Hello! I'm new...can someone explain what House Hacking is? Thank you!

Investor · Hampton Roads, VA · Member since 2023 · 32 posts · 9 votes

I'd rather hear it form people in the trenches actually doing it vs seeking out 'guru' answers on Google. Thank you in advance, I'm in the Hampton Roads, VA area. Hoping to connect with other local active investors.

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Ryan ThomsonBusiness Member

Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes

@Rickina Velte here are some more ways to find a deeper answer to your question.

House Hacking is amazing. Here are some resources I found really helpful on my journey.

1. For podcasts I really like the Huse Hacking episodes on Bigger Pockets Podcast and other channels. Here is a playlist with the best House Hacking Podcasts I’ve found: https://open.spotify.com/playlist/4A6uLsPfdWEMmJhG4TSjyb?si=743bb403548f47fb

2. Great beginners guide: https://www.biggerpockets.com/blog/wp-content/uploads/2022/08/Ultimate_Beginners_Guide_BiggerPockets.pdf

3. The Book on House Hacking Strategies by Bigger Pockets is also a fantastic book

4. Happy to talk if you want more advice

The Assumable Guy544 Reviews

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Randall AlanPro Member
Investor · Lakeland, FL · Member since 2017 · 1k+ posts · 1k+ votes
3y
Quote from @Rickina Velte:

I'd rather hear it form people in the trenches actually doing it vs seeking out 'guru' answers on Google. Thank you in advance, I'm in the Hampton Roads, VA area. Hoping to connect with other local active investors.

@Rickina Velte

Here’s lots of previous answers. You can search the forums using the magnifying glass in the upper right hand corner on bigger pockets.

https://www.biggerpockets.com/...

Enjoy!

Randy

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Rickina Velte
OP
Investor · Hampton Roads, VA · Member since 2023 · 32 posts · 9 votes
3y
Quote from @Randall Alan:

Quote from @Rickina Velte:

I'd rather hear it form people in the trenches actually doing it vs seeking out 'guru' answers on Google. Thank you in advance, I'm in the Hampton Roads, VA area. Hoping to connect with other local active investors.

@Rickina Velte

Here’s lots of previous answers. You can search the forums using the magnifying glass in the upper right hand corner on bigger pockets.

https://www.biggerpockets.com/...

Enjoy!

Randy

Thank you Randy
1 Reply
Jarred Dukes
Chesapeake, VA · Member since 2017 · 14 posts · 11 votes
3y
In its simplest form, house hacking was coined by Brandon Turner here at Bigger Pockets to teach new investors how to start out while keeping their largest expense other than taxes, living expense, low. House hacking is when the rental property you purchase is the same rental property you live in. That way your living expense (the mortgage) is paid by your tenant's rent. You can buy a SFH (single family home) and build an ADU (additional dwelling unit) and do it that way. Or buy a residential multifamily and live in one of the units. Either way house hacking is a great strategy and I encourage all new investors to go that route. Cheers. Hope that helps. By the way, I am also in the Hampton Roads area would love to connect. -Jarred
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Alan AsriantsBusiness Member
Real Estate Agent · Philadelphia, PA · Member since 2019 · 1k+ posts · 1k+ votes
3y
House hacking is another term for living in the building you invested in. Most people when they are looking to start investing do not have much money down and are first time home buyers. When you are buying your first home and a "primary" residence (meaning you live there) you can qualify for low money down options like FHA. This allows you to get started in real estate investing but using you first primary home as the vehicle. You would typically buy a multi family unit, live in one and rent out the other. This gives you a discount on your living expenses and other tax advantages. It's the best way to get started!
[email protected]267-767-0111
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Lawrence Potts
Real Estate Agent · Member since 2018 · 459 posts · 414 votes
3y
Quote from @Rickina Velte:

I'd rather hear it form people in the trenches actually doing it vs seeking out 'guru' answers on Google. Thank you in advance, I'm in the Hampton Roads, VA area. Hoping to connect with other local active investors.
House hacking, as mentioned by the previous replies, is simply maximizing your profits in your primary or next home. Whether it is renting by the room, renting a room, renting a unit, etc., it's finding a way to turn your own house into a profitable operation, hence the "hacking."
The long-term play for house hacking typically go this route: once you are done in that house, you move out, occupy your previous living space, and now you have your first rental. Ideally, you would underwrite your numbers before buying as if you were not living there to make sure that when you left, it is performing positively. Later on, you can sell (and defer capital gains & depreciation if you've lived in it 2 of the most recent 5 years), you can 1031 exchange it if you do not claim it as your primary and can show evidence of rental history, etc.
It is basically buying an investment property without having to use higher down payment methods used traditionally. You can utilize lower down payment options typically reserved for owner-occupied borrowers, but eventually turn the home into an investment property.
Sometimes you will not cashflow while you are living there, but that's why we run our numbers as if we are not living there first! I am currently house hacking a 4plex I bought in 2020 and it has been nothing but life-changing. Our goal is to refinance in 2024 and move on to the next property. It's currently a mix between long term and mid term renters and we plan on doing short term or mid term with the current unit we are living in.
Hope that helps! Best of luck to you on getting started and let us know how we can help!
1 Reply
Ryan ThomsonBusiness Member
Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
3y
@Rickina Velte House hacking is an amazing way to reduce your expenses and grow your net worth with minimal risk. You buy a primary residence for 0-5% down. Then you rent out the other bedrooms or units. This significantly reduces your living expenses or completely covers them. Then you get all of the benefits of real estate investing on top of that: appreciation, loan paydown, tax benefits.
If you want to scale you buy the first one with an exit plan that will cover most of the mortgage. You use that exit plan as qualifying income and buy another primary property in a year or two with 5% down and repeat it all over again!
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Ryan ThomsonBusiness Member
Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
3y
@Rickina Velte here are some more ways to find a deeper answer to your question.

