House hacking is a term used for a specific strategy that is ‘hacking’ your way into real estate investing.
House hacking is when you create an income stream from the property you are living in. The most aggressive house hack is purchasing in a 4plex, living in 1 unit and renting the other 3. Other options include: renting one or more roommates, purchasing a 2 or 3 unit property, living in 1 unit and renting the other units traditionally or on AirBnB.
This method is not for everyone, but those who are determined and have some flexibility in where they live, this strategy allows investors to build their portfolios with little to no money down.
Using FHA or other low down payment programs, investors qualify for an owner occupant loan. Most of these loan programs allow you to purchase up to a 4 unit property, the only catch is you must live in one of the units for at least 12 months. You can repeat this process yearly, up to 10 properties with most loan programs available.
House Hacking is an appropriate approach for buyers who:
The classic House Hack strategy is to purchase a multi-family property, however, this is not the only approach. Any way you can produce income from your primary residence could be considered a house hack, such as:
Here's a tutorial video demonstrating how to use Sagareus House Hack Deal Analyzer:
This video refers to the Conventional Buy & Hold Analysis + Deal Analyzer, which is similar to House Hacking except you don't live in the property. If your plan is to Buy a property using the House Hack strategy, then move out and keep the property long term, analyzing the deal with both approaches is very helpful. Here is the Conventional Real Estate Investing article which includes a tutorial video as well.