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In the last several years, millions of so-called ‘life hacks’ have gone viral on the internet. From quick DIY construction tips to organizational tricks, hacks promise to make your life easier and save you time and money.
One of the most popular hacks for people who are involved in real estate is ‘house hacking,’ but what is house hacking? This strategy is considered one of the best ways for first-time real estate investors to put their capital into real estate assets while living for free at their investment property – or at least minimizing their personal living expenses by offsetting them with the rental income.
Of course, before you can dive into this process you need to buy your first property. So, if you are ready to get started, let my team and I get you set up with a strategic mortgage in order to optimize your monthly payments for maximum success. All you need to do is click the link below.
What is House Hacking?
Now, if you are new to the world of real estate investing you may be wondering, what is house hacking?
As people invest in their education, progress in their careers and grow their families, they typically choose to stop renting and purchase a home to live in. Owning your own home can give you an incredible sense of pride and independence, but you will likely still be saddled with monthly mortgage fees that can be as high, if not higher than the average cost to rent. With these monthly payments, you might not be able to save as much money as you’d like to for retirement, investments and discretionary purchases.
This is where the house hacking example comes into play.
What is House Hacking Good For?
House hacking allows you to maximize your initial investment in real estate by purchasing a multifamily residential property, renting out the units and reserving one unit for yourself to live in. In this way, you can make enough money to cover all of your property’s expenses—including mortgage payments, utilities and taxes—while making an additional profit that you can put towards future investments and your savings.
Instead of following the normal progression of buying a starter home and then investing in profitable real estate, later on, you can get started with a profitable real estate investment right off the bat.
Now, if you are asking yourself, “is house hacking legal?” You are in luck. Not only is house hacking entirely legal, but as a new investor you would be hard-pressed to find a reason why you shouldn’t house hack.
Discover How To Analyze a Properties Cash Flow With This Step By Step Guide
Understanding the Financials of a House Hack
Since the main goal of this investment strategy is to minimize and potentially cut down on the property expenses associated with owning your own home, you want to obtain a mortgage with the lowest available monthly payments. This will allow you to maximize your savings.
To begin maximizing your savings today, simply book a free strategy call with our team today at the link below.
Benefits of house hacking
For many prospective investors, house hacking offers a way to get involved in real estate much sooner than they could otherwise. Here are a few of the most significant advantages of house hacking:
Minimize expenses
On average, Canadians spend nearly 30 percent of their monthly budget on housing. Through house hacking, you can cut your budget by a significant margin, build your wealth and pursue other investment opportunities with your saved capital. This takes a lot of the stress and burdens off of you so you can focus on developing in your career or growing your investment portfolio.
After all, if you didn’t know what is house hacking’s primary purpose, it is this. Reducing your personal living expenses to save money month-to-month.
Leverage financing
You may be wondering, what is house hacking going to do to help you create leverage for mortgage financing? After all, you don’t already have a tenant paying rent when you purchase the first property.
In many cases, investors who purchase multifamily properties are eligible for financing with smaller down payments. Owner-occupied financing also tends to be a better deal for investors than standard investment financing, meaning you can save on fees, interest rates and upfront costs.
Develop real estate skills
House hacking is a great way to get started in real estate investment for the first time. It allows you to learn about real estate firsthand and develop the skills you need to grow your portfolio with additional investment properties in the future.
At the end of the day, what is house hacking if not a personal application of the essential real estate skills you are going to need in the future anyways?
Gain landlord experience
What is house hacking if not an opportunity to try your hand at landlording and property management before you begin to build a massive portfolio. By house hacking, you can start with a single close-proximity tenant and discover whether you like doing your own property management.
This way, once you grow your portfolio, you will already know whether you would like to be a landlord or if you would rather offload your property management to a third-party.
Getting started with house hacking
If you’re wondering whether house hacking is a viable option in the area where you live, the answer is probably yes. The reality is, there are multifamily properties and demand for rentals, at least to some extent, virtually everywhere. First-time investors should start with a property with four units or less to maintain cash flow, without dealing with the complexity of the commercial real estate market.
Depending on how much capital, time and energy you want to invest in house hacking, you can decide whether you want to buy and flip a property or purchase one that’s ready to rent. Flipping a property allows you to purchase for a lower price and increase value through remodelling and renovation, but it will take more time before it’s move-in ready for you and your renters. Purchasing a move-in ready property, on the other hand, will cost more upfront but will fast-track the profitability of your property.
The most important thing for you to do before you get started with house hacking is to find a real estate agent or other qualified advisors. They will be able to help you assess all of your different options and provide you with the information you need to make the best investment decision possible. If you are unsure if a realtor is going to be capable of helping your find the right property, simply ask them “What is house hacking?” or “Where are some of the best places to house hack?
When you research your options, plan thoroughly and take a strategic approach to house hacking, you can enjoy all of the many benefits of this investment option. When it’s done right, house hacking can help you achieve your investment goals much more effectively and efficiently. That way you can stop asking, “What is House Hacking?” and instead can ask “what can I do next?”
So, if you are ready to get started today by learning what is house hacking and securing financing well suited to your investment strategy, all you need to do is book a free strategy call with my team at the link below.