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The House Hacking Strategy

The House Hacking Strategy

How to Use Your Home to Achieve Financial Freedom
by Craig Curelop 2019 200 pages
4.31
640 ratings
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Key Takeaways

1. House hacking: The ultimate strategy for building wealth and achieving financial freedom

"House hacking is the single most powerful way to build wealth. There is little luck involved and anyone can do it."

Concept explanation: House hacking involves purchasing a residential property, living in one part, and renting out the rest. This strategy allows you to:

  • Eliminate or drastically reduce your housing expenses
  • Build equity through loan paydown and property appreciation
  • Generate passive income from rental payments

Benefits:

  • Accelerated wealth building
  • Potential for living rent-free or even cash-flow positive
  • Learn valuable real estate investing skills
  • Take advantage of owner-occupied financing options

House hacking can be adapted to various property types and living situations, making it accessible to a wide range of individuals. Whether you're single, married, or have a family, there's a house hacking strategy that can work for you.

2. Understanding the power of leverage and low down payment loans in real estate

"The conventional definition is something like 'property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.'"

Leverage in real estate: Using borrowed money to purchase property allows you to control a larger asset with a smaller initial investment. This amplifies potential returns and accelerates wealth building.

Low down payment loans: Various loan options make house hacking accessible:

  • FHA loans (3.5% down)
  • Conventional loans (as low as 3% down)
  • VA loans (0% down for eligible veterans)
  • USDA loans (0% down for eligible rural properties)

Benefits of low down payment loans:

  • Lower barrier to entry for real estate investing
  • Ability to get started sooner
  • Potential for higher returns on investment due to less capital tied up

However, it's crucial to understand the trade-offs, such as higher monthly payments and potential private mortgage insurance (PMI) requirements.

3. Selecting the right property and location for successful house hacking

"The path of progress can revolutionize the marketplace."

Property selection criteria:

  • Multi-unit properties (duplex, triplex, fourplex)
  • Single-family homes with potential for additional units
  • Properties in up-and-coming neighborhoods

Location factors to consider:

  • Proximity to employment centers
  • Access to public transportation
  • Quality of local schools
  • Neighborhood safety and amenities
  • Potential for appreciation

Research techniques:

  • Analyze local real estate trends and market data
  • Drive neighborhoods and observe development patterns
  • Attend city planning meetings to understand future growth areas
  • Network with local real estate professionals and investors

Look for properties that not only work for your current house hacking strategy but also have potential for future value appreciation and rental demand.

4. Creating a winning team: Lenders, agents, and contractors

"You are going to need to work with a team. As the old adage goes, 'No (wo)man is an island.'"

Building your house hacking team:

  1. Lenders:

    • Understand various loan products and eligibility requirements
    • Compare rates and terms from multiple lenders
    • Look for lenders experienced with house hacking and investment properties
  2. Real Estate Agents:

    • Find agents familiar with house hacking and investment strategies
    • Look for local market expertise and strong negotiation skills
    • Seek recommendations from other investors or through networking events
  3. Contractors:

    • Build a network of reliable, affordable contractors
    • Get multiple bids for any major work
    • Consider learning basic DIY skills to handle minor repairs and maintenance

Developing relationships with these key professionals will not only help with your first house hack but also support your long-term real estate investing goals.

5. Analyzing deals and maximizing returns on investment

"Analyzing deals and submitting offers are typically the scariest part of real estate investing and understandably so."

Key metrics for deal analysis:

  • Monthly mortgage payment (PITI)
  • Estimated rental income
  • Cash flow (rental income - expenses)
  • Cash-on-cash return
  • Net worth return on investment (NWROI)

Deal analysis process:

  1. Estimate all costs (purchase price, closing costs, repairs, etc.)
  2. Calculate potential rental income
  3. Determine monthly expenses (mortgage, taxes, insurance, maintenance, etc.)
  4. Project cash flow and returns

Maximizing returns:

  • Look for properties with value-add potential (e.g., cosmetic updates, adding bedrooms)
  • Consider short-term rental strategies (e.g., Airbnb) where appropriate
  • Implement cost-effective improvements to increase rental income

Run multiple scenarios to understand best and worst-case outcomes, and always include a buffer for unexpected expenses or vacancies.

6. Marketing your property and finding ideal tenants

"The quality of your listing is always important. With short-term rentals, they are even more so."

