The author is not pictured.Inti St Clair/Getty ImagesWhen my husband and I looked at buying a home in a suburb of Jacksonville, Florida, we considered setting ourselves up to house hack, which would cover the costs of our property.House hacking is where you utilize your primary residence to help you earn income, so you can live for free or drastically reduce expenses.But we found that we couldn't find suitable properties for this strategy where we wanted to live. Plus, having a toddler makes it hard to rent space to roommates or do short-term rentals.Read more personal finance coverage.
As someone who's obsessed with optimizing their financial life, I like to take advantage of any opportunity I can to reduce as many expenses as possible. This means spending less on the three biggest categories in my budget: transportation, food and housing costs.
After drastically reducing my food costs by shopping from my pantry once a month and keeping transportation costs down by staying a one-car family, it was time to tackle housing.
When it came time to buy a house, I had read in many FIRE (Financial Independence, Retire Early) blogs about the term house hacking. It seemed like a great way to reduce costs since many bloggers have successfully slashed their housing costs in half, or altogether.
However, digging deeper and a whole lot of house hunting later, I decided it wasn't the best choice for my family.House hacking enables people to live for free (or almost free)
House hacking is a way you can live for free (or almost free) in a primary residence. Most commonly, you buy a small multi-unit real estate property (usually a duplex), live in one unit, and rent out the others. The idea is that your tenants' rent will cover your housing expenses. Some people use this as a stepping stone to purchase more properties, perhaps a single-family residence, and rent out all units in the first property.
There are also other ways to house hack. Instead of a multi-unit property, you can purchase a single-family home and rent out the bedrooms. You can even get creative and rent out your yard for some who needs space for their RV or boat. If you're handy (or want to invest a bit of cash for a licensed contractor), you can even build an addition to the house or in your yard to do short-term rentals on platforms like AirBnb.
It doesn't require a lot of money upfront to house hack. Yes, you need to qualify for a mortgage and provide a 20% down payment if you want to avoid private mortgage insurance, but if you can find a way to get someone else to pay for the mortgage, you don't have to constantly worry about how you'll make your monthly payments.
This sounds ideal for many people. But for now, it's just not for me. Here's why:Where we live, multi-unit homes are hard to come by
I knew that I had to be patient and pounce on the right property if I wanted to purchase a multi-unit house. That I was OK with. However, the area we wanted to live in — a suburb of Jacksonville, Florida — didn't have multi-unit properties.
Most of the duplexes where we lived centered around the downtown area and it wouldn't have been fair to ask my husband to drive a longer commute just so we could house hack. That could have increased our costs because of a higher gas usage and may have required me to get a second vehicle, furthering increasing the amount we would pay for transportation. Plus, those properties aren't necessarily in the safest neighborhoods.I have a young child, which doesn't make me the best host
Another option my husband and I could have pursued was to rent out bedrooms in a single-family residence. We looked at many houses that might have worked for this: We could have configured the layout to have a separate entrance, or the bedrooms were far away from each other so a short-term rental or roommates wouldn't be too hard.
However, my husband and I decided we didn't feel comfortable having other people on our house, even if we vetted them. Besides, we have a rowdy toddler and we weren't sure if he was going to act up in front of short-term rental guests, affecting our ratings. Roommates were also out of the question as we didn't want to risk our toddler going into someone's room and accidentally breaking something.
If it was just my husband and I, maybe we would have considered it. Right now, our priority is with our child.I focused on increasing my income instead
Sure, it's great to save money on major expenses, but that isn't the only part of having a healthy financial life. My husband and I saved as much money as we can without sacrificing our quality of life, and now it's time to focus on increasing our income.
A few years ago, I had a full-time job and my freelance writing was a side hustle. Once I quit my day job, I've been able to more than double my salary. My husband has also switched jobs and negotiated a higher salary.
Even though house hacking is an excellent way to save money in housing costs, doesn't mean it's for everyone. As long as I watch my expenses closely, spend on things that matter, and set aside a substantial amount for retirement, that's all that matters.