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"We never seen this before." Max, the one to watch for a good scream with Cricket. "Yeah!" Phone plan, streams, and standard definition. Programming subject to change. Fees, terms, and restrictions apply. See cricketwireless.com for details. Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now, while building a plan for financial freedom in 10 years or less.

My name is Joshua. I'm your host. And today we continue with part 3 of a very small real estate series dedicated to radical housing ideas. Some ideas that I hope will provide you with grist for your creative mill that will allow you to think about your situation and figure out how can you get more for less.

Today I want to cover the topic of what is usually referred to in the online financial community these days as "house hacking." So, of course, we have this idea of hacking being a way to get more with fewer inputs, a way to creatively string together certain things so that you can get more benefits.

Hack this, hack that. That's the common use. And this idea of house hacking is usually used to refer to the idea of buying a house, moving into it, and filling your house with roommates so that you can gain rental income from roommates while also having a place to live in.

I think it's a great idea. And I think it's a really worthy idea that most people should and can pursue. And I encourage you to consider it. There is a learning curve, but I think the risk of doing this is relatively low for many people, especially if you're careful.

First, you'll need the stability of income in order to qualify for financing if you don't have the money to just simply pay for housing. But you'll need stability of income to qualify for financing so that you can actually purchase a house or some type of housing, appropriate real estate.

And you can do this with something as simple as a standard residential house. You can also do this with an apartment, or you can do this with a multi-unit building. But if you'll go ahead and purchase a home and then seek to fill that house with roommates, that can be a really compelling way for you to control an asset that hopefully will appreciate in value while also profiting.

A lot of people have done this. But if you're going out and renting an apartment, a retail apartment, and paying $1,000 a month, why don't you go ahead and buy an apartment or a condo or a house with three bedrooms? And let's say that instead of renting that same apartment where I would rent where I live, the rental on a three-bedroom condo would be about $1,600 a month.

Let's say that your financing costs on such an apartment are $1,800 a month. Well, you could easily rent out two of the bedrooms for $700 a month or $1,400, and now your net cost drops down to about $400 a month. And you control that asset, which may appreciate in value in the future.

So you have a lower net cost to you, and you have control of an asset that may appreciate. Now look around your neighborhood and try to figure out what would be the best way to do it. You may do this with a single-family house. You may do this with a house that has multiple units, a garage unit in the back.

You may do this with a condo. You may do this with any kinds of real estate. You can even get into the multifamily world. I know of somebody who very early on, they bought a duplex. It was a very modest duplex. But one side of the duplex had a two-unit apartment.

The other side of the duplex had a three-unit apartment. And this particular duplex was very well suited to filling essentially each of the bedrooms with a tenant. If you have five bedrooms, you can rent out. And if you have the stability that can handle unstable renters, maybe it's a college town or something like that, then you can have a major source of income.

I don't see much reason for people who are not wealthy to own their own house that they only live in. Now for some people, this is very important, but it usually seems to be important as kind of a status symbol. Some people feel like once they've reached a certain point of earning, that this is their reward to themselves, to have a beautiful house that's all theirs.

That's fine. I don't deny you. It's your money. You get to control it. But it sure doesn't sound like much fun to me. I've always found that some of the most enjoyable times in my life are the times when I'm with other people who I like. If you ask most people when they had some of the most fun, it's often when they were in college, when they're surrounded by other people who don't have a lot of responsibility, who have a whole lot of time, and they're very available to one another.

Well, if you give me the choice of living alone in a big five-bedroom house or having four roommates who I've carefully chosen that are people that I want to live with and are paying me money, every time I'll choose the four roommates. Now I'm more flexible in my thinking than other people might be, but you might also be flexible like I am.

So consider this and consider is there a way that in your next housing move you can go ahead and purchase a house that is designed with the idea of you being able to live in it and function well in it and also to rent it out. Now here's a bonus point for you.

Here I think you have bonus points and bonus opportunities for property that has multiple structures. This is going to be hard for you to do if you live in certain intense cities. In the city environment, that's where you start to get into your multi-unit houses where you have three houses stacked up on one another and you have opportunities there.

You convert the basement and rent it out, but you already know some of those things. But if you get out where you have a little bit of land, oftentimes you could find a housing that the house itself would work well for one tenant with a family or a couple of tenants.

And perhaps there's another unit on the property, a mother-in-law quarters or some sort of carriage house that would also work well for a unit. And then perhaps you could also use the land and use it as a place for you to have an additional type of housing unit, whether that's a single wide trailer or you park an RV in the yard.

There are a lot of opportunities that you could use the same piece of property and put multiple tenants into it. And here's what I think is a cool idea. If you use that property with an eye towards the future, then you could buy one property and then it would just adjust and expand as needed.

