Airbnb House-Hacking: A Better Alternative To Long Term Rentals
By: Ricky S
Tags: Side Hustle, Investing, Personal Finance, Real Estate Investments, Airbnb

Housing costs make up the single biggest expense for most American households, whether through mortgage payments or monthly rent. Consider what life would be like if you didn’t have to pay your mortgage out of your own money. How much money do you think you could save? Though it may seem impossible, it is actually achievable. House hacking with Airbnb allows you to live for free. The primary concept behind house hacking is to leverage the rental revenue you receive from others to pay your own housing costs or even profit.

One of the least utilized methods to get into real estate is to house hack using Airbnb. It entails purchasing a multi-family home, residing in one apartment, and renting out the remaining homes on Airbnb. Most or all of your housing costs should be covered by the rental income from the other units. However, you must be willing to forego your comfort for a period of time. It’s a terrific investment plan for first-time real estate investors, even if it’s not easy to execute. When done correctly, this method can help you develop long-term wealth. This site is for you if you want to learn how to live rent-free with Airbnb house hacking.

How Can Airbnb House Hacking Be Done Successfully?

Renting out a spare room or rooms in a single family home is a great way to get started house hacking with Airbnb. Multifamily properties, on the other hand, are ideal for Airbnb house hacking. This is because renting a unit rather than a room allows you to charge a greater rental cost. You might want to explore purchasing a duplex, triplex, or fourplex. Buying a duplex would be the ideal option for novices because multifamily residences can be highly pricey up front. Depending on where you start your search, a triplex or fourplex may be more expensive up front and more difficult to find.

There are a few factors that must work together in order for you to properly hack your house. In general, house hacking on Airbnb will rely on the following factors:

An income property that is affordable or below market value.

A mortgage with a low interest rate and a low down payment

A substantial rental income that is sufficient to meet housing expenses

Here are the three steps to house hacking with Airbnb, based on these Airbnb house hacking foundations.

3 Steps to Airbnb House Hacking

1. Look into your financing options for investment properties.

If you want to be successful at home hacking with Airbnb, look for mortgages with cheap interest rates and a low down payment. Make sure you fulfill the fundamental requirements of mortgage lenders before you start looking into your possibilities. To secure a mortgage, you’ll typically need a strong credit score, a low debt-to-income ratio, a healthy cash reserve, and enough money set aside for a down payment. A down payment for rental property is normally a minimum of 20% for conventional financing.

Raising enough money for a down payment might be difficult for new real estate investors. As a result, understanding how to buy a multifamily property with little money is critical. Because you will be living in one of the apartments, owner-occupied financing is the best option due to the minimal down payment and low interest rate requirements. FHA and VA loans are two of the greatest loan kinds for Airbnb home hacking. When purchasing a home for personal use, the FHA loan is the most popular option. It only requires a 3.5 percent down payment and does not demand a great credit score.

2. Locate a Good Airbnb Location

In real estate investing, location is crucial. When it comes to Airbnb house hacking, it’s even more important because it determines the investment property price, Airbnb occupancy rate, and Airbnb rental income. For you to have a high Airbnb occupancy rate, the property market should be a tourist magnet. You should research an area’s Airbnb laws to ensure that they are conducive to Airbnb investing. In the United States, certain localities have tight Airbnb rules. For example, there may be limitations on the amount of guests you can host, or you may need to first secure a license. Renting out a non-owner inhabited property on Airbnb is unlawful in some cities, while renting out on Airbnb is prohibited in others. To prevent any penalties, make sure you follow the city’s Airbnb rules.

Using a real estate heatmap, you may quickly identify a successful location for Airbnb investment. Based on criteria like listing price, Airbnb rental income, Airbnb cash on cash return, and Airbnb occupancy rate, the heatmap tool will show you the best performing districts in your chosen city. Simply apply the filters, and the heatmap tool will color-code the neighborhoods based on their performance.

3. Invest in a profitable multifamily property.

The next step is to identify a lucrative multi-family property after locating a high-performing neighborhood for Airbnb investment. If you want to be successful at house hacking with Airbnb, avoid expensive or luxurious residences. You should look for a house that is below market value or that you can afford. Short sales and foreclosures are examples of properties with motivated sellers. These investment properties for sale can be found on a Property Marketplace.

Locate a Lucrative Multi-Family Property

In addition, the rental property should generate enough money to cover your living expenditures. You’ll be able to correctly examine Airbnb investment properties in your preferred neighborhood with our Airbnb profit calculator. The calculator calculates the potential return on investment (ROI) of an Airbnb investment property using Airbnb data and analytics. Remember to factor in the fact that you’ll be living in one of the flats when calculating the occupancy rate and rental income. You should also provide information about your mortgage and other housing bills. This manner, your Airbnb rental income will cover all of your housing costs, allowing you to live rent-free. If your cash flow is positive, it means you’re bringing in more money than you’re spending. However, the rental property’s negative cash flow indicates that it is not suited for house hacking with Airbnb.

Final Thoughts

House hacking with Airbnb, when done correctly, can make your goal of living for free a reality. While living rent-free is an excellent concept, real estate investors can also profit from Airbnb house hacking. This approach can be utilized to make money and build wealth in real estate. You can refinance and buy a second investment property if you’ve built up enough equity.

If you want to start house hacking with Airbnb and live rent-free, following these steps and utilizing technology and resources tools will help you succeed!