If you are looking for a creative way of buying your first Brewer investment property, you might want to consider house hacking. 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, you need to know a few things before you pursue your house hacking plan.
House hacking can offer investors a range of great benefits. It is a surprise to know how few new property investors use this acquisition strategy. If you do it correctly, living in your Brewer rental property can help you with your mortgage or rental payments and even let you enjoy some tax benefits. Still, house hacking is not for everyone because of a few downsides to the process.
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 and one you should be taking 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.
Another unique thing about house hacking is that 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. Maintaining a professional relationship with your tenant with these arrangements can be difficult and arguments might ensue between you and your neighbors. Still, if you feel you don’t mind such an arrangement or if you find a great tenant, house hacking could go very well for you.
One of the things you also have to consider before pushing through with your house hacking plan is your willingness to live in an investment property. Most new investors typically go for lower-priced properties at first. You have to be comfortable with living on the property. Bear in mind that your first investment property may not be your dream home. This can become a source of frustration for some. 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.
Lastly, you have to think about the possibility of your tenants not being able to pay the rental payments. Since you are the property owner, you have responsibility for everything from the mortgage to the utilities. A lease can help encourage your tenants to pay their share of the expenses but you have to be able to still pay your property’s bills in case your tenants are suddenly not able to not willing to pay their rent, leaving you without that income source for a few months. It takes some time to evict a non-paying tenant and find a new one, so it is a smart move to set up a cash reserve account as soon as you can.
Are you in the market for your next Brewer 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 Acadia team is ready and willing to help you. Contact us online today or call us at 207-561-7482. 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.