Using The House Hacking Strategy: Lessons From A Conversation With Jordan Moorhead

In our recent episode with Jordan Moorhead we discussed House Hacking & Mobile Home Parks. Based on that conversation, here is some important information to help you with "Using The House Hacking Strategy."

The house hacking is a strategy gaining popularity among real estate investors for its potential to generate passive income and build equity with minimal upfront investment. This approach involves purchasing a property and living in part of it while renting out the rest. Whether it's a duplex, triplex, or single-family home with extra rooms, house hacking offers a practical way to enter the real estate market. Jordan Moorhead, a seasoned real estate investor, shared his house hacking journey on the REL Freedom Show, highlighting its benefits and challenges.

The Beginning of a Journey

Jordan's foray into house hacking began out of a desire for financial independence. Initially a personal trainer with a small business, he recognized the limitations of his income potential and turned to real estate. "I saw real estate and said, 'Hey, I want to start making passive income,'" Jordan recalled. His first purchase was a duplex, followed by a sixplex, while still running his personal training business. These early investments laid the foundation for his real estate career and sparked his passion for helping others achieve financial freedom. For others, house hacking can look like purchasing a single family house yourself, and renting our rooms to friends or family. It could also look like buying a duplex, and living in one unit while renting out the other unit. Either way, it gives you an opportunity to have some, if not all of your mortgage payment taken care of by other tenants.

Scaling Up and Diversifying

House hacking isn't a one-size-fits-all strategy, and Jordan's experience underscores the importance of adaptability. Over time, he transitioned from smaller multifamily properties to larger investments and different asset classes, such as mobile home parks. Reflecting on his journey, Jordan mentioned, "What you think is going to be your forever strategy may not be." His story illustrates the necessity of evolving strategies based on market conditions and personal goals. This is why house hacking can be a great starting point. It may not be a strategy that continues years and years into the future, however if gives you a change to get started in the real estate investing game, and an opportunity to build up some equity that you can use in other areas down the road.

The Financial Benefits

One of the primary advantages of house hacking is its ability to reduce living expenses significantly. By renting out part of his properties, Jordan effectively covered his mortgage payments, allowing him to save and reinvest his earnings. This strategy not only provided immediate financial relief but also facilitated long-term wealth accumulation through property appreciation and equity building.

Lessons Learned

Jordan's journey wasn't without its challenges. He candidly shared his mistakes, emphasizing the importance of aligning investments with personal goals. "My biggest mistake was not paying attention to my goals," he admitted. While pursuing various deals, he realized the importance of focusing on investments that contribute directly to his financial freedom. This insight is crucial for aspiring investors who might be tempted by seemingly attractive deals that don't align with their long-term objectives.

Tax Advantages

House hacking also offers significant tax benefits, especially for real estate professionals. Jordan highlighted the value of depreciation, which can offset active income and reduce tax liabilities. "As a real estate professional, you have unlimited depreciation from passive investments to offset your active income," he explained. This tax strategy can be a game-changer for real estate investors, allowing them to maximize their earnings and reinvest in further opportunities.

The Investor Mindset

House hacking requires a shift in perspective from traditional homeownership. It's about viewing a property not just as a home but as an investment. This mindset is crucial for maximizing the benefits of house hacking and navigating the challenges that come with managing rental properties. Jordan's success story underscores the importance of starting with small, manageable investments and gradually scaling up as one's experience and confidence grow.

House hacking is a powerful strategy for those looking to enter the real estate market with limited resources. Jordan Moorhead's journey from a personal trainer to a successful real estate investor highlights the potential of house hacking to build wealth and achieve financial freedom. By living in one unit and renting out others, investors can significantly reduce living expenses, build equity, and enjoy various tax benefits. However, it's essential to stay focused on long-term goals and adapt strategies as needed to ensure continued success in the ever-evolving real estate landscape.

To see the full episode we recorded with Jordan Moorhead, check it out here or read our blog post here.