House Hacking

Imagine there was a way of purchasing a house with a mortgage and paying less every month than you would in rent… That’s what house hacking is all about! Finding a way of renting out a section of a house to minimize your monthly cost.

Co-living /Renting Rooms

If you’re a single person or a couple without kids you might not need all the space in the house and might even enjoy the company of living with other people. Buying a house and renting out the rooms individually can be a great way of enjoying all the perks of being a home owner while paying less than you would for rent at a similar place.

Imagine buying a house like the one listed above for 525K. With a 6.5% interest mortgage and only 3.5% dow the payment would come to bit less than 4K/month. By renting 5 of the six rooms for $800/month the mortgage would be completely paid by the rental income and the buyer could enjoy to live almost rent free while building equity every month.

Basement

In Colorado there are a fair amount of ranch style homes with basements that for the most part have the same footprint as the main level. A good amount of those are unfinished or partially finished mostly because in the past it was just use as extra space, entertainment space or sometimes extra guest bedrooms. However if used correctly a basement can offer tremendous value. A private entrance could be configured to offer extra privacy and higher rental price.

In the example above the homeowner rents out their basement as a separate unit getting around $2,500-$3,000 per month for their furnished rental. If the mortgage for their house was to be around $4,000 renting it out as a furnished rental would cover more than half of the mortgage and still still leaving the homeowners with their full 2-3 bedroom unit on the main level while only paying 1,00-1500/month!

ADU

An ADU, is an Additional dwelling Unit. This can be an uncached structure such as a pool house, or dwelling unit over garage. As well as an attached section or basement with it’s private entrance, bathrooms, and even separate cooking area than the main house.

Renting out an ADU in your property can bring in the greatest rental income out of the other options. After all they are usually the most private option and offer guest more amenities than an extra bedroom or basement . However most homes don’t come with an ADU and building one can be a bit expensive and time consuming making this one of the hardest ways to house hack.

Drawbacks

Not everything can be positive. House hacking does have two main drawbacks. The first one would be that it is added work acting as a landlord, being responsible to lease out the extra space and fixing any issues with the house. The other main drawback is that by renting out extra space you could loose out on some privacy in your home since you would technically be sharing that space.

Conclusion

House hacking is a great way of being a homeowner while spending less than a renter. It is some additional work and inconvenience but depending on your individual situation the monthly savings might be more worth it. If you’ll like to explore house hacking options give us a call today and we’ll help you find the perfect home to House Hack!