Sep 9, 2025
At a time when mortgage rates are elevated and housing prices are high, becoming a homeowner isn’t easy. The National Association of Realtors reports that in July, the median U.S. existing-home sale price rose to $422,400. As for mortgages, the average 30-year loan rate as of Sept. 4 was 6.5%, according to Freddie Mac.
It’s no wonder, then, that so many young homebuyers are turning to “house hacking” to make ownership feasible. If you’re not familiar with house hacking, it’s the tactic of buying a home to live in, but also renting out a portion of it to generate income and help cover the costs of ownership.
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A Zillow survey from 2023 found that 55% of millennial and 51% Gen Z homebuyers thought it was very important to be able to rent out part of their home for income, compared to 39% of homebuyers across all ages. Younger buyers may be purchasing a home for the first time, so they don’t have equity in a current home that can be converted into a large down payment. As such, bringing in rental income to offset those expenses can seem attractive.
Recent real estate trends may favor these younger buyers. Realtor.com reports 20.3% of listings in August had a price reduction, and that nationally, housing inventory grew 20.9% year over year. The more available homes there are, the more negotiating power buyers get.
If you’re looking to buy a home but think you’ll need rental income to help cover your costs, here are five house hacking tips to employ.
1. Rent out a room in your home
Renting out a room may be the easiest option for house hacking. It means you don’t have to pay to finish a basement or create another separate living space.
However, the big drawback is that you’ll have to share common areas with a housemate, like your kitchen and possibly even your bathroom. You may not enjoy the constant presence of someone else in your space. And if you have a tenant who’s messy, that mess may be in your face constantly.
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2. Rent out a finished basement
If you’re buying a home with a basement, renting it out could be a great way to house hack while retaining some privacy. But renting out a basement may not be as simple as you’d expect.
First, you’ll need to check your local laws to make sure you’re allowed to rent out an underground space. Second, if you buy a home whose basement isn’t finished, you’ll have to bear the cost to do that renovation.
This Old House puts the average cost of finishing a basement with 1,000 square feet of space at $7,000 to $23,000. The more complicated the project, the higher the cost will be.
3. Rent out a finished garage
Similar to renting out a basement, renting out a finished garage allows you to have a tenant who doesn't necessarily have to share your living space, depending on how extensively you're able to convert it. If you’re able to add a kitchen and bathroom, your garage could serve as its own miniature apartment.
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But just as there's a cost to finishing a basement, there's an expense involved in converting a garage. Angi puts the average cost of finishing a garage at $16,637. However, if there's plumbing and electrical work needed, you may be looking at significantly higher costs.
Plus, if you give up your garage, you won't have a way to protect your vehicle from the elements. You could also end up forgoing valuable storage space.
Read More: Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
4. Buy a multiunit property and rent out any unit you're not occupying
Another great way to house hack is to buy a home with multiple units under the same roof, such as a duplex. That way, the work is largely done, and from there, you choose which unit you want to occupy and rent out the other(s).
The benefit of buying a multiunit property is that you may not have to take on major renovations. And you may find that you have plenty of privacy, since your tenants will have their own self-contained space.
On the other hand, a multiunit home may cost more to purchase than a single-family home. In addition, since you're not guaranteed to have a steady tenant, if you can’t afford your mortgage without that added income, you’re taking a big risk.
5. Rent out your driveway or parking spot
Here’s a house hack that doesn’t require a tenant living under your roof. Parking can be limited in some places, especially in a city’s downtown area. If you live somewhere and have an extra parking spot or space on your driveway, and you’re not in need of it, you may be able to rent out any unused space to another driver if it’s permitted.
It’s a good option to consider if you have two parking spots but only one vehicle, or don’t have a car and therefore don’t need the space. And it might make life easier for a commuter who no longer has to find public parking.
Before you rent out your parking spot or driveway, it may be a good idea to talk to your homeowners insurance company to make sure you’re covered for damages or injuries that may occur. You may need to work with your insurer to increase or change your coverage if you’re going to be using your home to generate income in these ways.
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Maurie Backman has been writing professionally for well over a decade. Since becoming a full-time writer, she's produced thousands of articles on topics ranging from Social Security to investing to real estate.
