All Forum Posts by: Miller McSwain

I'm currently rent-by-room (RbR) house hacking. When I was analyzing, I would do a rough analysis and then fine analysis.

For the quick/dirty analysis, I found that RbR rent is about 1.5x the traditional long-term rate in my market. So I'd start by getting the long-term rate since there are lots of services that offer that data (BP Rent Estimator, Rentometer, Zillow). Then I'd multiply that rate by 1.5x and divide by the number of rooms to get an estimate for each room's rate. So if the long-term rate was found to be $2000 for a 5bd house, $2000x1.5=$3000. $3000/5=$600 per room.

If the numbers were decent for the rough analysis, I'd do some more research by looking around on Facebook marketplace, Roomies, Roomster to get a better idea of the room rates in the neighborhood.

Hopefully this helps!

There are lots of property management softwares. I'm a single-family investor, and I recently looked through the most popular softwares and selected one. The products I investigated were:
1. Tenant Cloud
2. Apartments.com
3. Innago
4. Avail
5. RentRedi

I was looking for a software that met the following criteria:
1. Online payments from tenants
2. Automatic late fees
3. Maintenance request portal
4. Free for the landlord
5. Online applications
6. Tenant screening (background checks, etc)
7. Lease signing
8. Ability to post vacancies in the software

I found that Innago was the only one to meet all these requirements. It does charge a $2 fee for each rent payment, but that is charged to the tenant by default. I haven't had any complaints from tenants about this charge.

The other softwares were pretty good, but here are the deal breakers for each.
Tenant Cloud: Tenants cannot setup autopay unless we have the paid version
Apartments.com: You cannot upload your own lease, you can only make modifications to their lease
Avail: You cannot upload your own lease, you can only make modifications to their lease
RentRedi: No free version

***I investigated these softwares 8-12 months ago, so some things could have changed. For example, RentRedi is free now if you are a BP Pro member that could potentially make it a contender with Innago for my use.

I'm currently rent-by-room house hacking.

You'd analyze it similarly to a normal long-term. Firstly, the total rent will be increased. In my market, I've found it is ~1.5x the long-term rate. So when analyzing, I looked up the long-term rate using Rentometer, BP rent estimator, etc and multiplied by 1.5. Alternatively, you could check out Facebook marketplace listings and see what room listings are actually going for.

Expenses could be different than long-term also. In our case, we pay for all utilities, provide shared supplies, and pay for a monthly house cleaner. So those expenses are higher than for a long-term.

I'm in a similar situation. I have a rent-by-room house hack. It is owned in my personal name, and to help with liability I got the maximum liability ($1 million like @Kenny Smith said).
When I buy my next property, I plan to purchase a $1 million umbrella policy also. I would like to get it now; however, when I recently got quotes it was more expensive than I was hoping for.

The cheapest I found was through RLI for $370/year, but if you've had 1+ auto tickets then it bumped up to $500/year. Additionally, they required that my auto/motorcycle liability be increased and resulted in an extra ~$500/month. So in my case it was going to be ~$1000/year when including the policy and increases. I just didn't think that was worth it to cover only 1 house right now.

We are using the "rent-by-room" strategy, and we put electronic locks on all bedroom doors and the front door. Our locks allow us to remotely add a pin for a new resident, make temporary pins for handymen/contractors, etc.

We looked for any lock that uses the "TTlock" app on Amazon. That way, all of our locks are in the same app and have the same functionality.

For exterior deadbolt locks (front door, garage door), we used this:
https://a.co/d/2SFMNcy

For normal interior locks (bedroom), we used something like this (the ones we have are currently unavailable, but this has similar capabilities):
https://a.co/d/8C6nYen

You can create codes from anywhere without the locks having internet connection because it can create them using an offline algorithm. But if you want to create specific codes with certain digits (instead of random), you either need to be close enough to the lock to use bluetooth or you need to have a gateway. The gateway is just a hub that all the locks connect to.

We are using this one, but there are other options:
https://a.co/d/0kEUCXv

Another thing to think about is what utilities do you want to include, and where you want to provide anything else.
We include all utilities, we furnish all shared spaces, and we provide all shared items (pots/pans, utensils, trash bags, toilet paper in the shared bathroom, etc). By including all of these things, it has decreased the chances of housemates having arguments/problems.

Good luck!

We are using the "rent-by-room" strategy, and we put electronic locks on all bedroom doors and the front door. Our locks allow us to remotely add a pin for a new resident, make temporary pins for handymen/contractors, etc.

We looked for any lock that uses the "TTlock" app on Amazon. That way, all of our locks are in the same app and have the same functionality.

