House Hack Your Way to Real Estate Wealth

7 reasons why "house hacking" can lead to financial freedom

Thumbs up to all the creative “house hackers” out there

“Marc how do I start investing with little money?”

In today’s free real estate guide, I’m sharing one of my favorite strategies.

The Art of House Hacking

You can get my full house hacking strategy and a lot more in my course.

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What is House Hacking?

House hacking involves buying a multi-unit property (like a duplex, triplex, or fourplex), living in one unit, and renting out the others. It can also involve renting out separate rooms or a basement in your home. The rent you collect from tenants helps to pay your mortgage and other property expenses.

This strategy can significantly reduce or even eliminate your living expenses while building equity and generating income.

Today’s guide will explore everything you need to know to successfully house hack and pave your way to financial freedom in real estate.

1. Benefits of House Hacking

• Reduced Living Expenses: Your tenants' rent can cover most, if not all, of your mortgage, property tax, and insurance.

• Learning to be a Landlord: It's a great way to get hands-on experience in property management.

• Building Equity: As you pay down your mortgage, you're building equity in the property.

• Tax Advantages: You can deduct property-related expenses, such as mortgage interest and maintenance costs.

2. How to Get Started with House Hacking

• Financial Planning: Make sure you have a good credit score and enough savings for a down payment and initial repairs.

• Property Selection: Look for multi-unit properties in desirable areas or single-family homes with rentable spaces.

• Financing: Consider owner-occupant loans like FHA loans, which require lower down payments.

• Understand the Market: Research local rental markets to set competitive rent prices.

• Legal Considerations: Be aware of landlord-tenant laws, zoning laws, and insurance requirements.

3. Finding the Right Property

• Location: Choose a location with high rental demand and good appreciation potential.

• Condition of Property: Assess whether you’re ready for a fixer-upper or prefer a move-in-ready property.

• Layout and Amenities: Consider the attractiveness of the property to potential tenants.

4. Financing Your House Hack

• FHA Loans: These loans are popular among house hackers for their low down payment requirement (as low as 3.5%).

• Conventional Loans: If you can afford a higher down payment, conventional loans offer more flexibility.

• VA Loans: If you're a veteran, VA loans offer attractive terms with no down payment required.

5. Managing Your Property

• Tenant Screening: Conduct thorough background and credit checks on potential tenants.

• Leases and Legalities: Have a solid lease agreement and understand landlord-tenant laws.

• Maintenance: Keep the property in good shape to retain tenants and maintain property value.

6. Maximizing Your Investment

• Strategic Upgrades: Make improvements that increase property value and rental appeal.

• Rent Optimization: Regularly assess the market to ensure you’re charging competitive rents.

• Expense Management: Keep track of expenses and look for ways to reduce costs.

7. Challenges and Solutions

• Dealing with Tenants: Be prepared for tenant issues and have a plan for handling disputes.

• Unexpected Repairs: Set aside a fund for emergency repairs and maintenance.

• Time Commitment: Be ready to dedicate time to property management, or consider hiring a property manager.

Is 2024 a good time to buy?

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Three ways I can help you build wealth with real estate:

1. Real Estate Investor OS: Learn the exact strategies that helped me build a $20M real estate portfolio. This 2-hour course equips you with the tools you need to build financial freedom through real estate investing

2. Invest with Me at MAK Capital: learn how you can passively invest with me in commercial real estate. I find the deals, you collect a rent check. Schedule a call with my team

3. Subscribe to the MAK Podcast: each week I share actionable real estate, business, and personal finance tips on the MAK Podcast