Looking to Buy and Rent Out Extra Rooms - Beginner

Buying & Selling Real Estate
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Looking to Buy and Rent Out Extra Rooms - Beginner

Eric Fox
Houston, TX · Member since 2012 · 2 posts · 0 votes

Hello all, I am a 23 year old professional in Houston, TX. With the market a bit low now and rates so extremely low, I feel I should take the opportunity to buy a nice 3 bedroom town house and live in one room and rent the other two out.

For the first year I already have 2 friends that want to live there and will easily pay the mortgage, taxes, etc each month, meaning I can live for free and be getting a house paid off. This seems like a no brainer to me.

However, there are some things I might be missing...please ask any questions you have or let me in on any information I might need.

I have a good steady job, but I want more income than it generates and have always seen myself as the kind of person that will make much more money on the side than I ever make at my actual job.

Do you have any recommendations for me? I am planning to read "Investing in Real Estate 3E", "The ABC's of Real Estate Investing:...", and "The beginners Guide to Real Estate Investing 2E". When I get into something...I really get into it and it begins to consume my life ha.

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    14y

    Welcome to BP! This is a common arrangement and "friends" can work until you start living together....I'd suggest you buy if you can without them being involved. They can take a bedroom and meet at the kitchen table on the first of the month. You may have some ordinaces concerning unrelated parties in a single family residence, usually no more than three but I doubt you'll have a problem with 2 friends.

    You need to know they have the capacity to pay what is due even if they are friends, that can destroy friendships.

    I'd suggest you list who is to do what as well and what you guys agree to, keeping personal items out of living areas, who cooks who cleans what, etc. My GF has a 26 yr old daughter that did this and these were issues they had and you know how the girls can be....lol

    Your arrangement really isn't "investing" so much as having a place to live. It depends on your relationship as to what you should have written down, IMO as a formal lease might be over the top....in fact if you feel that you need to nail down late fees and such, I'd not select that person as a boarder, you need a better relationship than that.
    Depends on the personalities involved.....good luck!

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  • Eric Fox
    OP
    Houston, TX · Member since 2012 · 2 posts · 0 votes
    14y

    Thanks for your relpy, and your points are well taken. I would like for them to sign a lease, but they are both young professionals like myself (making $65,000+ annually) so I know they have the capacity to pay. I lived with several roommates all throughout college and get along with people very well. The two people that would be moving in I have a lot of respect for and I know respect me, so I don't think it should be much of a problem (I see where they live now and they treat it well, so it doesn't concern me much)

    You are right that I am not really looking to INVEST, but more to have a place to live in for cheap and be getting a house paid off while I do it. Is this a sound strategy though? I have done the monthly calculations and included mortgage, tax, hoa, insurance, and cannot think of anything else I am missing. My monthly income will be so much more if I buy and rent out 2 rooms than just renting every month.

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