Did you know that you can generate revenue by renting out a part of your house? By doing this, you can equalize the amount of your mortgage and expenses related to owning or buying a house. This strategy is called house hacking, which can be a good real estate investment. You’ve probably heard the word duplex? How about the triplex? Or even fourplex? These are some of the terms used by other people, but it basically means owner-occupied multifamily property, and they are a great option as a housing hack.
House hacking can also happen in single-family houses by renting out some parts of your home like the basement, garage, or bedroom. There are so many ways to house hack, especially if you’re the investor, you live in the property, make few renovations, and put it on the market after a few years. It can be wise to spend a few bucks buying a small multifamily house to live in one part and put the other part on lease. This is making money, and you can even live for free in that property.
There are other benefits to doing this. Some real estate investors and newbie homebuyers can have experience being a proprietor with a low cost of money and risk. You can get valuable experience doing tenant management, reviewing and making rental contracts, lodger screening, and even advertising the vacancy on your property.
Dealing with repairs, renovations and unexpected issues within the house will happen eventually. The experience of successfully managing and owning a property can be advantageous for you in the future. If you’re looking for financing and lending opportunities from small to big banks, then being a landlord can increase the possibility of getting larger loans. Besides that, the income you’ll be able to get each month from your tenants will be able to help you pay your mortgage, and you can use it to invest in another property as well if you would want to.
Owning a house and being able to generate income from it can be an exciting job for some. You can do almost whatever you want without hearing complaints from anyone. But purchasing a house is not for everyone. If you don’t have enough money to pay for your mortgage or your main job doesn’t support you well financially, or if you are in a lot of debt, you will want to organize your budget first. Spending your money to buy a house is not just like buying candy. You’ll need to think it through, get it together, research, and finally decide on purchasing.
Before you go into the world of homeownership, you should have the confidence and knowledge to do so. You can even do real estate investing and start making it easier for you to hack your expenses. Most people think that this industry is only for old, rich, and bored people. However, anyone capable enough can enter the real estate industry no matter what age they are. You just have to be smart about it, since house hacking can be a great strategy if you have the proper knowledge.
Big multifamily properties can be an excellent option for house hacking. However, small multifamily land is a perfect choice because your tenants can help you cover all expenses and more when they pay each month. Finding or talking with a real estate agent can help you look for properties, or you can also look through websites like this one. Both ways can be fruitful. It just depends on what you’re looking for and how fast you want to find a place.
It’s best to keep in mind that you’re searching for small multifamily properties, ones that have two, three, or four units. Focus on finding duplex, triplex, and fourplex. As a newbie, you wouldn’t want to mess with big multifamily properties with five or even more units on it. The whole real estate world changes when you choose to play on the bigger side of things. That involves more risk and can cost you in the long run. Taking it slowly is be a great way to begin.
Property hunting is the most exciting part for most homebuyers. It’s like window shopping and previewing what you’re going to buy. The place’s location is also important to consider since it’s easier to find tenants if it’s in an easily accessible location. While checking out some houses, you should also remember, not all are created equal. Still, don’t worry about the smell, dirt, or the not so attractive houses, because those are the cheapest and easiest to get. Just a little work on them, and you’ll be able to see the beauty of that property again. Just don’t overdo it. Don’t buy a house that would waste your money and time.
If you end up buying a house with many things to fix, you’re basically digging your own grave in the real estate world. Both money and time are precious when starting out hacking. You will want to keep your cash flowing in the right direction. Be wise and be observant of what properties are the best ones to get, even though they’re a just bit messed up. Kitchens are often the part of the home that can make or break a home, especially if they have stone countertops (more information here).
Loans can be helpful if you can’t provide the needed hundreds of thousands of dollars to purchase them. The main issue is that with any loan, you will need to supply a certain amount of money to get the loan, known as the down payment. This is the primary way to fund your “housing hack” property purchase.
Many great things can happen and can change your life once you purchase a small multifamily property wisely. Remember, this can be a great real estate investment strategy if you play your cards well, but you need to do the math first to be sure it will be profitable. Calculate all the expenses and subtract them from how much you can get from renting out the property.