House hacking is a great real estate investment strategy for when you own multi-family rental properties, and choose to live in one unit while renting the other unit(s). Or if it is a single family home it can the act of renting one or two rooms to tenants and use the money to help you pay your mortgage and sometimes keep some profit. In the long run, owning a home is better than renting for life, because I recently read somewhere that after 2.7 years the benefits of owning a property outweigh the benefits of renting, so keep that in mind.
However, if you’re willing to “house hack,” owning a home could increase your net worth immediately. Broadly speaking, house hacking may be having tenants pay for your primary residence for example. You can use your cash flow to pay different expenses.
It is very easy to collect some income from property. It is also a fact that your income should be greater than the mortgage payments and expenses. It is a common question for everyone, “does house hacking always deliver the perceived benefits?” House hacking can work in every situation and in every market. It may be greater in some situations and in some markets. Here is Why you Should Consider House Hacking
- Increased cash flow
- Financing
- Land lording
- Lenders like experience
- Starting point for new real estate investors
- Decrease monthly housing allowance:
- Lowering your taxable income:
- Maximize flexibility and purpose
- Build credibility
- Save money for future ventures
- Cash Flow
Cash flow is one of the main benefits of house hacking rental properties, so you may collect some extra income each month after paying all expenses. You can use your cash flow either to pay down your mortgage or to invest in some other properties. So, it is the main reason why people consider house hacking. Some people have so many properties in different locations. If they have their property in an expensive area, then they can earn a lot of money and generate cash flow.
- Financing
Many investors like house hacking as it can provide financing a real estate deal. If you choose to finance through an FHA loan, then you can get a property for just a 3.5% down payment. So we can simply say that it is one kind of investment and you can earn a lot of money with house hacking.
- Land lording
With house hacking, many home buyers and real estate investors may be able to get some valuable land-lording experience with low risk. It can include advertising vacancy, tenant screening, understanding rental agreements, tenant management and contracts, dealing with unanticipated housing issues and repairs, negotiating with contractors, and bookkeeping.
- Lenders like Experience
If you are looking for some financing in the future, then it will be the best idea for you as house hacking can be also an investment for you. If you can show your properties then you have more chances to avail of the loan, so it is a great way to get experience. You can build great communication with your tenants. Furthermore, you can deal with contractors if you have any issues.
- Starting Point for New Real Estate Investors
If you have your property as your primary residence, then house hacking will be the best investing strategy for you. You can increase the portfolio of your property and generate extra monthly income. House hacking is the starting point of new real estate investments as they are considered the best investments and you can get lot of profit from them.
- Decrease Monthly Housing Allowance:
People also consider house hacking because it can lower the monthly housing allowance through generating the revenue in rent. You can save money on your monthly housing expenses while also owning a property, so it is the best way to have someone help you with your mortgage.
- Lowering your taxable income:
It is also a way of lowering taxable income. You can acquire extra tax write off due to house hacking. It can help you with tax avoidance but stay away from tax evasion. Speak with a public accountant or a tax professional on ways to maximize profit while minimizing taxes.
- Maximize Flexibility and purpose
One of the best reasons why people consider house hacking is you doesn’t need to pay the mortgage amount as your tenant will pay the amount. The remaining amount from the tenant can be used for your other expenses.
- Build Credibility
As we know the importance of real estate investments and house hacking is that you can build credibility among lenders. You can also build your credibility for real estate investments as they and build your track record in your bank.
- Save money for future ventures
The earning from house hacking can be used for saving money that will help you to start a new venture in the future. If you have a lot of property and your monthly cash flow is great, you can use this money in other projects such as:
• Starting a business
• Creating a blog
• Take a vacation
• Property upgrades
• Invest in your education
• Save for your next property
Conclusion:
House Hacking is the best technique that can be used for investment purposes as it is a way of increasing monthly cash flow. People like house hacking for many reasons. We have described some possible reasons for considering the house hacking. It is the best way to earn some money in a house that you live in. You can either live in a duplex/triplex/quadplex where you live with one unit and rent the others, or you can live in a single family home and rent out one or two rooms from it. It’s not for everyone, so analyze each situation and speak with a financial advisor before you start investing.
