Making Renters Pay Your Mortgage?
House Hacking Explained!

Key Takeaways

Why House Hacking is Ideal for Beginners:

• The hosts discuss the advantages of house hacking, noting that it requires less capital upfront compared to purchasing a separate investment property. They highlight how it enables owners to qualify for homeowner’s insurance rates, which are typically lower than landlord insurance, and reduces overhead costs associated with managing a separate rental property.

Choosing a Suitable Property for House Hacking:

• Seamus and Krista explain the types of properties best suited for house hacking. Multi-family properties are preferred for their ability to provide privacy and security, though they come with higher acquisition costs. Single-family homes with features like separate entrances or additional kitchens can also be effective, and basements with separate entrances are particularly well-suited for this strategy.

Considerations and Steps for House Hacking:

The conversation covers essential considerations and steps to undertake house hacking successfully:

• Research Local Laws and Regulations: Understanding landlord-tenant laws and residency requirements to ensure compliance and avoid legal issues.
• Build a Finance Team: Engaging with multiple lenders to find the best mortgage rates and terms.
• Assemble a Real Estate Team: Working with real estate professionals to find properties that meet house hacking criteria.
• Purchase and Prepare the Property: Ensuring the property is up to code and has all necessary amenities for renting out.
• Find and Screen Tenants: Advertising the rental space, accepting applications, and conducting thorough tenant screenings.

Benefits of House Hacking:

• Generates income to help pay the mortgage, thereby reducing personal living expenses.
• Offers the convenience of managing the property in-house due to proximity.
• Allows for homeowner’s insurance rates, which are more affordable than landlord insurance.

Drawbacks of House Hacking:

• Requires living in close proximity to tenants, which may not suit everyone’s preference for privacy.
• Involves the responsibility of maintenance and ensuring the property meets all safety and habitability standards.
• Necessitates a strict tenant screening process to find reliable renters.