House hacking as a newbie

[Rania Mutumhe]

Hello everyone, 

I've been learning a lot about house hacking and I think I'm ready to jump in. I'm single and I bought my 2 bed 2 1/2 bath townhouse as a primary home with no thoughts of REI. Mid last year I came across biggerpockets, have been learning about REI and am thinking house hacking maybe the place to start for me. I'll need to make some renovations like finish my basement so I can make use of that as well and move laundry to a more central and convenient spot so it can be shared. What are some things to keep in mind, how does one do a background check, what are the laws regarding that (I'm in St Louis), any advice, thoughts recommendations etc is greatly appreciated.

Thank you

[Randall Alan]

Quote from @Rania Mutumhe:

Hello everyone, 

I've been learning a lot about house hacking and I think I'm ready to jump in. I'm single and I bought my 2 bed 2 1/2 bath townhouse as a primary home with no thoughts of REI. Mid last year I came across biggerpockets, have been learning about REI and am thinking house hacking maybe the place to start for me. I'll need to make some renovations like finish my basement so I can make use of that as well and move laundry to a more central and convenient spot so it can be shared. What are some things to keep in mind, how does one do a background check, what are the laws regarding that (I'm in St Louis), any advice, thoughts recommendations etc is greatly appreciated.

Thank you

@Rania Mutumhe

Hi Rania,

Usually house hacking is where you have a multi-family property (like a duplex or triplex) and each tenant has their own unit.  It sounds like what you are describing is more like someone renting your basement space.  Is that correct?  (This is presuming your basement doesn't have all the other necessary things like a kitchen, bathroom, tub/shower, own entry, etc for a renter?)

That is a very different proposition - as you would be sharing your common spaces with a stranger.  My first word of advice, if that is what you are proposing, is to make sure you are ready for all that means.  You will basically be giving up a large amount of your privacy to a relative stranger.  In addition, they will need space in the common areas for their stuff as well (think refrigerator & pantry for food, etc.)

No background check will show how clean they are, how they respect your space, whether they are a loud person, or a night owl, who they invite over to stay with them and such.  It wouldn't be for me, but I do have a friend who does a rent by the room operation and he is very happy with it.  It is a lot about personalities.

All the best!

Randy

[Wale Lawal]

@Rania Mutumhe

House hacking means turning a place into a rental space, which calls for fix-ups, planning costs, and expert help. It means getting ready for renters, changing insurance, posting ads online, checking out who might rent, using a rent form, being clear on who fixes what, and talking well. It also means keeping track of money in and out, talking to a tax expert, and being good to your tenants.

Good luck

[Katherine Chinelli]

I know someone who did that for almost 10 years to keep her large home afloat and it really worked out well for her. Of course she loved socializing with her tenants, so that is a huge factor. You have to get along with whomever you choose to share your space with and trust them.

[Brian Miller]

@Rania Mutumhe If you are trying to finish and rent out your basement, then there should not be any regulations stopping you from doing that. Unless you have an HOA that does not allow for short term rentals. You could do long term or travel nurses since more HOA's have verbiage not allowing leaves under 30 days long. If you go the LTR rental route, I would recommend having a professional company do a tenant screening process. I've used Landlord Tenant Serices which is a local company and they do excellent work. They cost about $50 and have the applicant pay for it.

I'd recommend having a bathroom, bedroom or open living space, along with a small kitchen so that there is some separation between you and the tenant. 

Hope this helps!