Techniques for House Hacking/Rent Hacking

House Hacking
1. House Hack with Roommates
2. House Hack Multi-Family Property
3. Airbnb part of principal residence

Rent Hacking
1. Big House with Roommates
2. AirBnB part of unit
3. Live in Super/Maintenance Person

Zero Cost Approaches
1. Couch Surfing
2. Van/Bus/Stealth Camp/Mobile Living
3. Work/Live Blend
4. Off-grid - low cost dwellings

The average person spends 40% of their income on shelter and utilities. This is likely your largest spending category and opportunity for savings. You can likely have similar quality of living (or better) for less money – by finding a creative solution!

When determining the right shelter for you, there are a few major considerations:

1. Convenience to daily locations. (Where must you or your family travel to daily) Work/School is the most common. Having your shelter close to work or school will save you expensive commute time. Time which you can either dedicate to your WHY or to trading for more money while accumulating assets and experience.
2. Permanence/Level of Commitment – Most people do not consider the restrictions an expense or long-term commitment to shelter places on them. While young and in the accumulation phase of assets – priority should be given to agile living situations, so that should an opportunity come up in a different location, you can easily pivot to it. Have multiple exit strategies with whatever solution you decide upon for shelter (can you convert your house to a rental, or sell it easily or sublet your apartment or room).
3. Net Cost – what is the net cost to you. With creative solutions – we should be able to drastically reduce the net cost of your shelter. Your goal should be to live for FREE.

How to mitigate shelter cost – think creatively!

Traditional frugal advice is to move to a cheaper or smaller space, or take on a roommate to share the cost with - while this is a good start, it’s still likely to result in some net shelter cost to you. Ideally you should find a living situation that has a net cost of zero while you’re in the asset accumulation phase of your financial independence journey.

Creative solutions to shelter include:

Rent Hacking: Renting out a larger space, and subletting portions of it to cover (ideally) all the costs. Renting a 5 bedroom house for $2,000 a month and subletting 4 of the rooms for $500 each.

House Hacking: Buying a larger house or multifamily property where the gross rents exceed all the expenses and carrying costs, while still allowing you to live in one of the bedrooms or units at no cost.

AirBnB Hacking: Renting out a portion of your shelter (or another unit in it) to cover the cost of your shelter. This has the added benefit of not always having roommates – for those who cherish alone time.

Live-In Super: If you wish to become a real estate investor, and plan to be hands on – finding a live-in super position may be perfect. It’s an opportunity to live cheaply (often for free or get paid to live) while learning the systems and process of multifamily real estate property management.

Work/Live Space Blend – If you’re an entrepreneur perhaps you can blend your living and working environments and reduce your personal overhead? Or perhaps you found an incubator and have others move in with you.

However you decide to solve the shelter problem – ensure it’s costing you 10% or less of your income. This is the #1 hack for get your financial life in order. Doing this alone, and saving (or better yet investing) the difference in cost will give you financial independence in years not decades.

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Matt McKeever
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