To keep it simple, house hacking is when you purchase a property and rent out a room or rooms in that property while you still live there.
In Nashville TN, as of June 11th, 2024, it can be pretty expensive to live here with the 7% interest rates and high housing prices. A $400,000 mortgage with a 30 year term would be $2,661.21 a month, before paying taxes, insurance, HOA fees, and setting aside money for future repairs. All in, you’re looking at $3,000 a month. At this price point, if you’re not downtown, you can get a nice 3 bed / 2 bath house or potentially a 4 bed / 2 bath house.
With house hacking, you can reduce your expenses by renting out at least one of those rooms. In my area, you could rent out a room for $1,000 a month as 1 bedroom apartments would run for minimum $1,400 a month. You’d be saving your future roommate money and reducing your cost to own a home. Imagine renting out two rooms for $1,000 a piece. Your monthly expenses would effectively go from $3,000 to $1,000 a month. If you had a 4 bedroom house and rented out 3 rooms, now you’re living in a house for free.
My wife and I bought our first home together back in 2017. It was a 4 bed, 2.5 bath townhouse as we planned on having kids. Our mortgage + HOA was $1,400 a month and we had our room, a guest room, an office for my wife who worked from home, and then a room we used to throw random stuff in. We could have definitely rented out that room for $800+ a month at that time and saved up an additional $600+ a month towards the purchase of our house we have now (which is full as we have 3 kids now!) I knew about house hacking at the time, but didn’t put a lot of thought into it and wish I would have.
My advice, if you’re single or a young couple, is to consider house hacking. It can get you in a nice house and keep your monthly expenses affordable, possibly free!