How House Hacking Can Help You Build Wealth Faster Than Traditional Investing

House hacking is a real estate investment strategy that involves buying a property and renting out a portion of it to offset the mortgage payment.
This allows the investor to live in the property while also earning rental income.
House hacking has become increasingly popular in recent years, and for good reason.

Here are five ways in which house hacking can help you build wealth faster than traditional investing:

1. Rental income: 

With house hacking, you can earn rental income while living in the property. This can help you offset the cost of the mortgage and other expenses. For example, if you purchase a duplex and rent out one unit, the rental income can cover a significant portion of the mortgage payment. This can free up more of your income to invest in other properties or other types of investments.

2. Lower expenses: 

House hacking can help you save money on housing expenses. Instead of paying rent or a mortgage payment on a property that you do not own, you can use that money to invest in your property or other investments. This can help you build wealth faster by allowing you to allocate more of your income towards investments.
The key to House Hacking is to repeat the process. It is more than okay to just buy one property and save on your mortgage; it's WAY better than nothing! But, you can really catapult your wealth by down this over and over - whether that is every year, every 2 years, or even every 3 years.

3. Forced savings: 

When you house hack, you are essentially forcing yourself to save money. This is because the rental income from your tenant(s) is going towards paying down the mortgage on the property. Over time, this can help you build equity in the property and increase your net worth.
The only thing better than paying off your mortgage every month is when someone else is paying it for you!

4. Tax benefits: 

There are many tax benefits associated with owning rental property. For example, you can deduct mortgage interest, property taxes, and other expenses from your rental income. Additionally, you can depreciate the property over time, which can further reduce your tax liability.
Along with these, if you decide to House Hack every 2 or 3 years and decided to sell one of those properties, if you have lived in it for at least 2 out of the last 5 years - the gains/profit/proceeds you receive at closing are TAX FREE!
Example:
You purchased a property and lived in it for the first 2 years, and then moved out and rented it for another 2 years. If you decide to sell in year 5, the profits your receive from the sale is yours to keep with no payment to Uncle Sam out in D.C.
This is a very smart way to House Hack!

5. Leverage: 

House hacking allows you to leverage your money in a way that traditional investing does not. When you purchase a property with a mortgage, you are essentially using other people's money to invest in the property. This allows you to get a greater return on your investment, as you are only putting a fraction of the total cost of the property down.
Something I learned years back that changed my viewpoint on how leverage and money works, is that all of the money you have today is not really YOUR money. You got that money from someone/somewhere else. Could be a job, a gift, other investments - whatever! And when you spend your money it goes to someone else, too. It's never really yours. Take advantage of that!

In conclusion, house hacking is a powerful investment strategy that can help you build wealth faster than traditional investing. By earning rental income, lowering your expenses, forcing savings, taking advantage of tax benefits, and leveraging your money, you can achieve financial freedom and build a successful real estate portfolio.

Check out my YouTube channel for more helpful information on the Pro's & Con's to House Hacking, along with other content around real estate investing!


Location: 1606 S Duff Ave #100, Ames, IA 50010, USA

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