If you're tired of long commutes or expensive real estate in growing cities, house-hacking may be the solution for you.
WHAT IS HOUSE-HACKING?
House hacking is a rather popular investment strategy. It entails renting out a portion of your primary dwelling to offset the costs of homeownership. You can actually end up completely eliminating all housing costs, possibly even making some extra money.
House-hacking is more efficient than traditional renting because you're technically renting out your primary residence. When investing in traditional rental properties, you'd generally have to make a down payment of up to 25% of the property's value. This is not the case with house-hacking.
It's also a great investment strategy because it's a mutually beneficial exchange. You, as the investor, end up with short commutes and low net payments, and your tenants get to live in areas high in demand for a fraction of the regular price.
Investing doesn't need to be a headache. Let's get into some specific strategies for getting into house-hacking!
TIPS AND STRATEGIES
WHAT TO LOOK FOR
The key to successful house-hacking is choosing the right property. You and your tenants are all living in the same building, so it's important not to choose a tiny one-bedroom house with limited living space.
Multi-Family Properties, like duplexes and triplexes, are the best possible way to house-hack. In general, the more units there are, the better it is for house-hacking. Additionally, you and your tenants each get an isolated section, and the housing will always be ready to house-hack without major renovations.
Finished basements are another excellent option for house-hacking. Having a separate entrance, a kitchenette, full bathrooms and extra bedrooms in the basement also add to potential rent value. You can either live in the basement while renting the main space to families, or, if you have a family, you can live in the main space while renting out the basement. Like multi-family properties, a huge benefit to finished basements is that you don't have to share any living space.
Additional dwelling units, or ADUs, can be great for house-hacking. These are structures added on to a property, with full living facilities installed. They allow the most isolated house-hacking experience. When looking into properties with ADUs, always make sure you can rent them out. Some ADUs are build without a permit, and some cities do not allow ADUs to be rented out. If not, they're a great option for a house-hack!
Multi-bedroom housing can also be house-hacked. If you can't find a property with separate units for tenants, you can rent out the bedrooms of a property built for a single family. Just like with multi-family properties, the more bedrooms, the better. Buying a property that's above your price limit but with more bedrooms can end up drastically decreasing your housing costs. Even if you can't find properties with many bedrooms, you can always convert things like dining rooms or bonus rooms into extra bedrooms. This can be extraordinarily cost-effective. A great way to do this is to check 3-bedroom properties with more square feet than usual.
There are also some other factors to consider, outside of what type of property to buy.
Location – Your house-hackable property should be in a popular area with easy access to public transport. If you don't have any willing tenants, house-hacking won't save you any money.
Surroundings – Make sure you're not buying a property in an area with lots of other multi-family properties and house-hackers. These indicate a higher concentration of tenants, which is typically less beneficial for investors.
Legality – All properties you're looking into buying for house-hacking need to be in areas without restrictions. Many areas make it illegal to rent out portions of a property, and others do not allow short-term rentals like AirBnB, which can limit your options.
Space – Make sure there's enough space in your property for tenants to be comfortable. Features like lofts, outdoor areas and dining rooms make it so tenants aren't confined to their bedrooms. This lets you charge more for rent and keeps tenants for longer.
Overall, house-hacking is an excellent strategy to get into investing! If you're at all interested in trying it, I'd be happy to help. Just give me a call or text me at 312.477.9594, and I'll help you start your investment journey!
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Dan was always extremely responsive, and when we were under contract close to closing, he would make himself available to be at the property, even when I couldn't, to handle last minute tidbits.
Dan not only knew the local market but the general. He was able to guide us to an investment property that turned a positive cash flow from day one. His confidence and knowledge in negotiating the deal maximized our return. He listened to our needs and delivered flawlessly.
His hard work and attention to detail landed me with an amazing property and I will forever be thankful for that. I would highly recommend anyone looking to buy property to use Dan!
As a first time property investor, Dan spent a lot of time helping me navigate through my first deal. He is patient, responsive, knowledgeable, passionate, and dedicated to serving his clients.