New to Investing possibly starting with a house hack

Sacramento, California
House Hacking
3yFollow

New to Investing possibly starting with a house hack

Tyson Townsend
Member since 2022 · 4 posts · 4 votes

Hello all, I’m Tyson. I’m looking to start investing in real estate to reach financial freedom and generational wealth. I’m in it for the long game but don’t quite have what’s needed to just buy another property and flip or brrr. I’m looking to build relationships and hopefully get some advice or mentoring on getting into this game! Here’s my situation and idea to get started; please let me know if I’m headed in the right direction:

I just bought a 3/2.5 w/loft and expanded 2car garage with my brother in 2022 right before rates went crazy with some equity in it. We are living in it, but looking to cut our mortgage expenses to start saving for another property. The bathrooms need renovations (one worse than the others), kitchen could use a facelift and some new floors would instantly raise the value. The master bedroom has attached master bath with 2 sink vanity, standing shower, big soaking tub, and separate toilet room. I’m thinking about refinishing the shower and replacing floors in the master bathroom and renting the master bed/bath either LTR or MTR while we renovate the rest of the house. Once house is renovated we would look to rent it out completely or continue house hacking it while picking up another property to potentially do the same thing. Here’s my hang ups and where I’m asking for advice:

Would someone rent a place that’s being renovated while they live there?

Is asking 2/3 of mortgage too much for renting the master bed/bath?

Should we just renovate without a renter and then house hack/rent once renovations are complete?

I appreciate all feedback and suggestions/advice given. I’m also very willing to exchange information with you to discuss this in more depth. Thank you

2Reply
18 views

Most Popular Reply

Tim DelaneyPro Member
Buffalo, NY · Member since 2018 · 790 posts · 530 votes
3y

@Tyson Townsend the rent you charge should be based on market comparisons, not on your mortgage - this wouldn’t be a third partner, so they don’t care what the mortgage is.

I’ve had bad experiences trying to finish renovations after a tenant has moved in, but that was a different situation where they were renting the whole house. I would think you will get better rent if renovations are already done. If money is the issue maybe do one MTR then leave a month or two vacant so you can save the money to do the work.

Podcast Guest on Show #6
2Reply
See this reply in the discussion

6 Replies

Jump to latestLatest
  • Nathan Grabau
    Realtor · Longmont, CO · Member since 2021 · 577 posts · 631 votes
    3y

    This depends on how long and extensive the renovations will be. I would not expect someone to for example have a kitchen that they could not use while living in a property. Having to share a bathroom for 5 days on the other hand, not as bad. 

    In a 3/2 it is going to be hard to recover 2/3rds of your mortgage with one bedroom. I would not base the rent off of your mortgage, rent should be based off of what other people are charge for bedrooms with an on suite bathroom near you and in similar conditions. 

    What you are talking about reno'ing should not take more than a couple weeks. While working full time, I renovated my master bathroom in my house, on my own, in less than 3 weeks. This should not have a huge impact. That being said, if it is going to take longer, I find it really unreasonable to expect a tenant to deal with unfinished floors in their bedroom for more than a day or two and even then I would probably put them in a hotel or at least prorate their rent. 

    1Reply
  • Tyson Townsend
    OP
    Member since 2022 · 4 posts · 4 votes
    3y
    Quote from @Nathan Grabau:

    This depends on how long and extensive the renovations will be. I would not expect someone to for example have a kitchen that they could not use while living in a property. Having to share a bathroom for 5 days on the other hand, not as bad. 

    In a 3/2 it is going to be hard to recover 2/3rds of your mortgage with one bedroom. I would not base the rent off of your mortgage, rent should be based off of what other people are charge for bedrooms with an on suite bathroom near you and in similar conditions. 

    What you are talking about reno'ing should not take more than a couple weeks. While working full time, I renovated my master bathroom in my house, on my own, in less than 3 weeks. This should not have a huge impact. That being said, if it is going to take longer, I find it really unreasonable to expect a tenant to deal with unfinished floors in their bedroom for more than a day or two and even then I would probably put them in a hotel or at least prorate their rent. 

