WHAT IS HOUSE HACKING?

As you know if you’ve seen a property listing recently, home prices are higher than ever. According to Realtor, the Madison, Wisconsin market is up 5.9% year over year.

These high home prices give current homeowners a big opportunity to make extra income. This opportunity is called “house hacking.”

What is house hacking?

In the simplest terms, house hacking is when you rent out a portion of the property you own. It’s a popular technique, because for most people, mortgage payments are the biggest expense they have.

Imagine being able to pay most of your mortgage with the income from your tenant’s rent. What would you do with that money back in your pocket? Would you save more? Travel? Invest in more property? The sky’s the limit when you make house hacking work for you.

Is now a good time to try it?

If you’re interested in using house hacking to improve your finances, it’s a great time to get started. Loan interest rates are rising after historic lows (along with inflation), which means that more people might choose to rent over buying at high interest rates. That means more renters in the market for you!

How can I house hack?

There are many house hacking strategies to consider, but we’ll cover the most common ones.

• Buy a multi-family home: Many older neighborhoods have multi-family homes for sale, in which you can live separately from your tenants in the same building. This is a good option for people who want as much privacy as possible, since multi-family dwellings often have entirely isolated units like apartment buildings (separate kitchens, bathrooms, and entrances, etc.).
• Offer a room for rent: Not sure if owning a rental property is for you? Rocket Mortgage suggests starting by renting just one bedroom for a short period of time on Airbnb or other popular rental websites. If it doesn’t work out for you, it’s easy to take your listing down.
• Get roommates: This is the best option for house hackers who don’t mind sharing space with others long-term, because there’s an added financial perk if you’re willing to sacrifice your privacy. In addition to getting rent money from your roommates, you can split utility payments with them.

Want to explore other house hacking strategies like accessory dwelling units or flipping? Need help customizing a house hacking strategy? Our realtors are experts in investment property strategies and more! Call us at (608) 957-2683 today.