All Forum Posts by: Christopher Jason Lloyd

Great things to think about and I would consider these.  I will only rent out by the room if I lived there.  I did one rent-by-the room on a house that I did not live in when I started and quickly ended that.

Consider:

1. Are there any local zoning restrictions limiting the number of unrelated occupants? I have a city that will enforce this in my market.

2. Will the property still cash flow as a single rental (not by the room) when you move out?  

3. The worst part about renting by the room is roommate drama.  Its not your job to settle disputes but trust me, you will hear about it and many tenants will expect you to do something.  You need to stand your ground and if its not a landlord responsibility in the lease, you stay out of the drama.

4. Find out if your city allows for RUBS (Ratio Utility Billing System).  This will prevent your tenants from running up your bills.

5. Consider locks for bedrooms.  The tenants will want privacy in their space and not worry about the other tenants stealing.

6. Clearly notate what are the communal areas and the personal areas in the lease

Xavier,  I am not familiar with your market - but I made this post on another thread last week and thought it would be good to repost here.  We primarily work with clients looking to househack and have seen that ADUs have been growing in popularity since the small multifamily market is super saturated by non-investors simply just looking for discounted living, not a real estate investment deal.  This has driven the prices of most small multifamilies to prices that hardly make sense.

See post below:

In many markets, the ideal house hack is getting harder and harder to find but I always found this to be true after selling many househack properties to clients and buying them myself:

The more uncomfortable you are willing to get, the more money you can make in terms of cash flow.

Below are the different ways to make a househack work nowadays in my market and many others from most likely to cash flow to least likely to cash flow. Notice that as you get more privacy and do less work, your cash flow will go down.

1. By the Room House Hack - Get as many bedrooms as you can to rent out. You will likely find more deals that will cash flow while you live there on top of covering all expenses. But as mentioned in the rule - this will be the most uncomfortable since you will be seeing your tenants in your kitchen almost every day. Also check your zoning regulations to see if there are any restrictions for the maximum amount of unrelated occupants.

2. ADU (Live in ADU) - Rent out the home. It'll likely rent more than the ADU unless you have a unicorn where the ADU is nicer than the home. You will likely be living in the less desirable structure but numbers will look better.

3. ADU (Live in Main) - Rent out ADU. The clients that have made the most with this strategy is running an AirBnb out of the ADU. You live in the main home so turnover would be very easy to manage yourself or you could rent long term and just collect with less work. Less work, less money.

4. Multifamily - Good luck with cashflow. At least in my market, people are simply looking to reduce their living expenses and are willing to pay way over because well... their mortgage will still be cheaper than the singlefamily. They aren't analyzing the deal like you are which is why you are confused. Your mindset on these properties is "well this is way to high priced, my cashflow is negative $500". Their mindset "Oh my goodness, I only have to pay $500 per month to live here and all my other options are $1700+/month". That is your competition and something to be aware of if looking for a 2-4 unit. The play here is hold long term, value add and many will try and Airbnb or MTR a unit or two.

ADU's in my market are the most lucrative strategies if you find the right one. Just make sure it isn't falling apart and has its own: Water Heater, HVAC, Full Bath, Kitchen and Laundry. Also ensure there isn't some zoning restriction limiting what you can do with an ADU in your market.

Came across an ad for Home Equity Agreements the other day... I haven't heard much talk of these. Just curious, has anyone here ever used one if they couldn't qualify for a HELOC or want to refinance? What was your experience?

Just briefly looking into it, it seems like it would really only make sense if you had equity but couldn't/didn't want to get a HELOC or Refi depending on the situation but maybe someone here has more insight?? Looking forward to your responses!

Hey Quincy,

I know this can be extremely frustrating.  All the big wins on social media and the podcasts certainly set an unrealistic expectation.  

