House hacking may prove to be the strategy of choice to you, in case you ever wished you could live in your house rent-free in the process of amassing you wealth. It is an increasing tendency among new house-purchasers and real estate investors–particularly in hot markets.
So what is house hacking and how do you do that? Okay, let us get it disintegrated.
What Is House Hacking?
House hacking is one such strategy of real estate investing that involves you renting a portion of your property and being a resident in it to pay mortgage and other costs. Just imagine it is like turning your house into a money machine.
Common house hacking examples are:
- To purchase a duplex, triplex or fourplex and to rent out the other units and reside on a unit.
- Renting out a basement apartment or spare room in your single family house or apartment.
- Putting a garage or casita as a rented unit.
The rental income can be used in many instances to ensure that the house hacker lives rent-free or at a very minimal amount.
Why Is House Hacking so Popular?
Majorly, the concept is very common with millenials and Gen Z home buyers seeking clever entry into a real estate world without having to put up a massive budget.
Benefits include:
- Reducing or eliminating your monthly housing costs
- Building equity while someone else pays the mortgage
- Starting your real estate investment journey early
- Tax advantages from rental property deductions
How To Get Started With House Hacking
Are you ready? In a nutshell here is a guide;
1. Choose the Right Property
Look at multi-unit homes (duplex, triplex), or single family homes that allows renting part of the property (basement, ADU, casita). Find out if the property falls in a high demand rental area.
2. Get Pre-Approved
A conventional mortgage will still be necessary so pre-approval is necessary. House hackers love FHA loans and can put as little as 3.5 percent down on multi-unit homes.
3. Run the Numbers
Figure out how much is coming out and how much can be gotten in. Are your mortgage, taxes and insurance going to be paid by the rent on other units?
4. Know the Local Laws
Look up local ordinance about zoning laws or rental regulations and the option of long-term or short-term rentals.
5. Marketing Your Rental Units
As soon as you have moved in, begin renting out the other units. Search in the environment through sites such as Zillow, Facebook Marketplace, or Airbnb (in case it is permitted).
Wrapping Up
House hacking is not just a clever method to reduce spendings on rent, but also a sure method on how to generate long term wealth and gain real estate experience. With a good property and slight planning, you can work without paying rent and bring pure income.
House hacking may actually be the best financial decision you ever make in zoning in on your first home and becoming a property investor.
Richard Slezak, Las Vegas Realtor®
Agent License: S.0201790
Call: (702) 688-3508
MAIL: richardslezak@gmail.com
Address: 2298 W Horizon Ridge Pkwy #114, Henderson, NV 89052, USA
