House hacking is a popular real estate investing strategy. It starts with purchasing a property with multiple bedrooms, or purchasing a property with multiple units (like a duplex, triplex, or four-plex) as a primary residence. The idea behind house hacking is to get favorable financing terms and still have an opportunity to generate rental income. Once the person closes on the property, they move into it, and then can start to look for tenants to rent the other bedrooms or the other units. It's essential like living with a roommate and can significantly reduce your out-of-pocket housing costs. In places where real estate continues to increase at rates greater than inflation, having an opportunity to own a piece of real estate with great terms and make money off of it is incredible. House hacking is one of the best ways to get started investing in real estate because it is so flexible and easy relative to some of the other investing strategies out there.
House Hacking Pros 🤑
- Lets you get started invested in real estate relatively easy
- Can significantly reduce your housing expenses or even let you live for free
- You often get favorable financing terms because you're living in the property and will be eligible for primary residence lending programs
- It provides the perfect opportunity to get landlord experience
- Gets you to think creatively about real estate
House Hacking Cons 😭
- It requires you to be a landlord (this can also be a good thing as you'll get experience renting out property, working with tenants, and collecting checks!)
- It requires you to give up your privacy
What Makes a Property Good for House Hacking?
- Properties 4-6 bedrooms
- Any duplex, triplex, or four-plex
- A 1-to-1 bedroom-to-bathroom ratio (no one wanted to share the 🚽🧻)
- Enough parking for each bedroom or unit (1 or 2 spots for each 🚗)