According to Business Insider, Americans blow an average of 37% of their after-tax income on one expense: housing. Imagine what you could do with all that extra money if you no longer had to pay for housing.
Fortunately, with great cost comes great opportunity to save. Housing is one of the many things you can get for free with a little creativity and effort. Try one of these 10 house hacking ideas to snuff out your housing payment, and start putting more of your paycheck toward retirement, travel, or your children’s education.
1. Become a Building Manager
Owners of apartment buildings often offer free rent in exchange for basic property management responsibilities. Those responsibilities can include showing vacant apartments, collecting rents, fielding maintenance calls, and contacting contractors and handymen. If you’re not interested in management work, you could perform maintenance work.
For small apartment buildings, the landlord may only offer a discount on rent. For larger buildings, the landlord may pay property management fees in addition to offering free rent. Like everything else in life, your compensation for taking on these extra headaches is negotiable.
Action Steps to Get Started
Hit the Internet to search for property management, building management, or building superintendent positions in your area. Post ads on Craigslist and try reaching out to owners of small and mid-size apartment buildings in your area to see if they’re open to making a deal.
2. Buy a Multifamily & Move In
If you didn’t find much traction among landlords of other buildings, why not become the landlord yourself?
You can buy a duplex or small multifamily home, move into one unit, and rent out the others to cover the entire mortgage payment. With a conventional or FHA mortgage, you can buy properties with up to four units. It comes with the low down payment of a homeowner mortgage, and if you’re worried about having enough income to qualify, you can even use the future rents of the other units toward your income.
Keep in mind that your mortgage payment isn’t the only expense you’ll incur as a property owner. You’ll be responsible for maintenance and repair costs, you’ll occasionally have vacancies, and managing the other units involves some labor on your part — all expenses that impact your cash flow. Of course, you can always hire that out to a property manager if you like.
Another perk of house hacking with a multifamily property is that when you move out, you’re perfectly positioned to keep it as an income-producing rental property.
Action Steps to Get Started
Talk to your real estate agent about searching for two-to-four-unit properties in your area. Get comfortable with forecasting rental expenses, and speak with several lenders about whether they let you include rents from neighboring units toward your qualifying income when buying a small multifamily property.
3. Rent Out Rooms to Housemates
My first home was a two-bedroom townhouse, but I was single, so I posted an ad on Craigslist for a housemate. After screening several applicants, I signed a lease with a woman named Erika. She was a stranger, and at first, I was just happy to have 70% of my mortgage and half of the utilities paid by someone else. As we got to know each other, we started spending more time together. She eventually became a close friend, and we’ve traveled internationally together along with each of our spouses.
The moral of the story is that housemates get a bad rap, but they can be a fun and effective way to cover much of your housing costs.
And housemates aren’t only for the young and single. My friend Deni brought in a housemate after her divorce when she was struggling to get by with four young daughters. Her housemate loved children, and she ended up watching Deni’s daughters whenever Deni needed some extra help.
Action Steps to Get Started
If you have a spare bedroom, post it for rent on Roommates.com, Zillow, Trulia, and Craigslist. Beyond standard tenant screening, also ask applicants lifestyle questions: What kind of hours do they keep? Do they like to entertain guests at the house? On a scale from 1 to 10, how important is cleanliness to them? Make sure that it’s not only a good financial fit but a good personal fit as well. Start with this guide on renting out a room in your house.
Pro tip: Properly screening tenants can help prevent issues down the road. RentPrep allows you to pull credit reports and credit scores. You’ll also be able to do a full background check that includes a national eviction and bankruptcy search. Sign up for RentPrep.
4. Rent Out Space on Airbnb
If you don’t like the idea of a long-term housemate, consider renting out spare rooms on Airbnb when it suits you. Having guests for the weekend may be more manageable for you than having to share your home permanently.
My friend Renee loves hosting guests on Airbnb. She rents a two-bedroom apartment, and the second bedroom is on a separate floor with its own full bathroom. She rarely sees guests when they stay, and if she can rent her spare room for seven days in a month, it covers most of her rent.
Do you travel for work or spend many nights at your significant other’s or parents’ house? You can also rent out your entire home on Airbnb when you’re not using it. For younger and more flexible adults, this can be an effective way to leverage your living space. Renting out your home for two weekends each month might cover your entire rent or mortgage payment.
Action Steps to Get Started
Create an account with Airbnb and start pricing out similar rooms or homes in your market. Get a sense for what you can charge and how often you’re willing to rent out space in your home. Then check out these tips for being a successful Airbnb host.
If you rent your home, make sure you check your lease agreement for clauses that prohibit subletting. To be extra cautious, you can also check with your landlord to confirm they allow subletting. Finally, double-check any local legal restrictions on short-term rentals.
5. Add a Basement or Above-Garage Apartment
Does your basement have a separate entrance? How about your garage? Not every home is conducive to adding a basement or garage apartment. But in many homes, the costs can be low and the payoff high.
If it would cost you $6,000 to add a finished basement apartment, for example, and you could rent it for $1,000 per month, then it would take only half a year for the project to pay for itself and start covering a hefty chunk of your mortgage. More finished square footage should boost your home’s value to boot.
Action Steps to Get Started
Ask for referrals for at least three contractors and verify them on Angie’s List. You can also use HomeAdvisor to find contractors that have already gone through a detailed background check. Get three quotes to determine cost and feasibility for your home. Research market rent for the space and make sure the numbers make sense before making the decision. If you’ve never been a landlord, talk to a few veteran landlords first.
If you’re thinking about how you’ll pay for the work, you can tap into your home’s equity through a HELOC from Figure.com.
