The financial situation of people around the world has been steadily declining through the decades, and it has also frequently been linked to mental health. Needless to say, lots of people’s bank accounts took a massive hit over the past year due to the COVID-19 pandemic through job losses, pay cuts, etc.
House hacking is something that is becoming more and more popular as a way to make extra income. There are several benefits to it from the investor’s point of view, but also for the customer because they can get away with paying less rent. As for the house hacker, it can make a sizeable income – at the very least, enough to cover living costs such as rent, utilities, etc.
Let’s be clear: house hacking is a concept that has been around forever. Real estate entrepreneurs or even regular tenants can rent out portions of their space to others to make some extra income. Non-traditional living spaces like basements, garages, and even rooms within the same unit could be utilized with just a few changes. This creates a college dorm-like experience.
Subletting is a more traditional way of house hacking that allows regular tenants to earn some extra dough. But for non-real estate entrepreneurs, house hacking is just a way to make ends meet and pay their bills. They may stop doing it when they reach their financial goals or reach the end of a predetermined time period. However, real estate entrepreneurs tend to save money to collect enough to put down a payment for another property, and so on, and so forth.
Regardless of whether you are considering house hacking as a reliable long-term income plan or just a short-term money-making venture, there are some things you should do to keep yourself from getting stressed out. Here are 5 things you can do to properly house hack and earn some extra income while staying sane.
Draw Up a Plan
Before you metaphorically and literally open the gates, you should have a thorough plan about the details involved. This would include things like your financial goals, how long you plan to house hack, terms, and conditions that tenants would agree to, and of course, how you would break an agreement in case things do not work out.
Remember that you are responsible for the space, which is also a good thing because it also means that you have the leverage.
Get it in Writing
We’ve all made verbal agreements in the past that may have been misconstrued by either party. To avoid any such misunderstanding, memory loss, or manipulation of facts, it’s always best to get the terms of the agreement written and signed upon at the onset of the relationship.
This way, nothing is left up for interpretation and you can be sure the terms are fair for both parties. It’s also a point of reference if anything goes wrong or if you have to prove your claims in court.
Have an Honest Conversation About Money
There is no doubt that money is a very sensitive topic, and it is one that can make or break a relationship. In fact, several studies have determined that arguments about money are the second leading cause of divorce, behind infidelity. In many ways, having someone living in your property (especially if it’s in the same living space) is a lot like marriage. Both parties should have trust, communication, and respect for each other and the agreed-upon terms. Communication about money-related matters is even more crucial if you are planning to house hack with friends or relatives because you would want to preserve the integrity of those relationships.
You should obviously talk about topics such as how you will split living expenses and rental payments, but you must also have conversations about outstanding debt, job losses, etc. that affect income. Together, you must come up with a plan to mitigate overall financial risk.
Communicate Frequently
Communication, as we said, is very important. But money isn’t the only topic you need to stay on top of when living with someone else. If you are bothered by something that the other person does, make sure to let them know before it builds up into a much bigger issue. Differences in opinions about noise tolerance, frequency of guest visits, hygiene, food, etc. are all things to consider. All parties should learn to adjust and compromise on certain factors.
Establish Boundaries
When living together with others, privacy and personal boundaries can seem like a grey area. However, it is important to establish this upfront to avoid any conflict down the line. Privacy, personal space, and personal belongings that you do not want someone else handling when you’re not around should be clearly communicated as off-limits.
