Jeff White and I are excited to kick off the second season of House Hack Mastermind! Our guests are both utilizing a rent by the room strategy and shared their experience and tips on setting up the property and how to screen tenants for a house hack. To hear the full conversation, check out the YouTube video or podcast.
- Listen to the podcast “#427: Don’t Get Stuck with a Bad Roommate: How to Screen House Hack Tenants” Denver Real Estate Investing Podcast
- Watch the YouTube video.
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
The House Hackers
We’re talking with local house hackers Jordan Lindsay and Jake Shumate. Both recently purchased a house hack in the Denver Metro Area within the past few months–Jordan’s second and Jake’s first.
Jordan is an avid listener of the Denver Real Estate Investing podcast and house hacks with his wife. While it initially took some convincing to get her on board with living with other people, they found a way to make it work for both of them.
Jake was looking for alternative ways to invest other than stocks and mutual funds. He stumbled across our Ultimate House Hacking Guide and decided to give house hacking a try.
The House Hacks
Jordan owns a house in southwest Aurora. There are four bedrooms on the second floor, the main living area on the first floor, and an 800 sq ft fully finished basement. Jordan and his wife decided to live in the basement to have more privacy.
Jake owns a property in Westminster with a similar layout. He decided to convert the dining room into an additional bedroom so he would have four bedrooms to rent out. Like Jordan, he opted to live in the 600 sq ft basement for privacy. He installed a kitchenette so he can prepare his meals in his own space.
House Hacking Pro Tips
It can be challenging to live with roommates, especially as the landlord. Jordan and Jake offered us some tips to help things run smoothly.
- Get an extra fridge. With so many people living in one house, make sure everyone has enough food storage by adding a second fridge in the garage or basement.
- Make sure tenants are clear on whose responsibility it is to take care of snow removal. If you want the tenants to remove their own snow, include it in the house rules or lease agreement. As a landlord, check that your insurance policy won’t hold you responsible for slip and falls on the property.
- Require that all of your tenants have renter’s insurance. To verify they actually got the insurance, have them add you to the policy as additional insured. That way, you can see if they got the policy and if they cancel it without warning.
What’s the Best Way to Screen Potential House Hack Tenants?
Screening tenants for your property is one of the most important aspects of rent by the room house hacking. Jordan learned the hard way not to ignore red flags during the interview process and ended up having to ask one tenant to leave. Remember, this is your living space and it’s imperative that you and the rest of the tenants are comfortable.
When it comes to verifying employment and income, being thorough upfront can save a lot of headaches down the road. Jeff has learned to include some extra steps to avoid fraud. For instance, he doesn’t just verify employment with a company, he looks up the employer online to make sure the information is accurate. Instead of asking for last month’s pay stubs, he’ll ask for bank statements, too.
A motivated tenant will provide you with all of the documentation you ask for. Most of these requirements are the same as a larger apartment building, so if the person isn’t prepared to provide the information, they probably won’t be a good tenant.
Thoroughly screen house hack tenants upfront to save yourself from headaches in the future.
Learn More about House Hacking
Are you interested in learning how to house hack successfully? Enroll in Jeff’s course, How to Self-Manage Your Rental on Autopilot to learn all of his tips and tricks for self-managing a house hack using his time-saving, automated systems.