With housing prices climbing and mortgage rates still high, Grand Rapids buyers are turning to house hacking. This creative approach has gained major traction among first-time buyers and entry-level investors, and for good reason! It’s one of the most accessible ways to build wealth through real estate, especially if you’re just getting started. If you’re interested in investing in real estate but feel priced out, or you wonder how you can improve the cost efficiency for a rental property, house hacking might be the strategy you’ve been looking for.
In this blog, we’ll break down what house hacking is, the most common setups, and what realistic options exist for buyers in today’s market. We’ll also share how partnering with a professional property manager like United Properties of West Michigan can make the process smoother, even if you’re living right next door to your tenants.
What Is House Hacking?
At its core, house hacking is a strategy where you buy a property, live in part of it, and rent out the rest to help offset (or completely cover) your housing expenses. The income you collect from tenants goes toward your mortgage and other costs, sometimes leaving you with little to no monthly payment at all.
House hacking allows you to:
- Reduce or eliminate your living expenses
- Build equity faster than traditional renting
- Start your real estate investment portfolio with lower risk
It’s an ideal entry point for people who want to get into real estate investing but may not yet have the capital, experience, or comfort level to purchase a full rental property.
One of the biggest advantages of this approach is that you don’t need a large down payment to get started. Because you’ll be living in the property as your primary residence, you can often qualify for loan programs that require a much smaller down payment than typical investment properties, making house hacking an achievable first step for many new investors.
Is house hacking legal in Michigan? Yes, house hacking is legal in Michigan, but local ordinances may vary. In Grand Rapids, rental units must be inspected and certified before tenants move in. Additionally, local zoning laws also determine whether accessory units like ADUs are permitted. If you’re hesitant and unsure, or you’re overwhelmed by the state or local laws and ordinances, partnering with a property manager ensures your property stays compliant.
Common House Hacking Setups
There’s no one-size-fits-all approach to house hacking. The right setup depends on your comfort level, your property type, and your long-term goals. Here are the most common models new investors use.
1. The Duplex (or Triplex/Fourplex) Model
This is the classic house hacking setup and arguably the most convenient. You live in one unit and rent out the other(s). Because each unit has its own entrance, kitchen, and living space, you maintain privacy while generating steady rental income that covers most, if not all, of your mortgage expenses.
Example:
You buy a duplex for $300,000 with a $60,000 (20%) down payment. You live in one unit and rent the other for $1,800/month. That rental income covers most (or all) of your mortgage payment, leaving you with little to no housing cost.
Or, you buy a duplex for $300,000 with a $15,000 (5%) down payment. You live in one unit and rent the other for $1,800/month. That rental income covers 75-80% of your mortgage payment, leaving you with very little to pay.
This model also offers flexibility: when you’re ready to move out, you can rent your unit too and turn the entire property into a full investment (additional information regarding owner occupancy requirements in the next section, Realistic Expectations and Challenges).
2. Renting Out Rooms in a Single-Family Home
If you own or plan to buy a single-family home, you can rent out individual bedrooms to offset your mortgage. This approach typically works best for college towns, urban areas, or cities with a strong job market.
Example:
You purchase a 3-bedroom home and rent out two rooms for $800 each. That’s $1,600 in monthly income that can go directly toward your mortgage.
While it may require a little more coordination (and patience) living with roommates, it’s one of the most affordable entry points for new investors and can drastically reduce your living expenses. This approach works particularly well in cities with universities or healthcare hubs. Grand Rapids, for instance, has consistent rental demand from students and healthcare staff.
3. Accessory Dwelling Units (ADUs) and In-Law Suites
With local zoning laws becoming more flexible, many homeowners are adding Accessory Dwelling Units (ADUs) (also called guest houses, in-law suites, or backyard cottages) to their properties. You can live in the main home and rent out the smaller unit, or vice versa.
ADUs are appealing because they offer privacy for both the owner and the tenant while increasing the overall value of the property. They can also serve as a flexible space for family, guests, or short-term rentals in the future.
