The real estate market today is more than challenging, but some Millennials are using an innovative concept known as “house hacking” to build property portfolios. While many are doing this across the country, the trend has really taken hold in Florida, according to real estate fin-tech company Roof Stock. House hacking involves renting out part of one’s home to help cover mortgage payments or generate additional income. This strategy is particularly appealing to young buyers struggling with rising home prices, limited inventory, and high mortgage rates.

1. What is house hacking?

Say you buy a four-bedroom home and rent out the three rooms while living in the fourth. This is considered house hacking. If you have a duplex and are living in one unit while renting out the other is also considered house hacking.

2. Any type of property works

You can do this with any property–condos, townhomes, multifamily properties, accessory dwelling units (ADU), and more. Since the average American household spends almost 33 percent of its income on housing, House hacking is a potential income generator.

3. House hacking example

Michael and his two best friends decide to move in together. Michael purchases a three-bedroom condo and pays $1,500 monthly in total housing expenses. If his friends each pay $750, Brandon lives there for free while also building equity, according to Bigger Pockets. He can also use the house payment savings to re-invest in another property.

Househacking is the easiest way for the everyday person to become a millionaire.

— Ademola “A.D.” Dawodu | 🏘 Investment Specialist (@adtheflyrealtor) November 2, 2023

4. Property and investment tax

House hacking allows homeowners to avoid higher property and investment tax rates associated with traditional investment properties. By renting out rooms or units within their primary residences, property owners can improve their financial well-being as well as expand their property portfolios, according to Rocket Mortgage.

5. More Savings

You can enjoy tax savings through deductions on a portion of your housing expenses and simultaneously benefit from depreciation. On top of this, your home’s property value will appreciate over time as you build equity.

You’ll also qualify for owner-occupancy financing. “Since your property is also your primary residence, you’ll qualify for lower interest rates and better financing terms. As a bonus, you get to keep your owner-occupied loan even after you move out if you decide to convert your home into a long-term rental,” Bigger Pockets reported.

Photo by RDNE Stock project: https://www.pexels.com/photo/woman-throwing-moving-box-to-friend-7464479/