Whether you are looking for new ways to generate income to help afford your monthly expenses or trying to pay down your mortgage, house hacking is a concept worth exploring. Using your home wisely can help you make money, lower expenses, and even build equity.

What is House Hacking?

Traditionally, house hacking was a real estate investment strategy where the investor bought a multi-family unit, and, while living in one unit, rented out the others. The income from other units may be enough to cover the mortgage and even maintenance, repairs, and additional costs. The owner can maintain the property and build equity through this strategy. House hacking has evolved to include a variety of other methods to create passive income for property owners.

Is House Hacking Legal?

House hacking is practiced worldwide, but it’s essential to understand how any laws and zoning ordinances may affect your ideas. For instance, some cities do not allow short-term rentals, so you may have to consider alternatives. Researching all local laws or HOA ordinances that govern your property is imperative.

Additionally, you will need to comply with state and federal housing laws, including the Fair Housing Act, which prohibits discrimination in housing based on race, color, sex, national origin, religion, familial status, or disability.
You may also wish to speak to your attorney, tax specialist, or accountant concerning contracts, income, and tax liabilities.

House Hacking Strategies

After understanding the legal and financial implications of house hacking, you can develop your strategy. There are several traditional and modern ways to house hack and generate income.

Invest in a multi-family unit

Multi-family units are apartments, duplexes, triplexes, or other structures that accommodate multiple families in separate units. You can buy the entire building and live in one unit, giving you personal space but easy access to your building as the landlord. If you generate enough income from tenants, it may cover your housing-related expenses allowing you to live for free.

Rent out a portion of your home

You may have to consider giving up privacy, but renting out unused bedrooms or your basement is a viable strategy if you don’t mind sharing your home. If there will be shared spaces, such as a bathroom, living area, or kitchen, plan on rules that will make it easier to adjust to having roommates. Consider renting out rooms occasionally or renting your entire house, such as when you travel, on websites like VRBO or Airbnb. This might be ideal if you live in a location hosting major concerts or sporting events.

Rent out storage space

Do you have prime driveway space in an area with limited parking? You may have a garage or storage building that is sitting empty. Someone nearby may need a space to park a vehicle, a boat or to store personal belongings. If your price is more affordable than traditional storage units, you can approve of what is being stored on your property and begin to generate income on otherwise wasted space.

Rent out your RV or camper

If you own an RV or camper, you can rent it out to others for traveling. Various websites similar to Airbnb are designed for recreational vehicles such as RVs, pop-ups, Class C Motorhomes, Class A Motorhomes, travel trailers, camper vans, and toy haulers. With a secure payment system, you only have to create a solid advertisement, and the website puts your RV in front of potential renters.

Is House Hacking Worth It?

You will need to consider the pros and cons of house hacking for your situation and weigh them against the income you are likely to generate. Every situation will be unique, so it’s essential to consider your circumstances before diving in. However, house hacking is a common way to create passive income and reduce living costs.