Real Estate Investing Guide: The House Hacking Strategy

House hacking is one of the most common strategies in real estate investing, especially for those who are just getting started. The primary reason behind this is the fact that you can use this strategy to overcome the initial financial barrier that stops many people from getting into real estate. With that said, here’s a brief explanation of what house hacking is and how you can get started.

What is House Hacking?

Most simply put, house hacking refers to the strategy where you purchase a property to live in one part and rent out the rest of it. The income you make by renting out a part of the property can help you cover your initial and on-going expenses. The good thing about this strategy is that you can get into house hacking without purchasing a new property. 

If you already own a property that could be partially rented out, this could easily be your ticket to real estate investing. In that case, you wouldn’t have to pay off your investment loans, meaning you could direct this cash flow toward future investments. 

There’s a lot of flexibility involved in house hacking mainly because you can implement this strategy with a variety of properties. If you own or purchase a duplex, triplex, or fourplex, you will be able to make significant income from renting out the additional units. In this case, you will not only cover the initial expenses but you’d also be able to make a good profit.

On the other hand, house hacking can be done with single-family homes too. Even though this is the less lucrative scenario, it is possible to rent out a spare bedroom or section of the house if you don’t mind living with roommates. It is this additional income that will help you step foot into real estate investing.

The Benefits of House Hacking

While the main benefit of house hacking is the income you make by renting out the additional space, there’s more to this strategy than you can see on the surface. For example, one of the biggest benefits is the fact that you can build equity in your investment property while living there and having someone else cover the majority of the debt or expenses. 

House hacking can be your ticket to starting and building an investment portfolio, which could be worth millions years from now. However, the initial steps are always the most difficult ones. In most cases, the housing expenses are what keeps investors from making that first move. With house hacking, you can cut down those expenses and get a significant head-start on your way to a real estate career. 

While sharing the living space or living with roommates doesn’t seem like the most ideal situation to most people, it is really not that bad when you consider the benefits that come along with it. Young homeowners are more likely to go through the experience of sharing a home in exchange for an opportunity to start real estate investing. 

Start House Hacking to Build Wealth

In a nutshell, house hacking is a great way to build wealth in an asset. Think about it, if you were to rent a place to live in, your money would be going out of pocket into someone else’s bank account every month. Instead, you can easily invest in a property and have someone else cover the majority of expenses by renting out the extra space. Years later, you end up with full equity in a property that you didn’t even pay for yourself. Doesn’t this sound like a better option?