For most people their house is their biggest expense.
It makes sense when you think about it – it’s not really negotiable to have a roof over your head, and if you own it, you are investing into an asset for the future.
But what if you could have those pros, without the con of actually paying for it? House-hacking is a strategy that aims to do exactly that.
In simple terms, house-hacking is anything you do to reduce the cost of your house, or even make it generate money for you.
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The original idea of this is to get a bigger property so that you can have more people living there, and charge them enough to cover the home costs while you live for free.
- Listen to Frances Cook's Cooking the Books podcast below
The most private, but also most expensive, way is getting a property made up of several self-contained units. You live in one of them, and charge others to live in the rest.
A different strategy is if you have a downstairs area you can shut off from the rest of the house.
Or another standalone property like a granny flat is a great one, giving you the option to live in the main house with your family, or move into the granny flat yourself and charge even more to rent out the full house.
You could even just rent out extra rooms to flatmates, for more than the cost of your mortgage or rent. If you do this, be sure to consider how many bedrooms versus how many bathrooms the house has; you don’t want to set yourself up for a daily queue every morning.
Some people even put a caravan in the garden, decorate it nicely, and then open it up to boarders and AirBnB. Many AirBnB landlords say business is already picking up within the domestic market, as New Zealanders get to know their own backyard.
For the brave-hearted, there’s an even more extreme end. Some rent out their house, and live elsewhere themselves. Options can include a tiny home in the garden, or hitting the road and travelling in a van.
It can be as extreme, or not, as you like. What’s important is that you’re figuring out ways to get someone else to pay for your home.
To be honest, this is a strategy that’s easier if you own your own home. You have more freedom to find a bigger property in the first place, and can make any alterations needed to give everyone some privacy.
It’s still possible if you’re a renter, just make sure that your landlord is ok with it. Your money-making scheme won’t go well if it sees you turfed out.
Now imagine how you can combine house hacking with other money saving life changes, like living close enough to work that you walk or bike there. Or simply working from home more often, as many of us learned we could during lockdown.
In both of these cases, you’ve just cut transport costs to nearly zero.
If you’re able to cut both housing and transport costs out of your life, imagine how much faster you could save, invest, and reach other goals.
For those who find housing too expensive, or are searching for a way to pay down the mortgage fast, house hacking can be the golden ticket.
- Frances Cook is the host of the personal finance podcast Cooking the Books. She is not a financial adviser, and all information is general in nature. For individual advice, see a financial adviser.
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