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Buy a house, rent the top, live in the bottom?
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cuterpatooter




 
 
    
 

Post Mon, Aug 26 2019, 2:50 pm
Hello,

We're considering purchasing a home, renting the top and living in the basement. We're a small family, and don't need a full home space. The rent collected can ideally go towards the mortgage fees, but we should probably only purchase a home we could afford without the rent bonus, since it's not a given to have a renter. This way, we would be investing in a house that we could live in or sell instead of paying rent that leads to no where. Of course, it will cost more than renting, but if we can afford it, it may pay off long term...

Has anyone done this before or heard of people doing this? What was the experience like? How much time and effort did you need to spend 'land-lording' (collecting rent, finding rentals, managing repairs) Did you feel it was worth it?
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amother
Coral


 

Post Mon, Aug 26 2019, 2:56 pm
We will be doing this in the near future, as soon as the house is ready.
It was the only way we could afford to buy a house.
I live in Lakewood so it will be easy to rent it out, B”H.
Otherwise we won’t be able to afford to pay the mortgage
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amother
Ruby


 

Post Mon, Aug 26 2019, 3:06 pm
I know someone who does this.
She already has 5 kids and is fine with the setup. She has 3 bedrooms in the basement, a decent size kitchen, backyard, driveway.. and loves the income from upstairs. I think it makes a big difference if you have big windows in the basement and sunlight. If it’s very “basementy” and dark it’s harder to live there.

My husband on the other hand really relies on our basement rental income. I dislike the lack of privacy very much but he won’t forgo the extra monthly rental for anything.
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amother
Amber


 

Post Mon, Aug 26 2019, 3:09 pm
I know people who have done it and it worked out well. I would never count on it to cover the mortgage because things change and you can't guarantee a good market. But you said that's not the case for you.
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amother
Pumpkin


 

Post Mon, Aug 26 2019, 4:14 pm
My sister is going this now. I think it's a nice idea in theory but I am scared for her honestly. Her mortgage is HIGH. She barely works. Her tenant pays the bulk of it. She put in money she didn't have to make the apt downstairs and is moving in this week.
She happen to have got an amazing deal and all the real estate and finance gurus in my family think she is smart.
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amother
Jade


 

Post Mon, Aug 26 2019, 4:20 pm
Yes I did it. Anything specific I can answer for u?
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amother
Cobalt


 

Post Mon, Aug 26 2019, 4:27 pm
I purchased a house in Lakewood and live in the basement. From my experience, I would say it’s a very smart investment but you have to make sure of a few things. Make sure the neighborhood you are buying in is somewhere that it’s easy to get tenants. (For example, in Lakewood it’s pretty easy). That being said, you need to make sure you have money set aside for at least 3 months to cover the entire mortgage in case you don’t have a tenant at some point. Also, if its a new construction home, it doesn’t pay to upgrade nice features that you would be upset if you’re tenant ruins. Also, make sure you speak to someone about which “rules” you should put into your contract since you are living there. Let me know if you have any specific questions.
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amother
Jade


 

Post Mon, Aug 26 2019, 4:28 pm
misrael wrote:

Has anyone done this before or heard of people doing this? What was the experience like? How much time and effort did you need to spend 'land-lording' (collecting rent, finding rentals, managing repairs) Did you feel it was worth it?


How much time we spent land-lording? A lot. Pls pls for the benefit of everyone make a VERY CLEAR CONTRACT. If someome comes to look at the house try and be extremely perceptive as to how to act and react toward things around the house. We rented out brand new construction to very difficult people. There were constant complaints and demands. Window shades, storm door, insulating the attic (electric bills were high) we bought the house newly married and we very naive. We got taken for a ride. In hindsight I realize we are very eager to pls people and we are not cut out for landlording just as dh is not cut out for business! (Hes in med field)
It was worth it because we got our mortgage 75% covered for 5 years. Its was a hard 5 years but if we didnt buy when we had, they money that went toward the down payment wouldnt have stayed secure as we had a bunch of very expensive years following. We of course figured it out because we needed to because the money was locked into the house and im so so grateful for that. My home holds tremendous value and the fact that we easily paid the mortgage for all those years made it "worth it"
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oliveoil




 
 
    
 

