{"id":1598,"date":"2022-06-06T18:11:51","date_gmt":"2022-06-06T18:11:51","guid":{"rendered":"https:\/\/rankmyagent.com\/realestate\/?p=1598"},"modified":"2022-06-06T18:11:52","modified_gmt":"2022-06-06T18:11:52","slug":"how-a-house-hacking-strategy-in-2022-can-reduce-your-housing-costs-to-zero","status":"publish","type":"post","link":"https:\/\/rankmyagent.com\/realestate\/how-a-house-hacking-strategy-in-2022-can-reduce-your-housing-costs-to-zero\/","title":{"rendered":"How a House Hacking Strategy in 2022 can reduce your Housing Costs to Zero"},"content":{"rendered":"\n

Affording a home in Canada isn\u2019t easy. Even if you save for a down payment<\/a>, a monthly mortgage bill can remain a heavy burden. Not to mention that despite inflation and interest rates continuing to increase<\/a>, property in Canada\u2019s largest cities remains expensive.<\/p>\n\n\n\n

For many Canadians, owning real estate requires creativity \u2013 and House Hacking is a creative solution<\/strong>. Through House Hacking, you could reduce or eliminate your monthly housing costs entirely. In this article, we digest what House Hacking is and its advantages and drawbacks<\/strong>. If done right, you could be on the road to living in your home for free.<\/p>\n\n\n\n

What is House Hacking?<\/strong><\/h2>\n\n\n\n

The goal of House Hacking is to cut your living expenses while you build home equity<\/strong>. The premise is to purchase a larger home than you need so you can rent out the remaining space and act as a landlord. Your tenants\u2019 rent should cover the full or a substantial amount of your mortgage payments. All the while, it\u2019s you who builds equity in the property.<\/p>\n\n\n\n

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What goes into house hacking?<\/strong><\/h2>\n\n\n\n

House Hacking starts as soon as you look for a property \u2013 you must find a home you can live in and rent out<\/strong>. Some House Hackers opt to purchase a duplex or triplex or a home with a basement apartment<\/strong>. But you can simplify it further. For example, you can rent out an extra room in your house to start your House Hacking journey. The tenant’s rent in that other room, basement or unit goes toward your mortgage payment. Thus, you\u2019re effectively building equity in your home for free!<\/p>\n\n\n\n

When buying a home, you\u2019re not only looking for your primary residence but an investment property<\/strong>. Therefore, you want to consider your neighbourhood and how you can renovate the property<\/a>. University towns are great areas to look at, as they consist of student renters who are often ideal tenants<\/a>. You\u2019ll also want renovations that aren\u2019t specific to your taste and appeal to the general population.<\/p>\n\n\n\n

What rental income can I plan for?<\/strong><\/h2>\n\n\n\n

Of course, for house hacking to work, you need to plan how much you can earn in rental income<\/strong>. That is very dependent on where you House Hack. Vacancy rates are tightening<\/a> after they fell during the pandemic’s peak, so conditions are becoming more favourable for landlords. In many Canadian markets, you can expect at least $1000 of rental income, and in peak metropolitan areas like Toronto or Ontario, you may be able to get $2000 monthly<\/strong>. To determine how much you can earn, but sure to do research localized to the region you are looking to buy in.<\/p>\n\n\n\n

You have to put your investment before your comfort<\/strong><\/h2>\n\n\n\n

If this is your first home, you likely want to make the house really feel your own. But when you House Hack, this may not always be possible. For example, House Hacking may mean the room beside your or your basement is rented by a tenant. It may not be your ideal situation for taste, but it is best for your wallet.<\/p><\/blockquote><\/figure>\n\n\n\n

House Hacking is time-consuming and full of upfront costs<\/strong><\/h2>\n\n\n\n

