House Hacking: How To Live Rent Free

If you’re interested in getting into real estate investing and want to live rent-free, then house hacking might be for you!

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House hacking is when a person rents out a room or rooms in their primary residence and uses the monthly rental income to pay a part or even all of the monthly mortgage payment, thus living “rent-free.”

Benefits Of House Hacking

Living Rent Free The first big benefit is that house hacking provides a way for a person to be rent-free!

Lower Down Payment

The better a person’s credit score, the lower their down payment can be. Additionally, they can also qualify for a low principal interest rate.

Scale Faster

House hacking is a great way to grow a real estate portfolio due to the low down payment. However, an owner must live in the property for at least one year or face an extreme penalty.

Is House Hacking Legal?

There is nothing illegal about an owner living in one of the units of their property. However, it is unlawful for an owner to convert a garage into a bedroom for creative house hacking.

Real Estate Financing

Aside from working with a hard money lender, I strongly recommend any future successful real estate investor to build a good relationship with a local in-state banker.

Federal Housing Administration Loan

An FHA loan is a Federal Housing Authority insured loan. The U.S. government would insure lenders from any losses if a borrower defaulted on their mortgage payments.

VA Loan

The government also ensures VA loans but are designed only for U.S. military members and veterans. This type of loan requires no money down and does not include any mortgage insurance.

Conventional Loan

A conventional loan can have an even lower down payment requirement compared to an FHA loan.

How To Calculate A House Hack

it’s essential to calculate the cash on cash return to ensure that all expenses are accounted for in the rental income.

Monthly Mortgage Calculator

Having an idea of the monthly mortgage payment will give you an idea of how much rent you will need from the tenants to live rent-free.

House hacking is one of the most straightforward real estate investing strategies and a great way to start building wealth, increase your net worth, and reach financial independence!

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