House hacking expenses

[Austin Bull]

Hi all,

I'm learning how to analyze deals using the BP calculators. I think I am messing up the expenses portion of the calculator.

In the context of house hacking, when it comes to small multi-family housing, or even a SFH where I'm renting out rooms, what are typically the owners monthly expenses vs the renters monthly expenses?

For example, does the owner cover utilities and property taxes or is that covered by the renter..

Thanks!

[Kit Serrell]

Hi Austin - Great question. 

The landlord always pays property taxes and property insurance. Taxes and insurance are typically built into your mortgage payment. 

Househacking multifamily units: If the utilities are separately metered, most landlords have the tenant pay their own utilities unless the market dictates otherwise. For example, if all of the other listings in your area include water.. you likely should as well. If the utilities are not separately metered, you build this expense into the rent you charge. Tenants typically pay their own wifi. Landlords typically pay for lawn care. 

Househacking SFH by the room: You typically provide water, electric, gas (if applicable), lawn care, and wifi. You can opt to split these expenses evenly among the house members. However, if you have ever had roommates, I am sure you are familiar with at least one roommate complaining that another roommate uses too much water, always forgets to cut off the lights, works from home and therefore uses more electricity, etc etc. I prefer to avoid those scenarios so I personally pay those expenses and charge higher monthly rent accordingly.

There is no "right" way. You can do whatever works best for you.