SFH house hack- Should I use a lease?

Question

Hey all,

I am getting ready to buy a SFH with my daughter in Orlando. Looking at 3 bedrooms, daughter will live in one BR, her current roommate will rent out another BR, and the third will be rented out to another co-worker.

Question is, I assume, we should have the two "roommates" or "tenants" sign a lease?

Also, the goal is to rehab the place, and then move on to another SFH in a year or so. When we make that move, what is the best option for the first house? Leave that house furnished and just rent out the vacant room or move out completely and just rent out the house as a whole?

thanks!

JC

John Carr · Answer

Thanks everyone for the replies.

@Alecia Loveless great ideas with the cleaners! That was one of the issues I was worried about.

As it is right now, my daughter and a co-worker rent a small apartment. They both moved in together and both are on the lease. They are best friends and will move from house to house together(nice as we get a built in tenant), but with adding a third co-worker. Once the property is stabilized, we will start looking for the next investment.

Still looking for a property, but thanks for the advice to check the HOA for any potential restrictions. @Noah Bacon

Shawn McCormick · Answer

@John Carr using a lease is always best practice, its establishes expectations and allows for consequences should something go wrong. If you daughter is to be the landlord, a lease will let her refer back to it and not have to be the 'bad friend'

I would make sure the leasees are okay and understand the rehab process as they may view that as an inconvenience and may want a discount. After that is done, you should have a pretty good idea if you want to keep that model going or rent the whole house out. Depending on where it is (near UCF or somewhere that has a great need for affordable rentals) You may get 20% more renting by the room, but that will likely come with more turnover, time managing and expenses.

Best of luck!

Noah Bacon · Answer

Hi John,

I would have the tenants sign 2 separate leases for the rooms they rent respectively. If one roommate wants to move out before the other and they are on the same lease, you may run into a headache down the road.Is the home in an HOA? If so, you may have STR/Vacation rental restrictions renting out part of your home and not the entirety of the property on one lease. Are you planning on doing rehab with your daughter and tenants living in the property?

Alecia Loveless · Answer

@John Carr Furnished, and when your daughter moves out it definitely is not necessarily an AirBnB play.

There is no reason why you can’t continue renting the rooms in the first house out by the room to mature college students or whoever on a year lease by the month. It would be much easier than an AirBnB and lots of people get their start in rentals this way.

If you live nearby you can manage it or if not and your daughter is mature you could pay her a small fee to manage it. Or hire someone else to do it.

Personally I’d hire a cleaner to come every two weeks to clean the bathrooms, kitchen, and common spaces with it being in the leases that the tenants were responsible for keeping these spaces broom clean and picked up in the meantime.

Then you hire a lawn company and pay whatever bills and that’s it!

There’s much more to be made with by the room rentals. Where I live they average $7-900 per month so for a 3/2 house you get worst case $2100 and my 3/2 rents as a whole rental for $1600/month and with a mortgage and all the bills including electricity I cash flow around $150 so you’d likely be higher by the room.

Raymond J. Rodrigues · Answer

@John Carr, I would have each tenant sign their own lease.

Michael Thach · Answer

furnished will be an airbnb play and will get your more $$$ and when you have it furnished anyway this would be the way to go but it requires more management and few new skills. When you are ready for it, go for it, it will be worth.

Moving to another property with the furniture and renting it out for long-term is possible. Is the traditional route and more passive.

Always lease agreement, even between best friends. If you want to have flexibility sign shorter lease terms.

SFH house hack- Should I use a lease?

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