Consider a scenario in which you are trying to find a cost-effective or unique way to purchase your first Cleveland Park investment property. House hacking could be the solution in that case! House hacking is when investors acquire a property with several units or that can be modified to have several units, live in one unit, then rent the remaining units to other tenants.
The idea behind house hacking is to live in your home for free while the value of the property appreciates by using the rent your tenants pay to pay the mortgage and other property expenses. Especially if you’re just beginning as a real estate investor, it’s an attractive concept to many. This strategy, however, has benefits and drawbacks, just like all investments. Before you attempt house hacking for the first time, you should be aware of the following.
House Hacking Basics
Investors can receive a number of excellent benefits from house hacking. You might be surprised at how few people use this method of buying properties. There is no question that, if done properly, residing in your Cleveland Park rental property can assist you in paying your mortgage or rental bill, give your property time to increase in value, and provide some fantastic tax benefits 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?
Along with these advantages, there are a few disadvantages to house hacking.
The Reality of Landlording.
In exchange for living virtually rent-free, you may be required to devote a great deal of time to 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 Cleveland Park property manager.
Living with Tenants.
You will live with your tenants if you decide to house hack, which is another crucial consideration. Even if you don’t all live in the same apartment, you will likely see your tenants frequently because of how close they are, and you will have to put up with their pets, vehicles, noise, and even personal property. Living so close together may make it more difficult for you to maintain a professional relationship with your tenant, and if you find your tenants to be less than ideal neighbors, tensions may rise. Nevertheless, house hacking could be profitable if you’re okay with such arrangements or if you find a great tenant.
Include your willingness to live in an investment property when you’re planning all the potential scenarios you might encounter as a house hacker. It is usual for first-time investors to opt for less expensive properties. If you intend to live on the property, you must ensure that you will be comfortable there. It’s possible that your first investment property isn’t exactly what you had in mind for a 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.
Your local zoning laws should be the final thing on your list. Creating two or more rental units on a residential property is against the law in many places. Therefore, prior to making an offer, you should thoroughly examine local zoning regulations. If there aren’t many multi-family rentals in the area, even if it is legal, you might find that neighbors are not happy with your plans to move multiple tenants into your new rental. Although you have no control over how other people feel, you can try to reassure them by making an effort to interact with and speak to those who live close to your rental property that you will be a trustworthy landlord. In order to make your neighbors feel better about you and your tenant moving in next door, a short, friendly conversation can go a long way.
Are you looking to purchase your next Cleveland Park investment property? Alternatively, are you interested in finding out more about how investing in rental property can be made simpler by professional property management? Contact Real Property Management Washington DC online today or call us at 202-813-9993. We work with investors like you to help build your dream rental real estate portfolio.
Originally Published on February 26, 2021
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.