House Hacking is Gaining in Popularity

By Alex Capozzolo

House hacking is a real estate investing strategy that has become extremely popular over the past decade. First-time and repeat homebuyers are getting creative when buying real estate through various forms of house hacking. This strategy can be successfully pulled off in a single-family home with multiple rooms or a multi-family building. The goal is to rent out the other available rooms (or units) and use that rental income to offset your housing costs. Even if house hackers don’t entirely break even and cover their full monthly mortgage payment, it should still be considered a win!

Here are several undeniable reasons why house hacking has become more popular amongst the real estate investing community.

Real Estate Forums Have Popularized House Hacking

Many real estate forums have helped popularize the concept of house hacking. Many have eloquently broken down this real estate investing strategy into digestible and understandable pieces of content. Real estate investors across the country are able to grasp and take matters into their own hands to implement this homebuying strategy. This enabled some people to actually be able to afford a piece of real estate in their market.

Alex of SD House Guys, a homebuyer based in San Diego, used house hacking to purchase his first home. “My wife and I considered buying a condo, but instead went with a larger single-family that we house hacked. We rented out two empty rooms and actually became great friends with our tenants while offsetting a portion of our mortgage with the rental income.” Even in an expensive market, real estate investing is possible with enough creativity.

Real Estate Affordability is Fleeting

Without question, the affordability of real estate is fleeting. Purchasing a home in the United States – in many expensive markets – is getting seemingly more unattainable. SD House Guys was a great example of using house hacking to purchase a home in San Diego, California, which is an expensive market. This is true for many cities across the country. Up until recently, real estate values were continuing to skyrocket at rates that left many buyers priced out of the market. While values are currently dropping in some markets, they will eventually bounce back and continue rising. Once home values break all-time high values again, affording a house will be a financial challenge.

Additionally, the landscape of homebuyers is different now than a decade ago. Most millennials have insurmountable amounts of debt, mostly from college. This prevents many people from purchasing a home because they simply can’t afford it. House hacking has acted as a proven strategy for millennial homebuyers to offset part (or all) of their mortgage and purchase a house.

Aside from other macroeconomic factors that are pushing more homebuyers toward house hacking, wages aren’t keeping up with inflation. Things cost more – including real estate – yet many people aren’t making much more than they used to. This widening gap between the cost of living and income puts large purchases, like a house, on the back burner for many people across the country. Fortunately, house hacking enables people to purchase a property, rent out the available spaces, and cover part of their expenses. If house hacking is done well, you can completely cover your mortgage payment, utilities, taxes, and other costs while earning positive cash flow from the investment. The dream of earning passive income through real estate has also inspired many homebuyers to try out house hacking.

Alex Capozzolo is the owner of the Home Offer Solutions blog, a member of San Diego Creative Investors Association and a content writer for the real estate industry. Alex’s focus is on helping people through one of the most important investment decisions of their lifetime by seamlessly providing fast, honest, and professional real estate services.

Overheard in the Senate

The U.S. Senate’s Banking, Housing and Urban Affairs Committee held a “State of Housing 2023”-focused session in early February, and a few key insights reflected the political divide that is likely to prevent substantive housing legislation from moving forward in a split-control House/Senate. Housing is considered a priority due to affordability issues regarding interest rates and the expanding presence of Wall Street investments in single-family housing. The partisan divide can be differentiated:

• Democrat solutions: Tax credits and housing vouchers.

• Republican solutions: reduction in regulatory red tape and caution against additional federal spending.

The committee’s makeup is as follows:

MAJORITY MEMBERS (12)

Brown, Sherrod (OH), Chairman

Reed, Jack (RI)

Menendez, Robert (NJ)

Tester, Jon (MT)

Warner, Mark R. (VA)

Warren, Elizabeth (MA)

Van Hollen, Chris (MD)

Cortez Masto, Catherine (NV)

Smith, Tina (MN)

Sinema, Kyrsten (AZ)

Warnock, Raphael G. (GA)

Fetterman, John (PA)

MINORITY MEMBERS (11)

Scott, Tim (SC), Ranking Member

Crapo, Mike (ID)

Rounds, Mike (SD)

Tillis, Thom (NC)

Kennedy, John (LA)

Hagerty, Bill (TN)

Lummis, Cynthia M. (WY)

Vance, J. D. (OH)

Britt, Katie Boyd (AL)

Cramer, Kevin (ND)

Daines, Steve (MT)

It is important for NREIA Members living in these communities to make it a priority to meet with these offices representing 20+ states, as they will have a significant impact on everything from HUD regulatory oversight to new legislation. Whether you attended the Washington D.C. Day on the Hill event (March 7-8) or not, reaching out through your local REIA to develop relationships with these offices as community stakeholders will be crucial for future efforts to be