House hacking means you can earn passive income and also live in your dream house
Purchasing a home has become relatively expensive, and the inexplicable cost hike has led real estate investors, particularly first-time homeowners, to think outside the box. Thanks to tested house hacking strategies, real estate investing is now easier.
Buying residential real estate is a good investment. When you purchase a home, the value mostly appreciates over time, and by applying proper strategies, you can make a profit every year.
The FI Team is committed to providing valuable guidance to prospective real estate investors and helping experienced investors navigate hard spots. Craig Curelop is the founder of this exciting company.
Craig Curelop has appeared on several real estate investing podcasts and helped a growing army of budding investors learn house hacking strategies. Perhaps the best use of your next thirty minutes will be to dive into Craig’s podcast on “Aggressive Approach to Real Estate Investing and House Hacking.” You’ll quickly learn top-secret strategies for effective house hacking in real estate.
If you’re about to acquire your first home, this explainer offers relevant insight into how you can effectively implement house-hacking strategies and build a profit-generating business. Ensure you read till the end!
What Is House Hacking?
House hacking is an investment strategy used by real estate investors to purchase a property and earn income by renting out parts of the primary residence.
House hacking is cheaper than buying a property solely for receiving rent. Single-family and multi-family homes are equally suitable for house hacking.
Why Should You House-Hack?
For anyone new to real estate investing, implementing a house hacking strategy on your first home will save you lots of money and reduce the hassle of investing in your first property.
House-hacking can help you pay off your mortgage, especially in expensive areas, helping you generate cash flow.
What Are the Best House Hacking Strategies?
A proper strategy can help you stay ahead of the curve when you’re house-hacking. These are the house hacking strategies Craig and his team highly recommend.
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Traditional House Hacking
Traditional house hacking involves purchasing a multifamily property, living in only one room, and renting out the rest. This approach can help a real estate investor meet mortgage commitments using rental income.
2. Short-Term Rentals
House hacking in real estate investing can be short-term, as seen in examples such as Airbnb. You furnish and list one or more rooms on the Airbnb website and earn income whenever someone uses it.
3. Accessory Dwelling Units
Places like basements, guest houses, and garage apartments are great ways to implement house-hacking strategies on your investment property.
A closed property deal using the house hacking approach
6 Best Approaches to House Hacking
How do you implement house hacking? It’s simple if you follow these six best ways to do it.
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Understand Your Financing Options and Get Them in Order
The common ways to finance your primary residence in real estate include the Federal Housing Administration (FHA) and Veteran Affairs (VA) loans. They offer fair interest rates to borrowers.
Using this approach, the down payment on properties could be as low as 4-7%. Before going into rental property investment and applying for a mortgage, you should follow a set of procedures. These include:
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Check your credit score to verify eligibility.
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Perform an in-depth analysis to see how real estate investing could impact your other expenses will be affected after a mortgage.
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Plan your budget to accommodate other expenses after investing in real estate (your net operating income).
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Know precisely how much down payment you need for a property.
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Decide on the price of the home you’ll love to purchase.
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Apply for the loan. You’ll need documents such as bank statements, W-2 forms, proof of identity, and recent tax forms. Property taxes and income taxes are crucial.
2. Use a Knowledgeable Agent
When you begin real estate investing, it’s necessary to use a certified real estate agent. An agent with sufficient experience will help you get tenants when you purchase the rental property, leading to cash flow. It’s also advisable to have a good house hacking strategy.
3. Search for a Potentially Suitable Property
In the house hacking podcast, Mr. Curelop reveals factors you need to consider when looking for “hackable” properties. Some of these include:
Location: The city where you buy multi-family property for primary residence matters. Cities like New York and San Francisco are tier-one and typically have expensive homes, meaning paying off your mortgage may take a long time, even after renting out parts of the property.
For less expensive cities, effective house hacking provides sufficient rental income, a consistent monthly mortgage payment, and a good cash flow for the owner.
Privacy: Real estate investors and house hackers may save money when tenants pay rent for their living space. The lack of privacy might be an issue. Homeowners should focus on buying houses with multiple entry points. Such add-ons may increase housing expenses but improve privacy for all occupants.
Parking Spaces: It’s necessary to take note of parking spaces. For homes with up to four units, everyone who owns a car must have dedicated parking. Every good house hack considers parking spaces.
Make that property your dream home and rental investment through house hacking
4. Analyze the Numbers and Make an Offer for the Rental Property
It’s necessary to research if buying a particular home will be profitable enough for you. You also have to consider each property’s positives and downsides. Always try comparing the housing expenses with the potential rental income.
5. Close on Your Loan
As soon as your lender confirms your loan and gives you a closing date, you need to make the down payment and the closing costs. You’ll also have to sign a few documents before getting the keys to your new property.
6. Move In, Find New Tenants and Earn Rental Income
You’ll also need to make plans to make necessary repairs in and around the building. Once you do this, you’re ready to talk to an agent about bringing good tenants. Consider the steps to screen tenants to avoid breaking local real estate laws.
Conclusion
We have many ways to go about real estate investing; how creative you get depends solely on you. However, house hacking is highly attractive to new investors. House hacking makes it easy for individuals to own homes without bearing the financial burden of mortgages alone.
Many real estate investors are using house hacking in exciting ways. You can learn some of their techniques by listening to the best podcast for real estate investing, Icons of Real estate Podcast, sponsored by Ardor SEO. Follow Craig Curelop and other successful real estate investors as they give you tips and secrets to succeed in real estate.
To become successful in real estate, keep tabs on the latest updates and trends in the real estate niche. Listen to experts like Craig Curelop speak on “Aggressive Approach to Real Estate Investing & House Hacking.”
