4 House Hacking Mistakes To Avoid
Your house can be one of your biggest expenses, but it can also be a source of extra income through what’s known as house hacking. Essentially, house hacking involves using your own home to make money while still living there and building equity in it. Trending Now: How I Make $5,000 a Month in Passive Income Doing Just 10 Hours of Work a YearTry This: 7 Unusual Ways To Make Extra Money (That Actually Work)
There are many different ways to go about this, such as renting out a room in your house, building and then renting an accessory dwelling unit (ADU), or renovating your house while living in it with the intent to then flip it for a profit. While house hacking can boost your income, you’ll want to think carefully about how to execute your ideas. If done poorly, you could end up losing money or at least making your home less enjoyable to live in.
With that in mind, consider these four house hacking mistakes to avoid.
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Underestimating Potential Issues With an Upstairs/Downstairs Duplex
Sure, it seems like a great idea to find two spaces, one on top of the other, but this can potentially lead to more bad than good. In a duplex, you might find yourself overhearing the tenant’s daily noises or get stuck in a situation where one unit’s plumbing issues cause problems in the other unit, as real estate agent Craig Curelop experienced, according to his blog for real estate investing site BiggerPockets.
If you’re leaning towards a duplex, it’s a good idea to bring a buddy to test how the sound travels, and also do a further inspection of the plumbing so there are no surprises in the future, suggested Curelop.
Bypassing Thorough Home Inspections
It might be easy to let your excitement take over when you think you’ve found the perfect place for house hacking, but it’s still important to do your due diligence when it comes to inspections. If your goal is to earn additional money, the last thing you’ll want to do is shell out for unexpected problems like electrical issues or a faulty HVAC system.
Not Vetting Your Tenants
If your house hacking involves sharing your space with others, make sure you’ve selected people who are unlikely to cause you any trouble. Acting as a landlord can be tiresome and costly if your tenants don’t pay their rent on time or cause damage to your property, so it might be worth asking for some references before entering into an agreement with them.
Choosing an Undesirable Location
You might be willing to forgo your preferred location to find a more affordable home that you can buy and then house hack, but consider what that means for attracting others to rent your space. If you choose an undesirable location, yet your house hacking strategy is to find multiple roommates for your home, you might struggle to find tenants — at least at a good price.
Also, think about location as it pertains to more than just finding full-time tenants. If you try to rent out your garage as a podcast studio, for example, but you live in a small town, you might not get as far as if you did that in a city full of creative professionals.
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This article originally appeared on GOBankingRates.com: 4 House Hacking Mistakes To Avoid
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