House Hack Rental Model

[Dan Cook]

I've got a 5/2 SFR ranch. Layout is 3/1 main, 2/1 fully finished basement. The basement has a full kitchen as well. I'd like to maximize cash flow, so the intent is to rent by the room. I know other investors have had success with this model but it adds to the workload.

I'm looking for recommendations for listing, vetting, and managing this type of property.  I've looked at roomster, craigslist for the listing, but I'm not sure how to best streamline the vetting and managing. Zillow rents makes it difficult to rent by the room.

Thanks in advance to all you experts!

[Maria Vargas]

@Dan Cook Denver county recently changed those limitations, and you are now able to have up to 5 unrelated persons under the same roof so you're not actually violating anything with your 5/2 rent-by-the-room model. I believe you're able to have more depending on the sq footage of your property, tho I'm not as intimate with the specifics. 

There's a lot of folks actively advocating for these changes, and the changes this year were a significant win! While this is just my opinion, having Gov. Polis encourage counties with such limitations not enforce them during COVID as a means to help prevent homelessness I think sets precedent for these limitations to go away at some point in the future. 

Now you certainly want to set the stage for harmonious living between your residents and the neighbors, not just immediate neighbors next door. Because we can only control what happens within our properties (to an extent), you'll want to screen accordingly for the type of neighborhood your property is located in. Like you said, our best defense is getting the right peeps in the house!

One point worth considering as related to vetting residents is not just taking a reference from a previous landlord as some landlords will tell you only the good if that's a tenant they're wanting to get rid of. My business partner @Kevin Smith and I have opted for taking character references from existing employers, which also allows you to verify their income and likelihood to keep said income. 

Like most have already shared, we also conduct criminal background and credit screenings using Cozy.co and/or MySmartMove.com (TransUnion). Additionally, we do our best to have the existing residents present when a potential tenant is viewing so that we can take their input into account (final decision rest with us). After all, they'll be living together and the more buy-in you have from your residents the better the living situation for all. This also helps set the stage for a peaceful home limiting neighborly disturbances. Scheduling can get complicated to achieve this, so we typically ask our residents to give us their availability and try to schedule all showings within a couple of time frames. 

Best of luck and looking forward to hearing more about your success with this model!