Music Industry House Hacking: How to Make Money on Tour

Let’s talk about buying real estate as a touring professional – specifically music industry house hacking! Whether you’re a crew member or part of a band, as a touring pro you’re most likely constantly on the road. So how can you use your unique situation to your advantage and make money or cover your mortgage?

This is a somewhat niche topic, addressing some of the concerns and dilemmas associated with touring and traveling in the music industry. But the same principles apply to a ton of other industries. If you travel regularly for work, house hacking might be a great way for you to turn your home into a money-making asset.

Would you believe me if I told you there was a hack to buying a house, making money and building long term wealth while you’re traveling?

Music Industry House Hacking 101

House hacking is a real estate strategy where you buy a property, live in part of it, and rent out the rest. This could be as simple as renting out a spare room or as involved as turning your home into a multi-unit property. The idea is to use the rental income to cover your mortgage payments and other housing expenses.

Music Industry Translation: You buy a home or multi-unit property. Instead of leaving it vacant while you’re on the road all year, you rent out a portion of the home. This could be as simple as keeping a small room for yourself when you’re not on tour & renting the majority of the home to other people. Or, using it as a short term rental and renting the entire property out while you’re gone.

Why Is House Hacking Perfect for Touring Pros?

There are so many professions in the music industry that involve traveling regularly or being on tour for a good amount of time. What first comes to mind for most people are the band members or touring musicians. But there are so many roles. Music Industry House Hacking can apply to anyone in the industry. Think: tour managers, production managers, sound engineers, lighting designers, merchandise managers, backline technicians, catering & hospitality crew, drivers, etc.

So what are some the benefits of house hacking if you’re a touring professional?

Tax Benefits: Renting out part of your home can also come with tax benefits. You may be able to deduct certain expenses, such as repairs, maintenance, and a portion of your mortgage interest. Always consult with a tax professional to understand the specific benefits available to you.

Offset Your Mortgage: When you travel, your home can feel like a financial burden, especially if it’s just sitting empty. With house hacking, you can offset your mortgage costs by renting out part or all of your home while you’re traveling. This means you can be on tour without worrying about paying for an unused space.

Flexibility: If you rent out a portion of your home full-time, you’ll always have someone helping with the mortgage. If you prefer more flexibility, you can rent out your entire home on platforms like Airbnb or Furnished Finders when you’re on the road. This way, your home is working for you, whether you’re there or not.

Build Equity While Traveling: One of the best things about house hacking is that it allows you to build equity in your home without bearing the full financial burden. Over time, as your tenants help pay down your mortgage, you’re building wealth without sacrificing your ability to travel for work.

Security and Peace of Mind: Leaving your home empty while you travel can be a bit nerve-wracking. With house hacking, you have tenants or short-term renters who can keep an eye on things, giving you peace of mind that your property is safe while you’re away.

How to Get Started with House Hacking

Plan for the Long Term: Think about how house hacking fits into your long-term financial goals. Whether you’re looking to work and travel more, pay off your mortgage faster, or build a real estate portfolio to help you retire, house hacking can be a powerful tool to help you meet your goals.

Choose the Right Property: Look for a home that has the potential to generate rental income. This could be a house with a basement apartment, a duplex, or even a home with extra bedrooms.

Understand Local Regulations: Make sure you’re aware of local zoning laws and rental regulations. Some areas have restrictions on short-term rentals, so it’s important to do your homework.

Consider Financing Options: Some loans, like FHA loans, allow for lower down payments and can be used to purchase multi-unit properties. There are a lot of different options and it’s helpful to work with a lender who has experience working with self-employed individuals. I like to work with lenders who have experience specifically in the music industry & understand its nuances. It’s also helpful to work with a lender who understands alternative loan programs for people who are self-employed.

House Hacking Loans

Let’s talk about money. Figuring out financing can be confusing, regardless of your career or industry. But there are actually several types of home loans that can be particularly advantageous for house hacking & music industry professionals. These loans are designed to help buyers purchase multi-unit properties or homes with additional rentable spaces. Here are a few examples:

FHA Loans (Federal Housing Administration)

• Multi-Unit Properties: FHA loans allow you to purchase a property with up to four units with as little as 3.5% down, provided you live in one of the units as your primary residence.
• Flexible Qualification: FHA loans are easier to qualify for than conventional loans, especially if you have a lower credit score or a smaller down payment. However, you’ll need to pay mortgage insurance premiums (MIP).

Conventional Loans

• Multi-Unit Properties: Conventional loans can be used to purchase multi-unit properties (up to four units). The down payment requirement for multi-unit properties is typically higher than for single-family homes—around 15-25%—but it can be a good option if you have the funds.
• PMI: If you put less than 20% down, you’ll likely need to pay PMI (private mortgage insurance) until you reach 20% equity in the property.

HomeReady and Home Possible Loans

• Low Down Payment: Both Fannie Mae’s HomeReady and Freddie Mac’s Home Possible loan programs allow you to purchase a property with as little as 3% down.
• Multi-Unit Properties: You can use these loans to purchase a multi-unit property (up to four units) if you meet income and credit requirements. These programs are designed to help low-to-moderate-income borrowers and may offer more flexible underwriting guidelines.

203(k) Rehab Loans

• Property Renovation: If you’re interested in house hacking by purchasing a fixer-upper and renovating it, an FHA 203(k) loan could be a great option. This loan combines the purchase price and the renovation costs into a single mortgage.
• Multi-Unit Properties: You can use a 203(k) loan to buy a multi-unit property and make improvements, as long as you live in one of the units.

Fannie Mae Homestyle Renovation Loan

Renovation Financing: Similar to the 203(k) loan, the Fannie Mae Homestyle Renovation loan allows you to finance both the purchase and the renovation of a property in a single mortgage.

Multi-Unit Properties: This loan can also be used for multi-unit properties, making it a good option for house hacking if you plan to make significant improvements to the property.

Portfolio Loans

• Lender Flexibility: Portfolio loans are offered by some banks and credit unions, and they are held in the lender’s portfolio rather than being sold on the secondary market. This gives lenders more flexibility in their underwriting criteria.
• Multi-Unit Properties: These loans can be a good option if your financial situation or the property type doesn’t meet traditional guidelines, such as buying a multi-unit property with unique characteristics.

Local and State Programs

Down Payment Assistance: Some local and state programs offer down payment assistance or special loans for first-time homebuyers or low-to-moderate-income borrowers. These programs can sometimes be used for house hacking, especially if you’re buying a multi-unit property.

Music Industry House Hacking Questions?

I’m happy to chat about house hacking & real estate! I have extensive experience working in both the music industry and real estate – as well as a background in finance & economics. This gives me unique insights on how we can bridge the gap between being on the road and owning a home. It’s my goal to help simplify the process & find ways to help people not only invest in their future, but finds realistic ways to build long term personal wealth!

Don’t hesitate to reach out with questions or help finding referrals to make your next move!

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For informational purposes only and not intended to be personal financial advice. Past performance is not a guarantee of future results. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers should be considered approximate, and confirmed independently according to one’s specific circumstances.