“Buy your home like a landlord, live like a renter.”

Got another excellent idea for all house hunters / owners out there!!

This one comes from Jessi upon hearing news that we’re considering owning again, and I’ll admit it’s actually helped calm my nerves a bit just reading and seeing how you can *systematize* things and better separate out your emotions from the equation. Something I’m notorious for, especially when big decisions are on the line ;)

Check it out and see if it’s something that might be able to help you too!  Whether you’re on the hunt or even already a home owner… The second half of the email could be a good option for anyone.

And speaking of hunts, we just wrapped up our first one over the weekend and I actually didn’t hate it too much! In fact, there was a small part of me that even found it – dare I say – FUN! Haha… Kinda like having your very own HGTV show, only in real life :)

We ended up nixing about 6 of the 7 homes we saw, but the one that stood out was enough to give me some good hope and continue the process without kicking and screaming too much…

So we’re getting there! And already better than we were 10+ years ago when we bought the first thing we saw on the spot, haha…

But enough about me – here’s Jessi’s tips on how she manages her home and the finances that come along with it… Really interesting idea!

Hi J –

I’ve been reading for a long time, and want to say thank you for all of the great tips and humor you bring to my inbox! =)  We just hit $250,000 net worth this month (!!!) and a major part of that is because we bought our first house three years ago, and it turned out to be a fantastic investment.

So since I know you’re stressing about giving up the rent life, I thought I would share a tactic that has helped me feel more comfortable as a homeowner.

Buy your home like a landlord, live like a renter. Do the math on what a “fair market rate” is that you can afford for a three-bedroom house (and all your other “must haves”). I’m not familiar with rents in your area, but I live in $$$ California so I’ll use those numbers.

Let’s say rent averages $2,750 between the ‘burbs and closer to the city. Then ignore all of those investor rules like the 1% rule or the 50% rule. The cost of lumber, plumbing, paint, and appliances has nothing to do with rent or sale prices in an area. With Amazon and so many online retailers these days, flooring costs what flooring costs whether you’re in CA or the cheapest neighborhood in the midwest.

So decide how much you think you would need to stash away each year for home maintenance. I set aside at least $10,000 per year. Let’s round up and make it $12,000 for easy math. That’s $1,000 per month to set aside for home maintenance.

Now, take that $2,750 fair rent, subtract $1,000 per month for repairs/maintenance, and $1,750 is what you’re aiming for for your monthly PITI (mortgage principal, interest, taxes, and insurance). Buy a house in that price range (this is KEY, don’t overpay just because “it’s so cute!”), and set up a bank account just for the house.

Every month, pay that bank account your $2,750 “rent”. Set up an automatic mortgage payment from that account. Every time you do a repair or maintenance that normally would be covered by a landlord, reimburse yourself from that bank account. If you buy furniture or cleaning supplies or other “renter” items, you pay for it out of your general living expenses.

It starts turning into a game, seeing what the “landlord” will and won’t cover, and how much the account can grow from your investment in your “renters”. At least for those of us that think budgeting is a fun game. =D

If you buy right, the account will grow, and when it gets nice and full you can splurge on a new roof, or a kitchen remodel, or pay down the mortgage. If the home value goes up, tap into that equity by opening a HELOC. (But only use it as a house emergency fund. I treat mine like a super-low-interest credit card and try to pay it off immediately.)

Best part is, you’ll never be stuck with awful tenants. ;) After all, if your landlord invested correctly your rent should cover the mortgage, repairs, maintenance, and outsourcing those tasks as necessary so buying the home yourself shouldn’t be any different.

Don’t budge on that price, and don’t forget that the mortgage is NOT the same as the rent. We hunted for nearly a year before we found the perfect house in our price range. And it wasn’t even on the market! When the next-door renters moved out, I called up their landlord and asked if he’d be willing to sell for $X. He did! We got an insanely good deal for the neighborhood and had $100,000 in equity within a year of purchase. Now a lot of that is luck, but also because I refused to settle and overpay.

