Does the idea of real estate investing intrigue you, but the risk scares you? If so, you’re not alone. While many people say they’d love to get started in real estate investing, the stories of bad tenants and vacant properties deter them. The good news is that there is a simple way to get started in investment properties. It’s called “House Hacking,” and it’s very easy and low risk.
House Hacking is when you own a multi-unit residential property as your primary residence. You live in one of the units, and you rent out the others. The premise of House Hacking is that the rent your tenants pay covers all the housing expenses for the entire dwelling. This then enables you to divert your money to other real estate investment opportunities.
On a smaller scale, House Hacking can be when you have a small apartment over your garage that you rent out. While the rent from the apartment probably won’t cover your entire housing expense, it sure helps and gives you some great landlord experience.
The only real limitation to House Hacking is that the multi-unit property needs to be a duplex, triplex, or quadplex. Anything with five or more units is considering commercial property and you’d no longer quality for a residential mortgage. If you don’t want to buy a duplex or triplex, but if you have an apartment over your garage and a finished in-law’s apartment in your basement, you can still rent those two units out and explore House Hacking.
Is House Hacking for You?
If you’ve never been a landlord before, House Hacking can give you some excellent experience with lower risk than traditional landlording. Since you’re living on the premises (and often right next door), tenants tend to follow the rules and pay rent on time more often. Also, it’s easier for you to keep on top of maintenance, ensuring that small problems don’t spiral into big problems.
If the idea of real estate investing appeals to you, but the risks scare you, House Hacking may be a great way for you to get started.
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