Replacing Tenant Turnover in a House Hack

[Jacob Shumate]

Hey,

So I purchased my first SFH last year and quickly rented out 4 rooms before my 1st mortgage payment was due. I walled off the dining room creating an additional 5th bedroom turning the house to a 5bd/2.5ba and rented that one before my 2nd mortgage payment was due. I started with 2/3 month leases which were extended into the next year where now I've been dealing with turnover. Finding new tenants has not been easy but I also had some faults on my end which I learned of and fixed recently.

I'm hoping that this will improve application turnout. I've been told by a few in the Denver house hacking group that my house meets all the criteria for what rent-by-room people would be looking for. I also have strong screening, 3x income, 600+ credit, clean backgrounds, no evictions, felonies, or bankruptcies, 1-2 landlord references. It is 2720 sqft property, plenty of patio space, updated kitchen, lots of furnished common areas with kitchen supplies in a great location of Westminster only 15 min from downtown Denver. A few things I can think of that would deter applicants

     - 4 bedrooms have to share one full bath upstairs and half bath on the main floor

     - The yard is not perfect, especially the back. Grass is dead and hardly any plants in the garden beds. It's an ongoing project

     - I don't have tv in any of the common areas, I was advised not to where it would minimize potential tenant altercations

     - I have tenants on a rotating cleaning schedule where they only have to do their part every 4-5 weeks. I planned on hiring out cleaning                       services once I had moved out.

     - No pets. Love them but don't want to deal with them which I know that shrinks my target market by 70% considering nearly everyone in                 Colorado has a pet

     - I tell them in the showing that I am the landlord, live and work remotely in the basement. I don't share the rest of the house, I have my own           kitchen/bathroom.

I've had to go $25-75 down under market rate and it still feels like a struggle to get applications. I even changed from TurboTenant to Innago to reduce the application fees from $55 down to $35. I lowered the overall security deposits but started to do one-time move-in fees where security deposit plus fee is $100 less than rent. I'm also part of many local Denver/Boulder/Colorado housing groups where my ads get posted as well. 

What ways have you changed that significantly impacted application turn out for room-by-rent rentals? Is there other platforms to advertise on other than fb market place and roomies.com? I don't start ads until the tenant lets me know which is usually 30 days before the lease is up, should I be advertising 60 days prior to the lease ending? How many showings do you give a week before you get a lease signed for rent-by-room properties? It seems that I'm limited to only fb market place and roomies.com that allow ads for private rooms, are there others or other ways to get around zillow, trulia, padmapper that only accept rentals as a whole property? Is there a method to posting on market place, I've seen fb penalize my ads when I renew them and the boosting does not go as far as it did the first week, so I delete, repost and boost weekly.

Maybe I am worrying about trivial things but I don't like advertising for 3-4 weeks then the last week of the month I get bombarded by less quality interest only to get one applicant that I'm desperate to lease to so I don't have a vacancy. If there is something I missed, please ask any additional questions. Thank you

[Jacob Shumate]

Well that post looks awful. I'll try to make it easier regarding the questions.

1. What ways have you changed that significantly impacted application turn out for room-by-rent rentals? 

2. Is there other platforms to advertise on other than fb market place and roomies.com? 

3. I don't start ads until the tenant lets me know which is usually 30 days before the lease is up, should I be advertising 60 days prior to the lease ending? 

4. How many showings do you give a week before you get a lease signed for rent-by-room properties? 

5. It seems that I'm limited to only fb market place and roomies.com that allow ads for private rooms, are there others or other ways to get around zillow, trulia, padmapper that only accept rentals as a whole property? 

6. Is there a method to posting on market place, I've seen fb penalize my ads when I renew them and the boosting does not go as far as it did the first week, so I delete, repost and boost weekly.

[Brandon P.]

Hello Jacob,

First off you said you are apart of a local house hacking group in Denver, did you bring any of these questions up to them, if not that would be a good idea.

What faults "on my end" did you learn and fix? 

Your property seems to be pretty good for house hacking in print. How are the photos and how are the prices?

1. Our property has always had a lot of turn out.

2. We used roomies to get our current tenants. (Also am signed up for furnished finder - we get leads all of the time - but have not any availability in our place to take them in).

3. What is your policy for month to month - do you require a certain amount of days that the tenant has to notify you before they leave? We have a 30 day minimum notification that they must abide by.

4. It depends on the quality of applications that come in.

5. I don't have experience with the others. But using turbo tenant (Coronado based) as my management software, there is a feature that allows you to advertise on most websites from the home portal.

6.Again no experience with this one.

Best,

Brandon

[Jacob Shumate]

Hey Brandon,

Yes I have, I get most of my advice from @Jeff White

I learned that I was too verbose in my ad, messaging format and too long winded during my showings. Last year was a few back and forth messaging that I guess was more human. I was trying to automate to save time but ended up sending 3 paragraphs to the response "Is it available?". I thought that if they didn't reply they weren't serious but I think I was over pre-screening plus too much info all at once. I significantly reduced all 3 categories while still keeping important details and screening criteria. 

