House Hacking Lets You Become a Homeowner and Landlord on the Same Day and Here Is How It Works

The Strategy That Solves Two Problems at Once

Have you ever felt torn between wanting to buy a house and knowing you should also be investing and not being sure where your money should go first? House hacking solves that problem by making both happen at the same time.

You have probably heard the term. But here is what it actually means and why it works so well in the current market.

What House Hacking Actually Is

House hacking means buying a multi-unit property. A duplex, a triplex, or a quadplex. You live in one unit and rent out the others. That is the whole concept. The execution is where it gets genuinely powerful.

Why the Numbers Work So Much Better Than a Standard Investment Property

If you buy a property specifically as an investment the financing terms reflect that. You are putting at least 20 percent down and you are getting a higher interest rate because lenders treat investment properties as higher risk.

If you buy a property as your primary residence the financing terms are completely different. You get the best interest rate available and you can put as little as 3 to 5 percent down.

Here is where the hack comes in. When you buy a multi-unit property and live in one of the units the entire property qualifies as your primary residence for mortgage purposes. You get primary residence rates. You get primary residence down payment requirements. And on the same day you close you become both a homeowner and a landlord investor simultaneously.

As Brittney Fleischman explains this is the system working for you for a change rather than against you.

The Qualification Concern and Why It Is Not a Problem

A natural concern with multi-unit properties is that they cost more than single family homes which could make qualifying harder. That concern has a solution built directly into the loan programs designed for this strategy.

With a multi-unit property you can use projected future rental income from the units you will not be occupying to help you qualify for the loan. The rental income from the other units offsets the higher purchase price in the qualification calculation and can make a property that might have seemed out of reach on your income alone entirely achievable when the rental income is factored in.

What to Do Next

If you have a multi-unit property you are interested in or if you want to understand what your numbers would look like under a house hacking scenario give Brittney Fleischman a call or a text. She will run the numbers on your specific situation and show you how the power of house hacking could work for you.

Sources

HUD.gov
FannieMae.com
ConsumerFinancialProtectionBureau.gov
BiggerPockets.com
MortgageNewsDaily.com