I Told My Kids NOT to Buy a House… Until They Do This First!

I Told My Kids NOT to Buy a House… Until They Do This First!

Why I Am Telling My Kids to House Hack

As my kids grow up and start thinking about their futures, one of the biggest financial decisions they will face is buying their first home. But instead of encouraging them to follow the traditional path of homeownership—buying a single-family house and taking on the full burden of a mortgage—I am urging them to consider house hacking instead. Why? Because it is simply the smartest financial move they can make early in life.

What is House Hacking?

House hacking is a real estate strategy where you buy a home, live in part of it, and rent out the other space to help cover your mortgage and living expenses. This can mean purchasing a multifamily property, such as a duplex or triplex, and renting out the other units, or even renting out extra rooms in a single-family home. Instead of shouldering the full cost of homeownership alone, first-time home owners can have their tenants contribute toward their mortgage, drastically reducing their out-of-pocket housing expenses.

The Key Benefits: Why House Hacking Makes More Sense

1. Cutting Living Expenses Early On

The biggest expense for most people is housing. But with house hacking, a homeowner won’t have to spend as much of their income on a mortgage. Let’s say they buy a duplex with a $1,500 monthly mortgage and rent out the other unit for $1,200. That means they’re only paying $300 a month instead of the full $1,500. That’s $14,400 saved in just one year, money that can go toward investments, travel, or future financial goals. Compare this to someone who buys a traditional starter home—they are stuck paying the full amount, limiting their ability to save.

2. Using the Best Loan Options Available

What makes house hacking even more powerful is that a buyer can use low down payment and low-interest loan options available to owner-occupants. FHA loans, for example, allow buyers to purchase a property with as little as 3.5% down, whereas buying a traditional investment property typically requires at least 20% down. Plus, owner-occupants get the best mortgage interest rates, which means they’ll save even more in the long run. This is the cheapest way to start building a rental property portfolio.

3. Repeating the Process to Build Wealth Faster

What’s great about house hacking is that you can do it again and again. FHA loans require you to live in the property for one year, but after that, house hackers can move to another house, rent out the unit they were living in, and buy another multifamily property with another low-down-payment loan. If a person in their early twenties does this every year for five years, they can own five rental properties before they even turn 30. The alternative? Buying one home, living in it, and waiting decades to build wealth.

4. Faster Equity Growth Compared to a Single-Home Purchase

When you buy one home and live in it without any rental income, your equity growth is limited to that single property. But by acquiring multiple rental properties through house hacking, new investors can grow their wealth exponentially. Each additional property means more rental income and more appreciation over time. Owning multiple properties also reduces risk because income is coming from different sources.

5. The Best Time to Do It is Before Starting a Family

House hacking works best when you are young and flexible. Once my kids have families of their own, they might not want to live in a duplex or share a home with tenants. That’s why I am telling them to take advantage of this strategy while they are in their 20s and don’t mind sacrificing a little privacy for long-term financial success.

The Alternative: Traditional Homeownership Slows Financial Growth

If my kids choose to buy a single-family home right away, they will be stuck with a full mortgage, higher expenses, and little room to save for their next investment. Without rental income to offset their costs, they will have to work harder and wait much longer before they can start investing in additional properties. In contrast, house hacking allows them to turn their first home into the foundation of their financial future.

Final Thoughts

I want my kids to be financially free as early as possible, and house hacking is one of the best ways to get there. It allows them to reduce expenses, build wealth faster, and set themselves up for long-term success. Traditional homeownership can wait—for now, they should focus on turning their first home into an investment that pays them back. If they follow this path, they’ll be in a far better position than those who simply buy a house and get stuck paying for it alone.