House Hacking: How it Works and Is It Viable?
They say that owning a home is a huge investment. The usual way this happens is through appreciation, where your home gains value over time, and can cost more once sold. However, there’s a new way for homeowners to get their house’s worth: house hacking!
This article will look at what this up-and-coming trend is about and how you can make the most out of your property.
House Hacking Unlocked
In simple terms, house hacking is buying a home and renting out part of it to other people. Typically, house hackers buy a multifamily home and stay in one room while renters occupy the other rooms. Nowadays, homeowners can still do this even in a single-family home with multiple spaces. It hits two birds with one stone – having a place to live and generating passive income as a landlord.
Perks of House Hacking
House hacking offers homeowners various benefits, including:
Reduce Housing Costs
Having an additional source of income can help homeowners cover their monthly costs, like mortgage payments and power bills. Plus, you can have extra cash in your pocket to start on expanding the property or buying another one.
Potential Tax Breaks
Depending on the state you’re in, you may qualify for some tax benefits as a landlord. Check with your state on which tax breaks you can take advantage of.
Smoothly Transition to Property Management
If you’re planning to be a property manager, house hacking is a great first step in this direction. It gives you a peek into the industry in a managed, controlled environment. If it’s working, then you can start buying a second property with the money earned from renting the rooms out.
House Hacking Challenges
As with most business opportunities, house hacking has its set of obstacles. These include:
Loss of Privacy
Since you’re sharing the property with other people, some spaces like the living room or kitchen will be common areas, so keep that in mind. Also, noise and lighting can cause some concerns with the renters. Make sure to set some ground rules with renters and screen them well to mitigate this risk.
Delinquent Payers
While most renters stick to their rental agreements, some might miss payments for a reason or two. In some cases, this can even lead to landlords needing to evict renters, which can be a stressful and expensive deal. Check with your state on what to do in these situations.
Landlord Duties
Being a landlord is more than just providing a space and taking rent. You’ll also have to manage renter concerns, like leaky faucets or broken air conditioners. Plus, you might need to step in as a peacemaker amongst disgruntled renters.
To Hack, or Not to Hack
House hacking is an ingenious way to maximize your space while earning in the process. Especially if you’re planning to be a property manager later on, you may want to give it a go. Check with IjaraCDC’s expert Sharia-compliant officers on which program will fit your property acquisition needs.
