Househacking
House hacking means using property to improve your situation. Considering house is usually largest purchase people ever make and mortgage and rent are often largest ongoing expenditure, it is surprising to me that house hacking is not used by majority but only but small minority. House hacking is basically story how the idea of our financial independence started. Luckily for me I have learned how to share at University dormitory in Prague. We shared room 3 guys and with second room we shared mini kitchen and bathroom. That’s how I lived for 5 years and we had great time. Later in my first job I had shortly rented own studio apartment in Prague but soon I have packed my bags and left for Australia to study business course.
In Australia I have moved into 4 bedroom run down top floor 200sqm penthouse with few backpackers and international students. Penthouse was very close to beach and ferry, in the beautiful seaside Sydney suburb of Manly. I loved the place, as it was close to ocean (I have started surfing there), and to work we used to take ferry. About 2 years after I moved in, the housemate who had the lease in his name moved out and I had the lease transferred into my name. During this period I finished the business course, Master’s Degree at the University and started accounting job.
Transferred lease in my name
At the beginning of my lease my net pay was about $600 per week and the rent was $650. Luckily I was dealing with the owner, because real estate agency would not talk to me. So now the hustle for housemates started. Obviously I needed to cover the rent and bills as I was using only one room and without housemates I could not afford to stay in the place. Usually there were 2 people per room as rents in Sydney especially close to the beach are quite high. It was large responsibility for me because most of the time I had couple of jobs plus studies and managing 6 to 8 people in one place was not simple.
Some of the issues included huge winter electricity bills (up to $1500 per quarter) due to use of electrical heaters, mice and cockroach infestation, drug use on premises, inappropriate touching by one of the housemates, excessive noise, bringing extra people for extended period, organising cleaning of common premises or occasional large turnover of tenants. These were all my responsibilities and headaches but at the same time as a reward for solving them my bonus was free room in Sydney which seemed quite significant then. My girlfriend was running nearby 3 bedroom place as well. We have learned how to deal with students, so hopefully we could make this into the side hustle. I preferred to deal with housemates and agents over working at check outs or night filling (where I had extensive experience during my studies).
Subletting
We have figured that if we rent another apartment, we can start making extra cash after covering the rent and bills by subletting apartment fully furnished to students. No, agents did not appreciate it but we believe they have turned a blind eye as the rent was paid on time. Most suitable apartments for our side hustle were the older ugly 2 bedroom places, where main entrance was from living room and second entry through kitchen. We have tidied the place up to present well, got some used furniture and used it as 3 bedder with living room as one of the bedrooms. This solved 2 problems. It got us extra bedroom to rent out and it removed common area which is always hard to keep clean as nobody takes any responsibility for it. Sounds all bit complex but we quickly got a hang of it and at certain point we had up to 18 students to look after. Lots of stuff went wrong but it was fun and we have learned a lot about people, property and ourselves.
Our first own apartment
Once we got better paid office jobs, all this seem to be bit too much and we have changed tactics. We bought our first 2 bedroom apartment walk to the beach, where it was suitable to subdivide part of large living area to to create double bedroom with own window and sound insulated wall. So from the 2 bedroom apartment it was 3 bedder. One room for us and 2 rooms for housemates, one in each. Thanks to this arrangement though the prices in Sydney are high (this place was about 11 annual graduate salaries) there was not much of mortgage for us to pay as the housemates contributed most of it.
2 more rental units
We realized that it works so we have borrowed more money and bought another 2 apartments in the neighboring beach suburb only 10 min walk to the ocean, which we put through the same process as our first place. Couple of cons was that both were in the same small unit block and it was on quite busy intersection. Renovations included floating floors, paint job and new kitchens. So for a while we were owners of the 3 beach units. At this point we thought that we might take small profit and we have sold first unit and moved to one of 2 investment places we had. The sale cleared most of the mortgage on the unit we moved into and we felt on the top of the world that this system worked.
Our first freestanding house
Now cashed up was the time to move on from the units into houses. That is not easy in Sydney beach suburbs and I would compare it to probably similar situation in San Francisco. Global financial crisis struck and it looked like the world might collapse, and I seemed to be worried much more than my wife, who was saying it is all going to be fine. Luckily I did not listen to worried myself and went with the wife calmness, so we managed to purchase a house at the bottom of the market 10 min drive to the beach in quiet street close to the shopping mall about 20km (bit over 1 hour) from the CBD (which in Sydney is considered “CLOSE”!
