I've thought a lot about this....
Not being able to find tenants is one of the biggest fears beginning house hackers have when they first get started. I talk with my clients in Colorado Springs about it all the time.
Fears:
The number one fear among house hackers is the inability to find tenants, which can significantly impact your ROI and rental income. However, it's important to remember that this fear stems from the unknown. Once you've experienced the successful rental of your first house hack, this fear diminishes. In reality, finding tenants is quite easy, especially if you follow these steps to reduce your risk of vacancy:
Living in a growing city in a desirable location increases your chances of finding tenants. In addition to that, the current housing shortage creates a demand for affordable housing, making renting rooms even easier to do. Be willing to adjust the rental price if necessary to attract potential tenants.
Implement the following steps to increase your chances of finding suitable tenants and minimize vacancies.
Generating Interest and Attracting Potential Tenants:
Making the Listing
Take professional photos! You can use them every time you need a new tenant. If you can’t afford professional photos you shouldn’t be house hacking.
Make sure your listing description includes the following items:
- Rent
- Is utilities included or not?
- Credit score requirement
- Job/income requirement
- Description of yourself and other tenants
To maximize your reach and find potential tenants, utilize various platforms, including:
- Facebook
- Craigslist
- Apartments.com
- Zillow
- Roomster
- Roommate.com
Responding to Inquiries
Once you create an awesome listing you will start to get inquiries. While you may receive numerous inquiries from individuals casually browsing listings, focus your time and energy on serious prospects. Make them earn your attention by demonstrating genuine interest.
Ask them an easy question back to see if they are interested. I usually start with something like this:
“We require a 550+ credit score as well as a current job paystub or a co-signer who meets these requirements. The move in date is August 1. Does all that work for you? “
If they answer “yes” you are on to the next set of screening questions. I use this: “I have a couple questions for you to make sure it’s a good fit for you. Please answer these. Then we can go from there: “What is your Job? Only you? Pets? Move in date? Estimated length of stay? Any questions for me?”
Based on those answers you can decide if you want to set up a showing with them.
Before we talk about streamlining showings, I want to share a hack with you during the initial screening phase.
Prepare templated questions in advance to streamline the process and utilize text replacement features on your smartphone for efficiency. For example, all I have to do is type “rental1” in my iPhone and it will replace it with that first reply. I type “questions1” in my iPhone and it replace it with all of the questions I want to ask.
Setting up showings:
Do as many as you can in a one or two hour block. Tell potential tenants when you are going to be showing the house and make them work around your schedule. I like to schedule 15 minutes showings back to back and get several qualified potential tenants to come during the same window. While we are there I make sure I get a feel for the tenants and how I would get along with them. Tell them you will send them an application with background check, credit check, and eviction history. Ask them if there is anything that might come up on their reports that they want to let you know about?
Choosing the tenant:
When you are house hacking there is no fair housing laws. You can pick who you want to live with. I would recommend deciding based on these criteria:
- Will you get along with them and if they are a good fit for the house.
- Do they have the basic credit, income, and eviction history that you require.
Getting Leases and admin stuff set up
Use e-sign technology to get leases signed. I like Doc Hub and you get 5 free document signatures a month.
Once the lease is signed set them up with software you are going to use. The best software I’ve found for managing tenants are Apartments.com (formerly COZY) or Rentredi.
Personally I use apartments.com. With Apartments.com I can automate rent payments, have the security deposit paid, and have tenants upload their proof of renter’s insurance.
Challenges of living with other roommates and renting by the room
When living with roommates there are always challenges. More often than not it is enjoyable and a great way to make new friends. Here are some of the challenges I’ve faced with rent by the room house hacking:
Dishes!! People not doing them is annoying. Set up a chore list. Set an expectation that no one leaves their dishes in the sink. Create a chore list and if someone misses make them buy the house beer or do everyone’s chores the next week.
Drama between tenants. Facilitate conversation and get people to talk like adults.
Tenants not paying on time. Require autopayment set up in the lease. Use Apartments.com to do this. Have a lease in place that gives you some options if tenants aren’t paying on time. Enforce the late fees every time to incentivize on time payments.
You can do this!
With the outlined steps and strategies, you can overcome the fear and stress associated with finding tenants for your house hack. With these steps you can reduce your risk and your time. Remember that living in a growing city and providing affordable housing will attract potential renters. By creating an appealing listing, responding to inquiries efficiently, conducting effective showings, and choosing the right tenant, you’ll minimize vacancies and maximize your rental income. Additionally, setting up leases and utilizing software platforms will simplify administrative tasks. With these tips in mind, you’re well on your way to successful house hacking. Don’t be discouraged—finding tenants is an achievable feat!
And remember to declare your rental income on your taxes so you can use that income to help you qualify for the next house hack!
