat next to campus available for next year. Would you like me to call her for you?" They were acting as an informal booking agency for her, presumably because of the connection by way of her late husband.
22twain wrote:
Tue Oct 22, 2019 8:22 am
During my first job after graduate school in the early 1980s, a temporary college-teaching position, I rented the ground floor of a two-story house across the street from campus. The owner lived upstairs. We shared the front door and hall, with lockable doors to each part of the house. We had separate bathrooms and kitchens.
Cool. I got on the list for rentals at the medical school three years running, but never got tenants from that. They either rent a big house together (think Grey's anatomy) or rent at a nearby apartment complex. My tenants are found from a particular web site. No Craigslist or Facebook market. Too many scammers.

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Re: What do Bogleheads think about House Hacking?

Post by arcticpineapplecorp. » Tue Oct 22, 2019 4:38 pm

"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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Re: What do Bogleheads think about House Hacking?

Post by Grt2bOutdoors » Tue Oct 22, 2019 6:58 pm

JediMisty wrote:
Tue Oct 22, 2019 10:00 am
I have been doing this for two decades. After a break up, I had a big house. I choose housemates from nearby Rutgers and run it as a business. Tenants who are unruly won't rent with the landlady in residence. My room is actually a suite, with my own sitting room and master bath affording me privacy. I have two fridges. They get a nine month or one year lease with an option to renew at a grandfathered rent. I choose folks who have different schedules to help avoid conflict in the kitchen. Minimal extra maintenance. Minimal extra utilities. I gross about 25k per year. There are people at my home when I'm at work and on vacation. Only had one terrible tenant. He didn't attend Rutgers. I was in the process of evicting him when he moved out. These students are seldom a bother. Now step-kids, those were a nightmare!! It's not for everyone, that's true. I wouldn't do it if I wasn't around to do most of the maintenance myself. Generally, they don't even know how to replace batteries in the smoke alarms....
Do you report the income to the state/Fed?
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Re: What do Bogleheads think about House Hacking?

Post by Grt2bOutdoors » Tue Oct 22, 2019 6:58 pm

arcticpineapplecorp. wrote:
Tue Oct 22, 2019 4:38 pm
watch Pacific Heights first:

https://www.google.com/search?client=fi ... ic+heights
Sick movie! Michael Keaton played the psycho tenant.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

JBEB
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Re: What do Bogleheads think about House Hacking?

Post by JBEB » Tue Oct 22, 2019 7:12 pm

I bought my first house about a year after entering the workforce. Had a buddy live with me for about 7 of the first 10ish years. Not only did I have a buddy live with me, he really helped my savings.

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1789
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Re: What do Bogleheads think about House Hacking?

Post by 1789 » Wed Oct 23, 2019 2:42 am

protagonist wrote:
Tue Oct 22, 2019 10:08 am
The older I get, the less inclined I am to make money that I don't need, just for the sake of having more money. Getting more money takes effort.
It's not that I have money to burn....I don't. But I figure I have enough, and more is not going to significantly (if at all) change my life style, whereas having people living with me, or being a landlord, would.
He who dies with the most toys does not necessarily win.
I agree. I don't think this is a good idea to increase wealth. I would never live with people whom i don't know, exception is college years.
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)

protagonist
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Re: What do Bogleheads think about House Hacking?

Post by protagonist » Wed Oct 23, 2019 10:44 am

Grt2bOutdoors wrote:
Tue Oct 22, 2019 6:58 pm
arcticpineapplecorp. wrote:
Tue Oct 22, 2019 4:38 pm
watch Pacific Heights first:

https://www.google.com/search?client=fi ... ic+heights
Sick movie! Michael Keaton played the psycho tenant.
After a string of great roommates I had a roommate like that as a grad student in the mid 70s.
He came after me with a knife one night.
I haven't had a roommate since.

lukestuckenhymer
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Re: What do Bogleheads think about House Hacking?

Post by lukestuckenhymer » Wed Oct 23, 2019 11:44 am

I've lived in several duplexes before, and there's no return that could ever make me want to live in a building with shared walls, let alone my own tenant as a neighbor. I'll make sacrifices elsewhere (cars, vacations, everyday purchases) before I sacrifice privacy/peace and quiet. I've had enough rap-blasting/pot smoking neighbors for a lifetime.

As for being a landlord, I rented out my condo to one tenant before I sold it. I got extremely lucky with an angel tenant who gave me no problems. I can probably chalk this up to having a realtor find the tenant (well worth the commission). I know others haven't been so lucky.

