Assume you have been searching for a cost-effective or ingenious method to purchase your first Berryville investment property. The solution may lie in house hacking in that case! 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 goal of house hacking is to use the rent your tenants pay to cover the 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 you attempt house hacking for the first time, you should be aware of the following.
House Hacking Basics
Investors can benefit greatly from a variety of house hacking strategies. Therefore, you may be surprised at how few individuals acquire properties using this method. Without a doubt, if done properly, residing in your Berryville 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. This can lead to significant savings for future investments or use the equity in your rental property to reach certain 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, in exchange for practically living rent-free, you will invest a significant amount of time in leasing and managing your property. It’s important to remember that being a landlord should be taken seriously since it’s a real job. Most house hackers manage the bulk of the work required to own a rental property, unless you plan to have your property managed by a Berryville property manager professionally.
Living with Tenants.
You will live with your tenants if you decide to house hack, so keep that in mind as well. 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. 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. House hacking, however, might be a great idea if you don’t mind these arrangements or can secure a great tenant.
Include your willingness to live in an investment property when you’re planning all the potential scenarios you might encounter as a house hacker. New investors commonly start by selecting properties at lower prices. If you intend to live on the property, you must ensure that you will be comfortable there. It’s possible that your first investment property isn’t exactly what you had in mind for a home, which can frustrate some people. 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.
Local zoning laws are the final factor to consider. It’s against the law in many places to divide a residential property into two or more rental units. So be sure to thoroughly research local zoning laws before making an offer. Even if it’s legal, you may find that your neighbors are unhappy with your desire to move multiple tenants into your new rental, especially if there are few multi-family rentals in the neighborhood. 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 looking to purchase your next Berryville investment property? Or would you like to discover more about how investing in real estate for rental purposes can be made simpler by using professional property management? Contact Real Property Management Elevation online today or call us at 540-409-5857. We work with investors like you to help build your dream rental real estate portfolio.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.