Hacks are ruling the world right now. From life hacks to more technical hacks, everyone’s going crazy about hacks that simplify things for them. But have you ever heard of the so-called house hacking?
Yes, there is such a thing as house hacking. It is a modern lifestyle choice inspired by old-school ways and re-imagined thanks to the latest home-sharing platforms.
What is House Hacking?
To put it simply, house hacking is all about looking for ways to make money out of your home. House hacking traditionally meant purchasing a multifamily property and living in one unit, while the rest is rented out. The rental payments will then go to the owner’s mortgage while the owner maintains the property and build equity on it.
Ask any savvy investor and they will surely tell you that multifamily properties and other similar properties are one of the easiest ways to master the ins and outs of being a landlord and property manager while enjoying the perks of their tenants paying for their housing expenses.
Why Try House Hacking?
House hacking is perfect for a temporary reduction of living expenses. it is also a great option if you are still testing out the waters of real estate investing. Either way, considering the exorbitant housing cost, house hacking is an effective method to use an existing asset to afford your lifestyle, set aside money for savings, or purchase more properties while building your home equity.
Popular House Hacking Strategies
Everyone can try their hands at the following house hacking strategies. All you have to do is find the one that suits you best:
- ADUs
Renting an ADU or Accessory Dwelling Unit, also called the luxury house hack, is perfect if privacy matters the most to you or if you have a family. You can build an ADU in your backyard or buy a property with a readymade ADU.
- Multifamily Property
Fourplexes, triplexes, and duplexes are the perfect examples of multi-unit properties. You will live in one unit with the rest rented out. People often apply for loans for these properties, particularly first-time home buyers.
It is a great house hacking strategy for markets with lower prices. However, profit may be difficult in expensive housing markets with rents that can’t even cover mortgage payments.
- Short-Term Rental
As long as the county and homeowners’ association law allows it, any type of property can be transformed into short-term rentals. All you have to do is list the property on online platforms and have it rented out as often as you want. This house hacking strategy often generates positive ROI, especially in areas with high traffic.
- Single-Family Rental
Buying a large single-family home is the easiest way to try your luck in house hacking. You just stay in one room and the rest is rented out. Just make sure that there is sufficient space in the common area and that there are enough bathrooms for a more comfortable experience for everyone.
Yes, house hacking is a real thing, and yes, you can also try it for yourself!