Are you looking for ways to make extra money, but don’t have much time to give? Do you want to invest in real estate, but already have a big mortgage of your own to pay? If you own a home or land, you may have just what you need.
House hacking is when you rent your primary residence to help pay the mortgage. The most common form of house hacking is having a roommate. But there are many other forms of house hacking that you may prefer and haven’t thought of yet.
We can also extend the house hacking concept to unused land. Have you thought of all the ways you could use the extra land around your house to create revenue? How about the raw land you’re holding for the future? This is called land hacking.
Let’s dig into house hacking and land hacking strategies that you can use to turn your personal real estate into an investment.
1 Rent a spare bedroom
Renting a bedroom is the most obvious house hacking strategy. Most recent high school graduates start out this way, whether they own or rent. This makes it an easy extension in early adulthood.
Why rent when you can own and have your roommate pay the mortgage?
Having a roommate saves a lot of money compared to living alone. It doesn’t cost more money to heat and cool a house with an extra person in it. Trash, Wi-Fi, and cable/streaming services can be split. And fixed costs are a big part of most water, sewer, and natural gas bills.
There may be some extra wear and tear to floors and appliances with more use. But the roof, AC system, electrical, and paint don’t age any faster.
The financial side is a no-brainer. The bigger decision is the roommate you choose. A roommate can be a great friend who gives you company at home. Or someone whose lifestyle habits you despise and whose personality doesn’t mesh well with yours. So choose your roommate wisely!
1.1 My roommate experiences
I had 7 different roommates in college. Oddly enough, the first 3 were named Adam. Then there was Aaron, Barry, Brandon, and Chris. Literally the ABCs of roommates.
Two of them were friends of mine before living with me. The others were chosen more randomly. So I’ve had plenty of good and bad roommate experiences. Some were easy to get along with and I enjoyed having them around. Two of them were challenging.
I had to evict one after he stopped paying rent, accused me of stealing a frying pan that he lost, and threatened to get his lawyer friend involved. But before then, he was fine.
I only saw the other one when he hurried between his room and the front door, either going to work delivering pizzas or grabbing fast food to bring back to his room. He spent all of his free time playing World of Warcraft. I don’t think he ever stepped foot in the rest of the house since the room had an attached bathroom. It was one of the most disgusting things I’ve ever cleaned when he moved out a year later. Sorry for the image.
It’s fun to tell stories about the more unique situations. But my overall experience with roommates was good enough that I even considered it later in life.
House hacking doesn’t have to stop just because you got married and settled down with a permanent “roommate”. Early in marriage, my wife and I considered renting an extra bedroom to college interns at the company we worked at. And we did rent to our good friend for 2-3 weeks at a time when he rented his condo for the Gem Show in Tucson; doing some house hacking of his own!
So find a good roommate and make some money!
2 Buy a multiplex, live in one unit, and rent the others
A duplex, triplex, or quadplex can be a great investment, especially when you plan to live in one of the units.
A building with 4 living units or less is considered residential property. Anything above that is commercial. This means you can get a primary residence loan with a lower interest rate as long as you live there. And you’ve bought yourself one, two, or three rental units to go along with it!
With this type of house hacking, you have your own living arrangement with tenants to pay your mortgage. You can avoid having roommates if that works better for you. Or you can still have a roommate to make an even greater profit.
Most duplexes have the single-family house feel rather than the apartment feel, which makes them very private. Just check the insulation between units to make sure you won’t be hearing your neighbors after hours.
With a multiplex living situation, you can still keep a close eye on your tenants. And you’ll still want to choose them wisely since they’ll be your neighbors. But you won’t have to be concerned with whether or not they close the toilet seat, eat garlic and anchovies, or walk around shirtless all day.
3 Airbnb your house when away
Would you like someone to pay your bills every time you go on vacation? That’s what happens when you use your home as a short-term rental.
You can even hire a service like Evolve or Vacasa to do all the advertising for you. All you have to do is remove personal items, leave some room in the dressers and closets, and be willing to have a stranger live in your home when you’re not there.
This is a great option for anyone with an entrepreneurial mind who isn’t too private. And depending on where you live, you can make great money on short-term rentals.
