In an ideal situation, the best house hacks allow you to “live for free” because your tenants pay all of your bills and your mortgage. But home prices in Toronto have been going up much faster than rents in the past few years. So even though you’re still negative cash flowing, the amount will be a lot less compared to if you were renting and you’re actually gaining equity with the money you put in each month instead of going down the drain. 

Let’s take a look at the numbers. Instead of paying $1,600 per month to rent a basement apartment, you might be able to live in the same unit for a lot less if you could buy a house for around $1 million. If you put a 20% downpayment at our current 5 year fixed interest rate of 5.25%, then you can collect over $4,600 in rent, which helps pay for your operating expenses on the house and the mortgage, and you’d only be out $600 per month instead of $1,600.

And remember that $4,400 per month that you’re paying the bank each month? A big portion is actually principal paydown, so that’s yours to keep at the end, so you’re actually in a much better position compared to renting even before we take into account appreciation. 

House hacking looks great, but, of course, the biggest hurdle would be being able to actually buy one in the first place.

House prices in Toronto have dropped around 20% on average as of the July sales data, but prices are still pretty high. A $1 million house means you need around $235,000 of capital with a 20% downpayment and closing costs, and it might be even more if you need to renovate the place before you move in.

The other big hurdle is being able to qualify for an $800,000 mortgage, and that means you’ll need to have a six-digit family income to qualify.