Consider a scenario in which you are trying to find a cost-effective or unique way to purchase your first Marion investment property. In this case, house hacking could be the solution! When an investor purchases a property that has the potential to be modified into multiple rental units, lives in one unit, and then rents the other units to tenants is called house hacking.
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. It is an appealing concept, particularly if you are just starting as a real estate investor. However, as with any investment, there are pros and cons to this strategy. Before you try house hacking for the first time, there are a few things you should know.
House Hacking Basics
House hacking can provide investors with a variety of excellent benefits. The fact that so few people choose to use this method of property acquisition may therefore surprise you. There is no doubt that, if properly done, living in your Marion rental property can help pay your mortgage or rent, give your property time to increase in value, and provide excellent tax advantages as well. 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. Most house hackers handle the majority of the work associated with owning a rental property, unless you intend to have your property professionally managed by a Marion property manager.
Living with Tenants.
Another essential fact to remember about house hacking is that you will reside with the tenants. Perhaps you won’t share a unit together, but your tenants will be so close that you will see each other fairly regularly and have to encounter their pets, noise, cars, and even personal belongings. Living so close together may make it more difficult for you to maintain a professional relationship with your tenant, and if you find your tenants to be less than ideal neighbors, tensions may rise. However, house hacking could be very successful if you find a great tenant or don’t mind such arrangements.
Be sure to consider your willingness to live in an investment property as you brainstorm all the scenarios you might encounter as a house hacker. New investors frequently start by picking properties that are less expensive. It’s crucial to make sure you will feel comfortable living on the property if you intend to do so. Your initial investment property might not be your ideal home, which can frustrate some people. However, if you do not mind reducing your standard of living for a few years, house hacking may be the ideal way to get started in real estate investing.
Zoning Laws & Neighbors.
Your local zoning laws should be the final thing on your list. In many jurisdictions, it is illegal to convert a single-family home into two or more rental units. Check local zoning regulations thoroughly prior to submitting 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. While you cannot control how other people feel, you can attempt to reassure them that you will be a responsible landlord by meeting and speaking with those who live nearby. A simple, pleasant conversation can go the extra mile to help your neighbors adjust to the fact that you and your tenant will be moving in next door.
Are you looking for a new Marion 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 Indianapolis Metro online today or call us at 317-484-8444. We work with investors like you to help build your dream rental real estate portfolio.
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