How to collect rent when house hacking and renting rooms

Question

Hi BP family,

Just a quick question. I'm in the process of searching for a home to house hack and will most likely be in the position of renting out rooms since duplexes/triplexes/quads are hard to find in the area. When househacking and renting out individual rooms, how does one go about collecting rent? Should it be through an online website? Should the money be deposited into a business account? Also, how do leases work in this instance? Looking forward to feedback.

Thanks!!

Chace Fraser · Answer

@Marsharen DuPont congrats on starting the process to house hack! Like @Ben Sears said, Cozy.co is great and it's what my wife and I use. We opened an online checking/savings account with ally bank. We have the rent deposits go into the checking account, we deposit our "rent" into that account, and have the mortgage payment come out of that account as well. We keep the balance on this account equal to 3 months worth of mortgage payments just to ensure we have enough cash to cover a mortgage payment if someone's late on a rent payment.

Ben Sears · Answer

@Marsharen DuPont electronically is the way to go. Use a free service such as Cozy.co and enroll your roommates. You can get automatic bill and late notices with direct deposit into your account. A standard lease from your state realtors association can probably be found online for free. Don't make it more complicated than it has to be.

Rob B. · Answer

Hi Marsharen! I love to hear that you're taking the independent approach to self-managing. There are definitely some tools that can help with managing things moving forward. Aside from providing the basics (ie. listing tool to get the property published to 10+ major sites, scheduling tool to schedule viewings, tenant screening with comprehensive applications -- pulled reports from TransUnion, which include nationwide criminal background checks + credit checks + eviction history, digital lease creation tool, rent collection tool, and maintenance tracking tool), some services also offer your tenants additional capabilities which makes it an easier sell on your end when getting them to transition over (ie. their ability to report on-time rent payments to the credit bureaus; this can create an added incentive for making sure they pay that rent on time). Happy to answer any questions you might have!

Marsharen DuPont · Answer

Thank you all for responding! You've been extremely helpful.

Derek Hutson · Answer

Come up with the system you want to use that will best benefit you, and then write it into the lease.

For example, if you are only going to take certified funds (money orders, cashier's checks etc.) then write into the lease that is all you will take and it is due by the 3rd of the month (or whatever you want it to be).

That way in the future, when your tenants sign the lease you can prevent any disputes by just saying "According to the lease you and I both signed and agreed to..."

Also as a side note, the most important thing here is making sure you are getting paid rent. After that you can decide to put the funds in a business account, or a high yield savings account, etc. Come up with your plan before you get tenants and stick to it to save yourself some headaches!

How to collect rent when house hacking and renting rooms

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