House hacking is a real estate investment strategy where an individual or a family lives in a property while simultaneously renting out a portion of it to generate rental income.
The goal of house hacking is to reduce or eliminate one's housing expenses by leveraging rental income from the property.
In a recent study, "Data from Zillow’s Consumer Home Trend Report indicates that more than half of Millennial and Gen Z buyers view the opportunity to rent out their entire home for rental income as “very” or “extremely” important," the survey stated. The survey found that 39% of homebuyers believe that it is as important to be able to rent out a portion of their home as live in it, an 8% jump compared to 2021.
Young buyers are often attracted to house hacking for several reasons:
Affordability: House hacking allows young buyers to offset their housing costs or potentially live for free by renting out part of the property. This can significantly reduce the financial burden of mortgage payments and other housing expenses.
Investment Opportunity: House hacking serves as an entry point into real estate investing. It allows individuals to start building equity and wealth through property ownership without needing a large amount of capital upfront.
Income Generation: By renting out a portion of the property, young buyers can generate additional income, which can be used to cover mortgage payments, maintenance costs, or other living expenses. This extra income stream can contribute to financial stability and flexibility.
Learning Experience: House hacking provides valuable firsthand experience in property management, landlord-tenant relationships, and real estate investing. It allows young buyers to learn the ins and outs of being a landlord while living on-site.
Potential for Future Investments: Successful house hacking can provide a stepping stone for future real estate investments. The rental income generated from the property can be used to fund the purchase of additional investment properties or to upgrade to a larger home.
Flexibility and Control: House hacking offers flexibility in terms of choosing the property type, location, and living arrangements. It provides control over one's living situation while leveraging the property to generate income.
Overall, house hacking appeals to young buyers because it presents an opportunity to enter the real estate market, reduce living expenses, generate income, and gain valuable experience in property management and investing.