House Hacking
Your biggest monthly expense doesn’t have to just be an expense — house hacking turns it into something closer to a rounding error.
What Is It
House hacking means buying a property — often a duplex, triplex, or fourplex, but also a single-family home with a rentable room or accessory unit — living in one part of it, and renting out the rest to offset or even eliminate the mortgage payment. It’s usually done with owner-occupant financing, which typically allows a much smaller down payment (as low as 3.5% with an FHA loan on up to a fourplex) than the 20–25% typically required for a pure investment property. That financing advantage exists specifically because the owner is living there — lenders treat owner-occupied purchases as lower-risk than pure rental investments, and price the loan accordingly.
Why It Matters
Housing is most people’s single largest expense, and this is one of the few strategies that can meaningfully shrink or eliminate it entirely — which has an outsized effect on savings rate, since the money that would have gone to rent or a full mortgage payment is now available to save and invest instead.
This is a particularly well-known strategy inside the FIRE community specifically because of that leverage on savings rate, not because real estate itself is the point. It also comes with real trade-offs that are easy to underweight going in — sharing a property with tenants, taking on landlord responsibilities, and a level of hands-on involvement that a passive index fund simply doesn’t require. Most house hackers eventually move out and repeat the process on a new property, keeping the original as a straightforward rental once they’ve moved on.
Quick Example
A duplex with a $2,000/month mortgage payment, where the second unit rents for $1,400/month, brings the owner’s actual housing cost down to $600/month — a fraction of what a standalone rental or full mortgage payment would otherwise cost in the same market. Redirect the difference into savings or investing every month, and the effect compounds well beyond the immediate housing-cost savings alone.
See what house hacking would actually save you: