Assume you have been searching for a cost-effective or ingenious method to purchase your first McDonough investment property. In this case, house hacking could be the solution! When an investor purchases a property that has the potential to be modified into multiple rental units, lives in one unit, and then rents the other units to tenants is called house hacking.
The idea behind house hacking is to use the money your tenants pay in rent to pay your mortgage and other property costs, allowing you to live in your house for free while the value of the property appreciates. It’s a tempting proposition for many, particularly if you’re just getting started as a real estate investor. However, as with any investment, there are pros and cons to this strategy. Before you attempt house hacking for the first time, you should be aware of the following.
House Hacking Basics
Investors can benefit greatly from a variety of house hacking strategies. You might be surprised at how few people use this method of buying properties. There is no question that, if done properly, residing in your McDonough rental property can assist you in paying your mortgage or rental bill, give your property time to increase in value, and provide some fantastic tax benefits as well. This can lead to significant savings for future investments or use the equity in your rental property to reach certain financial objectives.
Is House Hacking Right for You?
Although there are some advantages to house hacking, there are also some drawbacks.
The Reality of Landlording.
For instance, in exchange for virtually free rent, you will have to devote a great deal of time to leasing and managing your property. A real job that you should take seriously is being a landlord. Most house hackers manage the bulk of the work required to own a rental property, unless you plan to have your property managed by a McDonough property manager professionally.
Living with Tenants.
You will live with your tenants if you decide to house hack, which is another crucial consideration. Even though you might not all live in the same apartment, you will likely see your tenants regularly and have to put up with their vehicles, pets, noise, and even personal property because of how close they are to you. Living in such close proximity to your tenant may make it more difficult to maintain a professional relationship, and if you find your tenants to be less than ideal neighbors, things may get out of hand. Nevertheless, house hacking could be profitable if you’re okay with such arrangements or if you find a great tenant.
Desired Lifestyle.
Be sure to include your eagerness to live in an investment property when you consider all the potential scenarios you may experience as a house hacker. It is usual for first-time investors to opt for less expensive properties. Make sure you will feel comfortable living there if you intend to live there. It’s possible that your first investment property isn’t exactly what you had in mind for a home, which can frustrate some people. However, if you do not mind reducing your standard of living for a few years, house hacking may be the ideal way to get started in real estate investing.
Zoning Laws & Neighbors.
Local zoning laws are the final factor to consider. In many jurisdictions, it is illegal to convert a single-family home into two or more rental units. Check local zoning regulations thoroughly prior to submitting an offer. Even if it is legal, it’s possible that your neighbors won’t be happy about your plans to move several tenants into your new rental, especially if the neighborhood doesn’t have a lot of multi-family homes. Even though you have no control over other people’s emotions, you can try to reassure them that you will be a trustworthy landlord by making an effort to interact with and speak to locals who live close to your rental home. A simple, pleasant conversation can go the extra mile to help your neighbors adjust to the fact that you and your tenant will be moving in next door.
Are you looking to purchase your next McDonough investment property? Alternatively, are you interested in finding out more about how investing in rental property can be made simpler by professional property management? Contact Real Property Management Anchor online today or call us at 770-506-1237. We work with investors like you to help build your dream rental real estate portfolio.
Originally Published on February 26, 2021
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