The House Hacking Guide – How to “Hack” Your Housing, Live For Free, & Start Investing in Real Estate

With housing prices through the roof and rising mortgage rates, it may be time to get creative if you want to buy a house and start to build long term wealth.  One creative way is to HOUSE HACK.

What is House Hacking?

House hacking is when you buy a small multi-unit real estate property, live in one unit, and rent out the others.  The property for house hacking could be a duplex, a triplex, a fourplex, a single family house, or even other creative property uses like garage apartments or mobile homes, which I’ll cover later. The income from the rental units can pay for some or all or expenses while you live there. Then once you move out, the property could also become a great long-term rental investment.

House hacking is the ideal housing choice for young homeowners who are willing to take the extra effort to learn how. If you start with house hacking as a young adult instead of the normal housing options (renting or buying a house), you can build much more wealth over the years.

The Basics of Running House Hack Numbers

As you can see from my real life example, one of the primary goals will be to reduce or eliminate your housing payment. Fourplexes typically have the best numbers because they have 3 tenants that help to pay the bills. But other properties like duplexes and triplexes can do well too.

In addition to your monthly cash flow numbers, you’ll also want to pay attention to the price you pay.  While it’s not always necessary to get a deal far below value for it to make sense (although that’s always better!), you also don’t want to overpay if you can help it.

A knowledgeable local real estate agent can help you estimate the value.  CONTACT me today for help!

You can also download the google spreadsheet that real estate investor coach Carson provides HERE.

Calculating Your Mortgage Payment

This is a step you don’t have to do on your own. Your banker or mortgage broker can easily help you. But if you’re reading this article, you’re an empowered, DYI type who likes to understand it for yourself (that’s me too!). So, let’s see how simple it is to calculate a mortgage payment on your own.

  1. Estimate the purchase price of the property
  2. Estimate the down payment
  3. Subtract the down payment from the purchase price to get your loan amount (aka principal)
  4. Go to this online mortgage calculator (my favorite online calculator for years).
  5. Enter the loan amount (principal), interest rate, and the number of payments (leave at 360).  Leave the fields for the payment amount and balloon payment blank, and leave payments per year at 12.
  6. Click “calculate.”