Effective property marketing:

  • High-quality photos and detailed property descriptions
  • Clear communication of property features and benefits
  • Targeted advertising on relevant platforms (e.g., Zillow, Craigslist, Facebook Marketplace)

Tenant screening process:

  1. Pre-screening through listing and initial contact
  2. Comprehensive rental application
  3. Credit and background checks
  4. Employment and income verification
  5. Previous landlord references

Ideal tenant qualities:

  • Stable income (3x monthly rent)
  • Good credit score (600+)
  • Clean background check
  • Positive rental history
  • Alignment with house rules and living situation

Remember to adhere to fair housing laws throughout the marketing and tenant selection process. A thorough screening process can save you significant headaches down the road.

7. Managing finances and being an effective landlord-roommate

"Do not be the reason why someone moves out."

Financial management:

  • Separate personal and business finances
  • Use accounting software to track income and expenses
  • Regularly review financial statements
  • Set aside reserves for maintenance and vacancies

Being an effective landlord:

  • Respond promptly to maintenance requests
  • Clearly communicate expectations and rules
  • Be professional, even when living with tenants
  • Stay organized with paperwork and records

Balancing landlord and roommate roles:

  • Establish clear boundaries
  • Maintain open communication
  • Be respectful of shared spaces
  • Address issues promptly and professionally

Effective property management is crucial for long-term success in house hacking. By staying organized, maintaining professionalism, and keeping a close eye on finances, you can maximize the benefits of your house hacking strategy while minimizing potential conflicts and issues.

Last updated:

FAQ

1. What is The House Hacking Strategy by Craig Curelop about?

  • Core concept explained: The book teaches how to achieve financial freedom by living in part of a property and renting out the rest, a method called house hacking.
  • Wealth-building focus: It details how house hacking builds wealth through cash flow, loan paydown, and property appreciation, often outperforming traditional investments.
  • Comprehensive guidance: The book covers every step, from finding and analyzing deals to managing tenants and scaling up to multiple properties.
  • Practical and motivational: Real-life case studies and actionable advice make the strategy accessible to beginners and those with no prior real estate experience.

2. Why should I read The House Hacking Strategy by Craig Curelop?

  • Financial freedom roadmap: The book provides a step-by-step plan to use your home as an investment, drastically reducing living expenses and building wealth.
  • Proven, accessible strategy: House hacking is presented as a practical way for anyone—regardless of background—to start investing in real estate with minimal risk.
  • Comprehensive resource: It covers deal analysis, financing, tenant management, and more, making it a one-stop guide for aspiring investors.
  • Mindset and motivation: The author emphasizes the importance of mindset, persistence, and community support in achieving financial independence.

3. What are the key takeaways from The House Hacking Strategy by Craig Curelop?

  • Turn your home into an asset: Instead of viewing your home as a liability, use it to generate income and build equity.
  • Multiple wealth generators: House hacking leverages cash flow, loan paydown, appreciation, and tax advantages to accelerate wealth.
  • Sacrifice for long-term gain: Short-term lifestyle compromises can lead to early retirement and financial freedom.
  • Repeatable process: The strategy can be repeated every year or two, snowballing your real estate portfolio and passive income.

4. What is the definition of house hacking according to Craig Curelop?

  • Owner-occupied investment: House hacking involves buying a one- to four-unit property, living in one part, and renting out the rest to offset or eliminate your housing costs.
  • Flexible strategies: It includes traditional multifamily rentals, renting by the room, short-term rentals, and creative arrangements like ADUs or live-in flips.
  • Accessible to most people: No prior real estate experience is required; just a willingness to learn and make temporary lifestyle changes.
  • Path to financial freedom: By reducing or eliminating your largest expense—housing—you can save, invest, and build wealth much faster.

5. What are the main house hacking strategies described in The House Hacking Strategy by Craig Curelop?

  • Traditional multifamily: Buy a duplex, triplex, or fourplex, live in one unit, and rent out the others for steady income.
  • Rent by the room: Purchase a single-family home and rent out individual bedrooms, often maximizing cash flow.
  • Short-term rentals: Use platforms like Airbnb to rent out parts of your home or accessory units for higher, though more variable, income.
  • Creative methods: Live in a converted space (e.g., RV, garage) or do a live-in flip, renovating and selling for profit after two years.

6. What are the key financial benefits of house hacking in Craig Curelop’s method?

  • Live for free or profit: Rental income from tenants can cover your mortgage, allowing you to live cheaply or even make money each month.
  • Loan paydown: Each mortgage payment reduces your principal, increasing your equity as tenants essentially pay down your loan.
  • Property appreciation: Real estate typically appreciates over time, and you can force appreciation through renovations or improvements.
  • Tax advantages: House hacking offers deductions, depreciation, and opportunities to defer or avoid capital gains taxes, boosting your returns.

