What is House Hacking exactly?

Question

Hey guys, I’m 23 with my own business. Saved enough $ and now turning to RE for my path to financial freedom. I keep getting recommended to house hack but I just don’t know what that is exactly can you guys help explain it to me, thank you.

Edward Stephens · Answer

Hey @Wilexis Ventura-Matos, it means that you buy a property and live in part of it and rent the other part out to make some income. It's popular with first time home buyers who might struggle to pay a house payment all by themselves. I've house hacked myself, in three separate ways.1) Bought a duplex and lived in one unit while the other unit was rented to another family.2) Within the unit I lived in, I got a roommate that I rented a room to.3) I rented my basement of my unit to someone who needed a place to store their belongings (it was cheaper for them to rent from me than to rent a storage unit)It's a little extreme the way I did it, but any of those individually would classify as househacking by themselves :)Hope that makes sense. Message me privately and we can talk about how to get started if you need help.

Ryan Thomson · Answer

House Hacking is buying a primary residence with 5% or less down and renting out bedrooms or other units to significantly reduce your rent and grow your net worth. Buy the first one right and you can scale to the next one in a year.

Tanner Pile · Answer

@Wilexis Ventura-Matos It's easier than you think! @Edward Stephens @Joshua Filkill gave some great advice to help you get started

Lawrence Potts · Answer

Happy to have you here! House hacking is simple: purchase a home and maximize rental potential while living in it. Traditional real estate investing is buying a home and renting it out. Typically this requires a larger down payment, etc. If you buy a house to occupy as your primary home, you can utilize low down payment options from 3-5% down, sometimes even 0% down depending on the lender and the property. So by purchasing a home as a primary, you can use a low down payment, but operate it as an investment property. Best of both worlds! Hence house hacking. You do have to live there and the main objective is to get you into a house, but you can rent out the bedrooms, live in one unit and rent out the other units, etc. However you can to maximize rental income to offset that mortgage payment.Sometimes you will not be able to cashflow when you are living there, but the goal would be to own it for a long time and eventually, when you move out to your next home, it would financially make sense as a full-time investment property. Even if you are paying a little each month with rental income, you are still gaining in tax incentives, appreciation, principal paydown, experience as a landlord, and an asset that you can, at the very least, sell down the road to capitalize on gained profit.Hope that helps! I highly encourage you to speak with a lender. Because you run a business, lending will be a bit different versus those that have a W2 job. Make sure your books are clean. Talk to a lender that invests in real estate and see what your next steps look like.

Min Zhang · Answer

Hey Wilexis,House hacks are a great way to get into real estate with minimal down and reduce your living expenses while having a tenant pay down the mortgage. Once you get a house hack then look at investing in other states with large population growth and job opportunities. If you still have questions, feel free to reach out! :)

Basit Siddiqi · Answer

House-hacking is purchasing a property that serves as both a personal residence and an investment property.

Ryan Thomson · Answer

@Wilexis Ventura-MatosHouse Hacking is amazing. Here are some resources I found really helpful on my journey. 1. For podcasts I really like the Huse Hacking episodes on Bigger Pockets Podcast and other channels. Here is a playlist with the best House Hacking Podcasts I’ve found: https://open.spotify.com/playlist/4A6uLsPfdWEMmJhG4TSjyb?si=743bb403548f47fb 2. Great beginners guide: https://www.biggerpockets.com/blog/wp-content/uploads/2022/08/Ultimate_Beginners_Guide_BiggerPockets.pdf 3. The Book on House Hacking Strategies by Bigger Pockets is also a fantastic book 4. Happy to talk if you want more advice 5. Connect with a realtor who understands house hacking and has invested themselves 6. Connect with a lender to see what you qualify for and how you can improve that situation 7. Go to local Real Estate meetups and learn from people there

Conner Olsen · Answer

If you have any additional questions, read the house hacking strategy by Craig Curelop.

Wilexis Ventura-Matos · Answer

@Joshua Filkill will do brother thank you!

Wilexis Ventura-Matos · Answer

@Edward Stephens thank you so much for that info bro!