Any landlord advice for a new House Hacker?

Question

Hi BP community. I'm a rookie investor looking to do my first deal with house hacking. One of my biggest concerns moving forward is landlording. For anyone that has house hacked before, is there anything different about land lording a property you also live in? Are the interactions with tenants any different? Any guidance here would be nice. It's already a little intimidating starting out as a landlord, but to do it with no experience while living next to my tenant(s) sounds like it could potentially be harder to navigate, set boundaries, etc. Any suggestions would be greatly appreciated!

Mason Hickman · Answer

@Eric Riddle

Boundaries are good to set. I have successfully house hacked at 2 properties and I find it’s best to tell the truth and not hide the fact that you’re the owner before a lease is signed. Some people claim you should say you are the property manager but I think it’s foolish, people are smart, and they’ll figure it out. If they don’t want to live next to their landlord, that’s fine but they should know before signing a lease. Additionally, the burden is on you to make sure not to be overbearing since you’re now the owner, landlord, and neighbor. I have found that tenants like me living next door because I am super attentive to any issues they have. I would rather know about a problem than let it fester and cause property damage or have resentful tenants. As with a lot of landlording, the devil is in the initial screening.

Jon Schwartz · Answer

Eric,

I'm house hacking a duplex and have some advice:

• Pick a good property in a good neighborhood. The property and neighborhood will be 90% of what draws your tenants. If you're buying in a neighborhood that you're really happy to live in, you'll find likeminded tenants who are jazzed to rent there.

• Find your own tenant. I live in CA, where we have very strict fair housing laws (though most fair housing laws are federal, so you're subject them to). I knew I shouldn't ask questions about personal habits, etc., but when I showed my rental unit, I talked about my family's habits. I explained that I lived upstairs with my wife and daughter, that we were early-to-bed and early risers, that we weren't fond of hosting dinner parties, etc. Just telling this to prospective tenants weeded out a few people who probably did want to host parties, etc. And the tenants we ended up going with responded really well to my story (like, "Oh, great! I'm up at 5 to hit the gym every morning. I'm always asleep by 9, it's hilarious!")

• This duplex is actually my third home, and honestly, managing a duplex is about as difficult as managing a single-family home. There are more appliances, but that's about it. When friends ask me if I have to unclog toilets, I happily tell them that I've only had to unclog toilets wrecked by my wife, never a tenant.

• Setup online rent payment through apartments.com. This way, you never have to discuss rent payment with your tenants (unless it becomes an issue). Make sure your lease states when rent is due, when a late fee will be applied (if any), and when a notice to perform will be delivered. This way, everything is in writing. Then stick to it! You can be friends/friendly with your tenant while also adhering to the signed lease.

Really, it's all about the screening. Pick a good building in a good neighborhood, then spend time with your prospective tenants to select the best.

Good luck!

Jon

Peri Eryigit · Answer

Hey Eric, my partner and I househack and we are about to close on a couple multifamilies in (Old) Louisville as well! Every unit we've bought has had a tenant in it when we closed. Not all of them have been great but we haven't had a problem getting them out. We usually plan to move in and rehab each unit one by one so we look at the leases and start with the unit with the lease that's ending next. We introduce ourselves to the tenants as soon as we close, ask if there are any problems in their unit, anything we should know about. If we're kicking them out, we explain we're doing it per the conditions of the loan we got and wish we didn't have to... Even if they aren't great tenants, they usually respond well to friendliness/concern and don't create further issues.

Jonathan Greene · Answer

Great advice you got up there from @Mason Hickman. Never try to hide the fact you are the landlord. It never works and then you lose trust. The balance is between being overzealous and rule-based and being too friendly. It's best to have a set of loose rules that also share what they can expect of you in terms of response time etc. House hacking is hard because they know where you live, but it's like having that friend in high school who you always say hi to, but know nothing more than you read in the yearbook (NTN application). Even though you live next door, still use online rent payment, it's much easier and less interaction required.

Jon Schwartz · Answer

Well, at least you're in a landlord-friendly state. You can always evict a bad tenant where you live!

Eric Riddle · Answer

Thanks, Jon! Lots of valuable advice here. I do plan to do my due diligence in the screening process, but am concerned for taking on a house hack that already have tenants in it. But what you said about finding a good building in a good area could better my chances. Those are sadly slim pickins in Louisville, KY. But I think if I stay persistent in my daily search, I will find a property that makes sense and can pounce on.

Eric Riddle · Answer

This worries me a bit as it seems most properties I take on will have tenants already in them. So I won't get the chance at an initial screening before moving in.

Thank you for your insight!

Any landlord advice for a new House Hacker?

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