Madison Heights, MI · Member since 2015 · 6 posts · 0 votes
Hello all!
Just purchased my first home to live in at warren, mi 48088! it is a 3 bed 1 bath w/ unfinished basement 2.5 car garage.
I want to rent out the remianing two rooms and live in the third one. The house needs to be renovated and i am wondering what the best stratgey is used to renovate a house i plan on renting currently and in the future.
Average price point in the area is 110-120K and average rent rate for a 3 bed 1 bath is about 1250-1000
Currently the kitchen is outdated and needs renovations. The bedrooms need the carpet removed and the hardwoods redone allong with a fresh coat of pain.
Also im wondering if i could put a room in the basement and rent out the three bedrooms. Has anyone done anything like that?
Any other advice you would give someone just starting out with a rental and living in it at the same time?
Lots of people sleep in their own basements even if they are not technically/legally a real bedroom due to the issues raised above.
There would be a liability problem with renting out the basement space as a bedroom to someone else. If the owner is the one sleeping down there - no problem.
Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
10y
Come up with a project plan and figure out how renters work around that. I like collecting rent while renovations occur, but it does complicate things. Doesn't sound like you are taking the only bathroom out of commission. If you want to move people in while renovations are happening, I would offer a stepped rate - a lower rate until the upgrades are complete (for hassle of living through it) and up to market rent once work is done.
It is easier to do the bedroom work before people move in. The bedroom work is also the cheapest, so bite the bullet and do it first. Maybe you can initially move them into Room A knowing that they will move to room B once room B is done.
The basement can only be included as a room if it meets fire code... i.e. has big enough windows for egress. And are you positive that the basement doesn't take on water in wet weather? Unless it is a death trap it may be a good option for you to sleep in until all 3 bedrooms are rehabbed.
Madison Heights, MI · Member since 2015 · 6 posts · 0 votes
10y
Thanks for the advice Michele.
Haven't thought of offering rooms for rent during renovation. Some income is better than none!
As far as putting a "room" in the basement i wouldnt plan on renting it out, rather having it as a space where i could sleep so i could rent out the three rooms. My logic behind that is i would be getting more income with more tenants(still exploring this thought, i do see some flaws as having an overcrowded property, tenants expecting the market value of the rent being split between all persons living in the property, is this legal?!?! lol etc etc what are your thoughts?)
Lots of people sleep in their own basements even if they are not technically/legally a real bedroom due to the issues raised above.
There would be a liability problem with renting out the basement space as a bedroom to someone else. If the owner is the one sleeping down there - no problem.
Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
10y
Don't forget to put in some sturdy bedroom doors and a keying system you can control for both the front door and each bedroom if you are going to rent them individually. You are going to want to re-key the front door and the room door every time a tenant moves because who knows how many copies of you house key they made for extras for friends ETC. Might even want to put some language in your lease forbidding copies, not that it can really stop anyone.
Not that this really has anything to do with the rehab but you should also spend some time thinking about how your are going to allocate use of common areas and the kitchen. Reasonable times of use, cleaning up after yourself, any areas of the property that are forbidden (IE garage or attic), are they going to bring their own dishes or are you going to provide them, maybe even something about "quiet" hours. These are all things you are going to want on a signed lease addendum before they move in.
Investor · El Paso/Socorro, TX · Member since 2012 · 365 posts · 75 votes
10y
Single rooms typically will rent a little higher than the whole house (IE: 3 bed house $1000, 3 single bedrooms $400 ea.). You can mitigate some of the cleaning issues by having maid service for the common areas and the maid may agree to add the renters at a good rate if they wish.
Business wise the smart move is to get a permit and build a proper separate unit in the basement. This way when you move out you will rent two full units.
Renting rooms is a stop gap solution at best to cover costs.
Madison Heights, MI · Member since 2015 · 6 posts · 0 votes
10y
Appreciate all the responses everyone!
I moved in my new house 5/31! renovations will begin this weekend and the process of drafting up a lease and my provisions has begun!
@Kevin Harrison how would you go about allocating the use of common areas such as a bathroom and kitchen that would be attractive to potential tenants?
Investor · Hyattsville, MD · Member since 2012 · 822 posts · 441 votes
10y
Also think about the implications of 3 folks sharing one bathroom. Then think about adding a fourth. Weigh if that additional income is worth it to you and if you could find roommates that would be ok sharing a bathroom with 3 other people. Some might lose interest if the proposition is sharing a bathroom and common areas with 3 other people. Or maybe it won't matter...
Investor · Woodbridge, VA · Member since 2015 · 476 posts · 197 votes
10y
Simple courtesy would be used for the kitchen with maybe a chalkboard to notify the rest of the house if you need the kitchen in its entirety for a couple of hours. the bathroom situation you will have to figure out once you have your renters as everyone is going to be different and cant just hold it until their time. But you could limit bathroom usage to 10 mins in the mornings if everyone is trying to get ready at the same time. That way you don't have someone in there trying to dry their hair and do makeup for 30+ mins.