The Top 5 Benefits of House Hacking for Real Estate Investors

House hacking is a popular real estate investment strategy that involves buying a property and renting out part of it while living in the remaining space.
This approach is a great way for investors to build their rental portfolio and generate income while also reducing their living expenses.

Here are the top five benefits of house hacking for real estate investors:

1. Rental Income

House hacking allows investors to earn rental income while also living in the property. This means that investors can cover a large portion of their mortgage payments with the rent they receive, which helps to reduce their overall living expenses.
For example,
if an investor buys a four-bedroom/unit property and rents out three of the bedrooms/units, the rent they receive can cover a significant portion of their mortgage payment, which would have been a major expense if they were living in the property alone.
Once you live in the property for a year, you can then purchase your NEXT property and rent out the room you were living in - generating even more income!

2. Lower Living Expenses

By house hacking, investors can significantly reduce their living expenses. With rental income covering a significant portion of the mortgage payment, they can also save money on utilities, property taxes, and other expenses associated with owning a property. This frees up more of their income to invest in other properties or to save for retirement.

3. Equity Growth

Investors who house hack can build equity in their property faster than those who simply live in their home without renting out part of it. This is because the rent they receive can be used to pay down the mortgage, which increases the amount of equity they have in the property. Over time, as the property appreciates in value, the investor can build even more equity, which can be used to finance additional investments. 
You get the BEST financing terms with owner-occupied financing or when you purchase as a primary residence. Meaning, your mortgage payment would be less than if you purchased as an investment property.
Here is the difference:
Investment Property - 20% down, high interest rate, 20 year loan term
Primary Residence: (as low as) 0% down, lower interest rate, 30 year loan term.

4. Diversification

Investors who house hack can diversify their real estate portfolio by owning both a personal residence and a rental property. This helps to spread out their risk and can provide a more stable income stream. For example, if the rental market in one area experiences a downturn, the investor still has income from their personal residence to help offset any losses.

5. Tax Benefits

Finally, house hacking can provide significant tax benefits for investors. Expenses associated with owning and operating a rental property, such as mortgage interest, property taxes, insurance, and repairs, can be deducted from rental income to reduce the investor's tax liability. Additionally, investors can take advantage of depreciation deductions, which can further reduce their tax burden.

In conclusion, house hacking is a smart investment strategy that can provide investors with multiple benefits, including rental income, lower living expenses, equity growth, diversification, and tax benefits.
By leveraging these advantages, investors can build a strong and profitable real estate portfolio that can generate income and build wealth over time.

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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