House Hacking Your Way to Financial Independence

In this article, I did some math on retiring on $60,000 a year. To retire, you needed to save up about 2.7 Million. Now let’s look at things differently.

I will go through how you can achieve a similar income with closely held real estate holdings while having to save vastly less money.

House hacking is a term coined by Brandon Turner, and it is simply buying a home and renting out parts of it to cover some or all of the mortgage payments.

What is House Hacking

Let’s say you focus on purchasing a fourplex apartment every two years. This four-family apartment building cashflows $200 a door. With each of these four families, you make $1,000 a month cash flow while self-managing it.

The Model

If you cannot find a building with as good of cash flow economics like this, do not despair. Making this strategy work with less cash flow per building is possible, and you will have to purchase a few more buildings.

How much does it cost per building?

In this example, you would need $10,000 to make your first purchase. You will probably want to have another $10,000 that is somewhat liquid in case of an emergency with the property.

So how much do I need to save up?