    Thank you @Nathan Grabau if I was to go this route the master bath would be renovated before a tenant went in, however other renovations around the house (new floors, guest bathroom upgrades, update cabinets in kitchen) would be worked on. I don’t think there would ever be a time that something wasn’t accessible or usable. Might have half finished floors in the kitchen or living room for a couple weeks but all amenities would still be functional to a tenant.

    0Reply
  • Noah Laker
    Real Estate Broker · Sacramento, CA · Member since 2021 · 516 posts · 408 votes
    3y
    Quote from @Tyson Townsend:

    Hello all, I’m Tyson. I’m looking to start investing in real estate to reach financial freedom and generational wealth. I’m in it for the long game but don’t quite have what’s needed to just buy another property and flip or brrr. I’m looking to build relationships and hopefully get some advice or mentoring on getting into this game! Here’s my situation and idea to get started; please let me know if I’m headed in the right direction:

    I just bought a 3/2.5 w/loft and expanded 2car garage with my brother in 2022 right before rates went crazy with some equity in it. We are living in it, but looking to cut our mortgage expenses to start saving for another property. The bathrooms need renovations (one worse than the others), kitchen could use a facelift and some new floors would instantly raise the value. The master bedroom has attached master bath with 2 sink vanity, standing shower, big soaking tub, and separate toilet room. I’m thinking about refinishing the shower and replacing floors in the master bathroom and renting the master bed/bath either LTR or MTR while we renovate the rest of the house. Once house is renovated we would look to rent it out completely or continue house hacking it while picking up another property to potentially do the same thing. Here’s my hang ups and where I’m asking for advice:

    Would someone rent a place that’s being renovated while they live there?

    Is asking 2/3 of mortgage too much for renting the master bed/bath?

    Should we just renovate without a renter and then house hack/rent once renovations are complete?

    I appreciate all feedback and suggestions/advice given. I’m also very willing to exchange information with you to discuss this in more depth. Thank you


     Hey Tyson, props to you for getting in the game! Most people don't make it that far. 

    I am a local real estate broker and property manager. In my opinion, you'd be wise to finish construction before renting. 

    You might consider STR for the bedroom to maximize profits. This is my specialty; we manage over 100 Airbnb rentals and they are far more valuable than MTR or LTR. Given that you are living there as your primary residence, you will have far fewer barriers to renting STR, even in the strictly regulated California market.

    DM me if you want to talk shop. 

    1Reply
  • Tim DelaneyPro Member
    Buffalo, NY · Member since 2018 · 790 posts · 530 votes
    3y

    @Tyson Townsend the rent you charge should be based on market comparisons, not on your mortgage - this wouldn’t be a third partner, so they don’t care what the mortgage is.

    I’ve had bad experiences trying to finish renovations after a tenant has moved in, but that was a different situation where they were renting the whole house. I would think you will get better rent if renovations are already done. If money is the issue maybe do one MTR then leave a month or two vacant so you can save the money to do the work.

    Podcast Guest on Show #6
    2Reply
  • Lyndsay Zwirlein
    Lender · Member since 2020 · 331 posts · 209 votes
    3y

    Rent should be set at market rent in the area for similar dwellings, versus being based on your mortgage/covering your own expenses. Also it might be at a discount compared to what others are charging in the area if you intend to be doing work on the property.  I would over-disclose the work being done to avoid any complaints!

    1Reply
  • Ryan ThomsonBusiness Member
    Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
    3y

    @Tyson Townsend your questions:

    Would someone rent a place that’s being renovated while they live there? Maybe. But probably not unless they are a friend or you are giving them a big discount. 


    Is asking 2/3 of mortgage too much for renting the master bed/bath? The market and interest from people will tell you if its too much. Try making a listing and see if you get any interest. 

    Should we just renovate without a renter and then house hack/rent once renovations are complete? I wouldn't worry about it being perfect. Maybe house hack now and renovate once you've saved some more money. 

    The Assumable Guy544 Reviews
    WebsiteView Page
    1Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free