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House Hacking: Live for Free

Whenever we come across a new investor, the first thing we ask – have you considered house hacking? This is probably one of the easiest, best entries into the real estate investing world. It also allows you to try it out before going all in. There are pros and cons to every strategy so we will try to cover them all but first we will explain what house hacking is, and our story on how it helped us propel in our real estate investment journey.

WHAT IS HOUSE HACKING? This is when you purchase a house and let others live in it with you. This could be through a completely separated dwelling [e.g., duplex] or by simply renting out rooms. The rent helps pay for the mortgage, utilities, and maintenance of the property. In fact, sometimes with a great deal, you can even live for free. There is also rent hacking, in which case you rent vs buy, and then sublease some of your space to others. This is a great strategy to help build up financial independence and free up monthly cash flows.

HOW WE STARTED? Our first house was house hacked. It was a duplex in Clarkson, Mississauga. We still have this property today, which has been one of the best purchases we have made. The property layout is 3 bedrooms upstairs and 2 bedrooms downstairs. The two units were completely separated. Now for a young couple, we only needed the 2-bedroom unit, so we decided to live in the basement apartment, since the upstairs unit would generate an additional $200/month or $2,400/year. Its this sacrifices that accelerated our ability to buy more investment properties and eventually our home. We bought the property for $390k. Our total expenses were $2,050/month which included mortgage payments, utilities, and taxes. Our rent for the top unit was $1,550/month (at that time). You can see that we were essentially living in that 2-bedroom unit for only $500/month. Now fast forward to 2021 – our rent for the top unit is now $2050/month – which means if we still lived there today; we would LIVE FOR FREE. Yes, that is right, our monthly payments would be covered completely by the tenants - Is that not amazing?

HOW DID IT HELP US? We were new to real estate investing world, in fact, we used to talk about how 6 properties by our 65th birthday would be amazing and that is all we would ever want for retirement. At that point in time, we did not know the basics, of refinancing, Brrrr strategy, leverage, and other tools available in the real estate investment world. Fast forward 7 years, and now we have 6 houses – 30 years earlier than what we thought. Isn’t that crazy? Simply because we now understand the strategy. Now mind you there is still a lot for us to learn – but just wanted to highlight the big difference a bit of education does. Before we used to think, save money, put a down payment buy another property. That is why our original goal took 30 years to achieve. Once we found out that we can use the refinance as a tool to buy more homes, this is when things really took off.

The one thing we did with this property, is the first 3 years we had accelerated our mortgage payments. Think of it as our piggy bank, we did not know what else to do with our money at that time, so we thought let us pay it off as quickly as possible. Now that is not something we would do today, but it worked in our favor given the circumstance. We used this property to purchase our second investment property in Hamilton, ON. Shortly after that, we bought our second home, where we live today. In total, we lived at this property for 4 years. It has served us well, with a lot of great memories like going on our first date, getting engaged, adopting our dog Lilly, starting our masters, and of course lots and lots of get togethers with friends and family during the summer months.




Typically, when you purchase a home, you can satisfy the mortgage on your own and/or with a partner. By adding a tenant into the mix, you are either a) able to offset the mortgage payments or b) increase your overall savings or c) increase your disposable income. You are essentially creating another revenue stream for your family. In addition, there are tax benefits for renting your household. There are quite a few things that you can expense since you are essentially running a small business [e.g., mortgage interest, utilities, maintenance, and property taxes]. Just remember this must be a fraction of the cost since its your primary residence. Please consult your accountant for more information and prior to committing to this strategy. If you are looking to invest long term and want to grow your portfolio as a primary goal, by utilizing this strategy, you will benefit from the experience you get in managing a property. Now, if you are interested in scaling your portfolio and completely against managing tenants, we believe this experience can still be useful. By having firsthand experience with managing tenants – you will be able to understand the requirements from both ends, this will help you with finding the right property management company as you start to scale. You will get a better understanding of finding tenants, screening process, dealing with property management, and tenant related issues.


The number one disadvantage of this strategy is really based on your lifestyle. For instance, we currently have 1 toddler, 1 baby on the way, and 1 dog. That is a family of 5 – at this point it does not make sense for us to house hack. We are a growing family and need the room for our growing children. This could be your situation as well. There are many reasons why a lifestyle just does not jive with this type of strategy, however if you are in the stage of your life where it would not be too big of a deal – then go for it. It will really help you accelerate your financial independence. Even if its only for 3-5 years, it will be worth it in the long run. The other big thing to consider is tax implications from a Capital Gains perspective. When you house hack, you will have to not only report the income that you generated from the property, but also, when you go to sell you might have to pay capital gains on the fraction of the household. Its best to talk to your accountant to ensure you are fully aware of the implications prior to committing to this strategy.

As you can see there is quite a bit to consider prior to committing to this strategy, but one thing for sure its one of the best ways to get started in Real Estate Investment. If you enjoyed this blog - please share with others. Let's get the word out on how real estate can help people secure their financial independence.

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The information provided in this blog is for entertainment purposes only and is not intended to be a source of advice with respect to the material presented. The information contained in this blog do not represent legal or financial advice and should never be used without first consulting with a financial professional to determine what is in your best interest to meet your individual needs.


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