Consider a scenario in which you are trying to find a cost-effective or unique way to purchase your first Fall River investment property. The solution may lie in house hacking in that case! House hacking is when investors purchase a property with multiple rental units or with the potential to be converted into multiple rental units, live in one of the units, and then rent out the remaining units to tenants.
The concept of house hacking is to use the rent your tenants pay to cover your mortgage and other property expenses, allowing you to live in your home for free while the property appreciates. Many people find it to be appealing, especially if you’re just getting started as a real estate investor. This strategy, however, has benefits and drawbacks, just like all investments. Before beginning your first house hacking attempt, consider the following information.
House Hacking Basics
Investors can receive a number of excellent benefits from house hacking. The fact that so few people choose to use this method of property acquisition may therefore surprise you. Without a doubt, if done properly, residing in your Fall River rental property can assist you in paying off your mortgage or rental bill, give your home time to appreciate in value, and provide you with a number of valuable tax benefits. You could use the equity in your rental property to help you reach some of your financial objectives or use it to save money for future investments.
Is House Hacking Right for You?
House hacking does have some drawbacks, though, that come together with these advantages.
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. Being a landlord is a legitimate vocation that you must take seriously. Unless you plan to have your rental property professionally operated by a Fall River property manager, most house hackers handle the majority of the responsibilities associated with rental property ownership.
Living with Tenants.
Another important aspect of house hacking to remember is that you will live with the tenants. 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. When sharing such close quarters, it may be more difficult to maintain a professional relationship with your tenant, and if you find your tenants to be less than ideal neighbors, tempers could flare up. However, house hacking could be very successful if you find a great tenant or don’t mind such arrangements.
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. If you intend to reside on the property, it is essential to ensure that you will be comfortable. 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.
Your local zoning laws should be the final thing on your list. It’s against the law in many places to divide a residential property into two or more rental units. Thus, carefully review local zoning laws before making an offer. Even if it is legal, your neighbors may not approve of your plans to move multiple tenants into your new rental, particularly if there are few multi-family rentals in the area. Even though you have no control over how other people feel, you can try to reassure them by making an effort to get to know and communicate with those who live close to your rental property. In order to make your neighbors feel better about you and your tenant moving in next door, a short, friendly conversation can go a long way.
Are you searching for the next Fall River 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 Success online today or call us at 774-840-5140. 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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