Best approach to house hacking
Hi there! I am new to real estate investing, and I'm beginning classes toward agent licensure in June. Being that I work in education, and I am starting from nothing (with some shared debt), I am looking at a house hack. I currently live in/own a property that would fairly easily split into two units (upstairs and downstairs), and is located in an historic area close to hospitals, restaurants and amenities. Renting the upstairs as a MTR or STR would cover the mortgage of the property. Renting both units could probably cash flow around $1000 per month. Other STRs in the area of smaller size have reported earning potential up to $3k per month. My question is this: Should we move out to maximize cash flow on this property? At what point will I know when we are ready to purchase the next house hack? These answers may seem obvious to you all, but remember-- I've never done this before, so it feels like a huge unknown risk.
Hey @Whitney Patterson,
Congrats on taking the steps to become an agent!
Have you considered starting with the house hack living in one unit while you rent out the other to start? You could learn the necessary skills to furnish, market, & manage the other unit. These could be valuable for future investments while you have a good safety net of having a steady place to live.
House hacking it for a year or so, could allow you to build up extra funds for a future down payment, furnishings, and other costs.
People much much wiser than I, always remind me, true wealth is built in the long-term. This applies to real estate too. It is about the long-game.
Ultimately, these decisions are based on your own lifestyle & goals.
Good luck Whitney!
Hey @Whitney Patterson,
These are some great questions! It sounds like you already have a property you own and are thinking of converting it into a house hack, this is an awesome idea! As far as moving out to maximize cash flow, I would first focus on your property that you are in now. From your post it sounds like you haven’t rented the property yet, I would first start to rent out the other half of your property. This will give a better idea for the demand for the property and will give you a better idea of how much cash flow to expect. At that point, I would start to look for another property, just make sure you have enough reserves (usually 3-6 months) before you buy another investment property!
Let me know if this helps or if you have any other questions! Good Luck!
@Anthony Swain Thanks for the thoughtful reply. Yes, I believe we will occupy the lower unit for a time to see how it goes!
@Brian Sardinskas Great ideas. Thank you for the time frame-- That is helpful!
To answer your question "At what point will I know when we are ready to purchase the next house hack" without sounding too cliche.. YOU WILL KNOW. Your finances will tell you when you are ready. Make a pros/cons list and go from there. What ever has more on the list go with that one.
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