Top Locations10 Best Cities for House Hacking in 2021 by Charles Mburugu January 20, 2021January 20, 2021 by Charles Mburugu January 20, 2021January 20, 2021Buying an investment property can be very expensive. According to recent data from Zillow, the median home price in the US housing market is $263,351. Home values increased by 7.5% in 2020, and are expected to go up 10.3% in 2021. With such skyrocketing prices, many beginner real estate investors are now turning to ‘house hacking’ in 2021 as a way to cut back on the costs of homeownership and investing. In this article, you will learn what house hacking is all about, as well as find out what the best cities for house hacking are.So, What Is House Hacking?House hacking is a creative real estate investment strategy where someone buys multifamily real estate (duplex, triplex, or fourplex), lives in one unit, and rents out the rest. House hacking can also happen in a single-family home where the owner rents out a bedroom, garage, basement, or tiny house in the compound. This can be a very effective strategy, especially for first-time real estate investors.Related: The Ultimate Guide to House HackingThe Benefits of House HackingLive for free + cash flow – House hacking allows you to live for free because the rental income should help you pay off your mortgage. And in certain markets with certain investment properties, you may even enjoy some extra cash flow from the rental income.Flexibility – House hacking allows flexibility for people with a dynamic lifestyle. For example, if you have to relocate to a different city or town for work, you could simply rent out your unit and keep earning rental income.Financing – Investing in owner-occupied multifamily property means that you can access an FHA loan where the down payment is only 3.5%. For example, if you are buying a $450,000 triplex, you will only need to put down $15,750. This is much more favorable compared to the 20% down payment required for traditional loans.‘Landlording’ experience – For beginner real estate investors, house hacking is a great way to learn valuable ‘landlording’ skills. This includes handling tasks like advertising your rental property, tenant screening, preparing lease agreements, bookkeeping, negotiating with contractors, and tenant management.Legally operate an Airbnb – In many cities across the US real estate market, investors cannot run an Airbnb unless they live in the property and are present during the guest’s stay. Since a house hack means you will be living on-site, many cities will allow you to operate legally.Related: House Hacking: Invest in Real Estate While Living for FreeThe 10 Best Cities for House HackingReady to take advantage of those benefits? Based on Mashvisor’s multifamily data, these are the best places for house hacking in the US housing market 2021:#1. Fort Wayne, INMedian Property Price: $98,230Price to Rent Ratio: 11Monthly Traditional Rental Income: $742 Multifamily Cap Rate: 5.8%#2. Naples, FLMedian Property Price: $486,644 Price to Rent Ratio: 14Monthly Traditional Rental Income: $3,005 Multifamily Cap Rate: 5.3%#3. Cleveland, OHMedian Property Price: $122,838Price to Rent Ratio: 12Monthly Traditional Rental Income: $848 Multifamily Cap Rate: 5.2%#4. Aurora, ILMedian Property Price: $224,575Price to Rent Ratio: 12Monthly Traditional Rental Income: $1,615 Multifamily Cap Rate: 5.0%#5. Akron, OHMedian Property Price: $113,738Price to Rent Ratio: 11Monthly Traditional Rental Income: $836 Multifamily Cap Rate: 4.9%#6. Baltimore, MDMedian Property Price: $320,025 Price to Rent Ratio: 17Monthly Traditional Rental Income: $1,576 Multifamily Cap Rate: 4.7%#7. Cincinnati, OHMedian Property Price: $306,968 Price to Rent Ratio: 19Monthly Traditional Rental Income: $1,341 Multifamily Cap Rate: 4.6%#8. Rochester, NYMedian Property Price: $130,207Price to Rent Ratio: 11Monthly Traditional Rental Income: $1,012 Multifamily Cap Rate: 4.6%#9. Detroit, MIMedian Property Price: $195,009 Price to Rent Ratio: 17Monthly Traditional Rental Income: $955 Multifamily Cap Rate: 4.6%#10. Scranton, PAMedian Property Price: $124,753 Price to Rent Ratio: 11Monthly Traditional Rental Income: $979 Multifamily Cap Rate: 4.6% Find a Profitable Multi Family PropertyHow to Get Started House HackingNow that you know the best cities for house hacking, here are some tips for getting started:Find the best neighborhoods to invest inSuccessful house hacking begins with identifying the best places to invest in real estate for this strategy. Mashvisor’s real estate heatmap is a tool that you can use to analyze neighborhood data of several areas quickly. It relies on real estate comps, current real estate trends, and predictive analytics to show you where to house hack for a good ROI. The heatmap tool comes with four main property filters; rental income, listing price, Airbnb occupancy rate, and cash on cash return.Find the ideal investment property for saleOnce you’ve found a great location, use Mashvisor’s Property Finder tool to identify profitable traditional and Airbnb income properties within minutes. You can narrow down your search to find multifamily homes for sale that match your criteria in terms of the listing price, the number of bathrooms/bedrooms, return on investment, and market availability. Using the latest machine-learning algorithms, the Property Finder tool will show you the most suitable income properties in your target area. You can search in multiple cities that you are considering at once, thus saving you lots of time.The Fort Wayne real estate market is the best city for house hacking and with Mashvisor, you can easily find profitable small multifamily homes here.Analyze properties using the multifamily investment calculatorThe city averages above reflect those of small multifamily homes that are fully rented out. So when it comes time to find a property in one of these cities, you need to conduct analysis and account for the fact that you will be living in one unit.For this, you need one tool. Also known as the investment property calculator, Mashvisor’s multifamily investment calculator is a tool specifically designed to help investors assess small multifamily homes. This tool generates return on investment metrics like cash flow, cap rate, occupancy rate, and cash on cash return. With these figures, you will be able to determine if the rental property you are considering is worth buying or not. Start Analyzing Investment PropertiesConclusionThese are just a few of the best cities for house hacking. However, before you decide to house hack in 2021, be sure to get familiar with the local zoning ordinances. In some areas, renting out any space in your primary residence is illegal. If you break this law, you could be slapped with a fine. In addition, you need to be ready to handle all the responsibilities related to being a landlord, like having clear tenant boundaries. However, if done properly, house hacking could be the ideal starting point on your road to financial freedom. Start Your Investment Property Search! START FREE TRIAL Cleveland OHDetroit MIFort Wayne INHouse HackingMulti FamilyOwner Occupant 0FacebookTwitterGoogle +PinterestLinkedin Charles MburuguCharles Mburugu is a HubSpot-certified content writer/marketer for B2B, B2C and SaaS companies. He loves writing on topics that help real estate investors and agents make better choices. 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