Good Morning, and welcome to Everything House Hacking.
In today’s edish:
😋 Tasty Tech
😅 Finally, a deal*
📈 Rates
Lesson
With proper screening and leases in place now, it’s time to make use of property management tools that will make your House Hack hum.
It may seem like overkill to have property management software if you are just getting into your first property and only have a handful of tenants to manage. Let’s put that preconceived notion aside for now…
We mentioned it’s important to have an electronic payment system in place for your lease in our previous letter. Luckily for us, there’s an abundance of helpful tech out there to help with all aspects of property management from rent collection to necessary repairs.
Software tools like Avail, Turbo Tenant and Appfolio all have the capabilities to collect payments, archive conversations and document repairs made to your property. These software systems can be free but charge for processing rent payments.
Benefits of this Software:
Automatic collections/payment set up allows tenants to avoid missing rent
Some have the capability of collecting credit cards, increasing the probability that you will collect rent
Streamlined communications - Avoid late night texts from your tenants and have them communicate through the app instead. For example, If there is an issue with a toilet, your handyman who has access to the same application will see the message and you can simply follow up instead of taking care of it yourself.
Basically a continuation of the point above, all communication is documented in a way that can help with keeping track of everything from the lifecycle of appliances to late rent. This can be extremely advantageous if you ever have to deal with legal issues.
Big Picture: We are here to work on the business, not in it. Using property management software can be the bridge to many gaps in your House Hacking endeavors.
Deal Analysis
Tbh, we don’t know much about the market where this property is located.
Only reason we would visit this area is for a supposedly good cheese steak, unless of course we find a good investment, similar to today’s feature.
This 3 unit apartment appears to be in great shape for its age, and is located only 2 blocks away from Widener University (Go Lions!).
One aspect of this deal that makes it less appealing based on our experience is that there will be tenants in place when you make the purchase. We prefer vetting tenants ourselves and making sure we have rock solid leases in place… right?
That being said, one tenant has been there for 16 years, which means we might be able to avoid high vacancy rates and pricey turnovers. Currently both tenants are paying close to market rent based on comps in the area, leaving you with an adjusted living cost of $497, accounting for reserves as well.
Final Thoughts: This one might work, especially if you’re a bachelor or bachelorette and are down to rent out that spare room! Then you could potentially live for free, achieving a grand slam deal.
If we are missing something about this market that would change our perspective of this deal, let us know! Email us at support@everythinghousehacking.com
Related News
Where are interest rates going?
Many speculate that they may plateau around this level or can reach 6-7%. Though these rates are historically low, they’re still doubling the rates we have seen in the past few years.
And what does this mean for buyers?
Homes are less affordable due to these higher rates. Let’s go over an example assuming the non-House Hack, traditional home buying method with a 20% conventional loan down payment:
Aspiring House Hacker has $40,000 for a down payment and can afford a mortgage (not including other expenses) of $1250.
Scenario A: Mortgage rate of 2.5% - Aspiring House Hacker could buy a $200,000 property and have a payment of $1207.
Scenario B: Mortgage rate of 5% - Aspiring House Hacker could only afford a $160,000 property with the same down payment, and a mortgage of $1220.
Big Picture: Interest rates doubling doesn’t mean that your mortgage payment will double. However, it might mean that you have to change the price criteria in your automated MLS emails.
Interesting Stuff
Book: Get professional rent reports from Rentometer
Rentometer is a great tool to use to get a deep understanding of rents in your market
Quote: “Every champion was once a contender who refused to give up” -Rocky
Podcast: How to talk about money
Closing Time…
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