{"id":14489,"date":"2024-06-21T09:35:38","date_gmt":"2024-06-21T14:35:38","guid":{"rendered":"https:\/\/listwithclever.com\/house-hacking-guide\/"},"modified":"2026-03-09T19:00:53","modified_gmt":"2026-03-10T00:00:53","slug":"house-hacking-guide","status":"publish","type":"post","link":"https:\/\/listwithclever.com\/real-estate-blog\/house-hacking-guide\/","title":{"rendered":"House Hacking 101: How to Live for Free (or Cheap)"},"content":{"rendered":"\n

House hacking is simple in concept: buy a property with multiple units, live in one, and rent out the rest so your tenants help cover your mortgage. In the best-case scenario, you live for free. In a realistic scenario, you pay a fraction of what your housing costs would be otherwise.<\/p>\n\n\n\n

The thing most guides don't tell you is that house hacking isn't really a real estate investment <\/a>strategy in isolation: rather, it's a way to start building a real estate portfolio by getting paid to own your first property. Every month that you collect rent, you're building equity, reducing your out-of-pocket housing costs, and learning how to be a landlord in a relatively low-stakes environment.<\/p>\n\n\n\n

But it's not effortless. You're signing up to manage tenants, handle maintenance calls, and live in close proximity to people you're in a business relationship with. Whether that tradeoff makes sense depends on your market, your finances, and your personality.<\/p>\n\n\n\n

This guide covers how to find, finance, and evaluate a house hack \u2014 including a real deal breakdown from Clever's co-founder \u2014 so you can decide if it's right for you.House hacking means you live in one unit of house (often a duplex, triplex, or quadriplex) and rent out the remaining units. Basically, you\u2019re signing up to be a live-in landlord.<\/p>\n\n\n\n

What is house hacking?<\/h2>\n\n\n\n

How house hacking works<\/h3>\n\n\n\n
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  1. Find an empty 2- to 4-unit house.<\/strong> Traditionally, house hacking involves living in one unit of a duplex, triplex, or fourplex (although it may also work with a single-family home). But you can also hack a guest house, converted garage, or mother-in-law suite<\/a>.

    If you want to start even smaller, buy a single-family home and rent the extra bedrooms. Just make sure you have enough bathrooms \u2014 and that you\u2019re okay sharing your space with strangers!

    Many lenders won\u2019t underwrite a house with more than four units, and it may be more than you can handle without taking on full-time responsibilities or hiring a property manager.<\/li>\n\n\n\n
  2. Finance your purchase.<\/strong> Buying with the intent to house hack isn\u2019t too different from a traditional home purchase since you\u2019ll live in it. However, if you\u2019re counting on having a low down payment, know that most government-backed loans restrict rental properties and how long you live there.

    Tell your lender about your plans to have tenants as they may offer you loan options with a lower down payment or a favorable interest rate.<\/li>\n<\/ol>\n\n\n\n
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    1. Find tenants.<\/strong> After you close on the house, you can start looking for renters. A good rule of thumb is to charge 1% of the home\u2019s value as rent, and for tenants to earn three times the rent. This is referred to as the 1% rule in real estate.[1]<\/span>

      So, for a $225,000 house, you might charge a monthly rent of $2,250 (1%) per unit. In that case, your ideal tenant may earn a gross monthly income of about $6,750.<\/li>\n<\/ol>\n\n\n\n

      Read a real-life house hacking breakdown<\/a> from Clever\u2019s co-founder.<\/p>\n\n\n\n

      Scenario 1: Large single-family home, room rental<\/strong><\/h3>\n\n\n\n

      Let's say you buy a five-bedroom house for $625,000, put 20% down, and rent out four rooms at $800 each:<\/p>\n\n\n\n

      Expense<\/strong><\/td>Monthly cost<\/strong><\/td><\/tr>
      Mortgage (at 7% APR)<\/td>$3,327<\/td><\/tr>
      Property taxes<\/td>$250<\/td><\/tr>
      Insurance<\/td>$83<\/td><\/tr>
      Repairs and maintenance<\/td>$125<\/td><\/tr>
      Vacancy rate (5%)<\/td>$160<\/td><\/tr>
      Total expenses<\/strong><\/td>$3,945<\/strong><\/td><\/tr>
      Rent from 4 tenants<\/td>+$3,200<\/td><\/tr>
      Out-of-pocket monthly<\/strong><\/td>~$745<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

      The rental income from four rooms covers about 87% of your total monthly costs, leaving you to pay just $745 for everything.<\/p>\n\n\n\n

      Scenario 2: Duplex with FHA financing (budget-friendly entry point)<\/strong><\/h3>\n\n\n\n

      For buyers who can't swing a $625,000 property, here's how a duplex works:<\/p>\n\n\n\n

      Expense<\/strong><\/td>Monthly cost<\/strong><\/td><\/tr>
      Mortgage on $350k duplex, 3.5% FHA down, 7% APR<\/td>$2,415<\/td><\/tr>
      Property taxes<\/td>$250<\/td><\/tr>
      Insurance<\/td>$120<\/td><\/tr>
      Repairs\/maintenance<\/td>$150<\/td><\/tr>
      Vacancy reserve (5%)<\/td>$75<\/td><\/tr>
      Total expenses<\/strong><\/td>$3,010<\/strong><\/td><\/tr>
      Rent from unit 2<\/td>+$1,400<\/td><\/tr>
      Out-of-pocket monthly<\/strong><\/td>~$1,610<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

      Compare that to renting a one-bedroom apartment in most metros \u2014 and you're often paying less while building equity each month. Your FHA down payment on a $350,000 duplex would be $12,250. After one year of required owner-occupancy, you can move out and convert both units to full rentals.MORE:<\/strong> 5 Best Ways to Invest $10k in Real Estate<\/a>Despite a tight housing market, house hacking is definitely still possible \u2014 even for first-time buyers. Higher housing prices and mortgage rates are squeezing margins, but the savings can make it a smart strategy.<\/p>\n\n\n\n

      Let\u2019s say you buy a large five-bedroom house for $625,000, put 20% down on the loan, and rent out four rooms at $800 each. Here\u2019s how it can work:<\/p>\n\n\n

      \n
      \n\n
      Expense<\/th>Annual cost<\/th>Monthly cost<\/th><\/tr><\/thead>
      Mortgage (at 7% APR)<\/td>$39,924<\/td>$3,327<\/td><\/tr>
      Property taxes<\/td>$3,000<\/td>$250<\/td><\/tr>
      Insurance<\/td>$1,000<\/td>$83<\/td><\/tr>
      Repairs and maintenance<\/td>$1,500<\/td>$125<\/td><\/tr>
      Vacancy rate (5%)<\/td>$1,933<\/td>$160<\/td><\/tr>
      Total expense<\/td>-$47,357<\/td>-$3,945<\/td><\/tr>
      Rent from tenants<\/td>+$38,400<\/td>+$3,200<\/td><\/tr>
      Out-of-pocket costs<\/td>-$8,957<\/td>-$745<\/td><\/tr><\/tbody><\/table>
      Show more<\/span><\/div><\/figure>\n\n<\/div><\/div>