Some Americans are house hacking their way to homeownership and rent-free living

After calculating single-family home numbers, Christopher Lynch decided that a $2,200 monthly mortgage payment wouldn't work, but he knew he wanted to own a home and build equity.
"I didn't want to rent anymore and wanted to keep my bills as low as possible," says the 29-year-old.
It was at this point that Lynch discovered house hacking, a real estate strategy that, broadly speaking, means finding ways to generate income from your home to help offset your expenses. It's a move that could become more popular as Americans grapple with both runaway home prices and rents.
"It's a real game changer because you become a homeowner and essentially live for free," said Lynch, who, with the help of a specialist realtor, began an extensive search that ended with the purchase of a townhouse-style duplex in West Warwick, Rhode Island.
A For Rent sign is posted in front of a home available for rent on March 15, 2022 in Los Angeles, California. Single-family home rental prices are skyrocketing, rising a record 12.6 percent year-on-year in January, according to new data from CoreLogic. (Photo by Mario Tama/Getty Images)
While home hacking can be as simple as renting out a room in your home, it traditionally involves buying an apartment building, living in one of the units, and renting out the other. The mortgage on the property -- and other associated housing costs -- is covered by the tenants renting out the extra space.
Like most home hackers, Lynch took out an FHA loan so he only had to put down 3.5% of the purchase price.
Lynch's initial monthly payment was $2,090 per month, and he collected $1,100 in rent. That brought his monthly expenses down to $990.
“With my equity gained, I refinanced, removed my [private mortgage insurance] and reduced my payments to $1,790. Then I was able to increase the tenants' rent to $1,300," he said. “Hacking houses has reduced my monthly expenses to just $490 a month out of pocket. In today's market, the apartment I'm in would rent for $1,800 a month.”
Lynch was so enamored with the process of building wealth that he has since pursued a career in real estate and helping others become true home hackers. That's not to say that house hacking, which has grown in popularity in recent years, is for everyone.
"You have to have a plan," says Melissa Forrest, who founded Host Life with her husband Zev to teach others how to successfully navigate the process to earning a steady income.
“If our customers want to make money right away, we ask them to look at what they have and see what they can do with it — whether it's renting out a room or making small improvements to their home like adding a new home. For example, turning a door into a wall if privacy is an issue,” said Forrest, who is currently monetizing a former garage converted into a studio apartment. "These are entry points into house hacking."
A 'For Rent' sign is posted outside a home in Arlington, Virginia, June 8, 2021, as the U.S. Supreme Court declines to block the U.S. Centers for Disease Control and Prevention's pandemic-related moratorium on evictions . Picture taken June 8, 2021. REUTERS/Will Dunham
More sophisticated hackers have more sophisticated strategies.
One of the biggest challenges is finding the right home in the right place, said Logan Allec, a home chopper at a four-unit estate in Santa Clarita, Calif.
"It's not like you can do this in a hot market like downtown Seattle, but you could do it an hour or two east of Seattle where there's less competition and things aren't as crazy from a pricing perspective." said Allec.
Allec, a CPA and founder of a tax break company, said he works from the outside in, working with an experienced lender and agent.
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