How to Cut Your Mortgage in Half!
As an agent I must say that my favourite way of helping clients invest is through the use of “house hacking”. This is a simple method of purchasing a home with multiple “units”. This can vary in the form of a basement apartment, duplex, triplex and so on. The owner of the property will live in one of the units while renting out the other units available in the home.
In doing so the owner of the property can see many savings in their home’s carrying costs. This allows the owner to occupy the home at a lower monthly cost. Once the owner has decided to move they can either keep the home and rent out their portion, which now creates a long-term investment, or sell the home with or without fully rented units.
House hacking allows more financial freedom for the owner of the property, especially with average home prices being so much higher now a days. If you are able to purchase a home and rent out your basement for $1,300/month you are looking at a total yearly additional income of $15,600. Assuming you have a monthly mortgage of $2,600/month you are looking at a 50.00% reduction in that home owner’s monthly contribution towards their mortgage.
In order to have a more successful house hacking experience, home owners should look into upgrading small things in the unit they are offering for rent. Such things can include: painting the walls to give a more neutral and fresh look, upgrading appliances, removing old flooring and installing some more modern options, and upgrading the bathrooms if need be. Things like this will allow the home owner to ask for a better rental value due to attracting better renters.
The second most important thing a homeowner can do to have a successful house hacking experience is making sure they hire a qualified agent to help them in renting out their unit. Agents will make sure to screen applicants in order to find the best possible tenants. This includes checking to see that they have a good credit score in place, the tenants have quality references that will allow a better idea of how the tenants have behaved in their previous homes. Agents will typically go above and beyond to make sure they find the right tenants for your property.
As you can see this is a great way to open up some more room in anyone’s budget meaning that you can invest that extra bit into your next property or use it any way that helps benefit your future. You can potentially even retire earlier.
Hope this blog post has been helpful to all of you, or even gave you something to think about when planning for your next or first home. If you ever have any questions feel free to contact us. We are always happy to have a chat over the phone or over some coffee!