Common things that get overlooked after moving out of a house hack

[Ben Einspahr]

Key Points:

• -Keep the utilities in your name and bill back to the long-term tenants.
• -Hire out lawn care and snow removal... or DIY.
• -Insurance costs will decrease when transitioning from homeowners to landlord insurance.
• -Tracking all income and expenses will make tax season a breeze.

Hello Bigger Pockets community. I had a conversation with one of our Airbnb house hacking clients yesterday, and she asked an excellent question: "What type of operational changes can I expect when turning my house hack into a rental?" This was such a great question that I wanted to post it here for the community to benefit from!

For context, an airbnb house hack is a single-family home with some sort of separate living space from the main part of the home. It could be an ADU, a mother-in-law suite above the garage, or a walk-out basement with a little kitchenette. This additional space is then rented out as a short-term or medium term rental to offset living expenses.

When moving out of the house hack and turning it into a stabilized rental, most of our clients continue operating the Airbnb as such (minimum nightly stay might change) and turn the space they were living in into a traditional long-term rental. Be sure to check with your local city for specific rules and regulations.

Now, from my 4+ years of house hacking, here are the most common things that get overlooked after moving out of your Airbnb house hack and turning it into a rental:

1. Utilities - For traditional rentals, the tenant is responsible for all utilities. Airbnb house hacks are a little different. Utilities (water, electric, trash, internet) are included in the rent for the section of the house that is operated as an Airbnb (or furnished rental). So, keep all utilities in your name and bill back utilities to the long-term tenant based on the sqft they occupy, either as a flat rate (RUBS) or actual costs. 
2. For example, if the house is 2000 sqft and 1000 sqft is a long-term rental and 1000 sqft is Airbnb, you would bill back 50% of the utilities to the long-term tenant.
3. Mowing and Snow Removal - If you can, hire this out and split costs with the long-term tenant. This can be a great win-win! Your tenants do not have to worry about it and will give you the peace of mind that the yard will not look neglected, and walkways will always be clear from ice and snow. Neglected yard can lead to bad reviews.
4. Spring and Fall Cleanup - A few hours on a weekend to clean up leaves or lay down some new mulch will go a long way. I always lean towards hiring this out as well. Do not assume your tenants will be doing this. Again, a neglected lawn can lead to bad reviews.
5. Financial Tracking - Tax season can be a lot if this is your first rental you are self-managing. Staying on top of all income, expenses, and receipts will make tax season a breeze. I have used the same excel spreadsheet for the past 5 years for all of my rentals. Keep it simple.
6. Insurance - (I am not a licensed insurance agent so please contact your local professional for your specific questions)  After you have moved out of your house hack, be sure to inform your insurance agent of the changes, including your lease lengths. Doing this will typically decrease your annual insurance costs.

If you would like a copy of any of the excel spreadsheets I use or learn more about the systems I have to stay on top of this, let me know! Happy to help.