All Forum Posts by: Melissa Hartvigsen

Hello @Colleen F.

Narragansett is beautiful, I have some friends who live there. Getting 80+ in renter inquiries the first day tells me that your price is too low.

I am based out of the Portland Oregon area, and have experience with rental properties dating back to 2011.  This is the way that I do it.

I look for a rental comps for my property, and if my property is significantly nicer than the others, or there just isn’t anything for a comp, I start my price on the high side. If I don’t get at least five to ten leads a day, I drop my price every couple of days until I get to that threshold.

When I respond to leads, I have an email template that I use and I paste the same reply to each lead.  

“Thank you for contacting me about my rental listing at (insert address here).

Before I provide an application, or schedule an in person viewing, please confirm that you have watched a video tour and are interested in the property.

(Insert video link here)

Also, I am a hands-on landlord, who manages my own property. I will be checking rental references. Please let me know in advance if your landlord will have anything negative to say when I inquire about your rental history.

I look forward to hearing from you soon”.

I only contact people for appointments at my rental who substantively respond to the email.  Based on some responses, I have opted not to make appointments for some people. For example, I only allow two pets: one person emailed me back and told me the reason they were moving is because they had ten cats and two dogs, and their landlord was going to evict them for violating the pet policy.  I politely emailed that person back and let them know that the number of pets they had exceeded what I can accept at my property. I wished them in their search.

Doing this generally gets me five to six people that come to my open house. If someone responds and cannot make it to a time that is convenient for me, I let them know that I will only book an appointment for them if I don’t receive applications at my open house.

Then, I provide applications via email after I have met prospective renters. I advise all parties that I process applications in order of completion. Once I have received two applications, I email anybody else who came to the open house to let them know that I already have two applications, and will not be processing any others unless the first applicants don’t work out.

It is a lot easier to manage this way.

I hope you find this to be helpful!

Melissa 

Hello @Jean-Marie Poth!

I have been running a midterm rental for more than three years. When someone books, I ask if they would like a fixed term lease without the option to extend, or a month-to-month agreement.  My contract for people who select the month-to- month option says they must provide me a 30 day notice prior to vacating. If they leave without the 30 day notice, they are obligated to pay rent for 30 days, or until I find a replacement tenant.  Only once did someone leave without giving a 30 day notice, and I had someone new book to 10 days after they left.  I received payment for the 10 days without issue.

I have found that most travel nurses want the fixed term lease because their contract ends on a specific date and they don’t plan to stay beyond that. Other professional travelers seem to prefer the month-to-month option so that they have the flexibility to extend.

I communicate to the month-to-month traveler upfront that I have my listing posted and available, so other people may inquire.  When I receive a booking request, I contact the current traveler and ask if they would like to stay another month or if I should accept the other booking.  If they opt to stay, I update my calendar availability for one month from that date. The system has worked really well for me.

best wishes,

Melissa 

Hello @Misael Herrera Granados

@Misael Herrera Granados
I am in a different market than you, in Portland Oregon, and have mid-term rentals at my house (two 1-bedroom options with kitchenettes each about 400 sq ft). My location is a similar distance to downtown, hospitals, and other amenities you mentioned. In the last six months I have seen a substantial increase in Furnished Finder listings. I think many Airbnb hosts are branching out to mid-term to keep up their occupancy. This increase competition is taking longer for the rest of us to get bookings, and I see prices dropping. In fact, the prices for mid-term furnished units are starting to get close to the long-term rental price.

For the first time in three years, I had a gap between travelers of 3 weeks. Normally I have an average annual vacancy of around 10%.  I have heard other MTR hosts have a vacancy of 30% annually. In my market larger full houses are taking even longer to fill up, a friend of mine with a full house gave up on mid-term and rented to a long-term tenant. 

With 59K MTRS competing with your property, you will have to price at the bottom of your competition to get booked. I recommend comparing the rent on a long-term rental to a mid-term rental. Then, calculate the cost to furnish the mid-term rental and determine how long it will take you to break even with the additional up-front costs.

