Experience or thoughts on Homeroom?
Member since 2020 · 9 posts · 6 votes
Experience or thoughts on Homeroom?
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Member since 2018 · 1 post · 8 votes
5yHi all, I'm a recent HomeRoom investor and want to chime in here to share my experience. I was interested in investing in the Austin area but obviously the market is really competitive and rents haven't gone up in line with the skyrocketing purchase prices so the numbers just weren't working. I was beginning to lose hope but then I connected with Johnny at HomeRoom and was immediately impressed. Although, to be honest, at first I thought it sounded a little too good to be true... totally passive investing? Guaranteed rent? I figured I would give it a shot and I'm really glad I did! The agent they connected me to was one of the best I've worked with - he knew exactly what HomeRoom was looking for and quickly found me a property that worked for them and for me. The house needed some work which normally would have been a pain for me but after close HomeRoom did everything. They acted so quickly the house was fixed up and I had tenants within 30 days of closing without ever having to talk to a contractor. Amazing! If you're considering HomeRoom I recommend you just reach out and have a call with them to see if it meets your needs. I'll definitely use them again in the future and I've recommended them to several friends. Good luck!
103 Replies
- Developer · Los Angeles, CA · Member since 2017 · 157 posts · 84 votes4y
Originally posted by @Matt Silk:
I am in a similar scenario as @Josiah Jenison as an SFH investor in the Austin area. I stopped buying in March 2020 as we didn't know how the pandemic would play out. Since then I can't pencil out any entry level SFH investments as rents are going to take a few years to catch up with the insane appreciation. Great problem for my existing portfolio, horrible problem for my chosen strategy.
I love SFH and was looking for ways to still play as the "easy answer" of moving to a new city where I have zero competitive advantage or scale feels like a much larger undertaking. Thus, I started looking into vacation rental and co-living platforms to see if I could get the same level of comfort building a portfolio of properties in various cities. I am looking at vacation homes and co-living as just different flavors of SFH. So, a company like HomeRoom will replace my agent and property mgmt solution that I use today and allow me to more comfortably expand into various cities without building the infrastructure on my own dime.
So far I have been very impressed with Johnny and HomeRoom and actively trying to figure out where/when I will pull the trigger. Anyone tried their competitors?There are some other operators in the metropolitan areas like LA and NY, such as Tripalink, Common, and Bungalow. Common doesn't do masterlease and they only work with apartment owners. Tripalink and Bungalow signs masterlease with both houseowners and apartment owners. Bungalow is more focuses on SFH while Tripalink is more focused on multifamily.
There's also Blueground, but they don't do co-living. They masterlease your apartment/condo, furnish it, and rent it out as an entire unit.
Hope this helps!
- Member since 2018 · 13 posts · 9 votes4y
Hey evyerone! So I am looking to invest with HomeRoom as well. I like the business model with them really helping get it all set up. You can also choose to take the consistent lower risk 70% of expected income model where you get that same check every month, regardless of turnover and vacancy rates. Or, you can go with 85% of actual rent recieved and share in any vacancy or downturn losses..but you also get more on the upside if rents appreciate. Initial setup is 3 years, and after you can renew for 5 years. The biggest downside I see is the added upfront cost of buying common area furnishings and paying to have extra rooms and closets added. You can recoupe that money with the over-market rent you should receive, but if you choose not to renew after 3 years and want to rent/sell as a standard SFH, you then have to tear the walls and such back down and now have a bunch of furnishings you probably need to get rid of. I plan on investing mainly for the hands-off nature of it. I have a full time job and do side work as well. It may not be the popular way as far as the Bigger Pockets community thinks, but it definitely seems like a viable, allbeit slower, way to get into real estate and build a little wealth over time. Just thought I'd share what I have learned thus far. Hope it helps and Happy New Year!
