Real Estate: Quick Beginner Tips

by Bill Conda 02/09/2020

Photo by Free-Photos via Pixabay

For some, house hacking is the key to getting started in real estate; for others, it's just a smart way to build cash flow into an otherwise uncooperative rental market. Wondering how to get your foot in the door? Here's what you need to know. 

What is House Hacking? 

The term "house hacking" was coined by Bigger Pockets, but in general, the practice has been going on for as long as people have been owning and renting properties. House hacking refers to renting out a part of your primary residence. Generally, that means owning a duplex, triplex, or quadruplex, living in one unit, and renting out the rest. For some, it means renting out one or more rooms of a single-family residence. In an ideal scenario, house hackers can essentially live for free--allowing the rental income from the space they rent out to pay for the mortgage and maintenance of the entire property. 

Why is House Hacking a Smart First Investment? 

As with any investment, the viability of house hacking depends on the market in your area. But for many who want to get into real estate investing but haven't yet taken the plunge, it's a smart step. 

  • Owner-occupants enjoy the best financing terms. When you plan to use the property as your principal residence, you'll get lower down payments (as low as 0-5%, in the case of VA and FHA loans) and lower interest rates. 
  • House hacking serves as training for managing more tenants. Because you'll be living in close proximity to your tenants, it will be easier to keep an eye on your property and address repairs and other issues as they arise. It's a great way to earn a few notches in your landlord belt before purchasing more rental properties in the future. 
  • When you decide to move out, you can rent out the final unit (or the primary house) and enjoy the full benefits of positive cash flow thanks to your low-interest-rate home. 

An Accessible Way to Start Small 

Step one: talk to a lender. If you can get pre-approved for a single family residence, you can get pre-approved for a duplex (or larger).

Already own a home? Consider renting out an extra bedroom, or finishing the basement to rent out as an ADU. And even if you don't net massive positive cash flow at first, you'll massively offset your own cost of living, while gaining valuable experience as an investor and property manager. 

About the Author
Author

Bill Conda

 With over 35 years of expertise, Bill is a highly awarded Realtor® and recognized Top 5% of all Brokers countrywide. Early in Bills career, while running his Family’s New Car Dealership, his commitment to his clients and employees earned him the "Masters Sales Managers' Award" from General Motors. In 1984 this ethic helped propel Bill to the top of the industry within 2 years of moving to beautiful York Beach, Maine. Where Bill earned his place in the Top 5% of all Brokers in the country, Including the Covenant Centurion Award 15 times! Having vacationed and engaged with the community right here on Singer Island for the past 27 years, He made the decision of moving here full time to better assist others on what he considers ‘his best life choice to date’! “The area is truly a hidden-gem…” has been spoken uncountable times. His experience and knowledge of the local Industry enable him to offer you outstanding results, making your buying or selling journey, seamless and enjoyable!