Photos are professional and I'm asking $750 which includes utilities for standard 10x10 rooms in Westminster. I was getting $800 for the last year, that may have been luck but is also the market rate for the area.

I don't do month-to-month but usually a 2/3 month lease to start then extended into a 8-10 month lease afterwards if it's a good fit. I also require 30 day minimum notice in my leases.

Thanks,

Jacob

[Brandon P.]

Yes, be strict in screening, but if you have too much upfront (you and I both know) that everyone will just skip the process and move onto the next place.

I do a month to month lease here, and have this since the beginning last year. We have two rooms rented and still both people in place 11 months later. This gives me flexibility for myself or them to not like the place and move on. Maybe open it up to month to month from the beginning.

Best!

Brandon

[Ben Einspahr]

@Jacob Shumate Here is some food for thought:

- If you are not already, I would aim for not including utilities in rent. Could drive for more applicants.

- Marketing 60 days out might be a lot if your lease agreements are 2-3 months to start off. It would start with first identifying if you as the landlord want to extend the lease agreement and if the tenant is interested extending. I would have this identified 30 days prior so you can start marketing asap. Do you agree Jeff White?

- Would think you would be able to have room filled with in 2 weeks. If you are past that time line, drop monthly rent to less than $725 per month. Don't be going months on end with empty room just because you are set on a price you want.

-FB market place should do the trick.

[David Culver]

Quote from @Brandon P.:

Yes, be strict in screening, but if you have too much upfront (you and I both know) that everyone will just skip the process and move onto the next place.

I do a month to month lease here, and have this since the beginning last year. We have two rooms rented and still both people in place 11 months later. This gives me flexibility for myself or them to not like the place and move on. Maybe open it up to month to month from the beginning.

Best!

Brandon

Hope it's ok to jump on this.

Brandon, I was wondering if you still require a deposit (and how much) for your month-to-month roommates?

[Ryan Thomson]

Quote from @Jacob Shumate:

Well that post looks awful. I'll try to make it easier regarding the questions.

1. What ways have you changed that significantly impacted application turn out for room-by-rent rentals? 

2. Is there other platforms to advertise on other than fb market place and roomies.com? 

3. I don't start ads until the tenant lets me know which is usually 30 days before the lease is up, should I be advertising 60 days prior to the lease ending? 

4. How many showings do you give a week before you get a lease signed for rent-by-room properties? 

5. It seems that I'm limited to only fb market place and roomies.com that allow ads for private rooms, are there others or other ways to get around zillow, trulia, padmapper that only accept rentals as a whole property? 

6. Is there a method to posting on market place, I've seen fb penalize my ads when I renew them and the boosting does not go as far as it did the first week, so I delete, repost and boost weekly.

 @Jacob Shumate sounds like you're in great hands if you get most of your advice from @jeff White 

1. Take really good pictures and make clear expectations for what you are looking for 

2. Craigslist, Roomster, Apartments.com, Facebook groups

4. Try to make the showings as efficient as possible for yourself. 

5. You could list the whole house in the listing and then in the description talk about renting the rooms. That may work

[Ryan Thomson]

@Jacob Shumate here is how I go through my rental process. It may be helpful to you.

[Jacob Shumate]

@Brandon P.

Month to month has too much uncertainty. The reason I do a 2/3 month lease is a form of a trial period that benefits both sides. The tenant gets to try it out to see if it's a good fit without locking them into a lease, I get to know whether they will be a good tenant (paying rent on time and getting along with others nor causing me any issues). I lock them into the 8-10 month so they can't break their lease in the middle of winter which I've been told is very difficult to find new tenants during that time of the year.

@Ben Einspahr

I already include utilities with rent. There is a chance for tenants to overuse the utilities but I'd rather take that chance then deal with the hassle of charging each person their share based on the total usage of the household.

As part of description I include "2/3 month leases for fit with up to 1 year extension", and reiterate in my showing that I'm only interested if they are interested in extending if it's a good fit. I always ask and get them to sign the renewal 30 prior of the end of their current lease, otherwise start ads for their replacement.

I was dropping it to $750 after 2 weeks. It also seems like I get flooded with a lot of low quality applicants on fb market the cheaper it gets.

@Ryan Thomson

1. I think I'm good on photos, they're professional but always room for improvement.
2. You sure about Craigslist? I've heard it's became worse due to scammers and low quality applicants. I'll checkout Roomster and apartments.com

4. I'm still learning about this as I go. If I get a lot of interest, I try to do showings with at least 2 people. But sometimes I only have one person for a week, which I'm afraid of putting off the showing for too long where they would lose interest. I generally schedule the showing 1 or 2 days after the initial pre-screen. How long can you usually wait?

5. I'll try that on apartments.com then.

Yes I've been following that blog since last month, great content!

[Ryan Thomson]

@Jacob Shumate I've found great quality on craigslist and the people that take the time to write you an email there are often more serious than the hoard of "is this still available?" facebook tire kickers. :)