Questions for all House-Hackers

[Logan Gilbert]

House-Hacking will most likely be my first vehicle of RE investing, it seems like a great way to get started with so many people having success doing this. I had some concerns about it, hoping BP can help me figure this out.

1. Do you prefer to rent the rooms out to friends/acquaintances OR do you rent them to strangers? I can see both having pros and cons.

2. A problem I can see coming up eventually is maintenance. For example: the brand new kitchen sink breaks. Say my friend used it last and claims it "was not him who broke it" when obviously I know it was him. (How do I go about getting him to pay for this if he refuses? Do I attempt to fine, evict, argue, put terms in lease, etc.) I can see this being a problem that will no doubt come up.

3. I have a lease copy from my old college apartment, can I copy majority of this? I of course will make changes to it to fit my needs, but is this legal for me to basically copy/paste this? (I think yes)

4. I want this to be as professional as I can make it, how do you typically structure lease terms? 1 year, 6 month, month to month, etc.

My plan is to offer Month-to-Month, 3- month, and 6-month leases. And of course I will charge a little more per month for the shorter term lease. I will do Longer term if need be, but with no big discounts. All advice is greatly appreciated!

[Nicole S.]

1) I can tell you that in the last 15 years of managing my family's rentals, we have a policy that we do not rent to friends and family, no exceptions. I can painfully recount every time we've rented to a friend or family member and it's never worked out in our favor, no matter how great the relationship was to start. Spare yourself the heartache and the money and rent to people you don't know. They have more incentive to abide by the terms of the lease. Same thing in reverse, don't befriend your tenants, maintain a professional landlord-tenant relationship. 

2) You are the landlord so maintenance is on you and if something breaks, it breaks. Unless the tenant puts golf balls down your sink, you can assume it's a maintenance item that you as the landlord are responsible for. Most tenants don't intentionally break things and usually abuse is obvious. If you want to move forward, come to terms with regular maintenance items - broken locks, appliance failures, etc. Then, when it happens you're not bent out of shape over it and you don't feel compelled to figure out who last used the washing machine - usually that has nothing to do with it's failure. 

3) Leases evolve - it's good to get a lease from a real estate agent or your local rental agency uses. We have a local group called RHA that you can subscribe to as a landlord and use their forms. They might be national. A bad lease could get you into trouble. I've seen one page leases and 30 pages leases that include everything from  crime-free/drug-free addendum, pet addendums, oil tank addendums, etc. I've never been able to use a template lease without modifying. Or, have an attorney draw one up for a couple hundred bucks. 

4) Most tenants want one-year lease minimum - six months is ok but every time you turn a tenant it's a pain - you have to do a move-in and move-out inspection, advertise, clean, repair, run applications and sign a lease. Spare yourself and get a long term tenant. Typically leases over one year require notary.