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House Hacking: What You Need to Know

Couple Embracing and Looking at their New Goose Creek Rental HomeHouse hacking is one way you can creatively buy your first Goose Creek investment property. House hacking is when investors purchase a property that either has or can be converted into multiple rental units, live in one unit, and then rent out the others to tenants.

Basically, house hacking is living for free on your property, using the rent your tenants pay to cover the mortgage payment and other property expenses. It is an attractive idea for those who are just starting as a real estate investor. However, there are also a few things to consider before pushing through with your house hacking plan.

House hacking can offer investors a range of great benefits. Surprisingly, there are only a few who use this strategy to acquire properties. Done correctly, living in your Goose Creek rental property can help lessen or eliminate your mortgage or rental payment and allow you to enjoy some tax benefits, all while giving your property time to increase in value. Still, the few downsides to house hacking make it not suitable for everyone.

In exchange for living virtually rent-free, you will be spending a lot of time leasing and managing your property. Being a landlord is a real job so you should take it seriously. Unless you are going to have your property professionally managed, most house hackers are very hands-on in doing the work involved in owning a rental property.

House hacking also means you will be living with your tenants. Even if you won’t be sharing the same unit, you will be seeing your tenants almost constantly, and you have to put up with their noise, pets, cars, and personal belongings. It could be hard to keep a professional relationship with your tenant, and tempers could flare if your tenants turn out to be less-than-ideal neighbors. Still, if you are comfortable with this arrangement or you happen to find a great tenant, house hacking could turn out to be a great thing for you.

You also have to take into account your willingness to live in an investment property. New investors usually choose lower-priced properties first. If you plan on living on the property, you have to be certain you will be comfortable doing so. It is highly likely that your first investment property will not be your dream home, and this brings about frustration for some people. If scaling back your lifestyle for a couple of years is not a problem for you, house hacking may be the best way for you to get into real estate investing.

One last thing to consider is a plan on what to do in case your tenants stop their rental payments. You are still responsible for everything from the mortgage to the utilities since you are the property owner. Although a lease helps encourage tenants to pay their share of the expenses, there might come a time when they are suddenly unable or unwilling to do so. You still need to be able to pay your property’s bills despite not having that source of income for at least a few months. It takes a while to evict a non-paying tenant and find a new one so setting up a cash reserve account early is a good idea.

Are you in the market for your next Goose Creek investment property? Or would you like to learn more about how professional property management can make it easier to invest in rental real estate? The Real Property Management Charleston team is ready and willing to help you. Contact us online today or call us at 843-900-4061. We work with investors like you to help build the rental real estate portfolio of your dreams.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.