Almost six years ago, we bought our first house. We were barely 24 years old, and honestly had NO idea what we were doing. Theo was working at the fire department for $12/hour, I was a new stay at home Mom and we had one sweet little baby. We bought our 4 bedroom house with the intention to one day renovate and rent out the basement. But, first…we needed some cash.
Since we only lived in two of the bedrooms and had two vacant bedrooms, we decided to start by renting out two bedrooms to local college students. We advertised at the local Christian college and found a young lady who needed a place to live during her internship in a nearby town. Although we didn’t know it at the time, this is called “house hacking” in real estate circles. House hacking is when you rent out a bedroom or space in your primary place of residence and use that money to pay toward the mortgage, effectively meaning that you are not paying your mortgage yourself.
After two semesters of house hacking and renting out the bedrooms within our house, we decided to begin renovating the basement and turning it into an apartment. Theo did much of the work himself, but we hired electricians, plumbers
The biggest problem we had with the Airbnb being in our basement was the sheer amount of noise that my children would make overhead. We were constantly worried about getting bad reviews because the kids were stomping around or screaming nonstop or throwing toys on the floor. That was when we realized that while we LOVED Airbnb and rental properties, we needed to move this operation out of our living space. I didn’t mind the people being on my actual property, but I also knew that I couldn’t tell my kids to be quiet just because someone was living below us. That’s just not how I wanted to live.
We also were unable to buy any separate properties because the bank saw our mortgage as debt and our debt-income ratio was too high to take out a loan to buy a second home/property. We knew that it was time to sell our home. If only it was that easy….
And that began the wild goose chase of trying to sell our home and move out. As most of you know, it was not as easy as we thought it should be. Our house just would not sell. We moved out, had a terrible experience and moved back in. It was all very hard and complicated.
Finally, after almost a year on the market, our house SOLD and we were able to move out! We moved into a rental property and began to look for a house to buy to rent out.
Now, most people do not understand why we would rent a house to live in while buying a house to rent out. The answer is actually quite simple- if we are paying rent for our residence, we technically have no debt and will be able to apply for loans from the bank that we could never receive if we were paying down a mortgage. Eventually, we would like to buy a piece of land as our permanent property, but for now we will continue to rent.
All throughout February, we were actively looking for a home to buy to turn into our first rental property. We found about a dozen properties and put offers on many of them, but we were either outbid or someone else put in an offer first. The market was HOT! Houses were going before we could even schedule a showing. We finally realized that we would have to put in an offer sight unseen if we wanted to be considered for a property. In early March (right before the pandemic hit), Theo put in an offer on a property- and it was accepted! A week later, he put in another offer on a property right across the street- and it was rejected. Two days later, he put in another offer on a house on the same street. That one was also accepted.
Friends….we now own not one, but TWO rental properties!!!
I share all that to explain that this was not a rapid process by any means. We have been actively house hacking, running Airbnb and researching rental properties for YEARS. We have been saving money and aiming for this goal for a long, long time.
And here we are.
In the midst of a global pandemic, we are now the owners of two homes that will become rental properties. I’m sure that I will continue to update my blog on the progress that is made. If you ever have any questions about this, please feel free to comment here, send me an email or hop on over to Instagram to follow along the journey in real-time!
What questions do you have about this process and our steps going forward?