Snorkeling in Tulum, Mexico (2021)
This article was originally written on September 17, 2021 for my friend's real estate magazine. I have since acquired my second rental property - more info on that to come!
I’ve been obsessed with money for as long as I can remember. All I ever wanted was the ability to support myself, go wherever I want, do whatever I want, without having to rely on anybody. You could say I’m the classic Persian Jewish girl stereotype. When people would ask me as a kid what I wanted to be when I grew up, I’d say, “I want to be rich.”
There are many ways to become rich as a rich Persian Jewish girl from Los Angeles. You can marry a rich Persian Jewish man. You can work a cushy 9-5 job at a big corporate firm, invest in a 401K, and hope it will all pay off when you retire at 65, considering you never peace out from that job due to getting bored or having kids in the process. You can go to school for 12 years and become a medical doctor, devote your life to medicine 24 hours a day, 7 days a week, until you have made enough money to call yourself “rich.”
That’s not the kind of rich I wanted. I wanted to live and finance my own dream life in my twenties, live in my dream home and travel and make YouTube videos for fun, making money without actually “working” for it.
I wanted financial freedom. That’s the best kind of rich, the kind of rich your teachers and parents told you is not possible unless you work your ass off or marry a rich guy who works his ass off.
They were all wrong. Being financially free in your twenties without a rich husband or fancy career is totally possible through a process called house hacking, which is what I’m doing and what I’ll explain in a minute.
By the way, I’m currently writing this from my beautiful 3 bedroom, 2 bathroom house on an almost quarter acre lot in a quiet neighborhood in Texas right near the airport and close to my favorite gym, dance studio, and supermarkets. I have a lot of free time, during which I’m working on my other income streams, improving my health and fitness, and connecting with people I love. I enjoy finding new ways to make my home and backyard more beautiful, both for my own pleasure and as part of my AirBnB business. In between my AirBnB check-ins, I sometimes travel.
House hacking allows people to attain financial freedom in the short term and wealth in the long term, with very little capital upfront.
If you already own a piece of property or rent in a place that allows short-term renting, by the way, you don’t even need the upfront capital to begin with. You just need to prepare any space in your home that a guest can live in, and list it on a short-term renting app like AirBnB or VRBO. If you own a business, you might be able to rent out a space in your business - it can be a separate unit, room, or even a spare couch or tent. People on VRBO and AirBnB aren’t looking for a hotel, they’re looking for a place to spend the night. Be creative and tasteful with the furniture and decor, and you may charge enough to cover the costs of occupying the space and maybe even more.
House hacking is not like traditional real estate. The goal with house hacking is not to use a separate space solely for renting to long-term tenants; it is to make the most out of the space you already occupy so that you are both enjoying it and making money at the same time.
That garage that you converted into a music room, for instance - have you ever thought about adding a sofa bed in there? If there’s already a bathroom attached, you are golden. Use it to play music during the day, and rent it out when you’re not using it. Your backyard that you never use - have you ever thought about setting up a tent back there and renting it out? It sounds crazy but people are doing it. And it is not that difficult. Your guest room that is barely ever occupied - that is a no brainer, definitely rent it out.
The best part is that you don’t have to deal with evictions or late tenant payments - all of that is managed through the app. AirBnB takes a cut from your rental profit to cover things like insurance, marketing, and payment processing. They also hold your guest’s government ID and credit cards so they really won’t want to steal things or damage your AirBnB, especially because you can give them a bad review which could stop them from being able to rent future spaces.
What if you don’t own a space? Be patient, I’ll get to that. Right now is back to storytime:
I discovered house hacking years ago when I lived in downtown DC and was paying $1400-$1500 per month for my studio apartment that I wasn’t always staying at because I traveled so much. I hated my writing jobs, which forced me to sit at a desk for 8 hours every day doing meaningless work in a cold, depressing office with some miserable mid-level manager breathing down my neck. I kept changing jobs and knew I needed to change my lifestyle eventually.
I started doing this thing where I’d rent out my entire place on AirBnB every time I was staying at a friend’s place or traveling, and I’d leave my door unlocked and the key on the table so my guests could self-check in. I charged a ridiculous amount - $150-$200 per night - but the location was so central and the way I decorated my studio was so cute that my place was booked out almost every day! People were leaving great reviews. I started making a full-time salary from this - more than my day job - so I decided to quit my day job and do the same thing with two other studios. I was making bank, dude. On average $3 grand a month from every studio, minus the cost of rent and cable/internet.
Until I got caught. Most apartment buildings and condos don’t allow AirBnB, and they say so in their leases. So when my property manager threatened me with a lawsuit I had to shut it all down and eat the remaining costs. It was miserable, I stupidly took a 40% APR cash advance loan from my bank to cover those costs, went into stupid debt, and swore to myself that someday I would only do this again with a space that is MINE.
Three years later, that’s what I did with about $10 grand in my bank account and a writing job that was remote thanks to Covid lockdowns. I did a Zillow search of houses around the country that I could purchase with that amount using a 3.5% down FHA loan, which was about $220 grand, and settled on moving to Dallas-Fort Worth mid-cities, where beautiful homes like mine in that price range were in abundance. My credit score was 640, and my previous two-year job history was very patchy, which raised a lot of eyebrows during underwriting, but my loan finally went through and I finally had my own place that I could both live in AND rent out.
A couple of months after I bought the house, my 9-5 job started demanding that I work from the DC office again, to which I eventually said, “no thanks LOL.” I moved to Texas permanently, got my real estate license, took a temporary restaurant job to cover some repairs I wanted done on the house, and finally began renting the two spare rooms on AirBnB. They are decorated real cute. My guests really enjoy the fun lights and scented candles. I've also got a piano and a dance pole in the living room, which my guests love.
Aside from furnishing and decorating my house, which I’d have to do anyway if it were just me living in it, the only real work I do is cleaning the rooms between every listing and attending to any issues or repair needs which isn’t very often. I’m constantly meeting new interesting people through the app which is fun, and I’m no longer relying on a full-time job which means I have lots of time to focus on my real estate and marketing clients and my other passive income streams such as YouTube, as well as brainstorming newer, more efficient wealth-building ideas.
This feels like the type of life I was supposed to wait until my 40’s to have. I’m not the smartest person in the world and don’t have the amount of savvy business experience your rich uncle has - but I’ve finally cracked the code to house hacking toward financial freedom. I’m realizing that if I could do it, anyone can.
The main steps I’d tell my friends to take is to move to a cheaper city or area, make sure the area allows short-term rentals, buy a home in that area that you feel comfortable both living in and renting out, and use your free time to keep building your other income streams or passions, whether it’s being a makeup artist, painting, singing, or running a yoga meetup or book club. The possibilities are endless.
Sorry for the cliché; it’s true, though. You can do and be anything you want. If you don’t like other people in your space, buy a place with a separate entrance. If you don’t have a steady job to show the bank or you don’t have $200 grand sitting in your bank account, be creative with your loan options. It’s a good thing I’m also a realtor, so I can answer some of your specific questions by email below.
The bottom line is that long-term financial freedom is attainable and much easier than you’d expect. Keep pushing. Stop listening to the negative voices in your life and in your mind. You are never too young, too inexperienced, or too poor to live your dream life right now.
Pardes is a real estate agent and house hacker based in Dallas-Fort Worth, Texas. Contact Pardes at firstname.lastname@example.org.