4. Basement Apartments or Garage Conversions
If your home already has a finished basement or detached garage, converting that space into a rental can be a cost-effective house hack. You’ll need to ensure it meets local rental codes (for example, egress windows and proper utilities), but it can be an affordable way to create a secondary income stream without buying a multifamily property.
Realistic Expectations and Challenges
House hacking can be a game-changer, but it’s not without its challenges. Here are a few realistic factors to keep in mind:
1. You’ll Be a Landlord
Even if you’re renting to friends or living on-site, you’ll still need to handle rent collection, maintenance requests, lease agreements, and occasional tenant disputes. Not only can this create points of tension in friendships and family dynamics, but it can also be time-consuming, especially if you’re new to property management.
Pro tip: Hiring a professional property manager (like UPM) can help take that burden off your plate while ensuring everything is handled legally and professionally. Even if you only have one tenant, a property manager can handle compliance with Michigan Landlord-Tenant laws and Grand Rapids City Code, giving you peace of mind and saving you time.
2. Financing and Property Rules
One of the best parts about house hacking is that it’s financially accessible; you don’t need the typical 20% down payment that’s required for most investment properties.
Because you’ll be living in the home as your primary residence, you can often qualify for loans that require as little as 3.5–5% down (depending on the loan type).
- FHA loans generally allow you to put down just 3.5%, and you’re required to live in the property for at least 6 months.
- Conventional loans typically require a 5% down payment, with an occupancy requirement of 12 months.
That means you can purchase a duplex, triplex, or even a single-family home with a low down payment, live in one part, and rent out the rest, all while building equity.
It’s important to note that requirements can vary by lender and loan type, so it’s best to confirm the details with your lender before purchasing. They can help you find the right financing option based on your goals, property type, and long-term plans.
3. Privacy and Boundaries
Living near (or with) tenants can sometimes blur boundaries. Establish clear expectations early on (especially around shared spaces, parking, and communication) to ensure a smooth arrangement.
4. Market Considerations
While house hacking can be done almost anywhere, it’s most effective in markets where rents are strong and housing prices are reasonable. In Grand Rapids and surrounding areas, the demand for affordable rentals remains high, with the average duplex renting for $1,300 to $1,500 per unit in 2024. This makes Grand Rapids an excellent market for house hacking strategies.
How House Hacking Builds Long-Term Wealth
What starts as a way to lower your living expenses can quickly become a foundation for long-term wealth. Here’s how:
- Equity growth: As your tenants help pay down the mortgage, your equity in the property grows.
- Appreciation: Over time, your property value increases, especially in desirable markets.
- Future flexibility: Once you move out, your first house hack can become a full-time rental property that continues to generate passive income.
Many experienced investors started with a simple house hack and used the equity and income from that first property to buy their next one.
Making House Hacking Easier with United Properties
Managing tenants while living on-site can be tricky. You want to maintain a good relationship without letting it get too personal, and that’s where a professional property manager like United Properties of West Michigan comes in.
At United Properties of West Michigan, we can:
- Handle tenant screening, leasing, and rent collection
- Coordinate maintenance and repairs
- Enforce lease terms and manage communication
- Keep your property compliant with Michigan’s rental laws
That means you can focus on living your life (and planning your next investment) while we handle the day-to-day operations, and use our experience in asset management to help you reach your goals. Whether you’re living in one unit or have moved on to your next property, we’ll make sure your investment continues to work for you.
Final Thoughts
Many investors start with a single house hack, one duplex or home with an ADU, and use the equity from that first property to grow their portfolio. What begins as a creative way to reduce your housing costs often becomes the foundation for long-term financial success and independence.
House hacking isn’t just a buzzword, it’s one of the smartest ways for new buyers and investors to enter real estate with less risk and more reward. By combining smart financing, thoughtful property selection, and professional management, you can live for less, build equity faster, and start creating lasting wealth through real estate.
Ready to explore your first house hack or have other questions about property management and how we can help grow your assets? Schedule a free consultation with United Properties of West Michigan or check out our ROI calculator to see how your current home could perform as a rental.
Want to know more about United Properties of West Michigan? Discover our roots, learn about who we are, and how we leverage 150+ combined years of experience to grow your assets.