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ClevrChico
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Re: What do Bogleheads think about House Hacking?

Post by ClevrChico » Wed Oct 23, 2019 6:45 pm

I'm in a LCOL area with abundant housing, so it's not worth the sacrifices. Studio apartments are easily available for those that want to live cheaply.

The only people here house hacking or with roommates are broke, young adults.

My grandparents did literally hack an apartment out of their house with a separate entrance, etc. when money was needed. It worked out like they wanted.

Cycle
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Re: What do Bogleheads think about House Hacking?

Post by Cycle » Wed Oct 23, 2019 6:54 pm

Many people owner occupy duplexes here and rent out the other half. I did that for several years, now moving and renting out the whole building.

Before that i owned a condo and rented out the spare bedroom.

You're just being an on-site landlord, which is easy imo.

Definitely better off trying to get a promotion and honing your career skills than spend time DIYing stuff around a rental property. So my recommendation for house hackers is to get something turn-key.
Never look back unless you are planning to go that way

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Re: What do Bogleheads think about House Hacking?

Post by stoptothink » Wed Oct 23, 2019 7:10 pm

Cycle wrote:
Wed Oct 23, 2019 6:54 pm
Many people owner occupy duplexes here and rent out the other half.
Everybody here has basement apartments that they rent out. In fact, of the 4 households on my side of the family that live in this area, we are the only ones that don't (my parents have a separate MIL basement apartment, but my sister lives there). We also lived in a basement apartment when we were just married and our landlords (who lived right above us) are to this day some of our best friends. I'm not so high on having a rental, but a lot of that worry (not all of it) is ameliorated when you are literally next-door or on top (or bottom) of your tenants. I had a lot of roommates before I married, well over a dozen, and I can only think of one bad one, and it wasn't really that big of a deal.

I understand the privacy thing, but it isn't a concern of mine. We have a shared wall with a neighbor (end unit townhome) and I'm not sure we've ever heard her in 4yrs. We've also had my in-laws live with us off and on, and it honestly didn't bother me a bit. I don't think I have the stomach for a separate rental, but we'll more than likely have a basement apartment in our next home (likely for family, at some point maybe to rent out).

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Re: What do Bogleheads think about House Hacking?

Post by DVMResident » Thu Oct 24, 2019 9:10 am

I liked it. Made land lording really simple: easy to do repairs, know when there were issues, etc. I dislike commuting/driving and don’t mind land lording (actually it was fun more often than it was a pain). The major upside was my expenses were really low in a VHCOL city. Having a separate entrance, facilities (kitchen & laundry), and enough parking are key.

I’ve never rented a room out. If single, I imagine it’s similar to having a roommate. With a family...no way.

getthatmarshmallow
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Re: What do Bogleheads think about House Hacking?

Post by getthatmarshmallow » Thu Oct 24, 2019 9:32 am

stoptothink wrote:
Tue Oct 22, 2019 8:56 am
getthatmarshmallow wrote:
Tue Oct 22, 2019 7:49 am
It's not a new thing - although the term is new to me. It's becoming more common or at least more talked about for millennials and I think it makes sense. For a single person it's not strange to have a roommate; having a roommate when you also own the property makes a lot of sense. It wouldn't be right for me now, but if I'd had the capital at age 22, I would have.
I did it (as in, rented a room from someone who owned a home) in grad school and then after my divorce for 2yrs. It was a blast both times, became great friends with the owners and the 2nd time there was 5 of us (late 20's to early 30's bachelors) in a single home owned by one of the guys. One of the most fun times in my life. All 5 of us are still friends 7yrs later. Both times I was way more financially stable than the owners, so I often thought I should be doing it myself, but being unsure if I was staying in the area made it an easy decision. Well, I stayed in the area and real estate has exploded here the last 5yrs, so I really wish I would have done it.
I'm still on the fence about what would have been the right call when we bought eight years ago. If we'd bought a place with a mother in law, I'd be likely renting it out and doing well, but it would have meant more house than would have been sensible at the time. It seems really common although to be fair also in many cases indistinguishable from failure-to-launch (except with kids), so maybe it's not profitable.

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Re: What do Bogleheads think about House Hacking?

