- Watch the YouTube video (at the bottom.)
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the property walkthrough video.
Overview of the Property
Basically, the property is a detached duplex. That means we get the best of both worlds: privacy and maximizing rents because there are two detached structures. Since I wanted to maximize my rental income, I moved into the back house with my wife and decided to rent out the whole front house. While living there, we had the tiny house to ourselves while still enjoying the benefits of house hacking.
Rental Strategy for the Property: Long Term Rental
The front house has a standard 4 bedroom/2 bathroom ranch home layout, and the total square footage is 1,850 sf. The best option was to rent it out as a whole unit instead of a rent by room model because the market is at a premium for detached single family rentals. This demand meant I could get almost as much for renting it out as a whole unit vs 4 individual rooms.
As you can see from the pictures, the property was already in rent ready condition, and it didn’t need any updates to bring it to market.
Since I knew that I was closing on 5/5/21, I listed the property ahead of closing. I confirmed in writing with the listing agent that I was able to utilize the photos and 3D tour from the original listing.
About one week before closing, I put an ad out for $2,850 per month on Zillow, Facebook Marketplace, and Apartments.com, and the response was incredible. I got over 40 applications in three days and 20+ phone calls/text messages. I was over the moon with the response since the southwest Denver location is not necessarily a hotspot for rentals.
Because I had so much interest, I went back to the original tenant criteria screening.
My Rent Box
For all my rentals, my Rent Box is pretty simple:
- 650+ Credit Score
- 3x income to rent
- No evictions, bankruptcies, tax liens, or judgements
The key thing to remember is that you don’t sacrifice your criteria just to fill a vacancy. I was able to get all those applications and interest because the property showed well in pictures, and I was renting it out during a prime moving time. If I didn’t get the same results, I would lower the rent, take better pictures, or repost again on those sites.
Screening Prospective Tenants: The Most Important Part
Then, I started the process of going through all the text messages, phone calls, Zillow applications, etc.
It was a long process but a very important one since some people who apply on Zillow aren’t necessarily serious. That means weeding out all of those people.
I was able to go through all the applications, text messages, etc, and nail down 7-10 interested parties. I set up both pre-recorded showings and in-person showings.
Following up with everyone went great. Everyone who saw the property submitted a rental application on turbotenant.com for $45. I don’t rely on Zillow.com since the tenant doesn’t have to pay anything to submit an application there, and the screening criteria isn’t as good as turbotenant.
The way I screen people when there are multiple parties is a first-come first-serve basis.
Additional Screening: Digging Deep in the Application
Since I don’t rely on just the application to get all my information, I require a few additional documents:
- ID Verification: Driver’s License or Passport
- Last 2-4 paystubs: 2 paystubs if W2 and 4 paystubs or direct deposits for 1099 employees
- Last 1-2 bank statements: Last one to two month’s bank statements to verify income
- Two prior landlord references: Need to verify rental history, and you want as much rental history as possible to get a good idea of how well they pay rent, rentability, damages done before moving out, and violations of the lease. All of these things are extremely important.
- Linkedin Reference: A simple 30 second search of their supervisor/boss to confirm that they are a real person.
It isn’t that I want to be super difficult when screening, but all of these steps are important because it separates the interested people from the people who are just looking casually. If they can get you everything that you ask, they are the winner!
Property Rented by 6/01/21
I found an excellent tenant–four guys on one lease–so it worked out great for them and for me. Sincemy first mortgage wasn’t due until 7/1, I had a free month’s rental income that went straight to my bottom-line.
More about the Back House Unit
This back house unit is why this property was so good for me. With a conventional lender like Joe Massey at Castle & Cooke, this property didn’t require duplex type financing. I was able to use single-family financing even though there are two houses on one lot, allowing me to put down 5% with conventional financing. Back when I was under contract, rates were still extremely low, and my monthly mortgage was only $2,550.
Rental income of $2,850 per month – $2,550 mortgage payment – $300 utilities = $0 to live for free in the back house.
What a sweet deal this one is. We didn’t have to share walls, rent out rooms, Airbnb, or implement any creative strategies to live for free. The tenants in the front house covered our cost of living, and it allowed us to live for free in this sweet 750 sqft 1 bedroom / 1 bathroom back house!
For the readers with families or who just want more privacy, I highly recommend this strategy. You get the best of both worlds with privacy and still getting the benefits of house hacking.
Connect with Us
Ben and I are both House Hacking Specialists who have our own niche. I focus on long term rentals, creative strategies like room by room, and finding value in properties that don’t appear to have it. Ben focuses on short and medium term rentals. If you have any questions about rental strategies, finding contractors, or doing repair work yourself, reach out to us.
Active Local House Hacker (currently on HH#2!) and Short Term and Medium Term House Hacking Specialist
Active Local House Hacker (currently on #6 House Hack!) and House Hacking Specialist