With "house hacking," homeowning is a dream that can be brought to fruition for some who would otherwise find it to be out of reach.
Now, you may be thinking, what is house hacking? And how do I start? Well, house hacking is a strategy to earn rental income by renting rooms or sections of your home, condo or apartment.
For example, if you buy a four-bedroom home to house hack, you would need to rent out three of the rooms to tenants to cover your living expenses essentially for free while building equity and saving money. This allows you to have your own home while having roommates help pay for it.
The income received usually goes to pay a mortgage, property taxes, upkeep and other expenses a home may generate. If living with roommates is a deal breaker, it may not be the best strategy for you. But by using this method, you can become a real estate investor and invest your cash flow if done correctly.
Realtors from left, Adelino Vincente and Jose Maldonado at 377 Ash St. in Brockton on Wednesday, Oct. 4, 2023.
Are ADUs allowed in Brockton?
Another way to house hack is by building an accessory dwelling unit, which is a fancy way of saying another independent residential unit on the property where you live. But there's a hitch: ADUs are not allowed in Brockton, according to Commissioner of Buildings Jim Plouffe.
"Additional units are principal and not accessory," Plouffe said.
But you may be able to build additional principal units, depending on the zoning of your property. You're out of luck if it's in a single-family zone, known in Brockton zoning jargon as an R1 zone. Those can have only one principal unit. If you're in a multi-family zone, called R2, you may have up to three principal units, based on lot area and other zoning conditions, Plouffe said.
Cities and states have been experimenting with making it easier to build an ADU, often for an aging relative. The city of Boston allows ADUs and offers programs to help residents build one. Gov. Maura Healey has proposed a wide-ranging affordable housing law to force cities and towns to allow ADUs "as of right." That's more housing lingo for having the right to build without going through an onerous local approval processes. The state's point-person for housing, Secretary Ed Augustus, said the change could add 8,000 to 10,000 units in the first five years.
"We think it's time to tackle that," Augustus said recently at a meeting with development reporters from the Enterprise's parent company, Gannett.
From left, Adelino Vicente and Emiel Barbosa, real estate brokers from Vicente Realty in Brockton, are outside a newly constructed house they are selling at 28 Clemens Ave., Brockton, Wednesday, Sept. 20, 2023.
No more than four unrelated adults in a house
If you decide to house hack, you need to know the law.
“Think of it as running a small hotel. You have to go into it with a business mindset,” said Adelino Vicente, realty broker for Vicente Realty of Brockton.
You might think of it as a "small hotel" but if you have four or more unrelated adults sharing a house, state law says you're running a lodging house. And running an unlicensed lodging house could get you fined or put in jail for up to three months.
Realtors from left, Adelino Vincente and Jose Maldonado at 377 Ash St. in Brockton on Wednesday, Oct. 4, 2023.
Family members buying a house together
A way to house hack and stay out of trouble with the law would be to limit your residents to family members. Real estate agents are seeing family members buying joint homes together due to the increased housing prices.
Whether it's siblings buying a home together or even friends to break even, many people are not buying homes alone, real estate investor Jose Maldonado said.
“We have high-interest rates and demand, and customer confidence is low. Rent and cost of living is so high now we’re in a weird place,” he said.
Realtors from left, Jose Maldonado and Adelino Vincente at 377 Ash St. in Brockton on Wednesday, Oct. 4, 2023.
High rents mean more roommates
In Brockton, on average, a one-bedroom costs around $1,600-$1,900, and a two-bedroom is around $2,400.
Rents in Brockton and the surrounding areas are so high that it's forcing people to rent out rooms in people’s houses for less than the average rent payment. Room rentals are going from $700 to $1,200 in Brockton.
Now if your mortgage is $3,500 and you have three tenants paying $1,000 each, you’re basically only paying $500 for rent, which gives you more money to play with.
“It's all a numbers game,” Maldonado said.
Even as a first-time homebuyer, this method can work for you, and if you need assistance, there are several grants and loans to help in Massachusetts, including FHA.
An FHA loan is a low-money down payment program with a 3.5% down payment. It allows borrowers with a lower credit score to obtain a home.
Buyers can also look into several other programs to accomplish their goals:
NACA Housing Program — The Neighborhood Assistance Corporation of America ("NACA") is a non-profit, community advocacy and homeownership organization. NACA's primary goal is to build strong, healthy neighborhoods in urban and rural areas nationwide through affordable homeownership by making it easier financially and teaching buyers how to become a homeowner.
MassDREAMS (Delivering Real Equity and Mortgage Stability) — A Massachusetts program that provides down payment and closing cost grants to first-time homebuyers who meet the program's eligibility criteria and who currently live in one of the 29 communities that were disproportionately impacted by the COVID-19 pandemic.
MassHousing — offers down payment assistance of up to $50,000 for eligible homebuyers in 29 select communities and up to $30,000 in every city and town in Massachusetts.
No matter if you have the money saved or are looking for a loan, house hacking is a cool way to benefit from homeownership. It is a nonconventional way of approaching it, and may not be for everyone, but it could be a short solution to helping you get your foot through the door as a homeowner or real estate investor.
Enterprise staff reporter Alisha Saint-Ciel can be reached by email at stciela@gannett.com.
