Hack That House!

I was first introduced to the term “life hacks” by my granddaughter. She was watching shorts of people making everyday life easier with the reuse of an item or the repurposing of an everyday item in a meaningful way. With that quick experience, I learned an innovative word. A new way of describing something I had done before such as, use a hair scrunchy to keep my rolled-up beach mat closed in the back of my truck, or use baby powder to remove sand from my feet. Little ways I have used items otherwise meant for a different purpose to make life a little easier in a pinch. Using what you have at hand to make life easier. It’s a “hack,” a way to “rig” something if you will. What does that have to do with real estate? It’s the word we give to the process; it’s the language of the generation.

Now a couple of years later, and “hacking” your house, is a very real thing. And it’s not a new idea, it’s an idea that’s having a moment, and has even gotten into the slang game, so we are going to talk about it. For centuries property owners and landowners have functioned as landlords and allowed the usage of their ancillary space for a fee charged to a tenant for the usage. Thereby providing the owner with an income from the otherwise vacant or extra property and the tenant with the use of something they do not own. It is symbiotic and when managed correctly can develop beautiful relationships and make the world a little easier for everyone involved.

The idea of renting is not new. What is more prevalent now is renting a space on the same property the landlord is living, or in some cases, in the same building. Hacking your house has become more and more popular because it allows an owner to purchase a house with excess space and rent it out. The income made from the rental is used to cover the expense of the mortgage, either in part or completely, depending upon the situation. Let’s say for example, you buy a house with a garage apartment, and you rent out the apartment over the garage. Or maybe you have a large yard and a tiny house on the property that you can rent out, or you could even buy a small complex with more than one living quarter. If you rent out an area of the property, it can be considered rental income and can be used to cover the mortgage expense of the entire property. This is not a new concept, what’s gained popularity is planning this move and doing it on the outset. Taking out a mortgage that counts on the income and buying with the intention of being a landlord. That is house hacking. Buying a house and the house becomes its own provider. Allowing the house which otherwise would have been meant to just be your home, to become shelter and use for another and thereby, pay for itself.

If you buy a triplex, you can live in one unit and rent out the other two. If you have not planned it in the purchase but you have the space to make it work, you might consider repurposing an area of your home. Maybe you have plenty of room to build above the garage. Do you have a house with around 400 square feet you never see? A smart investment might just be building it out to rent it out. Talk with your tax professional and if necessary, a lender to determine if the home you already own might be a suitable place to expand your investment. Maybe you can be the next “house hacker”?