House Hacking
"House Hacking" is a fantastic way for investors that are early in their careers to get into an expensive market like Santa Barbara. Instead of buying a Single Family Home and living in it, a House Hacker will buy a multifamily property (usually 2-4 units), and they will live in one of the units and rent out the others. This effectively supercharges your buying power, because the rental units greatly impact the income component of your Debt-to-Income (DTI) ratio, which is a key metric banks use to determine how much they will lend you.
Many House Hackers will live in their property for two years, saving up money that they are making from rent. Then, after two years, they will repeat the process, buying another property that they can House Hack, thereby growing a multifamily portfolio over the course of a few years.
Key Benefits of House Hacking
Increased Buying Power
Rental income is factored into your debt-to-income ratio, greatly increasing your buying power without increasing your out-of-pocket monthly mortgage payments.
Turn a Liability into an Asset
Instead of losing money every month on your primary residence, you can actually live in the black, with your tenants paying for your entire mortgage.
Generate Passive Income
The beauty of rental property ownership is the generation of passive income. You can generate a significant amount of income with a relatively small amount of work (or no work if you opt to hire a property manager!)
Opportunity to Build a Property Portfolio
By House Hacking repeatedly, you can build a multifamily property portfolio over the course of just a few years.
Access to Expensive Markets
If you think you can't afford to buy a home in Santa Barbara, House Hacking may change that. By buying a multi-family home, you can enter a market that didn't previously seem possible.
Can be Applied in SFRs with ADUs
If you don't like the idea of living in a multifamily property, you can apply this same concept to any single family home that has an ADU already built. You can even live in the ADU yourself and rent out the main house for more money!