Just, what, exactly, is House Hacking?
It’s definitely not taking a sledge hammer to that one wall in your kitchen, telling yourself you’re designing a ‘more open layout.’
No, Chip Gaines in disguise, house hacking is a phrase for the strategy of generating income from your residence capable of offsetting your monthly housing expenses. This is turning the creepy basement into an apartment and renting it. House hacking, done well, turns the nightmare of housing expenses into a vacation daydream- Taos, Puerto Rico, Disneyland?
You want to become a ‘house hacker.’ What’s the best way to start? Let’s run down some key features to look for, if not in your own current property, ideas for your next.
Multi-family lots or properties
This could be what we know as a duplex, but it also expands to multiple single-family homes on one lot. Often, these properties are purchased as a primary residence for one single family, while the rest of the residence(s) are rented out. That is done on either a monthly basis or through a service like Airbnb, generating extra income. This is probably the easiest way to house hack and make income from your housing.
Modifying Your Existing Home
You may have never finished out your basement or that weird blank space over your garage, hesitant that that relative might get too inclined to take up semi-permanent residence if you had a guest room, er, home, with all the amenities. It does, however, bear some rethinking. Homes with a finished basement, finished upstairs loft with separate entry, or garage apartment can all be turned into income-generating housing. As long as you, the owner, are already living in one of the existing units, the property is still considered a “primary residence.” You can even use your home equity towards the remodeling, since you are increasing your home’s resale value. The secondary dwelling then becomes an income source, rather than wasted space.
Accessory or Additional Housing Units (ADUs)
You might have heard these referred to as Granny pods, in-law suites, or mother-in-law cottages, but the quasi-official name for additional structures for living on your same property is an Accessory or Additional Housing Unit. The ADU is then rented out for income, or, if you are one of the 23 million people who are caring for an elderly parent, they can also be outfitted with safety measures. An ADU provides independent assisted living, outside of a nursing home while giving your elder the ability to still live on their own.
Other options for house hacking could be renting out additional unused bedrooms in your home, purchasing a second home or adding an ADU near public transportation for commuters.
Next up would be maximizing your current property. You can do this several ways. First, you can invest in a multi-family property. Then, if you are living in one of the residences, and you have additional rooms, you sublet those rooms as well, either short or long term. A short term rental would be through a service like Airbnb, especially if you are in a high tourism area or near a popular event location. You can use spare bedrooms, your ADU, or even that finished basement for this. You then utilize this income, paying off your own mortgage early. You could even continue to purchase homes, living in them for a year before purchasing another. You rent out the previous property and repeat the cycle. Suddenly, you own not one property, but many.
Have a question about how to get started on your own ADU house hacking journey?? Click the link to schedule an appointment or call us, we’d love to help!