Purchasing a home is hard. It\u2019s even harder when you\u2019re trying to buy a larger home so you can House Hack. There will be costs that you will have to pay upfront, including a down payment, lawyer fees and realtor commissions. Additionally, you\u2019ll likely need to renovate the property to make it desirable to tenants. Renovations will further take time, and it can be a stressful process for some<\/strong>. If you don\u2019t have the time or capital for these upfront costs, then House Hacking may not be suitable for you.<\/p>\n\n\n\n

House Hacking means being a landlord is your new part- or full-time job<\/strong><\/h2>\n\n\n\n

The idea of your mortgage payments being paid by a tenant seems amazing. However, you want to remember that you\u2019re a landlord, which will take up a sizeable part of your week. Despite what some believe, being a landlord is a job and requires attending to particular duties<\/strong>. You must prepare to find tenants, draft leases, and manage ongoing tenant issues and maintenance requests.<\/p>\n\n\n\n

Because you\u2019re living with your tenant, a rigorous tenant selection process is more important than ever. You\u2019re not just looking for someone to pay your mortgage; you\u2019re looking for someone to cohabitate with.<\/p>\n\n\n\n

Property management is much easier when you live there<\/strong><\/h2>\n\n\n\n

On the flip side, property management can be challenging when you\u2019re far away. Often landlords may live in a city but have investments across the province. If a toilet\u2019s clogged at 2 AM, a landlord often can\u2019t just get out of bed and drive over. Calling a plumber or other professional to remedy the situation may also be expensive or challenging. This issue doesn\u2019t exist when you House Hack because you live with your tenant. If there\u2019s an issue at 2 AM, it\u2019s a matter of going downstairs or to the other unit.<\/p>\n\n\n\n

Tax considerations have both pros and cons<\/strong><\/h2>\n\n\n\n

There are both tax benefits and disadvantages to House Hacking<\/strong>. In terms of benefits, House Hacking lets you deduct the costs of being a property owner, such as property taxes, house maintenance, utilities, and interest payments.<\/p>\n\n\n\n

In terms of disadvantages, the Canadian tax system will not allow you to claim the whole property for your principal residence exemption<\/strong>\u2014only for the areas of the home you live in. This is easily calculated if you\u2019re in a duplex, triplex, or renting a basement apartment. But more complex situations such as a tenant that shares a kitchen and bathroom can create confusion about your tax bill. In this case, it is best to talk to a tax professional to see how much you can deduct and how much you can owe<\/strong>.<\/p>\n\n\n\n

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Final thoughts<\/strong><\/h2>\n\n\n\n

House Hacking is a way to buy property while minimizing your financial expenditures. However, it\u2019s not as simple as getting a \u201cGet a House for Free Card.\u201d It will take time and money, and whether you have enough of both to reap the benefits of House Hacking is dependent on your situation.<\/p>\n","protected":false},"excerpt":{"rendered":"

Affording a home in Canada isn\u2019t easy. Even if you save for a down payment, a monthly mortgage bill can remain a heavy burden. Not to mention that despite inflation and interest rates continuing to increase, property in Canada\u2019s largest cities remains expensive. For many Canadians, owning real estate requires creativity \u2013 and House Hacking […]<\/p>\n","protected":false},"author":1,"featured_media":1601,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[39,488,38],"tags":[557,372,554,481,482,483,468,373,485],"class_list":["post-1598","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying","category-housing-in-canada","category-renting","tag-build-home-equity","tag-buy-a-house","tag-house-costs","tag-house-hacking","tag-house-hacking-advantages","tag-house-hacking-disadvantages","tag-mortgage-canada","tag-rent-a-house","tag-rent-basement"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/posts\/1598","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/comments?post=1598"}],"version-history":[{"count":3,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/posts\/1598\/revisions"}],"predecessor-version":[{"id":1604,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/posts\/1598\/revisions\/1604"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/media\/1601"}],"wp:attachment":[{"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/media?parent=1598"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/categories?post=1598"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rankmyagent.com\/realestate\/wp-json\/wp\/v2\/tags?post=1598"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}