All Forum Posts by: Leo Kotschenreuther

@Ali Boone I was thinking of having a month to month agreement with the roommates and the usual 1 year lease with the property owner. The benefit for the roommates would be that they could move anytime and that they wouldn't have to find somebody else to take their spot on the lease.

Dear BP,

it's time for me to move to a new place and I'm thinking about doing some house hacking this time.

Since I actually don't own any property where I live (SF Bay Area) and don't expect to do so at least for a while I am thinking about doing a house hack with a rental property.

This would mean that I would rent a property from somebody who actually owns it and then turn around and sublet all but one bedroom in the place to other people. Based on looking at current market rates for individual rooms and complete houses for rent, I am thinking that I may be able to lower my housing cost this way.

Potential upside:
By paying myself rent, I could net 300-400 dollars per month when there are no vacancies. Example would be a 3/2 house renting for 4200 and then renting out the master room for 1800 and another room for 1400. This would leave me with a portion of 1000 even though my room would rent for 1400 by market rate.

Potential downside:
I may have times where one or multiple of the rooms would be empty and then I would have to pay rent for them. This will likely especially happen initially when I first rent the place.

Now to my questions:
I spoke so far with one property manager about a property and they would have required everybody who would sublet from me to be on the main lease. I expect most landlords/ property managers to have this requirement and I would do so myself as a landlord as well.
What would be a great way to convince a landlord to not require this?
I am worried that if people get on the lease, they will also see how much the property rents for in total and think they are paying too much. How can I convince them that they are paying more for a reason?

What would you do in general to make this a successful venture?
Like have your own insurance and treat this like a landlording business just as if you owned the property yourself.

Looking forward to your responses!

@Pratik P. The house would have to appreciate 2% per year in order to zero out the 24k annual loss. 2% appreciation is rather low, compared to what we have seen in the last years.

@Huimin Zhang I would ask myself how much return on investment I wanted to have. You know how much money you put into the property and you also know your yearly cash flow of -24k. From there you can figure out how much the property would have to appreciate for you to achieve your goal (Also consider your monthly loan principal). Once you got there you can ask yourself how likely it is to get such an appreciation.

The tricky thing is, nobody has a crystal ball. All we know is that the market will very likely not forever appreciate 7% per year but we don't know when it will stop. I recently listend to some BP podcasts from 2015 and a recurring theme is Josh saying that the market is already very high and people thought it might crash soon afterwards. Now we are in 2019 and it has gone up a lot further.

@John Warren and @Bob Okenwa thanks for your advice!
What I really take away is finding an agent to sell your house is similar to finding a property manager to rent your house to tenants. There are some great questions and blog posts about questions to ask your property manager, I will just adapt them to the different situation.

The forum is full of posts about finding buyer's real estate agents and how to determine that they are good at working with investors. These are good at finding you great deals to buy.

Now my question is, how do you find a great seller's real estate agent? If you already had a great relationship with an agent then you would likely use that agent but what if not? What qualities would you be looking for in the agent? How would you interview the agent and what questions would you ask?

@Skyler Martinson

1) I would probably actually fly out there in order to do the following:
* Drive/walk through the neighborhoods
* Meet up in person with the property manager

2) HUD is involved because my tenant gets some form of government housing subsidies, my tenant actually pays a tiny portion of the rent, most of the rent is paid by HUD

@Skyler Martinson

My property so far has had negative cash flow.
I had a four month vacancy last year, it took about a month to get contractors into the house to get it rent ready (just fresh paint and minor fixes), another month to get it actually listed on the usual websites where people look for rental properties and then it took the remaining two months to get the property approved by HUD. Part of the problem might be that it's a 4 bed, 2 bath. It appears that there is not that big of a market for this. Could be that it's a lot easier to fill a 3/2.

Almost every month there is some small repair needed (e.g. plumbing).

The benefit of being in the area is that I could meet with the property manager in person and build a way better connection like that. I experience that at work, it makes a huge difference whether I can show up at somebody's desk or have to call them to get them to do what I want.
Generally I still think that having a property manager the way to go. I don't want to deal with the tenants and I'm ok to pay for that.

Welcome to BP!
I own a single family rental in Lufkin and I'm an absentee owner (maybe I'm even on @May Emery's list).

Things haven't worked out that well for me and I'm thinking about selling my property so that I can buy something within driving distance from where I live. I feel like the main reason for me being unhappy is that I cannot just drive by the property if necessary and it's also difficult to build rapport with the property manager if you never meet him/her.

@Mark Brooks
Thanks a lot, I already found somebody.

@Account Closed said, try a few things out on a small scale and see how it goes.