What is "House Hacking"?
"House Hacking" is a term used for a common investing strategy where the investor buys a property intending to live in part and rent the rest. By intending to owner occupy the property the investor is able to qualify for a loan easier and take advantage of a smaller down payment. In many cases, this can help individuals speed up their investing process as well as cut down on their living expenses. While in some markets, house hacking might not be able to cover all of the mortgage payments, the money saved can be used to fund future investments which is why it has become so popular lately.
Standard House Hack
Normally house hacking is done by buying a multi-family building and renting out the units that the investor isn't living in. The strategy can be done in a number of ways however in a single-family home. A multi-family unit is usually the most comfortable however as it gives the investor the privacy of having a completely separate living area. Depending on the investor, there are other ways to use your current residence as a house hack.
Mother-in-Law
Many houses that have a separate entrance to the basement can be modified to have a mother-in-law apartment which can be a great option for a house hack. The investor gets privacy having a separate living area for the renter but often will have to cover their utility use as well making it just a slightly less lucrative option than the multi-family house hack.
Renting a Room
Many areas allow homeowners to rent a room in their house which can help cut down on mortgage payments for the time that the investor is in the home. Often this is problematic for people unless they are single young adults. Most people don't like having another person outside of their family living in their house. The investor may have to sacrifice some of their privacy in order to take advantage of this type of house hack.
Bonus Income: Renting Storage
Another option that has been rising in popularity is to rent out space on the property for storage use for nearby neighbors. This can be anything from renting a parking space for a neighbors RV to renting space in a shed or garage. Lately, apps like have been rising in popularity because it is a great way to find people looking for storage space which is a great option for those looking to add a little bit of income coming from their property.
House hacking is an extremely effective way for those looking to get into real estate investing to get started quickly. The low down payments that come with an owner-occupied property provide a low entry point for investors and the income generated covers one of the investor's biggest expenses, their mortgage payment. With a variety of options, the house hacking strategy can be adapted to fit any number of situations making it a potential strategy for many people.
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