- Rental Property Investor · Oakland, CA · Member since 2021 · 22 posts · 61 votes4y
I'm a new investor, from CA, looking to get started OOS where I can actually afford something. I've been looking in Indianapolis mainly, got a team there, been hunting aggressively for almost 2 months. Initially looking for small MF properties, but inventory is limited and the good deals get snatched up quick, often cash buyers. I took my realtors advice and expanded my search to include SF homes, but the margin is always smaller, and it's a real needle in a haystack to find deals, and of course they get snatched up quick, same problem. That's where I'm hoping HomeRoom comes in. I've seen some very promising properties if I consider renting each room out separately. Nice big houses with 4 bedrooms that currently bring in around 1800-$2100/month, look much better when each room seperately can fetch $600 or $700. That puts total income at $2,400 to $2800. These are great prices per room in Indy, especially for the beautiful spacious immaculate houses in nice areas that suddenly look profitable. You've got 1/1 dumps going for $675 in neighborhoods you shouldn't stop in. I know HomeRoom doesn't currently operate in Indy, but my point is, their model finds value where it didn't exist before. Typical Prop Mgmt can't manage a co-living home, and all the special considerations that are required, but even typical mgmt costs 10% or 11% considering they take a months rent for vacancies to get a new tenant in place. HomeRoom charges a flat 15% and you get professional management specific for co-living by people who specialize in it. On top of that you get access to their team of contractors/handymen etc, and again, projects are managed by professionals who know how to operate co-living. To me that seems like a steal, for a few percentage points more that traditional prop mgmt, especially considering the premium rents you can collect. That's why I'm so excited to have a first meeting scheduled for this Tuesday, 2/15. I will come back and update this post after I've had my intro meeting, let you all know any more specifics I have to offer. I will also continue to update through the entire process if we find that we can work together and I end up making a purchase with them. I'm ready to pull the trigger. As I said, I've been hunting for a couple months already. Got a team, got multiple pre-approvals, got money ready to deploy. So with any luck, this will move forward quickly. Please let me know if there's anything specific I can try to provide details on and I will do my best. If this moves forward I'm happy to be an open book case study.
Cheers y'all,
May your money work harder than you do this year!
- Investor · Indianapolis, IN · Member since 2021 · 81 posts · 24 votes4y
This is interesting I've never heard of them. Maybe because I'm new to REI and I do live in Indy. I will look them up, thanks for posting.
- Rental Property Investor · Oakland, CA · Member since 2021 · 22 posts · 61 votes4y
So I just finished my introductory Zoom meeting with a HomeRoom representative, Peter. He informed me that they have recently expanded into the Indianapolis market! How excited am I?! I think this was meant to be for my current situation. So I didn't discover much new information that I wasn't able to find on my own, other than the expansion into Indy that is! I recommend to anyone who is curious, to start out by exploring the website, livehomeroom.com. There's a lot of good info there including some very informative short videos. I also enjoyed scrolling through some of their current for rent listings to get a feel for what they offer, and the type of properties they work with.
I would like to clarify their property management and lease options. They have 2 options, both for 3 year lease terms.
Option 1 - 85% gross rent receipt. Homeroom receives 15%. Vacancies are not insured. Property management is included at no extra cost. This includes some basic property upkeep such as 2x year gutter cleaning, lawn maintenance, and some other things that I can't remember right now (I will probably come back and update this after I digest the information packets they sent me after our meeting). Also included is the fully automated tenant/property management service app. Tenants use the app for everything including rent payment, maintenance requests, chore wheel, tenant meetings and dispute management, 60 day notice, and more. Also, all maintenance and CapEx projects are done fully in house with a team of professionals (supposedly at discount rates) so you know you'll have quality work done on demand. Perhaps most importantly, HomeRoom carries generous liability insurance, and requires all renters to carry renter liability insurance. They also have a strict tenant screening and matching process. Oh, and after the property is purchased and brought up to standard, HomeRoom has a team of decorators who do the work of furnishing the common areas. In my opinion, the expertise of a team of professionals in all these areas mentioned is worth more than 15%. It feels like a super deal.
Option 2 - 65% gross rent receipt. HomeRoom receives 35%. Vacancies are insured. In other words you receive 65% of gross rent, guaranteed for the entirety of the 3 year lease, regardless of occupancy rates. Again, property management is included.
That's all for now, and like I said, I will probably come back and update this after I've digested the info packets I received after our meeting. I have a review call scheduled for tomorrow evening, 2/16. I will be meeting an agent who I will stay in contact with through the process of looking at properties, until we find one that I like. I came into this with pre-approvals so although they have preferred lenders, they do not require you to use their referrals.
More updates soon,
Cheers!
- Member since 2019 · 67 posts · 17 votes4y
Under either plan, do they do rent increases over the 3 years?
- Rental Property Investor · Oakland, CA · Member since 2021 · 22 posts · 61 votes4y
Yes, @Aaron Signer, regular rent increases.
- Member since 2021 · 3 posts · 1 vote4y
Quote from @Joseph Spear:
Yes, @Aaron Signer, regular rent increases.
Thank you Joseph for the insights in your last few posts. How do they vet prospective tenants?
