House Hacking: Living for Free?
A strategy where you buy a multi-unit property, live in one unit, and rent out the others to cover your mortgage.
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By sarah-jenkins
Financial Analyst
For many young investors, “House Hacking” is the gateway to real estate wealth. It solves the biggest problem of investing: housing is usually your biggest expense.
How It Works
- The Loan: You use an owner-occupant loan (like an FHA loan) which allows for a low down payment (3.5%).
- The Property: You buy a duplex, triplex, or fourplex.
- The Math: You live in Unit A. You rent out Units B, C, and D. The rental income from the other units covers the mortgage, taxes, and insurance.
The Benefit
You effectively eliminate your rent payment. If you were paying $1,500/month in rent, you are now saving $18,000 a year. Plus, you are building equity in a property and benefiting from appreciation.
The Sacrifice
You are a landlord. You live next to your tenants. If the toilet breaks at midnight, you are the one who has to deal with it. It requires a willingness to trade privacy and convenience for financial acceleration.