All Forum Posts by: Laura Shinkle

Hey @Austin Berlick I understand the frustration with no multifamily inventory there to buy. The inventory in my market is practically non existant. I'm glad that didn't stop you with the househacking strategy and you're making it work! Based on your information, I have a few comments/questions: 

1. Is it possible to find something less expensive slightly farther away from downtown? I have lots of clients that assume that the only way to find roommates is to be close to center city, but it's not. People live in different locations for all types of reasons, so don't let that deter you. If there's an area that has a lot of jobs a little farther out, more affordable areas, check those out. 

2. Let's go back to basics. The point of househacking is to reduce your living expenses so that you can save your W2 income at a higher rate, which then allows you to purchase another home in a shorter amount of time. It sounds like this fits the bill, with saving at least $400/month in rent/mortgage, while also having tenants paying down your loan and building appreciation. Househacking gets you started, and in a market that is as hot/competitive/expensive as Austin, that's awesome that you found an opportunity. 

3. Could you rent the rooms out at furnished? Either a mid term rental (30-90 day stays) or STR? A mid term rental gives you a happy medium between the higher cash flow of an STR and less vacancy of the LTR. You would, of course, need to furnish the room with furniture and linens, but that initial up front cost may be worth it for the increased cash flow? Check out FurnishedFinder.com and Airbnb (room only, not the whole home option) to see what people are charging for a room in that area. Account for higher vacancy when running your numbers than a typical LTR and see what you come up with.

4. Any rental restrictions in that new construction neighborhood? Your realtor should hopefully have already found that out for you if they know what you're planning your purchase for. Perhaps after you move out, you could change it to an Airbnb or a midterm rental which would increase the cash flow. 

5. No one knows what will happen in a year or two years when you have the cash saved up to buy another home. Rents may have gone up by then. 

6. If you're going to be saving (average) of $600/month in "rent", that's a savings of $7200 in a year or $14,400 in two years. Let's say worst case scenario rents don't go up, and the price of your home doesn't appreciate or it goes down. You still have a cheaper place to live than if you were renting, you're essentially saving over $7k a year, PLUS you're building a real estate asset that over the LONG TERM will pay you back. OR you pay a guaranteed $21,600/year to live in a rental and pay someone else's mortgage and get none of that back ever. 

7. A new construction home should have very minimal things that you would need to pay out of pocket for maintenance on in the first few years. The roof and HVAC, which are the two big ticket items for homes in my market, are brand new and should last more than a decade. Perhaps this outweighs a slightly cheaper home that will need a new roof in a few years. 

When you look at it like that, it's a no brainer for me. That said, it all comes down to your risk tolerance. Let us know what you decide!

MyTripify in Charlotte is a good STR manager. Caleb is pretty active on social media if you want to follow him to see if you like his style/content/advice. FB and Insta. Not sure if he's on BiggerPockets though.

https://mytripify.com/

Living with family and them paying you rent can be a very tough situation. It's hard to walk that line of son/brother and landlord. 

1. Is the lease in writing? Having it in writing may signal them, in a way they haven't thought about it, that you're their landlord and that this is legit, not just a random idea you came up with. It'll also show that there are guidelines for this relationship (landlord/tenant) so that the expectations are set up front. No one wants to pay rent, and tenants, regardless of being family or not will try to get any opportunity they can to lower and/or not pay rent. 

2. Since the situation was clear from the beginning (ie the 4 of you in the house), then I don't think you should lower the amount. There were expectations set up front, and nothing has changed other than you being nice and not charging rent while the 4th person was out of town. 

3. Rent isn't set by your expenses. Rent is set by the market rate for that room/living space. Just because the mortgage/HOA comes out to $3300/month doesn't mean that's what the rent needs to add up to. Do some research on roommate situations in your similar area to see if you're charging too much/not enough/just right.

4. Rent is rent, regardless of whether they're on vacation or not. Always have the same standards for all tenants. If you give a little to one, everyone will have their hands out. 

 Just curious the time commitment/work required on your part. Was it comparable between the two, or was one easier than the other? I would have though the second would be a pain. 

 That's another great difference that's important to point out. You live in your own market, obviously, so you naturally know the good areas and bad ones, so you already have that knowledge. 

Studying other markets, building a network and relationships in a new place, and that's after you've even identified a good market that you'd like to be in. That takes time and definitely shouldn't be rushed. 

I like the analogy to baseball. Househacking is a solid, first base hit. It gets you into the game, gets you started, and will accelerate your knowledge and comfortability doing real estate and making offers. And there's no one here saying you can't do both. Househacking would probably be something you can do relatively soon (assuming you have financing straightened out) and then perhaps when you've househacked and your savings is accelerated, you pivot to another market after doing research. 

@Austin White   I'm going to back up even further than all the other comments....

What's your long term plan? And are you still active military and will likely be leaving in the next couple years? 

If you're active military and may be transferred soon, then I would look at it like an investment. What would you get for monthly rent to ONE long term tenant? What would you get per room? What would you get as a mid term or furnished rental? Would you be comfortable using a property manager or will you be a long distance manager from wherever you're next stationed? It sounds like it would cash flow if you continued the rent by room strategy. Would that be a problem if you needed to manage the property from a different location?

If you're not active, then I think there's less pressure. You may stay there 2-5 years, in which case presumably the value has increased and/or the rent has increased. You'll have saved more money (again, presumably) so you'll have more options. And in the meantime, you've been paying little to no money in living expenses/rent. 

For Killeen (I'm not familiar with that RE market, although I lived there for 3 months a while back!), is this an appreciating market? Do rents go up typically or stay stagnant due to the large military population? That would also be something. I would consider. If you aren't planning on leaving for the next 3-5 years, that'd be different than anticipating a transfer in a year. 

For example, to buy a home with no money down, and having to put in $200/month for the mortgage every month for a couple years until rents catch up would make total sense to me. $200*24 months=$4800 investment over two years for a home you didn't put any money down on. Much better than the $40k up front. However, if appreciation is very slow or stagnant, that's a different equation. 

So I think overall you have some research to do. Let us know what you decide!

As has been stated, it totally depends on the type of property. If there's a separate meter, that's a no brainer. If you're doing a house hack with a furnished rental, like a mid term or short term rental, then that type of tenant wouldn't expect to be paying utilities, so plan (and charge) accordingly. And also keep in the back of your mind that tenants don't care how much water and electricity they're using if they aren't paying for it, so if you don't bill separately, it'll likely be more than what you spend. 

If it's all billed to one meter or account, then I personally would recommend splitting it equally. That gives them some level of accountability with usage. 

Both times I've rolled utilities into the rent, the tenants have abused it. Both unknowingly, but it happens. 

Also, not sure what a SC rental agreement states, but I would try to add in the rental agreement (if the tenant is paying separately) that the tenant is solely responsible for getting those utilities in their name within a certain amount of days after the start of the lease, and that they're responsible for paying that bill. 

Assume the best, and plan for the worst. Good luck!

I think it depends on whether you're looking for a STR manager or a mid term manager. Those are two different people.

What kind of horror stories? I think it just depends on what aspect you're talking about. Tenants, house issues, etc. The one thing for sure I know about real estate is that you can't anticipate everything and crazy stuff happens. 

@Jordan Alequin I don't think you'll be jumping in with 0 knowledge. BiggerPockets is FULL of info. Go down the rabbit hole and start reading. Go to the Find an Agent page or search the forums and search in your area for Realtors and lenders. Don't be afraid to ask questions like you already have, and you'll do just fine :) Good luck!