House Hacking! This Is How I Started

This talks about how I got started in real estate while I was in college.

Ryan Pineda

October 14, 2021

House Hacking! A lot of people have heard the term, but don't really know what it is. Essentially it’s just renting out different parts of your house to subsidize your mortgage or your rent payment. So a lot of the house hacks you would see are for people in college, they all go partner up, get a house together, and then they just chop up the rent between. My first experience with a house hack was actually in college, me and three of my other baseball team mates went to rent an apartment together. I was playing baseball in Northridge, California, where it's super expensive, especially for college kids. A two bedroom apartment was $1,600. So I got me and three other guys to go and rent that $1,600 apartment.

We took a $1,600 a month payment and made it $400 per person. So throughout college, I was very experienced with the house hack. 

When I got out of college and I was playing professional baseball, I still wasn't making very much money. I was a late round draft pick so my signing bonus was very small. I was only making $1,200 a month in the months that we were playing. So over six months, it was about $7,000 a year. I actually lived the first year at my parents' house after I got drafted. But during that year, I got exposed to real estate for the first time. I was 21 years old and I was a realtor. So I had learned the market.

I learned how to buy and sell homes. I actually ended up teaming up with my cousin on buying my very first house when I was 22 years old. Him and I went in on it together. We were partners 50/50, and we bought a house for $160,000. You could not go wrong buying during that time. So we ended up getting an FHA loan on that house, lived in it and our payment was about 1200 bucks a month. We did some small renovations and made it a five bedroom home.

Now, remember I had lived the last three years of my life with roommates, even in the same bedroom. So renting out other bedrooms wasn't a big deal to me. So I ended up giving him the master bedroom because I wasn't there the whole time I was out playing baseball for six months out of the year, he lived there full time. I took the downstairs bedroom and then we had the other three bedrooms to rent out. We went and got three of our good friends and rented each bedroom out for about $400 a month. If you do the math, our mortgage payment was only $1200. We get three roommates at $400 a piece, boom! We just covered a full mortgage payment. Now, remember we still have utilities. We still have maintenance costs, but because of the house hack, we pretty much eliminated our full mortgage payment and got to live for free. The other added benefit was when you're paying down a mortgage, you're also gaining equity. So our roommates were helping us gain equity in the property and helping us live for free.

We had lived in that arrangement for about two years, hacking it with our friends. After two years I got engaged to my wife now. So I went to my cousin, Travis. I said, “Hey man, you know, we're not going to be able to house hack and have me be married in this house. We need to sell.”

Also at the time we were both pretty much broke. So we needed to tap into that equity and cash out. So we sold it two years later for $215,000, we only owed about 150,000. So we both got a good chunk of cash back. That helped us both start out our lives in a good way.

 I had some money to start off our marriage. He had some money to go start off some other things that he wanted to do. It was a great thing that was only possible because of house hacking. If we couldn’t house hack, there was no way we could afford the $1,200 a month mortgage without really stressing. But the house hack allowed us to do that. It allowed us to prosper and allowed us to get to where we are today.

So that's my experience with house hacking. And you can do the same. If you're trying to rent a house, you should try and get roommates, driving your price down. Even if you don't like living with roommates suck it up and live with them for a few years, it'll help you save up money so that you can go get your own place. 

Eventually, if you're buying your first house, you can look at multiple ways to house hack. If you get a multifamily unit, that's a duplex triplex, fourplex. You can rent out all the other units and pretty much pay for your unit for free. It's the same principle that we used for bedrooms, but you can use them for full units. 

So multifamily is a great way to house hack when you're starting out. Another great way is to look for properties with garages or separate entrances if you don't really want to interact with the people that you're renting to. If you live in places with our basement, you could put them in the basement. 

My point is there's a lot of ways to house hack. The list goes on and on. I know some of my wealthy friends today who still house hack, they just can't look at a bedroom and see it vacant and empty and have no purpose when they know that they can monetize it. So they go rent it out to a roommate. 

It's just a win all the way around. So I am a huge advocate of house hacking. It can help you get into your first property. It can help you live for cheaper. I think it can help you build wealth. It can help you save money. There are so many great parts of house hacking. 

There is a new way of house hacking that wasn't available when I was doing it in college. And that's through Airbnb. You can live in your current house and rent out bedrooms on Airbnb. That will be more profitable than anything else. 

Then you also have a totally new stranger living with you every night. So I don't know how much I would feel comfortable doing that, but you will definitely make more money doing it that way. What I'm actually doing on one of my properties in big bear is I converted the garage to a totally separate unit. We gave it a little kitchen. We built a bedroom, its own little living room and we made it its own unit on Airbnb. Then you have the main house which already had all of its stuff. So now I turned one house with a garage into two cash flowing units. So to me, when I bought that property, it was like I was getting two properties for the price of one. 

That is basically a house hack. So get creative guys. I'm sure I haven't even thought of all the different ways you can do it.

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