In its most recent survey in 2019, the U.S. Census Bureau reported that 44.1 million people were renting their homes. These statistics, coming five years before the current housing inventory shortage of 2024, raise the question: Where will the next wave of rental homes come from?
The short answer could be “house hackers.”
House hacking has become a verifiable trend in the past couple of years as cash-strapped homebuyers paying more than double the mortgage interest rate of a couple of years ago are looking for ways to monetize their homes.
House hackers are devising increasingly creative ways—from renting out individual rooms in residential homes to renting out garages or even backyards—to pay mortgages, which consume anywhere from 30 percent to 50 percent of their gross income.
“Renting out rooms has become more popular. It’s one of the best strategies right now in terms of living as cheap as possible,” Daniel McDonald, a Boston-area real estate agent, whose Instagram account (@househackandhustle) gives homeowners ideas surrounding financially capitalizing on their homes, told The Epoch Times.
“A couple of years ago, multi-family purchases were the big rage, and I did that with two duplexes and kept costs low. But now, with rents and rates as high as they are, more people are moving to a rent-by-the-room strategy and more of a college vibe.”
Some who are buying homes with Federal Housing Administration loans with low down payments are buying larger homes than they usually could afford or duplexes, which may appreciate exponentially in the next year. However, there are some definite negatives for homeowners looking to pick up quick cash through individual room rentals.
“There’s a lot of downsides,“ Jimmy Lieu, a real estate agent in Columbus, Ohio, said. ”You don’t get your own kitchen space, and everyone in the house is sharing it and they make a big mess. Same for the bathrooms. I’m fortunate to have a master with its own bathroom, but if I had to share a bathroom, I’d have no privacy at all.”
The 26-year-old Mr. Lieu said he moved to Columbus from Portland, Oregon, in 2021 because he believed the rental market there was more suitable for buying multiple properties. He started meeting his “house hacking” objectives by buying a four-bedroom home and renting out three of the bedrooms at $600 monthly.
Although Mr. Lieu now owns eight properties in the Columbus area, he still lives in the house with three renters. He is also using the revenue he creates to not only pay his mortgages but also take care of his Vietnamese and Chinese immigrant parents in Portland, who have worked hourly minimum-wage jobs since arriving in the United States.
“When I moved to Columbus, I didn’t know one person, but my goal was to be a full-time real estate investor. My real duty is to help my parents go from low to middle income, and I want to buy 30 properties a year. That goal unfortunately slowed down because of rising interest rates,” he said. “The key to building financial freedom in real estate is to buy what you can year over year and you’ll be financially free. It’s not the person that’s the richest who succeeds; it’s the person who buys consistently.”
Even more creatively, some “house hackers” have found that every inch of a property can potentially be rented out to increase revenue. Seattle entrepreneur David Adams is helping tens of thousands of homeowners rent their yards out to dog owners through his site, Sniffspot.com.
“It really was a wacky thing,” he told The Epoch Times. “I didn’t think it had any potential to be big at first. My girlfriend and I were having financial issues in Seattle at the time. I posted on Facebook in a local group about renting out my yard for dogs and a thousand people interacted with this. I was like, wow, people actually want this. I believed that people living in city high-rises would want to meet people who had yards. It turned out that most of our users live in the suburbs and the most popular hosts are those with over a half acre of land.”
Sniffspot lists more than 20,000 active locations in the United States and Canada and takes a percentage of the property rental fees, which range from $5 to $15 an hour.
“Our customers have grown faster than our locations, with Washington now our largest state. But it will soon be passed by California, with Florida probably passing that in a couple of years,” Mr. Adams said.
Mr. McDonald, who said he hadn’t heard about companies such as Sniffspot before, said he thinks the concept is a winning house hacking strategy.
“Renting out your backyard for an RV or a boat or shed space and a garage is becoming popular,“ he said. ”I definitely am not surprised. But renting to dogs—that is brilliant. I’ve toyed with the idea of renting out storage space but never thought about that.”
