How to House Hack Your Way to Real Estate Success
If you are someone who feels like owning real estate is out of reach, then you need to consider house hacking. House hacking is a great way to build a real estate portfolio. Not only do you get homeowner interest rates, but you also can bring in roommates to pay your mortgage payment. I highly recommend people take advantage of this system if they are currently a renter and are wanting to have the dream of owning a home and one day building a real estate portfolio. You just need to be a little creative, and open-minded as to what house hacking is and if it will work for you.
What is House Hacking
House hacking is a strategy that involves renting out portions of your primary residence to generate income that is used to offset the cost of your mortgage and other expenses associated with owning a home. It also affects your down payment, since you can get away with only putting about 5% down, vs an investment property that normally requires around 20% down. House Hacking is a means for those who cannot afford an expensive home to use creative methods in order to accomplish that goal while also getting into real estate investing. A mortgage is most people’s most significant bill, and through house hacking, you can free up that money for saving, investing in more real estate, or paying down your mortgage much faster.
How Can House Hacking Save You Money
- Lowers Your Housing Expenses
When you rent out rooms in your home, the rent will offset the cost of the home. With this additional income, you should be able to live mortgage-free, or have a very small mortgage payment. Some people even cash flow using this model. When renting out the rooms in your home, make sure you treat it like a business, with proper rental leases and security deposits.
2. Lowers Your Taxable Income
When you have a mortgage, unlike rent, it is deductible from your taxes. This will help you pay less in tax each year. Also, the income you produce from your tenants/roommates can be used for depreciation. This income also will help you when qualifying for your next mortgage as long as you have a lease tied to it.
3. You Will Learn How to Be a Landlord
Most importantly house hacking will teach you how to be a landlord. Purchasing your first rental is the hardest part of real estate, and when you live in it with your rent-paying roommates it is an easy way to slowly get into the game. You will learn a lot by managing your own property with your roommates and will find out if real estate investing is right for you. We did a whole webinar on house hacking with Zach Hurst who is a 27 year old that quickly acquired three properties in four years with very little down. If you want to get started in real estate and have the flexibility to house hack, you should check it out!