House Hacking in Texas: Live in One Unit, Rent the Rest

House hacking means buying a home, living in part of it, and renting out the rest. Your tenants help pay your mortgage, and you get started as an investor with a home-buyer loan. Here's how it works in Texas.

Common ways to house hack

• Duplex, triplex or fourplex: live in one unit and rent the others.
• Rent out rooms in a single-family home.
• Garage apartment or backyard unit, where the city and HOA allow it.
• Live there, then rent it: buy with an owner-occupied loan, live in it for the required time, then keep it as a rental when you move.

Why it works

• Owner-occupied loans usually need less money down than investment loans.
• Rates are often lower than investment-property rates.
• The rent you collect can cover much of your payment.
• You learn to be a landlord with your first tenant right next door.

Financing basics

FHA and conventional loans can be used for homes with up to four units if you live in one of them. Down payment, income and reserve rules differ by loan type and number of units, and some loans let you count part of the expected rent. You'll generally need to move in within about 60 days and live there for at least a year. A lender can tell you exactly what you qualify for.

Things to check first

• Rent comparables for each unit or room
• HOA and deed restrictions that limit renting or room rentals
• City rules for accessory units and short-term rentals
• Property taxes: your homestead exemption generally covers only the part you live in
• Insurance that covers both you and your rental units
• Separate meters and entrances, which make life easier for everyone

Is it right for you?

House hacking means living close to your tenants and handling some landlord work yourself. If you're comfortable with that, it can be one of the simplest ways to start investing.

Want to look at duplexes or homes with a guest unit? Call or text me at (512) 629-9050, and I'll help you find homes where the numbers work.

Trina Heinmiller
Team Lead | Southern Luxe Group | eXp Realty

Investor Guide 5 of 10: House hacking
← Guide 4: 1031 exchanges · Investor guide home · Next: Short-term rentals in Austin (coming Nov 19)

This post is general information, not financial, tax or legal advice.