What if I told you that there is a strategy you can use to buy real estate while reducing or eliminating your mortgage payment. Heck you could even make some extra money. House hacking is a great way to get started investing in real estate.
Essentially house hacking is a way that you could have a place to live while eliminating some or all of the burden of expenses that come with owning a house. For this reason, house hacking turns your house from a liability to an asset.
First of all, house hacking can be done in one of two ways:
- Buy a small multifamily property
- Buy a singlefamily house and get a roommate.
Buying a Small Multifamily Property
Ever heard of the terms duplex, triplex, or even a quadplex? These are all terms that are used to reference multifamiy properties.
A multifamily property is a residential property that consists of multiple units that can be rented out. The property could have one building or several buildings that have separate housing units. The most common form of multifamily is apartment complexes.
One popular form of multifamily properties that are owner occupied is “garage apartments”. I see all the time in my area. Garage apartments are houses that have a somewhat large 1 or 2 car garage that they have converted into a housing unit that can be rented out.
Small multifamily properties could also be a large house that maybe has been modified with wall and door locations so that it has separate housing units. For example, a house might have a large basement. All you need is a basement door, a small kitchen area, bathroom, living room, and maybe a bedroom. Voila, you have done some house hacking and now that basement apartment can generate some extra income.
Buy a Single Family House and Get a Roommate
Another way to house hack is to buy a single family house and just get a roommate to split the bills. Maybe you have a friend or family member that needs a place to stay, this is a great way to reduce your expenses. It’s a win win for both you and your roommate because you are both reducing the cost of living.
Need a roommate? There are always people out there who want a cheaper alternative to housing and some people just want some company. Post “roommate wanted” ads on sites like craigslist or facebook to find roommate candidates.
Of course, you will want to get a good roommate. You don’t want to be living with some stranger that is a serial killer, a deadbeat, or a slob. Hence, that is why you should treat it like you are an employer looking for the perfect job candidate to hire. Look at their resume, do a background check, and conduct interviews to make sure that you find the right one.
House hacking might not be for everyone. Not everybody wants a roommate or to have other tenents living on your property. Either way, if you are new to real estate investing or you just want to reduce your cost of living house hacking is a great option.