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Thread on house Hacking.
Is this the best way to get into real estate?
Let’s take a look at the financial benefits.
Is this the best way to get into real estate?
Let’s take a look at the financial benefits.
What is house hacking?
• A strategy that involves renting out portions of your primary residence to generate income that is used to offset the cost of your mortgage and other expenses associated with owning a home.
• A strategy that involves renting out portions of your primary residence to generate income that is used to offset the cost of your mortgage and other expenses associated with owning a home.
Financial benefits:
1.Reduced expenses
2.Low down payment
http://3.Tax benefits
4.Locked in mortgage payments
1.Reduced expenses
2.Low down payment
http://3.Tax benefits
4.Locked in mortgage payments
Reduced Expenses:
Your cost of living goes down; a portion of the rental income will go towards your monthly expenses
Instead of paying rent, you are now receiving rent
You could produce monthly cash flow or at the very least, reduce your monthly cash outflow significantly
Your cost of living goes down; a portion of the rental income will go towards your monthly expenses
Instead of paying rent, you are now receiving rent
You could produce monthly cash flow or at the very least, reduce your monthly cash outflow significantly
Example:
Rent: $1500/m
If you enter into a house hacking strategy and charge a tenant rent, this reduces your monthly cash flow out.
After all expenses, your monthly housing cost is:
$400/m
Rent: $1500/m
If you enter into a house hacking strategy and charge a tenant rent, this reduces your monthly cash flow out.
After all expenses, your monthly housing cost is:
$400/m
You can now invest the difference because you are saving ~$1100/m on housing costs.
Whether you are investing in equities, rental property’s etc., you are increasing your wealth by earning a rate of return on the difference saved.
Whether you are investing in equities, rental property’s etc., you are increasing your wealth by earning a rate of return on the difference saved.
Low down payment:
I am in Canada - I can reduce the down payment required through various programs that favour owner-occupied housing.
Research programs available to you!
This can get you into the real estate market with a low initial cash outlay.
I am in Canada - I can reduce the down payment required through various programs that favour owner-occupied housing.
Research programs available to you!
This can get you into the real estate market with a low initial cash outlay.
Tax benefits:
You can lower your taxable income base by acquiring extra tax write-offs (mortgage interest deduction).
I recommend getting professional advice about tax deductions as a house hacker as the deductions need to be separated based on use.
You can lower your taxable income base by acquiring extra tax write-offs (mortgage interest deduction).
I recommend getting professional advice about tax deductions as a house hacker as the deductions need to be separated based on use.
Example deductions:
•Interest
•Depreciation
•Maintenance and repairs
•Utilities
•Interest
•Depreciation
•Maintenance and repairs
•Utilities
Locked in mortgage payments:
If you are renting, your payments could increase year over year – this is based on market dynamics (supply/demand).
You have no control, other than through negotiations, to keep your rent payments the same.
If you are renting, your payments could increase year over year – this is based on market dynamics (supply/demand).
You have no control, other than through negotiations, to keep your rent payments the same.
If you are house hacking, your mortgage payment is locked in for X amount of years.
This won’t change until your mortgage terms change.
This won’t change until your mortgage terms change.
You also have the ability to raise rents if the market allows it.
While your mortgage payment is locked in, the rental rate you charge can increase.
While your mortgage payment is locked in, the rental rate you charge can increase.
Those are just a few of the main financial benefits of house hacking!
If you are new to real estate, take a look into the strategy - it is worth looking into.
If you are new to real estate, take a look into the strategy - it is worth looking into.
If I can add one more piece of advice - analyze the house hack with an investor mindset.
Look at it with a 20% down payment.
If the deal works with this way, you can leverage both units as rentals and increase your monthly cash flow.
Look at it with a 20% down payment.
If the deal works with this way, you can leverage both units as rentals and increase your monthly cash flow.
