New to Real Estate · Member since 2019 · 6 posts · 1 vote
Hello BP family! My name is Ahmed Seck and I am an aspiring 20 year old entrepreneur in Maryland. After reading a plethora of books and listening to countless BP podcasts, I am ready to take ACTION! My goal is to acquire my first House Hack before September 10, 2020. I am currently at a crossroads in deciding whether to pursue a traditional house hack (duplex, triplex, fourplex) or the Rent-by-the-room strategy (Single Family Residence). I would love to hear the opinions and insights from investors in the D.C., Maryland, and Virginia (DMV) areas as to which house hacking strategy they have had the most successes with in the DMV as well as any tips and warnings for new investors starting out. I’d appreciate any advice I can get. Thank you in advance!
Richmond, VA · Member since 2017 · 82 posts · 55 votes
6y
@Ahmed Seck I'd say look at it from a "getting tenants" perspective. With the single family home, I would imagine there is a smaller population of people that would want to rent by the room. Your target demographic might be young professionals or people around your age (early 20's). With a multi family property, your tenants will have their own space which will cast a wider net for potential tenants, from empty nesters to couples looking to rent. But if you know young professionals or have friends that would be interested in renting a room with you then that could definitely be a viable option. I think podcast episode 352 had some good info on the single family house hack. But multi family properties may be more expensive and harder to come by in your area too. I'm new to the Richmond, VA area but based on what I've seen online that seems to be the case. I'd love to hear from someone that tells me otherwise though!
But bottom line, I don't think it matters which strategy you use, obviously there's pros and cons to both. More importantly, do whatever you have to do to just get started and I'm sure you'll figure it out along the way. Worst case scenario you learn something.
This is a strange world we live in when it comes to businesses that have their hayday. I had a friend who started renting rooms when she had no money and within 7 years she owned 18 homes and her net worth was more than $2.3 million. She purchased homes and rented each home to 10 to 15 college students.
I haven't seen her since a little before the market crash in 2008 and always expected that she did well since she was still collecting rents and paying the mortgage. But..you should be able to guess where I am going with this since all the colleges have been closed for several months and I'm positive her college students bailed and went home.
For your question. I love the idea of buying homes and renting them by the room, but you had better be able to have serious House Rules and zero tolerance for breaking them because some tenants are just plain pigs and some tenants don't respect anything or anybody.
Rental Property Investor · Arlington, VA · Member since 2018 · 41 posts · 19 votes
6y
@Ahmed Seck I've been looking for a traditional 2-4 unit for 2+ years. Very hard to come by in our area. If I did not have children I would absolutely just rent out rooms. What I've noticed is very profitable in my particular area(Arlington) is to rent out the 2nd bedroom and Airbnb the 3rd room. Good luck!
Rental Property Investor · Marine City, MI · Member since 2016 · 145 posts · 230 votes
6y
@Ahmed Seck Considering everything that is going on, I would wait until the beginning of next year to start looking at "Rent by the Room" homes. Colleges seem to be waffling at the idea of bringing everyone back.
I bought a duplex to live in the upper unit and rent out the bottom unit. My brother moved in with me and was able to chip in on bills/rent. On average, I was responsible for $125-$150 per month for my cost of living there. This allowed me to save money and invest in other real estate opportunities. If you can find a duplex or 3-4 unit, look at it hard because it's a great way to not only save money, but it gives you a taste of what landlording is like. You'll learn about how to be a landlord and likely figure out if you want to continue to go this route on your real estate investing journey. Good luck!
Richmond, VA · Member since 2017 · 82 posts · 55 votes
6y
@Ahmed Seck I'd say look at it from a "getting tenants" perspective. With the single family home, I would imagine there is a smaller population of people that would want to rent by the room. Your target demographic might be young professionals or people around your age (early 20's). With a multi family property, your tenants will have their own space which will cast a wider net for potential tenants, from empty nesters to couples looking to rent. But if you know young professionals or have friends that would be interested in renting a room with you then that could definitely be a viable option. I think podcast episode 352 had some good info on the single family house hack. But multi family properties may be more expensive and harder to come by in your area too. I'm new to the Richmond, VA area but based on what I've seen online that seems to be the case. I'd love to hear from someone that tells me otherwise though!
