top of page
Search
access

What to Know Before House Hacking with a Multifamily Property



Real estate isn’t the easiest investment to break into. It’s no secret that residential properties are the single most expensive purchase a majority of people ever make. House hacking has become a favorite way to get a foot in the door.

It means you’re using your house to generate income, often by renting out a portion of the property while living in another portion. Multifamily properties are ideal for this purpose since separate units are built in. So what should you know before you get started?


Get a Residential Loan

To start, you need to finance your property. But should you get a residential loan or a commercial property loan? After all, renting out a unit of your multifamily property makes you a landlord and therefore a business owner.

As long as your property has no more than four units, you should get a residential loan. That means you can use a residential loan to finance a single-family home with a mother-in-law suite, a duplex, a townhouse, or any other multifamily property with a maximum of four units.


Treat It Like a Business

Make no mistake–as soon as you start renting your property, you are a business owner. It’s time to start treating your multifamily property like a business asset. In this case, that means making sure it’s well-kept and has paying tenants living in it.

Vacant units mean lost revenue, making it difficult to meet mortgage payments. You can’t always control whether or not you have tenants, so make it a priority to set some of the income aside to cover vacancies when they happen.


Choose the Right Property

A successful house hack requires you to start with the right property. Make sure it’s a desirable property to live in, inside and out. It should have all the amenities it needs for you and your tenants to live comfortably. Analyze the neighborhood to get an idea of what sort of tenants you’re likely to attract and what they are likely to afford to pay in rent. Look into the local job market and population growth trends, as well as average rent, rent growth rates, and the number of nearby rental properties.


House hacking is a great way to make buying a house more affordable. Once your property is paid off, you can continue to generate income with it if you want. Just make sure you’re prepared for the responsibilities of being a landlord. If you have concerns about your legal responsibilities as a landlord, consult an experienced attorney who can give you the guidance and answers you need.


Did you enjoy reading this article? Here’s more to read: How to Create a Healthy Living Environment in Your Home

17 views0 comments

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating
bottom of page