House Hacking: Why There Is No Bad Time to Start

Whether you're a first-time homebuyer - or looking to start a rental portfolio - house hacking provides an opportunity to do both, in any market condition. 

We're going to talk about why there is no bad time to start

So first, one of the advantages of house hacking is that you're not locked into a property forever. 

With house hacking, you already know you're not going to be in that property for long.

You can think of it like when you were in college - moving from apartment to apartment every year

So getting started has a very low barrier to entry and low risk to your living situation - especially if you find that you don't like living there

You always will have that flexibility - and the ability to change your living situation.

So it allows you to explore new areas, upgrade or downgrade your living situation - and adjust your plan.

Then you have favorable financing flexibility

Over time, your house hacks are building equity through things like - appreciation and loan paydown

The equity you gain gives you flexibility to leverage that through refinancing - whether that's a regular refi or cash-out refi.

So, even if you purchase a property with a higher interest rate - like today for example, somewhere in the 6's or 7's - you can refinance in the future if rates drop below your initial rate.

If they never drop below that rate you initially got - then you'd be pretty excited right? 

The financing flexibility allows you to purchase a property at any time - whether rates are low or high.

Thennn we've got the opportunity cost here of rising rents

Whether you get a low rate or high rate - or get low cash flow or high cash flow - historically rents increase with inflation of time.

It benefits the property owner and works against the renter.

Here's a real life example - When I lived on Welch Ave during my senior year of college, my rent was $425 per month.

Today, that same apartment rents for $475. Looking at recent pictures - it's the same place - with the same features - same appliances - same carpet. 

Now, all that considered - that's an 11.5% increase over four years from the time I left that unit

or almost 3% per year increase on average

So if you take the jump and buy that first property - and rates are high or the cash flow is low - or you don't like the place -

or, jeez if it's all 3 in a worse case scenario - it's important to know that these can change in your favor over time.  

House hacking really allows you to purchase in any environment - and gives you the most flexibility when it comes to owning investment properties.

Hate the place? You can move out and begin renting the property after 12 months

High rate? Refinance if or when they drop below your current rate.

Low cash flow? A refinance may solve this issue on it's own with a new lower payment - but without a refinance - keep in mind rents tend to increase over time, while your expenses remain fixed

Someone said, "once you change your way of thinking from 'this won't work' - or 'I can't do this' - to 'how can i make this work' - or 'how can i do this' - the way you see things will change your entire world forever"

It's natural for us to see things from a cautious view or negative lens - its human nature

Be open to the alternatives and learn as much as you can - you'll be just fine








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