House hacking information

8 Replies

Hi everyone. My name is Brenda and I live In Minnesota and I want to start house hacking my house. I just have a few questions about the legal side of the whole deal. Do I need to have someone come out and inspect it? When it comes to tax season -how do you go about informing the extra income? I'm really excited to get started on my road to financial freedom.  

Hi @Brenda Guzman ! Just starting out as well but I would highly suggest picking up the updated House Hacking book by @Craig Curelop . I was on the pre-order and working my way through it right now and it is packed with information re house hacking. 

Sure you will find your answers in the book and if not, confident the book will point you to the right places. 

@Brenda Guzman congrats on taking the first step towards financial freedom! I too am househacking.

I know BP released a new book on this that would probably be very helpful to read. But what I did was simply listed my place on renting websites, no inspection, no permit. Then starting collecting rent. You have to disclose this to your accountant so they can put this as untaxed income.

@Brenda Guzman

Just keep track of the income (and the corresponding expenses!) and be sure to report it when you do your taxes.

You don’t have to have any inspections done.

Other than that, the best thing you can do is educate yourself on how to properly find/screen tenants so that you minimize the headaches involved.

@Brenda Guzman Licensing laws are local so be careful in putting too much stock in what is legal from those who are out of state.  That being said Minneapolis does not require an owner occupant to get a rental license, I'm not sure about other municipalities.  I suspect most do not but you need to check it as part of your due diligence inspection period.  As for your question about income the other comments were correct.  Be sure to track the income, we like only accepting payments through Cozy.co.  This will make income tracking easy.  You will also want to track the expenses related to your home including the utilities you pay for other tenants, which are typically trash and water.  I recommend you use a CPA to file your taxes as there are several considerations that you should get right upfront.  @John Woodrich is the local pro.  He has a master's in tax and is a successful investor himself.  

I also recommend you use a Realtor who specializes in investment properties. There are a lot of benefits to working with an investment expert, but advice and access to properties that are not on the MLS are two of the big ones. @Jordan Moorhead is a pro at this.  He helps 30-50 people house hack every year and has an ebook on the subject.  I'd reach out and get coffee with him.

@Brenda Guzman House hacking is such a great way to get started! Like @Tim Swierczek mentioned, check with your local city regulations in regards to rentals. The city website will likely have all the info you need but you can also call them directly and ask. Cozy.Co or local company ZenLord Pro are free, easy to use services that help you screen tenants, collect rent and report extra income at the end of the year. Best of luck!

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