How We Made A 6-Figure Profit In 3 Years By Renting Our House

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Today’s post is by Maleah from Unconventional Prosperity. Maleah and her husband made a 6-figure profit in 3 years by renting out their house. Enjoy!

This is our story of how we purchased a four-bedroom townhouse in 2014 and used it to generate a six-figure profit in just three and a half years.

We hope that our story will inspire you to get started as a landlord or a real estate investor.

Before we get started, make sure to sign up for my free resource library and get access to exclusive printables all about saving money and building wealth, meal planning, and more.

Why We Purchased A Townhouse as An Investment Property

In 2014, we moved to the thriving college town of Bozeman in Montana. We were renting a two-bedroom apartment, but we decided that it would be smarter to buy a house and build equity in a house.

It didn’t take us long to realize that if we purchased a house, the monthly mortgage payment would be about the same as we were currently paying in rent. A no-brainer, right?

So why were we renting an apartment when we could own a house?

The decision to buy an investment property dramatically changed the course of our financial future.

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How We Decided Exactly What House to Buy

We looked at several houses in Bozeman, before deciding to buy the one with the most number of bedrooms that we could afford –  a four-bedroom townhouse.

The choice of the property was crucial – we wanted to have the maximum number of bedrooms for the lowest possible cost.

This pretty much ruled out any Single-Family Homes in Bozeman – this cost twice as much as townhomes for the same number of bedrooms.

Our Business Model

We pushed ourselves to buy a house that had four bedrooms.

We planned to rent out the three extra bedrooms and make some extra money on the side.

We didn’t realize at the time just how much money we would make.

We had discussed that renting the rooms out individually while living in the master bedroom would ultimately result in the most significant financial gain.

The more bedrooms the house had, the more money we would potentially make.

However, it was a difficult financial decision for us – we had to put our entire life savings ($12,000) as a down payment.

This was only 5% of the house price ($227,000), but it was all that we could afford at the time.

Our monthly mortgage payment was $1,450.

This might not seem like much, but we had never paid this much for rent, so it seemed like quite a lot to us at the time.

We purchased the house brand-new directly from the builder.

We got a great price on the house, perhaps because home builders often want a quick sale for cash flow purposes.

Because the house was brand new, we knew that there would not be any hidden or expensive repairs to make.

This proved to be true as we only had small maintenance costs for the property over the three and a half years that we owned it.

This was the first house that we had ever purchased.

It felt like a calculated risk, but we were confident that we could rent out the other rooms to cover at least some of the mortgage.

How We Turned Our New House into A Money-Making Goldmine

After we moved into the new house, the first thing we did was fully furnish all the extra bedrooms.

We already had furniture for the living room, dining room, our bedroom, etc., but we wanted to furnish the extra bedrooms so that we could choose to rent long or short-term.

This flexibility helped us to maximize rental profits.

It was important for us to provide a room for our guests that included all the essentials.

We also bought new guest towels, pillows, and sheets, etc.

We also made sure the bathrooms were well stocked with a variety of personal care products. We offered our guests coffee, tea, and oatmeal and fruit for breakfast each morning. We made sure the house was always spotless and tidy.

We upgraded our internet to the fastest package that was available so that we could accommodate multiple users.

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How We Promoted the Bedrooms for Rent

Soon after we had finished getting the bedrooms ready to rent, we took many photos of the bedrooms and the whole house in general.

We posted a very detailed and accurate listing of the rooms that we had available on Craigslist and Airbnb.

We Achieved Nearly 100% Occupancy

Within a just couple of days of listing the rooms, we received interest from both short-term and long-term potential tenants. We showed them the rooms, and they both agreed to move in.

One of the tenants found our listing on Craigslist and wanted to rent long-term, and the other tenant found us on Airbnb (read more about hosting on Airbnb) and wanted to rent a room for just a few months.

For the three years that we rented out our house, we had a close to 100% occupancy.

