Episode 47: Investing: Different Ways to House Hack and Pay Off Your Mortgage

July 15, 2021 Guest User

The Question: What is House hacking?

Do you want someone else to pay your mortgage? Um, yes? There are many different ways to make that happen. Let's dive into the house hacking strategies you can do for your next real estate investment.

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What is house hacking?

House Hacking is a real estate investment strategy. Amy simply explained, "You live in your home, and do you rent part of your home to whoever you want to rent to. And they pay some of your mortgage."

What Are Common Types of House Hacking?

There are many ways to house hack, but here are the most common ones.

Renting Out Room by Room
Garage (Additional Dwelling Unit)
Multi-Family
Income-Suite
Live-In Lfip
Work Provided

Renting out Room by Room

Exactly what it says. Renting a room to someone. One of Lori's very first clients 15 years or so ago was a client who needed a home in Adelanto. He had decided to purchase a home closer to his work, where often coworkers needed a place to stay for the jobs. "He would rent out each room. And then there was like three bathrooms, four bathrooms, one room would always get more money. And then the kitchen, everyone had full access to the kitchen and those rules and regs, and he just did this over and over and over again," said Lori.

And by the end of the month, he was netting more than his mortgage expense.

Tune in to Episode 36 House Hacking Your Way to Financial Peace to learn how you can use your property as an Airbnb rental.

Garage (ADU, JADU)

An Additional Dwelling Unit or Junior Additional Dwelling Unit is a tiny house separate from the main house. It could be in a basement, garage, or back guest house.
It’s a very inexpensive way to add square footage to your property.

Tune in to Episode 16: Is Renting or Buying Right for You? (Part 2) for more on ADU's. Stay tuned for an episode on this topic.

Multi-Family Triplex

Multi-Family

A multifamily is like an apartment building connected together. Two units, three units, or four units, etc. all connected together.

It’s multiple families living in their own spaces.

Income Suite

It's a live-work situation. A primary residence and attached to it is additional office space; some type of additional space that creates income towards you.

Live-in Flip

"So you live in the property, you buy it at a great price, you renovate and you put it back together and you make it look fantastic. You live in it for two years. You make the move because in two years, then there are no potential tax implications. And you can move forward because it was considered your primary residence."

A 1031 Exchange is also considered a live-in flip. To learn more about 1031 Exchange listen to the last episode, 046 Investing: Using Taxes to Grow Your Portfolio Using the 1031 Exchange with Dave Foster

Work-provided

So that's just going to be a property that you're going to generate multiple types of tenants who work in there.

Lori mentioned another realtor, “She bought a big, huge building where her Keller-Williams office is. And she's got a bunch of office suites there and guess what all of them are rented out and she makes us surplus in money.

That's so cool. Plus pays her mortgage.”