- Rental Property Investor · Oakland, CA · Member since 2021 · 22 posts · 61 votes4y
@Stone Zhou, exact details are unknown, but they do the usual background and credit checks, I'm guessing there's probably minimum income requirements as per usual. They then follow up with a video interview. There appears to be a matching process after acceptance to match prospective tenants who would be a good fit. Not sure exactly how that works. It would be cool to see an insider perspective of a renter and their experience.
- 4yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
It's a very interesting concept to address housing shortages in specific areas.
Concerns:
- What happens when they inevitably expand too quickly?
- What due diligence is performed to make sure a market will support their co-living concept and what percent of the rental market?
- 15% management fee covers specifically what? 2x gutter cleaning, lawn/snow maintenance, etc? Can't believe they would be profitable including those!
- How does their "generous liability insurance and requiring renters insurance" specifically benefit owners?
- What exactly is their, "strict tenant screening & matching process"? Sounds great, but what's behing the curtain?
- What insurance do they have to back up their 65% gross rents guarantee for 3 years? Have NEVER seen any company deliver on rent guarantees!
Too many newbies "buy" what's being sold without reading or demanding to be given the "fine print". Makes it very easy to take advantage them:(
Logical Property Management4.9459 Reviews - San Jose, CA · Member since 2017 · 1 post · 3 votes4y
- What happens when they inevitably expand too quickly?
- We have been slowly and steadily growing the company. We also expanding into additional markets as we determine the co-living demand in a market to be close to saturated. (We will not let investors buy into markets where we do not thing there is enough demand)
- What due diligence is performed to make sure a market will support their co-living concept and what percent of the rental market?
- We a significant amount of research into market rates of rents, population in-flows and out-flows and other data.
- 15% management fee covers specifically what? 2x gutter cleaning, lawn/snow maintenance, etc? Can't believe they would be profitable including those!
- Finding tenants is the big one -- we have the tenants pay for the maintenance & cleaning out of their utility payment.
- How does their "generous liability insurance and requiring renters insurance" specifically benefit owners?
- Less damage on the property. Not everything we do directly benefits owners.
- What exactly is their, "strict tenant screening & matching process"? Sounds great, but what's behing the curtain?
- 600+ credit score; income validation; we have potential tenants meet the existing tenants to make sure there is a good fit.
- What insurance do they have to back up their 65% gross rents guarantee for 3 years? Have NEVER seen any company deliver on rent guarantees!
- We self-insure and take on the rental risk ourselves. We average 90%+ occupancy so most investors do not actually take this deal.
- Rental Property Investor · Oakland, CA · Member since 2021 · 22 posts · 61 votes4y
So, update! I've not updated for a minute because I've been very busy, both in my personal life, and working with Homeroom, but I've got some time now so here we go.
I had my review call, again with Peter. He outlined what the purchasing process will look like and showed me a case study pro forma. Basically a 3 page excel spreadsheet that outlines the property details, as well as costs associated with purchasing and making ready for tenants, including adding bedrooms if at all possible, which is of course is Homeroom's specialty. All estimated costs are included, as well as estimates for purchase price (if they think you'll have to bid above asking or can get it for less, etc.), down payment and closing costs, repairs if/any, furnishings, appliances, and adding or changing existing layout including egress windows, closets, flooring, paint, etc. Included is estimated rent per room, a conservative estimate I am told, and by my own metrics and calculations and knowledge of the area, I would agree it is a conservative estimate.
With all this information you get a total out of pocket estimate, net cash flow and total ROI, which takes into account estimated vacancy (~10%) and property management (15%) and a maintenance/repairs budget.
They have target cash flow and ROI percentages for every market they are in, and if the numbers don't work out, that deal never makes to the investor.
On a subsequent call, I was introduced to an agent in Indy, and we discussed the types of properties and locations that Homeroom seeks out. They actively look for properties in target areas, which I do not have all the details on as it is a proprietary search, but suffice to say they are looking for B or better neighborhoods, safe, stable to growing population and income. I found a property that I liked after doing some of my own research and running numbers, and discussed it with my agent. We talked shop about the pros and cons of this property and this location, and passed on our thoughts back to Peter. He had a pro forma made up for this specific property and got it back to me quickly. I liked what I saw and agreed to the terms. The stage was set to get it under contract. That was yesterday.I spoke with my agent this morning, he called the listing agent and got back to me with relevant details as well as a seller's disclosure. We discussed our strategy on our bid, and he typed up a P&S agreement and sent me over all the documents to e-sign. The offer was sent before lunch and now I'm waiting to hear back from the seller's agent!
