Rental Property Investor · Columbia, SC · Member since 2020 · 302 posts · 186 votes
House Hacking is a phrase coined by BiggerPockets podcast host Brandon Turner. While Brandon came up with the cool-sounding name, the concept has been alive for a long time. While the idea isn’t new, the popularity of its application is.
House Hacking is a strategy that involves renting out portions of your primary residence to generate income that is used to offset the cost of your mortgage and other expenses associated with owning a home. When done correctly, it allows people to live in expensive areas completely for free, or even generate positive income through homeownership.
It is a way of squeezing every last ounce of value out of a home that you possibly can, in order to benefit yourself financially.
@Cole Simpson Is a house hack a goal of yours in the future? Study the requirements for an FHA loan like a book and make sure to set yourself up for success. Examples would be building up your credit, getting the most recent tax returns for the last 2 years in the same field, building up capital for the down payment, closing costs and 6 months in reserves so you can use as much of the rental income from the other units as your own income when you getting qualified. These are some barriers I had to make sure to be able to climb over. Let me know what questions you have.
I drove for Uber during college for roughly 18 months to get 2 years of the same 1099 income on my tax returns. Theoretically you could do it in just 13 months but you want to make sure you have enough income shown to qualify. I wrote off too many items and miles the first year and didn't realize the consequences of that. In terms of cash, I have conservatively allocated 20k for my house hack. 6125 (3.5% of down payment) + 4000 (closing costs) + 7000 (6 months of cash reserves to maximize the rental income I can pull from the other units to help me qualify) = 17.125k. The extra 3k is for any cosmetic upgrades or repairs that I make to add some value although that isn't the main goal with this house hack. It is to live for free and build equity!