All Forum Posts by: Brett Rhine

Thanks @Brandon Reed for the resource

Very true. Though a friend of mine who owns about 20 properties has built his company on the "roommate" model. I can definitely see your point of view, though. I'll need to ask my friend what he's done to mitigate the negatives that roommating your units can lead to.

@Brandon Reed I'm not familiar with the STR market in my area. Can you point me to where I can do some self-educating?

Thanks!

@Chinmay J. You're right, I did show yearly insurance instead of monthly. Pretax CF for Scenario A is now $262. Scenario B is now $585

I've had a good experience in house hacking over the last 18 months, but I'm sure experience is much different when you arent living on the premises. Can you tell me a little bit more about why that might be such a nightmare?

Hey everyone. I'm a newbie and trying to figure out whether I can reasonably move out and rent out the home I live in right now or whether I'd be better off selling it for (according to Zillow) about $35k in appreciation and pouring that into another investment down the line. Here are my two scenarios: 

House: 4/2/2 - 8 yrs old - 1476sqft - Central Florida home

Scenario A - Move out and rent to one person/family 

• Rent is based on Zillow and Rentometer
• The vacancy rate in my area is actually closer to 5%, but I'm factoring in some buffer for my newbie incompetence. 
• I'm not sure at all what kind of cost I'd be running for property insurance, so this is a very broad estimate (estimating 50% higher than my owner-occupant insurance). 
• Repairs and Maintenance estimate is low but the home is only 8 yrs old and I plan to have about 10K in reserve for any sizable expenses that may come up. 
• Not sure about where my taxes would be

Scenario 2 - Rent the rooms individually to 4 people

• Rent is based on my current house hacking experience (3 rooms at $550) and estimating Master bed/bath at $650. Not sure if Master bed/bath is worth an extra $100, so I'd be happy to hear your thoughts on that.
• Again 8% vacancy
• Estimating utilities (Water/Elec/Internet) at $400. This will be lower in the winter months, but I'm not counting that here.
• Lawn care (Other) at $150
• Again, not sure about taxes

If numbers with scenario 1 are reasonably accurate then that's a non-starter. I'd have to sell. Scenario 2 might work and at present my average room-renter stays for about 6mo and the work of finding a new tenant hasnt been too arduous. 

Anyone have experience with renting rooms like suites, as described? Have different thoughts about all this entirely? Think I'm an idiot? I would really be eager to hear what you all think of my situation and these 2 scenarios, as well as any critique or criticisms you may have about my approach. 

Thanks!

Thanks @Mike H. All of this is very encouraging. Assuming that I have to go  with conventional financing then I have maybe a year or more before I'm ready to buy, that will give me a lot of time to build up a nice cap ex buffer (especially since I'm house hacking right now and living for free). With 5-10k sitting in a savings account for just such emergencies that should help  the cashflow situation a lot. 

Thanks again!

Thanks for the education, @Jon Holdman, on the 50% rule. I didnt know that it included PM, for instance. Since I will be self managing, I can at least be sure that I'll be working harder for myself than a PM will. 

Obviously I'm going to have to do more legwork with regard to properly pricing my rental. I guess the Internet can't tell me everything I need to know. 

Thanks again!

@Curt Smith I just scanned your bullet proof rental file. Wow! Thats a lot of great information. I'm only just starting out and I can see where a lot of what you include here is the product of hard-won experience. I'm sure I'm going to reread this several times. 

"The question I'm guessing is will you do "ok" by keeping it?"

Yes, I will. I've been house hacking for over a year now so I'm currently living for free. The mortgage is getting paid down by my tenants and I'm stock piling cash for my next purchase. On top of that, Zillow tells me that I've got 40-45k in appreciation as well. So that gives me a few options, too. 

As far as your last your last paragraph goes, I can see the logic: "whats the catch?" is what they could be thinking if they see something priced substantially lower.

That's a very good idea @David Boroughes, thanks!

Thanks @Ashish Acharya. And you're right, I dont have a legal entity right now. I do need to start bookkeeping though. With 2 renters (one of whom was my brother) the math was easier but now I've got 3 so I gotta get into the habit. 

Do you have a recommendation for accounting software that a small-time newbie like me can use? One that's free, if it's not too much to hope for? 

Thanks!