House hacking is an activity that can help you save a lot of money very easily. Homeowners can use this method in order to balance out their finances after purchasing a property. This is a popular concept, providing a way to cut down on your housing costs by renting out portions of your house to generate income. House hacking allows young homebuyers to invest in prime properties which would otherwise be unaffordable for them.
The rental income can be used for equated monthly installments for the property. A study conducted in 2019 concluded that at least 30% of income is spent monthly on housing costs by Americans. House hacking can help you reduce up to 20% of that budget, using hacks such as room rental, multi-family, income suite, live-in flip, or ADU. There are a few things you should consider before investing in any property if you are looking to hack it, such as:
Properties that have more than two units have great potential for house hacking. A duplex or a triplex offers the chance to turn it into a multi-family property, from which you get a monthly rental. Search for your specific requirements and analyze all properties that you find. Some areas have specific ‘zones’ created for multi-housing properties. It means that there will be a higher population in that area, becoming a less advantageous property for the buyer. It is well-advised to purchase multi-family properties in areas where they are mixed in with single-family units as well, offering more diversity and potential for rising home value.
Even if the property you have finalized does not have a lot of bedrooms, try finding a property where you can make additional rooms by creating partitions. In order to get more in-depth information, you could see website to increase your house potential. Properties that have bonus rooms, living rooms or dens can be converted into bedrooms for renting out for a few thousand dollars. This even raises the property’s value.
Additional Dwelling Units (ADU)
These are structures that are supplementary to the main property, with all permissions in place. These can also be known as ‘guesthouses’, that can be lived in by tenants to generate extra income. This is considered a great asset in the world of house hacking, considering that the tenants are living in a completely different house but extremely close by in case of any emergency. Check with your local city office about ADU permits before buying a house.
A lot of homeowners convert their basement areas into studio units, with a small kitchen, washroom, etc. If the basement is big enough, it can even include multiple bedrooms and a completely different living area. A separate entrance to the basement is an added benefit, offering privacy to both the owner as well as the tenant. Buying a property with a finished basement can be advantageous, with the owner having to spend less money in order to convert it into something liveable.
House hacking can be an efficient way to generate extra revenue, pay your mortgage or just to reduce your monthly housing bills. Use these strategies to understand what kind of property to invest in for house hacking.