• Lisa Loesel

5 Ways to Live for Free: House-Hacking 101

I have always been and always will be a huge proponent of not paying your mortgage. To clarify, someone does have to pay your mortgage, it just doesn’t need to be you. I haven’t paid my own mortgage in years, and I don’t plan to start anytime soon.



How does one accomplish the dream of (legally) living in a home for free?



It’s called house-hacking and there are so many options available, you just need to find the one that works for you. There are two important questions to ask yourself to determine which of these is the best fit for you:

  1. How much time do I have to devote in my pursuit of a mortgage-free life?

  2. How comfortable am I with other people in my space?


The more time you have and the more comfortable you are with people in your living space, the more money you will take in.


For all options, we will use the same example of a duplex; purchase price $250,000, 5% down payment, each unit has 2 bedrooms and 1 bathroom. My example is ‘real world’ and is a property on the east side of Milwaukee. It is currently on the market and available to purchase. A 30-year mortgage at 3.5% interest will be approximately $1,066 per month. For simplicity, let’s only use the mortgage payment. Keep in mind you will also have property taxes, a water bill, an energy bill and maintenance costs.



Here are some options:


duplex house hacking

Option 1: Duplex, LTR (Long Term Rental)



Probably the most common of these options is to buy a duplex, live in half, and rent out the other half. If you screen tenants properly, this takes a relatively small amount of your time.


  • Current rent for unit 1: $1,150

  • Current rent for unit 2: $950


Take your pick, either way your entire monthly mortgage is nearly wiped out.



Pros: small time commitment

Cons: lower cash flow




Option 2: Duplex, MTR (Mid-Term Rental)



Average rent: $1300



Mid-term rental is a great option if you have a hospital or university near by and are willing to rent furnished and in shorter increments (6 months or less). Many states currently have a shortage of nurses and traveling nurses, and they are coming in from outside areas to help. Their contracts are typically 3 months, or less, and they often have a living allowance to cover their rent during this time frame.



You can get a premium over LTR, but it’s important to note that you will have to spend money furnishing the property, paying the energy bill, and it will take time to get new tenants every few months.



Pros: higher cash flow potential

Cons: larger time commitment and up-front cost


Option 3: Duplex, STR (Short Term Rental)



Average Gross: $1875 ($125/night @ 50% occupancy)



Short-term rental (also known as Airbnb or VRBO etc.) is a great option if you are in an area with some walkability and attractions nearby. This option will cost more as you will need to furnish the property and pay majority of the bills. It will take the most time out of all these options as you have new people coming and going to your property on a faster rotation. You will need to be available for client questions and manage any issues that arise during their stay. Cleaning the property after each client will also be an expense or a time constraint you will need to consider. You can clean the property yourself or hire the help. However, this option can also be fun, as you get to know many people from various areas of the country. Additionally, it’s a great way to not only cover your mortgage but can also produce income beyond simply covering your living expenses.



Pros: higher cash flow potential

Cons: larger time commitment and up-front cost



*It’s important to check out your city ordinances to make sure STR’s are allowed in your area.


Bonus Option 4: Duplex, Roommate



Roommate rent: $450



This is in addition to Options 1-3. The monthly property taxes for the example I’m using are $456, so by getting a roommate, you could offset almost that entire cost.


Bonus Option 5: Duplex, STR both units



Average Gross Upper: $1875 ($125/night @ 50% occupancy)

Your unit: $500 ($125/night for 2 weekends/month)


This option could potentially push your comfort zone and would take a decent amount of time and work, but there are plenty of people who do it. If you travel for work, visit family, go on vacation or stay with a significant other regularly, this could be a viable option for you. I had a friend who paid her entire mortgage on her condo every month by sleeping at her boyfriend’s house for 2 weekends out of the month. She was spending a lot of time at his house anyway, so she decided to clean her place immaculately, store all her personal items in her storage unit before she left, and rented it out for the weekend. When there was a big event going on in the city, she would capitalize on that and raise prices. This covered her mortgage payment in one weekend!


All these options do have some potential risk, so I recommend educating yourself before jumping in feet first. No one said getting your mortgage paid for was easy but think about how much income you’d free up by not having to pay your mortgage on a monthly basis. Imagine the possibilities of what to do with the extra cash flow!



Your home doesn’t have to be just a place to live, it can be a revenue producing asset. It’s an investment that pays for itself! We would love to help you buy your first or next investment property. Contact our team today.