Different ways to house hack.... let's discuss
This works anywhere, BUT your market does impact inventory and prices. I'm speaking from Raleigh, NC where I invest and work with investors. Here are the many ways to house hack that work here.
1. Traditional Duplex/Triplex/Quadplex: I grew up with plans to buy a plex and house hack it, ever since I got into REI in high school. I had to come to terms with the fact that for many markets, small multifamily has become so overpriced that the numbers don't usually come close to making sense. Unlike the midwest, our inventory in Raleigh is very very low and highly competitive because of that. If you're set on house hacking this way, you have to be patient, be open to going through a wholesaler or finding off-market deals yourself, or go pretty far from the city. Other than shared walls, a side-by-side plex offers the feeling of a townhome or apartment where there's a fair amount of privacy (great for families or couples). I have also seen new developments with detached duplexes or the equivalent of two houses on the same plot completely separate. A 3/2 in each for $650k for example.
2. ADU: This is a separate building, often a mother-in-law suite that sits on the same property. This can be attached as well, in which case it's essentially a duplex but the ADU is smaller, may only have a kitchenette (sink, fridge, microwave), and isn't zoned as a plex. If you have the cash to build one, expect anywhere from $80k-$200k+ despite it being small there are many set costs to account for. If at all possible, find one with an ADU. But typically they are more overpriced than plexes due to, once again, very limited inventory. We should see more in the years to come, and eventually, they might be more common to find. If you go out into Clayton and other outer suburbs, I've seen these at more reasonable prices so it could be an option. What I love about ADU is if it's separate there is more privacy and less noise transfer. However, it may be a smaller space with less luxuries (you could always take lower income and rent or airbnb out the ADU and live inside the main house).
3. Apartment: Let's talk about an "illegal duplex". When I say illegal I mean it's not zoned multifamily, and you aren't converting it into a plex or adu. Essentially you have a room or space with a separate entrance or you make a separate entrance and treat it as an ADU/apartment. Tangibly, this could be a detached or attached space converted, or maybe you find a master down floorplan with other bedrooms upstairs (and that master has a door to the outside and is large enough to add a kitchenette tapping into water and drain from bathroom or kitchen). BASEMENTS! I love basements because they often have a walkout entrance in the back. On my own house hack I turned a split level home into an up-down duplex or you could say I sectioned off the basement as an attached adu apartment with private entrance. This is the creative solution to still having your own private space without spending $$$ on a plex or existing ADU.
4: By the Room: We call this boarding style. Every room is rented either STR, Monthly, LTR, and you live in one of them. Could be the master, a second master, or any old bedroom depending on how much you want to maximize income. Best for singles, but I know couples who do this successfully and enjoy meeting new STR guests. They don't have to create or buy a separate apartment space, and they can use the same kitchen, living room, and amenities as everyone else which means less planning, renovation, and setup costs. This works best with large houses, 3-5 bedrooms, and makes any house work as long as there is no HOA or city limits on this rental type.
Quick chat about HOAs. Typically you can get away any of these strategies with a minimum 6mo or sometimes 12mo leases. But monthly or short-term rental is when you want as much control as possible with how you run your home, and should avoid HOA. Raleigh and Durham very chill with STR thankfully, but you want it to work as mid or long term as a backup plan. If you only want long term rentals, then HOA should be fine unless they specifically prohibit or limit rentals. Even then, there are ways around cranky HOAs.
I love house hacking and I love talking about creative living solutions to maximize wealth. Regardless of your stage in life, financial needs or goals, there's an option out there for you. Happy to discuss anytime - just reach out :)
