All Forum Posts by: Andrew Cooper

Hi All- 

I live in and own a rowhouse in Washington D.C. I have been house hacking for almost two years now and basically live for free in the basement while having three tenants occupy individual leases in the upstairs rooms. The kitchen and common areas are shared. I am in the process of building an Accessory Dwelling Unit in the backyard with a one-car garage and one-bedroom apartment that I will move into and then rent the basement to pay for the new unit. 

As I begin to expand, I am exploring the option of using an LLC to master lease the house out to and have my tenants pay their rent directly to the LLC, instead of me directly, as I currently do. I believe there are a number of advantages to this, including-

1. Increased liability protection for any damages that may be sought from a potential tenant. 

2. Increased tax deductions for things I currently cannot like cell phone, travel, entertainment, etc. 

3. Moving into a more formal business arrangement with the expansion of another unit plus the ability to expand further down the road. 

My question is- what are your thoughts on this in general? 

More specifically, how would I go about doing this? I know how to setup a an LLC but I have never used a master lease for this type of situation. I can't find much on other people exploring this type of arrangement and am wondering if anyone else out there has done something similar for a house hack.

Thanks for any advice/feedback you can give! 

It has been a great learning experience so far and the financial freedom has been tremendous. It's on the beginning, but I am wanting to learn how to grow and believe this is a next step. I'm happy to answer any questions from my experience doing this that others may have. 

This is a great question. I have been doing this since mid-2016 in my owner-occupied residence with up to 3 roommates living upstairs, I live in the basement but share the common area (kitchen) with the rest of the house. 

1) Yes, use a lease. I customize it for each room and other parameters. I also don't allow my tenants to enter the basement without prior permission. I use EZ Landlord Forms dot com. 

2) I have only done tenant referrals by word of mouth so far. I have been lucky in that regard and have yet to actually advertise. This gives me piece of mind as the referrals usually come from friends, coworkers, and the other tenants. That being said, I take care to treat everyone the same. My situation is a bit different, but if I was to rent out to a random person from Craiglist, I would vet them to the nines. 

3) Yes. Unclear on common area damage. It hasn't happened yet. The micro-cameras are a little creepy IMO. 

4) Let tenants sort this stuff out. You have enough on your plate and can't predict the future. Things change so much, it's almost impossible. 

5) I only do word of mouth and ask for guys only. I live with them in the same space so the laws technically don't apply to me since they are my "roommates". 

Bonus- 

One issue I have run into for those out there who rent rooms and owner-occupy is the insurance issue. I notified my insurance company after the fact about roommates and they told me I could be dropped from my insurance. This scared me and I haven't found a solution yet. The one thing I have done is to require renter's insurance though. This gives the tenant liability coverage and CMA in the process. So if something were to happen to them, they could go through their rental insurance company. Also, I make then sign a waiver of liability.

Here is the post I made. I still have yet to find an answer, unless renter's insurance is the answer...

https://www.biggerpockets.com/forums/52/topics/497275-insurance-for-roommate-tenants-in-owner-occupied-sfh-washington-d

Lastly, I am unsure of if you need this, since it sounds like your basement is a seperate unit, but you may need a Basic Business License. Finally, I did attempt to contact an attorney to touch base on my specific situation. They informed me that I needed to register with the city. I am working to figure this out. Please feel free to message me with other questions. I'm still learning myself on these issues.

Hi all- I currently own an owner-occupied SFH rowhouse in Washington, D.C. I rent out two rooms to tenants and live in the basement (which is shared with the rest of the house I.E. kitchen, living room, W/D). I had not really considered insurance for the property outside of my standard homeowners insurance. Recently, I inquired with my insurance agent about my policy to see if I am covered under my current situation. They told me that if the insurance company found out, I could be dropped from my insurance and any claims could be forfeited and breach the contract.

Needless to say, my stomach dropped. My agent proceeded to tell me that there are no policies out there that cover this type of situation outside of a special policy from a non-standard carrier like Lloyds of London. So I'm a little nervous at the moment. Additionally, I know that I am not the only person who is in a type of situation like this. I guess I'm just living on borrowed time until I can figure out something to do. I am also planning to add a third tenant in the near future. 

Has any one found a solution to this issue? Any advice? I don't want to lost my homeowners insurance and I don't want to lose my rental income either!

Cliff Kornegay with Capitol Hill Home inspections.

Would love to hear about this as well

Anyone here?

Hey- Has anyone out there ever gotten a special zoning adjustment in the from the D.C. Planning commission? I'm considering building a carriage house on the back of my house and renting it out. It looks like my zoning, RF-1 does not allow this unless I get a Special Zoning Adjustment. I'm just curious how likely this process is. Anyone with experience before the zoning board or anyone who has ever built a carriage house would be great to talk to! Thanks so much! -Andrew

Anyone?

Hi all- I'm new to BP and this will be my first post. I recently purchased a end unit row home in the H st NE area from my landlord. I fixed it up and am now renting out two rooms in it, bringing in $1700/month which covers a lot of my mortgage. I'm beginning to think long-term about what I want to do with the property though and someone mentioned to me the idea of converting it into condos. This seems like a reasonable idea given that I could turn a $500K property into a $1M property for $750K. Has anyone out there had experience with this? Just trying to get general info re: zoning, general costs, obstacles one might encounter, etc and possible networking opportunities to chat further. Thanks for your help! Andrew