Hey guys, it feels like it was just yesterday that I made my newbie intro on BP. Last month I gave the keys (keypad code) away to the Master Bedroom of my first House Hack and preparing for my next move which closed a few weeks ago. Here are the numbers! (Note: I have owned this property for 1 year now. This one closed Jan. 14 2020. )
Purchase Price: 189K
Financing: 3% down Conventional, my cash to close came out to $7435.12
Re-pipe home +water heater- $4800
Paint/Wall patching: $1200
Appliances & Misc: $1000
This property had OK bones but was pretty dated. I did some DIY painting and a friend helped with selecting some tasteful decor which has gotten some great compliments. This property is a 4 bedroom 2.5 bathroom home in Brays Oaks near Meyerland. I rent this property by the room and it does pretty well. I rent 3 of the bedrooms for $650 and the Master for $700.
Estimated Value of home today: 245k
Rents Received: $2650
Utilities + Lawn Care+ Internet: 280
Monthly Cleaner: 40
Note: I have a 10K reserve fund for this property.
Also I was able to rent my spare bedrooms before my mortgage was ever due so I have never actually paid the mortgage out of pocket.
Nice! I wish I’d done the same before I got married, or even before we had kids. Are these long term roommates or college students/str? What is your second property? Have you looked at duplexes-quadplexes?
@Bruce C. These are medium term roommates or tenants. I write my leases for 6 months a majority of them have been there for a little over a year.
My second property is a repeat of the first and much closer to my new day job.
I have looked into Multi-family, I just haven't found a good deal...yet.
@Stanley Ezeadi That’s so cool man, congrats on the success! My parents have been doing something similar here in Katy. I’m graduating college soon and have capital saved up to get started on this exact strategy as well.
A couple questions if you don’t mind: what was your criteria when searching for the properties? Also, how did you search for them? Did you use a service like Zillow or hire a realtor?
Hey @Haroon Qamar I was looking for a 4 bedroom 2 bathroom home over 2000sqft with ideal parking and that was either close to or in a popular area in town. I also wanted something that needed some minor work under 200k.
I used a realtor for my purchase. I met them at a Bigger Pockets meet up a little over a year ago. We are pretty good friends now!
Awesome! Congrats on your success and good luck with your next property! Hopefully it is as lucrative as this one has been!
@Ridge Tullos Thank you!
@Stanley Ezeadi This is a great win man! Congratulations and go get the next one.
Let's connect and see what we can do together.
@Stanley Ezeadi . Love to hear it! Where’d you find your roommates at? Or were they friends of yours?
Congratulations man that’s a sweet deal! I’d lien to house hack with a multi family this year here in Houston.
Couple questions.. What % did you save for vacancy? Haven’t heard of a good number when renting rooms out.
Did you know your roommates prior to renting out and did you run into any problems with that many different people under one roof?
Finally, what was your estimate for repairs prior to actually getting them done or estimated by a professional, were they accurate? If so what is your rule of thumb when it comes to repairs?
Once again man awesome job!
@Brandon Dove I’ve already bought my second house hack and I’m wrapping up Reno it is another single family. Multi-family will be my next house hack move by the end of 2021.
I don’t necessarily budget monthly for vacancies. I have a 10k reserve fund that I will pull from when a vacancy/repair comes up. In 2020, I had one vacancy but I was able to fill the room in about 10days there was always a large pool of candidates for me to pull from. So really none but I anticipate I will get one eventually.
I did not know any of my roommates. Most of my roommates were working 50-70 hours a week in different industries and we never really crossed paths much. We were all pretty busy with our own lives and really maybe talked for a few minutes when we did run into each other at the home. Everyone pretty much stayed in there own lane and was cordial.
I estimated 10k for repairs and came out a bit under. This was just based on some ball park quotes I received for the work I wanted to get done. My rule of thumb is to use the guys that your investor friends are already using. If you don’t have any, get 5 quotes and pick the guy/gal that was on time and was also reasonably priced.
You have a cool setup man. I am curious if you had trouble getting insurance, primarily flood insurance and is it pricey?
When it came to renting the rooms out, what did the process look like to ensure compatibility among the various renters (and personalities) living under the same roof?
@Effram Barrett Flood insurance was not required on my home. Also the home has never flooded.
Hey @Conor Kearns renting by the room has been a good experience for me so far. But it is very easy to pick the wrong tenant if you don’t stick to your criteria. And it's also important to note that there is only so much you can control. Personalities, which is one of them can be faked.
I interviewed every serious inquiry that I received about renting my rooms. The two main items I was looking for is that they are friendly, not related, and that they live their own busy lives. I saw that when you have 4 people living together who work 40+ hour weeks, they rarely cross paths with each other. Most of my tenants will greet each other and have only had a handful of conversations in a years time. They all have there own entertainment centers such as/TV's in there rooms so there were no arguments there. They also all commit verbally and on paper(via the lease) to clean as you go. Also at one point I did have a bi-weekly cleaner who would get a deeper clean of the property.
I also went about making a list of items that would make a bad roomie/cause argument/not so great experience and I put standards/processes in place to ensure that everyone has a good living experience and are cordial.
I never split utilities.. estimate the cost and automatically include it in the rent.
Buy all shared toiletries... I charge an application fee for every tenant that is serious about renting, I use this money to go towards a year supply of toilet paper, nice and trendy soaps from Marshalls/ross, paper-towels and other essentials. You wont get any arguments about who's turn it is to buy what.
Promote a clean environment! Always have cleaning supplies present and visible. But also hire a budget cleaner to keep shared spaces extra clean. I found that when doing this everyone keeps up with the shared areas and really my cleaner is just going in to sanitize restrooms, wipe down countertops, dust and mop.
Don't try to delegate any home maintenance , just outsource it and include it in the rent. Cutting lawns are a waste of time unless you love doing it.
Don't rent to couples.
Screen your tenants and treat it like a regular rental. Have a lease and include rules. Always keep your price firm, and if a potential roomie or tenant ever mentions an excuse or what if about the rent or deposit during the interview, they are most likely not the tenant for you. Also I do background checks, and review paystubs, and review social media.
I also write leases for 6 months and review the lease with the roomies.
Lastly, Give them nothing to argue about. Keep the place tight and your tenants will most likely do the same. Give it an airbnb vibe (stage/furnish it with your decor) and think about the last time you stayed in one and how did you treat it?(Most likely with care, your tenants will most likely do the same). My tenants say it feels great paying rent on the 1st and knowing the cleaner and landscaper will be there on the 2nd.
Sorry for the long reply I just wanted to make sure I put it all out there! Best of luck!!
@Stanley Ezeadi - Congrats!!
It would be great if you could see my property at 12318 Clear River drive Houston TX 77050 A few pictures on Redfin.
I think it's something you aspire to.
Convenient parking for at least 7 cars.
ADU in the rear (apartment A).
Small efficiency on back of house.
Main house 4 bedroom 2 bath.
@Larry Jonathan Denson beautiful house! I’d actually would love to see the layout in person if you’re up for it! Thank you for sharing!