Wholesaler · Mechanicsville, VA · Member since 2015 · 63 posts · 16 votes
I've been seeing the term "house hacking" pretty often lately, and I'm curious about what it means. Could somebody please tell me what it is and how you do it?
Thanks!
Another version of House-hacking, often discussed here on BP, is to simply use a SFR (single family residence) as a functional duplex or triplex. This is very common in college towns or expensive markets where you can rent out a basement or individual rooms in your home. You do have to be careful in certain areas that have local ordinances that make this more difficult. Some laws might state that only 3 or 5 unrelated people may live in a home.
You also may not be able to use the rental income from a functional (but not permitted) multi-family property to qualify for the mortgage.
I house-hacked 4 different SFRs on Maui several years back by renting out "ohana" units (mother-in law apartments) that were simply sectioned-off parts of a SFR. My ludicrous mortgage payments were mostly covered by my renters and the appreciation really paid off after 1-2 years in each place!
Investor · Aiken, SC · Member since 2014 · 398 posts · 120 votes
11y
No problem. The basic concept is to buy a property, perhaps a quad, live in one unit and rent the other three out ideally on a low DP loan such as a VA or FHA, so less than 5% down vs the 20-30% required for the same property with traditional financing. After a while, loan seasoning, re-fi the property to a traditional loan, and repeat the process.
If you don't want to mess with a small multi, then you can do it on a SFR, find a property that would be a good rental, live in it for a bit, move and rent it out.
Another version of House-hacking, often discussed here on BP, is to simply use a SFR (single family residence) as a functional duplex or triplex. This is very common in college towns or expensive markets where you can rent out a basement or individual rooms in your home. You do have to be careful in certain areas that have local ordinances that make this more difficult. Some laws might state that only 3 or 5 unrelated people may live in a home.
You also may not be able to use the rental income from a functional (but not permitted) multi-family property to qualify for the mortgage.
I house-hacked 4 different SFRs on Maui several years back by renting out "ohana" units (mother-in law apartments) that were simply sectioned-off parts of a SFR. My ludicrous mortgage payments were mostly covered by my renters and the appreciation really paid off after 1-2 years in each place!
Investor · Bloomington, IN · Member since 2015 · 195 posts · 36 votes
10y
I am moving to IN and will be doing "house hacking". I am buying a duplex and will live in one side. The rent from the other side will cover all PITA but about $150 (once I get homestead exemption on taxes). That is WITH a 3.5% down FHA loan, so if I did 15% down conventional, rent would completely cover PITA. Once I buy or build a long term house, I will rent the other side and it will cash flow about $200-300/unit. There aren't many 3-4plexes in my area, so hard to find, but there are a good amount of duplexes.
Rental Property Investor · Pickens, SC · Member since 2015 · 38 posts · 11 votes
10y
simply put it means to buy a multifamily building like a duple or triplex and live in one unit while renting out the other units. its a good way to start out because of the low down payment. it helps new investors get started.
Cincinnati, OH · Member since 2015 · 214 posts · 107 votes
10y
Great way to start investing! I am house hacking a 5 unit currently and have learned a lot. Great learning experience on how to handle different situations, because you're living in the same building as your tenants. I make sure I have set forth guidelines and the tenants understand them. Tenants have a way to submit maintenance requests and pay rent online. This way tenants are not coming to my door at all hours of the day and night. So far it has been going great. Screen, screen, screen your tenants!!! Probably just a little bit more than usual for a rental because they become your neighbors! Best of luck!
People typically do it to start out with an FHA mortgage (low down payment - 3.5%) and you can go up to 4 units as long as all criteria is met. 3-4 units must meet the self sufficiency roll a stork rents must equal or be greater than the mortgage payment. I am glad to give you more info on FHA financing.
New to Real Estate · Charlotte, NC · Member since 2015 · 177 posts · 69 votes
10y
@Zack Broaddus Here are some links that I have put together for you, hope it will help you on your path of REI. I hope this will answer some of your questions.
Rental Property Investor · Minneapolis · Member since 2015 · 6 posts · 1 vote
10y
I am currently looking to do the same. I am a beginner and this would be my first purchase. My question is why is it better to put less down vs paying more up front and make your monthly mortgage less? I read it somewhere but it wasn't fully explained. Thanks