House Hacking questions

5 Replies

Hi everyone, 

My wife and I have decided to go for house-hacking for our 1st investment. 

I was wondering, a few things. 

1. How do I structure things so that we have as little liability as possible? 

2. If we get a house in the winter, do we wait until the spring or summer months to have tenants to sign a lease? Or do we have them sign a lease agreement right away?

3. Should we let tenants know that we are the owners? 

Hi James! 

1. To limit your liability I would highly recommend you hire a property manager. Make sure you ask for 5 references and that they have a good reputation amongst the real estate investing local community! Maybe even asks some local realtors about them. 

2. The time of the season doesn't matter, yes people are more likely to be looking for homes in spring and fall but somebody (even good tenants) are looking for housing in the winter months!

3. I would highly suggest you not let them know you are the owners. It's really up to your preference, but if you do this then you are going to be getting door knocks at 3am in the morning to fix toilet clogs. Better just let your property management company deal with it in their system and spend $100 on labor while you sleep peacefully. There's a good chance if they know you are the owner they could take advantage of that in some way shape or form. Best to just be a tenant with them and nobody is the wiser!

Hope this helps!

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1. How do I structure things so that we have as little liability as possible?
Have it properly insured, can also setup LLC

2. If we get a house in the winter, do we wait until the spring or summer months to have tenants to sign a lease? Or do we have them sign a lease agreement right away?
Why lose income? Recommend making the lease 13-15 months, so it ends at end of Feb or March. You don't want to always rent in winter!

3. Should we let tenants know that we are the owners?
Not a good idea! Can be hard to hide depending on what you get in the mail and they see. So, at worst you are a minority partner and have no authority to make decisions. Keeps the heat off you of confrontations where tenants demand immediate answer.

I'd actually give different advice. Just goes to show there are multiple ways to go at it.

1. If you're house hacking, this is one of the few times when it's perfect for managing yourself. You'll learn SO much, including how to best manage property managers later in your career.

2. When renting in winter, I have often done short or long leases to make them end in (beginning) of summer.

3. When house hacking, it eventually comes out. Save the awkward moment later, and don't hide it now. The trick is making sure to "train" your tenants. Just because you're next door doesn't mean you're answering them at weird hours, or can give them special rent deadlines, etc.

Thank you @Christopher Cole,

That definitely sounds like something I'd like to do in this circumstance, especially since this is our 1st property and we're using an FHA to get it.

It certainly seems like there are a lot of different methods in managing a property