House hacking means that you rent out rooms or units of a property you live at to help pay bills or live for free.
A lot of people believe that in order to house hack, you have to own the home you’re living in. That’s not true – you can house hack a property that you’re renting (but you have to check what your lease agreement says about subleasing).
Owning the property that you’re living in and planning to house hack comes with more benefits and fewer obstacles in your way. For example, instead of having to contact your landlord for repairs and wait on them to take action (which could take long enough to piss off the people you’re renting to) – as the owner, you’ll be able to just get it done.
So, in this post, we’re going to talk about what house hacking means in the context of different properties and situations.
Table of Contents
What house hacking means if you’re renting
If you’re renting a property from a landlord, house hacking means that you’ll have to rent out additional individual bedrooms.
The living situation is very similar to having roommates. However, there are a few differences:
- Your tenants pay you and then you pay the landlord
- Your tenants report problems and request repairs from you instead of your landlord
- If your tenant destroys something in the property, you’re responsible
House hacking when you’re renting is possible but I don’t recommend it. You basically become the middle-man for your tenants but bear all the responsibility. You also have to read your lease carefully to make sure you’re not breaking any rules.
Most of the landlords I know personally, don’t allow tenants to sublease. But, it doesn’t hurt to look at your lease and see if your situation is different.
What house hacking means if you own a single-family home
If you own a single-family home, house hacking means that you’ll have to rent out additional areas (like a basement) or individual bedrooms.
The living situation is very similar to what house hacking means if you’re renting, but there are a few differences:
- You become the landlord over the entire property
- You get tax benefits to help offset the rental income
- Since you own the property, you can maximize the rental income
- With the extra income, you can pay down your loan faster or increase the home via renovations
- If you decide to move out of the house hack, you can rent your room or the entire single-family home to one family.
This is the bare minimum type of situation I’d recommend. You get the benefits of owning the property while reducing your expenses. And, this situation allows you to save for the situation I’d recommend – which we’re going to talk about next.
What house hacking means if you own a multifamily home
If you own a multifamily home, house hacking means that you’ll have to rent out any additional units.
This living situation is also similar to what house hacking means if you own a single-family home, but comes with a few extra benefits:
- You get to live alone in your private unit (so no sharing space)
- The tenants you can attract will be tenants looking for a more long-term solution than tenants living in a roommate-style setup.
- When you move out of your house hack, you can keep everything the same with your tenants and only rent out the unit you were living in.
- Depending on the price of the property, more units can help increase how profitable house hacking is.
I purchased a duplex (two-family property) when I was house hacking and I recommend all my friends or anyone interested in house hacking to start with at least a duplex. It’s such a more comfortable experience compared to house hacking a single-family home. If you’ve ever lived with roommates or several different people (with several different personalities) – you know some of the problems that can arise when sharing space.
Conclusion
The 3 sections above should help you understand what house hacking means in each different situation. I
f you’re interested in house hacking and trying to learn as much as you can, I’d recommend you start your research with my house hacking guide. There’s a lot of information in that guide but it’s organized. This should help shorten the amount of time it takes you to learn a lot about house hacking in general.
If you’d like to read a little bit about my story, check out the following post:
Both of the posts above have some information regarding how I got started with house hacking and what I did afterwards,
