Starter-Investor Hack: Multi-units

Imagine living in a home that pays you every month. That’s not a fantasy—it’s called house hacking, and it’s one of the most accessible and underrated paths to real estate wealth.

But here’s the kicker: most buyers have never heard of it.

In this article, we’ll break down what house hacking is, why it works, and how both buyers and agents can benefit from this strategy.

What is house hacking, exactly?

House hacking is when you live in a property and rent out part of it to offset (or eliminate) your housing costs. It’s a real estate investment strategy disguised as a primary residence.

Here are the most common versions:

• Multi-Family Hack: Buy a duplex, triplex, or fourplex, live in one unit, and rent out the others.

• Room Hack: Buy a single-family home and rent out spare bedrooms.

• ADU Hack: Live in the main house and rent out an in-law suite, garage apartment, or tiny home in the yard.

Why is house hacking so powerful?

1. Live for free (or close to it)

   Rental income can cover your mortgage, utilities, and even generate profit—turning your biggest expense into a cash-flowing asset.
   

2. Low down payment options

   Because you’re living in the home, you can use owner-occupant financing:
   

   • FHA loans (as low as 3.5% down)

   • VA loans (0% down for eligible buyers)

   • Conventional 5% down

   You’re essentially buying an investment property without needing investor-level capital.

   
   

3. Build wealth while you sleep

   You’re gaining equity, tax benefits, and cash flow—all while building your landlord chops. (Don't forget to get it in writing so you can prove the income when talking to finance pros.)

Leverage traditional financing option

Let's dig deeper into FHA financing. It’s a government-backed loan program that’s designed to help people get into their own homes, especially first-time buyers or those who might not have perfect credit. One of the coolest things about it is the low down-payment requirements, which makes jumping into the real estate game a lot easier—especially if you're eyeing multi-family homes where you can have a few tenants.

When you’re looking to buy a multi-family property, you can use FHA financing. The best part? You only need to live in one of the units as your main home. Plus, you can count the rental income from the other units when figuring out your debt-to-income ratio. This could help you qualify for a bigger loan than you might think! It’s a great option for anyone wanting to dive into rental properties.

Living in one unit while renting out the others means you can bring in a steady stream of passive income. Like we said earlier, this rental cash can help cover your mortgage, property taxes, insurance, and even those pesky maintenance costs. Sometimes, you might even end up with extra money after all the bills are paid, which is perfect for saving or investing elsewhere.

And let’s not forget about the potential for equity growth! As property values go up over time, you get to benefit from that increase. You can tap into that equity later for future investments, renovations, or whatever else you might need. Plus, owning a multi-family property can bring some nice tax perks. Landlords often get to deduct expenses like property management, repairs, and depreciation, which can really boost your financial situation.

The underlying benefits of multi-family living

Aside from the financial perks, living in a multi-family home can really help build a sense of community. Homeowners usually find themselves closer to their tenants, which can lead to great relationships and a more stable rental situation. Being close by also means you can respond to tenant needs and maintenance requests faster, making tenants happier and more likely to stick around.

Plus, owning a multi-family property can be a great first step toward bigger real estate investments.

As you get the hang of managing tenants and keeping up with property maintenance, you might feel more confident about expanding your real estate ventures. This experience is super valuable when dealing with the ins and outs of property management and investment strategies.

Why haven't you heard about this?

Surprisingly, many real estate agents don't suggest the idea of living in one unit and renting out the others, even though it has a bunch of benefits. This could be because they:

• Focus only on traditional single-family homes

• Assume buyers aren’t interested in becoming landlords

• Don’t feel confident explaining investment strategies

• Aren't familiar with the special FHA carve out and other financing options

  
  

But here’s the truth: Buyers—especially millennials and Gen Z—are actively looking for ways to build income through real estate. House hacking is the perfect entry point.

Wrapping it up: Living in one unit of a multi-family home and renting out the others is a smart move. It lets you enjoy the perks of owning a home while also bringing in some extra cash. Thanks to FHA financing, this option is easier to get into than ever, so it's definitely worth considering if you're looking into real estate. By going this route, you can snag a place to live and set yourself up for a solid financial future.