- Keallah Smith didn’t buy his first home with the intention of renting it, but ended up buying it.
- This allowed her to get a much lower interest rate and down payment than she would have as an investor.
- This is sometimes called “house hacking” and helps people with little cash to become landlords.
Keira Smith originally had no intention of becoming a landlord. Her parents owned a rental property when she was growing up, but she and her husband both graduated with a total of $100,000 in student loan debt and left to care for their three young sons. I had to.
Smith told Insider that he bought a $135,000 home just outside Atlanta in 2019, lived there for a while, then moved his family to his parents’ home in Covington, Georgia, and realized he could rent the house. what she did.
Since then, she has acquired two more properties in central Florida. We plan to use her Airbnb just outside of Disney World and her recently acquired beach house in Daytona as a long term rental.
When asked how he was able to scale so quickly despite being in debt, Smith said:
What is house hacking?
“This is a concept many early and new investors are doing — house hacking,” said Smith. “Buying a home as a homeowner gets you lower interest rates and more favorable terms.”
“House Hacking” Sometimes the definition is slightly different, and includes homebuyers who rent out rooms in the house they live in so they can pay off their mortgage more quickly.
Some critics of this practice Claims ‘home hacking’ is exploitativebut proponents of the practice say it’s a more accessible way to build wealth for those who don’t have a lot of wealth yet.
For Smith, buying a home in the suburbs of Atlanta as the primary homeowner meant he only needed a 3.5% down payment and was able to lock in a mortgage interest rate of 3.75%. If she had bought her house as an investor, she would have had to pay much more for her down payment and her interest rate would have been higher as well.
“If you go into the game as an investor, they’ll ask for 20% down. This can be a barrier for a lot of people. I know it’s for me.” says Smith.
That said, even for primary homeowners, making a property transaction at less than 20% of the gross purchase price can result in higher monthly payments for buyers due to less cash being paid upfront. means Additionally, those with non-traditional mortgages may need to pay extra cash each month. private mortgage insurance.
The second property Smith purchased was an Airbnb home near Disney World that was purchased as an investment property. Due to the fact she was buying it early in her COVID-19 pandemic she got so much out of it and just dropping 10% gave her a 2.75% interest rate .
“Today I’m pretty sure I needed 20 percent,” said Smith.
She used the house hacking tactic a second time to purchase her third property, a beach house in Daytona. Smith said again she only had to put down her 3.5% and the property’s interest rate was pegged at her 3.875%.
She suggests that this tactic also works very well for investors who buy multifamily homes, live in one unit, and rent out the other. I also added to
Starting with less money can mean more work, but
When she first became a landlord with her husband, Smith said they were “really new.”
“I created my lease online, took the staging photos myself, and fully listed the property,” said Smith, who also chose to manage his own property instead of hiring a property manager. .
“When we did the numbers, it was very expensive to hire a property manager and we weren’t really going to make any money,” Smith said. I decided to.”
This route saves her money, but conversely, she has to put more time and effort into her rental property than other landlords.
“When the toilet stops working, I get a call,” says Smith.