If you are looking for a creative way of buying your first McDonough investment property, you might want to consider house hacking. House hacking is when investors purchase a property that either has or can be converted into multiple rental units, live in one unit, and then rent out the others to tenants.
The idea behind house hacking is to use your tenants’ rent payments to cover the mortgage payment and other property expenses. Basically, you would be living in your home for free as the property appreciates. It is a very attractive idea for those who are new to real estate investing. However, there are some things you need to know before you proceed with a house hacking plan.
House hacking can offer investors a range of great benefits. It is a surprise to know how few new property investors use this acquisition strategy. Undoubtedly, if you do it correctly, you could live in your McDonough rental property while eliminating your mortgage or rental payment, giving your property time to increase in value, and enjoying some great tax benefits as well. Still, house hacking is not for everyone because of a few downsides to the process.
In exchange for living virtually rent-free, you will be spending a lot of time leasing and managing your property. Your job as a landlord is something you should be taking seriously. Most house hackers do not have professional management for their property so they end up doing most of the tasks involved in owning a rental property.
You also have to consider that house hacking means you are going to be living with your tenants. You would not be sharing the same unit, but you will definitely be seeing your tenants very often, and you also have to live with the noise, their pets, cars, and even their personal belongings. It might be harder to maintain a professional relationship between you and your tenant especially if your tenants turn out to be less-than-ideal neighbors. But if you think you can live with this arrangement or you happen to find a great tenant, house hacking could be for you.
You also have to factor in your willingness to live in an investment property. Most new investors choose lower-priced properties at first. If you plan on living on the property, you must be very certain you are comfortable doing so. Since it is your first investment property, it will most likely not be your ideal home, and this can possibly be a source of frustration. If you have no problem scaling back your lifestyle for a few years, house hacking could be the perfect way to get started in real estate investing.
One other thing to plan for has to do with the possibility of your tenants not paying their rental payments. As the property owner, all the responsibility for everything from the mortgage to the utilities fall on you. With a lease, you can encourage your tenants to pay their share of the expenses, but if something happens that makes them unable or unwilling to pay, you have to be able to pay your bills despite not having that income for a few months. Evicting a non-paying tenant could take a while, and so does finding a new one, so it would be best to start a cash reserve account early and keep topping it up every month.
Are you in the market for your next McDonough investment property? Or would you like to learn more about how professional property management can make it easier to invest in rental real estate? The Real Property Management Anchor team is ready and willing to help you. Contact us online today or call us at 770-506-1237. We work with investors like you to help build the rental real estate portfolio of your dreams.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.