But bottom line, I don't think it matters which strategy you use, obviously there's pros and cons to both. More importantly, do whatever you have to do to just get started and I'm sure you'll figure it out along the way. Worst case scenario you learn something.
New to Real Estate · Member since 2019 · 6 posts · 1 vote
6y
@Account Closed I couldn’t agree with you more. The rent-by-the room strategy is certainly great strategy especially if one’s aim is to scale their portfolio quickly. I will absolutely take into consideration your advice for being steadfast about having strict house rules in order to ensure that my tenants are mindful about treating the property with care. This of course can be prevented on my part by making sure that I screen my tenants properly from the get go. Thanks for the advice!
New to Real Estate · Member since 2019 · 6 posts · 1 vote
6y
@Wayne Brown thank you for your insight! I also had my share of difficulty in finding a great 2-4 unit Multifamily property in the Arlington VA market. Can I ask you why you chose to Airbnb the third room in your home as oppose to completely renting it out like your other two rooms? Is it because the area has a high vacancy rate?
Rental Property Investor · Arlington, VA · Member since 2018 · 41 posts · 19 votes
6y
@Ahmed Seck I haven't done it myself. I manage a residential community full time and noticed many people rent a 2 and den apartment with a roommate. They then airbnb the den. I think the roommate is enough to provide consistency and the Airbnb income for den is just pure profits.
New to Real Estate · Member since 2019 · 6 posts · 1 vote
6y
@John Lyszczyk that’s a great point. I had not taken that into consideration especially since my target niche involves college students and young professionals in my area. I also agree with you that looking at duplexes, triplexes and fourplexes would be a great way to get a taste of landlording while saving money. I am great with people and would love to learn how to manage a property myself before fully delegating the role to a property manager in the future. Thank you for sharing your experience with me I will definitely consider the rent-by-room strategy down the road especially considering the current state of the world.
New to Real Estate · Member since 2019 · 6 posts · 1 vote
6y
@Tom Hacku I like that perspective. Initially my target niche involved young professionals and college students like myself but this of course narrows my prospective tenant pool. Also I have not yet listened to the BP podcast episode 352. I will certainly give it a listen.
But definitely agree with you that which strategy I choose does not matter much as long as I get started. I agree both have there pros and cons. I think part of my mind is stuck in analysis paralysis mode which is keeping me from definitively choosing a strategy and just learning from experience. Thanks for the advice!
Real Estate Agent · Vienna, VA · Member since 2016 · 289 posts · 253 votes
6y
Hi @Ahmed Seck, congratulations on your decision to take action!
As you noticed, there are not many MF options in Nova or DC, and when the few that are for sale, don't make sense from a cash flow perspective. You can find more MF in MD, but you'll have to go further from DC to find cash flowing deals.
In our area, house hacking a townhouse with 3+ bedrooms is what usually gets the best results. If you don't cash flow it, you for sure get to live for free in one of the most expensive areas in the US. If you are willing to do some work and earn your sweat equity, you can combine renting out rooms with a cosmetic live-in flip to take advantage of the appreciation we usually see in this market.
Rental Property Investor · Baltimore, MD · Member since 2016 · 109 posts · 31 votes
6y
@Ahmed Seck I would start with the Rent-by-the-room strategy (Single Family Residence). As your first property, it will be easier to finance and manage. It will give you the experience and confidence to allow you to replicate the strategy a year later or scale up to a small multi-unit (2-4 unit).
Given the impact on COVID on the economy, you might be better off buying a home that you can rent by the room for a year or more.
Demand for small multi-units is high in the DMV while supply is low so pricing can be an issue. If your heart is dead set on small multi-families you're best bet for small multi-units will be in MD.
Real Estate Agent · Baltimore, MD · Member since 2016 · 520 posts · 379 votes
6y
If you are staying in the DMV look into PG county in single family detached homes in areas close enough to the University of Maryland. You could rent out upto 5 rooms and do alright on cash flow. If you want small multi come to Baltimore. A lot of the city is trash but there are good parts and not just the inner harbor.
I'm not familiar with your area, but I wouldn't do rent-by-room now with the pandemic. From what I've read, people prefer having the whole place to themselves. It probably makes sense.