This was partly due to our dual Craigslist/Airbnb strategy but was probably also mostly due to our location.

Bozeman is a very fast-growing college town, and there is a huge demand for housing. 

Room Pricing Strategy

We had two rooms listed for $750 per month with everything included.

We easily filled the two large rooms for this price, faster than we had anticipated.

This was an indication that the going market rate was probably higher than $750 per month.

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Lease Agreement and Tenant Screening

We downloaded a standard lease agreement for the State of Montana. We used it for the first tenant that rented a room from us via Craigslist.

Airbnb made it very easy to collect payment from the tenants on their website.

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After three months, the short-term tenant decides that she wanted to stay long term. However, $750 per month was too much for her to pay.

We came up with a solution – we turned our small office into a small bedroom.

We furnished it with a bed, etc. and we offered to rent it to her for $550 per month.

She immediately took us up on the offer.

This allowed us to relist the larger room on Airbnb.

The Pros: We Met So Many Interesting People and Lived Mortgage Free

A few months later, we rented a room to an exchange student for several months.

After the exchange student left, we rented to a working professional that needs a place to stay for a month while she was taking classes. After that, we rented the room again to another exchange student for several more months.

We were making an average of $2,000 a month, more than enough to cover our $1,450 mortgage and even enough to cover our utilities.

We were essentially living rent/mortgage free and utility free. This helped us to save a lot of money those couple of years that we lived there and rented out rooms.

The Cons: People can be crazy. We had to live with strangers in our home and sometimes that can be frightening. We had our fair share of close calls! We had a tenant that filled the house with gas by accident by leaving the gas stove on, but not ignited.

This was a 1,900 square foot house filled with gas…you can imagine our shock when we returned and opened the front door to be greeted by a wind of pure gas!

Luckily, I was able to hold my breath, run in, and turn the stove off without sparking the gas-filled room.

People are not always as competent, aware, or as sensible as you might like them to be. Tenants can often be very inconsiderate of your home and sometimes very demanding.

Long Term Rental

After a couple of years of living in the house, we moved to California.

We decided to keep our Bozeman property and rent out the whole house to long-term tenants.

We hired a local property management company to manage our house.

Renting the whole house was not as lucrative as renting out the furnished rooms, but we still made an extra $200 – $300 a month after paying our mortgage and the property management company.

Selling The Property

After a couple of years of renting out our house long term, we decided to sell it.

Our decision to sell was motivated by the dramatic increase in the house’s value.

We also didn’t want to keep it too long, in fear that something major might happen that would cancel out all our earnings.

Conclusions – The 3 Lessons That We Learned

The decision to rent out rooms in our home changed our financial future in a major way.

We were able to use the money (and the free time!) that it brought us to build a company, start new side hustles and build a successful blog all about how to make money online.

Here are our top 3 tips if you are thinking about getting started with a rental property:

  1. Renting rooms in your home is not for everybody. You must be willing to sacrifice privacy, and couple alone time, and be willing to clean up after tenants. In the end, we were happy that we did it because it helped us to get further ahead financially. Before you get started, be sure to consider the sacrifice that you will be making.
  2. If you are interested in renting rooms out, we highly recommend using a combination of Airbnb or Craigslist to find tenants. Make sure to do background checks if you rent on Craigslist and make sure to have an official lease with your tenants. It is a bit easier renting your rooms via Airbnb. However, they do take a cut of the profits. The nice thing is that they have an insurance policy and you can read reviews of the tenants before agreeing to rent to them.
  3. Don’t be afraid to ask for high rent. We found that often you can ask for a higher rent than other people are charging – if you provide exceptional service. It also really helps to live in an area that is in high demand.

We hope that our story inspires you and helps you take that first important step to buy your first rental property. If you would like to read more about our journey, you might want to check out our blog about our life of financial freedom.

What to read next: How Natalie Built A $100,000 Blog With A Full-Time Job

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