First Time House Hack and Garage Conversion

[Tony Carter]

Hi everyone,

Last May I bought my first home with a conventional loan and 20% down - a 1900ft 3-2 on a .5 acre lot with a 500ft garage in a nice neighborhood with no HOA. I have spoken to the city to confirm that a garage conversion is permitted and am preparing to submit for permits in June. My brother lives in one bedroom and I am living in the office while preparing the other two to rent out. We are 5 minutes from one hospital, 15 minutes from two others, and 15 minutes from the University of North Texas, so I am leaning toward cutting my teeth on MTR. I aim to have the first room listed and the plans submitted for the permits within a few weeks. I have a few specific questions, but any general advice for a rookie would be greatly appreciated.

1.  How should I estimate rent for the master vs the other room?  The master is larger, has two closets, a private bathroom, and private entry.  Does this matter much?  I've seen listings ranging from 1,000 to 1,500 in my area on furnished finder.  The ones on the higher end have been updated more than my house, but with less space and privacy.

2. Outside of nurses and grad students, are there other groups I should consider?

3.   The city requires me to build a new garage in order to convert the current one.  This brings the projected total cost for the project to 65-75k - for which I will need a loan.  I only have about 25% equity in the home.  Are there any options that I should consider outside of major lenders' home improvement loans or private capital from family?
   

Thanks,
Tony

[Bonnie Low]

Hi, Tony and congrats on getting your first property! Given that you live in the home and are looking to do a rent-by-room strategy you're probably targeting the right guest type: students and traveling medical professionals. It doesn't sound like you have to cash flow the property but rather are looking to get as much of the mortgage taken care of as possible while also getting a feel for managing your own property. It's a good place to start. Generally speaking (based on interactions with hundreds of people on sites geared at travel medical professionals) most prefer to have their own space and not be in a rent-by-room situation. Those who are willing to be in a shared space will pay on the low end of the spectrum. If they can have a room with a private bathroom, that's a premium. If they have to share a bathroom, lower still. A room with a separate entrance so they don't have to interact with other guests unless they want to is another premium some will be willing to pay for. Be very cautious when mixing guest types. For example, travel nurses work long hours and generally just want to sleep when they're in your home. College students, not so much. These guests types may be incompatible. All bedrooms in a shared home should have individual keypad entry doors so they can lock their space from the outside when they're not home. This gives them more of a sense of security that no one will have access to their belongings. You have a lot of options. Maybe just start with one room and see how it goes but you're on the right track!