And hey, think of all the shenanigans you can get away with then you’re the landlord too:

  • Cookie cutter house? No problem! You’re the landlord! Add whatever character you want. Don’t underestimate the power of fancy hinges and interesting window casings.
  • Boys get a little wild and put a hole in a wall? No problem! You’re the landlord! Call up a Task Rabbit and have it patched in a jiffy. Use the house account.
  • Get a dog one day that digs up the bushes? No problem! You’re the landlord! Zero-scaping is better for the environment anyway.
  • Wife wants to paint a mural on the kid’s bedroom wall? Luckily the landlord is super lenient, and will let your family really put their own mark on the place. (Literally!)

The benefits go on and on. Best of luck in your home search! I don’t think you or your family will regret it.

– Jessi

PS: I was firmly in “camp renter” until my brother bought a house and I realized I did not know enough about the process. I started researching and became obsessed with real estate investing, and we have an addition planned that’ll let us “house hack” (another interesting concept you might want to check out, but definitely tougher to do with kids).

Awesome, right?? Treating your property like a rental, only you’re the ones who are actually renting it? From yourself??? :)

And again, even if you already own your home it doesn’t mean you can’t still try out the *separating* of accounts and finances like that… I don’t know why it is, but I swear it’s much easier to spend money that’s earmarked for something than when it’s just lumped together in a large savings account…

It’s as if your brain has already told you it’s “gone” so spend away!! Which I suppose could backfire if you’re trying to buy something ridiculous, but in terms of home ownership here I think it’s a worthy trick ;)

Lemme know what you think! And especially if you’ve got your own house-hacking tips as sometimes the smallest things can make the biggest differences in our lives/finances… Big thanks to Jessi and everyone else who’s been sending these over lately. 👍👍

(Visited 41 times, 1 visits today)

Get blog posts automatically emailed to you!


  1. Curtis Elliott March 12, 2019 at 8:12 AM

    Great concept!!! I love her approach and I speak as a landlord with 8 houses paid off.
    On my Rental Management Spreadsheet I set aside 12% for Vacancies and 15% for Maintenance. I also set aside the prorated annual costs for Taxes/Insurance. However, that will usually be escrowed and part of the monthly mortgage payment anyway.

    If buying a house is what works for your personal circumstances and goals…Great! Just follow most or all the suggestions in this post and you’ll be just fine. Emotions so often cloud good judgement and get people into trouble. It only takes minutes to make an emotionally charged bad decision; it often takes years to undo those bad decisions. I like the setting up firm boundaries that help control the emotional side with rational planning.

    Great job!

    1. J. Money March 13, 2019 at 7:26 AM

      8 houses paid off – wow!! Good for you, man! Love the insight with your %’s here too – thanks for sharing those… I suppose the good thing with renting it out to yourself is that you at least save on the vacancy costs, haha…

  2. DEC1 March 12, 2019 at 8:21 AM

    Great tips from Jessi and a fun way to look at home ownership.
    However IMHO, the single most important thing to consider when looking for a home has little if anything to do with the math. You have 3 little coins that are going to be playing with the neighbor kids. Who do you want them to be playing with? People you can trust, in homes that are safe? I thought so… ;)
    It’s all about the neighborhood and the quality therein. Your kids (errr I mean coins) will be influenced significantly by the friends they keep, and those will be the neighborhood kids in the area you choose. So choose carefully. You can’t choose your kids friends but you can influence where they find them. So if it takes a little more cash to step up to a safe neighborhood, with lots of kids of similar age that they can grow up with, and with parents you can trust your kids’ lives with…go for it.

    1. J. Money March 12, 2019 at 9:50 AM

      Yes please to all of this!

      We’ve actually narrowed it down to two communities we already know of and love, so hopefully we’re okay on that front… Now whether an acceptable house comes on the market within the time frame we’re looking is another story :)

    2. Not quite sexy March 12, 2019 at 12:11 PM

      I totally agree with this. When my wife and I bought our house, we had pretty much 4 criteria: it was in a great school district, we could afford it, it was within 20 miles of work, and it had enough rooms for a family of 6 (we had 2 out of our 4 planned children, at the time). My wife got maps from AAA, and she drew the areas for each school. I different color for each type of school: Elementary, Jr. High, and high school. Then she looked up the great schools score or API for high school. She’d put lines through the schools that didn’t hit her threshold. After that, we ended up with 6 properties. That’s it. We ended up getting the best of the lot! and it had some nice to haves, too…like a pool, big backyard, and open floor plan. It also had a ridiculously old kitchen, scary landscaping, weird colors, and a barely functional bathroom…but we improved some of those things over time. Our landlord still hasn’t opened the coffers to update the kitchen, yet…even though it’s been almost 8 years!

