The first major thing I am trying to take advantage of is the largest expense for 99% of people. Housing!

Most Americans spend 30-35% of their disposable income on housing associated costs. This includes the mortgage/rent, utilities, HOA and capital expenses that come up.

By far the largest single thing I have been taking advantage of is housing. I have taken advantage through what some refer to as House Hacking. This term means I rent out the home I live in to generate income each month.

When I moved to Orlando three years ago, I knew I was ready to buy versus rent. What I didn’t know at the time was how much of a home I could afford. I bought a home that I shouldn’t have bought and before I knew it this huge mortgage was hitting met each month.

I went from paying $1,100/month to rent out a one bedroom apartment in PA to paying a mortgage of $1,800. I was a single guy living in a 2,100 sq. ft. 3 bedroom/2 bathroom home by myself. I had more space then I knew what to do with.

3 months after moving into the home, I had a friend from NY reach out to me asking if he could come down for a few months. He wanted to play in a local mini pro tennis tour in Orlando. I had the extra space, so I told him I didn’t have any issues with that. I didn’t know how much to charge him, so I asked him what he thought was fair. At that time, he asked if $500 worked. How could I turn down $500/month of my mortgage getting paid!

I was now paying $1,300 per month for my mortgage if you accounted for the $500 my friend was paying.

How I Dropped My Mortgage Payment to $800/Month

I was loving every minute of having my friend live in one of the bedrooms in my home. I was saving money on my mortgage and he had a cheap place to crash at.

A few weeks into his stay he said there was another guy playing in the pro circuit who wanted something similar. This other guy wasn’t from the area and was looking to play the pro tournaments for a few months. My friend asked me if I would be okay with him crashing in the third bedroom for a few months. I mean…yeah, why not!?

At the time, I decided it would make most sense for them both to pay $500 per month. What just happened?! I went from having a 2100 sq. ft. 3/2 home living by myself to having two roommates paying $1k/month. Not only that, but I was now paying less for my mortgage than I did for rent in PA for a one bedroom apartment.

I was beginning to like this. A lot.

Time to Take It To The Next Level

We were a few months in and my friend decided he was going to move back to Long Island. As much as I wanted him to stay, I now saw an opportunity. I started doing some research to see how much I a fair rent was in my area for a bedroom.

What I found shocked me. On Airbnb, people were charging $30-35 per night or roughly $900 per month. I was $400 off in my rent estimate at the time from what I charged my friend.

Seeing this as an opportunity, I transitioned to renting out the bedroom on Airbnb. I will write an entire post on this at a later point, but this was a very fun experience. I was making more money through rental income and meeting amazing people from all over the world. My other roommate didn’t mind this at the time which allowed for a very smooth transition.

Updated House Hacking Numbers

Airbnb ended up bringing in much more than the $500 a month I was making from my friend. I averaged $750-900 per month in rental income on this bedroom. So now my housing financial outlooked looked like:

  • Bedroom #1 Rent: $500/month
  • Bedroom #2 Airbnb: $825/month
  • Me: $425

I was paying for 25% of my total mortgage while the rental income contributed 75% of each payment. Not too shabby, but I knew I could do better. There was still more opportunity to optimize.

Converting Second Room to Long Term

Something very interesting happened to me while renting out the bedroom through Airbnb. I had a guest who came down to the area looking for apartments/homes to live in. They were planning to move two weeks after their stay with me. It happened to be they liked my place so much they asked if they could go long term.

How could I say no to this?!

They asked what a fair price was for rent. I looked at what their all in costs charged by Airbnb for the two week stay to help me determine what made sense. I landed on $1,000 per month. I asked them if that would work out and they immediately accepted.

I couldn’t believe what I had just had someone agree to. I was now bringing in $1,500 per month on a mortgage payment of $1,777. That dropped my total part of the mortgage to 15%.

Getting Paid to Live In My Home

I was almost optimized. The last thing I needed was for the roommate who was paying $500/month to leave or agree to a higher rent payment. I didn’t want to ask him to pay anything more than what we had agreed upon. I knew money was tight for him and he wouldn’t be able to afford an increase in rent.

Luckily for me, I didn’t have to ask. He ended up moving out a few months later and I now had more opportunity! I could do the same thing I had done with the other bedroom. That is exactly what I ended up doing.

I started renting out through Airbnb and saw roughly the same amount of income ($750-900 per month). And I ended up having the same thing happen again! Another guest stayed, liked the place so much, and asked to stay long term. I kept things consistent at this point. I charged him $1,000 per month.

Rent By The Numbers

So now let’s analyze the current state of my living situation.

That is right, I was making $223 per month in rental income and living for free. The whole time I am also paying down my mortgage principal. How incredible was this? It was incredible to see what was happening. I went from putting myself in a bad situation to now getting paid to provide a service people needed. Housing.

Can’t Stop There – Time To Double Down

It would have been great to stop there, but why not continue to push the bar. My home had a walk in office that I wasn’t using for anything. The room didn’t have any privacy, but I saw there was an opportunity for more rental income!

Checkout this link to see what I did!

$700 later and I had another bedroom to rent out! This bedroom was now ready for rent. This particular bedroom was a little different than the other two. I didn’t furnish the bedroom and it also didn’t have a closet. For those reasons, the rent was a little bit cheaper than the other two rooms.

New Housing Financial Outlook

Now let’s look at the new numbers for how my house hacking was coming along.

I was now making $2,525 a month! Note the rents of the other two bedrooms dropped a little bit as I had the long term individuals move out. Not too shabby though!

What would you end up doing if you were to be getting paid to live in the home you live in? Yes, some privacy things are a little bit different living with others. Would you be willing to make the sacrifice to be paid to live where you live. I find it to be awesome, for now.

Key Takeaways:

  • Most Americans have housing costs of 30% of their take home pay. This is more than likely the most significant expense you have each month. Determining how to optimize this expense can set you on an faster path to financial independence.
  • You walk by opportunity every day. Some people see it while others don’t. It is there. You need to change your mindset and look a little harder.
  • Getting paid to provide something people need is a great feeling. I provide a very comfortable brand new home in a safe neighborhood. No I am not trying to be a slumlord. I am trying to provide something of great value to others in need.