Hi there! You new here? We love that you found our little corner of the web. Here at Debt Free Guys, we’re all about helping people experience the freedom of becoming debt free! Would you love to feel that relief? After reading our article below, see how we can help you more here.

Consider house hacking as a retirement strategy

Retirement planning – or any other financial planning for that matter – doesn’t just need to be just about cost-cutting. Here’s house hacking can increase your income to reach all your money goals more easily. Before house hacking, pay off those credit cards with this free tool.

What’s house hacking?

In anticipation of us house hacking our first investment property, which has changed a bit since this recording, we’re sharing what house hacking is, ways to house hack and why you should consider house hacking.  You see, a lot of folks think that real estate investing is out of reach for them, and they’re missing a great opportunity to reach other goals more quickly and easily. Still others are scared about how they’ll afford retirement. House hacking is a solution for both fears. So, what’s house hacking? The traditional definition of house hacking is that house hacking is a real estate investing strategy for generating income from a property, more specifically from buying a multi-family unit like a duplex or 4-plex.

Let’s add some glitter and a rainbow hew to that for the Queer Money® podcast’s definition of house hacking, which is leveraging the properties that you own or rent to reduce or eliminate your housing expenses and possibly more.

Hear how to start house hacking today:

What are the benefits of house hacking?

There are many benefits to house hacking, otherwise why would we talk about it on the podcast?

The first benefit is that you can generate a little to a lot of income. Let’s face it, most Americans don’t have an income problem. They have a spending problem. That reality doesn’t reduce the number of hours that people spend thinking about ways to increase their income (or complaining about their income).

House hacking also lets you generate income to invest or save for something specific, such as a down payment on a home, fund a Traditional or Roth IRA or cover your bills so that you can invest more of your W2 income in your company-sponsored retirement plan.

You’ll want to run this by your accountant or tax professional, but house hacking in some cases can reduce your tax liability. If you own the property and you treat it as an investment, such as using the property as an Airbnb, you can depreciate the asset thus reducing your tax liability. If you own the property, as well, you could qualify for the mortgage interest rate deduction if you’re itemizing deductions. 

The clearest benefit of this strategy, especially for folks on leaner budgets, is to generate enough income to have some or all your mortgage or rent paid. With housing expenses being one of the leading expenses for most people – we mean, it’s pretty damn expensive – house hacking can reduce or eliminate this cost. This could put you in the black – positive – every month or free up cash for you to use otherwise, such as saving, investing or simply planning an awesome annual vacation.

Finally, you can generate enough income to become geoliberated – the ultimate retirement goal. We coined the word geoliberated to mean having the ability to live and work from anywhere in the world. Of course, if you’re already retired, this will just help you live anywhere in the world that you want to live. Many LGBTQ folks want to live abroad in retirement in cities or towns that are LGBTQ-friendly and is also not gravely expensive. Finally, not too many of those places exist here in The States, but they’re quite ubiquitous outside the US in places such as Portugal, Spain, Mexico, Belize and Thailand.

OK, but are there any drawbacks to this unicorn strategy? Of course, there are always drawbacks.

What are the drawbacks of house hacking?

Look, most people are awesome, but some people suck. 

So, one of the drawbacks of house hacking or real estate investing in general is having to manage tenants or a property manager. The tenants are your clients, so you’ll want to treat them well, but some tenants are demanding, difficult or both. If you’ve ever waited tables or tended a bar, you know. 

The next potential headache is with taxes. With real estate investing, your taxes can get complicated. But to be fair, with almost any non-traditional retirement strategy, you’re looking at complicated taxes. When we started Debt Free Guys and the Queer Money® podcast, we would do our taxes ourselves. The more we’ve grown, the more complicated things have gotten. The solution is to hire professionals. We now have a bookkeeper and an accountant. If or when things get complicated for you, you’ll want to hire professionals, too.

Next, no investment is a winner year after year, year over year. With real estate investing, there are some years when you make no money. This could be due to one-off expenses, emergency repairs, drastic fluctuations in the housing or rental markets or you simply can’t find the right tenant at the right time. This is why it’s important to set aside 1% to 3% of the value of your property each year to help with maintenance and with those months you won’t have tenants. 

