By now the majority of our readers understand what house hacking is, but if you are new here (welcome!) house hacking is the genius act of purchasing a multi-unit property, living in one unit, and renting out the other(s). House hacking is one of the best, most effective strategies to significantly reduce your living expenses while also dipping into the real estate business.
Beyond that, what if I told you that we can all go further than just house hacking? With little to no time commitment, you can take the concept of house hacking to the next level and earn an additional $1,500 of monthly income. Yes, seriously.
The strategy? I call it “life hacking”, and it’s a lot simpler than you may think.
Before we fully delve in, I want to be clear that this concept of life hacking is most achievable for a single adult, without kids, living in a well populated city. However, anyone who has a true passion to achieve early financial freedom can absolutely practice life hacking. Firstly, you need to be willing to make the necessary sacrifices in the present to reap benefits in the future. Be willing to forgo your current luxuries for long-term happiness. You will need to be on a mission and believe in your core that you will reach your goals, allowing absolutely nothing to stop you.
If you have the drive to be financially free and don’t mind making some personal sacrifices, keep reading!
If not, don’t waste your time. Get back to your IG survey so you can finally discover which “Friends” character you are.
So, what exactly is life hacking?
Scott Trench articulates this in his book Set for Life, and so many studies back this up: the average American’s two biggest expenses are housing and transportation. Trench discusses that in order to reduce these heavy hitting expenses, the first steps to take are house hacking AND living in a location where you can easily commute to work by bike, or work remotely.
Let’s assume you have accomplished both of these ideals. Great! You are now living practically for free (or very cheaply), and your transportation costs are close to $0. This is an awesome achievement in and of itself!
BUT WAIT, THERE’S MORE!
You can actually increase the amount you are paid to live at your own house, and collect income on your own car. This will help turn properties in highly sought-after locations, where cash flow can be tough, into cash-flowing properties.
For example, I live in Denver where prices are generally high. A few years ago, when I first started aggressively house hacking, these sky-high prices made it tricky for just half of a one-bedroom duplex to fully cover all of my expenses.
So I began to ask myself, “What can I do to cover my remaining expenses?” And it dawned on me.
House Hacking 2.0
I realized that I could take house hacking to the next level by also renting out my bedroom on Airbnb. It sounds crazy, I know!
“But Craig, where did you sleep?!”
I didn’t! Sleep is for the weak! Just kidding.
As so many now know, I sectioned off a corner of my living room with room a curtain and some simple dividers to make it into a temporary bedroom. See below to view my setup.
Was it uncomfortable for the first few nights? Sure it was! Was it a sacrifice on my part? Absolutely. But as with any other challenge in life, the best way to approach it is with a positive mindset and willingness to adapt. Perhaps you’ll find that you even enjoy it!
I know I truly did. I got paid to meet new, interesting people from all over on a regular basis. Heck, I even ended up befriending most of them, and they often offered me a place to stay if I was ever in their home city.
Got a Spouse and/or Kids?
“Craig, I have a wife (or husband) and kids. This is going to be a problem.”
There is no doubt that this strategy will be easier if you are single with no kids. However, there are plenty of ways to apply life hacking in a family situation. It goes back to the question: Do you have that burning desire for financial freedom? If so, you will find ways to make it happen.
What about that extra bedroom you have? You know, the “guest room” where a family member or friend will sleep maybe once or twice a year, that serves mostly as an oversized closet?
What if you went couch surfer style and rented that out as an inexpensive option? You likely won’t make as much as a private room may, but anything is better than nothing. I definitely considered renting the couch out as an option for myself, but ultimately decided that I am the one willing to sleep in the living room — for the premium I am able to charge for a private bedroom.
So how much did I make on this Airbnb? Typically, I charged $40-$50 a night with a $25 cleaning fee, which netted me approximately $1,000 a month after expenses. This income did not include any additional tax write-offs, which is a subject for another post, another time.
What you can charge will vary quite a bit based on your location and the amenities you offer. I live about 1.5 miles outside of downtown Denver and offer the essentials: a comfortable place to sleep with clean sheets, towels, and coffee.
Now that you see how I made an additional $1,000 per month from housing, where did the other $500 come from?
You guessed it! My car.
If you are like me and you work from home most days or can easily bike or take public transportation to work, your car is likely just sitting idle for at least five days a week, depreciating every single day. How do you turn this money-sucking false asset into a real, income-generating asset?
Yup – you rent it out! Even my super sexy ol’ 2011 Suzuki SX4 totally worked!
There is an awesome site called Turo, which is exactly like Airbnb—but for your car. People who are traveling to your location are able to rent your car from you, rather than deal with a dealership, for a daily fee. You set the availability of your car, and travelers can rent it from you on your schedule.
I’m sure you have plenty of questions regarding insurance, logistics, payents etc. This article will not be touching on those questions, for the sake of keeping things brief. But I will tell you it works and you are completely covered. To learn more about the details and terms, head over to Turo.com.
Now, let’s assume that your car makes you an additional $500 each month renting it out during the work week. However, similar to Airbnb, the fee to rent increases on the weekend. If you can go without your car on the weekend, you can make even more! So, on weekends that you have no plans, why not?
I rent my car out for $30-$40 per day and on most weekends, I’m now making between $700-$900 per month—that’s a serious chunk of change I didn’t have before. Moreover, I’m actually well over that $1,500 mark in peak seasons.
If you couldn’t already tell, my philosophy here is “when in doubt, rent it out!”
Now that we are all familiar with life hacking, you have the ability to actually make money on what would normally be Americans’ two largest expenses. Talk about expediting your journey toward early financial freedom!
In summary, life hacking CAN be accomplished by anyone. However, it will be most achievable for those who are single, without kids, living in a popular city. In reality, you can use all of the excuses in the world, but your excuses will not get you any closer to true financial freedom.
Here’s my question to you: How badly do you really want it? How badly do you want to for work to be an option? How badly do you want to have all the time in the world to spend with your family, travelling, and doing those things that you truly love?
If your desire for financial freedom runs deep, I have no doubt that you will find your way. The scenario outlined above worked great for me, and while it may not work for you I ask you to consider what will? Get creative!
How do you increase your monthly income by $1,000 to $2,000 per month? That is something for you to figure out, and for you to ultimately decide. Good luck! And keep me posted.