Hey guys, would you get umbrella insurance for your home, if you are just getting started on house hacking, and would you treat each individual room as apartments, when it comes to providing tennants with the same paper work you sign when you lease an apartment? I rented a room I found on craig list, but the guy did not offer me any paper work at all. No lease or anything else. We just agree to things verbally.
I hope you're doing great. I would definitely recommend insurance as that can act as your first line of defense. Depending on how your home is designed I may recommend treating each room as a separate tenancy with the living room/kitchen being a common area. As a best practice, I would absolutely recommend having some type of written lease arrangement and not have a verbal agreement as that can make it more difficult to evict and open the door for he-said, she-said arguments.
If you have not considered already, I may also recommend looking into investing with Trusts and LLCs to have asset protection and/or anonymity with your personal residence and/or other investment properties.
Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.
Umbrella insurance is good as you scale. It also isn't expensive. Just keep in mind it is liability insurance that will only cover you AFTER your main policy is used up. So if your main insurance won't cover the liability, then neither would your umbrella policy. Confirm with your insurance agent.
In terms of renting by the room, typically you have separate leases for each one since they tenants are not renting together. I would consult a loan officer on how you would handle the leases for future loans assuming you buy the next property before you can show the income on your tax returns.
Thanks for the response. would you involve the same amount of paperwork that you get when you are renting a regular apartment, when you rent out a room? meaning addendums such as lead paint, pet policy, behaviour in the community etc
Thanks for the response. would you involve the same amount of paperwork that you get when you are renting a regular apartment, when you rent out a room? meaning addendums such as lead paint, pet policy, behaviour in the community etc
Absolutely. That's the law. It's not up for debate.
Plus you have to protect yourself. Everything needs to be in writing, including a lease.
Also, in case you are wondering, yes you need to report all rental income on your tax return. I'm not a CPA but that is tax fraud to not report it.
Thanks for the response. would you involve the same amount of paperwork that you get when you are renting a regular apartment, when you rent out a room? meaning addendums such as lead paint, pet policy, behaviour in the community etc
Absolutely. That's the law. It's not up for debate.
Plus you have to protect yourself. Everything needs to be in writing, including a lease.
Also, in case you are wondering, yes you need to report all rental income on your tax return. I'm not a CPA but that is tax fraud to not report it.