Is Buying a Short Term Rental The Investment For You?Guest Blog by: Michelle SmithIf you have been paying attention to the real estate market at all, you have certainly heard about Short Term
House Hacking: Buying a Home That Can Pay for Itself
Dated: January 11 2022
House Hacking: Buying a Home That Can Pay for Itself
Guest Blog By: Jacqueline Lee
Growing up, I dreamed that one day I’d buy the quintessential single-family home, it would be my “forever home”, and I’d live there for 20+ years. However, purchasing a home and thinking about having a mortgage was very intimidating. As a Realtor in my twenties, I’ve gained so much knowledge not just from my formal real estate training and running my day-to-day business, but also from the terrific volume of ideas from real estate professionals and DIY’ers sharing innovative home ownership strategies. The most creative strategy I’ve come across that’s gaining in popularity is purchasing a home that you’re able to “house hack”.
Now what is house hacking? The most basic definition is using your home to make you money. Whether you purchase a multifamily home that allows you to live in one section of the home while renting out a dedicated second living area, renting out a detached accessory dwelling on the property, or even just renting out a single room in your home, the goal is to use the income from this short or long-term rental to offset your monthly mortgage payment. IMAGINE LIVING PRACTICALLY MORTGAGE FREE!
If a long-term rental is your goal (typically 3+ months), you need to make sure the separate part of the home you’re renting out has all the essentials: bathroom, bedroom, living area, separate kitchen. Imagine having renters pay $1,000+ to stay at your home and how that can help with your mortgage payment!
By going the short-term rental route with Airbnb, VRBO, or a similar hosting site, it’s most ideal to purchase a home within walking distance or a short ride to desirable destinations - for example, in downtown Raleigh or Durham, or near urban shopping areas like North Hills or Southpoint Mall. You need a home that makes it possible to rent out a basement, or other clearly sectioned off part of the home. Alternatively, you could construct a small, detached structure in your backyard, separate from the home you live in, for guests. While this gives an added level of privacy for guests, and separation for you from your primary home, this type of accessory dwelling unit is permitted only if your local municipality and HOA allows for such things. Check out what The City of Raleigh has done to allow this type of accessory dwelling.
An added step for short-term rentals is ensuring that guests have what they need for a short stay. This can vary from providing toiletries and linens, all the way up to providing laundry services or groceries stocked for their stay. Ultimately, you’ll invest in updating that rental space with neutral colors and furnishings, making it comfortable and easy to showcase to potential renters. Lastly, marketing the property to potential renters and positioning yourself as a host who’s an expert in the area with a rental in the heart of all things a renter would love to experience when visiting your area.
I’ve had several clients in the past, and many more that I’m currently working with, who are searching for this sort of arrangement. To get started with this more unique search, there are a few important factors to keep in mind. Honestly, the first obstacle is finding the right resale home with the correct configuration to keep renters separate from your primary living space. Great options do come on the market, but oftentimes we need to brainstorm bringing in a contractor to add a bathroom in a basement, or adding a wall to section off part of the home.
Another crucial part of finding the right fit is making sure there are no outside restrictions to your investment goals. Reviewing your restrictive covenants and understanding the local zoning laws for a home you’re interested in is critical when considering a home for short or long-term rental purposes. This is where using a real estate agent can come in handy when buying a property with this type of investment in mind. Sometimes a client sends me a home they found on their own that structurally is the perfect fit for their needs, but it’s just not going to be possible for their rental goals if an HOA restricts it. Thankfully there are plenty of neighborhoods that don’t have such restrictions, it’s just very important to be mindful.
Our firm, Society Real Estate, is a resource for our clients not just throughout the transaction but also any time after a home closes. If a client finds a home that’s a great fit with some updating or renovating projects post-closing, we have recommendations for trusted general contractors, interior decorators, and other specialists to make any plan possible. One local company specializing in accessory dwelling units here in the Raleigh area is Boss Rooms. They design custom ADU's that fit your needs and lifestyle!
Whether you’ve bought and sold many homes before and are looking for a different way to approach your next home purchase, or if you’re a first-time buyer who’s looking for a non-traditional home buying strategy, I hope this has put some insight and inspiration into other possibilities! There are so many smart, creative ways to go about home ownership, and the Triangle is perfectly positioned to help those unique strategies rise to the top and allow new investors to be successful. How can I help you house hack your way into 2022?!
Sherry relocated from Maine in 2005 and has called North Carolina home ever since. Raleigh's tight knit feel was exactly what she needed when moving from smalltown Maine and attending North Carolina....
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House Hacking: Buying a Home That Can Pay for ItselfGuest Blog By: Jacqueline LeeGrowing up, I dreamed that one day I’d buy the quintessential single-family home, it would be my “forever