Housing is one of our biggest expenses. Ever.

Whether you rent a home or buy it via a mortgage, you are paying hundreds of thousands or millions of dollars for a place to live and be safe.

But what if we told you it is possible to live in a comfortable home and do it for free while investing in real estate.

This might sound impossible, but it can be done without any illegal activity involved.

Owner-Occupied Multifamily Properties

The concept of house hacking is pretty easy to understand. You need to buy a small multi-family property like a duplex or a triplex, occupy one unit and rent out the rest.

You can then pay for the mortgage of the property with the rents earned from the leased units. This allows you to own a profitable property, live it in, gain secondary income, without paying the mortgage out of your pocket.

Such properties exist in all markets and at every good price points.

You don’t need to invest millions of dollars on a large multi-family apartment building. It is just a matter of finding something small enough for three or four tenants.

Can You Buy A Home?

Before you consider house hacking, it is important to determine whether you’re ready to buy a home. There are several factors to consider before attempting this hack:

Are You Able To Buy A House? – Do you have a good credit score, some savings, and a relatively steady job? All of the conditions needed to buy a home still apply because you won't be able to get a mortgage if you're not a suitable candidate.

Are You Ready For House Ownership?– Even if you have the financial resources, you might not be ready to own a property. This is a big responsibility and requires a lot of effort. You will need to keep the property in good condition, pay taxes and fees, repair any problems that crop up, etc.

Are You Ready For Tenants?– Tenants bring a whole host of problems with them. You will have to find the best ones, ensure they don’t damage your property, follow up with them for rent, and manage their complaints.

House hacking might improve your financial stability and allow you to build wealth, but it is also a great responsibility that requires both effort and patience.

House Hacking In Your 20s

It is a good idea to start young when it comes to building wealth and making investments.

House hacking is a great option for young professionals with a relatively stable income.  Check out our new best seller on Amazon HERE for more details.

Instead of investing in your first home, invest in a multi-family unit that you can rent out.

This will give you better financial stability down the line with the added benefit of living in your own home. The logic behind this solution is pretty straightforward and here’s an example of how it works in real life:

You buy a property with three spare units. You are living in one unit and can rent out the other three.

You charge a rent of around $600 per month on every unit, which gives you $1,800 of additional money every month.

Your mortgage, taxes, utility payments, etc, work out to $1,200 to $1,500 per month.

You still have $300 to $600 in your pocket and are getting paid to live there.

You can eventually buy a new home and move out of the 4th unit. That will provide you more rental income and prove to be a profitable investment over time.

House Hack Ideas – What to Keep In Mind

1. Choose The Property Carefully

Consider what kind of profits you might gain before you invest in a property. Make sure you choose a home with four units or less because different laws apply to multi-family properties with five or more units.

They are commercial real estate units and might not be a profitable venture for you.

2. Choose A Property That Can Provide Cash Flow

You need a property that doesn’t just cover all of your bills and mortgage, but also ensures you have some money in the bank.

The best way to do this is to consider all of the rent you will get and divide it by half.

You can use one half to pay all your property-related expenses, pay the mortgage out of the other half and keep the remaining money in the bank.

Is House Hacking Worth It?

Every deal has its pros and cons. You need to consider them carefully before making such a significant financial commitment. If you don’t plan this carefully, you’ll be stuck with a large white elephant and will have to pay the entire mortgage out of the pocket.

House hacking is worth it if you get good tenants and profits. It will provide long-term financial security and keep you debt-free.

However, you will need to manage finances properly, invest time to find the best tenants, and make sure all the tenants pay their rent on time.

If you consider the pros and cons of house hacking carefully, this can prove to be a very profitable venture for you.