You don’t necessarily have to choose between buying a home and buying an investment property. House hacking can let you do both, using rental income from part of your property to help offset the cost of owning it.
Chicago is full of two-flats, three-flats, and small multifamily buildings.
Most people walk past them and simply see apartments.
A buyer might see something else: a home that can help pay for itself.
That’s the basic idea behind house hacking, and for the right buyer, it can completely change the way you think about buying your first property.
So, what exactly is house hacking?
House hacking means buying a property, living in part of it, and generating income from another part.
One of the simplest versions in Chicago looks like this:
- You buy a two-flat.
- You live in one unit.
- You rent the other.
Instead of carrying the entire cost of the property yourself, you have rental income coming in every month to help offset it.
And importantly, this is still your home.
You aren’t necessarily buying an investment property somewhere else and becoming a remote landlord. You’re buying the place you’re going to live in, while also owning an income-producing unit.
That combination is what makes house hacking so interesting.
Why Chicago is especially interesting for house hacking
Chicago has something many cities don’t have in nearly the same abundance: small multifamily housing woven directly into residential neighborhoods.
Two-flats, three-flats, four-flats, greystones, brick multifamily buildings, and converted properties are part of the city’s housing fabric.
That means a buyer doesn’t necessarily have to choose between living somewhere they enjoy and owning a multifamily property.
Depending on budget and location, you may be able to find a property where one unit becomes your home and the others become part of the financial equation.
A simple example
Imagine buying a two-flat where your total monthly housing expense is $4,500.
You live in the larger unit and rent the other apartment for $2,000 per month.
That doesn’t mean your housing suddenly “costs $2,500.” There are still vacancies, repairs, maintenance, utilities, capital expenditures, and other expenses to consider.
But you now have $2,000 of gross monthly income attached to the property where you live.
That’s a very different financial structure from buying a single-family home with the same monthly payment and no rental income.
And that’s where house hacking starts getting interesting.
You may not need 20% down
This is probably one of the biggest misconceptions around multifamily properties.
People hear “investment property” and immediately assume they’ll need a massive down payment.
But if you’re actually going to occupy the property as your primary residence, financing can look very different from financing a traditional non-owner-occupied investment property.
Depending on the loan program, property, borrower qualifications, and number of units, owner-occupied multifamily buyers may have access to lower-down-payment financing options.
That’s an important distinction. You’re not simply an investor buying an apartment building. You’re also a homeowner buying your primary residence.
A good lender who understands owner-occupied multifamily properties should be involved early so you know exactly what financing options are available to you.
The rent may also help you qualify
Here’s another piece that surprises some buyers.
When you’re purchasing an owner-occupied multifamily property, a lender may be able to consider qualifying rental income from the other unit or units when underwriting the loan, subject to the applicable loan program and documentation requirements.
That can change the buying conversation considerably.
Instead of looking exclusively at your personal income against the entire property expense, you’re potentially purchasing an asset that already has another source of income built into it.
Again, the exact calculation is lender- and loan-specific. But it’s one of the reasons I like buyers who are interested in house hacking to talk with a knowledgeable lender before assuming what they can or cannot afford.
You’re buying two things at once
This is where I think house hacking becomes particularly powerful.
You’re buying a place to live and an income-producing asset.
That means I don’t analyze a potential house hack exactly the same way I would analyze a traditional home.
Yes, I want to know whether you like the owner’s unit. But I also want to know: What could the other unit realistically rent for? Are the layouts desirable? Who pays the utilities? Is there laundry? Is there parking? What’s the condition of the major building systems? What expenses will the owner be responsible for? Are the current rents below market? What improvements might increase the property’s usefulness or income over time?
And, importantly: Would this still be a property you’d want to own after you stop living there?
Because that’s where the longer-term opportunity begins.
What happens when you move out?
Suppose you live in your two-flat for several years. Eventually, life changes.
Maybe you want more space. Maybe you want a single-family home. Maybe you’re moving neighborhoods.
You may have an option that someone selling a traditional starter home doesn’t: rent your old unit, too.
Now the two-flat that originally helped offset your housing expense has the potential to become a fully rented investment property.
You move into your next home. The original property stays behind.
And instead of starting your real estate investment journey someday, you may realize you already started it years earlier.
That’s one of my favorite things about this strategy.
Does that mean everyone should buy a two-flat?
No.
Some people simply don’t want to be landlords. Some buyers value privacy more than rental income. Others would rather own a condo or single-family home and build wealth in completely different ways.
House hacking isn’t a loophole or a magic formula. It’s simply another way to structure homeownership.
And a lot of buyers never seriously consider it because nobody showed them what the option could look like.
A different first-home question
Most buyers begin with: “How much home can I afford?”
House hacking introduces another question: “How much property can I responsibly own?”
That’s a subtle distinction, but potentially a powerful one.
Your first property doesn’t necessarily have to be just the place you live.
For the right buyer, it can also become the first income-producing property they own.
And in a city filled with two-flats, three-flats, and small multifamily buildings, that’s an option worth understanding before you decide what your first home should look like.
See what others miss. Make every move count.
Frequently Asked Questions
What is house hacking?
House hacking generally means living in a property you own while generating income from another portion of it. A common Chicago example is buying a two-flat, living in one unit, and renting the other.
Can I house hack a two-flat in Chicago?
Yes. A two-flat is one of the most straightforward forms of house hacking: the owner occupies one legal dwelling unit while renting the other. Buyers should verify the property’s legal use, zoning, existing leases, and other property-specific considerations during due diligence.
Do I need 20% down to buy a multifamily property?
Not necessarily. Owner-occupied 2–4 unit properties can qualify for financing that differs from financing for non-owner-occupied investment properties. Available down payments and requirements depend on the loan program, property, and borrower.
Can rental income help me qualify for the mortgage?
Potentially. Certain mortgage programs allow lenders to consider qualifying rental income from additional units when underwriting an owner-occupied multifamily purchase. The amount and documentation requirements depend on the loan program and circumstances.
Is house hacking only for first-time homebuyers?
No. House hacking can be used by first-time or repeat buyers. It can be particularly interesting for buyers who want their primary residence to also play a role in a longer-term real estate investment strategy.
What should I look for in a Chicago house hack?
Beyond whether you like the owner’s unit, evaluate realistic rents, unit layouts, utilities, parking, laundry, building systems, maintenance needs, current leases, legal unit count, and the property’s potential as a future fully rented investment.
