Top of the Mornin’!
Hope everyone took some time to remember those that have paid the ultimate price for our freedom over the weekend.
Now it’s time to talk about how we can achieve financial freedom.
👨💻 Managing Tenants
🧮 Deal analysis for a reader
👷♀️ Building that business mind
Let’s dive in.
Lesson
A Classic CYA Strategy
In the last issue we discussed how to find a tenant that wont make your life difficult. Check it out here if you missed it, along with any of our other letters.
Now that we have screened a tenant, it’s time to manage them. Not micromanage, but rely on efficient systems that will save time and headaches. Let’s take a look at a crucial part of your business that should be fine tuned in order to keep your house hacking running smoothly.
Leases - Having a formal lease is the second best insurance you can have when House Hacking, behind your actual home insurance of course.
A few ways to obtain a rock-solid lease are:
Having a lawyer draft one up for you
Asking a real estate agent or other investors for the legal lease form that is specific to your state,
The internet (note that if you go this route we recommend consulting with a lawyer to make sure you’re in compliance with local and state laws)
In your lease make sure that you have which form of payment you accept, and keep in mind that you want to grow this as a business!
It’s easy to go next door and collect cash or check, but what about when you move out and live further away? This is why a system to collect payment electronically is an important part of the lease.
Stay tuned… Next issue we are going to share some tools that can help with this part of the business.
Deal Analysis
We’ve been excited to see that subscribers are sharing what deals they are considering! First and foremost, thanks for submitting these to us, and always feel free to use our free deal analysis spreadsheet.
A reader recently emailed us at support@everythinghousehacking.com with this question:
“Hello
My wife and I are currently looking at a duplex in Rhode Island:
If the 3 bedroom unit is rented for $2100-2200 and the second unit (2 bedrooms) is eventually rented for $1975 would this be a good deal for our money?
Loan: FHA 3.5%
Purchasing Price: 541K
CC: Approximately 2% of the loan
Thank you for any advice/input!”
After looking into this property and using our deal analysis spreadsheet, we responded:
Final Thoughts: It looks like the reader who wants to do this deal would be living at market rents if they were to purchase this property, which doesn’t meet our minimum criteria of living at 50% market rent for our area. Like we said in the email though, it all depends on your goals!
Related News
Looks like most homeowners would prefer keeping their stake in the ground at their current property instead of selling.
This isn’t all that surprising. While many homeowners have realized some serious gains in appreciation of their properties over the past year, the reality is that if they sell to upgrade they are still going to be paying an arm and a leg, because everyone else’s real estate has appreciated as well.
*Queue the Home Depot theme song*
It looks like 37% of the respondents from a recent survey share similar values to us house hackers, where they want to renovate to increase the value of their property, while the remaining only have the desire to “enjoy their homes more”...?
The 72% of homeowners that would rather remodel aren’t necessarily ready to throw cash at the projects they’ve been youtubing though. Due to recent economic turmoil, 36% of homeowners are putting off projects and 16% say that delays are related to supply chain issues.
Big Picture: With a major spike in home prices over the past few years, some starter homes are becoming forever homes. With the recent variables we’ve been discussing, we are interested to see what the future market holds.
Interesting Stuff
Newsletter We are Loving: Mostly Metrics
Opening our inbox and seeing this every Tuesday is something we look forward to. CJ covers everything from Business Development and analytics to Investor relations that provide a broader perspective on where business is heading.
His most recent letter in Ways to Monetize Your Tech takes a look at different pricing strategies (very relatable to short term rentals using the transaction strategy)
Quote: “Today’s opportunity is tomorrow’s problem if a company fails to take advantage of the opportunity” - Brown & Suter
Book(s): Brandon Turner’s new books The Multifamily Millionaire Volume 1 and Volume 2
Closing Time…
Shoot us your feedback to support@everythinghousehacking.com — And, if you don’t like it or don’t want to receive this anymore, please unsubscribe.