Let’s say you’ve been looking for a cost-effective or innovative way to acquire your first Burlingame investment property. Then house hacking could be your solution! 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.
Using your tenants’ rent to pay your mortgage and other property costs is the idea behind house hacking, which allows you to live in your house for free while the value of the property appreciates. Especially if you’re just beginning as a real estate investor, it’s an attractive concept to many. 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. Therefore, you may be surprised at how few individuals acquire properties using this method. There is no doubt that, if done right, living in your Burlingame rental property can enable you to cover your mortgage or rent, give your property time to increase in value, and provide excellent tax benefits. This can help to reduce costs for future investments or use the equity in your rental property to reach specific investment goals.
Is House Hacking Right for You?
Although you have all these advantages, house hacking also has a few disadvantages.
The Reality of Landlording.
In exchange for living virtually rent-free, you may be required to devote a great deal of time to leasing and managing your property. It’s important to remember that being a landlord should be taken seriously since it’s a real job. Unless you intend to have your property professionally managed by a Burlingame property manager, the majority of house hackers manage the bulk of the work associated with owning a rental property.
Living with Tenants.
You will live with your tenants if you decide to house hack, so keep that in mind as well. While you may not all reside in the same apartment, your tenants will be so close by that you will frequently interact with them and put up with their noise, pets, vehicles, 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. House hacking, however, might be a great idea if you don’t mind these arrangements or can secure a great tenant.
Desired Lifestyle.
Make sure to account for your willingness to live in an investment property as you consider all the scenarios you might encounter as a house hacker. It is common for novice investors to begin with low-priced properties. If you intend to live on the property, you must ensure that you will be comfortable there. Some individuals may experience frustration if their first investment property is not their ideal residence. However, if you have no problem reducing your lifestyle for a few years, house hacking could be the ideal way to enter the real estate investment market.
Zoning Laws & Neighbors.
The last thing you should think about is the zoning regulations in your area. In many locations, it is illegal to divide a residential property into two or more rental units. Therefore, prior to making an offer, you should thoroughly examine local zoning regulations. Even if it is permitted, you might discover that your neighbors are not happy about your plans to relocate multiple tenants into your new rental, especially if there aren’t many other multi-family rentals in the area. Although you have no control over how other people feel, you can try to reassure them by making an effort to interact with and speak to those who live close to your rental property that you will be a trustworthy landlord. 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 Burlingame investment property? Or, are you interested in learning more about how professional property management can facilitate real estate investment? Contact Real Property Management Mid Peninsula online today or call us at 650-696-1800. 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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