3 Reasons to Turn Your Next House Hack Into a Luxury Rental

House hacking has been around for years. House hacking is an investment strategy where you purchase a home using a low down payment mortgage and then rent out the home to generate income. You might be wondering why we chose to use the luxury house hacking method instead of purchasing more homes of lesser quality. Our decision was based on the following benefits:

Higher Quality Tenants

Having luxury properties ensures that your tenants will be of high quality. These higher-quality tenants come with less hassle and almost guaranteed payments due to their existing high living standards. Other benefits include:

• They have good jobs and will pay you good money for a luxury home.
• They will be clean and respectful of your property.
• You won't have to deal with late rental checks or, even worse, evictions.
• Easy tenant turnover at the beginning and end of leasing period

Appreciation and High Rental Rates

The truth is that when you own a higher-end house, it will appreciate faster, even though the amount of money put into the property tends to be higher. There are two main reasons for this:

Desirable locations with high-quality features tend to go up in value faster. For example, suppose you renovate an older house and put in quartz countertops, luxury vinyl flooring, and stainless steel appliances. In that case, it is going to increase your property value significantly.

Secondly, desirable locations tend to go up in value faster. The rate value increases on properties close to public transportation, downtowns, and schools versus property with tough transportation routes and far from the every days of life will not be the same.

In addition to those two reasons, rent alone is consistently rising. One example can be found at a property we manage where from 2021 to 2022, the rent increased by over $500/month!

Systematizing is Effortless

Paying rent has never been easier! Most of our tenants utilize their modern checking systems to pay rent virtually, lessening the likelihood even further of missed or late payments.

If a tenant has any problems, they can easily reach out to us, making them feel more connected and happy to be tenants at our luxury properties. We have an easy-to-understand lease that explains their rights and obligations as well as ours. For example, we have our tenants responsible for snow removal, lawn care, and painting for the next tenants - this also helps keep their property looking better!

At the end of a lease (which typically lasts anywhere from two-five years), the turnover is smooth and simple, with current tenants happy to allow showings and parting on good terms.

In short, we have found that luxury house hacking is a fantastic way to invest in real estate. The process is a bit more expensive than buying a traditional property, but the returns are much higher, and there are fewer risks involved as long as you set clear expectations and keep an open line of communication. All it takes is some time and effort on your end.