      1. J. Money March 13, 2019 at 7:29 AM

        “different color for each type of school” haha.. nerdy to the max on this one, and love every bit of it ;)

  3. [HCF] March 12, 2019 at 8:24 AM

    Thanks, J&Jessi, I haven’t thought about this aspect. But it is totally valid, who would say no to an offer for buying a real estate investment with warrantied nice long term renters? Sounds like a good deal :) Happy hunting ;)

    1. J. Money March 12, 2019 at 9:52 AM

      Or maybe if you *don’t* trust yourself it’s a quick reminder to stick to renting someone els’s property! Haha…

  4. Jessy March 12, 2019 at 8:33 AM

    Jessi’s idea is not only practical, it’s a great little psychological trick for the reluctant buyer. It sounds like you and Mrs. J$ are on your way to happy homeownership!
    By the way, I got “Work Optional,” the book that I won, in the mail the other day. Thanks again!

    1. J. Money March 12, 2019 at 9:52 AM

      Excellent! You’ll have to let me know what you think when you’re done with it :)

  5. Paul March 12, 2019 at 8:36 AM

    Its an interesting concept, one that could definitely help prevent overpaying. Its just, in HCOL areas I”m not sure this works unless you want to be a director of a company living in a 2 bedroom apartment with a family of 5.

    For instance I could rent my place out for about $3k a month, if I said $2k was the max monthly payment I could afford after mortgage + escrow. That would put me in the small apartments and small town homes in the worst of areas range. Maybe if you can get away with living further away from jobs its doable though. If I were in J$’s shoes I’d probably get my wife to scrap her job and move to central Florida for the cheap housing and no state income tax. Although the schools are terrible… which is the reason I haven’t made that jump.

    1. J. Money March 12, 2019 at 9:55 AM

      If I were in Florida I’d be retired and reading other peoples’ blogs on the beach right now ;) So you better hope my wife keeps her job up here! Haha…

    2. Paula Borman March 14, 2019 at 11:42 AM

      I’m very interested in the comments on HCOL places, because having grown up in a very (as per most people’s criteria) LCOL, moved to a medium COL, and now live in Chicago, I’ve experienced them all.

      I feel like people still don’t REALLY look at cost. And I say this because affordability of a house is not as simple as percentage of income. For example, my LCOL rent was only 180 for a house (rents for 400 now). Sounds great. But my utilities were more than 200 percent higher than I pay here in Chicago, my internet was stupid expensive, and thanks to lack of competition, I was facing expensive groceries with a complete lack of variety. I drove my car over 25,000 miles year just to work, groceries and regular driving because I had to drive EVERYWHERE. I had to buy a different car much much sooner.

      If I add those REAL costs up, I live on less here in the city. I still have a car- but I drive it 7000 miles a year, and if my goal to get a walkable job pans out, I won’t have one at all. My utilities are included in rent and we have low-cost internet options. My grocery store is 100 feet from my door and the prices are much lower and variety enticing. I walk everywhere and don’t even pay a gym membership, now that I don’t have to dodge country people thinking I’m a target on the side of the road when I try to get exercise. How can we not count the car costs in to the affordability equation?? It’s a huge huge difference! I figured out once I had to budget 300-400 a month to take care of my aging car. I know that seems high, but when single and absolutely dependent on it to get to work, an unreliable beater just is not an option.

      And quality of life? VERY different. Much better. Real estate is expensive, but once I hunkered down and got one property paid for, the costs of real estate is relative because it’s an asset. The rent on my one paid off unit pays my rent, phone, cable, and small gas bill every month. So… it doesn’t really matter anymore how much that place cost, because it will always have the power to pay my rent. I just don’t like living in the area of my condo, so I rent a smaller place in a better hood.

      I get the school situation; however there are good schools hidden in neighborhoods here that are reasonable. You just have to do a LOT of research. I say that as a teacher:-) Some move to the burbs for

  6. Penny March 12, 2019 at 8:48 AM

    This is such a fun exercise.

