What is house hacking!?
“House hacking” is becoming increasingly popular among millennials and Gen Z for a very good reason… home prices continue to outpace income. If you’re like most Americans though, home ownership is still highly desirable and one of the biggest milestones in life.
No, house hacking isn’t breaking into homes, it’s finding creative solutions to afford a home. While it initially began as strategies around buying and owning multi-family homes (homes with multiple units), it has quickly evolved into even more strategies like rentvesting, co-buying and ADUs. PIcking a house hacking strategy depending on your goals, budget, and priorities. We’ll help you determine which one is right for you!
Primary multi-family home 🏘️
What it is
- Unlike single-family homes these are multi-unit homes (2-4 units) where you live in one unit and rent out the others.
Why it helps affordability
- Owners can use the rent from other units to offset their monthly mortgage and monthly expenses.
- Multi-family homes are typically 20-30% cheaper per square foot than single-family homes, giving them great value.
- Fannie Mae lets buyers put as little as 5% down now!
- Rent from other units is counted as income when lenders underwrite your loan, meaning you can afford more home.
Who should consider this strategy
- If you live in an expensive market, rental income from the others units will dramatically lower your monthly mortgage and expenses.
- If you have a down payment, but are worried about the monthly mortgage payment.
- Buyers who prioritize flexibility. You can use other units for family, friends, parents, nannies, etc.
- Multigenerational families.
Co-buying 👯
What it is
- When you buy a home with friends or family members.
Why it helps affordability
- Split the down payment and upfront costs.
- Split the monthly mortgage and expenses.
- Split responsibilities.
- Afford more home.
- Helps non-W2 employees team up with W2 employees for better lending terms.
- Pair co-buying with multi-family homes or rentvesting to make things even more affordable!
Who should consider this strategy
- If saving a full down payment will take a long time.
- Parents and children.
- If you are self employed.
Rentvesting 🤑
What it is
- When you continue renting in the city you live and buy an investment home in a more affordable city.
Why it helps affordability
- Buying in a more affordable city than the one you live helps reduce your upfront down payment and monthly mortgage and expenses.
- Start building equity earlier!
- Rental revenue offsets your monthly mortgage and expenses while you let your equity grow.
Who should consider this strategy
- Buyers with lower down payment available.
- If you can’t afford to buy in the current city you live in.
- Buyers that want a hands-off experience.
ADU’s 🛋️
What it is
Accessory dwelling units are detached, typically pre-fabricated living units placed on your property.
Why it helps affordability
- ADUs bring in extra rental revenue that offsets your monthly mortgage payment and monthly expenses.
- Add more units over time using equity you build in your home.
Who should consider this strategy
- Buyers who want to add rental revenue in the future.
- Buyers who want flexibility and options.
Want an expert to help you decide which house hacking strategy is for you?
