Let’s say you’ve been searching for a cost-effective or original way to purchase your first Richardson investment property. If so, house hacking might be the solution for you! House hacking is when investors acquire a property with several units or that can be modified to have several units, live in one unit, then rent the remaining units to other tenants.
The idea behind house hacking is to live in your home for free while the value of the property appreciates by using the rent your tenants pay to pay the mortgage and other property expenses. It is an attractive offer, especially if you are just starting as an investor in real estate. But this strategy has advantages and disadvantages, just like all investments. Before you attempt house hacking for the first time, consider the following information.
House Hacking Basics
The practice of house hacking can provide investors with a variety of advantageous opportunities. You might be surprised at how few people use this method of buying properties. There is no question that, if executed right, residing in your Richardson rental property can assist you in paying off your mortgage or rental payment, give your property time to appreciate, and provide a number of superb tax advantages. Using the equity in your rental property can help you achieve some of your financial objectives or save money for future investments.
Is House Hacking Right for You?
Along with these advantages, there are a few disadvantages to house hacking.
The Reality of Landlording.
For example, you would have to invest a lot of time in leasing and property management in exchange for living virtually rent-free. You should take landlording seriously because it is a real job. Unless you intend to have your property professionally managed by a Richardson property manager, the majority of house hackers manage the bulk of the work associated with owning a rental property.
Living with Tenants.
Keeping in mind that you will live with your tenants is another crucial aspect of house hacking. Even if you don’t all live in the same apartment, you will likely see your tenants frequently because of how close they are, and you will have to put up with their pets, vehicles, noise, and even personal property. Living so close to your tenant may make it more difficult to maintain a professional relationship, and outbursts may occur if you find your tenants to be less-than-ideal neighbors. However, house hacking could be very successful if you don’t mind such arrangements or are able to find a fantastic tenant.
Be sure to include your eagerness to live in an investment property when you consider all the potential scenarios you may experience as a house hacker. It’s typical for novice investors to start by picking properties that are less expensive. Ensure that you will feel comfortable living on the property if you intend to do so. For some, the fact that their first investment property is not their dream home can be a source of frustration. However, if you don’t mind temporarily reducing your standard of living, house hacking might be the best way to start investing in real estate.
Zoning Laws & Neighbors.
Your local zoning laws are the final thing you need to take into account. A residential property cannot be divided into two or more rental units in many places. Therefore, prior to making an offer, you should thoroughly examine local zoning regulations. If there aren’t many multi-family rentals in the area, even if it is legal, you might find that neighbors are not happy with your plans to move multiple tenants into your new rental. Although you cannot control how other people feel, you can attempt to convince them that you will be a responsible landlord by addressing and talking with those who live in the neighborhood. Simple, cordial communication can go a long way toward making your neighbors more comfortable with you and your tenant moving in next door.
Are you searching for your following Richardson investment property? Or perhaps you’d like to grasp more about how professional property management can facilitate your investment in rental property? Contact Real Property Management One Source online today or call us at 214-721-0727. We work with investors like you to help build your dream rental real estate portfolio.
Originally Published on February 26, 2021
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