Another suggestion is to seek out bookings in other ways. I would contact a insurance placement service to see if there is demand for furnished housing in your area.  Insurance companies need places for families who are displaced for 3-6 months when they experience a loss due to fire or weather-related issues. Here is a link to a popular one:  https://www.alesolutions.com

Good luck to you!
Melissa

Quote from @David Rodriguez:

Thanks for the tips! How will anticipated rental income impact what I can qualify for? Does the rental income impact change depending on the amount of units or do the banks just care about total rental income? 

I will check out the Mortgage+ app

Hello @David Rodriguez:
 
When you house hack a single-family home that you owner occupy, and rent out rooms, a lender cannot consider any rental income toward the loan amount you qualify for. That is because the underwriting guidelines for both FHA and conventional loans as a primary residence are not investment loans.

The exception to this is when you are purchasing a home with a permitted additional dwelling unit (ADU), or a duplex. Then underwriting guidelines will allow the lender to count 75% of the rent from the unit you will not be occupying toward your qualifying income. They use 75% of the rent because they are accounting for some expenses like taxes, insurance, etc.

Technically, they would also count rental income on a triplex or a four plex. However, underwriting guidelines for these have something called a self-sufficiency standard. That requires the units that you are not occupying to cover 100% of the mortgage.  It is extremely rare for a property to meet that standard.

The house hack is that you get to use a substantially smaller down payment and enjoy a better interest rate than an investor who would be required to put 15% down on a single-family home. Then, after the first year of occupancy, you can move out, keep the better interest rate and not have to put additional money down and use a property strictly as an investment.

HOA's can be very punitive if you violate their rules. I don't recommend relying on posters here in BP and their interpretation of the rules and regulations at your HOA.

If your HOA decides you are in violation of the rules and charges you fines, they can stack up quickly. If you opt not to pay the fines, they can put a lien against your unit. Attorney fees will rack up quickly.

I recommend paying an attorney who specializes in HOAs a consultation fee to get their interpretation. A couple hundred dollars is worth it in my opinion.

Another option would be to request a special meeting with your HOA board to confirm your plan with them and get approval prior to starting.

If the attorney or HOA board gives you the all clear, then make sure when you set up Airbnb and VRBO that you have a 30 day minimum on your booking settings. You should also disclose in your house rules that signing a lease is required. That way you can enforce it on your guests.

Neither booking platform provides a lease document to you so you should find one that will work for your needs.

Quote from @Benjamin Crowell:

Hi BP forums,

First time buyer here! I'm looking to purchase a home near the Anschutz medical campus and convert the basement to it's own 2 bed 1 bath unit with a separate entrance. I'm going to have a contractor do most of the work with me doing some of the labor of demo and installing cabinets and counter tops etc. Are there any issues doing this from a permitting standpoint or things I may not be aware of?  I know it doesn't count as an ADU with it being the same structure, I'm struggling to find info on this subject in the Aurora zoning codes if it would be allowed. Thanks for any help!

I was interested in doing something similar at my home. I live in Oregon, and reached out to the local building department for my municipality.

They were able to look up at my property specifically and let me ask my questions directly to a city planner. I came home with a very straightforward plan and understanding of what I could and couldn’t do. For more complex situations they offered something called a pre-planning meeting that will cost about $500. 

It was well worth my time, and I recommend you reaching out to the building department for Aurora.

@Matt Wells

You should do regular rental increases each year.  When you send the new rental rate to the housing authority, they will run their calculations to make sure the rent you are charging is still within their approval amount. Small increases are easily approved.

If you "bank" the increases and do a 6% all at once, you may price your tenants out of your housing if the local housing authority does not approve the new amount.

Sometimes the housing authority may be able to approve a large increase. I would not risk doing a 6% increase without first checking to see what the local housing authority considers  "Fair Market Rent" for your unit size. My local housing authority publishes the fair market rent amounts online. I am sure a quick google search for "Section 8 Fair Market Rent {YOUR CITY}" will help guide you with your decision.

You could also try the national HUD fair market rent lookup tool at:
https://www.huduser.gov/portal/datasets/fmr/fmrs/FY2023_code/select_Geography.odn

Hello @Daniel King,

First, I recommend reading Dan Sheeks "First to A Million: A Teenager's Guide to Achieving Early Financial Independence".  It lays out a plan for how to budget, build credit, and get into real estate investing (if that is what you want), or how to set up other income streams. The appendix of this book has an excellent "to do list" and additional reading that will help you.

