Have you heard of house hacking?
House hacking is a fairly common term these days, and it refers to buying a property and living there essentially for free—in some cases, you can even make money while you do it.
House hacking is the safest and easiest way to buy your first multifamily property and start building immediate wealth, so long as you don’t buy a property that requires major capital improvements. If you intend to do some house hacking yourself, you need to:
1. Get approved for an owner-occupied down payment loan of 3.5% to 5% down. This will consist of a 25- to 30-minute conversation with a mortgage lender.
2. Figure out your maximum purchasing power. This will not only tell you how much house you can afford, but it will also give you an idea of what areas and multifamily properties you can afford. Remember to be open-minded; this home will likely not be your forever home, so you might need to make some sacrifices with your home criteria. However, if you do make the sacrifice, this will be one of the best investments you can make
3. Work with a good real estate agent (wink wink). Not to toot my own horn, but all I do is sell multifamily properties, so if you sign an exclusive agreement to work with me and my team, you’ll likely get a few off-market properties presented to you, as well as having the first crack at new listings coming on the market. Regardless, you need an agent who knows what they’re doing so that you don’t end up overpaying or buying a property that has a lot of capital improvements. We help our clients throughout the whole process, including by helping them set up automatic rent collection.
4. Start looking at properties on our website. Day and night, our agents are out scouring the market to look for the best deals for our clients. Every day you work with us, you’ll get opportunities to tour properties with our team of agents. The more properties you look at, the more of an expert you’ll become.
You’ll have additional income from the units, which can help pay for a bigger house or even another multifamily property.
5. Start making offers. In today’s market, you might have to make a lot of offers, but that’s okay. When you find a property you like, don’t be afraid to go over the asking price so long as the numbers work out in your favor. In 15, 20, or 30 years from now, it won’t matter that you overpaid for the property since it pays for itself each month.
6. Get your offer accepted and close on the loan. That means you’ll need to work with a mortgage lender throughout the process and make sure to get them the documents they need to close in a timely fashion.
7. Move in, live cheaply, and manage the property and the tenants.
8. Enjoy your additional income. After a year when you move out, you’ll then have additional income from the units which can help pay for a bigger house or even another multifamily property.
If you have any questions about house hacking or would like to speak with us to help get you started, don’t hesitate to reach out to us. We’d love to help you.
CEO, Multi-Family Property Exchange, LLC 1-888-48-MULTI
Realtor, LUX realty North Shore 978-922-1000