House hacking Questions

General Landlording & Rental Properties
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House hacking Questions

Jonathan Craig
Member since 2019 · 22 posts · 2 votes

I have some questions:

I recently bought a 5 bedroom 3 bath house. I plan to househack it and I have some general questions.

1) Should I rent the whole house as a 4 bed 2 bath or by rooms individually? If I rent by room, I'm looking at 37% increase in ROI and 2-3% increase in cap rate than doing the whole house. What has everybody experiences been househacking by room? Is it worth the headache for 4 separate leases or just rent one lease for the whole house? I'm used to living with people but not landlording over them.

1)  How do you advertise a househack on FB Marketplace, Zillow, Craiglist, etc? If you have any templates or wording that works consistently for you I'd appreciate it.  

2) Controlling the temperature while house hacking.  How do you control the temperature amongst 3 to 4 other housemates?  How do you make sure fights don't break out about this. 

3) Splitting the utilities while house hacking.  If your house hacking, do you split utilities with housemates or include in the rent?  Does this strategy change if you go by room versus whole house?  

4) Washer and Dryer.  Do you provide w/d in the unit or do you require tenet to purchase.  I bought w/d in a previous househack but i've been told not too because it's one more item you have to maintain. 

Thanks for any help you can provide. 

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Grace Wang
Realtor · Denver, CO · Member since 2018 · 227 posts · 241 votes
5y

Hey @Jonathan Craig, where is this house hack located?

1) Rent out each one by bedroom...why not. If you're willing and able to live with three other people and living for free at the same time, what's to lose? If you were to rent out the entire house, where would you live? House hacking is a great way to ease into the landlording game-- You're living in your investment and able to get hands-on experience. I vote to get more cash and landlording experience vs worrying about having too many leases to manage. 

2) Use a header that's straightforward. Mine was along the lines of "Private Room Available in Shared House -- $750 + utilities"

3) Set expectations that it's a shared house and not everyone will get what they want. People will definitely be fussy about temperature, so allow them to have heaters and fans in their rooms. Get outlet protectors. 

4) Flat-rate utilities is the way to go. Some months will be covered, plus some change...other month's you'll pay a little more for utilities. Telling potential tenants that they don't have to worry about fluctuating bills tends to be a selling point for me.

5) Yes I provide the washer/dryer so all tenants can use the common hookup. 

Hope this helps!

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  • Grace Wang
    Realtor · Denver, CO · Member since 2018 · 227 posts · 241 votes
    5y

    Hey @Jonathan Craig, where is this house hack located?

    1) Rent out each one by bedroom...why not. If you're willing and able to live with three other people and living for free at the same time, what's to lose? If you were to rent out the entire house, where would you live? House hacking is a great way to ease into the landlording game-- You're living in your investment and able to get hands-on experience. I vote to get more cash and landlording experience vs worrying about having too many leases to manage. 

    2) Use a header that's straightforward. Mine was along the lines of "Private Room Available in Shared House -- $750 + utilities"

    3) Set expectations that it's a shared house and not everyone will get what they want. People will definitely be fussy about temperature, so allow them to have heaters and fans in their rooms. Get outlet protectors. 

    4) Flat-rate utilities is the way to go. Some months will be covered, plus some change...other month's you'll pay a little more for utilities. Telling potential tenants that they don't have to worry about fluctuating bills tends to be a selling point for me.

    5) Yes I provide the washer/dryer so all tenants can use the common hookup. 

    Hope this helps!

    6Reply
  • Jonathan Craig
    OP
    Member since 2019 · 22 posts · 2 votes
    5y

    Grace thank you for your input.  I'm in the Tacoma area.  

    -For the temperature, i heard that some landlords control with a NEST.  So i was wondering if there was a device but fans and portable heater is a way to go.

    -I felt similar about the washer/dryer.  

    -How about door locks for each room?  I know some people use keyed fobs or just different locks for each room.  

    0Reply
  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    @Jonathan Craig

    1. Cap rates don’t really apply to SFRs, or at least people don’t refer to them often. I’ve househacked a 4 bedroom house going on 3 years now. It’s not usually a headache, but over time some things will get under your skin.

