Suppose you have been searching for a cost-effective or innovative method to purchase your first Boston investment property. House hacking could be the solution in that case! When investors buy a property that already has or can be converted into multiple rental units, and live in one of them while renting out the others to tenants is called house hacking.
The goal of house hacking is to use the rent your tenants pay to cover the mortgage and other property expenses, allowing you to live in your home for free while the property appreciates. It is an attractive offer, especially if you are just starting as an investor in real estate. However, as with any investment, this strategy has both pros and cons. Before you try house hacking for the first time, there are a few things you should know.
House Hacking Basics
House hacking can provide investors with a variety of excellent benefits. Therefore, you might be surprised by how few people choose to use this method to buy properties. There is no doubt that, if properly done, living in your Boston rental property can help pay your mortgage or rent, give your property time to increase in value, and provide excellent tax advantages as well. Using the equity in your rental property can help you achieve some of your financial objectives or save money for future investments.
Is House Hacking Right for You?
There are some drawbacks to house hacking that come together with these advantages.
The Reality of Landlording.
For instance, in exchange for practically living rent-free, you will invest a significant amount of time in leasing and managing your property. Landlording is a legitimate occupation that should be taken seriously. Most house hackers handle the majority of the work associated with owning a rental property, unless you intend to have your property professionally managed by a Boston property manager.
Living with Tenants.
Keeping in mind that you will live with your tenants is another crucial aspect of house hacking. Perhaps you won’t share a unit together, but your tenants will be so close that you will see each other fairly regularly and have to encounter their pets, noise, cars, and even personal belongings. It may be more difficult to maintain a professional relationship with your tenant if you live in such close proximity, and frustrations may flare if you find your tenants to be less-than-ideal neighbors. Nonetheless, house hacking could be fruitful if you are fine with such procedures or if you find a decent tenant.
Desired Lifestyle.
Be sure to consider your willingness to live in an investment property as you brainstorm all the scenarios you might encounter as a house hacker. It’s typical for novice investors to start by picking properties that are less expensive. It’s crucial to make sure you will feel comfortable living on the property if you intend to do so. Your first investment property might not exactly be your ideal home, which can frustrate some people. However, if you don’t mind temporarily reducing your standard of living, house hacking might be the best way to start investing in real estate.
Zoning Laws & Neighbors.
Local zoning laws should be the final consideration on your list. Creating two or more rental units on a residential property is against the law in many places. So be sure to thoroughly research local zoning laws before making an offer. Even if it’s legal, you may find that your neighbors are unhappy with your desire to move multiple tenants into your new rental, especially if there are few multi-family rentals in the neighborhood. Although you cannot control how other people feel, you can attempt to convince them that you will be a responsible landlord by addressing and talking with those who live in the neighborhood. A simple, cordial conversation can go a long way toward easing your neighbors’ concerns about your and your tenant’s impending move.
Are you looking for a new Boston investment property? Or perhaps you’d like to grasp more about how professional property management can facilitate your investment in rental property? Contact Real Property Management Commonwealth online today or call us at 617-299-2342. We work with investors like you to help build your dream rental real estate portfolio.
Originally Published on February 26, 2021
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