Hello fellow investors!
I am looking to buy a property, and have some general questions, since I'm looking to house hack as I start on this investment journey. I've listened to many podcasts, where a lot of people start by house-hacking. Maybe I'm just have missed these answers, or maybe its common sense and I'm just oblivious to this, but my question is, if the house is big enough to so that one floor can be rented and the other is occupied by me, are the utilities just split depending on the amount of tenants (members of a family), electrical, water/sewer, etc. or can you have it metered separately, if its not registered as a 'duplex/multi family dwelling'. Also how do you handle the mail? Do you assign an A and B, so that everyone gets their own mail delivered, or would it just arrive and then I would just give them theirs and take mine? Like living with roommates.
Total newbie here, so I just want to make sure I'm doing things right. I live in Washington, I don't know if that matters or not, but would love your input and help in this.
I rented to tenants in roommate situations over the years. The best situation is one tenant is in charge, charge the others a fixed amount including utilities, and forgo arguments. In other cases, they split the water, electric, internet costs and inevitable arguments would arise, in some cases, causing one or all of them to leave. When they do it, it's usually based on the number of people.
As to mail, over the years, I own triplexes, often to roommates, and over time, have different groups come and go. What happens to the mail? Over time, I would have mail for 6 or 8 current tenants, then mail for dozens of former tenants. What does the mailman do?, He puts a rubber band around all the mail, and leave it in one mailbox. He's got so much time to complete his route, so he has no time to figure out current tenants, former tenants, and non-tenants. We even get mail for people we have no record of living there.
I put a table in the lobby, have tenants pick up their own mail, and place the mail for others to the side. Then, a few times a month, I come by and discard the others. At my duplex where I live, the mailman leaves all the mail in one box, even though there's two, because a typical delivery has a few former tenant's mail, and he's not going to figure it out.
As to utilities, keep it simple. If you're in charge, charge a fixed rate to others, make a few bucks for yourself, and no one will complain. You can come up with the fairest way to allocate costs, and some one will complain it's too much. I run into these situations.
One was a co-worker of mine, and his landlord was stupid enough to split a monthly gas bill of $30.00 with him. His complaint? He and his wife eats take out food for dinner, doesn't cook, but his landlord often have dinners with friends, big meals. His allocation should be at most 25%, or $7.50. He even keeps a count of how many guests his landlord has. He ask if he can suggest his landlord get a separate meter. In his case, gas is not used for heating, just cooking.
I explained to him his landlord probably doesn't have a CO for his unit, and it will cost a few thousand to make it legal. Putting that aside, an extra meter would costs a few hundred to install, but it would cost him MORE even if it was done. Why? There's a fixed charge per month per meter even if you don't use any gas. It's about $15.00 here in NYC and the gas use is on top. If the current gas bill is $30.00, about $15.00 is for use of the meter. With two meters, he'll pay the $15.00 plus his use, so it wouldn't reduce his bill at all. If he used none, his bill would come to $15.00., for having the meter, and service to the location. The landlord would be better adding $25.00 to the rent, include the gas, and be done with it. He was paying $750 for his apartment, and if the landlord charge $775 with gas, even he said he wouldn't complain.
That's my 2 cents on splitting costs.
House hacking is just living with roommates. Just be organized with the mail. You might want to have a compartment or cubby if possible.
For utilities, I have done it where I added up all the bills and just divide them. It did work out for me, but we were all friends. I do think a flat fee is wise. Some include it in the rent. That might make it easier than everyone writing 2 checks per month.
Thank you both for taking the time to share with me, your personal experiences and suggestions. I appreciate it very much and will take this to help get me started.
Frank, I agree, even here in WA the set rate for gas is still a flat rate regardless of what you use or don't use, so I think its pretty reasonable the way he lumped it in with the rent, just makes it more manageable.
@Elizabeth Najera If I were to house hack, I'd probably just factor utilities into rent and make that known when advertising the unit. You'll have to talk with some small MF owners around you and figure out what the average utilities are so you can make it fair.