House Hack
An investment strategy where an owner-occupant purchases a multi-unit property, lives in one unit, and rents out the other units to help cover the mortgage payment. This approach allows investors to use owner-occupied financing terms while generating rental income from day one.
Example
“By house hacking a duplex and renting out the other unit, Sarah covered most of her mortgage payment while building equity.”
Memory Tip
House hacking is like 'hacking' the system to live for free by having tenants pay your mortgage.
Why It Matters
House hacking allows new investors to enter real estate with lower down payments and better financing terms while reducing their living expenses. It's often the first step toward building a real estate investment portfolio.
Common Misconception
Some people think house hacking only works with multi-family properties, but you can also house hack by renting out rooms in a single-family home or converting spaces like basements into rental units.
In Practice
A first-time investor buys a duplex with 3.5% down using an FHA loan, lives in one unit, and rents the other for $1,200 monthly. The rental income covers $1,000 of their $1,400 monthly mortgage payment, reducing their housing costs to just $400.
Etymology
A modern portmanteau combining 'house' with 'hack' in its contemporary meaning of 'clever workaround' or 'life hack,' popularized by real estate investors in the 2010s.
Common Misspellings
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