HOUSE HACKING

Get Ahead of the Game With This Simple Strategy

One of the biggest misconceptions in regard to house hacking that I get asked about is “well, this deal doesn’t pencil positively.” The point of house hacking is not to cash flow: the goal is to reduce your cost of living significantly versus renting or buying and paying the full mortgage. Here’s some simple math:

If your mortgage on your duplex house hack is $3,000 and you can rent out one unit for $1,700, your net cost would be $1,300. That’s a $400 savings versus renting and a $1,700 savings if you didn’t rent the other unit. That is your cash flow: your savings rate. If you take that savings rate and can reinvest that into another deal, save for another down payment, etc., you can still win.

The most difficult part of getting started is the first few deals. That first deal needs to catapult you into the next deal. The House Hack strategy follows such principles precisely.

If you’re ready to get started, it’s important that each transaction propels you closer to your goal. Having an agent who clearly hears and understands your goals and comprehends your underwriting is crucial.

How Do I Find a House Hack?

The obvious would be to filter by Multifamily in any platform. However, we find that inventory in this space is incredibly limited and in high demand. Here are a few ways you can find a great match for your criteria:

• Check in with your cities/counties zoning on specific properties to see if you can build a permitted ADU (accessory dwelling unit). Some municipalities are encouraging these builds, especially if they are to be used for long-term rentals. They may even waive some of the permitting fees!

• Look at the floor plans of targeted homes. You may find it easy to convert a garage space if you have easy access to plumbing and have high enough ceilings, to name a few criteria.

• Oftentimes master suite conversions are easier than garage conversions: many already have a private bathroom, which is one of the most labor and capital-intensive additions when doing a garage conversion. A master suite conversion typically needs a kitchen or kitchenette and an exterior door. If the floor plan supports this, this is an easier conversion.

• Basement conversions can be more complicated than garage conversions: ceiling heights are often a large limiting factor and plumbing can be more challenging when dealing with what can be compared to slab foundations. However, converting this space can be very lucrative in optimizing income per livable square feet.

• Good ol’ fashioned mailers and cold calling. There are several different lists you can pull to find this information. Contact us to find out how we can help build your list.