Rent by the Room - Still possible after you move out?

Question

I've read and heard a lot about renting out a SFR by-the-room after you've satisfied your occupancy term on a househack. I'm interested in hearing how others this is done well (preferably in the Denver Metro), and how they've managed to count the income towards their DTI. As I understand it, lenders can only accept whole-unit lease contracts, not individual rooms, to count towards your DTI.

Ryan Deasy · Answer

@John Mayer i completely agree with @Dan Mackin. there was a short period a few years ago where i took a bit of time to find a lender that was okay with rent by the room but i found a few and it certainly seems like they have lightened up lately. as you know, happy to help with anything rent by the room (or otherwise)!

Nicole Heasley Beitenman · Answer

Be sure you're claiming rental income on your taxes whether you occupy the house or not. It's more advantageous to have that rental income history with lenders than it is to try to avoid paying taxes on the income, trust me.

Julie Berks · Answer

@John Mayer

I can not confirm this information since I am not in the lending industry, but I had this conversation at a meetup.  It was mentioned that if you have been claiming your rental income on your tax return for the past 2 years then it might be accepted without a formal lease in place.

Can anyone confirm or deny this?

James Carlson · Answer

@John Mayer

No fancy new info here. Just confirming what others have said. Maybe some lenders in Denver have trouble with this but many do not. If you're doing 3-month furnished rent-by-the-room rentals, I'd still get year leases for the lenders but include some sort of opt-out clause for the tenants.

Matt M. · Answer

I have several clients on multiple houses already. One already has 14 that she rents by the room. She's my age and retiring next year!

Dan Mackin · Answer

It's not that lenders won't accept the room rental income, it's that SOME lenders won't accept it. There are some pretty simple rules to follow. Have a signed YEAR LONG lease for each tenant with security deposit showing in your account. One of the hackers I work with closed #2 today utilizing all of his room rents from his first property. Let me know if you need the mortgage broker's info.

John Mayer · Answer

maybe @Craig Curelop you'd have some insight?

Rent by the Room - Still possible after you move out?

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