You may or may not have heard that’s it’s possible for you to live for free while getting paid for it.
Well i can tell you….It’s easier than you think.
If you’ve ever wondered how it’s done, then keep reading 🙂
Today people are growing and holding their wealth in real estate to become financially secure and free.
I want to show you how hacking a house is one of the easiest ways to becoming financially liberated!
How Does House Hacking Work?
Alright, I’ll explain how this works…..house hacking is buying a house with spare bedrooms to rent out to tenants while you live in another room.
The income coming from the rented rooms usually more than covers your utilities like water, electricity, etc, and the mortgage repayments as well.
If done right, you could expect a surplus of cash after your expenses. This is known in the industry as positive cash flow, and that is what I aim to talk about most in this whole blog 🙂
The same goes if you’re in the U.S, buying multi-family complexes like duplex, triplexes, and fourplexes, you can live in one unit and rent out the rest of the building.
Why I Love House Hacking
House Hacking is by far my favorite business model to date because it allows me to live for free which means I can save more money, take more time off and do more of what I want.
A lot of people are scared off by the purchase and expenses that come with owning a house, and so house hacking works around that problem. It takes away all of the financial stress of owning a property and enables you to grow your wealth a lot more effectively.
7 Step-By-Step Process To House Hacking
In this section, I’ll describe to you the exact methodology I use to buy profitable house hackable homes.
1. Finding The Right Location To House Hack
The 1st step in living for free through house hacking is to find a potential property that’s close in proximity to a lot of employment opportunities (like a major city or town, offices, schools, shops, and industrial areas).
I like to buy property in these desirable places as they provide lots of work and entertainment for the people who want to live in your home.
2. Getting The House At The Best Price
So let me get one thing straight, to make my properties profitable, I have to ensure I get the place at the best possible price! Getting the property for the right price is imperative to making it cash flow nicely.
Plus expensive properties take so much longer saving up for and require bigger mortgages which just east away at your profits. Keeping your expenses as low as humanly possible is one of the major factors in House Hacking.
3. Finding The Right Configuration To Hack
The 3rd step in the process is to find the right property configuration that will make you the most passive income.
If you think about it, a one-bedroom house wouldn’t be very profitable because only you could live in it. However, if you had another bedroom, the rent from that extra bedroom could pay most of your expenses.
In Australia, I find 2 to 3 bedroom properties the sweet spot for maximum cash flow. Any more bedrooms than this and houses tend to go over my budget. So I generally find 2 -3 bedroom houses to be the sweet spot!
4. House Hacking Due Diligence
Due diligence is the time we spend analyzing the income and expenses seeing if it can be hacked efficiently. This is the core skill in Real Estate investing.
Funny story, when i moved into my first home, i received a massive water and power bill and i didnt know why. Turns out my hot water system broke just a week after i moved in….eh…some things you just cant plan for.
First, you must calculate and budget all the expenses (mortgage payments, body corporate, electricity, rates, etc.) and work out if your monthly rent will exceed that amount every month. If it does, great, you’ve found a winner!
If it doesn’t, either find a way to charge more per room/unit or buy the house for below market value. Buying a property for below market value will make it easier to cashflow!
It also might mean the house is just too expensive for your budget and you need to look elsewhere. Oh and stay away from flats with lifts, gyms, or anything fancy, the body corporate bills on these buildings are most often hideous!
5. Financing Your Home Hack
Getting a good interest rate to finance your house is another major step that shouldn’t be overlooked. For example, when you buy a car or new tv, you shop around right? Well in real estate, it’s no different.
To get the best interest rate for our home loan, we need access to all the financing products that are out there, right? The problem is, most people walk into the first bank they see and ask for money. The problem with this is that you’re only seeing One banks range of products, not every product out there!
Instead, by using an independent mortgage broker rather than a bank broker, you’ll get access to the wider range of rates from different companies making sure you’re getting the best rate possible!
6. Keeping Your House Profitable
I know a major cause of fear of owning real estate is the ongoing upkeep and running costs of owning a home. But what I’ve have realized over the years is that as long as you buy a solid home with good foundations you can avoid a lot of maintenance.
What I keep in mind with the overall construction of the house, I don’t look at anything made with a lot of wood, as wood rots, especially if it’s on the outside of the building. I just don’t want to be forever fixing things that will fall apart 😐 Getting trade people in every few months just wouldn’t be good for the cash flow situation. So I best avoid wood as much as I can.
But but but!!!!!……The one exemption I have when looking at homes that need some work is they can be great value add deals! You actually want a bit of flakey paint or damaged carpet because these can be easily fixed for relatively low cost. It’s a great opportunity to add value to the home or to acquire the property for a discount!
7. Finding Quality Tenants Who Want To Live In Your Property
So now we come to the most important part, renting out the place to tenants. They are the lifeblood of making house hacking work. You won’t be able to make money if nobody wants to live in your home. So it’s important, make sure its a nice place to live!
Location is one aspect of Tennant attraction, the other, is the appeal. Make your place appealing to tenants by putting in furnishings and making the place a nice easy place to live and relax. A lot of light, plants and a bit of white paint, new fixtures, fittings, and fresh carpet work well.
If you need ideas, jump on flatmates.com or craiglist to see what other people are doing to their properties and just model after them. In conclusion, you just want to be a little bit better than your competition around you.
IN CONCLUSION
So that about wraps up my brief summary of how I house hack! 🙂 I really hope you found this guide helpful. If you have any questions PLEASE drop me a comment or message me! I’ll be uploading A LOT more stuff soon so don’t worry…… =) Cheers!
Kristian 😉
