We all see the popularity of Van life on Youtube. It’s arguably cheaper than renting in most cases and allows the freedom of living in some of the most expensive cities. Although I am a fan of Van Life (In my case car life as I like to camp in my car while traveling) I started to think how Van Life can help with achieving FIRE goals.
Sometimes it is not possible to buy a large house with two suites. But what about buying a town home or rancher with an attached garage on a low income? It certainly is possible. A 3 bed 2 bath town home could go for $450,000 in my area. If you get a good mortgage broker they could take into account renting out the town house as well as combining that with B lenders in order to qualify you for a mortgage with a low yearly salary. Assuming a 4.5% interest rate (1% higher since you are dealing with “B” lenders) your mortgage payment would be $2,379.93 with 5% down. Market rent for a 3 bed 2 bath in my area is $2,400/month with a 10% discount (discount to find good tenants).
Okay that’s great but where do I live? This is where Van Life principals comes into play. You would live in the garage. However, the building department will not issue permits for a bathroom and kitchen plumbing for a garage suite. So how can I make the garage a comfortable place to sleep without installing illegal plumbing and structures?
- Make the garage warm and safe. If not done already you could install insulated garage door panels and replace the seals. Put down areas rugs or wall to wall carpet to keep the floor warm. Insulate the walls with an attic insulator such as this one from home depot. Drill 4 inch holes with a hole saw between the studs and fill up with insulation using the attic cat blown in insulator which you can rent from Home Depot. Then patch up the holes and paint. The garage at this point should be warm and safe and you did not need to get permits for any of this.
- Add some extra electrical outlets (if the garage is not well equipped already). Permits will be needed for this however the building department will issue this no problem as its normal to put extra outlets in a “garage”.
- Add a kitchen. Van Life uses a kitchen involving a gray water jug and clean water jug under the sink with some sort of hand or electric pump to the faceut. Designing a self contained kitchen like the ones used in van life do not require any permits as no plumbing gets connected to the house. The gray water jugs get dumped in the compost in the back yard and the clean water jugs get filled up from the hose tap. The burner would ideally be an induction portable cook top since we have access to power (Van life would use a propane stove). A fridge would be a standard residential fridge.
- The bathroom would utilize a composting toilet. A designated area in the back yard would be utilized for this high quality compost perhaps in a compost bin. A shower would be as simple as large bin with a shower curtain and a shower head connected via pump to a bucket of hot water. The hot water would be heated on the convection portable stove and poured into the bucket (1 part boiling water to 3 parts room temp water). When the shower is done simply take the bin out side and dump it in the garden. Both the kitchen and bathroom are not connected to plumbing and is portable therefore no need for permits.
- Heat. A portable 110volt heater connected to a built in thermostat is all that is needed (perhaps two if double garage in a very cold area) .
Okay so it is possible to do a “Van build” in the garage not requiring any permits. How does this help me get my financial freedom in order to do the things I love. The cost to own this home are ~1200 mortgage interest+ 200 property taxes + 250 maintenance, insurance and garage improvements which is $1,650 a month. Since the tenants are paying 2400 a month you are getting paid 750 a month to live there (of course there is still your share of utilities). Also assuming the price of the house goes up in value at least 3% per year conservative estimate (it’s actually averaged 7% since 2000 in my area) we would have an additional 13,500 per year or 1125 per month. So we are getting paid 1875 per month over the long term to live in our “Van Build” garage. We didn’t make any structural changes or add plumbing so no need for permits.
This type of lifestyle requires a minimalist approach. It requires us to be respectful of our tenants and neighbours. While we are technically not allowed to live in the garage I think it would be worth the risk. If a noisy neighbour ever complained then we would just say we use the garage for storage or as an art studio or whatever and there is nothing they can do since we did not make any structural changes etc. However, although unlikely if the issue is pushed worst case is we would have to move out of the garage. That being said, being paid $1875 per month is worth the risk.
If you could save an additional $2,500 per month on top of the $1875 in equity and appreciation for at least 5 year invested a total market ETF then you would have about $410,000! At that point you could move into the main part of the house go immediately to part time and never have to save another penny. In order words you would be coast FIRE. So by choosing to live in a “Van life” converted garage for 5 years, we would only have to work 2-3 days a week for the rest of our life and have a sweet retirement. Basically you just bought 2-3 days of freedom per week! That’s a pretty good trade off.
Photo credit: https://thevanproject.com/8-vanlife-kitchen-must-haves/