How I House Hacked My Way to Financial Freedom

When I tell people that I owned multiple rental properties before the age of 30 and retired from my government job at the age of 32, there are three common assumptions: I come from a wealthy family, I hit the lottery or I robbed a bank. 

I’m sure those scenarios would make for a fantastic dinner table story, but I can assure you that none of them are true.

So how did an Agricultural Economist with a history of terrible spending habits in her 20’s end up retired at the age of 32 years old? 


Believe it or not, a board game is what motivated me to start investing in Real Estate. My husband and I sat around a table and played a game with fake money and plastic figurines that set off a chain reaction of events. The game is called Cash Flow and it changed our lives forever

The concept of the game is to get out of the “Rat Race” of life; to do that, your passive income has to be greater than your expenses. 

Before this epiphany, my husband and I were really just going about life checking the boxes and doing things we’d always been told to do growing up. Go to college. Get a good job. Work that job until you’re in your 60’s and then you can retire and live the life of your dreams. 

We suddenly realized the importance of making our money work for us and decided to take the leap into real estate investing in order to start making passive income. After about three months of searching, we found our first rental property, a duplex in Washington D.C.

Once we got that first rental property under our belts, and saw how lucrative it was, our world was turned upside down (in a good way). We were addicted! We started hunting for our next rental property about a year later when the idea of “House Hacking” fell into our laps.

How I House Hacked My Way to Financial Freedom

How House Hacking Changed the Game For Us

Don’t worry, I know the word “hacking” sounds pretty shifty, but it’s not! It’s actually an extremely popular method of Real Estate Investing. 

House hacking is buying a multifamily property where you will live in one unit and rent out the others.

When my husband and I started investing in real estate, we had no idea there were ways to get around the hurdle of paying 25% as a down payment for a rental property. We found out via a random conversation one day. We were on the way to view a potential rental with our real estate agent and while we were walking up to the property we passed by a four-unit building for sale on the same street. I mentioned how nice the building was and said “I wish we could buy that!” Our agent replied, “You know you can buy it with a down payment of only 3.5% using an FHA loan as long as you live in one of the units.” 

Our minds were blown! The fact that we could buy a four-unit building with less money down than our first rental property was mind boggling! I honestly wish we would have known about this method sooner because if we were first time home buyers, there were so many grants and down payment assistance programs that we could have used to lower or even eliminate an already low down payment!

That particular property that sparked this conversation with our realtor was sold before we could even put in an offer, but we immediately switched our search to start looking for four-unit buildings and finally found the perfect one for us. We rented out the home we were currently living in, moved into the four-unit and the rest is history! With an FHA-backed loan, you have to live in the property for one year. After the year was up, we moved out and purchased a new home for ourselves!

Here’s why House Hacking accelerated our journey to financial freedom:

  • Because of the way the lender calculates your income when buying a multi-unit (factoring in potential rental income), we were able to qualify for a higher loan amount. 
  • By qualifying for a larger loan, we were able to buy a four-unit building in a neighborhood with high market rent.
  • The rental income from the property not only covered the mortgage and other expenses, but it also increased our cash reserves, which allowed us to invest in more properties.
  • Our living expenses were completely covered by rental income while we lived in the four-unit, which allowed us to save more money.
  • The value of the four-unit increased our net worth.

House Hacking provides an opportunity to buy an asset and get your tenants to pay the debt! That’s the ultimate hack if you ask me!

Questions to Ask Yourself Before House Hacking

  • Can I afford the mortgage and maintenance costs if some or all of the other units in the building are empty for any period of time?
  • Does this align with my goals?
  • What is the market rent in the neighborhood that the property is located?
  • What’s the potential cash flow on the property if all units are rented out?
  • Are the units already occupied? (Buying a multi with tenants already in place can be good and bad.)

[P.S. There are tons more questions associated with deciding if purchasing a multi-unit and house hacking is right for you. These are just my top five.]

How I House Hacked My Way to Financial Freedom

Crunching the Numbers

If you are looking into purchasing a multifamily property, researching the market rent is extremely important. 

Ideally, you should be able to cover the mortgage and utilities with the rental income received. Anything left over after all of the bills are paid is profit/passive income. By starting backwards and researching the market rent, you can get a pretty good idea of what price range you should be shopping in. 

Let’s take a look at a scenario and take a look at the numbers (keep in mind that monthly expenses can change).

Scenario: John bought a duplex. He has two goals: 1) Use an FHA loan and 2) Live “mortgage free” by having the rental income from his tenant cover the mortgage. Each unit in the duplex has two bedrooms. The mortgage for the duplex is $850 and all other expenses average $330 per month, which brings his monthly expense total to $1,180. John is living in one unit and renting out the other. The market rent for a two bedroom in John’s neighborhood is $1200. 

So, John is making $1200 per month in rental income and spending $1,180 per month on the mortgage and expenses. His monthly cash flow is $20.

Now that may not sound like a lot, but John’s goals for buying this property were to use an FHA loan and live “mortgage free.”  He’s achieved those goals and is making an extra $20 a month on top of that! Now that’s a win!  Don’t just focus on the $20 per month. Think about all of the money John is saving by eliminating his living expenses.

Your scenario will look different depending on your goals and the area you are buying a multi unit in. Be sure to run the numbers and do what makes sense for you.

PRO TIP: If for some reason you can’t find a multi-unit where you live, you can buy a single family home and rent out a room, basement or a guest house! The goal is to bring in rental income that will cover some or all of the mortgage. 

A few things to remember as you start your Real Estate journey:

  1. You are worthy of wealth.
  2. Abundance is all around you.
  3. You can get started right now with what you have. No steps are too small. Just start!

Kendra Barnes is a full-time Real Estate Investor and founder of The Key Resource. Her real estate investments afforded her the ability to retire from the 9-5 life at the age of 32. She created The Key Resource to inspire, empower and educate people about the power of homeownership and Real Estate investment.

How I House Hacked My Way to Financial Freedom

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