Post Mon, Aug 26 2019, 6:40 pm
amother [ Jade ] wrote:
How much time we spent land-lording? A lot. Pls pls for the benefit of everyone make a VERY CLEAR CONTRACT. If someome comes to look at the house try and be extremely perceptive as to how to act and react toward things around the house. We rented out brand new construction to very difficult people. There were constant complaints and demands. Window shades, storm door, insulating the attic (electric bills were high) we bought the house newly married and we very naive. We got taken for a ride. In hindsight I realize we are very eager to pls people and we are not cut out for landlording just as dh is not cut out for business! (Hes in med field)
It was worth it because we got our mortgage 75% covered for 5 years. Its was a hard 5 years but if we didnt buy when we had, they money that went toward the down payment wouldnt have stayed secure as we had a bunch of very expensive years following. We of course figured it out because we needed to because the money was locked into the house and im so so grateful for that. My home holds tremendous value and the fact that we easily paid the mortgage for all those years made it "worth it"


It's also important to realize that landlording is a job. It's not just passive money.

Maybe your tenants were particularly difficult, but you can't just sit back and not take care of things either.
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amother
Jade


 

Post Mon, Aug 26 2019, 7:45 pm
oliveoil wrote:
It's also important to realize that landlording is a job. It's not just passive money.

Maybe your tenants were particularly difficult, but you can't just sit back and not take care of things either.


Broken things- of course need to be dealt with. Complaints like "we need the attic insulated bec our bills are thru the roof" that should have been a flat out "no, im sorry" instead that conversation lasted months amd went in circles and circles Rolling Eyes
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cuterpatooter




 
 
    
 

Post Mon, Aug 26 2019, 7:53 pm
Thank you so much, these answers are super helpful!
Yups, I've got questions!
We live in Lakewood, and will continue for the next couple years, but will probably move oot eventually. Would it still make sense even if we don't intend to keep the house for more than five years or so?
What were unexpected expenses that we should factor in?
Is it a headache to upkeep the house?
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amother
Jade


 

Post Mon, Aug 26 2019, 8:23 pm
misrael wrote:
Thank you so much, these answers are super helpful!
Yups, I've got questions!
We live in Lakewood, and will continue for the next couple years, but will probably move oot eventually. Would it still make sense even if we don't intend to keep the house for more than five years or so?
What were unexpected expenses that we should factor in?
Is it a headache to upkeep the house?


You have to consult with a financial advisor but I dont think most people would tell u to buy knowing that you want to sell in 5 years. Value of lkwd homes havent been skyrocketing now like they have in the past due to many people buying in toms river, Jackson etc.
Expenses when buying? Or maintaining a house with tenants?
Its usually not a headache to upkeep a house with a tenant when its a new construction home. Buy a 10 year homeowners warranty. Itll cover almost everything. Buy warranties on your appliances too ...
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FranticFrummie




 
 
    
 

Post Tue, Aug 27 2019, 2:03 am
Have someone go upstairs and jump up and down on the floor. Have them walk around in high heels and clompy boots.

If you don't like what you hear downstairs, invest in carpeting! Get heavy duty wear carpet in a neutral color like gray, and be prepared to replace it between tenants if it gets badly stained and you can't clean it. Expect to pay for a carpet cleaner between tenants, at the very least. Factor that into the cleaning deposit, or across the time of the rental.

Get references! Rent to someone you know personally, or at least get community references. You'll need references from a previous landlord, as well as at least one personal reference. When people feel accountable, and don't want a bad name in the community, they will take much better care of your property.

As much as I am an avid pet lover (and I rent) I would say "no pets" if you put in carpeting. Your next tenant might be very allergic, and pet pee is nearly impossible to remove once it gets to the floor boards. You think it's gone, until the next hot summer day, and then EEEEEWWWW! It comes right back. Confused The biggest pet deposit you could realistically get will not cover the cost of replacing the damaged floor boards.
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oliveoil




 
 
    
 

Post Tue, Aug 27 2019, 4:44 am
amother [ Jade ] wrote:
Broken things- of course need to be dealt with. Complaints like "we need the attic insulated bec our bills are thru the roof" that should have been a flat out "no, im sorry" instead that conversation lasted months amd went in circles and circles Rolling Eyes


I don't know. If an apartment is so poorly insulated that it's impossible to heat or cool without bills waaaay above the norm, I do think the landlord bears some responsibility.
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watergirl




 
 
    
 

Post Tue, Aug 27 2019, 4:56 am
oliveoil wrote:
I don't know. If an apartment is so poorly insulated that it's impossible to heat or cool without bills waaaay above the norm, I do think the landlord bears some responsibility.