The lock we are using for the front door has been in use for 6 months and is at 90% battery 👍⚡

For exterior deadbolt locks (front door, garage door), we used this:
https://a.co/d/2SFMNcy

For normal interior locks (bedroom), we used something like this (the ones we have are currently unavailable, but this has similar capabilities):

https://www.amazon.com/dp/B09P...

You can create codes from anywhere without the locks having internet connection because it can create them using an offline algorithm. But if you want to create specific codes with certain digits (instead of random), you either need to be close enough to the lock to use bluetooth or you need to have a gateway. The gateway is just a hub that all the locks connect to.

We are using this one, but there are other options:
https://a.co/d/0kEUCXv

Quote from @Robert Durden:

Quote from @Miller McSwain:

Hey Robert, I am currently rent-by-room house hacking in Colorado Springs! Similar to you, I also found that RbR SFH made more cash-flow sense than small multi-family.

We are renting 3 rooms in our 5bd house. 2 of the rooms share a bath, and the smaller of those is rented for $700 while the larger is rented for $800. The room with the private bath is rented for $800 also (to a military guy like you mentioned).

ALSO, we pay for all utilities and provide all shared supplies (cleaning supplies, pans, utensils, trash bags, etc). So be sure to think about that when you are analyzing.

We are -$500/month to -$1200/month while we live here (depending on capex/repairs), and we are occupying the whole basement So it is definitely cheaper than rent in our case. When we move out, we will be right around break even, but over time our projections predict mega-cash flow. Also, I think we are going to add a room, so we will make instant cash-flow in that case.

Let me know if you have any questions!

 @Miller McSwain - congrats on this man! Sounds like a great deal. Living in the basement sounds like a great idea! The upstairs of these homes I am see are typically huge. Two questions if you don't mind me asking: 

- Do you mind me asking WHEN you purchased your home? 

- When you are running your house hack numbers, do you include everything like CAPEX, maintenance, etc.? Seems like you have been

Thanks so much! 

 I bought in April 2022, so the market was more competitive than now and interest rates were lower. My purchase price was $460k and interest rate was 4.8%. 

I definitely included capex and maintenance in my analysis!

Hey Robert, I am currently rent-by-room house hacking in Colorado Springs! Similar to you, I also found that RbR SFH made more cash-flow sense than small multi-family.

We are renting 3 rooms in our 5bd house. 2 of the rooms share a bath, and the smaller of those is rented for $700 while the larger is rented for $800. The room with the private bath is rented for $800 also (to a military guy like you mentioned).

ALSO, we pay for all utilities and provide all shared supplies (cleaning supplies, pans, utensils, trash bags, etc). So be sure to think about that when you are analyzing.

We are -$500/month to -$1200/month while we live here (depending on capex/repairs), and we are occupying the whole basement So it is definitely cheaper than rent in our case. When we move out, we will be right around break even, but over time our projections predict mega-cash flow. Also, I think we are going to add a room, so we will make instant cash-flow in that case.

Let me know if you have any questions!

I'm a house-hacker in Colorado Springs, and I had a similar experience when I started analyzing. I found that it was difficult to get Duplexes to cash flow because of the high purchase price; however, it was much easier to find single-family homes that would cash flow if rented out by the room.

As an example for you, we ended up buying a 5 bed/3 bath single-family. We occupy 2 of the rooms in the basement, and the main level 3 bedrooms bring in $2300 while our mortgage is $2800. So we are negative cash flow while living here, especially when adding in capex, repairs, etc.

Even when we move out, we may be negative for the first year or so, but things look much better by year 3, 4, 5, ... So be sure to consider projected cash flow (with reasonable rent increase, expense increase, etc assumptions).

Also, don't forget that you will also be making money from the other 3 wealth generators: Appreciation, Loan Paydown, and Tax Benefits. So when we added those into our projections, we saw that we may be negative cash flow while we live here and for the next couple of years, BUT we are very positive when you consider all the generators.

So in summary, CONSIDER THE BIG PICTURE: projected cash flow and all wealth generators 😀

Are you worried that you won't qualify for this $850k home solely based on your household income? So you are wanting to use the potential income of the property to help you qualify?

I've had a situation similar to this. I purchased a house that I am renting-by-the-room. My lender wouldn't consider potential income when qualifying me for this house.

HOWEVER, he will consider the income of this property when I purchase my next property. So when he is calculating my Debt-to-Income ratio while I'm being qualified for the next house, he will see that all or some of my mortgage payment on the first house is covered by tenants.
I'm not sure if he will assume the market long-term rent income, or if he will actually look at the leases I have in place though.

But basically, I don't think your lender will consider un-proven income to help purchase this house. Once you've proven income though, the lender may consider it during the purchase of your next property.