September 10, 2020 at 1:56pm | BBHST Admin
By: Kyle Spearin

Over the past few years, how much have you spent on rent?

Looking back on your life, calculate  how much money you’ve spent on rent. It’s probably a pretty large number. Unfortunately, you’ll never see this money again. 

Home buying may seem like a distant dream for you, but it might not be. There is a powerful way to become a homeowner that will save you money on living expenses: house hacking

A house hack is the act of buying a property that qualifies for a single family loan (up to 4 units), living in one unit (or room), and renting out the rest of the house. There are enormous benefits to this method that will help you build wealth (home equity and passive income) while having your tenants pay down your living expenses. 

If this sounds good to you, there are 6 simple steps you can take to begin your house backing journey.

Step 1: Save Enough for a Down Payment

In order to buy a house, you need to save enough money for a down payment. Don’t get discouraged if you think that this is impossible. 

Contrary to popular belief, you don’t need to have 20% saved for a down payment to buy a home. Programs such as the FHA loan make owning a house attainable for first time home owners. The best part? You only need to put 3.5% down.

Now that home ownership is within your grasp, you need to start saving. The best way to set a target amount for your down payment is to work backwards. In El Paso, the average home costs roughly $138,000. With that in mind, you would need to save 3.5% of $138,000 or roughly $4,830 for a down payment (plus closing costs).

Start saving today!

Step 2: Decide on a Strategy that Meets Your Needs

Each individual has their own living preference. If you’re single, perhaps you don’t mind having roommates. In contrast, couples might want more privacy but still want to reap the rewards of house hacking. Whatever the case may be, you need to decide on a strategy that meets your needs.

Luckily for you, there are a multitude of different ways to house hack. Here are a few examples.

1. Single Family

One potential house hacking option is a single family residence. If you decide to employ this strategy, you will be renting out living space by room. This tends to lead to the highest amount in rent. It does mean that you’ll be sharing living space with other people, potentially strangers, so take this into consideration before moving forward.

Within the single family housing umbrella, there are many different options for the type of house you might choose to target. Two commonly debated options are fixer uppers and updated homes.

Fixer Upper

As the name implies, a fixer upper is a house that requires updates. These could be cosmetic, such as new paint or adding granite countertops. It could also refer to a total gut job (beware that if you prefer this type of home you may not qualify for a conventional loan, so check out the 203k loan). In either case, there will be some work to do before renting it out.

As with anything, there are pros and cons. A potential drawback might be living in a space while rehabbing it or the additional costs that go into projects. The benefit of this approach, however, is that you will create something called forced appreciation. Essentially, this means that you will increase the value of your home by making these improvements. This in turn increases your equity in the property as well. 


If you’re not into rehab projects and prefer a more finished product, an updated house is right for you. Chances are that this will cost more money than a fixer upper and as such might require a higher down payment (assuming the price is higher you will need to save more to get to at least 3.5%). 

Although you’ll pay more to get this type of house, there are obvious benefits. One major benefit is that you’ll be able to rent it out right away without completing any projects. You may also be able to charge more for rent depending on your market and the cost of a similar apartment. 

2. Multi-Family

Using a conventional or FHA loan, you are also able to purchase a multi-family home. These will be more expensive, but it also means that you can buy a home with up to 4 units under 1 roof!

 Like a more traditional single family house, there are variations such as fixer uppers and updated places to choose from. When choosing a multi-family home, you have options such as renting out by the room or renting each unit separately, keeping one unit to yourself. 

As you might imagine, this means that you could have tenants in multiple units. There is tremendous income potential if you get the right deal. You may find that there are less of these on the market and when they are available, investors buy them. Don’t let this discourage you if it is your preferred strategy.

Step 3: Find a Great Realtor and Mortgage Broker Combination

To successfully purchase a house, you need to find both a great realtor and mortgage broker. A realtor will help you search for houses and negotiate for you, while a mortgage broker enables you to obtain financing. You really can’t have one without the other.

In order to find great realtors and mortgage brokers, start by asking for referrals. Many times people begin their search by finding a realtor. The realtor, in turn, can recommend a mortgage broker that works with them. You can also follow the inverse process and start with a mortgage broker. Both are essential to closing any real estate deal.

Step 4: Find a House

At this point, you’ve already defined your purchasing criteria. After you find a rockstar real estate agent, you can tell them exactly what you’re looking for and have them set up an MLS search. From there, you will begin to go to open houses and eventually find the house you’ve been looking for.

Step 5: Rent it Out

Finding renters will lower your monthly costs,pay your mortgage, and maybe even give you additional income on top of this. For these reasons, this is the most essential step to a successful house hack. 

Step 6: Repeat

Wash, rinse, repeat. After living in your house hack for 1 or 2 (there are tax benefits) years, it’s time to replicate the process. Now you have an income producing asset that you can sell or hold as you move into your next property.

Final Thoughts

A journey of a thousand miles begins with a single step. Start taking action towards house hacking in El Paso today.



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