Easy Guide to Buying Your First House Hacking Property 

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House hacking presents a very appealing prospect to a real estate investor, because it allows you to virtually live for free in a particular residence. While you’re renting out one part of the duplex or triplex, you can be living in another part, with little or no cost to yourself. With the cost of lodging soaring higher every year, this is a considerable advantage to have, and it can save you a fortune over a period of time. In this discussion, we’ll present some of the most useful information which you can use to purchase your first house hacking property, so you can take advantage of this terrific opportunity.

Why is house hacking so beneficial?

House hacking is considered to be one of the most advantageous real estate investing strategies available today. It can be much more beneficial to a prospective new homeowner to hack a house rather than to buy or rent one when just starting out. The Bureau of Labor Statistics says that the average household budget is obliged to allot nearly 20% of the total for housing costs, which comes to well over $10,000 annually.

Just think of what you could do with that money, while you’re living in one section of a duplex and letting someone else pay most of the cost of living there. That money you save can then be used later on for other real estate investments. If you’re willing to just spend a few years hacking your house, you can end up with a very nice sum of money which can earn you even more money, in the form of bigger investments later on. While you’re living there, you’ll also be learning about tenants and the real estate business in general, and you can put that knowledge to good use in the future.

Run the numbers

In choosing your first house hack property, you’ll need to see if it makes sense financially before deciding on a given property. Your goal should be to reduce or possibly eliminate your own financial responsibility while living there, and that makes a four-plex or a triplex the best choices, because you have more people paying monthly costs. Against the contributions made by your living mates, you’ll need to add in the cost of the property itself.

The crucial figure you need to determine is your net operating income (NOI). Get out your calculator, and determine this number accurately, because it’s ultra-important to your house hacking strategy. The NOI is determined by starting out with the gross rental income, which is the amount paid by your co-habitants. From this number, you’ll need to subtract property taxes and insurance, common utilities, maintenance and repairs, vacancy expenses, and miscellaneous expenses.

Once you know what the net operating income is, you can calculate the mortgage payment. You don’t really have to figure this out on your own, but it will be helpful so you’ll have an idea of your monthly outlay. In order to calculate the mortgage payment, you’ll need to know the purchase price, your down payment amount, the interest rate, and the number of payments. There are plenty of online calculators which can help you figure out the actual payment numbers, and then you’ll know what your responsibility is. Compare this number to your net operating income, and you’ll see whether or not you can live for free at your house hack property.

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Obtaining a mortgage

When seeking a mortgage for your house hack property, you should keep in mind that you’ll want the lowest interest rate possible, the smallest down payment, the lowest overall monthly payment, and no surprises like pre-payment penalties. There are three really good ways to obtain a low mortgage in the U.S., and you should consider one of these. An FHA loan will require a low down payment, and it’s fairly easy to qualify for one of these. It also has generally attractive repayment terms, so it’s a good all-around choice.

Veterans Administration loans are also very appealing in terms of their requirements, and in many cases are even more favorable than FHA loans. The big catch is that only military veterans are eligible for these kinds of loans, so that may exclude you from applying. Conforming loans are those which conform to mortgage giants such as Fannie Mae, and although they require larger down payments than either the VA or FHA, the terms are very appealing over a 15 or 30 year period.

References on house hacking

Because house hacking is such a tremendously beneficial real estate strategy, there have been numerous books and other reference material created about it. You can read my recommended house hacking book here or browse my resources page for additional useful links. Some of the books describe some very creative ways for you to break into house hacking, and others get very detailed about the steps you should follow. It will be very easy for you to find some of these references, and depending on your own approach to house hacking, you’re bound to find several which appeal to you, and which can increase your knowledge on the subject.


Above you’ll find most of the important points you’ll need to be armed with when you seek your first house hack property. In this day and age, living for free or nearly for free can be one of the most financially advantageous arrangements you could possibly make. Take this information and use it to begin saving money toward your future career as a real estate investor and enjoy the experience along the way. This is just one of the many ways to start creating passive income for yourself. If you are interested in learning about other ways, read my post about The Top 11 Real Estate Investment Strategies.

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