 With some of these house hacking strategies, you’re living with people who aren’t your partner or child. Remember above when we said that some people sometimes suck? Well, living with people you aren’t committed to or aren’t required to love can sometimes suck. Let’s be real, living with people you’re committed or obligated to also sometimes sucks, but hey you chose them. 

We don’t want to make it appear as if house hacking is like when Dorothy and her friends traipsed through the poppy field on their way to Emerald City – and WTF is with one of the most popular movies for kids promoting poppies? Your expenses with real estate investing will increase because you’ll need to buy insurance, maintain the quality and value of your property and manage general wear and tear.

Finally, real estate investing is a business that’s best managed like a business. That means that it’s not for everyone. We know that today it’s all about inclusion, but some folks aren’t meant to be business owners or entrepreneurs. Stop letting people (who have a product to sell) bully you into becoming a business owner if it’s not for you. If you know you’re not cut out for business and you’ve done all the work to ensure you’re not letting your fears do the talking, then don’t get into real estate investing. That’s fine. There are other strategies that will better suit you.

'You could generate enough income from house hacking to be geoliberated, the ultimate retirement plan, where you're generating enough income to subsidize your lifestyle wherever you decide to live.' - John of Debt Free GuysClick To Tweet

But if real estate investing or even house hacking sounds like it might be for you, here are nine creative (some not so creative) ways to house hack.

9 house hacking strategies to save you money (and time)

1. Buy a multi-family property and have your mortgage paid for by others

The most common way to start house hacking is to buy a duplex, and rent out one side while you live in the other. This is a very popular strategy in the Capitol Hill area of Denver. Other versions, of course, are buying a 4- 6-, 8-plex and living in one of the units while renting the others. The duplex is the easiest hurdle for most people to, well, hurdle. 

In fact, this was going to be our strategy in Toledo OH starting early next month. It may still be our strategy, but we had to rescind the offer on the property we were under contract for because the seller kept failing to meet his requirements to make the sale happen. We’ll continue researching this strategy as an option for us but will consider other options to find one that’s most suitable for the time.

2. Get roommates

Quite honestly, this is the easiest form of house hacking. If you have a spare room in the place that you own or rent, rent out that spare room. Even if you only charge a few hundred bucks, it’s a few hundred bucks that’ll offset your rent or mortgage.

This is a very popular house hacking strategy for college students. We both knew several students in college whose parents bought a house with several bedrooms. Their kid had one bedroom and the rest were rented out. This pretty much gave their kid a free place to live for four years and then they had a house to either keep renting out or sell after their kid graduated college.

For about a year, we rented a spare bedroom and bathroom to a colleague we worked with at Charles Schwab. He and his partners lived full-time in Portland OR, but our colleague had to be in Denver for two weeks each month. It didn’t make sense for him to pay full price for rent each month and to have his rental sit vacant for two weeks each month. So, this accommodation made his life cheaper and helped us make a few extra dollars. As a matter of fact, it helped us redecorate our condo, improving its value while we lived there and when we sold it.

3. Move in with a roommate and rent your home for more than your mortgage

This one’s a little creative but also creatively good. Every now and then people realize they either can’t afford the place they bought, it’s bigger than they need now, the place they bought is making them house poor or it’s keeping them from reaching other financial goals. If you own a place, either a house or a condo, you can always rent out this house or condo for more than your monthly mortgage while renting a bedroom for cheaper in another house or condo.

This may sound crazy, but this is exactly what our friend, Jeff Underwood of Homo Money, did and talked about on Queer Money® episode #299.

4. Airbnb or Misterb&b your place for several weeks a months

Not too dissimilar to number three, you can Airbnb or Misterb&b your place for a few days, weeks or months on end while you live somewhere that’s cheaper or when you simply want to live somewhere else for a while. This can mean you’re staying with friends or family; you’re renting somewhere cheaper or you’re staying in another property that you own.

This, too, may feel too far out of reach, but our friend Zeon McIntyre shared on Queer Money® episode 163 how she does this.

5. Rent out garage space for storage

This may not feel like house hacking but it sure is. As of 2019, the rental storage industry was nearly a $40 billion a year industry. People have too much shit and they don’t want to get rid of their shit. 

Hello Storage Wars! We see you, Hoarders. Are we all sparking joy, yet?