House was not exactly pretty, it was quite on slope and EVERYTHING was old including kitchen, bathroom, paint, carpets, doors, etc. But it was reasonably well built, it was big, had some views. Big thing was that previous owners separated lower level and created 3 bedroom place there for their daughters. Lower level had own kitchen, bathroom and entry. It seemed like perfect to rent out. Also under the lower level was quite large laundry at the time unused but already converted into the full studio with own mini bathroom and mini kitchen. Both, middle level and the studio were easy to rent out after quick renovation and regular paint jobs. At the end we loved our space at the top level which was our 2 bedroom home for a decade. This house helped us long way on our journey to FIRE.
Selling down
Gradually we have sold both remaining investment apartments and kept only mortgage free house. It was incredible feeling to have paid off house, salary and rent coming in. Luckily we have not increased much spending much and all spare cash went into savings and investments.
Jobs and our lives were at that point quite stable. Our life was awesome with plenty of time for our surfing, soccer, taekwondo, gym, blogging and of course travel. We used to go mostly for 3 holidays per year with one international. We always kept an eye on budget to stay on course towards FIRE. Then we finally got our prayers heard and we got and addition to the family. Beautiful twin boys. It had impact on all sides of our lives. Mainly we thought when we have waited for them close to a decade, there is no point to send them to childcare at 6 months as some of the people we knew. At that point we could afford to take it easy. We thought bit of fresh air might help us.
Small acreage on beautiful South Coast, NSW
Our good friend lives at South Coast of NSW, an area of beautiful beaches, rivers and mountains. We used to go there often though it is 4.5hours from Sydney. We have checked some properties there, put offer on few of them and purchased small acreage (11,000sqm) with little orchard and 4 bedroom cottage close to local town as our next place. Only that was the point when we realised we love this kind of properties. Large block (at least compared to our 550sqm in Sydney), privacy, close to small town. When we moved there, we have rented out top level of our Sydney house and this rental income together with small dividend stream supported us while living at South Coast.
Nothing is simple and neither this move was. With little twins from 4.5 million people city to 6000 people town. After about 6 months we realised we totally love the move. There were couple of things we hoped it could be better but we were extremely happy with our sea change. Actually happy to the point we thought we could make another big decision. We did not like too much the colder part of the year, especially nights when for 3 months temperature dropped under zero with frost everywhere.
Another move in the same year
I know we both come from countries with winters topping minus 20 degrees Celsium. But after 2 decades away we have forgotten that. Second minor thing was that we loved living next to the small town, but it felt bit too quiet as the place was favourite retiree destination. Don’t get me wrong, this area is just absolute stunner. Beaches are second to none of the places I have seen so far in my life. Nature is incredible too.
Anyway. We could not imagine going back to Sydney anymore. But we thought that if we have couple of these reservations, we might be able to move to the best place for us that we could imagine. And that included considering overseas destinations. Main consideration was safety, healthcare, beach, nature, weather, property prices and infrastructure. Our research of the best place in the world for us pointed to Sunshine Coast area in Queensland. So we booked ticket and AirBnB for 9 days, went to see about 15 properties and one was just ticking many boxes so we put an offer on it and soon we closed the deal. House was bit run down and slightly further from the beach than we wanted. We were hoping max 20min from the beach and this one was 30min.
House on hot Sunshine Coast, QLD
But the pros were more than enough to make it our home. House was well in our price range, positioned on no through road, on 10,000sqm, with park like garden which was overlooked from living area, swimming pool and good layout. We had to replace 2 bathrooms, put in new tiles instead of the old carpets, repaint, put in a wood burner, change all the doors and knock out couple of walls to make nice open space. But after this renovation the place is good home and will be great place to grow up for our twin boys.
Oh and as a bonus there is a separate brick 3 bedroom cottage completely separated by few trees and bushes from the main house. We managed to rent it out within a week of moving in. We are here already a year and we are loving it. Weather is awesome, we have large nature block with good privacy but large shopping malls are only under 40min drive, airport is 30min and Brisbane only under 1.5hour.
Debt?
After all these purchases, sales and moves we have small line of credit which is mostly covered by the income from the cottage on our property. So remaining rent and dividend income is available for our living cost and for further savings. Most of the FIRE movement do not like property too much, but we believe it is possible to achieve financial independence through property quite well. I like both, property and shares, but my wife is more property fan. House hacking is practically opposite of thinking “buy best house you can afford and keep it fully renovated so you have nice place to live”. House hacking requires focus on income, sharing with housemates, renovating first for rentals.
So instead buying for yourself, you buy for income. But it is only small compromise. Our house in Sydney is great and instead of using all house you live in still awesome upper duplex and rent out the rest. Here in Sunshine Coast we have the cottage on our property but there is plenty of space between us and we rarely see each other. So we don’t feel that we had to compromise too much between home and home with income. And our life is great partly thanks to this compromise.