House Hacking is amazing. Here are some resources I found really helpful on my journey.

1. For podcasts I really like the Huse Hacking episodes on Bigger Pockets Podcast and other channels. Here is a playlist with the best House Hacking Podcasts I’ve found: https://open.spotify.com/playlist/4A6uLsPfdWEMmJhG4TSjyb?si=743bb403548f47fb

2. Great beginners guide: https://www.biggerpockets.com/blog/wp-content/uploads/2022/08/Ultimate_Beginners_Guide_BiggerPockets.pdf

3. The Book on House Hacking Strategies by Bigger Pockets is also a fantastic book

4. Happy to talk if you want more advice
The Assumable Guy544 Reviews
Website View Page
3 Reply
Jay ThomasPro Member
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
House hacking refers to a real estate investment strategy where a homeowner buys a property with the intention of renting out a portion of it to generate rental income. This strategy is particularly popular in the United States and can be used by first-time homebuyers or real estate investors who want to generate additional income from their property.

The most common way to house hack is to purchase a multi-unit property, such as a duplex or triplex, and live in one of the units while renting out the others. This way, the rental income generated from the other units can be used to offset the cost of the mortgage and other expenses related to the property.
[email protected]832-889-5607
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Rickina Velte
OP
Investor · Hampton Roads, VA · Member since 2023 · 32 posts · 9 votes
3y
Thanks so much for all the value added feedback!
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Rickina Velte
OP
Investor · Hampton Roads, VA · Member since 2023 · 32 posts · 9 votes
3y
Quote from @Lawrence Potts:

Quote from @Rickina Velte:

I'd rather hear it form people in the trenches actually doing it vs seeking out 'guru' answers on Google. Thank you in advance, I'm in the Hampton Roads, VA area. Hoping to connect with other local active investors.
House hacking, as mentioned by the previous replies, is simply maximizing your profits in your primary or next home. Whether it is renting by the room, renting a room, renting a unit, etc., it's finding a way to turn your own house into a profitable operation, hence the "hacking."
The long-term play for house hacking typically go this route: once you are done in that house, you move out, occupy your previous living space, and now you have your first rental. Ideally, you would underwrite your numbers before buying as if you were not living there to make sure that when you left, it is performing positively. Later on, you can sell (and defer capital gains & depreciation if you've lived in it 2 of the most recent 5 years), you can 1031 exchange it if you do not claim it as your primary and can show evidence of rental history, etc.
It is basically buying an investment property without having to use higher down payment methods used traditionally. You can utilize lower down payment options typically reserved for owner-occupied borrowers, but eventually turn the home into an investment property.
Sometimes you will not cashflow while you are living there, but that's why we run our numbers as if we are not living there first! I am currently house hacking a 4plex I bought in 2020 and it has been nothing but life-changing. Our goal is to refinance in 2024 and move on to the next property. It's currently a mix between long term and mid term renters and we plan on doing short term or mid term with the current unit we are living in.
Hope that helps! Best of luck to you on getting started and let us know how we can help!

Love to hear that. We're currently not in a position to do that method, but I love the creativity behind it! Thank you for sharing.
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Basit SiddiqiBusiness Member
Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes
3y
house-hacking is buying a property that is treated as both a primary residence and an investment property.
The goal is to reduce the cost of your monthly housing.
[email protected]917-280-8544
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Dave SpoonerPro Member
Rental Property Investor · Cincinnati, OH · Member since 2020 · 869 posts · 823 votes
3y
Quote from @Jarred Dukes:

In its simplest form, house hacking was coined by Brandon Turner here at Bigger Pockets to teach new investors how to start out while keeping their largest expense other than taxes, living expense, low. House hacking is when the rental property you purchase is the same rental property you live in. That way your living expense (the mortgage) is paid by your tenant's rent. You can buy a SFH (single family home) and build an ADU (additional dwelling unit) and do it that way. Or buy a residential multifamily and live in one of the units. Either way house hacking is a great strategy and I encourage all new investors to go that route. Cheers. Hope that helps. By the way, I am also in the Hampton Roads area would love to connect. -Jarred

Explained well!
[email protected]
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Matthew Kwan
Lender · Seattle, WA · Member since 2022 · 482 posts · 768 votes
3y
HI Rickina,
House hacking is always the best way to start off in Real Estate investing since you get to manage your tenants while living there, and most importantly they help offset/lower your mortgage payments. The government incentives us with down payment 0%-5% (depending on the loan programs) and competitive rates just to incentives consumers to purchase a house. Usually, lenders would lend up to 45%-50% of your gross income. For example: if a gross income is $6000 your expected monthly mortgage payment should be around $2700-$3000 assuming no debt just to keep the numbers simple. This will give you a sense on what house much you would qualify. If you have any questions about your scenario, happy to connect with.
@Carlos Valencia @Albert Bui.

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