I was just wondering if anyone here is house hacking in Indy and could share their experience. I'm looking to relocate for work and I'm having trouble finding suitable multi-families so I'm thinking about renting a room and/or an AirBnB in a single family. Just wondering if anyone could share their experience in this market....Thanks!
If you don't get a lot of replies here from others in your area, you could look up ads on Craigslist for rooms for rent and such. This way you get a good idea of what others nearby are getting for a room, if they're including utilities, etc.
I'm not in your area, but I house-hacked from 2009-2015. We had a standard/fairly basic written lease and it spelled out in writing some things unique to sharing a home such as where the tenant could park, how much of the utilities they paid, etc. For utilities, we put something along the lines of "Utilities split among the number of occupants living in the home". This way it would still be accurate if we had 2 rooms rented out rather than one room. Oh, and our lease also said in writing that they are responsible for keeping their bedroom and bathroom clean and tidy.
We did not allow couples to rent a room together. You should double check your area's laws, but many times when renting out your own personal residence where you live allows you to do things like not allow couples, which otherwise could typically be violating Fair Housing laws.
One big thing we learned house-hacking was to make written leases month-to-month right from the start. So for example, the lease would start 01 July 2018 and end on 31 July 2018 but continue month-to-month after that. This way, if the tenant/roommate was doing nothing legally wrong but we just didn't mesh well, we were not contractually obligated to continue sharing our own home with this person.
Overall, we had a great experience renting out rooms and it split our mortgage in half. We did reach a point where we personally were tired of sharing our home, so we stopped. But if things got rough for whatever reason, it's an easy way to get extra income.
Hi Tyler, I'd be happy to share my experience.
I bought a house in Butler Tarkington for around $160k and immediately found 3 roommates to pay me $1,575/mo and I lived in the semi-finished basement area. The financials looked something like this:
- P/I: $776
- Taxes: $250
- Insurance: $125
- Repairs/Maintenance: $100
- CapX: $100
- Property Mgmt: $0
- Vacancy: $0
- Utilities (wifi, gas/water/sewer, electric): $240
- CF: -$16/mo
Essentially, I was able to "live for free" after putting the whole deal together. Well that was just the beginning. I somehow was able to keep my vacancy at 0% while I put together a complete renovation of the house, going from a 3/1 to a 4/3 with a finished basement and an upgraded master suite for around $70k. All-in, I was at around $230k. The house today is worth around $305k about 2 years later.
Looks good on paper, sure. If I could go back, I wouldn't have done the rehab with tenants in place. I also would have paid more for the rehab with a more experienced, efficient contractor. It caused more headaches than it was worth. But hey, at the end of the day, I got where I wanted to be - tax free equity and I reduced my largest month to month expense, my housing cost, to net $0.
I hope this provides some insight.
@Matt Speer is a house hacking samuri! I started house hacking myself and now own ~2,000 units. It's a great place to start and there are definitely opportunities in re-developing areas in several parts of the city. FYI: there's infinitely more duplexes in Indy than 3 or 4 unit deals.
For duplexes and triplexes you might look on the north side of downtown (20th-30th street - ish) or a really easy single family househacking area is in Broad Ripple and around Butler.
Happy to help if you have other questions!
@Nicole A. Somehow I managed to forget about Craigslist! I've been using Trulia and Zillow to get an idea for room rentals and it's given me a good idea on where to start. While I didplan on having a formal lease, you bring up some really good ideas on things to include that I hadn't thought of so thanks!
@Matt Speer , Ive looked all over the city except for Butler Tarkington. I'll have to check this area out. One of the ideas I've struggled with is how to do renovations with tenants in place. Glad to hear my reservations are warranted!
@Ivan Barratt That's an impressive portfolio, congrats! Are there any areas you could recommend to stay away from? I looked at one duplex in Martindale-Brightwood and my agent saw a hit and run right in front of the property while waiting for me! That aside, it didn't seem like the best area to invest after just driving around...
@Ali Hashemi I've heard Broad Ripple is a booming area but haven't actually been there yet. I'll also need to look closer to 20th - 30th street. Thanks for the tip!
What about single families on the edges of town? I've looked at a nice 2 story with a 3 car garage in Greenwood but all the bedrooms except for the master were too small and I didn't think people would want to rent that small of a bedroom. I'm also looking at a house in Beech Grove (very close to work) that has had some remodling but still has room for improvement. I like the price because even without roomates it wouldn't break the bank (kind of a plan for the worst thing). Does anyone think I would have some luck here? I'm also looking at a larger home in East Warren as a possibility which has a few nice features (basement, deck, over 1/2 acre, solar panels, extra bedroom), but the higher price is a concern if I can't get tenants....
Thanks for the feedback!
@Tyler Richardson there's plenty of areas to stay away from. Study the market yourself until you know the answer. Also, pay more and stretch to get into a better area. Look for redeveloping areas where you can buy an eyesore in the path of redevelopment.
@Tyler Richardson the best way to handle a reno on a house-hack duplex is to rent out the best side, live in and reno the worst side, and then you move into the tenant side when reno is done (at the end of their lease). Then you start reno all over again.
This way you can be bringing in at least some rent the entire time. That’s me recommendation if you’re trying to do it on the cheap and potentially do some of the work yourself.
If you have the cash and can reno the whole thing from the get go without any rent coming in though, that would probably give you the fewest headaches.