House hacking is one of the strategies I recommend beginners start with to get their feet wet. But, before I talk about why I recommend house hacking to beginners – let me define a beginner.
A beginner, in the context of this post, is someone who’s interested in owning rental properties but not ready to commit yet.
Now that I’ve defined what a beginner will mean in this post, let’s talk about why I recommend house hacking to them.
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Why I Recommend House Hacking For Beginners
The main reason I recommend house hacking to beginners is that it allows you to kill two birds with one stone.
The first “bird” you kill is your own housing
Regardless of what you do in life, you’re always going to need a place to live.
Instead of owning two different properties (one as a rental and one as your primary residence) or owning a rental property and renting from someone else as your primary residence – you can own one property, ‘rent’ from yourself, and rent out part of your property to a tenant.
Note: This works best when house hacking a duplex but can be done when house hacking a single-family home too.
The second “bird” you kill is your “virginity” as a landlord
House hacking allows you to own a property, live in a portion of it, and have additional space/units that can be rented out. This makes renting out any additional space or units less risky.
Instead of having to fully commit to owning rental property and becoming a landlord, you can test the water since you have additional space. And, if you test out being a landlord via house hacking and decide you don’t actually like it, there’s a lot less downside compared to if you purchase a dedicated rental property.
For example, if you’re house hacking with a family – one of the benefits of house hacking is that it can make raising children easier by renting your additional unit to a parent (or any family member or friend you trust) to help reduce your daycare bill.
However, if you purchased a dedicated rental property – your only option is to sell the property or hire a property manager and let them do the work. But, even if you hire a property management company to manage your rental property, you still might not enjoy managing the property management company.
So, the risks are higher than if you take the house hacking route.
My Number #1 House Hacking Tip For Beginners
Keep it simple!
I’ve noticed that a lot of information and advice given on the internet is made a lot more complicated than it needs to be. And, in addition to that, a big percentage of the people I see asking questions online or in forums act like they’re afraid to fail.
The common questions include:
- What’s the best way to….?
- How to …. quicker?
- How should I do *step #73* (when they haven’t even done step #1)
Look, It’s so easy to get caught up in trying to do things “right” or the “best” way. And it’s scary to do something you’ve never done before without knowing exactly how to do it. But, those types of questions are a gateway drug to paralysis by analysis.
In order to truly succeed, we can’t fall victim to that mentality.
I’ve done many things so far in my life and probably failed at the majority of them. Some of my failures were from not having enough education and others were from bad decision-making. But that’s OK.
All it took was one success to rejuvenate my confidence and change my life.
However, if I didn’t fail (and learned from my mistakes) I wouldn’t have been prepared to handle some of the opportunities that came my way. I would have been on Reddit asking for the best way to take advantage of an opportunity.
While it’s important to learn as much as you can (especially the necessary information – like analyzing a house hacking deal as a beginner) – once you know enough to start, get started and keep taking action. Then, once you reach a roadblock or hurdle, take a step back and figure out what you need to learn in order to move past that roadblock.
So, if you’re interested in house hacking as a beginner and need some advice on how to proceed: keep it simple.
