What is House Hacking - How to Build Wealth

by Laurie Dick

What is House Hacking?

House hacking is a smart way to invest in real estate. It’s an opportunity for savvy investors to offset their mortgage and other expenses associated with owning property by renting out part (or all) of the home they own. The classic strategy involves purchasing multi-unit homes, such as duplexes or fourplexes, and living in one unit while subletting the others - but there are additional ways too! Any homeowner can house hack by charging rent through online platforms like Airbnb or VRBO for rooms within their residence.

Benefits of House Hacking:

For many American households, housing expenses can make up a large portion of their income. However, through house hacking - living in an investment property that you rent out part-time or use as an Airbnb - homeowners benefit from lower interest rates and better financing terms than with investor loans for rental properties. By getting the added bonus of being able to keep your owner-occupied loan even after you move out without having to put down 20%-25%, house hacking can be quite attractive!

House hacking is an ideal way for adventurous minds to invest in real estate and grow with their ever-changing lifestyle. The homeowner who purchased a duplex - if they were to lose their job or decide to start a family, the money from renting out their other unit will help support this transition period! Being able to learn firsthand about investing while living on-site offers up invaluable lessons without the harsh consequences often associated with more significant investments.

Tips to Find the Right Tenants:

It's important to be selective when choosing tenants, especially if they’re sharing your home. To ensure you get the best people possible and protect yourself against any discrimination claims, lay out a clear set of criteria ahead of time - from minimum income-to-rent ratios and credit scores to clean background checks and non-smoking policies. After that comes pre-screening: determining which applicants meet all or most of those expectations so you can select responsible renters who are perfect for your property!

The verification process begins when applications come in: a credit and background check is conducted, and it's up to you to give the potential tenant a final seal of approval. Reach out for references, connect with previous landlords, and confirm employment - if these all align suitably according to your screening standards then congratulations! You can accept them as tenants and plan their move-in date accordingly.