7. What are the common drawbacks and challenges of house hacking according to The House Hacking Strategy?

  • Landlord responsibilities: Managing tenants, maintenance, and finances adds work compared to simply renting, but the time investment is small relative to the payoff.
  • Reduced privacy: Sharing your home with tenants or roommates can be uncomfortable, especially for families, but careful tenant selection helps.
  • Lifestyle compromises: You may need to live in a smaller or less desirable space temporarily to achieve long-term financial goals.
  • Learning curve: New house hackers must learn about real estate, tenant laws, and property management, but the book provides tools to ease the process.

8. How does Craig Curelop recommend getting started and staying motivated with house hacking?

  • Find your “Why”: Identify a deep, personal reason for pursuing financial independence to sustain you through sacrifices and challenges.
  • Live frugally: Continue living like a college student, even with a full-time salary, to save aggressively for your first house hack.
  • Build a support network: Join local real estate or financial independence groups (e.g., BiggerPockets, ChooseFI) for motivation and advice.
  • Take action: The book encourages starting small, learning as you go, and not waiting for the “perfect” deal.

9. How do I choose the right property and neighborhood for house hacking as advised in The House Hacking Strategy?

  • Property type selection: Consider single-family homes, duplexes, triplexes, fourplexes, townhomes, or condos, each with unique pros and cons.
  • Neighborhood class: Target Class B neighborhoods for the best balance of cash flow, appreciation, and tenant quality; avoid unsafe areas.
  • Commute and amenities: Proximity to work, public transportation, and good schools increases tenant demand and property value.
  • Path of progress: Look for neighborhoods undergoing development or revitalization to benefit from future appreciation.

10. What team members do I need for a successful house hack, and how do I find them according to Craig Curelop?

  • Essential team: At minimum, you need a lender, a real estate agent, and a contractor if renovations are planned.
  • Finding lenders: Seek recommendations from investors or BiggerPockets, and interview multiple lenders for the best loan products and experience with house hacking.
  • Finding agents: Look for full-time agents experienced with investors and house hackers, using referrals and interviews to assess knowledge and commitment.
  • Finding contractors: Network with local investors for trusted referrals, check references, and clarify expectations on licensing, insurance, and communication.

11. What financing options for house hackers are covered in The House Hacking Strategy by Craig Curelop?

  • Conventional loans: Require 5–20% down, with PMI if under 20%; best for single-family homes and those with strong credit.
  • FHA and 203k loans: FHA loans allow 3.5% down and lower credit scores; 203k loans include rehab costs for fixer-uppers.
  • USDA and VA loans: Offer zero down for eligible rural areas (USDA) or veterans (VA), with favorable terms and no PMI for VA loans.
  • Alternative financing: Programs like HomeReady, Home Possible, HELOCs, hard money, seller financing, and partnerships are available for unique situations or those with limited resources.

12. How do I analyze a house hacking deal using the Net Worth Return on Investment (NWROI) and other key metrics from The House Hacking Strategy?

  • NWROI formula: Calculate NWROI as (cash flow + loan paydown + appreciation) divided by your initial investment (down payment, closing costs, rehab).
  • Profitability focus: Use the formula: monthly rent minus monthly debt and reserves equals expected profit; set a minimum profit bar for your market.
  • Conservative analysis: Ignore appreciation when evaluating deals to avoid speculative risks; focus on cash flow and loan paydown.
  • Adjust reserves: Set reserves for vacancy, repairs, and capital expenditures carefully to balance safety and cash flow.

Review Summary

4.31 out of 5
Average of 640 ratings from Goodreads and Amazon.

The House Hacking Strategy receives mostly positive reviews, with readers praising its practical advice on real estate investing and financial independence. Many find it helpful for first-time homebuyers and aspiring investors. The book explains house hacking concepts, financing options, tenant screening, and property management. Some criticize repetitive content and similarities to other real estate books. Readers appreciate the case studies and to-do lists but note that the strategy may not suit everyone. Overall, the book is considered informative and motivating for those interested in real estate investing.

Your rating:
4.65
29 ratings

About the Author

Craig Curelop is a finance expert at Biggerpockets.com, a real estate investor, and an advocate for the Financial Independence/Retire Early (FIRE) movement. Based in Denver, Colorado, he has gained recognition from the Denver Post and BBC for his innovative approaches to financial optimization. Curelop is passionate about sharing his knowledge to help others achieve financial independence. He actively seeks ways to maximize both time and money efficiency in his personal and professional life. Outside of his financial pursuits, Curelop enjoys outdoor activities such as biking and snowboarding, as well as socializing with friends.

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