One of my favorite investment strategies is called house-hacking. While the concept is not new, it has been a hot approach for buyers in expensive markets such as Denver. House-hacking is simply a term used when a homebuyer buys a home and rents out a portion of the home to another person(s).  They become homeowner and landlord at the same time. Here are a few ways people house hack:

• Buy a single-family home, live in one room and rent out the other rooms.  

• Buy a zoned duplex, triplex, four-plex, live in one of the units, and rent out the other units.  

• Buy a home with an Accessory Dwelling Unit (ADU) or create a separate unit, live in the main house, and then rent out the separate unit.  

This is how my wife and I purchased our first home. We purchased a bi-level home with a walk-out basement. We built a permanent separation with a lockable door between the upper and lower levels. Then we furnished the downstairs to create a short-term rental that was rented out on Airbnb and VRBO for two years. We were a family of four (with a three year old and 6-month old) living upstairs and hosting guests downstairs. We have endless stories about our adventures there. While not always smooth, the rental downstairs paid our mortgage for two years! We eventually moved out of that house and kept it as a long-term rental for another two years. That first house-hack benefited us in so many ways:

• Our first primary home!

• Two years of mortgage paid by the STR in the 2nd unit.

• Two years of landlord and STR hosting experience.

• $70k HELOC that helped us buy two other investments and our next primary home.

• Became a solid long-term rental when we moved out, cash flowing $600/month.

• Netted us $200k in equity when we sold it tax free in 2023 (because we lived in the house two of the past five years).    

I advise people who want to house hack to consider any rental income they receive as an offset or “subsidy” to their living expenses. Your living expenses will be less, you’ll receive the tax benefits of owning a rental property, you’ll gain experience as a landlord, and you will own an appreciating asset that will pay dividends for your net worth and future investing.  BONUS: This is one of the few ways to get into an investment property by putting only 5% or less for a down payment!!

Contact me below if you want more information on how to execute this strategy or want to work with me to find your first house-hack investment!