So here's what I would consider. Let's say I were single and I were young and I were very flexible. I would buy a house that was the type of house and the type of neighborhood that I thought I might want to be when I were older. But I would try to buy a house that had a main quarters and perhaps a house that also had a carriage house or a mother-in-law quarters out back.

Then I would try to rent out the main house. And then I would put the carriage house also up for rent. And I would move, let's say, an older travel trailer into the yard. If the property were big enough, this could be done in an appropriate way. Go ahead and plummet into the septic system so you had all your hookups ready to go.

And I would live in that travel trailer myself while I were young and flexible and I would keep the other units rented out. Then let's say I moved on towards marriage. And if my wife were enthusiastic about the idea of living in a travel trailer, great. But more likely, I would then move into the carriage house.

Be a little bit more comfortable, but I might rent out the travel trailer still or go ahead and sell it. And then as our need for housing grew and expanded, then perhaps we'd go ahead and move into the big house and rent out the carriage house. And then once we got to the point where we would enjoy having the space all of our own and our wealth had grown to the point where we were more interested in lifestyle than in maximum income, then we'd go ahead and cancel the renters in the carriage house and keep that available for our own guests or for use as an office or something like that.

Now this would be a very efficient way to own property and to make good use of property. Because if I were 22 years old, I don't have need for a big giant house all myself. But as long as my income is sufficient to allow me to purchase it, I could purchase it and let my tenants pay off the first several years of the mortgage while I'm stacking aside money, building my investment portfolio.

And then I have the property established for my own future expansion plans. And I could expand into the house as I got older. And then in theory, very few of us would stay on the same property for this long. But I could go ahead and downsize as time went on.

Kids grow up, move out of the house, or I could go ahead and move into the carriage house. And I would love to be in a situation if I had adult children where I would move into the carriage house with my wife and we would have one of our children with grandchildren renting the main house.

That would be wonderful. And then perhaps change from there as circumstances warranted. This type of approach is very efficient. It's much more efficient than moving constantly. Buying houses, selling houses, moving apartments is very expensive financially. There are the costs of moving. There are the costs of buying and selling.

There are the costs of fixing up a place to be the way that you want it to be. And many of the costs that you, the expenses that you incur in owning property will pay off well if you have time on your side. But if you're constantly moving and moving in and moving out, they don't pay off so well.

And so if you have a stable life, a stable income, a stable community, you could use a strategy like this to have a beautiful place that you've lived in for many years and it just gets better and better over time. And there's no reason why some of the previously discussed strategies are exclusive.

These strategies are not mutually exclusive. Rather, these are ideas that you could put together and you could work with multiple ideas. So consider house hacking and look around in your situation and see if there's a way in which the idea of house hacking could work in your life. Final note, don't forget the idea of short-term rentals.

Obviously, short-term rentals, i.e. listing on sharing sites such as Airbnb, such as VRBO, etc. Short-term rentals are really powerful and they can be used to your own benefit on many different houses. And so you can rent them out seasonally. You want to go away for part of the season, come back for part of the season.

They can also be used flexibly. I have a friend of mine right now who has exactly this type of situation. He has a large house. That house is very desirable on a sharing site. There is, in the back of the house, a mother-in-law quarters, and the house is perfectly appropriate for an RV to be parked there and to be lived in.

And my friend is young and single, so it's relatively easy for him to be flexible. Run the numbers. I think it's really compelling. And I see no reason not to maximize that stream of income if you're willing to be flexible in which bed you sleep in on a nightly basis.

Thank you for listening. You've honored me with your time and attention, and I'm grateful for that. And I hope that I've effectively served you today with some ideas and strategies and tactics and techniques and tools that will help move you towards your goals. Before you go, three simple requests.

One, if there's an idea that's been helpful to you in today's show, make a plan to take action on it. Listening does lead to learning, but learning in and of itself doesn't automatically lead to a life change. It's action that leads to a life change. So take action. Two, take something that was helpful to you in today's show and share it with somebody that you care about.

I'm depending on you to be a co-laborer with me in helping me to propagate the message that I'm seeking to share. That helps the person that you are engaging with, and it also helps you because teaching others is one of the most effective ways for you to learn and for you to cement your learning.

Three, if there's an idea that's been specifically helpful to you, and if you're gaining financial benefit from radical personal finance, I'd be grateful if you'd consider paying me for this work voluntarily. Come by radicalpersonalfinance.com/patron and you can sign up there to support the show at whatever level you feel is right for you.

This is a voluntary support. That's my Patreon page. You can support me with a dollar a month, five dollars a month, ten dollars a month, any number that seems right to you. But if you're gaining financial benefit from this show, and if it's achieving financial results in your life, I'd be grateful for your financial support at radicalpersonalfinance.com/patron.

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