    As a teacher (you knew I was going to do this!), I have to also plug the school system that you’re in. What got us the biggest bang for our buck was to actually choose a home within X boundaries rather than worrying about a precise city. We are technically in a different town than our school system, and we got a house that was 30 years newer for the same price.

    A strong school system (even if you don’t have kids!) is a great investment to make because it keeps your property values more stable even when the market dips.

    Now I’m off to crunch these numbers to see if we are being good landlords and better renters!

    1. J. Money March 12, 2019 at 10:00 AM

      Haha yup…

      And the two communities we’re looking at are halfway based on the school zones too :) Although I’ve heard the boundaries can change over the years which can make it tricky? Unless you live super close where you can walk?? (Would LOVE to be able to have that option like we have now – it’s so wonderful walking them to school every day!!)

  7. Liberty March 12, 2019 at 11:27 AM

    Hey J and Jessi! Very timely post for us, as my husband and I are soon switching from debt payoff mode to saving for our first house.

    House hacking is going to be a HUGE part of our FI plan. We’re in HCOL Northern Colorado. If we buy a $325k house, no HOA, in our neighborhood of choice, we’ll VRBO our tiny house from the backyard as well as the basement.

    Tiny House: $80/ night, 50% occupancy= $1200/mo
    Basement suite: $53/night, 50%= $800/mo
    = $2000 + cleaning fees – supplies & upkeep

    And $2000 will fully cover the PITI. It’s been a new dream of ours to try this out, and we feel a mix of excitement, confidence, and healthy nerves:)

    Thanks for the ideas about separate ear-marked accounts. I think managing your home like a business (in the very best, positive, optimized way) can be very rewarding.

    1. J. Money March 12, 2019 at 11:44 AM

      Ahhhh that is so exciting!!!

      I hope you’ll blog about the entire process so we can come along the journey with y’all!

      I’ve been secretly scouting all back yards here in case I want to plop down a tiny house one day too, haha… Though I’ll probably be greedy and want to use it myself for a writer’s cabin ;)

    1. J. Money March 13, 2019 at 6:32 AM

      Okay, it’s too early for this at the moment but will star to check out once the coffee kicks in, haha… thx!

  8. Cashflow Cop March 12, 2019 at 6:02 PM

    This is such a simple and brilliant concept. If only more people did this.

    This is how most home buying purchases happen (in the UK at least):

    1) Guy or girl go to bank to find out what the maximum amount they can borrow is to be agreed in principle.

    2) Guy or girl go house hunting. “Falls in love” with a house above the maximum they can borrow.

    3) Guy or girl returns to bank and resubmit application. This time artificially lowering their expenses so the computer says they can afford more. Alternatively, they get a broker who finds a bank which will lend more.

    4) Guy or girl buys a house too big for them and which they can’t afford.

    5) Guy or girl spends the next 35 years on the hamster wheel to pay of said mortgage. If they get a pay rise, they go house hunting again.

    6) Go back to stage one.

    It’s a sad state of affairs and sounds more like a prison sentence to me. Hey, but we live in a free world and each to their own. Doesn’t sound much like a life but that’s just my opinion.

    1. J. Money March 13, 2019 at 7:34 AM

      Yup, pretty similar to most people here too!

  9. Eddie March 12, 2019 at 7:42 PM

    Interesting idea.

    We’ve had this house just about 8 years. When we bought it, a new kitchen wasn’t a splurge, it was pretty much required. 40 years of grime, a chunk of water damage and being builder basic garbage to begin with…

    Also… roof!? Probably not a splurge either. When that thing needs to get replaced because patching isn’t enough and interior water damage is expensive you do what you gotta do.

    1. J. Money March 13, 2019 at 7:35 AM

      Ugh… more reminders why I’m going to miss renting!

  10. spiffi March 12, 2019 at 10:00 PM

    I like this idea – it’s very similar to my thinking when I was convincing myself to take the leap into home ownership.

    $1000 a month for home maintenance though – that feels like a lot! I’ve been in my house now for just over 8 years and there is no way that I’ve spent anywhere near 96k on home repairs! I live in California too btw!

    That being said – I *know* there are some big ticket items coming up any time now – the furnace in my 35 year old house is original, and the water heater is living on borrowed time. But even if they both crap out the same week, AND I had to replace all my appliances in the same year – that might be 12k that year – but I would not expect to do that every year?

