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When I figured out the house hacking strategy, it changed everything
The house hacking strategy is not just your typical good first step before full on investing in rental properties. Once you get to know what house hacking is, the possibilities can be limitless.
But, what is house hacking?
Contrary to what it sounds like, you aren't going to be chopping up your house (or any house for that matter) with an axe.
What you will be doing with the house hacking strategy is sectioning off a portion of your residence as a rental, or maybe use that portion as a short-term income producer, something like an AirBnB.
What probably comes to mind is that house hacking is a way to rent off a room, basement or mother-in-law type quarters for extra income.
You might advertise your available space for a special event that is coming to your city where hotel rooms are at a premium. Or consider a more permanent situation, such as a year long lease for that extra space.
From zero to abundant wealth in real estate
You can build wealth in real estate one-room-at-a-time. It's an awesome way to test the waters and see if you enjoy being a landlord. And if you decide you aren't keen on the whole landlord thing, it's easy to slip out once again, since you have little invested.
I like to think back on when I bought a bubble gum machine, filled it with peanut M&Ms. Tim, the manager at our local sporting goods store let me install it near the front door. Boy did it crank out the quarters!
That one small inexpensive bubble gum machine was soon to be my entry into a full on vending company, which I then proceeded to grow and grow. A few years later, I sold the vending route, which included 70 stopes at high end offices like FedEx and a Ford dealership, for a huge profit. As much fun and profitable as that was, the vending business is daily work. Not at all like passive income through the house hacking strategy.
So like that 25¢ novelty machine, I tested the waters, and it was the start of a very profitable business. But one that I was destined to move on from.
Make money with real estate you already own
A good real estate investment is real estate that appreciates (grows in value year after year) and the best real estate investment is one that pays you income, month after month.
I bet you already own a space you could use for the hacking strategy. Very few of us use all the space we have, and it can be a wise decision to let that do-nothing space make money for you. Leasing out a space doesn't necessarily mean you'll have a tenant living with you.
3 Ways to use the house hacking strategy
- Convert a space on your property to lease out. That space can be anything you can charge a monthly lease fee for. Think extra parking for RVs, if you have land, you could set up a horse exercise ring, how about a storage unit and of course there is the typical convert an extra bedroom.
- Buy a multi-unit property and live in one while collecting rent from the other unit(s). Start with a duplex.
- Rent out a small section of your house as a short-term rental, that's how my neighbor Sandy got started, and she turned it into an exciting business that she and her husband run full time. Read more about Sandy and Mick's house hacking strategy here.
The house hacking strategy is your perfect jump-start to real estate investing
While taking in some much needed sunshine and exercise last week, I was tuned in to a podcast. The guest on this podcast was a young man who shared how he built up his real estate investing by starting out with a fixer-upper while he was still in college.
His particular first real estate investment was a duplex in a great area., and he talked his college buddy into investing with him.
One side needed more fixing up than the other, so they were able to move out of the college dorms and into one side of the duplex. The guys worked on it while collecting rent on the other half of the duplex. Saving a portion of the rental income enabled these young real estate investors to put a down payment on another duplex.
Soon, he and his business partner has a good size portfolio of real estate investments
Don't just survive, using the house hacking strategy for increasing your income
For a good weekend read, I can recommend this house hacking book by Bigger Pockets. Then once you've read it, share it with someone you care about.
The house hacking strategy can be a life changer, I know it was for Sandy. She and Mick have a wonderful business they love, while using real estate they already own.