House Hacking: Earn Money From your Primary Residence

Purchasing a property to owner-occupy is often referred to as “house hacking.” This means that you live in part of the property and rent out rooms or apartments in the rest of the property, thus helping to pay down your mortgage payments. If you do it well, you have the opportunity to live for free while owning an investment property. House hacking is what started my real estate investing journey and the reason that I am a realtor today.

Who wouldn't want to earn money just from living in their house?

I highly recommend the book The House Hacking Strategy: How to Use Your Home to Achieve Financial Freedom  by Craig Durlep. This book breaks down the steps to help you feel confident about looking for and purchasing a multifamily home to owner-occupy.

There are multiple options for house hacking. You can live in a single family home and rent out bedrooms, you can live in a single family home and rent out a guest house on the property, you can live in a multifamily home and rent out the other apartments.

The Capital District has plenty of incredible options for house hacking. Mechanicville, NY, Albany, NY, and Troy, NY have plenty of multifamily properties which would afford you the opportunity to live in one unit and rent out the others. In Saratoga Springs, NY, you could live in one unit and use the second as a short term rental, or even rent out your entire home during track season while you stay with family, friends, or take a little vacation. There are plenty of ways to get creative about your house hacking strategy and I would love to help you figure out what best suits your goals!

Whatever you choose, it’s important to understand your goals and to run your numbers. For example:

1. Will you be living on your own, or do you need to take children into consideration?

2. Do you want rent to cover your entire mortgage, or just a portion?

3. How much cash flow (or profit after all expenses) do you want when you move out?

There is nothing I love more than sitting with a client, helping them to clarify their goals, and then helping them run through the numbers and options until they find the fit that is perfect for them.

FHA loans are often recommended for house-hacking. An FHA loan requires a smaller down payment (3.5%), so that you can purchase a property with less money out of pocket. The catch is that you must live in the property for at least 2 years and you cannot have more than one FHA loan at any given time.

Many investors purchase a new multifamily property every two years with FHA loans, making it a great way to grow your portfolio, if that's one of your goals. The caveat is that you have to refinance out of your FHA loan and move every two years. A great strategy for some, but not for others. Depending on your life and your goals, an FHA loan may or may not be your best option. That’s why it’s so important to carefully examine and define your goals prior to investing in any property.

So far, I have loved house hacking. My tenants are wonderful people, I love my unit and the property, and best of all, I own and live in a beautiful home for free. I love watching the rent money come in each month.

This strategy is not for everyone, but if it sounds like a good fit for you, your life, and your goals, let's get in touch and find your perfect house hack!