House Hacking

4 Replies

I have been reading a lot of post on house hacking and I have a few questions. I live in and own a single family home. If I purchase a duplex, do I have to move out and rent out the house I am living in now and move in the duplex to get the benefits? If this is the case when the one year is up then what. Its good for a year but to stay in pass a year with a family and a business could be complicate with lack of space since I cannot  return to my pervious home. 

House hacking is the idea of moving into a single family house and getting roommates to help pay the mortgage or purchasing a small multi (1-4units) where you move into 1 unit and rent the others.  This is a great idea because you can take advantage of owner occupied loans (small down payment usually 3-5%) instead of using an investor loan that will require 20-25%.  Another added benefit is you get the experience of being a landlord, and you will basically be living for free or having a small monthly payment since the other units will be rented out.  

To answer your question, no you do not have to move out and rent your current house. However, you won't be able to house hack and a lender will require 20-25% down payment. If you decide to move into the duplex you would have to live in the property for at least a year. But your down payment will be small. After that year, the plan would be to purchase another SFH or house hack again at another property.

@Sherri Somers you are right. The concept of house hacking is to use the low downpayments that owner-occupants get and then rent the extra rooms (in a SFR), or rent the other units (in a 2-4 unit). What you do with your current home is up to you. You could sell it and use the profit to purchase the house to hack, or keep it and rent it out, or whatever you want. Some people's lives are not set up for house hacking: too many kids, do not want to move, school districts, friends, etc. If so, then house hacking may not be for you.

I did it and it was a great way to pick up a few doors with very little money out of pocket, but it was hard on the family so we have stopped that style and now do more traditional investing. It is all about what works for your life and goals.

@Bryan O. thank you so much. I don't think house hacking is for me due to my family size and businesses

@Sherri Somers

If you can sacrifice space and comfort for the year in the duplex, then I would move out of your current home and rent for 12 months but tell the tenants you'll be moving back in at the end of their lease.  No renewals possible. You're only obligated to live in the house hack property for a year but you can keep the good financing in place forever.  

Its a great way to acquire your first properties with low down payments and great mortgage terms.  Almost everyone who is successful in real estate can tell you stories about sacrifices they made to get to where they are now!  Let me know if you have any specific questions I might be able to answer.  My husband and I lived in a 4-plex we own and now live in a duplex.  We don't have any kids though, so that makes it easier!  Good luck!  

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