Are you one of the citizens who are living their lives in an upscale real estate market and feel that the affordability of properties is quite impossible to reach? Would you be glad to be an owner of the property but have accepted that reality means reaching way your property budget?
This is 2022.
In many places all over America, prices of properties have skyrocketed and somehow in coherence with wage increases in some of the United States’ most lucrative cities. This does not pose a large quandary for those at the top of the salary scale who are garnering the highest salary such as executive leadership, salesmen, and the like. But it poses a problem for the median American trying to supply a good way of living for their family while staying away from a two-hour commute.
On the other hand, talking about the blue-collar, hardworking people who work in main business districts, perform work crucial to the economy’s infrastructure, and compose the backbone of a city’s financial health? What do we tell the huge amount of workers who have planted their occupational roots in big cities having fast wage increases, but who are not witnessing those increases in wag themselves? Are they bound to an existence of hour-plus commutes not to mention the daily road rages?
Chances are, they could be. Unless they know more about it in terms of revolutionary technology that is opening the doors of homeownership in lucrative communities and giving freedom to those willing to exercise a tiny pinch of flexibility and creativity to be able to build financial wealth. We are talking about the term more commonly known as “House Hacking”.
House Hacking is a term invented by BiggerPockets podcast host Brandon Turner. While it is true that Brandon invented an enticing name, the idea has been there for a long period. And while the concept is not novel, creative home purchasers have adapted and are looking for novel ways to own a property without breaking the piggy bank.
House Hacking 101. In simpler terms, house hacking is an approach that involves renting out parts of your main residence to obtain income that is utilized to offset the cost of your expenses such as mortgage and maintenance linked with owning a property. When executed properly, it gives freedom for individuals to live in lucrative communities completely for free, or even garner positive income using homeownership. Not too shabby, eh?
House Hacking is an approach for people who cannot afford a lucrative property to utilize creative strategies to be able to attain that goal. It is a way of getting every last drop of value out of a property that you can, to be able to take advantage financially. Just like all of the things in life, House Hacking comes with a cost. To be able to save on the financial aspect, the homeowner must be willing to shed a little time for work and sacrifice some comforts throughout the process.
House Hacking is slowly becoming famous together with the so-called “FI” or Financial Independence. It gives freedom for people to trim down expenses on their property and commute, significantly. It also gives freedom for previous renters to begin availing some of the tax incentives linked with homeownership such as mortgage interest tax deduction. For a lot of Americans, housing expense is considered to be the most expensive line item in their budgeting. By battling this figure utilizing house hacking, they can enhance their budget significantly and free up some money for investing, saving, or even paying down their mortgage.
House Hacking can be able to help you save a significant amount of money in many ways such as:
- Lower your monthly housing allowance employing obtaining revenue by renting out an area of your property.
- Decreasing your taxable income base by obtaining extra tax incentives like mortgage interest deduction.
- Lowering transportation costs such as gasoline expense.
- Lowering spending unproductive time during commutes.
- Having the chance of eradicating your insurance, car payment, and expenses on maintenance all at the same time.
- Learning the ways how to be a landlord and transitioning into the realm of real estate investment. And the truth is, there are a lot more.
Another big advantage to house hacking is you do not have to shell out 20-25% of the property values when you buy. House Hacking approaches being utilized allow purchasers to buy a property with extremely low or no money down payment since they are buying a home to be utilized as their main residence. This gives freedom for investors to save their money destined for beneficial purposes, and allows those who are not in a position with huge amounts of expendable capital to still pave their path into the housing realm.
So how can this be implemented? Let us unravel the ways…
The Roots of House Hacking. House Hacking originated when housing became too lucrative to be able to attain comfort. While a lot of property buyers decided to move further away from work to save a significant amount of money, or simply rent instead of owning a property, wise purchasers find ways to have what they want. By constructing, purchasing, making, or otherwise obtaining multi-unit properties, keen real estate investors were able to live where they wanted, and have other people pay much of their expenditures.
This was swiftly executed by obtaining multifamily properties. These types of complexes are traditionally utilized for House Hacking since they offer multiple spaces to garner revenue and can still be bought with a low down payment. These properties are specified by lending fundamentals and regarded as “single-family property” even if they hold multiple units in one complex. When individuals know about this, they began purchasing these properties, living in one unit and rented out other units.
The concept is plain, purchase a multifamily property, and move into one of the units. Have the rest of the units been rented out to others? The amount of rent you obtain from the tenant will aid you in augmenting housing expenditures. This will give the freedom for the owner to save all the money destined for rental and mortgage expenditures and create their wealth while living in the best upscale area in the community. If you have the chance to acquire a property in a downtown community that is in proximity to a lot of establishments and public transportation or allows easy biking going to work, you can also significantly lessen your transportation costs. In return, you will be able to save a significant amount of money.
Tons of successful real estate investors obtained their start House Hacking. These individuals tell stories of manners they saved money by renting out even a bedroom unit or other parts of the complex to those who needed a place to live and did not want the responsibility of paying full rent. Whether you are the homeowner renting out a certain space in your property, or the lessee renting the space, House Hacking gives you the benefit of sharing expenditures as well as gives freedom for each occupant to enhance their wealth and save money.