House Hacking A Townhouse: What You Need to Know

House hacking your townhouse has become a very popular source of additional income and an often easy way to cover mortgage costs. Many people can either reduce or entirely cover their monthly mortgage through house hacking. But there are a few things to keep in mind before renting out a room in your home.

The primary thing to note about house hacking a townhouse is checking the HOA restrictions on your home. These restrictions could include additional fees to rent out, or even prohibit it entirely.

Provided you can avoid such restrictions; house hacking is a great way to get started in real estate. This is often the first step people take when getting into property rental on a much larger scale. Keep reading for more information on what you need to know to house hack a townhouse successfully. 

Why House Hack a Townhouse? 

House hacking means you are living on your property while renting out parts of your home to tenants. This can be an entire section of a large townhouse, a single bedroom in a smaller home, or even multiple guests sharing your house as roommates.

The Financial Benefits of House Hacking

The biggest upside for many is that the added income from getting one or more tenants can reduce or even eliminate your own home’s cost. Depending on the unit you are renting out, the cost to rent it out could cover your cost. 

Even a smaller townhouse can very expensive if it’s located at an attractive location. However, sometimes the price may be worth it, and by adding tenants for shorter or longer periods of time, the burden of a large mortgage will be easier to cover.

Some people use house hacking to help reduce home expenses, but many also use it as a starting point for a landlord career. This is a very appealing option for any who have extra space or are willing to share their home with others.


A great thing about house hacking is that you can rent out parts of your home if you ever need to leave for a longer period, while still keeping some space for yourself. This way you can store your belongings in your home and you can return home at any time for shorter or longer periods. This is a great way to continue gaining income even if you move away for a time but don’t want to sell your home.

Real Estate 

If you are looking to get into real estate investment, then this is a perfect step in that direction. It’s a much simpler version, but it will give you an idea of what it takes and experience with dealing with tenants. Many people start out with house hacking before getting into real estate, precisely so they can see if this is something they will enjoy on a larger scale.

Passive Income

Over time, the extra income will pay down your mortgage and allow you to start earning money on the side. This is great if you are looking to invest in another property or if you just want to make a little extra money.

How to House Hack a Townhouse

There are a few steps to take before committing to the idea of house hacking.

The Property

The first step depends on your situation. Are you looking for a new property to live on that can also be house hacked, or do you already own a home that you want to hack?

If you are looking to buy a new home that you are going to be house hacking, then you’ll have a lot more flexibility in finding spaces to rent. If you are planning to house hack, then you should make sure your home has the extra space for someone else. 

It’s usually preferable to have an area where tenants can be completely self-sufficient. This means having all necessities, including a shower and a kitchenette. 

Financing Options 

If you are looking to buy a property specifically for house hacking, make sure you can afford the mortgage even without the added rental income.

This is in part because you may be without tenants from time to time, but also because even the best tenant could fall on hard times and be unable able to pay. And you don’t want to lose your home just because of a few months’ missing rental income.

Besides, house hacking is not for everyone, and you may realize that you prefer to keep the entire place to yourself.

How Much Can You Charge?

Finding a home that will generate a high rental income relative to the property’s purchase is essential. If you are going to be purchasing a home specifically for house hacking, then it is smart to consider this factor as well. Perhaps even higher than your own preferences.

Finding a home that offers attractive features for tenants will allow you to charge a higher rent relative to other houses in the same price range. You will be glad you took the extra time finding the right place once you see the additional income rolling in.

HOA Restrictions

A homeowner association (HOA) is an organization that makes and enforces rules regarding all properties within its jurisdiction. Occasionally membership of an HOA is voluntary, but often it is mandatory for all property owners in the community, which is almost always the case for condos and townhouses.

Every HOA has its own rules and regulations. Some only focus on basic rules and regulations, such as setting time limits on when loud noises are allowed, whereas others are much more restrictive.

Some communities are specifically intended for retirees and require all inhabitants to be over a certain age. Others have certain restrictions on renting out homes or entirely forbidding it.

Before you start looking for tenants for your current home, check your HOA policies. Some may require your home (or even the tenant) approved by the board whole others may increase your membership dues. If you are looking to buy a townhome, make sure the HOA house hacking friendly and, not only now but also for the foreseeable future. If this could be an issue, look for another townhouse. There are plenty of communities with little to no restrictions.

Rentable Spaces 

The next step in deciding how to house hack your townhome is finding spaces that can be rented out. These tend to be areas that can be somewhat separated from the rest of the house, like an entire floor or even a converted garage.

It’s not uncommon for house hackers to add an exterior door to an available room. This is an excellent way to give the tenant their own pace as well as maintain your privacy.

Some popular areas to rent out for house hacking are:

  • Spare rooms
  • Entire floors
  • Garage 
  • Basement 

Final Thoughts 

An important thing to keep in mind when house hacking a townhome is to know any relevant HOA restrictions. This is particularly important if you are buying a specific townhome with the explicit purpose to house hack as it would otherwise defeat the purpose. 

Knowing if there are going to be extra fees is also essential, as this could balance out the income and you would balance out at zero or even a negative income. 

House hacking is highly recommended by those who do it, especially if you have space. It is a great way to have an additional income that will either reduce or completely cover your mortgage.

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