House Hacking

House hacking turns the place you live into a partial income property. You buy a home with rentable space, a duplex, triplex, or fourplex, or a single-family house with spare bedrooms or a basement unit, live in one part, and rent the rest. Because you occupy the property, you can often finance it with a low-down-payment owner-occupant loan (FHA loans allow two-to-four-unit purchases with the owner living in one unit), rather than the larger down payment a pure investment property requires.

The appeal is a lower effective housing cost. After a vacancy allowance and operating costs, the net rent is subtracted from your mortgage payment: the rent might cover part, most, or all of it, and in strong cases it produces positive cash flow. The math depends on the space staying rented, so a vacancy allowance and a cash reserve matter. When you later move out and rent your own unit too, the property becomes a conventional rental.