If you are willing to move and be a little uncomfortable for a few years, househacking would be the best way (in my opinion) to get in for low money down. Buy small multis or singles with ADUs that need work. Fix them up while living there and rent out the units to help reduce your mortgage. Take the money saved and pay into a separate account each month until you have a downpayment for the next one. Rinse and repeat a few times and watch it appreciate. Then you could sell, take out a HELOC, or refinance to pull the cash out. Bam, you now have capital and experience.

You could also try subto.  Just know if you want low money down and you do owner finance/subto/lease options, you will need to do direct to seller advertising and have a good real estate attorney.

 11 closed

Here are my numbers for my closed sales from BP as of two weeks ago.  Conversion rate on the leads is about 4-6%.

Invested: $11,000

Commissions: $54,607.79

I would like some agent's opinions on how to market this product.  We are trying to explode this product in our market and have done a little over 10 of these so far.  Most of the time I pitch this at the listing presentation, it's a no-brainer for the seller and they love it, just looking for more.

Currently we are sending mailers to absentee owners, social media marketing and homes around our recent projects.

The product - We offer a product through an affiliate business for our sellers that would normally be the target of many wholesalers.  We are looking for homes that need work to sell and covering all costs of renovation and managing the project start to finish as long as the property qualifies (mostly any project under $40k).  We make the seller a lot more money on the backend than selling to a "cash buyer".  We split added equity at closing with the seller for the project manager fee.

@Eric Jubeck All of the BiggerPockets leads were from the Featured Agent Program.  I have been with the program now for 1 year and 8 months.

BiggerPockets and social media have led to approximately 80% of my closed deals within the last year.  I did a marketing audit and about 35% of my closings were from biggerpockets, 45% from social media (however, this took a while to build up.  Social media leads require building your brand which is very time consuming and you need to be consistent for a long time before it is a stable lead generation source.  Its great once you have established yourself because it is free).  The remainder of the 20% was about equally split from referrals, networking, soi, company leads, etc...

Communication with us and the listing agents of any offer we submit.  All my preferred lenders do an in-depth approval before I show property and when we make an offer, my lenders reach out to the listing agent to talk about how in depth they have approved my client to make our offer look as good as cash.  We have gotten properties up to $7000 under the best offer because of how we presented it.  Be a team member with your agent and show your value.  I love my LOs

Hey there!  Ive been with the program for about 1 year and 8 months.  I have received 232 leads and 11 have closed on a property and I am currently working with 3 in my pipeline.

I am typically between a 4-6% conversion rate on these leads.  Whether or not it is worth it depends on what your specialty is.  Because Biggerpockets doesn't really qualify, I like to add an additional section in my description to attract more of the clients I like to work with.

I specialize in working with with househackers, live-in-flip and buy-and-hold turnkey properties.  Converting 3 househackers that each purchase a $250,000 multifamily pays off a lot different than 3 flippers that each purchase a $80,000 property that may refinance and you wont get the listing.  Also, I have found most the flip investor leads, just want your connections.  They don't want to work with you.  So let's do some math:

Househack - 3 purchase at average a $250,000 property.  Total volume $750,000.  Assume 2.75% commission.  $20,625 comes into the brokerage, now apply your split.  Divide by two biggerpockets packages for your ROI. Househack investors have a higher conversion than flippers by A LOT with these leads.

Flippers - 3 purchase at $80,000, one lists with you for $250,000 and the other two refi.  Total volume $490,000. Assume 2.75 commission. $13,475 comes into the brokerage.  Now apply your split. Divide by six biggerpockets packages for your ROI. Your leads looking to flip mostly don't want to work with you because they want to buy off market with a wholesaler and don't want to pay your fee. They just want your connections and deals you can't close. Also you will receive A TON of people that saw a flip on HGTV and realized that its more than the TV shows make it out to be and you won't find out until they burned themselves out looking at 10 properties.

The math works great for my splits at my brokerage and the plan I pay for.  I definitely get my money back and more working with my specialty.

You also will get property managers, wholesalers and other service providers looking to network.  You can take these leads and send them to support to receive a lead credit back.  They have been pretty good at making sure I am not paying for a "non-lead".