House Hacking: Best Ways to Save in 2021

What is House Hacking?

House hacking is when an owner lives in their property and rents out other parts of the property. Ultimately, the tenants are the ones paying the monthly mortgage payment while the owner lives rent-free. My simple house hacking strategy was owning a single-family house and having roommates pay rent.

Benefits of House Hacking

Live Rent-Free The first big benefit of house hacking is living rent-free! A mortgage payment is composed of the principal amount, interest payment, and potentially mortgage insurance. However, the tenants are the ones paying back the debt service, or at least a good portion of it.

Pay Your Mortgage Off Early

You can also take things a step further by paying off your mortgage early. Instead of simply pocketing whatever your tenants pay, why not put some or all of that money toward extra principal only payments and watch your mortgage balance drop.


Lenders offer lower interest rates to people who will occupy their property compared to investors who do not. Lenders offer low-interest rates to people living on their property because they tend to take better care of where they live. Thus, they are less risky.

Low Down Payment

Owner-occupied properties don’t require as much of a down payment compared to non-owner occupied borrowers. I won’t bore you with the math. But, this low down payment makes house hacking a steal!

Passive Income

Aside from living rent-free, successful house hacking can generate monthly cash flow, known as the net operating income. You can calculate the net operating income (NOI) by subtracting the monthly operating expenses from the gross rental income. Net Operating Income = Gross Rental Income – Operating Expenses

How To Get Started In House Hacking?

Step 1: Become Creditworthy Step 2: Build a Relationship With a Local Bank Step 3: Study Your Local Real Estate Market Step 4: Create a Process to Find Leads Step 5: Make an Offer

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Money Saved Is Money Earned!