First HouseHacking Questions

Houston, TX · Member since 2016 · 25 posts · 2 votes

Hello BP, I am currently in the process of buying my first residence in Houston, TX (and ever). In order to make the most out of this purchase, I would like for it to provide some sort of cash flow. You know what that means, House Hacking. I have a pretty narrow price range right now, <125k, so I'm thinking either a really small multi-family or just be a live-in landlord and go the roommate route. Also, I'm not very handy at the moment, so I've been trying to avoid any houses that need some sort of major rehab.

I'd like to get some opinions on the less obvious pros and cons of each method. For example, if I were to go the live-in landlord route, how does that affect things like Lease Agreements. Are there any legal gotchas I need to know about?

Thanks in advance for any help or advice!

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Patrick N.

Investor · Austin, TX · Member since 2015 · 16 posts · 6 votes

10y

One way to ease into it is to rent out your extra room(s) for a few months at a time through AirBnB. I'm doing that now with my two rooms, and have not had any issues because I only rent to people that have stayed with other hosts and have been reviewed. AirBnB collects rent for you and insures your home. The whole process is pretty seamless.

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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
10y
My opinion: always avoid having anyone live in the same physical space as you whenever possible. I would do a small duplex before I would rent out rooms in my place to anyone. Either way, you want to have as close to an iron-clad lease as possible.
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Matt Faix
Investor · Carnegie, PA · Member since 2014 · 259 posts · 144 votes
10y
I agree with @JD Martin - I'd go with a small duplex over the shared room situation. Also, if you're not handy, just make sure that you have the right contacts (handymen, plumbers, electricians, etc) in your network that you trust and can call on quickly if something does go wrong. Best of luck!
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Anthony Washington
Investor · Houston, TX · Member since 2015 · 12 posts · 17 votes
10y
I'd also consider homes with garage apartments or guest quarters, price point notwithstanding.
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Antoine Baisy
OP
Houston, TX · Member since 2016 · 25 posts · 2 votes
10y
Originally posted by @JD Martin:

My opinion: always avoid having anyone live in the same physical space as you whenever possible. I would do a small duplex before I would rent out rooms in my place to anyone. Either way, you want to have as close to an iron-clad lease as possible.
JD, is there a reason you would avoid being in the same quarters? I live with roommates now so the terrain isn't necessarily foreign for me.
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Joseph Moudni
Melrose, MA · Member since 2015 · 12 posts · 1 vote
10y
hello Antoine, being a landlord, and being a roommate are two different experiences. If you are young and used to having roommates that you can get a long with, I don't see why you wouldn't share your house.My issue with such a strategy is that when you try to acquire your next investment. You need to know if the house that you're thinking of buying is going to have positive cash flow, let say if you decide to rent it.If you buy a duplex, and a tenant decided to leave, you only have to come up with what that tenant was paying for rent to cover your mortgage, but if you have SFH, you will have to cover your entire mortgage. What I suggest is to use the BP rental calculator, include all the expenses and see if the numbers work.
Good luck.
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JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
10y
Originally posted by @Antoine Baisy:

Originally posted by @JD Martin:
My opinion: always avoid having anyone live in the same physical space as you whenever possible. I would do a small duplex before I would rent out rooms in my place to anyone. Either way, you want to have as close to an iron-clad lease as possible.
JD, is there a reason you would avoid being in the same quarters? I live with roommates now so the terrain isn't necessarily foreign for me.
Yes. Being a landlord is kind of like being a boss, or being a bank. What happens if you have to "discipline" or "fire" the employee (the tenant)? You are creating a business relationship and should treat it as such. A roommate is more of an equal footing scenario than a lender/borrower relationship. If you don't make your car loan payment, the bank asks you nice once or twice and then comes and takes your car. If you don't show up to work on time the boss asks you nice once or twice and then fires you. If your tenant doesn't make the rent payment on time, or smokes in the room, or acts a hoarder, you ask nice once or twice and nothing happens. Now what? You are stuck living in the same quarters as someone who is now (hopefully) being evicted or sued in court.
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Antoine Baisy
OP
Houston, TX · Member since 2016 · 25 posts · 2 votes
10y
Originally posted by @JD Martin:

Originally posted by @Antoine Baisy:
Originally posted by @JD Martin:

My opinion: always avoid having anyone live in the same physical space as you whenever possible. I would do a small duplex before I would rent out rooms in my place to anyone. Either way, you want to have as close to an iron-clad lease as possible.
JD, is there a reason you would avoid being in the same quarters? I live with roommates now so the terrain isn't necessarily foreign for me.
Yes. Being a landlord is kind of like being a boss, or being a bank. What happens if you have to "discipline" or "fire" the employee (the tenant)? You are creating a business relationship and should treat it as such. A roommate is more of an equal footing scenario than a lender/borrower relationship. If you don't make your car loan payment, the bank asks you nice once or twice and then comes and takes your car. If you don't show up to work on time the boss asks you nice once or twice and then fires you. If your tenant doesn't make the rent payment on time, or smokes in the room, or acts a hoarder, you ask nice once or twice and nothing happens. Now what? You are stuck living in the same quarters as someone who is now (hopefully) being evicted or sued in court.
Solid point. In the event of an eviction, I would then be living with a possibly unruly tenant. This would put personal belongings at risk as well as turning my own living quarters into an undesirable place to be.
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Patrick N.
Investor · Austin, TX · Member since 2015 · 16 posts · 6 votes
10y
One way to ease into it is to rent out your extra room(s) for a few months at a time through AirBnB. I'm doing that now with my two rooms, and have not had any issues because I only rent to people that have stayed with other hosts and have been reviewed. AirBnB collects rent for you and insures your home. The whole process is pretty seamless.
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Antoine Baisy
OP
Houston, TX · Member since 2016 · 25 posts · 2 votes
10y
Originally posted by @Patrick N.:

One way to ease into it is to rent out your extra room(s) for a few months at a time through AirBnB. I'm doing that now with my two rooms, and have not had any issues because I only rent to people that have stayed with other hosts and have been reviewed. AirBnB collects rent for you and insures your home. The whole process is pretty seamless.
That's a cool idea. Can I ask what part of town you're located in? Also do you think that matters with a city like Houston? I've been focusing on properties inside the beltway
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Patrick N.
Investor · Austin, TX · Member since 2015 · 16 posts · 6 votes
10y
I'm in East Downtown so I get quite a bit of traffic. My home is also not too far from the Medical Center, University of Houston, or the George R. Brown convention center. My recommendation would be to at least list your place on the site since it won't cost you anything. They will even come take professional photos for you free of charge.
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Matt Jones
Real Estate Agent · Pensacola, FL · Member since 2014 · 379 posts · 307 votes
10y
I rented out 1-2 rooms in each of my first two houses. The rental income was huge for me at the time and allowed me to still make strong contributions to my 401k and own a home at a young age. I was fortunate that I always knew someone that needed a room so I knew all of my roommates prior to agreeing to take them on.
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Antoine Baisy
OP
Houston, TX · Member since 2016 · 25 posts · 2 votes
10y
@Patrick N. I didn't know about the professional photos thing. That's pretty sweet in itself.
@Matt Jones Yeah I know there is always a debate over whether or not to rent to family and friends. I've been roommates with friends for around 4 years and there haven't been any issues with paying the bills. Do you feel like when you're actually the landlord the relationship changed at all?
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