House Hacking a 4-Plex: 7 Important Considerations

Real estate investments are an effective way to build equity and retire early if you do it right. The age-old question: where do I get enough capital to invest in a home and pay for the home I am living in? Well, you may not have to make that choice.

House hacking is a current trend among young people looking to make long term investments in property. House hacking is when you buy a home and rent out part of that home at a rate high enough to cover your portion and yours. Some people eventually move out, renting out all the units, and keeping the building as an investment. 

This is an extremely effective way to both cut costs in the immediate future and provide multiple streams of income in the future. But, while that sounds like a win-win, like anything else, it is an endeavor with a multitude of both pros and cons. 

The Living Conditions

Usually, if you are buying an entire building with multiple units, like you would be if you decided to house hack a fourplex, an affordable building is not going to be the coziest to start.

Furthermore, you are presumably going to have to put a decent chunk of change into renovating it. If nothing else, flooring or paint or hardware may need to be changed out. Even the smallest changes can add up across multiple units!

With that said, you likely will not be living in a beautiful two-story penthouse. These units are often less than cushy and have a lot of room for improvement. While you will be making money on your living arrangement (a bonus in and of itself) you will likely not have granite counters or ceiling to floor mirrors.

It is usually temporary, after all. So if you think you can make do with a lightly renovated space until your income grows exponentially, then you are in the right place. And, if you love home improvements, then it is definitely an ideal situation for you.

Other People Pay for You to Own

Obviously, we have touched on this. While you are living in a fourplex, those living in the surrounding units are paying for you to own the entire building and rent it out for years to come.

There are very few opportunities like house hacking. Getting to live rent-free is already quite a luxury, especially if you are living in an urban or up and coming area. But, having other people pay a mortgage for you is a great benefit. It is a long-term investment for which other people pay, and you reap the rewards.

Not only is that rare in real estate, but it is rare to get any worthwhile investment that you do not even outright pay to own. 

If you only have a set amount for a down payment, it is really no issue. Though it will take longer for your tenants to pay it off, it is really at no detriment to you, with the end game being the same: ownership. 

Learning How to Landlord

The challenges of house hacking a fourplex can be seen as a plus and a minus.

Plus: you get hands-on experience running a property and managing the finances and operations of a building. That involves an array of both hard and soft skills that can be put on a resume as well as prepare you for running your own business.

But you are also a landlord. That can, at times, be thankless and seemingly endless work. An, since you live in the building, your tenants always know where to find you when they have a bone to pick with you. You are not just a phone call away, but merely a short walk away.

House hacking a fourplex can be a very worthwhile skillset enrichment. But it can also be a real big pain until you firmly grasp your role and establish adequate boundaries with your fellow tenants.

All of that comes with time, so it is worth considering if you are truly willing to put that time and work in before you commit yourself to it. 

Saving A Ton of Money

Of course, you live for free, and you may even be making a net profit each month while you do it. Haven’t we already gone over this?

Yes. But usually, when you own a rental property, it is ideal to have a property manager around to keep an eye on the wellbeing of your property and answer to the tedious needs of your tenants.

And while that will take up some precious time, you will not have to pay the aforementioned property manager 10-20% of your profit because you can do all of those things from the comfort of your home. 

Peace of Mind (or a Lack Thereof) 

Just because you are living for free does not mean you should not have a safety net. Should a tenant dip out unexpectedly, that unit becomes a cost that needs to get covered. It is important to have money set aside should a lease fall through.

Whether it is a death, family emergency, or just a shady tenant who skips town with 3 months left on their lease, that empty space becomes a liability that could take you into the red. This can also just be anxiety-inducing to have on your mind, so having a bit of cash set aside for this kind of emergency is a good game plan. 

Even if you are renting to friends or your aunt’s bridesmaid’s brother- life happens to people no matter how well we know and trust them. Free does not mean risk-free.

The Ever-Fluxing Market

Owning a home is inherently risky, no matter your tax bracket. The market ebbs and flows, and if you do not have it almost entirely paid off by the time of the next downward dip, it can be tough.

In the case that a tenant is affected by an economic downturn, you will, as we have discussed, have to take that unit on as your own. The housing and job markets are never necessarily steady, and what effects your tenants very directly affects you. It is putting a lot of eggs in other peoples’ baskets, so that’s important to consider before taking on a complex of your own.

Living Alone… Kind Of

Owning a fourplex or apartment buildings is nice because you can live semi-alone, rather than if you were to house hack a single-family home where you would have to share that home with strangers. That type of scenario can really blur the lines of professional relationships (are you their landlord, or their roommate? Yes.) 

And, having to live amongst a lot of strangers is eerily reminiscent of dorm living. If that is not your style, a building with separate units is much more ideal than a lot of people renting rooms under one roof. Your peace of mind will benefit greatly from separate living spaces.


House hacking is extremely trendy amongst young investors, and it is a smart way to live below your means while expanding your portfolio in the meantime. While it does require a good amount of effort on your part as an owner, it has the potential to improve your financial situation greatly. 

Whether the goal is to diversify your income streams or just add another property to your Monopoly board of investments, house hacking is a great option. The beauty of getting to stay as long as you want, on top of some of the other pros we have considered, builds a strong case in favor of house hunting.

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *