House Hacking
I want to share a “hack” that, when properly done, can have a huge effect on your wallet and the wealth of your family. I’m talking about hacking your housing and living for free. I’m talking about building wealth automatically. I’m talking about buying an owner-occupied multifamily property and getting paid to live for free.

It’s often called an “owner-occupied multifamily property” but you probably have heard other names for it, like “duplex,” “triplex,” or “4-plex.” There is a good chance you’ve even rented a unit in one of these places in the past or you know someone who has. They exist in every market, every neighborhood, and every price point – and by purchasing a small multifamily property, living in one unit, and renting the other units out – you can live for free and get paid to do so.

House hacking can take other forms – like buying a house and living in the basement suite or garage apartment. Check out this guy for example who paid off his mortgage super fast.

Why Purchase a Small Multifamily?
By purchasing a great small multifamily deal, the rent that your tenants pay each month can cover all of the expenses for the property – and more.  For example, if you buy a 4-plex, live in one unit, and rent each of the other units out for $1200 a month, you could be making a certain amount per month in income. If your mortgage, taxes, insurance,  utilities, and maintenance expenses come to just $3000 – you could get paid $600 a month just to live in the home.  

Where to Find Small Multifamily Properties
The easiest way to find them is by speaking with a real estate agent. Ask your family and friends for recommendations and start up a conversation. 

Keep in mind, however, that you are only looking for properties that have 2, 3, or 4 units. Once you hit 5 units or more, the entire world of real estate changes into commercial real estate. So for now, focus on the duplexes, triplexes, and 4-plexes.

If you want to just start looking, you can also use sites like Realtor.com, Zillow.com, HAR.com (i.e. in Houston, TX) or Trulia.com to start looking at properties. With each of these sites, you have the ability to limit your searches to only multifamily properties.  Start looking at the cheapest properties in your area and try to find neighborhoods that you would want to live in.

Why purchase a single family home (SFH) with a basement or garage apartment?
Personally, I think buying a SFH is the best way to get into real estate. Why? The numbers are smaller, its easier to manage and it will give you experience being a landlord. Its much easier to deal with one tenant than 3-4. Also, these places are typically cheaper, require a smaller downpayment and its less likely you will make a mistake on the math.

There are risks involved, for example, here in Houston, TX - a common problem is that a local subdivision or homeowners association will not allow you to have more than one family living on a property. You can find this out just by calling the subdivision or the property management company before you start making offers.

How do the numbers work? Here's an example I was working on (deal didn't go anywhere because of the subdivision rules). 
  • List price of $205,000. 
  • Offer price would have been $195,000
  • Downpayment of 5%: $9,750
  • Closing costs of say $5,000
  • Total upfront costs: $14,750
  • Monthly rental income $1,400 for the house
  • Vacancy assumption of 8%
  • Result would have been slightly cash flow negative of around $300. 

So in this case, it would have cost me $300 a month to live in a garage apartment. That's pretty cheap "rent" if you ask me. And that's on a cash flow basis. I would still have been paying down my mortgage by around the same amount. So, all that's happening here is that I get almost free place to live and I pay down my own mortgage.

Can you think of how quickly you can build wealth while almost essentially eliminating your largest cost in your life? In 5 years, after paying yourself $300 a month... you'll have created equity in your home and plus started perhaps a nice investment portfolio using the money you used to pay on rent!


House hacking is so common these days .It refers to the situation that one buys a house and rent out some part of it. While living in that house 's other part too.

12/06/2016 1:27am

I have a few friends who do house hacking. Maybe it’s because they need extra cash to pay off their mortgages. But I haven’t tried living in a house shared with the landlord. I feel uncomfortable and lacking of privacy. For a single lady like me, I would rather have my own place in a multi-family property than live in a single family property. I can do whatever I want to do and not worry about anyone sharing the same house with me. Maybe some people can manage that but I don’t.

06/16/2017 11:15am

thank you

11/03/2016 6:15am

Start looking at the cheapest properties in your area. i like Zillow.com to find cheapest properties.

11/09/2016 9:45am

Well, it's a good idea. I should think about it. This might help me to save some money.


Nowadays, house hacking ratio going up, but i think we don't have to worry anymore about it, because recently a locksmith company invent a advance type of a security lock, which can secure your home.

06/16/2017 11:16am

thank you nice blog


Thank you for opinions from you and your information.

02/19/2018 7:34am

Thanks a lot for this really good post. I really appreciate it!


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