While the traditional approach involves buying a multi family property, living in one unit and renting out the other - with rising prices and interest rates; others have considered renting out bedrooms as unit spaces. 

Spending $1,000 to start the process can be worthwhile if you’re clear on the steps needed to reach that point.As for renovations, the approach really depends on your goals and the scale of the work.

The IRS is taking a more conservative approach and you want to ensure you have all your ducks in a row + a team behind you to back you up if something comes into question.

Also, when it comes to enforcing the lease, use a simpler approach.

This is a numbers game so you may have to take an aggressive approach towards negotiating several deals before one of them actually works out.

Can try to reposition to Class B, but neighborhood may impede these efforts.Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.Tenant Pool: majority will have FICO scores of 560-620 (approaching 22% probability of default), many blemishes, but should have no evictions in last 2 years.

- Any lessons learned or best practices you’d recommend for someone leaning toward this approach?

The income based approach to valuation is only used for commercial properties, that’s 5 units and up for multifamily.  

However, I should note that this tenant has been late paying rent several times recently, which has added some strain to the landlord-tenant relationship.How would you approach this situation?

It’s a move that worked out exceptionally well, especially in a growing market like Phoenix.Here’s how you could approach it:Unlocking Equity:A HELOC is great for flexibility, while a cash-out refinance might be better if you’re aiming to make multiple acquisitions quickly.