Mind you, I've been very involved in this whole process, including doing my own research, crunching numbers, identifying properties, etc., because I like doing those things. I'm a hands on investor, and sniffing out a deal is part of the fun for me. That said, Homeroom doesn't require or ask of the investor to do any of this extra work. Most investors show up, say how much money they'd like to invest, and Homeroom does the rest. That's kind of their thing, truly passive investments in rental real estate. But it's cool that they're flexible. I've been very pleased by the professional attitude of everyone I've worked with so far.
Moving forward, Homeroom does the inspection, at which point, as in any deal, we can negotiate with the seller based on findings (unless you dropped that clause to make a more competitive offer).
Once Homeroom are on premises, they can also make an accurate edit to the planned reno and repair estimate.
Ok that's all for now, I gotta run. I will try to update again tomorrow at the latest.
Cheers!
- Investor · Indianapolis, IN · Member since 2021 · 81 posts · 24 votes4y
Hey Joseph, thanks for including these details! I'm more your speed type of investor.. I like to do the research as well. Your details have made me, atleast curious, and I see they answered questions above as well. I'm checking out the website and scheduling a call, I'll be sure to add you to referral! looking forward to hearing how you tie loose ends!
- Member since 2021 · 4 posts · 7 votes4yWe’ve been invested with them for a few years now and have received rent every month without any hiccups or excuses. Easiest process ever.
Quote from @Monica Lee:
I just talked to Homeroom and was a little concerned that they want 75% of renovation/rehab costs up front. Does anyone have any opinions about this? Are they trustworthy?
- Member since 2021 · 4 posts · 7 votes4yNot sure of the process they use exactly but we’ve had no damage issues nor vacancy issues in almost three years with them. They’ve been super reasonable when doing any work as well. I’m sure there are less than reputable companies out there doing the things you describe but we’ve been very pleased with Johnny and his team.
Quote from @Drew Sygit:
It's a very interesting concept to address housing shortages in specific areas.
Concerns:
- What happens when they inevitably expand too quickly?
- What due diligence is performed to make sure a market will support their co-living concept and what percent of the rental market?
- 15% management fee covers specifically what? 2x gutter cleaning, lawn/snow maintenance, etc? Can't believe they would be profitable including those!
- How does their "generous liability insurance and requiring renters insurance" specifically benefit owners?
- What exactly is their, "strict tenant screening & matching process"? Sounds great, but what's behing the curtain?
- What insurance do they have to back up their 65% gross rents guarantee for 3 years? Have NEVER seen any company deliver on rent guarantees!
Too many newbies "buy" what's being sold without reading or demanding to be given the "fine print". Makes it very easy to take advantage them:(
- Rental Property Investor · Oakland, CA · Member since 2021 · 22 posts · 61 votes4y
Quick update. I'm under contract! Woop!
Inspection scheduled.
More soon.
Cheers!
- New to Real Estate · Fort Worth, TX · Member since 2020 · 21 posts · 8 votes4yWhy would you have to tear down the walls and other additions?
Quote from @CJ Wine:
You can recoupe that money with the over-market rent you should receive, but if you choose not to renew after 3 years and want to rent/sell as a standard SFH, you then have to tear the walls and such back down and now have a bunch of furnishings you probably need to get rid of.
- Rental Property Investor · Oakland, CA · Member since 2021 · 22 posts · 61 votes4y
Quick update.
I signed closing papers yesterday!
Very excited!
Now that the property is mine, we will start getting to the more fun stuff, and I will post updates as we move forward with reno and make-ready for tenants.
More soon.
- Investor · NJ · Member since 2022 · 155 posts · 224 votes4yCongrats Joe! Keep us updated. Very interested in this concept as a first time investor. Thank you for all the info
Quote from @Joseph Spear:
Quick update.
I signed closing papers yesterday!
Very excited!
Now that the property is mine, we will start getting to the more fun stuff, and I will post updates as we move forward with reno and make-ready for tenants.
More soon.
- New to Real Estate · NJ · Member since 2019 · 4 posts · 1 vote4y
Quote from @Joseph Spear:
Quick update.
I signed closing papers yesterday!
Very excited!
Now that the property is mine, we will start getting to the more fun stuff, and I will post updates as we move forward with reno and make-ready for tenants.
More soon.
Congrats, curious to hear more, but did schedule a call with them for tomorrow.
- Member since 2021 · 4 posts · 2 votes4y
Quote from @Joseph Spear:
Quick update.
I signed closing papers yesterday!
Very excited!
