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Despite the need for accommodation and housing rising on a daily, millions of Americans struggle to own a property or even afford suitable housing. This is due to the sky rocketing prices in real estate.
How does an individual who feels like buying a house is out of reach in an expensive market work towards purchasing a property?
They can do so through house hacking!
House hacking has become one of the most popular real estate investments for people. It can be a very effective, low-risk investment strategy you can use to build wealth in the home you are living in.
What is House Hacking?
House hacking is the term used to describe the practice of buying a home and renting out the extra bedrooms or creating a separate rental unit.
Overtime, it has become popular in areas where it is too expensive to own a home and live comfortably. With househacking, homeowners who find it too costly to live close to work or in desirable areas and make their monthly mortgage payments rent out one or two of their bedrooms and use the income from their tenants’ rent to offset their expenses or towards their mortgage.
Due to its nature, house hacking has evolved to a real estate venture that have considered investing in. This is the case for Tom Brickman who quit his job at a movie theater after he saved up enough money to purchase his first property which started his house hacking journey.
How To House Hack
While at The Money Exchange Podcast, Tom Brickman, a full time real estate investor, shared some tips on how to house hack.
One key tip to ensuring one masters the art of house hacking is to buy property they would be comfortable living in.
He stated that if the environment is unsafe or doesn’t offer easy access to necessities, it makes it hard for one to secure tenants. This can cause you to lose out, even after investing tons of money in renovations.
No one can operate independently in the real estate industry and having the contacts of individuals who can help you in the renovation process once you acquire a property is something you should definitely consider.
Putting these tips into practice will have you reaping the benefits of house hacking.
Benefits of House Hacking
There are so many benefits to house hacking that should make you seriously consider getting started.
1. It Eliminates Your Housing Cost
House hacking can help you lower or even eliminate your housing costs when done properly. Having a house with several units will cost more up front. But renting out the other units that you don’t live in allows you to have someone else pay your mortgage.
2. It is a Form of Passive Income
House hacking allows for the owner to rent out their property in scenarios where they may be away for a certain period of time. The money earned can be used to settle debt and to support other investments one may consider. In the long run, this can lead to financial independence.
You can even get these benefits if you don't own! Consider making passive income through real estate invest by renting your rental and more!
3. It Eases You Into Your Rental Property Career
When living on-site and near tenants you will learn how to be a landlord quickly. Your personal involvement in the living community will provide you with the valuable skills needed to manage properties and perform regular maintenance.
Get acquainted with the various tax benefits available to rental property owners, such as depreciation benefits or business-related tax deductions.
Learn how to supplement your daily, weekly or monthly income by trading stocks. Teri Ijeoma is G.O.A.T in the industry and will be your partner to teach you in her popular and transformational Trade and Travel course. While you’re waiting to start making money house hacking, this course will teach you another awesome way to make some extra money!
Mistakes To Avoid When House Hacking
Now that you are set and ready to enjoy the benefits of house hacking, it is important that you work towards safeguarding your property by avoiding these mistakes.
1. Neglecting Your Landlord Duties
Don’t forget about your new duties as a landlord. Setting up your property for house hacking automatically makes you a landlord. Your tenants depend on you when faced with any issues while renting out your property. It is important that they can easily communicate with you about what trouble they are having. Failure to keep up with your duties can cost you financially or legally.
2. Failing to Set Boundaries Between You and Your Tenants
It’s super important to have healthy boundaries with your tenants as you are their land lord. Living on the same property as your tenants also calls for setting clear, enforceable boundaries early on. Communicate clearly about your expectations so your tenants will not turn out to become an inconvenience to you.
3. Forgetting to Budget for Repairs
Don’t forget to set aside money when there’s an emergency. Setting aside money for repairs for incidents like when the roof collapses or a big plumbing issue happens will help you step right back into reaping the benefits of house hacking.
This can be done by setting aside a percentage of the rental income each month for incidences when repairs are needed.
If you need a great budgeting guide, check out my resource page! I have a free one just for you as well as some other great resources for your money needs.
4. Choosing an Undesirable Neighborhood
When you’re renting, you don’t want to choose an unsafe or an undesirable neighborhood. This mistake can cost you everything so make certain that you can see yourself living in the area you would personally choose to purchase property. If you would not live there then most certainly your tenants wouldn’t either.
When done right, house hacking is an excellent strategy to swiftly pay off your mortgage and free up cash flow for further investments. It is also a reasonable method to lower your home expenditures.
To learn more about how you can effectively house hack, listen to how Tom Brickman was able to quit his 9 to 5 and double his income with the help of house hacking below!
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