I was recently talking to someone privately on Reddit (u/TheManOfManyThings) after talking about house hacking publicly and they asked me if it was truly worth it to house hack or if people on the internet were just making it sound like it’s some amazing “new” thing.
I basically told him (or her) that house hacking is worth it if the benefits of house hacking outweigh the amount of work it takes to manage the property.
They followed up with another question asking me about the benefits of house hacking. I answered their question by listing a few benefits that I could think of off the top of my head. But, after thinking about my specific situation and the house hacking benefits I received (and still receive even though I’m done house hacking) – I thought I’d write this post to share what I think are the benefits of house hacking based on my personal experience.
Table of Contents
Rental Income
Collecting rental income is one of the most simple and obvious house hacking benefits. You rent out a portion of the property and charge them monthly for it. Even if you’re not interested in being a full-time landlord and owning a lot of rental property, adding another source of income for not much more work is almost always worth it.
You Save Money
In addition to making money due to the rental income, another house hacking benefit includes saving money.
Some people rent and other people own their own homes. You always have to live somewhere. This means that regardless of your current housing situation, you’re always paying for the upkeep of the property you live in (roof, walls, floors, water pipes, etc..).
If you’re living in an apartment, this upkeep is spread out amongst many units and included in your rent – so this benefit may not apply to you. However, if you own (or aspire to own) property one day (most likely a single-family home), you will be responsible for 100% of the upkeep of that property.
But, if you choose to house hack like I recommend in our House Hacking Guide, you can:
- Own the property
- Live in your own unit as if it’s a single-family home
- Collect rental income (like I mentioned in the section above)
- And split the upkeep of your property with someone else
By splitting the upkeep of your property with someone else (or multiple people depending on how many units are in your property) – you’re able to save half of the money you would normally have to spend on property upkeep if you lived by yourself in a single-family home.
Your Net Worth Increases
This benefit isn’t unique to house hacking but is more impactful due to part of this increase coming from your tenants.
Every time you pay the mortgage on your property, you’re paying down the loan and increasing how much of the property own completely (aka gaining equity). Take a look at the example table below for a visual representation of what gaining equity looks like for a $200,000 house hack.
| Your Ownership % | The Bank’s Ownership % | How Much $$$ You Control | |
| Year 1 | 20% | 80% | $40,000 |
| Year 15 | 50% | 50% | $100,000 |
| Year 30 | 100% | 0% | $200,000 |
This doesn’t even include the increase in net worth that happens if the house appreciates in value.
While the benefits of your net worth increasing aren’t immediately available to use, in the next section, I’m going to talk about how you can use this increased net worth from
You Have Access To More Credit / Financing Opportunities
As you gain more control of the equity in your house hack, you begin to gain access to more financing opportunities.
That equity can be accessed through many different methods, for example:
- Refinance your mortgage and pull some of your equity out.
- Sell your house hack and take your equity as profit from the sale.
- Open up a HELOC (Home Equity Line of Credit) and use your equity like it’s a credit card with a high limit.
This benefit may not seem like much on the surface since it requires you to either sell your property or increase the amount of debt you have. However, if used properly, this increase in financing opportunities can help you take advantage of good deals (other properties, businesses, etc..) that pop up in the world that most people don’t have the money to take advantage of.
This benefit may not be a benefit for someone not interested in future opportunities but, at the same time, could be life-changing for someone that knows how to spot a good deal.
You Gain Property Management Experience
If you choose to manage your property on your own (which I recommend if you’re house hacking) – you’re going to gain property management experience.
For some people, this could actually be more of a negative than a benefit because it requires you to put in some work and time. And, if your time and workload are already maxed out – managing your house hack is just additional stress.
However, as a man of many things, I believe gaining property management experience is a big benefit.
In my opinion, the world and society are fragile. People lose their jobs and income sources every single day. And some people never recover because they’re no longer needed in the area they have experience.
By branching out and expanding your experience and skill set, you improve your value as a human in society. This means that if for some reason your current job becomes obsolete (hello AI and robots) or you lose the passion to continue doing it – you have another fallback option if needed.
That level of safety and confidence allows me to try many different things in life and be comfortable failing at most of them. Because worst case, I can always make a decent living utilizing other areas I have experience in.
It’s Easier To Assist Aging Family
This is a benefit that I never see talked about online. It could be due to this benefit not being directly tied to improving your financial situation but, this is a benefit I love.
If you come from a family or culture that prioritizes family and assisting one another during the aging process, house hacking is amazing.
One of the difficult parts about taking care of aging family members, parents for example, is that there comes a day when they shouldn’t live by themselves, and having them live with you and your family isn’t great either. Most of us will still bring them into our homes because we love them and don’t want them to live out their remaining days in nursing homes.
This can cause a lot of conflicts if you don’t enjoy sharing living spaces with your parents, in-laws, or family members in general. And, most aging family members don’t want to feel like they’re imposing or being a burden.
But house hacking solves that problem. Instead of renting an additional unit to someone you don’t know – you rent it to an aging family member that you’re going to be assisting.
House hacking allows you to live on the same property and assist your aging family members without having to share the same living spaces. You get to maintain the peace in your home and your aging family members get to hold on to their independence and get help when needed.
I know I always mention on this blog how house hacking is one of the best financial decisions I ever made. However, even if house hacking wasn’t profitable for me – I would 100% still do it if for no other reason than this one.
Making money and improving your financial situation is extremely important. But, there are some things to me that more important than money – and being there for my aging family is one of them.
Raising Children Can Be Easier
Similar to the section above, this is another benefit that’s not widely talked about. However, unlike the last section – this section comes with some financial benefits as well.
If you live in America, daycare is ridiculously expensive in most parts of the country. And when it comes to raising children and still working full-time, your only choices are to take them to daycare or take them to a family member’s place (probably their grandparents).
Although taking them to their grandparent’s house (or any family you trust) is perfectly fine, it makes an already difficult task (raising a child) even more difficult. You’ve got to set aside extra time in the morning to pack up everything they’ll need, drop them off, and then still have time to make it to work (if you don’t work remotely). And if you accidentally forget something and have to make another trip back home to get it – an ‘ok’ morning can turn rough real fast.
However, if you were house hacking duplex, for example, and your parents lived next door – not only would life be easier for you but it could be a win-win situation for you and your parents.
Instead of paying thousands of dollars per month in daycare expenses, you could reach an agreement with your parents that allow them to live in a unit of your property for a discount (or free) in exchange for taking care of your child(ren) while you work. They save money on housing expenses and it’s likely that you will save money on daycare.
You’d want to run the numbers but, it’s possible that the savings you experience from not paying for daycare could cover the entire unit that your parents live in, depending on where you live.
And, to add to the financial benefits above – you would no longer have to:
- Get the kids ready for your parent’s house
- Pack up their items and hope you don’t forget something
- Drop them off before work
- Pick them up after work
- And unpack everything
That means additional time and vehicle expense savings.
Everybody’s situation is different, so this benefit may not work for you. But, for the people that can utilize this benefit – it could also make a huge impact on everyone involved; the kids, the parents, and the grandparents.
