Househacking is probably one of the most underestimated strategies that can help new real estate investors build their wealth faster and in a more efficient way possible. Once properly implemented, househacking gives savvy investors the chance to speed up their business efforts in the real estate industry like no other. it also eases the way for aspiring investors to transition to real estate.
Househacking Defined
Househacking is a real estate strategy that allows savvy investors enjoy a good return on investment through physically living in the property they use to generate passive income. Househacking provides investors a way to lower their overhead and mitigate risks at the same time.
How do you get started with househacking, then?
Commit
Househacking is a commitment of and in itself. Househacking requires a serious commitment in behalf of potential investors. It is in their best interest then to commit to this idea at the soonest time possible. Commit to this idea before considering househacking. You have to be convinced that this strategy is something you are comfortable to live with for literally a long period of time. Even the tiniest reservations are indications that you are not prepared. This means that you shouldn’t start househacking if you are not ready for the impending commitment. However, if you are, you can proceed to the next step.
Secure
Next is to secure financing. Make sure you line up financing prior to checking out properties. When you do so, you can get the precise amount you can borrow. Whether it is a traditional loan or one from a private money lender, secure financing at the soonest time possible. This allows you to know the amount of property you can afford, and refrain from considering properties not within your price range.
Study
Once you secure financing, observe due diligence and study as needed. Test the waters of the market you plan to buy in and where your cash will let you purchase. This is the time when you should be locking down your exit strategy. Would you like a duplex or do you want to try a triplex instead? Whatever it is, identify the type of property you wish to purchase and run the numbers. See to it that the numbers make sense. Keep in mind that the goal is to live down mortgage free as your tenants pay down the principal. Ensure that the property you buy into can achieve just that.
Locate
After you determined the profit margins you have to work within as well as the expected cash flow, look for a property that fits with your criteria. It doesn’t make sense to purchase a home that will not take you a step closer to your househacking goal. The cash flow must offset the mortgage enough for you to live in the property with no need for you to make any payments yourself.
Act
After you finished your homework and you are sure that the house you found meets your househacking criteria, it is time to move. Purchase the house and be ready to move in. When things go as planned, your tenants will pay your mortgage as you continue to live without paying any mortgage at all.