All Forum Posts by: Natalie Schanne

My friend wants to house hack by buying a 4/2 house, live in 1 bedroom and rent out the other 3 bedrooms. (Purchase price $190k, room rentals worth $600/mo each). House hacking would work out very well for wealth building by paying off his mortgage monthly (PITI approx $1500/mo). This is in Mercer County New Jersey. The neighboring township says they don't require landlord licenses / inspections for renting rooms to people in a house you live in. The lady I reached on the phone at this township said boarding houses were not allowed when I asked if a license was required to rent a room. I looked up the code she couldn't reference offhand and it looks like he could apply to have 3 'rooming units' in his house for a $5/year fee plus up to $200 (perhaps per unit?) in inspections. There are many local room share postings on craigslist for $600-900/mo. The area's newspaper says the community wants more 'affordable housing.' A 1 br apt starts at $1100/mo. If he buys the house and applies for the rooming units and doesn't get approved, he would flag his property to the township and face significant financial hardship due to an inability to pay that much rent. He might have to move out and rent the whole house (upon which 3-4 unrelated parties could all co-tenant the same house on a lease?!?) If he buys the house and rents to roommates and doesn't apply for rooming units, he might have problems with the township or with evicting non-paying tenants in court. (He reduces his risk by keeping everything clean and up to code, and by screening higher quality roommates.) The only examples in the local newspaper of code enforcement seem to be for slum rent-by-room $250/mo/room housing not up to code (electrical) being cracked down on because it was unsafe. What would you do? Should he buy it or not? Have you ever dealt with a township not willing to let someone (an owner occupier) have paying roommates (long term, not Airbnb) freely? It seems like a huge restriction of freedom, especially given property taxes are like $6000/yr for a $200k house around here. Thanks for your insights!

Erin Walt - it is easiest to take the exam as soon as possible after the class. I took it the earliest time possible which was the next week (and passed). Go conquer!!!

@Account Closed - don't take over lawn care. I can tell it'll annoy the heck out of you to think about it at all. You were much happier before you knew. And the tenant might not care so much. 

Just make sure you have the financial budget covered for a full backyard 're-sod' on move-out.

@Account Closed - probably best to not give a reason. Say circumstances changed and you're willing to offer a new lease for x period at $y rental rate (3-8% increase). If you can increase your security deposit based on that new monthly rent number, do it. If you aren't charging $25-35/mo pet rent with a pet addendum, add it.

If you need to change any terms or clauses in the lease, now is the time.

Casually say something like 'I noticed the backyard looks a little muddy.' Please note clause # on your lease that says you'll maintain the grass in the backyard. You can get a bag of grass seed and a spreader for $30 at Home Depot. Thanks. Appreciate it.

Moving is expensive and most people try to avoid it, especially with animals.

Mary M. - if the rest of the house isn't being damaged significantly by the dog on an ongoing basis (hopefully you have wood/tile floors), I'd consider renewing them at your standard market rate rent escalation. You have a guaranteed re-sodding or landscaping expense after you remove them. Why be emotional about a yard you don't live with? Option A) keep paying tenant in place. Yard can't get much more damaged, can it? Option B) change tenants, guaranteed vacancy and expense - pay to rehab property (painting, carpet?, yard - may exceed total security deposit which you can't easily recover?), get unknown new risks.

@Christopher K. - the house isn't listed yet. A 3 br 1.5 ba house down the street went under contract within a few DOM for +18k my ARV. the partners want to list the house asap so no time for more permits.

@Cheryl Schuck @Mark Moore @Zana Blue - I agree. if I could go back in time, I'd absolutely try to permit to add a bedroom AND bath since the space is plenty large enough. But all the walls are closed up, everything's painted, etc.  Trying to add a permitted sink and toilet would postpone selling the house for at least 60 days and cost nearly what we'd net.

Maybe next project...

I'm working on a rehab in a great school district. I am considering converting an existing bonus living room to a bedroom to try to increase the ARV by 5-10k and increase interest in the listing. I think the closet will cost $2500 max. House is currently 3/1 and would be a 4/1. I'm too far along to try to make it a 4/2. I want to build a closet (~8x3) and add a door to an existing open 10x20 symmetrical extra living room area off the mud room & kitchen. Ceilings are about 12' high with fans. Are permits needed to build a closet? (No new electrical). This is in New Jersey. I will call my township but I wanted to know your experiences. Do you think it'll add value to add a technical bedroom, regardless of how they use it? This would be a large 'master' bedroom because the other 3 bedrooms are about 12x10. The main living room/dining area is open to a beautiful kitchen (12x14) and is about 16x10. Total house is about 1200 sf. Most of the similar models have a similar room that's much smaller and have not made it into a bedroom. Do you have any examples where the additional bedroom didn't add any value to the sale price? Thanks for all your insights.

Tarcizio Goncalves - how about: Your name (and picture if desired) Real Estate Investor (title) Email Phone # (if desired, some get a free google voice) Specializing in xyz area/county (tagline) Vistaprint or staples can make you 500 for like $10.

Masta Purba - File a 5 day notice to pay rent or quit today. (Or whatever your state allows). Date, sign and email & mail it. Include any owed late fees per your lease. State that you appreciate their maintenance and you look forward to returning most/all of their sec dep to them if they abide by the terms of the lease. State that the two month's deposit on the lease will be returned according to the lease such as 21-30 days after they've vacated and you've inspected & repaired the premises. Any late fees are considered as additional rent. Additionally, you should be marketing and showing the unit to new tenants now within 60 days of the end of a lease. So start giving your standard 24-48 hour notice of showing to the tenants. Personally, if legal and a nice tenant, I may have allowed for the final month to be paid from a 2 mo security deposit but definitely not the second to last. That's just asking for trouble. In Philly, the landlord usually collects first, last and 1 mo sec dep which is essentially 2 months sec dep until the final month.

Rachan Malhotra - if you want cheap Fannie/Freddie financing, you'll need to acquire any properties in your name. Some investors risk the mortgage due on sale clause and transfer these into their LLC. Other investors take out extra blanket insurance for the asset protection an LLC usually provides.