Completed Deal Diaries: House-Hacking in Houston TX $900 cashflow

[Stanley Ezeadi]

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

Renovation: 

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

PITI: 1450

Utilities + Lawn Care+ Internet: 280

Monthly Cleaner: 40

Cashflow: $880

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. 

[Stanley Ezeadi]

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.

For example...

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!!