Assume you have been searching for a cost-effective or ingenious method to purchase your first Smithfield investment property. In this case, house hacking could be the solution! When investors buy a property that already has or can be converted into multiple rental units, and live in one of them while renting out the others to tenants is called house hacking.
The idea behind house hacking is to use the money your tenants pay in rent to pay your mortgage and other property costs, allowing you to live in your house for free while the value of the property appreciates. It is an attractive offer, especially if you are just starting as an investor in real estate. But like all investments, this strategy has advantages and disadvantages. Before beginning your first house hacking attempt, consider the following information.
House Hacking Basics
Investors may benefit greatly from house hacking in a number of ways. Therefore, you might be surprised by how few people choose to use this method to buy properties. There is no doubt that, if properly done, living in your Smithfield rental property can help pay your mortgage or rent, give your property time to increase in value, and provide excellent tax advantages as well. This can assist you in setting aside cash for potential investments or utilizing the equity in your rental property to meet some of your financial objectives.
Is House Hacking Right for You?
Although there are some advantages to house hacking, there are also some drawbacks.
The Reality of Landlording.
For instance, you would spend a lot of time leasing and managing your property in exchange for living virtually rent-free. You should take landlording seriously because it is a real job. Most house hackers oversee the majority of the work related to owning a rental property, unless you desire to have your property managed professionally by a Smithfield property manager.
Living with Tenants.
Another important aspect of house hacking to remember is that you will live with the tenants. Maybe you won’t all live in the same unit, but your tenants will be so close that you will see each other frequently and have to tolerate their noise, pets, cars, and even personal belongings. Living in such close proximity to your tenant may make it more difficult to maintain a professional relationship, and if you find your tenants to be less than ideal neighbors, things may get out of hand. 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 involve your desire to live in an investment property when you consider all of the potential scenarios you may face as a house hacker. New investors commonly start by selecting properties at lower prices. Make sure you will feel comfortable living there if you intend to live there. For some, the fact that their first investment property is not their dream home can be a source of frustration. However, house hacking might be the ideal way to start investing in real estate if you have no problem reducing your standard of living for a while.
Zoning Laws & Neighbors.
Local zoning laws are the final factor to consider. In many jurisdictions, it is illegal to convert a single-family home into two or more rental units. So be sure to thoroughly research local zoning laws before making an offer. Even if it is legal, it’s possible that your neighbors won’t be happy about your plans to move several tenants into your new rental, especially if the neighborhood doesn’t have a lot of multi-family homes. 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. An informal chat with your neighbors can go a long way toward assuaging their concerns about you and your tenant moving in next door.
Are you searching for the next Smithfield investment property? Or perhaps you’d like to find out more about how investing in rental property can be made simpler by using professional property management. Contact Real Property Management Dominion online today or call us at 757-395-4274. 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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