House hack question and advice

[Ephrem Bekere]

I just bought a single family to house hack using fha in Lancaster City, PA area and I'm looking for roommates. What are your screening tips and any other advice you might have for me? How do I know how much to charge people for a room? Thanks in advance!

[Joe P.]

I check Craigslist and Apartments.com to try and set a price for my units. Look for comparables based on location, # of bedrooms, # of bathrooms, and any amenities that would increase value (or negatives that could reduce it). You don't and shouldn't aim to take someone's shorts -- just provide a good, clean, safe unit at a reasonable price you can both be happy with. If your price is unreasonable, you'll know right away. All this being said, I would start on the higher end (note I didn't say highEST, its always easier to come down in price then try to negotiate up) and let the market dictate whether or not its attainable.

For screening, I would use a tenant application form to evaluate at a high-level if these tenants would be a good fit. I use ezlandlordforms.com for most of what I need including a screening form, move-in document, etc. I go back and forth for charging an application fee, but lean on the side of doing so. Many prospective tenants will automatically put in an application if there is no cost to them; then when push comes to shove and you want them to commit, they suddenly become a ghost. So, if someone is serious about the property, have them put some of their skin in the game (e.g. $25) to get a serious applicant. You can always refund them that cost if you choose them as your tenant.

I have had success with TransUnion's SmartMove program -- they charge the applicant directly and its a trusted company. You'll get a financial profile, criminal report, and eviction report for your tenants, along with a recommendation from the company. I always check with the previous landlords (in a references section) as a primary go-to. If they don't provide any, simply ask. A falling out with their landlord will become apparent very quickly and help you to glimmer more information about your applicant.

House hacking makes sense but keep in mind you need to live with these people too -- something too formal may scare people away, but at the same time, I'd want to know if the person I'm living with is in bankruptcy, can't pay their bills, has a criminal record, etc. You should find the right mix for what you're trying to do AND consider personalities on top of everything, since you'll be seeing these tenants more often than not.