House hacking. The idea of living in a rent-controlled apartment for years on end, saving up money and slowly climbing the property ladder is all well and good, but what if there was another way to build your nest egg while still living in comfort?
Benefits of House Hacking
There are a number of benefits to house hacking that may change your life. Perhaps the most obvious is the fact that you can save a ton of money on rent. If you live in an expensive city, this can be a game changer.
In addition to saving money on rent, you can also use house hacking to build up your credit score. By living in a home that you own and paying your mortgage on time, you can improve your credit score. This can open up doors for you in the future when it comes to getting loans for bigger purchases like a car or a home.
Another benefit of house hacking is that it allows you to get experience as a landlord. If you eventually want to own rental properties, this is a great way to get your feet wet and learn the ropes. You’ll learn how to screen tenants, handle maintenance issues, and more.
Last but not least, house hacking can be a great way to meet new people and make friends. If you live in a multi-unit property, you’ll have the opportunity to meet your neighbors and form relationships. This can be especially valuable if you’re new to an area or are looking for ways to expand your social circle.
How to House Hack
If you’re not familiar with the term “house hacking,” it simply refers to living in a property that has units that you can rent out to cover some or all of your mortgage/housing expenses. This strategy is most commonly used when purchasing a duplex, triplex, or fourplex, but can also be done with a single-family home (although it’s less common).
There are several benefits of house hacking that may change your life, including:
1. Potentially eliminate your monthly housing expenses
2. Force you to be a better landlord
3. Help you save money on your taxes
4. Introduce you to the world of real estate investing
5. Give you the option to move into a nicer unit as your income increases
If you’re thinking about purchasing a property to live in and rent out the other units, here are a few things to keep in mind:
Financing – When applying for a loan to purchase a property that will be owner-occupied, most lenders will require a smaller down payment (usually around 5-10%) than if it were being purchased as an investment property. Keep in mind that you will also need enough cash reserves to cover any repair/remodeling costs, as well as the added costs of being a landlord (e.g., insurance, accounting, etc.).
Finding Houses
There are a number of ways to find houses that you can hack. You can look online, in the newspaper, or even drive around your neighborhood.
The first step is to find a house that you like. Once you find a house, you need to contact the owner and see if they are willing to let you hack it. If they are, then you can start working on making the house into your home.
If you are having trouble finding a house to hack, there are a few things that you can do. You can try looking in different neighborhoods or even try looking for houses that are being foreclosed on. These houses may be more willing to let you hack them because they need to sell the property quickly.
Once you find a house that you want to hack, make sure that you have all of the necessary information before you start working on it. This includes things like the address, the price, and any other important details. Once you have this information, you can start working on making your new home.
Risks of House Hacking
There are a few risks associated with house hacking that you should be aware of before you jump into this strategy. The first is that you could end up in a situation where you are responsible for more repairs and maintenance than you can handle. This is especially true if you are living in an older home or one that is in need of significant repairs. If you are not handy or don’t have the time to deal with these issues, it could end up costing you more money in the long run.
Another risk is that you could end up being evicted from your home if your landlord finds out that you are running a business out of it. This is why it’s important to have a solid lease agreement in place that clearly states what is and is not allowed.
Lastly, there is always the risk that something could go wrong with your tenants and they could damage your property or cause other problems. This is why it’s important to screen your tenants carefully and make sure they are trustworthy.
Overall, these risks are relatively minor compared to the potential rewards of house hacking. However, it’s important to be aware of them before you get started.
Conclusion
House hacking can be an incredible way to save money, live in a nicer home, and reduce your monthly expenses. If you’re considering house hacking, we hope this article has given you some food for thought. Weigh the pros and cons carefully and decide if it’s the right decision for you — but know that it could very well change your life for the better.