    I live in a townhouse, so my HOA fees pay for exterior siding, roof etc.

    That all being said – I have been putting money away every month to cover those maintenance things – and once the house is paid off in 539 days (not that I’m counting) – I will be shoving a bigger chunk of cash every month into my maintenance bucket to allow for some improvements (aka I *hate* my kitchen counters, but they are totally functional so I’ve lived with them for 8 years)

    1. J. Money March 13, 2019 at 7:38 AM

      AHHHH how exciting!!! And all under 10 years too – that’s pretty impressive! I agree that $1k seems a bit high, but def. smart to set aside *something* for sure every month to help lessen the sting more… I haven’t quite ran the #’s yet, but I def. plan on “spending” at least as much as we are now in rent towards this “house fund” ($2,300/mo) since we’re already used to it, and then see from there how it needs to be adjusted once we find The House…

      I want an email the second the house is paid off, please! :)

  11. Chris March 13, 2019 at 8:20 AM

    I’m sure the cost of repairs correlate a lot to how old the house is. Our house is approximately 20 years old. We bought it at about 1-2 years old. The heating pump was a dud and we had to repair it a lot and finally replaced it. We replaced our roof once. But we really haven’t had too much to do, just little odds and ends. It has been paid off now for nearly 12 years. Our taxes and insurance are around $250 a month and our adult son (20’s) still lives at home and pays rent $200, which goes up $50 a month per year). (He works, invests in 401K, buys stock, and pays all his own bills – we don’t support him). Sometimes I have thought that maybe renting would be cheaper but we can do whatever we want with our house, we own several acres in the country at the end of a dead-end road, so we absolutely love it! Plus, we live in a low cost area of the country – our first home was less than $30,000 and we paid it off in 3-1/2 years.

    1. J. Money March 13, 2019 at 2:28 PM

      Dayyyyyyum!!! All of this sounds amazing! Especially that rent your son pays, haha… I’d love to live back w/ my parents for a year or two and bank mad $$$$ but so far haven’t been able to convince the wife ;) (the kids are on board though – it would be a paradise to live with Grandma!). Congrats on paying off that mortgage – that right there is the game changer.

      1. Chris March 14, 2019 at 8:01 AM

        PS: Oops, it rent up $25 a month. Pretty good deal for him too

  12. Jessi March 14, 2019 at 2:52 AM

    The house is 120 years old, and we plan to do a lot of work (like the addition – $80k, landscaping – $10k, fancy woodwork -???) so I’m DEFINITELY saving more than someone would have to for a newer, updated home that might only worry about a new furnace or something in the next few years. I’m also way more into a “project house” than someone with little kids might be. ;) Everyone’s number will be different. The important part is working out what YOU would need to save for THIS HOUSE and factor that into the “rent”.

    1. J. Money March 14, 2019 at 7:18 AM

      You got that right…

      Thanks again for letting us share all your juicy tips :) 100% ready to start that “house fund” right up!

  13. Andrea March 14, 2019 at 11:32 AM

    And one of the neatest things about being your own landlord/renter??? …..The rent won’t be surprisingly jacked up on you when your lease is up!! Yeah, taxes & other home costs are constantly creeping up, but you’ll *probably* have a fixed mortgage (that you’ll pay down early, of course!). Imagine that…….”rent” at a fixed rate for 15/30 years………and then FREE rent! Ahhhhh……living the dream…….!

    1. J. Money March 14, 2019 at 2:52 PM

      That’s what I’m trying to tell myself every day at least, haha… I’m slowly warming up to it ;)

  14. The Frugal Expat July 27, 2020 at 7:57 AM

    This is a great concept. It helps you to think as a landlord and live as a renter. I know my wife and I call on our landlord for a couple of things every now and then, and that extra money put aside for maintence is something everyone should do. Thank you Jessi for making things easier and a better way to look at the numbers when buying a house. Great article and great advice. Thanks to Jessi.

    1. Joel July 27, 2020 at 1:15 PM

      Cheers Steve. Yeah I think many homeowners have emergency funds for their mortgage payments, but don’t set aside much more than that. It’s smart to have a maintenance fund that is automated and continues to grow.