If you're considering investing in Baltimore city, you may have heard the term "house hacking" thrown around. House hacking refers to the practice of buying a multi-family property, living in one unit, and renting out the other units to generate income. This can be an attractive option for those looking to invest in real estate, but it's important to consider both the pros and cons before making a decision.
Pros
1. Additional Income
The biggest advantage of house hacking is the potential for additional income. By renting out the other units in the building, you can offset your mortgage payments and potentially even make a profit.
2. Reduced Living Expenses
By living in one unit and renting out the others, you can drastically reduce your living expenses. This can free up more money for savings, investments, or other expenses.
3. Building Equity
By owning a multi-family property, you'll be building equity in the building with each mortgage payment. This can be a great way to build long-term wealth.
4. Property Management Experience
If you're new to real estate investing, house hacking can be a great way to gain experience with property management. You'll learn how to find and screen tenants, handle maintenance and repairs, and manage finances.
Cons
1. Shared Living Space
If you're living in one unit and renting out the others, you'll be sharing common areas like the yard, basement, and laundry room with your tenants. This can be a challenge if you value your privacy or have a difficult tenant.
2. Tenant Turnover
When renting out units in a multi-family property, tenant turnover is inevitable. This means you'll need to constantly be looking for new tenants, which can be time-consuming and stressful.
3. Landlord Responsibilities
As a landlord, you'll be responsible for maintaining the property, handling repairs and maintenance, and dealing with tenant issues. This can be a lot of work, especially if you're managing the property on your own.
4. Risk
There is always risk involved with real estate investing, and owning a multi-family property is no exception. If you're unable to find tenants, or if your property is damaged in a natural disaster or other unforeseen event, you could be left with a significant financial loss.
In conclusion, house hacking can be a great way to generate income and build long-term wealth, but it's important to consider both the pros and cons before making a decision. If you're considering purchasing a multi-family property in Baltimore city, it's important to work with a knowledgeable real estate agent who can help you navigate the process and find the right property for your needs.
