House Hacking Ideas
Let’s take a look at some of the most common ways a house hacker earns their rental income.
Buy A Multifamily Home
Most areas offer single-family homes since attached housing has become less popular. However, many savvy real estate investors prefer starting their portfolio with a multifamily home. These types of homes can give you the opportunity to live on-site while not having to share a bathroom with your tenant.
Choosing to go this route allows you to maintain your own space and privacy while still gaining rental income from your home. The downside is that you’ll likely need to commit to maintaining a long-term rental with all that extra space.
Offer Rooms For Short-Term Rentals
If you don’t own a multifamily home and you’re not sure you like the idea of committing to a long-term rental of any part of your current home, you can explore real estate investing by offering up a spare room on a short-term rental platform like Airbnb or Vrbo. Women property owners interested in renting only to other women for safety reasons might be interested in Golightly, an invitation-only site that vets its gender-exclusive membership.
For those who are currently thinking of buying a multifamily property for short-term rental purposes, there is financing available for Airbnb rentals. Make sure to look up short-term rental laws in the state and locality where the property is located, and if the home is part of a homeowners association, make sure you’re thoroughly familiar with their rules before buying. Many HOAs flatly prohibit both short- and long-term rentals.
Find Housemates
Sharing a home with a housemate is an easy way to hack a house. Not only will you receive a monthly rent payment, you’ll also be able to split your utilities and maintenance costs.
There’s undoubtedly a cost in terms of privacy and personal space lost when renting out your home while you’re living in it. However, the financial pluses of sharing household expenses in addition to rent may outweigh any privacy considerations. Your house may be configured in such a way that both you and your tenant have plenty of private space. Remember: As the owner, you’ll want to consider a roommate contract to enforce household rules.
The key to finding a good housemate is lifestyle compatibility. You should carefully vet anyone you’re thinking of renting to, particularly if you’ll be sharing common spaces and responsibilities around the house.
Build An Accessory Dwelling Unit On Your Property
You can also hack your house by building an accessory dwelling unit (ADU). These separate living units will sometimes come with certain homes, presenting you with an opportunity to rent them out.
Homeowners with a detached garage or a basem*nt with a separate entrance might want to consider converting those spaces into a rental unit for short- or long-term rentals, or moving into the unit themselves and renting out the main house.
This might be particularly appealing for parents whose children need a larger home than they do. The parents might build or refurbish an existing accessory dwelling and move into it while their child and their family move into the main home. Parents who are retired can travel frequently without having to worry about who will take care of their home, and the child can offer the ADU as a short-term rental while the parents are away.
Provide Rental Space On Your Property
If you have a bit of acreage, you can convert that space into rental income. For example, you can rent garage or barn space to folks who need a place to store their vintage cars or boats for the winter.
You could allow someone to park their RV or mobile home on your property, or you could move into an RV on your property and rent out your home. Make sure to check your local zoning regulations or HOA rules to see if there are restrictions on renting out use of your property.
Do A Live-In Flip
House flippers hack houses quite often. They’ll buy older homes that need repairs but have a lot of upside, based on comparables in the area. Consider this example: Houses in a particular neighborhood routinely sell for $250,000, but there’s a house that has fallen into disrepair – you can buy it for $180,000 and fix it up for $20,000. (You should know that these numbers were chosen for simplicity, and not because the average home in disrepair can be repaired for $20,000. You should plan on it costing far more.)
Say it’s going to take 6 months to complete your repairs. You can live in the house (assuming it’s at least livable) while you make the repairs. You’ll be paying the mortgage during that time anyway. Then, in 6 months, if all goes as planned, you’ll walk away with a $50,000 profit – and you’ll have saved 6 months of rent. On to the next house!
