House hacking: A creative solution for your exhausted buyers

Real estate is changing fast, and so must you. Inman Connect San Diego is where you turn uncertainty into strategy — with real talk, real tools and the connections that matter. If you’re serious about staying ahead of the game, this is where you need to be. Register now!

In a market squeezed by higher interest rates and low inventory, we’ve got to get creative. Lately, I’ve been leaning into an old concept with a fresh twist: house hacking — and it’s working.

Instead of buyers feeling stuck, they’re seeing opportunity: Rent out a unit, a basement, even a spare room to offset the mortgage. It’s turning “Can I afford this?” into “How can I make this work for me?” If you’re not already talking to your clients about this creative solution, here’s why you should be.

What is house hacking?

House hacking, in its most basic form, means buying a property and then renting out a portion of it, using the new income to cover mortgage payments, property taxes and other costs associated with homeownership. For some, house hacking is a great entry point into real estate investing, providing an affordable way to own a property without having to bear the entire financial burden alone.

Why house hack?

House hacking offers a wide variety of benefits for homeowners, some of which include:

Added income: Mortgage payments and property expenses are offset by the added rental income. Depending on the situation, some house hackers even end up with little to no housing costs.

Real estate appreciation: House hacking enables the accumulation of equity in a property and an increase in net worth, particularly when compared to renting. 

Potentially afford more: When a buyer knows they will rent out a portion of a property and receive a return, they can usually afford more. One of our clients is working with one of our favorite lenders and was initially targeting condos and townhomes for $650,000.

Now that she’s house hacking, though, she’s looking at a $1.2 million multiunit property with a larger backyard and two-car garage. Additionally, she’s building her real estate portfolio for better returns in the future. 

Tax benefits: Owning property often comes with tax advantages, such as deducting property-related expenses, such as mortgage interest, repairs and property taxes. 

Advice for getting started with house hacking

Here are a few things buyers should consider:

Analyze finances: Buyers should take a financial deep dive and figure out everything from what they can afford for a down payment, full monthly costs and projected (realistic!) rental income.

Choose the right property: This part is crucial. Our favorite property for house hacking setups is a multiunit, where the owner lives in one unit and the renter lives in the other. This way, you can keep a good eye on your property. 

Get a feel for financing options: House hackers may be eligible for some really great loan programs and products. Right now, we have a client using a loan program where she can finance any improvements she makes to the property. 

Understand landlord responsibilities

It’s a good reminder that house hackers become landlords! Remind your buyers to check into local regulations regarding renting out a portion of a property. 

One way we got started was to ask our clients for a weekly chat and bring up the idea during that informal meeting. We then gauged interest and made the relevant introductions.

House hacking is a powerful tool that we love to discuss with clients, and it is not just a workaround; it’s a mindset shift that turns today’s market challenges into strategic advantages. As brokers, we have the opportunity to educate our clients, expand their options and help them build wealth in creative ways.

Julie Busby is the founder and president of Busby Group, and in the top 1 percent of Chicagoland brokers. Follow her on Facebook and LinkedIn.