D
enver-based couple Jeff White and Suleyka Bolaños retired before 40 by leveraging a strategy called house hacking. They used a 1031 exchange to upgrade properties, boost cash flow, and achieve their early retirement goal.

    The first property they bought was a fourplex that required significant renovation work. Despite the challenges, it worked out for the couple, generating enough rental income to cover their mortgage and living expenses. Several years later, they used this property to scale up and leverage a 1031 exchange, swapping it for two better-performing assets that significantly boosted their cash flow.

    White and Bolaños continued purchasing one property a year, using house hacking to live for free and qualify for owner-occupied financing with just 5% down. However, this strategy had limitations, including the need to live in each property for at least 12 months before selling or renting it out.

    In 2021, they found a large single-family home that would be perfect for their portfolio but required them to sell their worst-performing property and reinvest the proceeds into another like-kind property. They used a 1031 exchange to defer capital gains on the sale of their fourplex and reinvested the proceeds into two new properties: a single-family home and a condo.

    The rental income from these properties more than quadrupled their cash flow, going from $400 to $1,700 per month. White and Bolaños worked with a 1031 exchange intermediary and title company to navigate the complex process, which involved meeting strict deadlines and adhering to specific rules.