Sergio joined United Properties in 2020. He is a graduate from Pickens Technical College as a Nurse Assistant and as a Small Animal Care Provider in 2010. In the past nine years, Sergio has had various jobs, all focused around customer service.
Eden joined United Properties in 2016. Eden graduated from Davenport University in 2015 with an Associate’s in Business Administration. She’s the Executive Assistant to the Owner of United Properties, with a focus on procedural documentation. She enjoys playing guitar, reading, and doing outdoor activities. Eden is trilingual and able to communicate in English, Spanish, and American Sign Language. 
David joined the United Properties team in 2019 as the Director of Client Relations and Business Development. In this capacity, he is responsible for leading all leasing, application underwriting, tenant relations, accounts receivable, process improvement, remote workers, and general office functionality (essentially anything outside of maintenance and service). David comes from a longstanding career at a Fortune 15 company primarily in a sales and customer service leadership role.
Matthew joined the United Properties in early 2020. He is a graduate of Lee University with a bachelor’s in Intercultural Studies and also a master’s in Discipleship and Christian Formation. Matthew serves as a project manager over the Rent Ready process. He has 20 years of construction experience and over 10 years of experience in leadership positions. He oversees a team of technicians and schedules outside vendors getting properties back to the United rent-ready standard so that they can be leased again.
Cristina joined United Properties as the Accounting and Billing Team Lead in October of 2020. She has experience as a technology professional, an English-Spanish translator, and has worked the past several years as the treasurer of her condominium.
Rick joined United Properties in 2020 as a Service Coordinator and then later transitioned to the Collections team, where his customer service shines. Rick has an extensive background in customer service and enjoys being able to resolve issues. He and his wife are raising their two kids and in his free time, Rick enjoys making his own homemade jerky.
Harriet joined United Properties as a Accounting & Billing Specialist in February of 2021. She has experience as a bookkeeper and a Property Manager for a Real Estate account. She was a working student during her college days. Harriet loves cleaning because she thinks it is therapeutic. She also loves watching series during her free time, and she’s a fur mom of one dog. Her inspiration to work every day is her family.
Diego has an extensive background in customer service and, most recently in Maintenance and
Paulina joined United in early 2021 as a Leasing Assistant. She has a background studying social work, with several years of experience in customer service. She speaks English and Spanish fluently and loves to learn. Paulina enjoys small road trips and cold, rainy weather. Her dog is her favorite thing in the world.
Jessica has a Bachelor’s Degree in Financial strategies and public accounting and is studying a masters in Blockchain and Fintech regulation. She has previous experience as a customer service representative. She speaks English and Spanish. She loves taking long walks with her three dogs, hiking and road tripping during the weekends.
Chris Good is new to the United Properties Team since June 2022 as a Business Development Manager. With years of experience in both the construction industry (Master Electrician) and the Real Estate industry (Broker), he will closely work with new and experienced investors to facilitate their real estate goals.
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Soroya has been with United Properties since March 2025. Her problem-solving, time management, and communication skills help her shine when working collaboratively with tenants and prospects. She is currently pursuing a degree in Cyber Security at Davenport University. Thanks to her tech-savviness, she excels at navigating and troubleshooting common technology and software issues.
Marlon Joined United Properties in 2025 as a service coordinator. He arrived with solid experience in customer service, property management, and marketing. If you need assistance with either a new or a previous situation, he will be more than glad to help you. Depending on the season, he likes spending time outdoors, going hiking, or simply taking a stroll around town to see what’s new in the city.
Hector began his career in customer service in 2017, gaining valuable experience in client support and communication. In 2021, he transitioned into sales roles, where he developed a strong ability to drive results and build relationships. Since 2023, he has worked in maintenance, IT, and tech support, expanding his skills in troubleshooting, systems support, and hands-on problem-solving. His background combines over eight years of customer-facing roles with a growing expertise in technical support and operations.
Gar Allison joined United Properties as Director of Operations in August 2025. He brings a decade of experience, covering construction project management, supply chain, sales, marketing, and regulatory compliance. Before that, he spent five years as an Engines Sales Representative in Kansas City, MO, shortly after graduating from Davenport University in 2011 with a bachelor’s degree in business management.