Finding A Property for House Hacking

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Nick and I’s house search started back in November and the key criteria for our first home: the rental income from the property should cover the full mortgage payment.  We were on a house hacking venture. House hacking is a popular term for a real estate investment where you rent part of the property (either other rooms or units) to help pay for your mortgage and lower your living expenses relative to renting, while building wealth by owning your house.

The advantage of being an owner-occupied landlord, you’re able to take out a residential loan vs. a business/investment loan. Residential loans offer lower interest rates and you can put less down than if you were to take out a business loan. 

What to look for when you’re house hacking

We found our property through redfin and it was the only property where the numbers made sense; the rental income would cover the mortgage. Nick and I also fell in love with the character of the home and the long-term potential to increase the value of the property. The other big bonus, it was a 3 family so we would rent out 2 of the units making it easier for the rental income to cover the mortgage. 

The other piece that we felt strongly about was location. Our investment thesis centered around finding a property within a walkable distance to public transportation. We believe this made the property more valuable now and potentially in the future as rent prices in Boston proper continue to rise. Additionally, walking distance to public transportation made the units a more desirable location for potential tenants. 

Upfront Costs of Preparing the Units for Rental

It would be foolish not to mention that although our rental income is covering our mortgage expenses (as long as the tenants pay their rent) we still spent money to prepare the property for rental such as fixing old electrical work, updating plumbing work, putting a fresh coat of paint on all the walls, and these are just a few of the expenses. The good news, these are tax deductible expenses. 

While we are still early days into our house hacking venture, we feel good about the property we chose and are excited about the long-term potential of the property.

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