What is house hacking and how can you benefit from it?

Estimated read time: 4-5 minutes

Want to earn a little extra income but don’t have time for an active side hustle? If you’re a homeowner (or prospective homeowner), there’s a solution — it’s called “house hacking.”

So, the basics. What is house hacking? It’s simply a catchy term (everyone loves “hacks” and alliteration) that means renting out your primary residence in some way to generate income. It’s a concept that’s been around for a while, but for good reason: it’s an easy-ish way to earn some cash — which is especially valuable when times get tough.

Before diving deeper into the topic — it’s going to be exciting stuff, promise — a quick disclaimer: make sure to check with the HOA and/or local authorities to acquaint yourself with the house-hacking rules for your property before getting started.

The benefits of house hacking

Why house-hack? Money. Cash. Mula. Income. Dough.

In all seriousness, house hacking is an efficient and relatively easy way to earn all of the things above. You’re already paying for your mortgage — might as well get more out of it.

It’s also a fantastic way to dip your toes in the world of real estate investing. It doesn’t require extra capital like purchasing a separate rental property would, and with your tenant(s) being literally next door, it’s easy to address any issues or questions immediately. You can learn the ins and outs of being a landlord and figure out if more serious real estate investing would be your jam or not.

How do you house-hack?

As long as you follow local rules and regulations, house-hacking opportunities are virtually endless. Here are some of the most popular ways people have leveraged their property for income.

Renting out a room

If your lifestyle allows it (i.e., you don’t mind sharing living spaces with someone else), renting out a room might be the most accessible house-hacking option since all you need is an extra room.

Renting out a basement

Basement gym not seeing a lot of use? Understandable. Working out is hard. Rent it out instead. Even without converting it into a full apartment, you can still earn some income while maintaining more privacy than if you rented out a room.

Airbnb

If you’re on the road a lot and leaving your home unoccupied, why not rent it out when you’re gone? According to realhomes.com, there are certain styles that profit more on Airbnb than others. For example, the ultra-trendy cottagecore featuring natural wood elements and soft colors, tends to rent for a higher price. Of course, that depends on the size of the space, other amenities, etc.

In-law apartments

In-law apartments aren’t just for in-laws! In fact, they’re officially referred to as accessory dwelling units (ADUs), which are defined as a full apartment (or house) located on your property, Investopedia says. This can be anything from a tiny home in your backyard to a basement apartment. Building an ADU will cost you more than some other house-hacking options, but can recoup that by charging more in rent — plus your property value could increase.

Multi-family home

A multi-family home is a building that contains two (duplex) to four (quadruplex) separate living units, according to Bankrate. If you own one, you’re almost certainly already renting out the other units. But if you’re in the market for a home and have the capital, they’re certainly worth exploring — especially if you work with reputable realtors like those from The Stern Team to find the right one.

Renting storage

If you don’t want other people in your home, you can still house-hack by renting out unused storage space. For instance, you could rent out your garage and earn on average $4,000/year, according to Stache. They also report that RV pads can net you $1,500+/year and just your driveway $1,000+/year. The best part? You hardly have to do any work.

Screen your tenant(s) well

Depending on your tenant(s), your house hacking can either be delightful or catastrophic, so it is crucial you select them carefully. Don’t be afraid to take your time to find the right fit, and make sure you screen them well. According to LiveAbout.com, you should run background checks, credit checks and income checks can help you make a good decision — and ideally the tenant(s) would be recommended by someone you trust.

Start with the people who know real estate best

Are you currently looking for a home and interested in house-hacking opportunities? Get in touch with The Stern Team to find the perfect opportunity. The Stern Team is a real estate team servicing the Wasatch Front uniquely focused helping their clients find their perfect home. With a 5-star Google rating on over 750 reviews, you know you can trust the experts at The Stern Team.

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