House hacking is one of the unique ways you can buy your first Lombard investment property. House hacking is when investors purchase a property that either has or can be converted into multiple rental units, live in one unit, and then rent out the others to tenants.
In a nutshell, house hacking is using the rent that your tenants pay to cover your mortgage payment and other property expenses. This means you would be living in your home for free while your property increases in value. To a budding real estate investor, this seems like an attractive idea. But there are some things to ponder on before proceeding with your house hacking plan.
House hacking can offer investors a range of great benefits. It is surprising that only a few people use this property-acquisition strategy. If you do it correctly, living in your Lombard rental property can help you with your mortgage or rental payments and even let you enjoy some tax benefits. Given all these, house hacking is still not for everyone because there are also a few downsides to the process.
In exchange for living virtually rent-free, you will be spending a lot of time leasing and managing your property. Being a landlord is a real job and one you should be taking it seriously. Most house hackers manage their rental property themselves instead of having it professionally managed.
Another unique thing about house hacking is that you will be living with your tenants. You won’t necessarily be living in the same unit but your tenants will be so close by that you will constantly be seeing each other. You also will have to put up with the noise, their pets, cars, and often even their personal belongings. This could make it harder to keep a professional distance between you and your tenant especially if tensions arise between you as neighbors. Still, if you feel you don’t mind such an arrangement or if you find a great tenant, house hacking could go very well for you.
As you consider all the possible situations you will find yourself in as a house hacker, you also have to assess your willingness to live in an investment property. A lot of new investors choose lower-priced properties at first. You have to be comfortable with living on the property. Bear in mind that your first investment property may not be your dream home. This can become a source of frustration for some. But if you are fine with scaling back your lifestyle for a few years, house hacking can be your entry point into real estate investing.
Lastly, you have to think about the possibility of your tenants not being able to pay the rental payments. Since you are the property owner, you are responsible for everything from the mortgage to the utilities. A lease helps encourage your tenants to pay their share of the expenses, but you have to prepare for the possibility of them becoming unable or unwilling to do so. You still have to pay your property’s bills without your regular income for at least a few months. Evicting a non-paying tenant –and finding a new one– takes time, so it is best to start a cash reserve account as soon as possible.
Are you in the market for your next Lombard investment property? Or would you like to learn more about how professional property management can make it easier to invest in rental real estate? The Real Property Management DuPage Preferred team is ready and willing to help you. Contact us online today or call us at 630-427-2200. We work with investors like you to help build the rental real estate portfolio of your dreams.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.