The dream of living rent free can be a reality with a house hack. While it’s not the easiest real estate investment strategy to pull off, it can and has been done many times before.
So, What Do You Need to Successfully House Hack?
There are a few key elements that need to come together in harmony in order for you to hack your housing. And what you’ll notice from the lists below is that location plays a big role in how successful a house hack is. That’s because location determines the price you can get for an investment property, whether you can find the right kind of multi family homes for sale, and the amount of rental income you can make.
Here is what you need:
- An affordable mortgage with low, fixed interest rates and a low down payment
- A below market value (BMV) property or at least an affordable property
- Rental income that can cover all (if not most of) your housing expenses- property taxes, insurance, mortgage payments, etc.
While you can go about house hacking by renting out a room in a single family home, it’s best to go for a multi family home. This is because you can charge a higher rental rate when you’re renting out a house vs. a room. There are three options for types of multi family homes that work best with house hacks:
- Duplex– 2 units
- Triplex- 3 units
- Fourplex- 4 units
Ideally, a triplex or fourplex would make for the best option for house hacking. That’s simply because there are more units to rent out even with you living in one in the same multi family home. However, there are two issues you are likely to run into if you try to house hack with these two types of properties:
- These multi family homes can be more expensive upfront. So even if the math works out and the rental income covers the mortgage, you may not be able to afford the down payment or mortgage to begin with.
Discover: How to Buy a Multi Family Property with No Money
- It’s harder to find a triplex or fourplex- a duplex investment property is simply more common. While this may not be true for every real estate market, it’s prevalent in many.
So, the cities we are focusing on here are all the best places to house hack with a duplex. If you have your heart set on finding a triplex or fourplex, there is an easy way you can do that. Mashvisor can help you find these multi family homes and analyze them for a house hack in a matter of minutes.
Click here to start your search for the right property to hack.
The Best Cities to House Hack with a Duplex
When reviewing the following list of the best cities to house hack, keep three things in mind:
- The data is taken from Mashvisor’s investment property calculator and is based on the duplex investment listings on the platform.
- The CoC (cash on cash return) and rental income don’t take into account the fact that you’ll be living in one of the units. You will have to use a house hacking calculator to get the full analysis of a specific duplex investment in the city of your choice. (Mashvisor’s investment property calculator can double as one!)
- Any city you choose, you will have to relocate to. This works great if you were wondering how to invest in real estate in your 20s and aren’t tied down to your location. But it may not be the ideal strategy if you can’t make a move simply for the purpose of living rent free.
To find an investment property to house hack in any city so you don’t have to relocate, click here.
All of the cities below have a median property price below $100,000 for duplexes and a good CoC return. This makes them great choices for a future house hack for your endeavor to live rent free.
#1. Huntington, West Virginia
- Median Property Price: $89,717
- Traditional Monthly Rental Income: $940
- Traditional Cash on Cash Return: 8%
#2. Malone, New York
- Median Property Price: $83,160
- Traditional Monthly Rental Income: $1,216
- Traditional Cash on Cash Return: 6%
#3. Lyons, Georgia
- Median Property Price: $68,233
- Traditional Monthly Rental Income: $1,201
- Traditional Cash on Cash Return: 6%
#4. Barnesville, Georgia
- Median Property Price: $65,600
- Traditional Monthly Rental Income: $1,072
- Traditional Cash on Cash Return: 4%
#5. Crescent, Oklahoma
- Median Property Price: $70,900
- Traditional Monthly Rental Income: $880
- Traditional Cash on Cash Return: 4%
#6. Leavenworth, Kansas
- Median Property Price: $95,000
- Traditional Monthly Rental Income: $1,152
- Traditional Cash on Cash Return: 4%
#7. Clarksville, Tennessee
- Median Property Price: $89,720
- Traditional Monthly Rental Income: $1,160
- Traditional Cash on Cash Return: 3%
If you want to live rent free, start your search for a duplex in any of these cities right now.
These are just a few cities where the average return on investment for buying a duplex is good and the median property price makes sense for house hacking. However, using the right search tools, you can find properties with higher returns while taking into account you’re financing as well.
It is also possible to find a good investment property to house hack anywhere, even in some of the more expensive cities and maybe even in the city where you live in now.
How to Find Real Estate to House Hack Anywhere in the US Housing Market
If you’re keen on hacking your housing and living mortgage and rent free in your city of choice, then here are the steps to take:
Step #1: Find the Best Neighborhood for House Hacking
Even if you want to stay put in the same city, it’s likely the duplex investment property or triplex you’re looking for is not down the street. You need to go house hunting to find a below market value/affordable multi family home. When we say “house hunting,” we don’t mean driving around as you’ll waste a lot of time and energy- something a new house hacker needs! Instead, use a tool like a heat map. The one below can show you the best neighborhoods based on the following metrics:
- Listing Price
- Rental Income
- Cash on Cash Return
- Airbnb Occupancy Rate (Yes, you can house hack with the Airbnb rental strategy as well! Learn more about this in our House Hacking Guide.)
Set the filters for Listing Price, and then Rental Income and CoC Return until you find a neighborhood that has more affordable investment properties in the city. Pictured above, those would be all the neighborhoods in red.
Step #2: Find the Real Estate Property
Once you’ve found a neighborhood with relatively cheap homes for sale, it’s time to use more filters. Now you want to use the “Multi Family Homes” filter and the “Budget” Filter (pictured below respectively).
This neat filter will make sure you only see the multi family homes for sale in the neighborhood of your choice.
Set the “Budget” filter to suit your budget. This way, you will only see multi family homes that are in the right price range for house hacking.
Step #3: House Hacking Math
At this point, you’ll have a few investment properties to analyze and do the math for. Visit the investment property analysis page and adjust the values for rental income and occupancy rate to account for the fact that you’ll occupy one of the units. Also, be sure to set your mortgage information as well as any other expense information needed.
This way, you can make sure that the rental income is covering all of your expenses and you’re either living rent free/simply saving on housing costs or even making a positive cash flow.
Learn How to Evaluate Multi Family Investment Properties
You will probably have to do this for a few different properties until you find good returns as you aren’t likely to find the perfect property for a house hack in one try. However, because these tools allow you to do all of this in a matter of minutes, you can go through 50 properties in one sit down and find the one.
Now that you’ve found a few potentials, you’ll have to perform home inspections. Once you have all the information, revisit the investment property calculator and adjust the values. This will help you decide if renovations are needed and how they affect your ability to hack your housing.
Ready to Start House Hacking?
If you are ready to house hack in any of the cities above or in another city of your choice, then you need Mashvisor’s tools. Start your 14-day free trial right now and start living mortgage and rent free very soon. This dream can become a reality.
To learn everything you need to know like “What is house hacking?” or “How can I finance a house hack?” we have a complete House Hacking 101 guide for you: The Ultimate Guide to House Hacking.