How The FHA Hack Will Change Your Life

Jeremy BiberdorfBy: Jeremy Biberdorf

May 7, 2018May 7, 2018

How The FHA-Hack Will Change Your Life

What is a House-Hack

House-Hacking is the act of purchasing a duplex, tri-plex, or four-plex as your primary residence. This allows you to live in one unit and rent the other units out.

This is an ingenious method to purchase your first home because you will reap the benefits of home-ownership while your tenants pay the mortgage. You will enjoy smaller living expenses than you were paying for rent in that old apartment you were staying in. In some instances, you might even get paid to live in this home!

When you vacate the property and all units are rented you will receive monthly cash-flow until you sell the property. Of course, that is provided you ran the numbers correctly before purchase.

Reduced living expenses, home-ownership, and passive income when you move out, that is great! The only downside to this plan is that with a conventional mortgage it does still require 20% down in order to purchase the property. That is where the FHA-hack comes into play!

An Affordable Way to House-hack (the FHA-hack)

The FHA-hack is the exact same process as the house-hack but without a 20% down payment.

A Federal Housing Administration (FHA) loan can only be used for primary residences, but only requires 3.5% down payment! Any property with four units or less can be classified as a primary residence.

So, the FHA-hack is when you purchase a duplex, triplex, or four-plex with only 3.5% of the purchase price out of pocket! You can still negotiate that the seller pays closing costs and fees at closing to mitigate your expenses. To put this in perspective, a $200,000 duplex would only cost you $7,000! That is less than a car, and you can earn that money back in the first year with how much you’re saving on rent.

The Numbers

The Duplex pictured below was my first FHA-hack!

My First FHA-hack

Entry numbers

Purchase: $81,000

Down payment: $2,835

Monthly numbers while living in it

Rent income: $515

Mortgage/taxes/insurance: $590

Property Manager: $73.50

Utilities: $120

Total cost of living (plus repairs): $268.50

Housing allowance was: $850.00

I pocketed $581.50 every month!

Current monthly numbers (After moving out)

Rent income: $1050

Mortgage/taxes/insurance: $590

Property Manager: $73.50

Money left for repairs/me: $386.50

I keep $200 a month to budget for Repairs/Cap Ex estimations.

This property makes me $186.50 every month now that I have moved out!

Using these numbers, you can see that I was able to recoup the cash I purchased this duplex with in the first five months of collecting my left-over housing allowance!

Let that resonate with you real quickly!

I moved out of my apartment and bought a duplex for less than $3,000. I got all of that money back in less than a year and I have been getting paid a little over $2,200 a year for keeping the duplex! I’m sure you can appreciate how happy this eye-opening experience made me, and why I want to spread the word!

The Big Four!

These are the four ways that Real Estate helps build your wealth, find more about them here!


The amount of money in your pocket each month after all expenses have been paid is called cash-flow. I use this money to invest in my next real estate ventures and grow our portfolio exponentially.


Depreciation is a tax write off used to cover costs associated with aging buildings and structures. This write off, and many others, are great benefits of real estate investing. Every year I get better at tax-planning in order to increase our return and minimize the money paid in taxes.


Amortization is debt payoff. The way mortgages are paid off is set up to pay more interest in the beginning and less interest towards the end of the loan. None of that matters though because your tenants are paying your mortgage. Every month we build around $1000 in equity between our properties and none of that equity is paid for by us!


I think of appreciation as a bonus in order to avoid planning for it in my purchases. There is never a guarantee that your real estate will appreciate in value. There are a lot of reasons for market fluctuations but we can take educated guesses. I never buy property hoping for appreciation. I buy for cash-flow in order to protect me against a market crash, but appreciation is a welcome bonus!

The Cost of Taking Action

The cost of taking action and buying my first real estate deal is that I am always looking for better deals now! Taking action is the single best thing you can do for yourself in any action in life. I wish that I had taken action sooner to learn about investing, Real Estate, and the FHA-hack!

Don’t be afraid to start researching and investing. I promise you’ll be pleasantly surprised!


Getting involved in real estate is the best financial decision I have ever made! We recently closed on a 10-unit apartment complex for $10,900 out of pocket, and earn over $1,000 every month for owning it! With a little creativity it doesn’t have to be expensive to start Real Estate Investing!

I hope that you’ll pick up a book or two and learn about how to hack your living situation! Swing by our website and take a look at some of our other posts about investing and personal development. It is time we stop worrying about how little we get paid, in order to start learning how to turn it into wealth for the ages!

About the Author Bio: David Pere has been a United States Marine for 10 years! In 2015 heDavid Pere bought his first Real Estate Investment (the FHA-hack) and was hooked! Three years later he and his wife have purchased 4 properties with a total of 13 rental units, and farmland for 10-head of cattle.

In January From Military To Millionaire was born. This blog is meant to help other military, public-service, and blue-collar employees realize financial independence. We grow up hearing that you can’t get rich, or financially free in these professions.

The reality is that you can, but you have to be smart about it.

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Jeremy Biberdorf
Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. He's a father of 2 beautiful girls, a dog owner, a long-time online entrepreneur and an investing enthusiast.

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