- House hacking is when someone buys a house to live in and then rents rooms to others to cover the costs.
- Recent viral videos on TikTok explaining home hacking have garnered thousands of critical comments.
- Proponents say the strategy is an accessible way to build wealth, but critics call it exploitative.
In the fall of 2021, Seattle realtor Vayna Jerabek posted a short sketch for its 576,300 TikTok followers who explained the concept of home hacking.
In the scene, she plays two characters: an owner and a guest. The guest, in disbelief at the beauty of the property, asks how much the owner pays monthly.
His answer is meant to stun.
“I’m paying $100,” the owner replies.
It is then revealed that an upstairs tenant pays $2,300 per month, while the house carries a monthly mortgage of $2,400. The owner goes on to explain the hypothetical finances it would take to purchase the property for $500,000, including a 3% down payment.
To say the skit was poorly received is an understatement.
Racking up 8 million views, the November video drew more than 9,000 comments, with some calling Jerabek a “leech” and others saying, “That’s stealing.” Commentator @storiesandspells wrote: ‘It’s more work to earn an honest living, but not exploiting people is priceless.
Basically, the strategy boils down to becoming a resident owner. The idea is to buy a house as your main residence, while renting out rooms or separate units to tenants. Their payments cover a little or a lot of the owner’s monthly expenses.
Content creators, including Jerabek, describe home piracy as an accessible way for young people to build wealth despite tough economic conditions. And while many social media influencers don’t hack themselves, they see themselves as popularizers of personal finance advice that helps people.
People who have bought homes and rented rooms, meanwhile, told Insider that home hacks don’t deserve the ire.
And while Jerabek isn’t hacking herself, the backlash from her explainer video indicates growing resentment from real estate investors. Critics say the concept is just another form of exploitation, another step to turn housing into a game of winners and losers.
For young progressives, who have portrayed landlords – and capitalism more generally – as exploiters, home hacking is another example of a system gone wrong.
The Popularity of Home Hacking, Explained
It is almost impossible to determine how many American owners are hackers. The 2020 census found that just 1.5% of rental properties nationwide, or nearly 8 million units, were owned by individual investors who also had a mortgage or similar debt. This statistic does not indicate whether the person lives in the same property as tenants.
Another indicator of the practice’s popularity is the viewership of “BiggerPockets,” a real estate investment advice podcast with 25 million downloads. It comprises a lot guests who share how they managed to hack the house. One of the co-founders of “BiggerPockets”, Brandon Turner, introduced the term to a wider audience.
Real estate investors are also touting home hacks as a way to start building a portfolio of more traditional rental units without spending too much money. In fact, influencer investor Marko Zlatic said he regrets not doing it more when he was younger.
“I would go back in time and house-hack,” Zlatic told Insider’s George Glover in October. “As soon as possible, I would buy a duplex, triplex or quadruplex, live in one unit, and then rent out the rest of the property.”
Domestic Hacker Defends Strategy
Ian Love, a 36-year-old Amazon accountant, started hacking in 2011.
“I don’t know if there really was a term for it back then,” he told Insider.
Love got the idea from his friends’ parents who invested in real estate. As a Chartered Accountant, he focused on reducing his own living expenses to free up money to invest in additional properties.
At 24, he said he saved $25,000 over two years for a down payment on a $250,000 house north of Seattle that came with a master suite. The plan was to rent the in-laws’ suite for $900 a month, which would help cover her monthly mortgage of $1,200.
At first, he rented to friends and family, but discovered issues, like after-hours noise that can quickly become messy when you know your tenants.
“It was a little stressful when I was younger,” Love said. “Trying to thread the needle in terms of being a respectful owner but also not wanting to hurt friendships or family relationships.”
Now he writes quiet hours from 8 p.m. to 8 a.m. in rental contracts.
