House Hack Details-Water Subdividing/Rent Collection/Insurance

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House Hack Details-Water Subdividing/Rent Collection/Insurance

Carlos LiconPro Member
Albuquerque · Member since 2017 · 14 posts · 3 votes

I am currently looking at a Triplex to house hack, however the numbers do not look great and I am looking at ways to try to optimize them. 

1) I often hear Brandon Turner say to Subdivide/Submeter the water utility that way tenants can pay for their own water. Though, from my understanding the ABQ Water Authority doesn't let you, but I was wondering if any investor in Albuquerque has done that successfully? 

2) I would have a negative cash flow of about (-$500-$600) depending on the final details of the insurance and utilities. But I would be living in a nicer area 2bed\2bath and garage. Or I could choose to purchase a multi-family in a not so desirable area with other issues such as (crime, vacancy, and parking) but I would break-even or possibly cashflow a little $100-$200?  

3)Any recommendation on a good Software to collect rent?

4)Any recommendation on a good insurance provider for a Triplex in Albuquerque?

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Kirsten M.
Realtor · Albuquerque, NM · Member since 2017 · 121 posts · 68 votes
5y

1. I have a duplex and the water isn't separately metered. I just send a copy of the bill to each of the tenants and tell them what they owe. The duplex is near UNM and most landlords (in that area) pay for water, but I haven't had any issues finding tenants.

2. If one of the duplexes is going to be your primary residence, make sure you will be happy in the home. Don't settle on a less desirable neighborhood for your investment if you wouldn't normally live in that area yourself. Does the $500-$600 negative cashflow include your own home? If so, I'd say that's pretty good. 

3. Zelle, PayPal, Venmo...

4. I've used both Travelers and Farmers. So far, I like Travelers better.

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  • Kirsten M.
    Realtor · Albuquerque, NM · Member since 2017 · 121 posts · 68 votes
    5y

    1. I have a duplex and the water isn't separately metered. I just send a copy of the bill to each of the tenants and tell them what they owe. The duplex is near UNM and most landlords (in that area) pay for water, but I haven't had any issues finding tenants.

    2. If one of the duplexes is going to be your primary residence, make sure you will be happy in the home. Don't settle on a less desirable neighborhood for your investment if you wouldn't normally live in that area yourself. Does the $500-$600 negative cashflow include your own home? If so, I'd say that's pretty good. 

    3. Zelle, PayPal, Venmo...

    4. I've used both Travelers and Farmers. So far, I like Travelers better.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    5y

    It's pretty simple to split the bill and is actually cheaper for everyone because you're only paying the base fees once and splitting them three ways. IF you had three separate meters, each meter has to pay the base fees. Base fees often make up the majority of the monthly charges. Take the bill, divide it by three, and charge the tenants. If you want to simplify it, get an average use for the past year, divide that by three, and add it to the rent. I personally increase the average by 15% to cover overages.

    As for not cash flowing, that depends. I believe it would cost you $800 - $1,000 a month to rent something comparable in that City so you're technically saving money by living in the house hack, right? It's costing you $500 instead of $1,000 and you're building equity. If you will experience negative cash flow even after factoring in the value of living there, then I would stay away from it.

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  • Ryowon Kim
    Member since 2020 · 5 posts · 1 vote
    5y

    3) Look at BP's REI resources list as they list a lot of different services like Avail, ClearNow, ClickPay, etc. Here's the link on the BP site: https://www.biggerpockets.com/...

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  • Carlos LiconPro Member
    OP
    Albuquerque · Member since 2017 · 14 posts · 3 votes
    5y

    @Kirsten M.

    1) I understand that it is pretty rare for the water to be subdivided on small multifamily and that the cost of that can be very expensive. I see, you simply divide the bill between the tenants or I can also try a simple flat fee that's included with the rent. 

    2) Yes that's pretty much what I have been told, that if I am going to live in it to not settle for a bad area with better cashflow. While I live in it (1-3years) the cashflow will be negative but once I moved out I should be positively cash flowing $400-$500. 

    3)I have heard of Paypal and Venmo, I'll look into Zelle.

    4)I talked to Travelers today but they said they couldn't insure the property because the units had wood burner stoves. 

    Thank you for your Input!

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  • Carlos LiconPro Member
    OP
    Albuquerque · Member since 2017 · 14 posts · 3 votes
    5y

    @Nathan Gesner

    That's a very good point, I didn't think about the base fees that others would also have to pay! In that case I think I will most likely just split the bill three ways with the other tenants.

    Yes that's pretty accurate, I currently rent a place for $1,100 so technically I would be saving like $600 from living in one of the units. Good point, combined that with building equity, home appreciation, and the current low interest rates I guess it doesn't sound bad.  And no, once I move out I should be positively cash flowing around $400-$500 if I self manage. 

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  • Carlos LiconPro Member
    OP
    Albuquerque · Member since 2017 · 14 posts · 3 votes
    5y

    @Ryowon Kim

    Thank you for sharing the article I will look through the software's mentioned.

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