House Hacking: The Most Beginner-Friendly Way to Dip Your Toe in Real Estate?

by Benjamin Urrutia 03/15/2020

Photo by Free-Photos via Pixabay

For some, house hacking is the key to getting started in real estate; for others, it's just a smart way to build cash flow into an otherwise uncooperative rental market. Wondering how to get your foot in the door? Here's what you need to know. 

What is House Hacking? 

The term "house hacking" was coined by Bigger Pockets, but in general, the practice has been going on for as long as people have been owning and renting properties. House hacking refers to renting out a part of your primary residence. Generally, that means owning a duplex, triplex, or quadruplex, living in one unit, and renting out the rest. For some, it means renting out one or more rooms of a single-family residence. In an ideal scenario, house hackers can essentially live for free--allowing the rental income from the space they rent out to pay for the mortgage and maintenance of the entire property. 

Why is House Hacking a Smart First Investment? 

As with any investment, the viability of house hacking depends on the market in your area. But for many who want to get into real estate investing but haven't yet taken the plunge, it's a smart step. 

  • Owner-occupants enjoy the best financing terms. When you plan to use the property as your principal residence, you'll get lower down payments (as low as 0-5%, in the case of VA and FHA loans) and lower interest rates. 
  • House hacking serves as training for managing more tenants. Because you'll be living in close proximity to your tenants, it will be easier to keep an eye on your property and address repairs and other issues as they arise. It's a great way to earn a few notches in your landlord belt before purchasing more rental properties in the future. 
  • When you decide to move out, you can rent out the final unit (or the primary house) and enjoy the full benefits of positive cash flow thanks to your low-interest-rate home. 

An Accessible Way to Start Small 

Step one: talk to a lender. If you can get pre-approved for a single family residence, you can get pre-approved for a duplex (or larger).

Already own a home? Consider renting out an extra bedroom, or finishing the basement to rent out as an ADU. And even if you don't net massive positive cash flow at first, you'll massively offset your own cost of living, while gaining valuable experience as an investor and property manager. 

About the Author
Author

Benjamin Urrutia

About Benjamin:

“His leadership, business, and real estate knowledge make it possible to achieve a win, win for his clients. It is clear that his MBA helps make a property decision a better decision for his clients.”

Timothy M. Ricke –
Entrepreneur of the Year
  • “Would it serve you better if your Realtor(R) were also a real estate investor with an MBA?”
  • Why choose Benjamin?
  • * Full-time real estate professional
    * Specialized in the residential sector in metropolitan Orlando
  • * Commercial Properties (Shopping Centers, offices, land, multi-families)
    * Bilingual Spanish & culture provides quality service to his clients.
    * His background is decisive to ensure that you get the best deal ever.
    * He has over a decade of experience.

*Technology Resources – He has the technology and resources to generate demand for your property, provide buyers with the detailed information they desire, and have the ability to respond instantly to online inquiries.

Benjamin's Specialties:

  • International customers • Relocation • First Time Buyers • New Homes • Buyer;s agent • Short Sales, bank-owned properties • Investment properties – Commercial Properties.

Additional Continuing Education

  • Analysis of Income Producing Properties
  • Introductory course on Commercial Real Estate
  • Foreclosure properties for buyers and sellers
  • Certified on International Transactions, TRC.
  • Certified Relocation Specialist.
  • Five Star Institute bank-owned properties certified.
  • Short Sale and Foreclosure Resource (SFR) Certification

Professional Associations:

  • Orlando Regional Realtors Association, ORRA
  • Florida Realtors, FR
  • National Association of Realtors, NAR
  • Orlando Regional Commercial Council
  • Central Florida Commercial Association of Realtors
  • Budget and Finance Committee of the Orlando Regional Association of Realtors
  • Global Real Estate Council, GRECO. International buyers and sellers
  • National Assoc. of Hispanic Real Estate Professionals, NAHREP

Other Associations:

  • Toastmasters International, past Winter Park FL club president
  • Financial Executives Networking Group, FENG
  • Rotary Club of Maitland, Paul Harris recipient, President 2019-2020
  • 2016, 2017, 2018 and 2019 Orlando Regional Realtor Association Honor Society
  • Gold Key Certification on providing superior service to customers
  • Art and History Museums of Maitland - Maitland Florida - Board Member

As a practitioner and advocate of quality customer service, Benjamin is reliable, loyal, dependable and intelligent real estate expert. His academics include engineering (BS Civil Engineering – University of Illinois), MBA (Majoring in Finance – Loyola University of Chicago), and a Marketing degree (ICESI University – Cali, Colombia)