House hacking is an investor term for buying an investment property that you live in while you either rehab it or while renting out the other units in a multi-unit building while gaining enough equity to refinance and buy another property.
Whether you are looking to start an investment portfolio, or you just want to be able to live without having to worry about a huge mortgage payment, house hacking is for you. The advantages of house hacking are bountiful. Let’s break them down:
Down payment: When buying a 2-to 4-unit building that you will live in, you only have to put 3.5 to 5% down. If you were purchasing the building as an investment you would need at least 20, if not 25% down, to purchase the home.
Interest rate: The interest rate, and thus total costs, of the loan are both much lower on an owner-occupied building than an investment property.
Your housing costs: Instead of paying a mortgage, or rent for yourself and for the building, you are just making one payment. And, if you find the right deal, the other units should pay your mortgage. So, you would be living rent-free!
Being a landlord: Investments should be passive! Hire a great property manager to deal with the day-to-day. Live in your home without worrying about calls in the middle of the night or not knowing how to deal with a specific tenant issue. If your in the Chicago area and are looking for a great property manager, give us a call to get a free quote! Even if your still in the searching process of buying a home, it is best to go in with as much info as possible before investing.