Consider a scenario in which you are trying to find a cost-effective or unique way to purchase your first Albuquerque investment property. In this case, house hacking could be the solution! When an investor purchases a property that has the potential to be modified into multiple rental units, lives in one unit, and then rents the other units 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. It’s a tempting proposition for many, particularly if you’re just getting started as a real estate investor. But this strategy has advantages and disadvantages, just like all investments. Before you start house hacking for the first time, you must be aware of the following.
House Hacking Basics
Investors can receive a number of excellent benefits from house hacking. Therefore, you might be surprised by how few people choose to use this method to buy properties. Without a doubt, if done properly, residing in your Albuquerque 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. You could use the equity in your rental property to help you reach some of your financial objectives or use it to save money for future investments.
Is House Hacking Right for You?
House hacking does have some drawbacks, though, 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. Landlording is a legitimate occupation that should be taken seriously. Most house hackers handle the majority of the work associated with owning a rental property, unless you intend to have your property professionally managed by an Albuquerque property manager.
Living with Tenants.
Another important aspect of house hacking to remember is that you will live with the tenants. Even if you don’t all live in the same apartment, you will likely see your tenants frequently because of how close they are, and you will have to put up with their pets, vehicles, noise, and even personal property. Living so close to your tenant may make it more difficult to maintain a professional relationship, and outbursts may occur if you find your tenants to be less-than-ideal neighbors. Nevertheless, house hacking could be profitable if you’re okay with such arrangements or if you find 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. It’s typical for novice investors to start by picking properties that are less expensive. If you intend to reside on the property, it is essential to ensure that you will be comfortable. 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, 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.
Your local zoning laws should be the final thing on your list. In many jurisdictions, it is illegal to convert a single-family home into two or more rental units. Check local zoning regulations thoroughly prior to submitting 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 other people’s emotions, you can try to reassure them that you will be a trustworthy landlord by making an effort to interact with and speak to locals who live close to your rental home. Simple, cordial communication can go a long way toward making your neighbors more comfortable with you and your tenant moving in next door.
Are you in search of your next Albuquerque investment property? Or perhaps you’d like to find out more about how investing in rental property can be made simpler by using professional property management. Contact Real Property Management Expertise online today or call us at 505-796-8047. 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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