House hacking is a new and curious term in the real estate industry, which was coined by Brandon Turner, an English real estate investor. It basically translates to a situation when a house owner gets a tenant or a roommate to pay off the loan/mortgage amount by cohabiting. It is different from other forms of real estate, where the home owner resides in the place which is bought or invested in.
However, house-hacking has received a lot of flak from real estate investors and realtors across the world. Many have opined that house hacking is an easy way out for the ones who desire to make instant money without much effort.
We are listing out the most common cons of house hacking. Please note that these are just our opinion and we do not impose any of them as the ultimate truth.
When your rent a part of your house to someone else who would levy the same amount of rights in the place as you, you tend to lose your sense of privacy, if not completely. This is worse if the person living as a tenant is a stranger to you.
Being the owner of a house comes with responsibilities. You will be responsible for the maintenance, upkeep and care of the property. A lot can go wrong if you are not careful, and thus house hacking requires lot of work and investment as a landlord.
You probably house hacked your house to make some extra bucks and pay the mortgage without much work. However, it cannot be denied that it needs money to make money. Considering the maintenance cost and the dry periods as the tenants move in and out, the money you will be making wont be much. It might be just enough to cover your loan, but not for huge investments.
The houses that are put in the market for hacking often tend to get less responses because they are viewed as owner occupied properties. As the owners live in the houses, many prospective tenants do not prefer such houses.
Sharing a house with a tenant means that the expenditure on utilities like water, electricity, internet, gas etc. increases. If theses are not mentioned in the rental agreement, the owner ends up paying for such expenditures many a times.
Buying a house is a huge expenditure and it is highly probable that such an investment would make you hit your financial rock bottom. Many a times, buying a house doesn’t leave the owner with much money for further investment. If you are one of those who are new in the real estate industry and have a long way to go, house hacking is not the best option for you. You can rather investment your money while it makes money. Read our article on Rent vs Buy to know more about it.