House Hacking Strategy: How to Make Money in the Housing Market
A lot of people get into the thing called “house hacking”. What is that? House hacking is all about turning your home into a money-making tool, often through renting out part of the space while you live there. The goal is to offset your living costs. There’s no one-size-fits-all approach, but a lot of people womder whether there are some popular house hacking strategies to find your way into this way of making money.
Our Atlanta property services oversee investors in all parts of their journey. And many of them are diving into a particular house hacking strategy, possibly to build momentum and get the ball rolling on a larger portfolio. Understanding many of those beginning techniques can be a great way to learn in so many ways. Let’s get into a lot of these ways of house hacking to see if any stand out to you on your journey.
Table of Contents
- 1 – Buy a Multi-Unit Property and Live in One Unit
- 2 – Rent Out Spare Bedrooms in a Single-Family Home
- 3 – Turn the Basement or Garage into a Rental Space
- 4 – Try Short-Term Rentals as a House Hacking Strategy
- 5 – House Hack with an Accessory Dwelling Unit (ADU)
- 6 – Buy a Fixer-Upper and Rent Out After Renovating
- 7 – Use Rent-By-the-Room for a House Hacking Strategy
- 8 – Live in the Property for a Year, Then Fully Rent It Out
- 9 – Hire a Property Manager!
1 – Buy a Multi-Unit Property and Live in One Unit
One of the classic house hacking moves is buying a duplex, triplex, or fourplex and living in one of the units while renting out the others. This setup lets you live on-site while collecting rent from your neighbors. The extra units help offset your mortgage, and in some cases, cover it entirely. Plus, residential loans (like FHA loans) can still apply if the property has four units or fewer.
2 – Rent Out Spare Bedrooms in a Single-Family Home
2 – Rent Out Spare Bedrooms in a Single-Family HomeIf buying a multi-unit building feels overwhelming, another approach is to rent out extra bedrooms in a house. You get the benefits of house hacking without taking on a bigger property. This works well for people who don’t mind having roommates and want to start small. The rent from just one or two bedrooms can make a noticeable dent in your monthly mortgage payment.
3 – Turn the Basement or Garage into a Rental Space
Got an unfinished basement or a garage that’s not getting much use? With a little investment in finishing or remodeling, you can turn that space into a separate rental unit. This option helps keep some separation between you and your tenants, giving both parties a little more privacy while still providing rental income.
4 – Try Short-Term Rentals as a House Hacking Strategy
4 – Try Short-Term Rentals as a House Hacking StrategyInstead of a full-time tenant, some house hackers use their extra space for short-term rentals. Renting out a spare room or basement suite on Airbnb or another short-term platform can bring in more money per night compared to a long-term lease. It also gives you the flexibility to block off dates when you want the space for yourself. Just be sure to check local zoning and rental rules first… short-term rentals aren’t allowed everywhere.
5 – House Hack with an Accessory Dwelling Unit (ADU)
If you’ve got the space and zoning allows it, building a small Accessory Dwelling Unit (like a backyard cottage or in-law suite) can be another great way to house hack. You live in the main house and rent out the ADU, or flip it and live in the smaller space while renting out the larger home for more income. ADUs are becoming more popular as cities adjust zoning to encourage affordable housing.
6 – Buy a Fixer-Upper and Rent Out After Renovating
For people who aren’t afraid of a little elbow grease, buying a fixer-upper is another strategy. Live in the property while making improvements, then rent out part (or all) of it once it’s ready. The bonus here is building instant equity through renovations, while also setting yourself up for rental income.
7 – Use Rent-By-the-Room for a House Hacking Strategy
Instead of renting out to one single tenant or household, consider renting each bedroom separately. This strategy (often called rent-by-the-room) can bring in more total rent each month, especially in college towns or cities with high demand for affordable room rentals. It does mean dealing with more tenants at once, but the income can make it worthwhile.
8 – Live in the Property for a Year, Then Fully Rent It Out
Some people use house hacking as a stepping stone. They buy a property with favorable owner-occupied loan terms (like FHA or VA loans), live there for the required year, and then move out and turn the whole property into a rental. This approach lets you lock in lower down payments and interest rates while setting yourself up for future rental income after you move on.
Hire a Property Manager!
Doing any kind of house hacking strategy can be a smart way to make money from empty space. Oftentimes it is just sitting there, so you might as well make use of it. And since there is such a shortage of affordable places to live, this is a great opportunity to take advantage of that demand, right? At the same time, you need to remember that you are responsible for a person’s living arrangement. That comes with huge legal responsibilities. At a certain point, going down the rental property becomes a lot to deal with… that’s why it may be a smart idea to leave things to the professionals.
Professional property managers can take care of so much so you don’t have to worry about it… from legal compliance to screening tenants and conducting inspections… there is so much you probably just don’t want to deal with. Ready to explore how property managers can support you on your rental journey? Contact Bay Property Management Group today to learn more! We provide property management in Sandy Springs and Atlanta areas, as well as Texas, Massachusetts, Maryland, and many other locations.
