How Do I Get Started In Real Estate Investing ?

We often get the question from aspiring real estate investors, “what is the best way to get started?”. Our immediate response to them every time is, house hacking. We have completed multiple house hacks and feel strongly that it is one of the best ways to get started in real estate investing.

For starters, let’s discuss the alternative. You could continue to pay rent to your landlord, in your (most likely) overpriced downtown apartment… (been there, done that). This is not necessarily the worst decision, but it certainly won’t allow you to save the amount of money you will need for your downpayment.

This leads me to my next point; house hacking allows you to begin saving at a rate otherwise unattainable (unless you choose to live in your parents basement…been there, done that).

One benefit to house hacking is the low downpayment options available to owner-occupied investors. If you agree to live in the home for a specified period of time (often times 12 months), you receive significantly more favorable mortgage terms vs. and investor. Owner-occupied mortgages have downpayment options as low as 3.5%! Even in the most high-cost cities (like Boston), a 3.5% downpayment is attainable with some financial discipline.

Getting into your first house hack is a great option because it is a great way to get your feet wet, while learning on the fly. I’ll be honest, living so close to your tenants poses it’s own set of unique challenges, but with that being said, being close to your tenants while learning to be a landlord is extremely helpful.

Learning to be a landlord is great, and if you enjoy it - the house hack is an awesome way to get to your second property. Remember that financial discipline we discussed? While living in this property, you should be living mortgage free (if not, very close!). Since you’re still working, and have no mortgage payment, you can be dramatically increasing your savings rate for the next downpayment.

The goal is once you move out of your current house hack, and into your next, your first property then starts to make you a profit, while you’re living close to mortgage free in your second house hack… & so the journey begins!