Some extra money is always nice, right? In this post, I will talk about how we are making extra money by “house hacking” in our single-family home.
Aka, renting out a room in our home.
What is house hacking?
“House hacking” is where you attempt to reduce or eliminate your mortgage payment by buying a multifamily property, living in one unit, and renting out the other(s); or, renting out an individual room in your house.
You then use the money from the rent to put toward your monthly mortgage payment.
We decided we wanted to start house hacking because we have debt we are wanting to pay down and eventually we want to be able to save this income.
House hacking seemed like one of the easier ways we could earn some extra money without having to get an additional job (I guess I mean a W-2 job because being a landlord is definitely a job).
Can I house hack a single-family home?
You can absolutely house hack a single-family home!
We currently live in a single-family home and have been able to make it work for us!
Here are our details —
- General home info: 3b/2.5ba, 1600 sqft, purchase price $320,000, with a loan of $304,000 at a 3% interest
- Mortgage payment: $1634 + 101 (HOA) = $1,735/ month
- Total revenue for renting out one room (includes utilities): $975
- New mortgage payment: $760
Our utilities have not seen much of an increase with an additional person living with us, which I was surprised about, but something to watch out for.
We did not buy this home with the intention of renting it out. After about 2 years of living solo, we were re-evaluating our finances and goals and decided to give it a go!
But there are some people that do go through the home buying process knowing they would like to rent out a room, or multiple, from the beginning.
How do I get started renting out a room in my home?
The first thing we made a decision about was whether we wanted to have a short, medium, or a long-term roommate.
We decided to pursue short/medium-term tenants because we didn’t want to commit to living with someone long-term just yet.
Some questions to consider when house hacking a single-family home:
- How long are you offering the room? (a few nights, a few months, or a year+)
- Are you providing a furnished room?
- Where will you find the roommates? (air BNB, furnished finder, Facebook, word of mouth)
- How will you screen them? What questions will you ask them?
- Will you require a deposit? How much?
- What will you put in your lease? You can have a lawyer draw up one or use a website like EZ Landlord Forms, click here to visit their website!
- Will you allow pets?
- 1 occupancy, 2, 3+?
- Do you need a permit to rent out your home?
What we decided to do:
Like I said above, we are only offering medium-term leases of about 1-6 months.
The room we are providing is furnished and all utilities are included.
We found our first renter from a housing Facebook group in our area, but now we are solely using Furnished Finder and have had great success! (It’s $100 a year to list on their platform.)
We aren’t using Airbnb as I feel like Airbnb is geared towards very short-term rentals, and for us to not need a permit, we had to rent out the room for 30+ days.
Nothing wrong with needing to get a permit – we just didn’t want to go through the hassle! And it’s kind of nice to not have high turnover because we do clean the room/bathroom between guests.
We do have all tenants sign a lease and we made one using EZ Landlord Forms.
Tips for making the most of your rental income
Do what you want with it! It’s your money.
In terms of taxes, I would check to see if you should be withholding a portion of the income for taxes.
We talked to the person who will be doing our taxes next year and he said we don’t need to put anything aside for taxes as landlording does not have much impact on taxes, but setting aside money is not a bad idea either!
But if you’re serious about pursuing this, I would talk to someone about your personal tax situation.
Final thoughts on how to house hack a single-family home
I would highly recommend this as another method for bringing in extra income if you can make it work.
You definitely have to be okay with people in your space! We have had to get used to it.
But it’s definitely worth it with the money we are bringing in at this time.
And, we have met some great friends along the way. A bonus for sure!
If you’re interested in learning more about house hacking or real estate in general, I would highly recommend checking out The FI Couple’s website here!
Have you house hacked before? Would love to hear about your experience/methods in the comments below!