Next, How to get the loan:

To piggy back off of @Erin Church to qualify for a standard loan you generally need at least 2 years of steady income history, at least a 640 credit score (though the higher the score the lower your interest rate).

Or, you need to have a qualified co-signer. They must have the credit and income history the bank requires but do not have to live in the property with you.

Once you have the above, you should shop around with different lenders to find out which loan program best suits your needs. Of course there are FHA loans, and conventional loans, but there are other loans sometimes called "Portfolio" or "Private Lending". The last two may have more flexible loan guidelines, but come with higher interest rates.

How to build credit:  One way to instantly get credit is to have a responsible adult with good
credit and responsible credit card usage add you as an "authorized user" to their account. Within 30 days, this gives you a real boost on your score.

If this option is not available to you, you can get a secured card through your bank or credit union. They basically have you set up a savings account that will pay the bank if you default on the credit card. After 6 months to a year, you may be eligible for a regular credit card, and then they would close the account and send you the savings deposit back.

The trick to keeping your score high with your new credit card is to never use more than 30% of the available credit, and to pay the ENTIRE balance every month. Example. If you have a $500 credit limit, the maximum you should charge on that card is $150. When you go above 30% of the available credit, the credit bureau actually deducts points from your credit score.

Part of having good credit is having a mix of installment loans (like home loans) and revolving credit like a credit card.

The rest of getting good credit is built on time and payment history.

Budget for your purchase:
I tell my clients to budget for at minimum 6% of the purchase price to be ready. That is because your loan program may require 0%, 3%, 3.5%, 5% or more down. The 6% number I use is to account for closing costs and additional expenses that are not typically financed like the home inspection and appraisal.  However, as a first time home buyer doing a house hack, you may qualify for some down payment or closing costs assistance. By shopping around for a lender, you can find these programs.

Finally, if you cannot purchase as soon as you want to, do not be discouraged. Keep building your credit, income, and savings so you are ready to go.

Best wishes,
Melissa

The short answer is, yes you can charge utilities separate from rent as long as it is the allowable rental amount. 

The housing authority who manages Section 8 uses an affordability calculator that encompasses utilities and fair market rent as determined by HUD, and evaluates the tenant's need to make sure everything meets the program requirements. They look at the amenities provided, and weigh the total rental costs including utilities. In my area, the local housing authority publishes the amount they will pay for a unit based on size and zip code online. If there is a property that exceeds the amount they will pay, it does not disqualify the tenant from moving forward if the tenant can fully cover the amount above the approved rate. (That does not happen often).

Using a quick google search, I found the Missouri Section 8 information at:

https://www.hakc.org/landlords

https://affordablehousinghub.org/state-section-8-guides/missouri-section-8-housing

If you have further questions, you should reach out to the local housing authority directly. They are usually very helpful (there is always high demand for rentals and they need willing landlords to work with them).

Unit Size	Fair Market Rent
Studio	$614
1 Br	$723
2 Br	$932
3 Br	$1,218
4 Br	$1,407

Hello @Kristina Hinostroza,

For landlord forms, do not use any of the free leases available with tenant tracking software. They are general, and not updated as often as the local landlord tenant laws.  You should reach out to the local landlord association or Real Estate Investor Association (REIA) in the area where you are buying your property and join. Membership around the country is usually under $200, and the rental agreement forms are deeply discounted for members. This way you always get something that is specific to your area and is legally compliant. You also get lots of great advice by being a member.  Your posting didn't say where in South Carolina you were buying, so here are links to a directory of Landlord Associations around the state and the National REIA directory:
https://www.thelpa.com/lpa/associations/south-carolina.html

https://nationalreia.org/find-a-reia/

For everything else I use: https://www.apartments.com/

-It allows you to accept electronic rental payments. This is one of the top 5 things prospective tenants ask for as an amenity.
-It makes advertising easy, and automatically puts your listing on a couple of other sites (realtor.com is one of them).
-It allows you to accept applications and screen prospective tenants. The fee is $29 per person.
-It lets you track expenses.
-It makes the accounting reports neat and tidy, especially if you are using a CPA. (It reports income automatically if you accept electronic payments from the tenants. You will just need to manually enter your expenses).
-It is FREE to use, you just need to put in the time to set it up.

Best wishes for your investment!
Melissa