Post by Cycle » Thu Oct 24, 2019 11:20 am

stoptothink wrote:
Wed Oct 23, 2019 7:10 pm
Cycle wrote:
Wed Oct 23, 2019 6:54 pm
Many people owner occupy duplexes here and rent out the other half.
Everybody here has basement apartments that they rent out. In fact, of the 4 households on my side of the family that live in this area, we are the only ones that don't (my parents have a separate MIL basement apartment, but my sister lives there). We also lived in a basement apartment when we were just married and our landlords (who lived right above us) are to this day some of our best friends. I'm not so high on having a rental, but a lot of that worry (not all of it) is ameliorated when you are literally next-door or on top (or bottom) of your tenants. I had a lot of roommates before I married, well over a dozen, and I can only think of one bad one, and it wasn't really that big of a deal.

I understand the privacy thing, but it isn't a concern of mine. We have a shared wall with a neighbor (end unit townhome) and I'm not sure we've ever heard her in 4yrs. We've also had my in-laws live with us off and on, and it honestly didn't bother me a bit. I don't think I have the stomach for a separate rental, but we'll more than likely have a basement apartment in our next home (likely for family, at some point maybe to rent out).
Adu's (aka mother in law units) have been legal for years here, but there haven't been a ton of permits pulled. In my ward, there have been 13 pulled since 2014.

The economics just don't make sense for most; however, in more desirable neighborhoods they do make sense bc rent is higher.

OR if u DIY the remodel, which one of my coworkers is doing, it can make sense ($30k investment for $10k/year rent). He's not doing it under permit... which is negligent/slumlordy. No rental license is risky if tennant talks to the city.
Never look back unless you are planning to go that way

GT99
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Re: What do Bogleheads think about House Hacking?

Post by GT99 » Thu Oct 24, 2019 11:29 am

Is it still considered "House Hacking" if it's basically a roommate situation but your roommate is paying you rent? Years ago, buying a townhouse and having 2 roommates that I was previously living with in an apartment pay me rent was one of the best financial moves I've ever made.

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Re: What do Bogleheads think about House Hacking?

Post by MarkerFM » Thu Oct 24, 2019 4:25 pm

Growing up, my parents finished our basement into four rooms (kitchen, two bedrooms, family room plus a very small bath). I'm assuming my mother's parents gave them the money because they had none. It had an outside entrance. For awhile, they rented to four college student (two to a bedroom). We all shared the family room, and there was a door from one bedroom and also one from the kitchen into it. There was no door at the top of the interior stairs, and never any issues except for one time a tenant's monkey named Dammit got loose upstairs. With six kids running around upstairs, I'm guessing it was noisy down there.

Eventually, I think it was too much work to find four college kids every year, and they had no income during the summer, so they rented to single people. One was a local school principal and another a priest at the nearby church (who lived there quite awhile). After my grandparents died, by parents inherited enough that they could stop renting the basement.

When I was in college, I rented a large attic room from a guy who was a financial advisor/insurance agent sharing the house with his teenaged brother. The brother and I shared a bathroom one level down. Everyone got along well, but I didn't stay long because I didn't feel like I had privacy and didn't feel comfortable having people over, even though we shared the living room and kitchen.

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Re: What do Bogleheads think about House Hacking?

Post by retired@50 » Thu Oct 24, 2019 4:44 pm

Grt2bOutdoors wrote:
Tue Oct 22, 2019 5:57 am
Cubicle wrote:
Tue Oct 22, 2019 5:53 am
I can see how it may be financially attractive. But I value my privacy, peace, & quiet far more than what I'd take in rent wise. I've been told many times I should do it.
Is safety included in Peace above? You are potentially inviting serious trouble into your home.
If anyone doubts the potential trouble, they should watch the Michael Keaton film called "Pacific Heights". Regards,

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leeks
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Re: What do Bogleheads think about House Hacking?

Post by leeks » Thu Oct 24, 2019 9:37 pm

I think House Hacking is a silly term and certainly not new.

I live in a neighborhood that has a lot of 2 and 3 family rowhouses designed for this purpose 100 years ago. The marketing materials encouraged owners to rent out the upstairs unit to help pay the mortgage. Of course it also appealed to families looking to house the inlaws.
Old movies and novels are full of the concept of taking in a "boarder" to make ends meet.

Other cities I have lived in had neighborhoods built as single-family houses in 1890s-1920s but over time many of them were broken up into apartments or rooming houses as neighborhoods changed. Some as informal set ups, some as legal conversions. It's very common.

Short-term room rentals are also not new, although AirBnB has made it much easier to find customers for that.

If one intends to do this as an investment (not just to house the inlaws), I would only recommend doing it in a way that meets all legal and zoning criteria.

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