Young Professionals Can House Hack to Achieve Financial Freedom
For millennial home buyers in Denver, getting in on the housing boom requires finding creative ways to make homeownership affordable. House hacking has been proven to be one of the most effective strategies for buying property in expensive markets.
The concept of house hacking has gained traction due to skyrocketing real estate prices in metro markets where home prices are otherwise unattainable to many first-time home buyers. It refers to buying a home with the intent of renting out part of it to cover some or all the expenses. There are many types of house hacking, including the following popular strategies.
Purchasing Multi-Family Properties
This approach may involve buying a small building with two to four units. The owner would live in one unit and rent out the others. Buildings with four or fewer units can be considered a primary residence, which allows the buyer to pay a lower down payment than if purchasing a building as an investment property.
When finished basements have bathrooms and kitchenettes, they are great options for house hackers. The homeowner can live in the basement while renting out the main home, depending on his or her living situation and income goals.
Accessory Dwelling Units
Accessory dwelling units (ADUs) are separate from the house and have at least a bedroom area, bathroom and kitchen, making them rentable as a studio or full apartment. Before buying a home with an ADU, ensure that renting the ADU is legal in the area.
Imagine owning a four-bedroom house, renting out three of the bedrooms and living in the fourth. This strategy requires giving up some privacy and convenience, but it’s a way to own an appreciating asset while also earning passive income from the property.
Homes With Convertible Areas
Many homes have areas that can easily be converted into extra bedrooms that can be rented. For instance, an unused work room or office could be converted into an income-generating rental space. Some expense may be involved, but in an appreciating housing market, it may be worth the cost.
Building Wealth is Liberating
House hacking takes an asset perspective on real estate versus a life-style perspective. Many people buy homes because they want a certain standard of living and end up not increasing their wealth as a result, especially when the price tag is high. This emerging trend helps young professionals create a reliable revenue stream while growing their nest egg.
In today’s growing sharing economy, house hacking appeals to young professionals seeking a more fluid, adventurous lifestyle. Having renters contribute to their property expenses allows them the freedom to move around, travel or work remotely.
Owning real estate is a great long-term investment but buying a home without a strategy may leave you tied down. Instead, millennials would be wise to consider wealth-building house hacking strategies that enable them to enjoy life in the Mile-High City’s vibrant neighborhoods.