For the past two years the real estate market in Denver Metro, as well as the rest of the country, has been moving at lightning-fast speeds. Thanks to the increased demand for homes and the limited inventory of available houses, home prices have increased at a much higher rate than many consumers are used to.
The real estate market has taken off earlier than usual this year and both buyers and sellers are hitting the ground running trying to reach their real estate goals. But with the odds currently tilted in the sellers’ favor, many buyers are wondering how they will be able to afford to buy a new house or enter the world of homeownership. As a result, “house hacking” has become a popular strategy for increasing the purchasing power of buyers.
“The concept of house hacking is simple,” explained Garrett Beserra, house hacking expert and broker with LIV Sotheby’s International Realty. “You purchase a multifamily property or a residence with an accessory dwelling unit (ADU) and live in one unit while either renting the extra unit to tenants or using it for short-term rentals when legal, such as Airbnb. “By doing this, the buyer is able to offset most, if not all, of their housing costs with the income they make from the additional unit.”
This approach to real estate makes home buying much more enticing to those who may be intimidated by the housing market’s recent significant growth. Due to the increase in affordability that it creates, house hacking has been a game-changing strategy for millennials buying their first home and anyone looking for a financially more efficient way to live.
One of the most important steps to take when starting your house hacking journey is finding the right real estate professional to guide you through the process. House hacking does require some additional insight in order to get the most out of your investment. For example, purchasing certain types of properties in certain areas may yield buyers more success than others.
“In Denver, I’m seeing West Colfax, Sloan’s Lake, and RiNo becoming popular areas for house hacking because of the areas’ walkability and proximity to some of the city’s most popular destinations,” commented Beserra. “In these neighborhoods, properties priced between $700,000 and $1,000,000 are where buyers will get a quality residence and still be able to offset half if not more of your costs. And ultimately, you might end up paying the mortgage for your million-dollar home at the price of a $500,000 dollar home.”