    2. Facebook and craigslist only at this point. Has worked well.

    3. We put in a landlord thermostat that tops off at 71*. Common areas go by what I (the owner) want.

    4. Rent is all inclusive. Including wifi. Just price accordingly.

    5. Rent is all inclusive. Including use of machines. Just price accordingly.

    3Reply
  • Jonathan Craig
    OP
    Member since 2019 · 22 posts · 2 votes
    5y

    @Grace Wang thank you for your input. Sorry about the double post.  I'm in the Tacoma area.

    -For the temperature, i heard that some landlords control with a NEST. So i was wondering if there was a device but fans and portable heater is a way to go.

    -I felt similar about the washer/dryer.

    -How about door locks for each room? I know some people use keyed fobs or just different locks for each room. Did you have a preference? 

    0Reply
  • Jonathan Craig
    OP
    Member since 2019 · 22 posts · 2 votes
    5y

    @Filipe Pereira Thanks for your reply.  

    How has that been for three years househacking? Can you tell me a little bit about your experience.  I've been doing 1 for a couple of months for few months and its been great but I only deal with one person at my current house.  The next house will be a 5 bed 3 bath so that will be something new for me.

    Here's a question for you.  What do you use door locks for those individuals rooms?

    0Reply
  • Sherief Elbassuoni
    Realtor · Bellevue, WA · Member since 2019 · 882 posts · 1k+ votes
    5y

    @Jonathan Craig, house hack is a great tool especially for expensive markets like Tacoma.

    1- Rent by room will typically result in higher ROI than renting the whole house

    1- Advertise on Craigs list and Facebook Market place is working great for rent by room

    2- I have Nest. You can set a range of temperatures (for example 69 to 72 degrees). Even if one of the tenants changed the temperature, it is still withing acceptable range of other tenants

    3- For utilities, having a fluctuating utility each month is a pain in collecting them. You have two options. Either add it to the rent or collect average utilities every month. Some months you will be over what needs to be paid to the utility company, but some other months, it will be under. It will all balance out.

    4- I use a commercial-grade washer and dryer with a Bluetooth device mounted on it. They just scan the QR code from their phone and money will be withdrawn from their Credit Card account. They abused the washer and dryer when it was provided for free.

    Feel free to reach out if you wanted to discuss any other stuff. 

    Best of luck.

    Thanks!

    0Reply
  • Aaron NelsonBusiness Member
    Real Estate Agent · Seattle, WA · Member since 2016 · 307 posts · 191 votes
    5y

    Hey @Jonathan Craig - Congrats on your househack. I have helped a number of clients purchase househacks recently and am of the opinion that it is a great way for investors to really set themselves up for financial success!

    Where abouts in Tacoma is your property (general area/neighborhood is fine)?

    As for your questions, I think a lot of this really depends on your goals and preferences as well as the property location. Rent by room works really well in some areas but not as well in others.

    Example: Being next to one of the three Universities or the community college helps as they are a great source for tenants. Same with being next to public transportation.

    Another factor is time. Rent by room often comes with more work (you’ve now got 4x the number of renters, leases, etc. to manage) and more turnover (not everyone gets along). How much time and effort do you want to put in?

    As for things like marketing, all of the sources you mentioned are good ones. Just be sure to call out what it is you are offering (rooms with common area, entire house, etc.) and have a good strategy for screening potential tenants.

    Controlling temp depends on whether there is central heating/air or individual. A lot homes in Tacoma don’t have AC and most of the older have baseboard heaters or cadets.

    Room locks – You could do electronic keypads so you don’t have to rekey every time you have a move out (just change the code). We have this in some of our rentals and it works well.

    Hope that info is helpful!

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  • Filipe Pereira
    Property Manager · Windsor Locks, CT · Member since 2016 · 1k+ posts · 1k+ votes
    5y

    No problem @Jonathan Craig

    In my case I bought a SFR that was in need of cosmetic rehab for about 50K below retail. I try to buy anything and everything with multiple exit strategies. So that's exit strategy 1 - sell it, take my 50K equity and run. My situation works for me because what I collect by renting a couple bedrooms more than covers my mortgage payment and all utilities.

