House Hacking your rented property?

Question

I'm closing on a 4 unit property this month. One of the units has a tenant who is barely ever there. It sits empty most the time. I don't mind this- less wear and tear, however I'm wondering if it's possible to house hack a property that someone else is renting. How would you try to convince your tenant to let you house hack? Deal on rent? I plan on furnishing their space (currently is Blahhhh)... so they would also be benefiting from getting a furnished apartment. Do you think this is possible? I'd just love to make more money on this unit if possible.

Albert Bui · Answer

You need the ability to occupy within 60 days of closing and most lenders will want the tenant to either move out or state their intent to move out so that you can accomplish your occupancy prior to closing.

@Carlos Valencia

@Matthew Kwan

Account Closed · Answer

Yeah, I'm not planning on living there- the idea is to have my tenant house hack- and I can do the maintenance... short term turnovers. And she would benefit by having a lower monthly rent. I would benefit by having more income from that unit. The current tenant and I would coordinate which days she would be there- so there would be no surprise friends on the couch lol. Just an idea that I had today- wanted to be thinking outside the box on how to make the most of my units.

Matthew Kwan · Answer

If you are buying a primary residence 1-4 units you are entitled/required to live one of the units. In your scenario, you did not need to convince the tenant as you would just have to provide them sufficient notice for the tenant for accommodation to move out.

@Carlos Valencia @Albert Bui

Andrew Freed · Answer

Account Closed - Just to echo other peoples sentiments, a tenant not at your unit often but paying rent is a benefit. Less wear and tear on the unit, less water and sewer, and less parking issues, which is usually the biggest pain point for tenants of multis. I would welcome this tenant and keep them as long as possible.

Additionally, you cannot rent a space that is rented by someone else. Maybe you can convinence them to change their rent to a rent by the room to save them funds and you can leverage renting the other bedrooms? But like I said, I would prefer to keep the tenant as is if they pay on time, are close to market rent, and treat the unit right.

Dave Foster · Answer

Account Closed, I give you an A for creativity!!!  Working a deal with the vacant tenant for a STR could work.  But did you purchase this property with an FHA or conventional owner-occupied loan?  If so then you have to occupy one of the units for a year at least.

Justin Hammerle · Answer

Account Closed - are trying to occupy the unit yourself?  or sublease?  It's a cool idea of your thinking of occupying the unit yourself; if there are multiple bedrooms, you could lower the rent and convince the tenant to let you occupy the bedroom and the share the rest of the space.

Account Closed · Answer

True. Good point. I wouldn't want them to be discourage or stressed and then leave. I guess I'll be counting this as a blessing.

Account Closed · Answer

yes, I could have them move out. maybe I'll just wait until they are ready to go on their own as long as they are continuing to pay their rent. Just wanted to get creative is all.

Jay Thomas · Answer

House hacking is a great way to get into Real Estate, as it allows for a more affordable entry point than traditional investments. It can also provide additional steady income from renting out other units if you buy a multi-unit property. As long as the tenant pays rent and follows the terms of their lease, it doesn't matter how much time they spend in the unit; what matters is that you have reliable income from your Real Estate investment. Investing in Real Estate through house hacking can be an incredibly rewarding experience!

Alfath Ahmed · Answer

I would not recommend doing this. By no means am I an expert in legal matters, but this just seems like a conflict of interest. I would rather focus my time finding another apartment 1bd/1bth apartment and do an airbnb arbitrage.

Also, do you have experience with short-term renting? Did you run the number's through AirDNA to see what your occupancy rate and charge per night would be? Does the ROI make financial sense? If so, wait for a unit to empty out and then renovate it and do and STR or MTR.

House Hacking your rented property?

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