🔑House Hacking: Live For Less, Learn Faster, Own More

Over the last few weeks, we have talked about:

• ADUs - adding another door on the same dirt

• Microunits - getting more income from smaller, smarter layouts

• Redevelopments - turning tired buildings into true value add deals

This week we are shifting to a strategy that many investors quietly use to get into the game and scale up:

House hacking.

House hacking is the bridge between being a renter and owning an investment portfolio. It is simply:

In this issue we will cover:

• What house hacking looks like in practice

• Why it is so powerful from a financing and learning standpoint

• Real world style examples with simple numbers

• My own first house hack story and why it matters

• Risks, realities, and how to get started

🏠 What house hacking actually looks like

House hacking is flexible. A few common setups:

• Live in one unit of a duplex, triplex, or fourplex and rent the others

• Live in a single family home and rent extra bedrooms or a finished basement

• Add an ADU and live in either the main home or the ADU while renting the other

The common thread is that you are:

• Owner occupied for loan purposes

• Landlord for at least part of the property

Your tenants are not just paying rent. They are helping you:

• Reduce or eliminate your personal housing expense

• Pay down principal on your loan

• Build equity and a track record with lenders

💵 Why house hacking is so powerful

House hacking works on three levels: financing, cash flow, and education.

1. Better financing terms

Because you are living in the property, lenders often treat the deal as an owner occupied loan, not a pure investment loan. That can mean:

• Lower interest rate

• Lower down payment in some programs

• More flexible underwriting

On the exact same property, the payment and required cash in can look very different between owner occupied and non owner occupied financing.

2. Lower personal living cost

When your tenants cover a large portion of the mortgage, taxes, and insurance, your out of pocket housing cost can drop dramatically.

In some cases, the rents from the other units or bedrooms fully cover the payment. That lets you live nearly for free while your equity grows.

3. On the job landlord training

You learn:

• How to advertise, screen, and lease

• How to handle repairs and contractors

• How to communicate with residents and solve issues

You get that experience on a smaller, more forgiving asset before moving into larger properties.

📊 Real world style example 1

“Duplex starter house hack”

You buy a duplex for $400,000 using an owner occupied loan.

• 5 percent down: $20,000

• Loan amount: $380,000

Assume:

• Monthly principal and interest: about $2,150

• Taxes and insurance: $550

• Total monthly payment: $2,700

You live in Unit A and rent Unit B for $1,800 per month.

Your personal out of pocket housing cost before utilities is:

• $2,700 payment - $1,800 rent = $900 per month

You are effectively living in your own unit for $900 in a location where similar rentals might cost $1,600 to $1,800.

Over time:

• Rents can increase

• Your loan principal goes down

• You may get some appreciation

The tenants in Unit B are helping you build equity instead of you paying full rent to someone else.

📊 Real world style example 2

“Fourplex stack and move”

Now take it a step further.

You buy a fourplex:

• Purchase price: $700,000

• 5 percent down owner occupied loan: $35,000

• Loan amount: $665,000

Monthly numbers (simplified):

• Principal and interest: about $3,760

• Taxes and insurance: $840

• Total payment: $4,600

You live in one unit and rent the other three:

• Each of the other three units rents for $1,700

• Rental income: $5,100 per month

Before reserves and small expenses, the building covers the payment and even throws off a small surplus.

You are:

• Living in one unit with very low net cost

• Running a three unit mini portfolio under one roof

• Building experience and a lender friendly track record

A few years later, you can move out, keep the fourplex as a full rental, and repeat the process with another property.

🧩 Different paths within house hacking

House hacking is not one size fits all. A few variations you can consider:

1. Bedroom house hack

   • Easiest entry point. You buy a single family home, live in the master, and rent out the other bedrooms.

   • Works especially well near universities, hospitals, or employment hubs.

2. Small multifamily house hack

   • Duplex, triplex, or fourplex. You live in one, rent the others.

   • Strong blend of owner occupied financing and true investment property feel.

3. House hack plus ADU

   • Live in the main house and rent the ADU, or live small in the ADU and rent the main house for more.

   • Great where ADUs are allowed and land is valuable.

4. Live in then move out

   • Start as owner occupied for better terms, stabilize the property, then move and keep it as a full rental.

   • Repeat to stack multiple properties over time.

⚠️ Risks and realities to respect

House hacking is powerful, but it is not free money. A few realities:

1. You live close to your tenants
   Some people love this; others do not. You will hear noise, deal with parking, and see your residents regularly.

2. You are both neighbor and landlord
   You have to be clear and firm on boundaries. Written leases, house rules, and systems still matter.

3. Vacancy and roommate changes
   If you rely on roommate rent, turnover can hit your personal budget. Keep a small reserve to cover gaps.

4. Zoning and occupancy rules
   Some cities limit unrelated adults in one unit or have strict rules around ADUs and shared housing. Always check local regulations.

5. Lifestyle trade offs
   You may sacrifice a bit of privacy or ideal layout for a few years in exchange for long term wealth building. Not everyone is willing to do that.

🧭 When house hacking makes sense for you

House hacking can be an excellent fit if:

• You are early in your investing journey and want to get started with limited capital

• You are willing to live in a property that is also a business asset

• You value learning the landlording basics by doing, not just reading

• You are playing the long game and looking at where you will be 5 to 10 years from now

It may not be ideal if:

• You or your family strongly value privacy and space

• Your local market has very weak rent fundamentals

• You are not willing to manage people and property at close range

👇 What you can do this week

If house hacking is even slightly on your radar:

1. Run the numbers on one property

   • Pick a duplex, triplex, or fourplex listing in a decent area.

   • Underwrite it twice: once as an investment loan and once as owner occupied.

   • See how the payment and down payment change.

2. Map your living comfort zone

   • Are you comfortable living in a smaller unit while renting the nicer one?

   • Are you comfortable having tenants above, below, or beside you?

3. Talk to a lender who understands house hacking

   • Not every loan officer is fluent in this.

   • Ask what programs exist for owner occupied 2 to 4 unit properties in your market.

Next in the series, we will dig into seller financing and how creative terms can make deals pencil when conventional financing falls short.

🧑‍💼 Now back to my own story

Many of our seasoned readers are familiar with this story. For those who aren't, I've detailed the structure of the deal, the financials, and what I would change if I were to do it again today. It wasn't magic; it was a straightforward house hack with a solid business plan. I won't recount the entire narrative here, respecting your time. However, if you're interested, get into the details here. It's a worthwhile read, guaranteed!

 🙏🏾 Thanks for reading!

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Stay blessed and Do Something!

— Dami Fadipe