If you haven’t noticed, real estate is the most expensive it’s ever been. For newcomers and experienced investors, it’s been a lot harder to find good deals at affordable prices.
Luckily, real estate investing provides enough strategies that you can get around the barrier of entry by executing a tactic known as “house hacking”. Let’s talk about what that means.
What is House Hacking?
House hacking is where you leverage the home you live in by renting out some portion of the property to generate income and offset your monthly mortgage payment.
For most people, a monthly mortgage or rent payment is their biggest expense. If you could reduce or eliminate your monthly housing payment, you would inevitably have more financial independence, extra passive income for the lifestyle you want, and more cash to set aside for your next real estate investment.
In reality, house hacking is an actual life hack that forces your largest expense to work for you. It’s also one of the easiest ways to become a landlord.
Why Now is the Best Time To Start House Hacking
Just think of the headlines in real estate over the past two years: “historically low-interest rates”, “unprecedented appreciation”, “historic low inventory”, and “record inflation”. The list goes on.
We face surging inflation as we enter the aftermath of these unprecedented and historic runs. To combat it, the Fed has raised interest rates, and in conjunction, the 30-year fixed mortgage rate has already jumped from an average of mid-3% to over 5% in a few months.
Here’s how that affects people’s wallets:
Let’s use a $500,000 home as an example.
Based on the 2% rise in interest, the monthly payment has increased by over $500! $500 extra each month can make a real impact on your budget. Based on the Fed’s indications, rates could continue to increase. People have also lost significant purchasing power because of the increased rates.
As the market fights against first-time…