A Guide To House Hacking – The BRRR Way

Have you ever heard the term “house hacking” and thought it was a scam of some sort? Many feel that way! House hacking can be a legitimate way to build wealth as a new real estate investor! House hacking offers the easiest and most low-risk way to enter the world of real estate investing who otherwise would not be able to afford to do so. Throughout this article, we will break down exactly what house hacking is and how you can do it.

Where to Start

First things first you need to acquire a property. This property can be a single-family home or a multi-family that you will use as your residence while you live in one of the units and rent the other remaining units. The end goal is to live in this home for little to no cost while your tenants’ rent will pay for the mortgage.

Single Family House Hacking Downsides

If you choose to invest in a single-family home for this type of investment be sure to consider the pros and cons. While the rent that is generated will cause you to live for little to nothing you will have to share your private space with another person – who you might not be close with! This means sharing bathrooms, the kitchen, and other common living spaces. This option is doable but many find it easier to have their space separate from that of their tenants. Generally, when you house hack a single-family home you rent out rooms to tenants and split the utility bills.

Traditional House Hacking – Multi-Family Homes

The most common house hack that you will find is when investors buy a multi-family home, whether that be a duplex, triplex, or a quadplex. First time home buyers can often take advantage of FHA loans with low down payments to enhance a great deal. After the closing, you will move into one of the units while you rent out the remaining units. The rent generated from the remaining units should cover or come close to the cost of the mortgage.

Accessory Unit or In-Law House Hacking

Purchase a home with a garage that has an apartment above it or a finished basement apartment – you can then rent out these bonus spaces to generate rental income!

What are the Benefits?

Other than the potential to live in your home for free many other benefits include a growing passive income, a way to build wealth without much work, flexibility, portfolio diversity, and getting landlord experience for your future investments.

What’s Next?

If house hacking sounds like a feasible way for you to enter the world of real estate investing then reach out to a trusted local agent today to discuss the matter.

Anthoney Hanks with Beyond 404 Realty is an experienced investor in the Dallas/Fort-Worth community and would love to help you get into the world of building a passive income. Visit our website for contact information.