Love made fixes to the house, including updating the bathroom and refinishing the hardwood floors. He was able to refinance and collect $50,000, he said. He combined that with savings to set aside $112,000 on a $560,000 quadruplex in Seattle. Love then rented out the four bedrooms as traditional landlord. In total, he hacked his house three times, while investing in other real estate opportunities.
Love said he offered tenants a good deal and considered house hacking a “partnership”.
“If you want long-term tenants, give them affordable rent and a nice, clean place to live,” he said. “If you don’t treat people fairly, everything will come back to you.”
Social media popularized home hacking
Jerabek isn’t the only TikTok creator preaching the virtues of home hacking. At least a dozen other content creators focused on personal finance and real estate investing have posted similar skits about the concept over the past six months.
With followings ranging from a few thousand to over 3 million, these influencers provide advice on everything from credit cards to investing in the stock market.
According to a recent survey by The Motley Fool of 1,400 investors aged 18-40, 91% of Gen Z respondents and 75% of Millennial respondents said they had taken to social media for investment information.
Even if they don’t hack, content creators said they see spreading real estate advice as key to building an audience for their online identities. More followers can also create opportunities for brand deals, which can turn a side business on social media into a lucrative full-time career.
Take Joshua Erabu, a 21-year-old Nebraska realtor who also used the “surprise I’m a landlord” trope. in a sketch he posted on TikTok.
Video shows him impersonating landlord charging tenants $100 After than the monthly mortgage, which allows the owner to live for free – and even to profit.
Some commentators praised Erabu’s proposed strategy, while others called it “parasitic”. Erabu told Insider that while he might have presented the concept differently in the video, he still believed home hacking was a practice that could help young people buy homes and build wealth.
“I’m not really trying to change people’s minds,” Erabu said.
Both Jerabek and Erabu emphasized the “accessibility” of home hacking. No one needs a college degree to be a hacker, they said.
“I think people underestimate our generation,” Jerabek, 21, told Insider. “So I want to prepare my generation to create wealth for themselves.”
Critics think hackers are part of the problem
Critics of home hacking say the practice is exploitative.
Reviews of owners and frustrations with the housing system have increased in recent years. Rent prices have reached historic levels, reaching a national average of $1,300 for a one-bedroom home, and have caused an affordability crisis for many renters. When the moratoriums on pandemic evictions ended, anti-landlord sentiment worsened.
On a broader level, “anti-capitalist” sentiment has grown both online and offline. In a 2020 Axios-Momentive survey which polled 18-34 year olds on their view of capitalism, 58% of respondents said they viewed it positively, while only 38% said they viewed it negatively. But the same survey conducted in 2021 found the gap has narrowed: 49% said they viewed capitalism positively and 46% said they viewed it negatively.
Kevin McLarty, 21, castigated similar house hacking videos he saw.
“‘Househacking’ is a fun way to spell the exploitation of other people’s labor,” he commented on one post.
McLarty said the housing crisis on its campus at the University of California, Santa Barbara, where local reports indicate that there are too few on-campus housing units and unaffordable off-campus options, reflected the struggles of the nation as a whole. The college junior pays $700 to share a room with another student, he said. There are four people crammed into a two-bedroom apartment.
He finds young aspiring homeowners unpleasant.
“You keep operating the system, instead of, as a society, trying to figure it out,” he told Insider.
Kalic Perry, a 21-year-old paralegal, wants to work on tenant issues one day and said home hacking is “further exacerbating housing inaccessibility”. He saw an explanatory video of house-hacking Posted Jan. 1 by Leroy Crosby, whose bio says he’s “your favorite #financebro” offering “education/entertainment, not advice.”
Perry said he thought the home hack was an example of “leeching.” He called home hacking “more parasitic than symbiotic,” pointing to other instances where a landlord has personally taken advantage of an unwitting tenant.
Instead, Perry wants to see tenants build equity alongside their landlords. He said he couldn’t support the idea that “one person reaps all the benefits of someone else paying rent”.