How to LIVE FOR FREE and House Hack with NO MONEY DOWN: Rent Hacking 101

Here is how to live in a place for free without buying, without coming up with the down payment, and best of all is that it’s fairly simple for just about anyone to do…and it’s what I call “Rent Hacking.” Enjoy! Snap/Insta: GPStephan

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When it comes to living for free by Rent Hacking, the premise is rather simple: Instead of renting a house just for you, you take advantage of the economies of scale and rent a house larger than you’d normally need, and then sublease the extra bedrooms. When done correctly, oftentimes the rents of the other units will cover your entire lease - allowing you to pretty much live for free, sometimes even turning a small profit. All without owning the property, without coming up with a huge down payment, while still keeping the mobility of being able to rent. And…you’ll get to live in a much larger house than you’d be able to afford on your own.

But, like anything that sounds too good to be true, there are some downsides that I should mention…

The first, and biggest hurdle to overcome is that oftentimes lease agreements include a no-subletting clause. This means that you CANNOT rent out individual rooms or sublet the property without the owner’s prior written consent. So before doing this, make very clear with the landlord with your intentions - and make sure the lease agreement allows a room subletting clause.

The second downside, assuming you’ve found a landlord okay with you subletting rooms, is the liability. Generally if you sign the lease, you claim sole liability for anything that happens to the property - and then it’s up to you to go after your tenants to collect for any damages. This can often be mitigated by collecting a security deposit from your room mates, and drafting a strongly worded lease agreement outlining the responsibilities of your co-tenants. This way, you have some recourse in the event of damage.

The third downside is that you’re responsible for covering the entire amount of rent. When you sign a lease, the landlord doesn’t care who pays and who doesn’t….but the entire amount of rent will need to be paid on time.

The fourth obstacle to overcome is proving the financial ability to pay the lease. Many landlords don’t want to take the gamble of assuming you’re going to find renters to cover your $3800 per month cost if you’re only making $2000 per month…any landlord will know that if you don’t find tenants, you can’t pay and you’re screwed. So qualifying for something like this will often include still renting a home within your means.

And as a fifth downside is that, yes, you’ll need to live with room mates. This isn’t for everyone, and I get that - but it’s par for the course.

Now if you do decide to do this, definitely screen your room mates HEAVILY. You’ll need them to show proof of financial responsibility, give a security deposit, have a decent credit score or come with a co-signer, and you’ll need to draft your own lease agreement between you and the tenant. But overall, rent hacking is a great starter step for those who want to potentially live for free, or greatly reduce their housing costs to save more money - and this would also be great training for moving up to owning multi-family real estate and graduating to “house hacking.”

For business inquiries or one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at GrahamStephanBusiness@gmail.com

Suggested reading:

The Millionaire Real Estate Agent

Your money or your life

The Millionaire Real Estate Investor

How to Win Friends and Influence People

Think and grow rich

Awaken the giant within

The Book on Rental Property Investing

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