Rent Hacking 101: Creative Ways to Reduce Housing Costs
Getting an accommodation can be difficult, and sustaining your accommodation can be even more difficult. So many people need to earn more to get suitable accommodation for their status, and sometimes it is hard to cope with housing expenses.
Well, this is where rent hacking comes in. In recent times, individuals have been able to sustain their accommodations and even earn more cash with this housing strategy.
What is rent hacking?
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As the name implies, house hacking is a hack of a strategy that helps you cope with the challenges of sustaining and maintaining an accommodation.
This passive income strategy involves renting part of an apartment you bought or rented to others and using the income to cover part of your rent. House hack, as it is sometimes called, has recently helped many secure their homes. When done efficiently, house hacking makes it easier to afford accommodation, lowers competition, reduces monthly expenses, and even gives you extra cash for the future.
Many individuals have gone on to secure the purchase of their houses, some have been able to pay their rents without issues, and others have gone on to build wealth off this process. The main idea behind house hacking is to purchase or rent a big apartment or an investment property and put out part of the building for rent.
Over time, the accumulated income you get from the rent can cover your house’s purchase price and rent. Also, it mostly covers mortgage payments or any expense incurred as you reside in the apartment, helping you save money.
With a rent hack and other house hacking ideas like co-living, a single-family home with up to four units or smaller can help sustain the family from the rental income even when a real estate investor owns the home.
Importance of finding creative solutions to reduce housing costs via house-hacking.
Commonly, the housing market is challenging, and not only is it expensive to purchase or rent a house, but it is also difficult to see the one you like.
The price of houses has increased exponentially over the years with very high-interest rates, making it more difficult for renters, buyers, and real estate investors to get accommodations of their choice.
House hacking helps renters get suitable accommodations while working to fund the rent with their rental income. Based on a recent survey, over 20% of individuals that rent houses spend more than 50% of their income on rent alone, with only 50% for every other expense. Sec
This figure is alarming, but with the help of the house hacking strategy, it is now possible to balance the cost, which might be as high as $100,000 annually, depending on your location. Most people ask the question, “Is rent hacking legal?” Well, it is, and here we will show you how rent hacking works and the various types.
Short-term rental is a house-hacking example of leasing part of your accommodation for a specific period. In the US, laws guide this process, one of which is that you must be in the accommodation to rent your house as a short-term rental.
This method makes it easy to put the house for rent or home hacking while monitoring the rental property in case of any damage. Real Estate investors sometimes start from short-term rentals by investing their rental income.
Popular Short-term rentals platforms
So many platforms allow the opportunity to engage in short-term rentals and other forms of rent hacking. Some of these platforms include Airbnb and VRBO.
Airbnb, also called Air Bed and Breakfast, are rental property owners that rent part of their houses to travellers needing spaces.
Depending on the traveller’s wants, these house hackers may rent multiple spaces or a single space to be shared.
Either way, the price of the rented space is fixed, and house hackers make sure they make the investment property as comfortable as possible.
Like Airbnb, Vrbo is a marketplace that allows individuals to get homes available for short-term rentals online. These spaces could be for vacations or any other reason.
Another strategy of house hacks is the house-hacking arrangement. Sometimes, the ideal method to manage accommodation expenses is to look for someone willing to share the financial cost of your accommodation with you.
This method is similar to rent-hacking but different in that it might take longer. House-sharing arrangements involve renting an apartment and sharing the building with someone else so you will pay rent together.
You would all have your rooms in the apartment, and the cost would be shared based on the worth of the particular part of the apartment you reside in.
In both house and apartment sharing, the rental is done privately when the house hacker looks for and finds a place to live, signs a lease in their name, and then proceeds to find a roommate.
Benefits of house-sharing arrangement
- Lower rents without the need for a monthly mortgage payment.
- Shared living expenses.
- Better house hack property management.
- Alternative housing options
Sometimes, accessing the rent-sharing strategy or housing option takes work. Well, you’ve still got options. There are a whole lot of other house-sharing options that could help. However, you cannot live rent-free in any of these and still have to pay.
These methods are mostly unconventional and might include co-living in a primary residence with other people where you all have your rooms but use the same kitchen, bathrooms, or even living room.
Rent Hacking Examples include:
- Room sharing, where you share rooms with others.
- Staying in the guest house of a multifamily property.
These alternative house choices could be the most suitable depending on your need, especially when you have issues paying rent.
Pros and cons of alternative housing options
Pros of rent hacking
- Alternative housing options are quite cheaper.
- They are readily accessible.
- It gives you a chance to relate with other people more closely.
Cons of rent hacking
- There might be better choices for individuals who value their personal space.
- Also, you could get infected by sharing spaces like bathrooms
- Interpersonal issues may arise from relating with people.
Tips for finding and securing alternative housing arrangements
- Know what you want.
- Check for investment properties that will accept a down payment.
Negotiating with landlords
A strong case of negotiation must be made to get an affordable bargain for house rents or fees. The goal is to negotiate a lower rent or get an additional amenity from the landlord.
Rent Hacking Strategies
- Make inquiries about the important details of the apartment before negotiating.
- Ask about who you would negotiate with and how the person thinks or reasons.
- Find allies or witnesses to go with when signing the lease agreement.
Tips for presenting a strong case for negotiation
- Be friendly yet very firm.
- Give a few reasons why the rent should be lesser.
- Do not be in a hurry, but be decisive.
- Refrain from being too impressed, and do not talk out of excitement; keep cool.
Legal considerations for rental agreements and leases
A written agreement signed by a court official is very necessary while taking an agreement. On no account should your agreement be just verbal. Also, it is advised that you always go with a witness or two.
Additional income sources
One of the major reasons why people explore the rent-hacking option is to get more money. Whether it is to cover their rent or to sustain a living, it is always important to have an extra source of income.
As much as your rent-hacking might help financially, you should consider other options to get extra cash. So many side hustles and gig work could be of help. Some include freelancing, forex trading, crypto trading, data analysis, etc.
Tips for balancing work and home life
- Set boundaries.
- Follow a strict schedule.
- Enjoy your work.
- Eat healthily
Wrap-Up – Rent Hacking
As we have just discussed, it is very important to subsidize your housing cost. Whether it is the house-hacking strategy, the house-sharing arrangement, or one of the alternative housing options, you’re on the right side if it gives you a positive cash flow.
As described in this article, the idea is to be creative and think of a way to solve the financial hurdle phased with housing.