Some people might be scared to own and manage their own rental property, even though a lot of people want to start dealing in real estate. You can keep your investment closer to home with a method called “house hacking.” Take a look at how it works.
What is House Hacking?
House hacking is a way to invest in real estate where you use your home to make money, usually by renting out parts of it. There are many ways to hack into someone’s home, but the most common way is to rent out rooms in your house or flats in a building you own. Then, you can pay your mortgage with the rent, which will lower or even eliminate your personal living costs.
House hacking is a great way for people who are new to renting out their homes to learn the ropes without having to buy their own home yet. You can be close by to deal with problems as soon as they arise and keep an eye on your renters to make sure they’re following the rules in the lease. For people who need help paying their mortgage and have extra room they’re not using, this is also a good idea.
Let’s See House Hacking Strategies
Multi-Family Home House Hack
The usual way to “hack” a house is to buy a building with two to four units, live in one of them, and rent out the others. Most people who break into homes choose this way because it gives them more privacy than others. Everyone will still live under the same roof, but they will each have their own room. House hacking works best in duplexes and triplexes, but it can be done in almost any apartment building.
Rent by the Room
You could also buy a single-family home and rent out rooms or a whole part of the house as a house hack. You might have an extra bedroom that’s not being used. You could rent it out and pay the debt with some of the rent money. If you’re ready to charge even more, you could rent out the whole floor and share common areas like the kitchen and living room. If you do that, you might have to live in the same house as your renters. That being said, this is a good plan if you’re okay with it or know people who need a place to stay.
Put Your Home on Airbnb
Another great tool for house hacking is Airbnb, especially if you live in a place that gets a lot of tourists during the summer. You might not want a long-term tenant, but you don’t mind renting out an extra room for a short time. You could also want to make money while you’re traveling a lot. You can find people looking for short-term rentals on Airbnb, and you can often get better rates than if you rented it out for a whole year.
RV House Hack
If your house doesn’t have much room but you have a lot of land that you’re not using, you might want to do a mobile home or RV house hack. That means you have to buy an RV or mobile home and park it on your own land. After that, you can either rent it out to people or live there yourself and rent it out.
Mobile home and RV hacks work better in rural areas because you need a good-sized piece of land. In many suburban neighborhoods, building a mobile home or putting an RV is against the law. Before you try this method, make sure you know what the zoning rules are in your area.
FHA House Hack Strategy
When you use a normal house hacking method on an FHA loan, this is called “FHA house hacking.” Traditional mortgages have stricter standards for income and credit than FHA loans. Also, you can get a loan with as little as 3.5% down. But FHA loans can only be used for main homes, not rental properties.