House Hacking

[Alexandra Preziosi]

When trying to consider an investment in, what on BP is called, house-hacking. What is the best way for one to go about getting tenant. In owning a 2 unit, aren't you paying double the mortgage essentially? How difficult is it to find a 2 unit for the price of one? For example, owning a unit with 3 beds and 2 baths, where you reside yourself with 2 other people, how do you go about charging, essentially your own roommates rent? Are tenants ever resentful of the fact that you are sharing the same space and profiting off of them? Perhaps I am a bit confused as to how house hacking can work. Please add any comments regarding the subject. Thanks! From New Jersey.

[P.J. Bremner]

@Alexandra Preziosi

House hacking is THE best way to get started (in my opinion) in real estate investing. I don't have experience with multi-unit investments but I have house hacked several SFR and with great results. My personal opinion on how to handle this topic:

- Keep all rental agreements month-to-month: This allows your tenants to feel comfortable trying the place out, not locked in for long term and makes it WAY easier to kick them out if they don't work with your living style.  If someone decides to move out, they give a 30-day notice and you post your ad on Clist THE SAME DAY THEY GIVE NOTICE.  You show the room WHILE THE TENANT IS THERE still.  You will have the room filled before they even move out, never deal with vacancy, ever.

- Pay for all utilities in the house and increase the rent charged: This is SUPER important.  The last thing you want to do it run around chasing tenants for $4.52 for gas, $26.47 for electricity, internet,  etc.  Don't put yourself through the insanity.  You know roughly what the monthly bills are, pay for them yourself and charge the tenants more.  I also personally pay for toilette paper, laundry detergent, paper towels, dish soap, etc. (AT MOST $45/month at Costo) and I can usually charge way more than that in rent due to convenience.  It simplifies your tenants life and your life.

- Be very relaxed about things that don't matter and VERY FIRM with things that do matter:  I have a 0 tolerance policy for parties, loud noise past 12 pm. etc.  I don't care if they have their gf or bf stay the night a couple times per week.  Pick and choose your battles :)

- My favorite rule: You are NOT the boss:  Take all of the responsibility off of your shoulders and place it on someone else.  That person may or may not be fictional, it doesn't matter.  Tenant says, "Hey my paycheck is light, can I pay half now and half on the 15th?".  You live with that person and don't want any awkward feelings, so you say, "Oh man, that sucks!  I'm sorry to hear that.  I have to check with my boss, he expects it all in by the first".  Then you tell them you texted your boss, and the @$$hole said NO! lol You can be on their side still, deliver the bad news and talk crap about your boss together, have the tenant ask friends or family for short term loan to cover the deficit and like magic, they come up with the cash.  I can't tell you how many times I have done this and it worked like a charm. :)

I hope this helps!  Let me know if I need to elaborate on anything.