House hacking is one of those terms you may hear as you begin your investment journey, but what is it exactly? Learn more about what it is and how to do it in our latest post!
House hacking in Detroit can be an excellent way to build your personal wealth. Finding these sorts of loopholes has allowed people to purchase properties with little money down and next to zero out of pocket costs. So…
What Is It?
House hacking is a term used when an individual purchases a multi-family property with, occupying one of the units themselves. A buyer using an FHA loan will have a much lower down payment than someone taking out a conventional loan and they will be able to purchase a property with up to 4 units. By doing this, the buyer will have their mortgage and other expenses covered as long as the other units in their building are being rented out. As with anything, there are some pros and cons. However, as long as you don’t mind having some neighbors for a little while, house hacking can be one o the easiest ways to get started with investment real estate.
House hacking can also apply to single-family properties. A buyer will purchase the property, claiming one bedroom and renting out the others to tenants or friends. The rent collected should cover the mortgage as well as other ownership expenses. This can be an excellent way to finance the purchase of a property you can see yourself living in years down the road. It will help you easily build equity without little to no cash out of pocket.
What Are The Benefits?
As you can imagine, there are many benefits to purchasing your rental property in this manner.
- Your expenses are paid for by the other occupying tenants
- It can be a great way for individuals to get started in real estate without a huge financial investment up front
- Buying a house in this manner can be great for singles preparing for homeownership down the road
- The tenants living in the other units will be on their best behavior since you’re living there too
- You will have a very low down payment when using an FHA backed loan
- You will only have to occupy the property for a short amount of time
What’s The Catch?
Purchases made with FHA loans will often have restrictions associated with them. These will vary based on area, however, you will typically be required to live in one of the units for at least 12 months before renting out the entire building or house.
You’ll greatly increase your accessibility to your tenants. Sure, you want to be able to provide help when needed, but you don’t need to be woken up by your tenants at all hours of the night over meritless complaints. When your tenant is also your neighbor, they’ll be able to tell when you’re home and will be able to knock on your door any time day or night. You might lose your sense of privacy in this sort of situation. However, if you get good tenants in the door, it can turn into a wonderful living situation for all.
How Do I Get Started?
To get started house hacking in Detroit, you’ll want to find the best multi-family properties available. Sell My Home Detroit can help you whether you are looking for a duplex, triplex, or four-unit building in the Detroit area. Proper tenant screening and building maintenance is a must in order to create a harmonious living environment for all.