Storage space isn’t cheap, either. As of 2019, the average monthly rent for a storage unit was $89. But try living near or in any sizeable city and that rate is way higher. 

Who can help manage people’s costs and make money in the process? You! By renting out whatever space you have in a garage or anywhere on your property. Don’t have space in your garage but have space in your backyard? Install a shed and rent the space in your shed. Have friends or family who don’t know where to put all their stuff, offer them space in your basement or attic for a small fee.

6. AirBandB rooms in your house or your whole house during special events near you

Okay, so you can’t easily rent out your home for weeks or months on end while you live somewhere else. But there are special occasions in and around where you live that drive up demand for hotels and other accommodations? Things like conventions, sporting events, concerts and shows.

You can rent your home just during these unique and special times. This can give you a quick infusion of cash to put toward debt, fund a vacation or buy someone special a special gift.

We saw folks who rented out their houses, condos and apartments for the Democratic National Convention in Denver in 2008. They were getting $500-1,000 a night, especially those who were close to downtown. We heard of folks who did something similar in Salt Lake City for the 2002 Olympics. Finally, there are people every year who do this wherever the Super Bowl, Final Four, All-Star game and other annual events are.

7. Rent a parking space if you live in a condo/co-op and don’t have a car or can’t park on the street

Similar to number five, this is a twist on house hacking. People are always in need of a parking space. Our condo in Denver was near a health complex that included an ER, dentist, medical college, VA hospital and more. The complete didn’t have enough parking space for all its employees and patients. So, some genius residents in our building who had the extra space rented their extra space to the medical professionals who worked nearby our building. 

The condo we’re currently renting in Las Vegas has two parking spots, but we only need one. So, our landlord is renting the extra space to a friend of hers who needs a place to store their car for long durations at a time.

If you have extra parking year-round or even for special occasions, you have a house hacking, money-generating opportunity.

8. Long-term AirBnB your place and geoarbitrage during peak seasons

Geoarbitrage is taking advantage of a big city salary while living in a little(r) city or town. So, another house hacking opportunity is to exit your more expensive city during peak season – those times of the year when your neighborhood becomes a tourist destination. It may seem like you’re giving up some of the best of what your area offers but hear us out.

We spent three months in early 2020 living in Sitges Spain, a beach town about an hour south of Barcelona. The peak season in Sitges, what with it being a beach town and all, is during the summer. People, especially gay men, from all over the world flock to Sitges to soak up the sun during the day and embrace the very-LGBTQ-friendly entertainment scene in the evening.

When we were there in 2020 between January and March (yes, just before anyone ever hear the word COVID), we met numerous people who get outta dodge during the peak season. They do this for two reasons. The first reason is that they can rent their condos or homes for obscene prices during the summer months – so obscene their rentals subsidize their vacations to other popular destinations, and they still return home with a profit. The second reason is that living in the center of a tourist destination can get to you after a while. So, if they jaunt to quieter destinations, they have an even bigger profit and they get a break from people.

9. The ULTIMATE house hacking strategy

Finally, the ultimate house hacking strategy is to have enough rental income, likely from numerous rentals, to cover all your living expenses in early or regular retirement. So, basically, it’s a job that requires just a bit of engagement from you and one that pays for your living. We say, “requires just a bit of engagement from you,” because if you have a property manager who does the heavy lifting for your portfolio of properties, you still need to manage the manager. But you’re managing them from your pool in the backyard of your modern home in Palm Springs, or your casita in Puerto Vallarta or your condo in Portugal or anywhere you want to live.

And there you have it, nine ways to start house hacking. These can be strategies for you to take the plunge into real estate investing, fund big life goals of yours or simply reduce your cost of living.

We’re diving into house hacking in 2022 and will be sharing more of our hacking hacks. Make sure you follow us on Instagram where we will be sharing more and come back for articles about house hacking tips to get started or make the journey easier.

Connect with David and John

• Debt Free Guys on Facebook
• Debt Free Guys on Twitter
• Debt Free Guys on YouTube
• 7-Step Credit Card Debt Slasher
• Queer Money Facebook Group
• Queer Money on Instagram
• Subscribe on iTunes
• Email [email protected]

Resources on house hacking

• 5 Early Retirement Real Estate Tips
• 15 Best Geoarbitrage Tips to Live Larger
• 7-Step Credit Card Debt Slasher Guide