Claiming House Hack Income??

Question

Hello BP family. I have a few questions that I would like help with. I currently owner occupy a 3/2 SFR in which I would like to rent a bedroom. I would like to rent the room to accomplish two things; 1) extra income and 2) start building landlord experience that is evident on my tax returns. I keep reading that most lenders require 2 years of landlord experience to qualify for investment loans.

If I have a lease/'s (M2M preferably) and claim the income on my taxes, will this count as landlord experience assuming I can keep the room mostly rented for two years? Do lenders even consider house hacking to be a landlord/tenant experience?

What are the pro/cons of claiming or not claiming? I was told by someone in the finance world that it may not be worth it to claim.

Thanks!

Will C. · Answer

@Javi Chipi one of my goals this year was to start building a relationship with a CPA. Thus far I have been using TurboTax. Thanks

Will C. · Answer

@Nick Colamarino @Lance Lvovsky Thank you for the response!

Yes, I would agree the income must be claimed.

I was not clear in my original post. When seeking financing for my next property, I want to include the rental income of my house hack and the estimated rental income of the purchased property to lower my DTI. I have read that, to include estimated rental income from a prospective property towards lowering your DTI, the lenders will require 2 yrs landlord experience proven by your tax returns. Even then, they will only count up to 75% of the estimated income towards your DTI.

I realize that the 2 yr requirement is lender overlays, I guess I just wanted to be prepared to provide landlord history if lender options are limited down the road and DTI was an issue. Starting the 2 yr timer now is easy, IF house hacking is considered landlord experience. Does that make sense?

Will C. · Answer

@Louise Alexander Thanks! Ill start looking for and building that relationship now.

Louise A. · Answer

@James Clements

I was told the same thing by many lenders when I was getting started out.  Call all the banks and brokers you can find to locate a lender who will give you credit on your DTI right away.  My lender will give me credit for the rent amounts as long as I give him leases.  He doesn't require years of experience either.  He's with Ruoff if they are lending in Richmond.  Best of luck!

Nick C. · Answer

Where are you reading that lenders require 2 years of landlord experience? You'd have to find out what constitutes as "landlording experience" from the lender. Personally I would just find a new lender that doesn't have that requirement.

Claiming House Hack Income??

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