House hacking is a real estate strategy where an investor purchases a property, lives in a portion of it, and rents out the remaining space to generate rental income. The goal is to reduce or eliminate the owner's housing costs while building equity. Common house hacking formats include multifamily properties, single-family homes with room rentals, and properties with accessory dwelling units (ADUs).
House hacking is often the first step for new real estate investors because it requires less capital than traditional rentals and qualifies for owner-occupied financing with lower down payments and better interest rates.
Key takeaway
House hacking formats
- Multifamily (duplex to fourplex): Live in one unit, rent the others. FHA loans allow 3.5% down on owner-occupied multifamily up to 4 units.
- Single-family room rental: Rent spare bedrooms to roommates. Lower barrier but less privacy.
- Basement or ADU: Convert basement or build/garage apartment. Check zoning and permit requirements.
- Short-term rental: Rent spare rooms on Airbnb or VRBO. Higher income potential but more management and regulatory risk.
Financing advantages
- FHA loans: 3.5% down, competitive rates, up to 4 units
- Conventional loans: 5% down on owner-occupied multifamily
- VA loans: 0% down for qualified veterans
- USDA loans: 0% down in eligible rural areas
Compare these to investment property loans which typically require 20–25% down and charge higher rates.
Analyzing a house hack
Calculate your net housing cost: mortgage + taxes + insurance minus rental income from tenants. A successful house hack reduces your cost below market rent for a comparable property.
Example: You buy a duplex for $300,000 with 5% down ($15,000). Your monthly mortgage (PITI) is $2,200. You rent the other unit for $1,500. Your net housing cost = $700/month. If market rent for a comparable apartment is $1,400, you are effectively "paid" $700/month to live there and build equity.
Risks and considerations
- Privacy: Sharing walls or space with tenants
- Tenant quality: Screen rigorously—you live next door
- Zoning: ADUs and room rentals may face local restrictions
- Exit: Moving out may convert to a full rental or require refinancing
Finding house hack deals on OffMarket Deck
Look for duplexes, triplexes, and fourplexes in markets with strong rental demand. Filter by price range that fits FHA or conventional owner-occupied limits. Open Texas or Florida hubs to compare multifamily inventory and rent levels across active markets.