    I've been living in it and renovating it slowly while renting out a couple bedrooms so my living expenses are nothing (strategy 2 - if having free rent is good enough, then that's a fine investment - it's not about the exit in this case).

    Because I am renovating it room by room as needed, I am forcing appreciation so that if I do sell it I could sell it above what I bought it at and because it will be 2 years I can take all the gains tax free (that's exit strategy #3).

    The last option I have is that I could keep the property and cash flow anywhere from $3-500 if I rent the entire house to one tenant/family when I move out (exit strategy #4).

    I could also do a mix of 4 and 3, which would be to rent it for 3 years, maximize rental gains then sell it (to qualify for the tax free owner occupant gains) - although I would need a CPA to breakdown the depreciation recapture rules for me at that point, LOL.


    In terms of moving forward, I don't recommend moving out and leaving the tenants behind or having to put in new tenants afterwards. It basically becomes a college rental at that point, but with older people. I think it's weird, and when something breaks in the common area no one seems to claim ownership for it.

    In terms of the housemate search, I recommend advertising with a description of who you are, and state that you are looking for someone who thinks they be a good match. I.e. I'm a young professional - I know there are multiple large aerospace companies in my area of Connecticut that hire college grads (aka young professionals) so that's my target housemate.

    My girlfriend and I know this is temporary and realize it's a huge sacrifice now but we understand the financial gain this is affording us, so we stick through it.

    That's about all I have. ;)

    Oh - also make sure you have enough fridge space and check your local zoning laws. In some towns if you rent more than 2 bedrooms you are considered to be operating a boarding house. Just FYI!

    As for locks - we don't have locks beyond push button locks that can be bypassed with a pen. If I can't trust people to live there and they can't trust me, it isn't meant to be. This is a home, not a rooming house!

    0Reply
  • Michael Doherty
    Real Estate Agent · West Hartford, CT · Member since 2016 · 449 posts · 476 votes
    5y

    @Jonathan Craig if you are also living there you really have no choice but to rent it by the room. I suppose you may find a family who doesn't care if you live there but that may be rather hard. You should use 1 lease if all 4 roommates are related or know each other. Otherwise use just 1a different lease per room. You should be fine just posting a normal rental listing on fb marketplace, I use that mainly as well. 

    You should look into a smart home thermostat. I would also recommend including utilities in rent. You will appeal to more renters with washer dryer hookups. Include water/sewer with rent as well. 

    0Reply
  • William CollinsPro Member
    Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes
    5y

    @Jonathan Craig

    @Jonathan Craig  Rent by the room would be great in specific towns to maximize your return.  Do the separate leases and line it up like that.  

    2) Build in the costs of expenses like utilities.  Don't try to split it out, as that won't work.

    3) Use a programable smart home thermostat- program it to alert you on issues.

    4) Provide a Washer and Dryer for use, and set up ground rules- move your clothes through.  This is big- make sure people treat their home (which their room is) as a place that is clean and neat.  You should also have a dishwasher with detergent and a rule- all dishes cleared up.

    5) In general run this like it is an Airbnb.  Keep it nice, and clean.  Make the common area's friendly and sharp.  Help your tenants keep clean by making it so they can clean as lazily as possible (provided: washer, dryer, dishwasher, vacuum, a plunger in each bathroom).   Take your "coat closet" and make it your cleaning closet.

    6) Get kitchen gear that is easy to clean (dishwasher safe) and matching, with spares. 

    1) 

    0Reply
  • Jonathan Craig
    OP
    Member since 2019 · 22 posts · 2 votes
    5y

    @William Collins @Michael Doherty alot of great points you all have made.  Thank you all for responding.  Here's some additional questions:

    -Do you furnish the rooms?  I thought about advertising i can furnish the room for you but I will tack on a $100 to the rent for a fully furnished room.  

    -What kind of door locks or keypad are your using?  

    -Do you use a cleaning lady?

    0Reply
  • William CollinsPro Member
    Investor · Rocky Hill, CT · Member since 2013 · 373 posts · 299 votes
    5y

    1) Furnish common area- not bed rooms-if house hacking.

    2) Use smart locks if you need to- change out easily.

    3) If your living there- how about cleaning it?

    0Reply
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