Is house hacking worth it? Yeah, the house hacking strategy is easy for many investors to jump into real estate. There are a lot of benefits in this strategy like low-cost financing, reducing or eliminating your cost of living and positioning to take advanced real estate investments.
House hacking is the process where you buy a single family or multi- family property as a primary residence. The primary goal of this investment is to live for free, i.e by using the rental income from your tenants you can pay the mortgage.
These house hacking properties include a duplex, triplex or fourplex. You can also house hack with extra rentable space, like a guest house or basement apartment.
Benefits of House Hacking
Successful house hacking allows owners to live for free, if this is not possible at least at a reduced cost. A multi-family property costs more, so it could be a huge task to rent multiple units.
House Hacking is one of the best real estate investing strategies for beginners. This strategy helps to buy real estate that acts both as a primary residence and investment property. This may reduce their financial burden and reduce the risks.
The rental income helps investors to pay their mortgage. Once you’ve paid the mortgage completely, the property can become a completely cash flowing, passive investment.
Building equity through real estate is something really amazing. If the cash you get from rental income is enough to pay your entire mortgage, your property is building equity using other people’s money.
House Hacking will help you experience being a landlord. You are next-door to your tenants which is easy for you to keep an eye on how your property is being treated. You can easily monitor noise levels, and take actions in case an emergency repair needs to be made. Managing rental properties is much easier when it’s in close proximity.
Owning rental property can come with huge tax benefits. House Hacking investors will get a lot of benefits through depreciation and a mortgage interest tax deduction. Depreciation is the wear and tear a property goes through over time which decreases the value of property. Investors can save a lot of money in taxes with depreciation. Owning this type of property also reduces your taxable income.
- House Hacking Pitfalls to Avoid
- Buying in an undesirable neighborhood or market
- Not spending enough money for repairs
- Being unfamiliar with local ordinances and laws
- Getting too casual about landlording responsibilities
- Not being able to set proper boundaries with tenants.
The house hacking investment strategy is one of the great ways to get into real estate and build lasting wealth. Even if you already own the house, there are several creative ways to earn money by renting your extra or unused space. However, this may not work for everyone, house hacking can be an extremely successful and lucrative investment strategy.