All Forum Posts by: Ryan Thomson

Hey @Rebecca Readus I have done several house hacks in Colorado Springs and my clients are often looking for this set up. You asked for what to look for to convert a single family home, but that might not be your only option. Here are things to look for:

Walk-out basement:
Not sure they have basements in Orlando. One strategy is to purchase a property with a walk-out basement and rent out the basement as a separate unit. 

Duplex, triplex, quadplex: Another option is to purchase a multi-unit property, such as a duplex, triplex, or quadplex, and rent out the additional units. 

House and cottage: Purchase a property with a separate cottage or guest house and rent out the cottage while living in the main house. Or vice versa depending on how comfortable and profitable you would like to be. 

Garage conversion: Convert your garage into a separate studio apartment. By building a shower and a kitchenette you can turn the garage into an apartment. Your biggest costs will probably be connecting to the sewer and getting water/electricity into the garage.

Hey Andriy,

What are your goals? - Reducing living expenses? Capturing the benefits of owning a home instead of paying rent? 

I think what you are really asking is help running the numbers. DM me. I have a great house hacking calculator that I use when I analyze house hacks in Colorado Springs!

@Christopher Pride I'm guessing you are going to get a lot of people recommending their markets. Which makes sense bc most people specialize in one market. 

Trying to cover all of your mortgage while living in one of the rentable units may work if you are willing to put down a larger down payment (all of that 100k). 

Happy to send you the properties I find in Colorado Springs if that sounds like a fun place for you to live. I think it is. I run the numbers for my clients on new properties I find on and off market and send them out daily. Shoot me a DM if you would like to be on that list. 

@Allan Pan I wonder if your criteria may be a little unrealistic for the current market. Although I'm not sure bc you didn't share it. 

I'm guessing you are trying to find something that cash flows. House hacking is tough to cashflow in year one (with current house price run-ups and interest rates) for a couple reasons:

1. You are living in one of the rentable units

2. You are only putting 5% down so your loan amount is much larger and therefore your mortgage payment.

I would consider your net worth ROI. What I mean by this is considering how much your down payment returns to your net worth (appreciation, loan paydown, tax benefits, AND rent avoidance). Don't forget to include rent avoidance in your numbers! You have to live somewhere.

You may need to lower your return or cashflow expectations so you can get into a house hack that will allow you to avoid throwing rent money away every month. You know this, but don't forget all the other ways real estate makes you money. Paying down your mortgage and owning an asset that will appreciate over the long term.

@Jose N. you are so close! 

In my efforts to scale to 5 in Colorado Springs (also starting as a social worker). I've found luck using actual tax returns as my income instead of talking about rents or how I rent it out. Just show them the numbers and try to find a lender that isn't concerned with how your property generates that income.


What can be done to lower that DTI?

1. Ask for a raise or move jobs to one that will pay more. I switched from Social Work to a sales job after year 1. 

2. Put more money down - save more money and put a bigger downpayment down to get the DTI below 50%. Or see if someone is willing to give you a "gift" for the downpayment.

3. Talk to a couple lenders and see if they have ideas or if they can go higher on the DTI%.

Run the numbers and think if sacrificing $600/month is worth all of the value of owning another home. Loan paydown alone on the next house will be worth $600/month. That doesn't even factor in long term appreciation and tax benefits. Sometimes you have to sacrifice cashflow to scale. 

@Nana Ofori I would find a tenant asap. Lower the rent if need be. Market it really well! 

Here is the process I walk my clients through in Colorado Springs:

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.

@Rob Trufant 

I wonder if your criteria may be a little unrealistic for the current market.

In Colorado Springs (and most other markets) House hacking is tough to cashflow in year one (with current house price run-ups and interest rates) for a couple reasons:

1. You are living in one of the rentable units

2. You are only putting 5% down so your loan amount is much larger and therefore your mortgage payment.

I would consider your net worth ROI. What I mean by this is considering how much your down payment returns to your net worth (appreciation, loan paydown, tax benefits, AND rent avoidance). Don't forget to include rent avoidance in your numbers! You have to live somewhere.

You may need to lower your return or cashflow expectations so you can get into a house hack that will allow you to avoid throwing rent money away every month. You know this, but don't forget all the other ways real estate makes you money. Paying down your mortgage and owning an asset that will appreciate over the long term.

If you are paying close to what you pay in rent to cover PITI and expenses then owning a house is a much better financial decision than renting.

@Tyler Ferguson 

It will be a little easier for your taxes and finances if you create a separate account for all of the property's income and expenses including the personal and rental part. Then have a second account for your personal expenses and income (groceries, job, etc).

I would use an accounting (I use quicken) software to then manually label those expenses as related to your portion of the property or the "rental" portion. I think its too complicated to make sure you are always using the right card and bank account for the right property portion. I just have one card for all my investment properties. Then I go through and label the expenses for which property it is for.

Hi BP Community!

Are you interested in joining a community of local, like-minded real estate investors designed to learn and grow together? If so, then we welcome you to join us for our meetup centered around creating community and sharing experiences related to Real Estate investing and House Hacking in the Colorado Springs area.

See you all at Goat Patch Brewing!

Meetup Link: https://www.meetup.com/house-hacker-mafia-real-estate-invest...