Now that the property is mine, we will start getting to the more fun stuff, and I will post updates as we move forward with reno and make-ready for tenants.
More soon.
Thank you for sharing your experience. I have been interested in investing with them, but wasn't sure since they are more of a start up and there are lots of scams out there. I'm a rookie in a HCOL area so I see this model as a great opportunity for OOS investment. I appreciate you sharing your experience!
- Rental Property Investor · Oakland, CA · Member since 2021 · 22 posts · 61 votes4y
So it's been a while,
and I'm beginning to get a pretty clear picture of total costs, as well as projected room rates and expected income, so I thought now would be a good time to start throwing some numbers out.
The total cost paid out of pocket to Homeroom, after the purchase of the house, will be around $24,818
That includes about $8,480 for various purchases including furniture, appliances, kitchen stuff - dishes etc , smart locks and thermostats. Also, $625 for capturing pictures and building a 3D model of the house to go on the website.
That leaves $16,338 for adding two bedrooms, among various other mostly minor fixes and cosmetic stuff.
I put 20% down on my loan. Got the property for $274,000. After all closing costs including pre-pays, points, fees, etc, my loan total oop was $65,345.
So total oop will be around $90,163
The home went from 5 bedroom to 7. The (tentative) room rates are as follows, from smallest to largest room, $400, $425, $425,$475, $500, $525, $550. For a total gross rental income of $3,300.
PITI will total $1,364
$561 for 5% maintenance, 5% CapEx and 7% vacancy allowance (HomeRoom gives 10% vacancy as a general estimate but my property is the best location of all the Indy properties, close to downtown and UIPUI campus, and discounted compared to room rates at other houses so I don't expect 10% vacancy) The house just underwent a complete top to bottom gut reno with new everything including roof, sewer, electrical, appliances, etc, so I'm budgeting low for CapEx.
$495 for 15% property management.
That puts total expenses at $2,420, out of GRI of $3,300, for a monthly cashflow of $880 (11.7% CashROI).
This also leaves plenty of room for future rent increases. As I said above, my location and rates are very attractive.
Here is the link to the Indianapolis listings on HomeRoom if you're interested. I'm listing #239031
https://app.livehomeroom.com/?...
Cheers!
- 4yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
@Joseph Spear Please post again in 6 months:
1) Ho wlong it took to fill al vacancies
2) Tenant payment performance
3) Tenant turnover rate & costs
4) Any surprises
Logical Property Management4.9459 Reviews - Rental Property Investor · Oakland, CA · Member since 2021 · 22 posts · 61 votes4y
So I just want to take this opportunity to give a shout out to my realtor, who helped make this all possible, Tyler Lingle.
He was instrumental, not only in doing a fantastic job negotiating with the seller, and closing on the property in well under 30 days, but he also made the deal possible from the very start. As I mentioned in one of my earlier posts, I had a property that I liked when I reached out to Homeroom initially. When I told Tyler about it, he was receptive from the jump. He did his own market research on the property, and got back to me right away with his thoughts, and his stamp of approval. He then passed that information on to Homeroom on my behalf, which made this all possible.
I'm so pleased with the property I landed, and pleased to have made it this far in my RE journey. I can thank Tyler for a large role in this process. Send him a message here on BP if you're interested in property around Indianapolis, whether with Homeroom or not. He has great knowledge of the area, he's a great communicator, and he's effective. Furthermore, I used multiple references of his which were also fantastic, for my lender and my insurance agent. I can't wait until we can work together again.
Cheers!
- Member since 2018 · 13 posts · 9 votes4y
Quote from @Steven Le:
Why would you have to tear down the walls and other additions?Quote from @CJ Wine:
You can recoupe that money with the over-market rent you should receive, but if you choose not to renew after 3 years and want to rent/sell as a standard SFH, you then have to tear the walls and such back down and now have a bunch of furnishings you probably need to get rid of.
The additions they put in to make extra bedrooms take away the standard livable areas you would find in a typical SFR. If you were trying to sell it down the road to a a family and not to Homeroom or another investor that liked the layout, you would likely need to remove the co-living additions to make it more of a standard home. As is, it is maximized for bedroom spaces with only minimal shared space. They also told me their additions can cause issues in valuation if you atttempt a cash-out refi. That, and the fact that I would just barely recoupe the additional charges they impose for initial setup in the first 3 years, turned me off of it as an investment for the time being. Still an interesting model and would provide good 5+ year profit potential, but for now I put my money in a Fundrise portfolio for hopefully for immediate returns until I am in a better spot to make a longer term investment.
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