Househacking Single Family Utilities Methods

3 Replies

Hello BiggerPockets Family!

I am a new real estate investor in California looking to do my first deal in the next year. My goal is to househack a single family home by finding one with a guest house and living in that while the tenants I rent to stay in the main house. I'm doing this to replace the traditional househack strategy of buying a multifamily home because those are far more expensive and I want to move out of my parents house as quickly as possible. The analysis process has gone smoothly so far, but I hit a snag when it comes to utilities. If I were buying a multifamily I would just make sure every unit was individually metered and be done with it, but with a single family this obviously can't be done. Additionally I am planning on renting by the room to individual people and not one family in order to maximize cashflow. My plan is to sub meter the guest house I stay in so my utilities are all separate from theirs and have them get all utilities that don't place a lien on the home in their name. The utilities that can place a lien on the home will be in my name (just in case they don't pay) and I will simply forward the bill to them to split evenly. I've read many past posts that expose flaws with this method that I am hoping to negate by getting great tenants, but I was hoping someone from the community had a different/better method just in case this does not work. Please let me know what you think!

Hi @Bryan Igboke it sounds like you have a very solid plan. Have you compared the cost of getting separate metering versus leaving it as is? What you might want to do instead if this is costly is just charge a higher price per room to cover the utilities, then pay it yourself. You can probably find out the average cost of water, electric, etc by contacting the town, private companies involved, or even the current homeowner just to get a rough idea. Good luck!

Hi @Kyle Spearin , doing that comparison is something I would definitely look into. My only concern with using the average costs to cover the utility is that they would vastly exceed this average cost and have me paying out of pocket every month. I've seen many posts talk about how tenants tend to be less conservative with utilities when they know it's someone else's responsibility to pay it, so this is the reason I shy away from that method. I will still look into it more though. Thanks for the response!