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House Hacking: What You Need to Know

Couple Embracing and Looking at their New Rigby Rental HomeLet’s say you’ve been looking for a cost-effective or innovative way to acquire your first Rigby investment property. Then house hacking could be your solution! House hacking is when investors buy a property with multiple rental units that either already exists or can be converted, live in one of the units, and then rent out the others to 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 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 done right, living in your Rigby 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 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?

There are some drawbacks to house hacking that come together with these advantages.

The Reality of Landlording. 

For instance, in exchange for virtually free rent, you will have to devote a great deal of time to leasing and managing your property. A real job that you should take seriously is being a landlord. 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 Rigby property manager.

Living with Tenants. 

You will live with your tenants if you decide to house hack, which is another crucial consideration. 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 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. Nonetheless, house hacking could be fruitful if you are fine with such procedures or if you find a decent tenant.

Desired Lifestyle. 

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. It is common for novice investors to begin with low-priced properties. Make sure you will feel comfortable living there if you intend to live there. Your first investment property might not exactly be your ideal home, which can frustrate some people. 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. 

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, carefully review local zoning ordinances before making an offer. 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. 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 Rigby investment property? Alternatively, are you interested in finding out more about how investing in rental property can be made simpler by professional property management? Contact Real Property Management Southeast Idaho online today or call us at 208-522-2400. 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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