If it happens that you have been looking for a really creative way to buy your first Jamaica Plain investment property, house hacking may be for you. House hacking is whenever 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.
The thought behind house hacking is to use the rent your tenants pay to cover the mortgage payment and various property expenses, giving rise to you living in your home for free while the property appreciates. It’s a delightful idea to most, specifically if you’re starting as a real estate investor. Though there are, likewise, some things you first need to understand prior to moving forward with a house hacking plan.
House hacking can give investors a broad range of good advantages. So you may be amazed at how few people there are that make use of this strategy to acquire properties. There is no denying that if accomplished correctly, living in your Jamaica Plain rental property can help you to eliminate your mortgage or rental payment, give your property time to build value, and get a few attractive tax benefits too. Additionally, house hacking isn’t for everyone, and the explanation for this is that there are a few downsides to the method.
In return with living virtually rent-free, you could be spending a lot of time leasing and managing your property. Being a landlord is indeed a real job, one that you should take into consideration earnestly. Except if you’re planning to have your property professionally managed, various house hackers end up doing the vast majority of the work that is called for in owning a rental property themselves.
Another crucial thing to keep in mind as regards house hacking is that you may be living with your tenants. Possibly you won’t all be sharing the same unit, nevertheless, your tenants will be living nearby and you will be seeing one another constantly – and putting up with the noise, their pets, cars, and even their personal belongings. It may be more difficult to keep things professional between you and your tenant if you’re all living in such close quarters, and tempers may flare if you see your tenants being less-than-ideal neighbors. Still though, if you couldn’t care less about such agreements or manage to find a perfect or ideal tenant, house hacking could work out great.
As you’re considering all the possible scenarios you might confront as a house hacker, ensure to include your willingness to live in an investment property. It is normal for particularly new investors to choose lower-priced properties at first. If you intend to live on the property, it’s essential to be certain that you will be comfortable doing so. Your first investment property may not specifically be your dream home, which for quite a lot of people may begin to turn into a source of disappointment. But really, if you have no problem scaling back your lifestyle for some years, house hacking may be the ideal strategy to enter real estate investing.
One last factor you should include on your list has to do with rental payments and what happens if your tenants stop paying them. As the property owner, you are financially on the hook for everything from the mortgage to the utilities. A lease can help encourage your tenants to pay their share of the expenses, although if something takes place and they are unexpectedly unable or unwilling to do so, you will need to be able to pay your property’s bills without that source of income – at least for a few months. It can take some time to evict a non-paying tenant and eventually find a new one, so start a cash reserve account as soon as you can and keep adding to it every month.
Are you in the market for your next Jamaica Plain investment property? Or would you like to learn more about how professional property management can make it easier to invest in rental real estate? Contact Real Property Management Boston online today or call us at 617-522-0099. 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.