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’s 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’t 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.