6. Build or Buy a Guest House
A guest house is a detached, self-contained living unit on your property, also known as an in-law suite, granny pod, casita, or accessory dwelling unit.
They’re not cheap; you can expect to pay anywhere from $10,000 to $100,000 or more for one. But the good news is that they can add enormous value to your home. How much value will depend on your market, so talk to a real estate agent before you meet with a loan officer.
Unlike most of the other options on this list, adding a guest house is a major long-term investment. It could take years to recover the cost, so beware before building or buying.
With that said, if you think it likely that an aging parent will need to move in with you in the coming years, adding a guest house now can help you recover some or all of the costs through rent in the meantime. And it remains a lucrative house hacking strategy afterward.
Action Steps to Get Started
Price out options to build a guest house or to buy a prefabricated structure. You have plenty of choices, from cabin kits to shipping container homes. Consider your family’s long-term needs and ask your real estate agent’s opinion on how it might impact your home’s value. Do not buy lightly!
7. Rent Out Storage Space
According to self-storage industry publication SpareFoot, 1 in 11 Americans pays for extra storage space. It’s a booming industry, and one that you can participate in if you have storage space to spare.
This tactic works best if your storage space has a separate entrance for convenient access. Even if you don’t have any storage space, you could always build or buy a garage if you have plenty of land.
My friend Jerry had a large detached garage, and unlike many men, he resisted the temptation to fill it with unused tools and junk. Instead, he rented it out as storage space and covered a third of his mortgage. That’s not as lucrative as other options on this list, but it also came with no costs or work. He almost never saw his renters; it was effectively free money with no inconvenience or downside.
Action Steps to Get Started
Start by researching the going rate for private storage units in your area on websites like Neighbor and StoreAtMyHouse. Keep in mind that climate control, location, and accessibility all affect storage space rates. Before spending any money on modifications, building, or buying storage buildings, run a test ad on Craigslist or another local classified service to confirm local demand.
8. Do a Live-In Flip
Are you handy? Do you like working around the house? If so, consider house haking through a live-in flip. It’s exactly what it sounds like: You buy a habitable home that needs significant cosmetic updates and renovations, make them while you live there, and then sell the property for a profit.
Note that the property must be habitable, and not just according to your definition. If you plan on getting a mortgage, such as a 203k home improvement loan, the appraiser will need to sign off on the property being habitable.
While some tactics on this list will only partially cover your housing expenses, doing a live-in flip can leave you with significant profits in your pocket beyond your housing expenses. If you buy a house for $150,000, put $30,000 of updates into it, and sell it for $230,000, you’ll walk away with a tidy paycheck even after paying real estate agent fees and other closing costs.
For that matter, no one says you have to do the work yourself. You can always hire a contractor to do the work and never lift a finger. But be prepared to live with dust, noise, and construction in your home either way for the duration of your project.
As a final thought, keep in mind that if you live in the property for at least a year, your profits will be taxed at the lower capital gains tax rate. If you live the property for two years, your first $250,000 in capital gains, or $500,000 for married couples, is tax-free.
Action Steps to Get Started
Start looking for fixer-uppers with your real estate agent and chat with several prospective lenders about their owner-occupied renovation loan programs. If you’ve never done a project like this before, read up on how to effectively flip a house to make sure you fully grasp the fundamentals.
9. Host a Foreign Exchange Student
This is among the more creative house hacking tactics I’ve ever seen. My friend Deni recently did this. She and her husband had a large suburban house with a large suburban mortgage, but their children had all left the nest. The traditional maneuver at this stage in life is to downsize, except they didn’t want to downsize. They loved their home and weren’t ready to part with it yet. So, instead of shrinking their space to meet their family, they grew their family to fit the space.
They found a foreign exchange student placement service that pays a generous stipend and welcomed a 15-year-old Chinese student named Alex into their home. The stipend covers over half of their mortgage payment, plus the house has come back to life with the energy and commotion of young people. It’s a family home again.
Action Steps to Get Started
Research foreign exchange student placement services. Deni used the Cambridge Network, but other student placement services include the American Homestay Network and USH.
10. Get a Job That Provides Free Housing
I house hack through this method. Or, more accurately, my wife does: She works for an American school in Abu Dhabi, and it’s a spectacular deal. The school provides us with free upscale housing, full health insurance, and paid flights home every year. Our next stop is Brazil.
Of course, international schools are not the only employers that offer free housing. Many caregiver positions include live-in housing, as do property caretaker positions and some private security positions. The military also offers free housing.
Many overseas travel opportunities offer free housing as well. You can’t beat a chance to see the world and live for free.
Action Steps to Get Started
There are likely jobs available somewhere that offer free housing for someone with your skill set. The question isn’t “if,” but “where,” so go out and find them. For example, if you’re an IT specialist, you better believe that international schools have positions for IT.
If you’re interested in international education, my wife uses Search Associates for job placement, and other recruiting services include Global Recruitment Collaborative and The International Educator. Education aside, you can check mainstream job listing websites like ZipRecruiter and Indeed for other jobs that include free housing.
Final Word
Most people never question expenses like housing, food, and car payments. They simply assume that everyone has to pay for them – except not everyone does.
There’s always a creative way to spend less without getting less value. The first step is simply suspending disbelief. Start from the assumption that there’s a way for you to live for free, rather than assuming you need to spend 37% of your paycheck on housing. While you’re at it, you can kick off your real estate investing career, whether you buy a multifamily property or single-family home to partially rent out, do a live-in flip, or keep it aftward as a rental property.
You have plenty of options. Your mission is to find the one that works best for you.
Have you ever received free housing? How did you do it?
