Let’s say you’ve been looking for a cost-effective or innovative way to acquire your first McKinney investment property. The solution may lie in house hacking in that case! When an investor purchases a property that has the potential to be modified into multiple rental units, lives in one unit, and then rents the other units 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 appealing concept, particularly if you are just starting as a real estate investor. However, as with any investment, this strategy has both pros and cons. Before you start house hacking for the first time, you must be aware of the following.
House Hacking Basics
Investors can benefit greatly from a variety of house hacking strategies. Therefore, you may be surprised at how few individuals acquire properties using this method. There is no doubt that, if done right, living in your McKinney rental property can enable you to cover your mortgage or rent, give your property time to increase in value, and provide excellent tax benefits. This can lead to significant savings for future investments or use the equity in your rental property to reach certain financial objectives.
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 virtually free rent, you will have to devote a great deal of time to leasing and managing your property. A real job that you should take seriously is being a landlord. Unless you intend to have your property professionally managed by a McKinney property manager, the majority of house hackers manage the bulk of the work associated with owning a rental property.
Living with Tenants.
Another essential fact to remember about house hacking is that you will reside with the tenants. 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. However, house hacking could be very successful if you find a great tenant or don’t mind such arrangements.
Desired Lifestyle.
Be sure to include your eagerness to live in an investment property when you consider all the potential scenarios you may experience as a house hacker. New investors frequently 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. House hacking, however, might be the ideal entry point into real estate investing if you have no problem lowering your standard of living for some time.
Zoning Laws & Neighbors.
The last thing you should think about is the zoning regulations in your area. It’s against the law in many places to divide a residential property into two or more rental units. Check local zoning regulations thoroughly prior to submitting 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. While you cannot control how other people feel, you can attempt to reassure them that you will be a responsible landlord by meeting and speaking with those who live nearby. A simple, cordial conversation can go a long way toward easing your neighbors’ concerns about your and your tenant’s impending move.
Are you in search of your next McKinney investment property? Or, are you interested in learning more about how professional property management can facilitate real estate investment? Contact Real Property Management Legend online today or call us at 214-227-2404. 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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