I didn’t do this with my primary home. But I did use the vacation home that I’m now living in full-time that way. Whenever we weren’t there, it was up for rent. We had an “owner’s closet” where we locked up anything valuable that wasn’t for renter’s use. And the vacation home paid for itself! Plus we didn’t have to winterize it or worry about maintenance issues going unnoticed for too long. Someone was always checking in on it.
4 Convert an attic, basement, or garage into a rental
If you have unused space in your house, you may be able to convert it to a rental unit. I’ve seen many garages converted to living quarters. I’ve also seen basements and attics with separate entrances and full kitchens as well.
This was something I looked into when I was considering a job in San Diego years ago. My wife and I didn’t want to pay a mortgage on a million-dollar home. But the house we liked most had a separate garage with an apartment above it that could be rented full-time or as an Airbnb. If we moved there, we would have done something just like that to house hack our way into a very nice property.
5 Add a tiny house, airstream, or yurt as a short-term rental
There are many options for temporary rental units that you can set up on your property and make serious money. This is a hybrid of house hacking and land hacking. It’s the land you’re using most, but the house’s utilities or other amenities that will make the accommodation more comfortable.
I’ve seen multiple airstreams in the resort town I live in that are constantly rented by vacationers. They’re set up with nice outdoor living spaces to add square footage in the warmer months. And they’re made to look like a fun and cozy getaway that’s outside of the normal hotel experience.
“Glamping” is another trend, where you can rent a luxury camping experience to vacationers looking to get a little closer to nature. Or they just want something less expensive.
You need to live in a desirable location without strict neighborhood association or government rules for this to work. But many people have made money this way without much overhead cost or upkeep.
Be creative and make a profit you didn’t know was possible!
6 Rent a space for RV hook-up
The next best thing to creating your own temporary rental unit is to rent a spot where someone else can hook up on your property. Again, this is a hybrid of house hacking to get the utilities and land hacking. But I would call it more of a land hacking strategy.
RVers are self-contained and won’t need much from you. So this is a pretty simple business to run. You shouldn’t need to be around to answer questions. But you will also make less money than some of the other options. An RV hook-up and parking space obviously doesn’t rent for as much as a housing unit.
Websites like RVProperty.com can list your space for rent.
7 Lease land for ranching or farming
This is the first pure land hacking strategy on the list. All it requires is raw land that’s zoned appropriately and suitable for raising livestock or growing produce. And possibly the water rights to support the activity.
Some ranching operations require other utilities to be brought in. So there might be some infrastructure costs there. But if you’re just going to have animals grazing on your grass, all you need is the fence to keep them in.
Don’t count this out yet if you live in an urban area. Urban farming is making a comeback in some cities. And there are still cattle operations on the edge of the Phoenix valley and horses in the middle of Tucson. Take a closer look into the possibilities if you’re really interested in this.
8 Lease land for its natural resources
Another land hacking strategy comes into play when your land has natural resources.
In some areas, water rights are very valuable and can be sold to someone else if you don’t need them. You may also have oil or minerals that can be extracted or trees that can be sold for lumber as you develop the land.
Or maybe you just own land in a beautiful, secluded area that you can rent to campers or hunters. Natural beauty and wildlife are resources too!
Summary
There are a huge number of house and land hacking strategies out there. With some creativity and entrepreneurism, you can make money on your home or land that you didn’t know was there.
This article covered 8 strategies:
- Rent a spare bedroom
- Buy a multiplex, live in one unit, and rent the others
- Airbnb your house when away
- Convert an attic, basement, or garage into a rental
- Add a tiny house, airstream, or yurt as a short-term rental
- Rent a space for RV hook-up
- Lease land for ranching or farming
- Lease land for its natural resources
Which one works for you?
If you haven’t read the other articles in the Pathway to FI rental property series yet, here they are:
- Part 1 How to Know if a Rental Property Is a Winner
- Part 2 What Makes the Best Cash Flow Rental Property
- Part 3 How to Know if You Should Invest in Rental Property
- Part 4 How to Find Good Rental Properties to Buy
The simple ROI calculator discussed in the first 2 articles is my most valuable tool.
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