What Is House Hacking And Can It Help You Buy A House?

What Is House Hacking And Can It Help You Buy A House?

What Is House Hacking And Can It Help You Buy A House?

House hacking, a popular concept in the West, is a unique way of investing in a property that may be slightly heavy on your pocket. This is also an interesting concept to balance your finances after a property purchase.  

How does house hacking work? 

You invest in a prime property and then rent out a certain portion of it while living in the remaining part. This concept allows young homebuyers to buy property in prime areas, or areas closer to their workplace which otherwise would not be affordable for them. The income earned from the rent can be used to pay the equated monthly installments (EMIs). Moreover, since the property is located in a prime area, the rent fetched can be handsome, too. 

The benefits of house hacking

  • Apart from¬†earning rental income, the homeowner could save on the fuel costs as they start living close to their workplace. They also save on¬†time wasted in traffic jams, etc. Moreover, the cost¬†of maintaining and use of utilities¬†of¬†the house,¬†is further split among the dwellers.¬†
  • This¬†move gives you a hands-on experience of being a landlord, making you capable of further investing in real estate and earning rental income from other properties, too.¬†
  • The renters¬†play a role in the¬†¬†upkeep¬†of¬†the property. For instance,¬†if¬†you have a day shift and your tenant works in a night shift, you can be¬†assured that your house is not empty and hence, not unsafe during anytime of the day.¬†

Disadvantages of house hacking 

  • It could be a challenge to live with your tenants in the same property.¬†Your home¬†may¬†not¬†feel like 'your'¬†home anymore,¬†and¬†instead¬†become a multi-unit space.¬†
  • It¬†could¬†get¬†awkward¬†and stressful¬†if they¬†miss paying¬†the¬†month‚Äôs rent¬†or misbehave, etc.¬†¬†
  • The¬†idea of the property becoming vacant¬†could¬†become a¬†constant¬†source of¬†worry¬†as that would substantially increase your costs.¬†

What to keep in mind if you are planning to house hack: 

  • It¬†is¬†advisable¬†that you invest in a multi-unit property to get the best of house hacking. For instance, investing in a duplex of a triplex in a builder-floor property,¬†is a good idea. These properties could fetch you better rent and also, provide you the independence to have a space of your own.¬†¬†
  • In¬†case you don‚Äôt have a big budget, invest in a property with multiple bedrooms that have attached bathrooms. In case a room or two do not have an attached bathroom, keep them for your own use.¬†
  • You¬†could also look for homes with a basement or the ones¬†with a plan that allows you an expansion. This way,¬†one could rent out the better part of the home and live in the extension.¬†
  • Does¬†the property you just saw have¬†a large open area that could be converted into a bedroom? Such properties could be a viable option, too.¬†
  • While¬†you are on¬†the¬†lookout for a property with the right kind of bedrooms, do not forget to factor in the common areas such as¬†the¬†living room, kitchen, among others.¬†
Last Updated: Mon Feb 19 2024

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