House Hacking 101: How It Works and the Best Property Types

House Hacking 101: How It Works and the Best Property Types

House hacking is, without doubt, one of the most effective ways to earn money in real estate. With house hacking, you can take advantage of a plethora of long-term benefits, no matter how much money you have. In the world of real estate, the sky is the limit, so you should know about the many ways investors build wealth.

You can start the process by understanding house hacking. To make things easier for you, we’ve put together a guide with all the info you need.

Read on to learn all about how house hacking works.

What Is House Hacking?

House hacking revolves around generating income from the house you live in. Many people have been involved in house hacking without knowing that’s what it’s called.

For example, owning a multi-family home is considered to house hacking if you live there and rent out another part of it to someone else. People partake in house hacking for a variety of reasons, but it’s a simple way to enjoy different financial benefits.

Landlord Unlocks the House Key for New Home

House hacking can be done with duplexes, triplexes, fourplexes, guest houses, basement apartments, and more. Anything with extra rentable space is suitable enough for it.

The Benefits of House Hacking

House hacking is one of the best strategies to use if you’re conscious about your money. No matter what kind of house you have, there’s a good chance you can enjoy the benefits of house hacking, but what exactly are they?

Here are some of the main benefits:

Generate Passive Income

Renting out an extra space is how people earn money from house hacking. Because of this, you can expect to make money each month for as long as you rent out your property. You can then use this cash flow to pay your mortgage and continue earning money.

Gain Real Estate Experience

If you plan on investing in real estate, house hacking is a great way to gain experience. Not only will you learn about the rental process, but you’ll also learn how to interact with tenants. With this experience, you’ll have a much easier time transitioning into larger rental properties, such as apartments or single-family homes.

Have Flexibility

Another benefit of house hacking is the flexibility you get with extra space. Should you need to relocate for any reason, you can rent out your property instead of selling it. If it’s not a permanent relocation, you can set up a contract with a tenant for the amount of time in which you’ll be gone. This will ensure you can return when you’re ready.

Simple Ways to House Hack

Now that you know about the benefits of house hacking, where do you start? Fortunately, house hacking can be done in various ways, so you can find something that works for you, no matter what type of investor you are.

As mentioned, you can use several types of properties to earn money. Here are some of the main house hacking strategies:

Traditional House Hacking

Traditional house hacking is all about living at a property with multiple units while renting out the others. While doing this will cost more initially, you can earn more money for renting out a larger space.

Another thing you can do is buy a home, live there for some time, then move and start renting it. Many real estate investors do this when they’re trying to establish themselves, but you should avoid doing this if you don’t want to juggle multiple mortgages.

If you learn more about the types of rental property loans, you’ll have an easier time deciding whether moving is right for you.

Renting a Room

Husband, Wife and Their Daughters Playing With Boxes and Moving in New Home

If you don’t want to buy a multi-unit property, you can rent out one of your rooms. This is the most cost-effective way to house hack, but you won’t earn as much as you would with other properties.

Yet, renting a room out can help you cover mortgage payments and utility bills. The main downside is that you’ll have much less space and privacy.

Accessory Dwelling Units

Those that have the money to invest in expansion should consider accessory dwelling units (ADUs). An ADU is a part of a single-family home that has everything a person needs, such as a kitchen, bathroom, and sleeping area.

ADUs can be basements, garages, guest houses, and more. Doing this can ensure you get more money than you would be renting a room, and you’ll have more privacy because ADUs often have private entrances.


The last house hack we’ll outline is using Airbnb. Instead of traditional renting, you can list your property on Airbnb and earn much more than you would with normal rental agreements.

Airbnb is a site that many people use to rent rooms, houses, and apartments in a hotel-like fashion. Owners can charge any amount they’d like per night, and users can book stays as long as the property is available.

This happens to be one of the best house hacking strategies because you can earn a ton of money while having more control over your rental property.

Start House Hacking as Soon as Possible

Now that you’ve read this article, you have all the info you need to know about house hacking, so you should start thinking about how you’ll earn money with your home.

Keep in mind that house hacking is meant for people to gain real estate experience while earning some extra cash. It’ll be great for paying off property loans, but if you have enough money, you can buy an investment property and earn much more.

Milica Brborović
Milica Brborović
Articles: 128

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