I plan on living in Plano, TX for a W-2 job, and I am eager to buy a property in the city. I have been considering trying to leverage an FHA loan; however, there are not many affordable duplexes in the areas (to my knowledge).
I was wondering if it is a bad idea to buy a single family home, live in it, and rent out the other rooms.
I assume that it is more tricky with regulations and simply having a greater number of tenants, but I just wanted to get some opinions. Thank you!
Realtor · Denver, CO · Member since 2016 · 278 posts · 371 votes
5y
@Christopher O'Brien Yes, you can rent out the rooms, but first, check out your city's occupancy limits and HOA is if there is one.
I've done it successfully here in Denver, you just need the right systems in place and house rules to establish guidelines for all roommate-tenants to abide by. The key is short-term leases (4-8 months) because it can give you flexibility if it isn't working out for either you the landlord or the tenant, so you can not renew the lease at the end of the lease term.
Also, most rent by room people move a lot, so not having a 1 year lease is better for them in most cases.
New to Real Estate · Member since 2020 · 2 posts · 1 vote
5y
I live in Plano and this is what I do. It covers the mortgage for me. Just make sure to pick the right roommates as you’ll be living with them for a while. You’re not likely to find any duplexes in this area and if you do they probably won’t be a good deal.
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
5y
Probably not a good idea. As a SFH you can rent out to 1 family or friends. Whenever you haver multiple cars coming to the neighborhood not looking like a family. You will start getting written notices anywhere from trash cans, noise, illegal parking making police want to tell you manage your tenants better. The positive side you may get more rent totally or vacancy if there is someone problematic.
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
5y
It's tricky, but lots of people advocate it. Living with other people is not always easy. In Plano you have to find homes that might allow it...like no HOA. If you can put up with the headaches, you can make some money. Headaches, for example what if people don't pay and there is an eviction moratorium...then you get to live with someone while they use your power and water and house, while not paying. Some people enjoy the game though and make good money doing it, so you just have to decide if that game is for you.
Investor · Cincinnati, OH · Member since 2018 · 304 posts · 185 votes
5y
It depends on local laws, house, neighborhood, local tenant pool. Overall I like it because it increases income and is more than 1 revenue stream. So if 1 tenant moves out your mortgage is still covered (unlike if a family moves out of the house and you have no income). Downsides are there's more turnover to deal with and can be more management with issues between roommates... this can be minimized with good tenant screening, leases, roommate agreements.
I make sure the house is profitable as a normal rental along with room rental incase something comes up and strategy needs to change. Room renting is usually best for 3+ bedrooms and less bathrooms shared the better. Make sure there is adequate driveway and street parking for roommates and potential guests.
Investor · Kansas City, MO · Member since 2015 · 128 posts · 89 votes
5y
I'm not sure about how it works in TX, but I did this same thing in Denver when I started. I bought a townhouse for 298k with 3 bedrooms and 2.5 baths. I rented my extra two rooms, and even my couch for some time. After I moved out, I tried to keep the property rented by the room, which I did successfully for a couple years. However, at some point the tenants started verbally fighting with each other and they were constantly calling me. I knew at that point I didn't want to self-manage anymore so I sold the property ($50k profit, excluding all the rent received) to invest it in my KC market portfolio. While the househack in Denver didn't work out long-term, it turned out to be a great investment.
I hope all the best for your journey!
Feel free to send me a message if you have any questions.
Realtor · Denver, CO · Member since 2016 · 278 posts · 371 votes
5y
@Christopher O'Brien Yes, you can rent out the rooms, but first, check out your city's occupancy limits and HOA is if there is one.
I've done it successfully here in Denver, you just need the right systems in place and house rules to establish guidelines for all roommate-tenants to abide by. The key is short-term leases (4-8 months) because it can give you flexibility if it isn't working out for either you the landlord or the tenant, so you can not renew the lease at the end of the lease term.
Also, most rent by room people move a lot, so not having a 1 year lease is better for them in most cases.
@Sam Shueh thank you for the the reply, and those are thing thats I have no thought about. I will make sure to keep those in mind moving forward. Thank you again!!
@Rick Novotny ok that’s great to hear and it seems like making sure that boundaries and relationships between tenants is at the forefront of decision making in this setting. Thank you!!
Real Estate Investor · Atlanta, GA · Member since 2016 · 8 posts · 1 vote
5y
Great question @Christopher O'Brien.
Pre-pandemic, this is something I would have considered doing. However, I’m hesitant now because I’m concerned that the tenants may not follow proper hygiene and social distancing protocols which would heighten the risk of exposure especially if one of them gets infected.
Which brings up a reasonable question;
If you decide to try this, would you include these concerns in your house rules and on a more sensitive note, would you require your tenants to be vaccinated to qualify?
Rental Property Investor · Member since 2021 · 335 posts · 193 votes
5y
@Christopher O'Brien
Sure - You can do that. I’ve had friends who did it in college and it covered the mortgage payment. He sold later and made some gains.
For me, I am a W2 as well. Looking back at my 20s I should have house hacked if I had the money and time.
Instead, I focused mainly on W2 wage / career growth, and moved my cash to SFH investments while I rented (i found it was cheaper to rent than own in my neighborhood).
Rental Property Investor · Stockton, CA · Member since 2020 · 35 posts · 22 votes
5y
@Christopher O'Brien
I did it for years while I was working and finishing college in a 5 bedroom house. It worked out very well for me. Just make sure you screen your people well. The art is getting a group of adults that can get along with each other. Do not target A-type personalities or only children. Preferably get someone that has a full time job and/or school. So they’ll be busy and won’t be hanging around each other all the time at the house, which equals less problems.
Virginia Beach, VA · Member since 2020 · 5 posts · 4 votes
5y
I did this for a year or so, actully just recovering from the aftermath. Here are some mistakes/issues I had:
1. Multiple leases: I rented out 3 rooms to 3 different people with different leases. Ideally you will want to group them, so they all share equal responsibilities. This also made it dificult to handle the security deposit, since I wanted to withold some for damages.
2. Property had an HOA: None of the tenants took responisbility to maintain the outside of the house, or really any of the common areas. Ended up with large fines because of this.
3. When they movied out, no one wanted to clear out/clean any of the common areas. basically they moved out 1 by 1 throughout the month, and the last one was left with a bunch of junk in which most of it wasnt his, so it got left behind. Just another thing i had to pay for trying to get it ready for another renter.
4. Marketing: if one tenant decieds to move out after thier lease ends, or for another reason (military orders), you now have to market a house that is already partially occupied. This is not very appealing to anyone. I actully had to ask my 3rd tenant to find another palce to live beacuse the other 2 were leaving, and i wasnt able to find replacements.
Also like others said, there are zoning laws on how many non-blood relatives can live together under the same roof. It varies state by state, so look into that also.