How to House Hack Your Way to Financial Freedom in Utah – Buying duplexes, ADUs, and renting out rooms.

How to House Hack Your Way to Financial Freedom in Utah

House hacking is one of the smartest ways to get started in real estate investing, especially in a growing market like Utah. Whether you’re a first-time homebuyer or an aspiring investor, house hacking allows you to reduce (or even eliminate) your housing costs by renting out part of your property. In this guide, we’ll explore the different ways to house hack in Utah, from buying duplexes to adding accessory dwelling units (ADUs) and renting out spare rooms.

What is House Hacking?

House hacking is a real estate strategy where you buy a property, live in part of it, and rent out the other portion to generate income. This income helps cover your mortgage, property taxes, and maintenance costs, significantly reducing your housing expenses or even turning your home into a profitable investment.

Why House Hacking Works Well in Utah

Utah’s strong job market, growing population, and rising home prices make it an ideal location for house hacking. Cities like Salt Lake City, Draper, and Provo have high demand for rental properties, making it easier to find tenants and generate rental income. Additionally, Utah’s laws and incentives for ADUs make it even more attractive for homeowners looking to maximize their property’s earning potential.

Ways to House Hack in Utah

1. Buy a Duplex, Triplex, or Fourplex

One of the best ways to house hack is by purchasing a small multi-unit property (up to four units). These properties qualify for owner-occupied financing, meaning you can use FHA or conventional loans with lower down payments.

Pros:

• Collect rental income from tenants in the other units.
• Qualifies for residential loans with lower interest rates than commercial properties.
• Builds equity while reducing your living expenses.

Cons:

• Managing tenants can be time-consuming.
• Higher competition for small multi-family properties.
• Property maintenance responsibilities.

2. Convert or Build an ADU (Accessory Dwelling Unit)

An ADU is a separate living space on your property, such as a basement apartment, garage conversion, or a detached tiny home. Utah cities like Salt Lake and Provo have eased restrictions on ADUs, making it easier for homeowners to build and rent them out.

Pros:

• Increases property value and rental income.
• Provides privacy since the main home and ADU are separate.
• Can be used for short-term (Airbnb) or long-term rentals.

Cons:

• Initial construction or renovation costs.
• Some zoning laws may restrict ADU rentals in certain areas.
• Managing short-term tenants can require more effort.

3. Rent Out Extra Rooms

If you’re a first-time homebuyer, the simplest way to house hack is by renting out extra bedrooms in your home. Whether you take in a long-term tenant or list a room on Airbnb, this strategy can significantly offset your mortgage payment.

Pros:

• Low-cost entry into house hacking.
• No need for major renovations.
• Flexibility to rent short-term or long-term.

Cons:

• Less privacy compared to a duplex or ADU.
• Requires sharing common spaces with tenants.
• Need to screen tenants carefully.

Financing Your House Hack in Utah

Many first-time buyers use FHA loans (3.5% down) or conventional loans (5-20% down) to purchase their house hack property. VA loans (0% down) are also an excellent option for eligible veterans. Owner-occupied properties qualify for lower interest rates, making it easier to get started with house hacking. Additionally, owner-occupied duplex, triplex, and fourplex properties can use 75% of the appraised rental income for the additional units, allowing buyers to qualify for higher-value properties.

Is House Hacking Right for You?

House hacking isn’t just about making money—it’s about lowering your living expenses, building equity, and positioning yourself for future real estate investments. If you’re willing to manage tenants and take on the responsibilities of being a landlord, it can be a great way to achieve financial freedom in Utah.

If you’re interested in house hacking in Utah, reach out to Team Parsons today! We can help you find the perfect property to start your journey toward financial freedom.