What is House Hacking???

Question

I'm a new investor and I've heard some investors talking about house hacking. Can someone explain to me what that is???

Brent Coombs · Answer

@Alex Coke, I believe "house hacking" is one of those secret-hand-shake expressions invented by 'Bigger Pockets' (was it Brandon Turner)?

Now that you've been filled in on the secret - whatcha gonna do?

[Please thank the prior responders in your next post].

Welcome to Bigger Pockets.  Cheers...

Wale Lawal · Answer

@Alex Coke

House Hacking is a great Real Estate Investment Strategy.

House Hacking is when you live in one unit or room and have the tenant pay or renters from the other unit or room pay your mortgage and expenses💵.

It can be done with a Single Family Home (1 Unit), Duplex, Triple, 4 Plex or Multi-family (more than 4 Units).

8 Benefits of House Hacking are:

✅ House Hacking allows you to LIVE FOR FREE (If done right).

✅ Great Investment Strategy for Beginners.

✅ Monthly Cash-Flow and Passive Income.

✅ Build Equity and Wealth.

✅ Flexibility to live and do what you want.

✅ Get Landlord Experience.

✅ Tax Benefits through depreciation.

✅ Can be use for AirBnB or Short-term rentals.

Goodluck!

Grace Wang · Answer

@Alex Coke In Denver it's common for house hackers to rent out bedrooms individually, or to block off a section of the house to rent long or short term. As you can see from the previous comments, too, there are many ways you can house hack. You may want to chat with a local investor-friendly agent to see which best fits for your situation and/or market.

Cortney Arenstein · Answer

We also consider "live-in flips" a "house hack." We bought a junky property we knew we could stand to live in (with minimal down payment because it was our primary residence) while we "rehabbed" it (basically cosmetic updates and a handful of small fixes) to get max value (ARV) when we went to sell. We sold it about 13 months later and made ~$40k (it was a steal of a buy and this was back in 2015). Used the "profit" to buy the next junky house at under market prices that needed cosmetic updates and will sell that for a small profit at some point in the near future. (We did all the work up front though so we could live in the nicer house this time around rather than a construction zone.) Some of that profit also went to seed our investment pot. So the idea that your primary residence is also in some way an investment (can be multifamily like a duplex, could also be renting out rooms or even AirBnB rentals in your primary residence) is the basic idea behind house hacking.

Wale Lawal · Answer

Great Idea. Goodluck with your current and next flip-hacking.... Smile

Alex Coke · Answer

@Brent Coombs

I'm currently tackling my first flip and just looking for new options for investments! Very interested in doing some house hacking, but will have to be on the next flip!

Aigo Pyles · Answer

It is renting a space of your primary resident. You can usually generate bigger income through multifamily house.

Ben Rhodin · Answer

Hey @Alex Coke! Like everyone else has already pointed out here, house hacking can take on many different forms. It's it simplest forum house hacking is buying a residence and offsetting the cost of the mortgage in one of many ways. It can be as little as renting it as a short-term rental while you are traveling, or have a buddy to shack up with for a few weekends; or as involved as living in a van or trailer on the driveway and renting the house out completely.

It can really take on any form and people are finding new ways to do it each and every day! The main goal is to offset your living cost and gain an appreciating asset which you can then move out of and do it over and over again. It frees up your time, and is a great way to kickstart an investing career without much risk!

Abby Weinstock · Answer

House hacking can take many different forms. Options include:

• If the investor purchases a multi-unit property, he can live in one unit and rent out the others.
• If the investor purchases a single-family home, he can rent out however many bedrooms he is not using.
• If the property has an additional dwelling unit (sometimes called an accessory or auxiliary dwelling unit), the investor can live in the main unit or vice versa. The additional dwelling unit (ADU) could be a carriage house, a guest house, an in-law suite, a pool house converted into livable space, an apartment over the garage, a basement apartment, etc. Some important considerations include:The ADU should have a full bathroom, a cooking area, and a sleeping/living area.Some jurisdictions have ADU regulations, such that you might need a license before it can be rented, or a minimum acreage, or might only be able to rent an ADU to a relative.
• The ADU should have a full bathroom, a cooking area, and a sleeping/living area.
• Some jurisdictions have ADU regulations, such that you might need a license before it can be rented, or a minimum acreage, or might only be able to rent an ADU to a relative.
• An investor who purchases a property with the intent to live in it while fixing it up could combine this with a house hacking strategy. That is, he could also rent out a unit or bedroom while working on other areas (such as finishing a basement). If the investor lives at the residence for at least two years out of the five years prior to its date of sale, he is exempt from paying capital gains tax on the first $250K of capital gain ($500K if filing a joint return with a spouse).
• An investor could rent a house and live in a trailer on the property (1) if the property is sufficiently large to make that practicable and (2) if such a circumstance is permitted by the local jurisdiction.

• The ADU should have a full bathroom, a cooking area, and a sleeping/living area.
• Some jurisdictions have ADU regulations, such that you might need a license before it can be rented, or a minimum acreage, or might only be able to rent an ADU to a relative.

Jonathan Styer · Answer

Hello and welcome Alex,

House Hacking is when you buy a multifamily property and live in one unit and rent the other(s) out in an attempt to live cheaply or for free as the rental income pays your mortgage. Hope this helps!

What is House Hacking???

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