I agree with you.

There are some things that are deal breakers for renters and should be fully disclosed. I cant imagine anyone owning a home and living in it without proper insulation. You would take care of the issue so you are not freezing or boiling and not paying a ton for energy. Even windows should not need to have cracks stuffed with plastic bags to seal gaps (yes, I have a friend who has to do this because her landlord wont repair the window gaps!).

This is not a difference of upgrading the counters from linoleum to granite, or upgrading a shower head - those things are not standard in rentals.

Landlords DO have a responsibility towards their tenants. I've rented for MANY years and there is a clear difference, from my own experience, when a landlord takes tenants as business or when they do it to supplement their mortgage. People who are in it as a business see their tenants as clients and generally take their job seriously. People who buy houses that they can not afford without a tenant see their tenants as a tircha. Those people should not be taking tenants.
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amother
Jade


 

Post Tue, Aug 27 2019, 6:59 am
I wrote in my orginal reply that we are definitely not cut out for landlording. Yes, when it's somebodys job they are probably a lot better at it and a lot less bothered. However, your tenant knows who they are renting from when they take the house...
Regarding the insulation- I live on a block with a bunch of identical houses and some did and some didnt insulate. It was a personal choice if laying out the lump sum to save a little every month was worth it. DH was told by the shul rav that it definitely isnt a requirement. Well guess what? Weve been living upstairs for years now and never insulted it. Some people just naturally are going to kvetch and complain....
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Chayalle




 
 
    
 

Post Tue, Aug 27 2019, 7:09 am
FranticFrummie wrote:

Get references! Rent to someone you know personally, or at least get community references. You'll need references from a previous landlord, as well as at least one personal reference. When people feel accountable, and don't want a bad name in the community, they will take much better care of your property.



This.

I moved almost 2 years ago and am renting out my previous home. Initially, there was someone who expressed interest in renting and I got rubbed the wrong way in conversations with the guy, and I just dropped them and told them I would be renting to someone else. I'm so glad I did that. Don't be in a hurry to rent to people who are not mentchlich, it's not worth the money to deal with the hassle.

B"H I ended up with really nice tenants, and I'm glad I waited the extra little bit of time to find people I can have a normal, decent relationship with.
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amother
Amber


 

Post Tue, Aug 27 2019, 8:05 am
Chayalle wrote:
This.

I moved almost 2 years ago and am renting out my previous home. Initially, there was someone who expressed interest in renting and I got rubbed the wrong way in conversations with the guy, and I just dropped them and told them I would be renting to someone else. I'm so glad I did that. Don't be in a hurry to rent to people who are not mentchlich, it's not worth the money to deal with the hassle.

B"H I ended up with really nice tenants, and I'm glad I waited the extra little bit of time to find people I can have a normal, decent relationship with.


Yes yes yes. For better or worse, it's a bit of a marriage. Decide carefully who you want to be meshadech with.
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Chana Miriam S




 
 
    
 

Post Tue, Aug 27 2019, 8:30 am
misrael wrote:
Hello,

We're considering purchasing a home, renting the top and living in the basement. We're a small family, and don't need a full home space. The rent collected can ideally go towards the mortgage fees, but we should probably only purchase a home we could afford without the rent bonus, since it's not a given to have a renter. This way, we would be investing in a house that we could live in or sell instead of paying rent that leads to no where. Of course, it will cost more than renting, but if we can afford it, it may pay off long term...

Has anyone done this before or heard of people doing this? What was the experience like? How much time and effort did you need to spend 'land-lording' (collecting rent, finding rentals, managing repairs) Did you feel it was worth it?


We rent our basement to students. We getca cleaning lady in the common area every two weeks to ensure that things stay good down there.


So far we’ve had no trouble
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Elfrida




 
 
    
 

Post Tue, Aug 27 2019, 9:54 am
My parents did this when we were little. I remember being warned that we had to be invited, and weren't just allowed to go and visit them whenever we felt we it just because they were living in our house. I don't remember much about the details but when I mention it my parents seem to have very positive recollections of that period.
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