How to start house hacking in Central Alberta  

The cost of living nowadays has significantly gone up. Even if Central Alberta is considerably more affordable than the rest of the country, it can’t be denied that with inflation and rising interest rates, living a comfortable life now comes with a great cost.   

If you are accustomed to a certain type of lifestyle, you might be worried it will be hard to manage what you’ve been used to considering the notoriously high cost of commodities and a challenging housing market.   

What if I tell you there is a secret about how to live in an expensive market while saving money?   

Yep, you’ve read it right. This strategy is called house hacking.   

Learn the house hacking strategy and minimize the cost of your living through earning rental income.

What is house hacking?  

According to Forbes.com, house hacking gives you the ability to invest in a property for a very low-down payment. In simpler terms, it is renting out a portion of your home generating income to offset the amount you pay in purchasing your home.   

Interested in house hacking? Keep reading as we give you tips on how to get this strategy right.  

Get pre-approved for the right loan  

To get started with this strategy, you need to find a trusted loan officer to help you identify your financing options.  

It is important to see if you can apply for a Federal Housing Administration (FHA) loan or a conventional loan so you can get a low down payment before you begin a property search.   

While house hacking saves you money and generates income, it doesn’t come without an upfront cost. The good news is that you can get that cost for a low price when you get pre-approved for the right loan.  

To put this in context, if you were to buy a fourplex which you aren’t living in, you will have to put a 25% down payment. For example, if the fourplex is priced at $400,000, you will need a $100,000 down to be able to purchase it.  

However, if you get approved for an FHA loan on a house that you register as your primary residence, you may be able to buy a property with just 3.5% or under $15,000 money down on the said $400,000 fourplex.  

You may think this strategy will only have to pay more in mortgage insurance since you paid for a low down payment but, when the numbers work in a property, this strategy provides a gateway for people who do not have large amounts of expendable capital for real estate investment.   

Image from Unsplash

Find your type of property   

You need to find a property with a good house hack opportunity that fits your lifestyle and budget.   

The first option is a single-family home. To do this, you will need to purchase a single-family home and rent out bedrooms. This works if you are single and do not have an extra unit to rent out. It is important to consider the number of bedrooms so when shopping for a home, it is best to find a property with the most bedrooms within your budget range.   

Another type of property that can be used for house hacking is homes with attics, garages, or basements. You can turn these extra rooms into an additional bedroom that you can rent out. Just don’t forget to check your local zoning regulations or HOA rules so you don’t get in trouble.  

You can also house hack through Additional Dwelling Units (ADUs). ADUs are often called “in-law units’ or “guest houses”. These are separate living units which provide a perfect opportunity for renting out.   

A better option is to go for multifamily units like a duplex, triplex, or fourplex. A multifamily property is the most suitable property for house hacking as it allows you to rent out the units you don’t occupy so that you can use the income you get to cover monthly property expenses.  

Keep in mind, however, that you can only get a financing option that provides a low down payment if it is a four-unit property or less. So, fiveplex or tenplex properties won’t work here. 

Find a good realtor  

Finding a good realtor who knows about the market can save you so much time and stress and can give more potential to a successful investment.  

They can help you tailor your search according to your criteria. After all, realtors have access to resources you don’t have.  

Their expert advice can help you find the perfect property for house hacking so that you can be successful in your first-ever real estate investment.  

Work with the Lapp Realty Commercial Group. You can never go wrong with working with the top real estate agents in Central Alberta.   

Setting the rent   

When setting the amount you will charge your tenants, it is important that you consider the market rent and your monthly property expenses.  

One good tip that Rocket Mortgage gives is that you should make sure that you are charging an amount that can cover your monthly mortgage or even have some more extra for homeowners' insurance, taxes and repairs.  

Bottomline  

If you are so eager to get into real estate investment, there is a way to do so without spending a huge capital. House hacking is the key! You just need to learn about this strategy with the help of top real estate agents at Lapp Realty, and you start generating income while paying for your mortgages.