Many people are on the path to generating passive income or retiring early through house hacking.
Traditionally, House Hacking means buying a large house, then renting out individual rooms. This is a great starting point. You might think you can managed all of this yourself and deal with any broken issues yourself because it’s all happening in your own house. While it might start that way, things can quickly get out of hand. That’s likely why you’re looking for an app to help manage your house hacking! You might be looking for a way to collect rent and avoid taking checks from your room mates. If you want something a little more reliable and trackable than passing Venmo requests back and forth, an app based software solution might be just what you need.
With House Hacking, property management is likely not your main job. You want to do everything you can to avoid turning yourself into a full time property manager, so why not outsource some of the tasks and tracking to software and automation?
Most house hackers are just getting started with renting out their first home. Once they get a taste for it, and see how fruitful it can be, they quickly see how expansion is the route to greater passive income. That means purchasing a second house, maybe in the same neighborhood, and renting that out. To continue optimizing in the house hacking way, you may want to rent that house room by room, as opposed to a single entity. This starts to get confusing. Imagine renting out 2 bedrooms in your primary residence. Now you buy a 4 bedroom house and rent that out by the room. You’re managing 6 separate agreements with 6 different groups! That sounds crazy enough to give up the potential gains of room by room rentals, and just rent the whole property. But no! The house hackers goal is to maximize their passive income. And we can do it with software to organize each of these relationships. Automation can help improve your situation and help you scale!
How can an app help with house hacking?
Now you can continue to imagine the situation as we expand to 3 and 4 houses, renting each out by the room. There are a few pain points this expansion will cause, and a few solutions software can offer to help make you successful in this pursuit.
Ability to track duration of the stay and cost
We want to record who is staying in each room. Easy enough. We need the ability to specify the duration of the stay and agreed on rent. This is all specified in the lease, but you don’t want to pull out a paper lease each time you want to figure out when it’s time find a new tenant, or how much rent you expect. You may have different lease start and end dates per room, and different prices charged per room. Ideally you don’t even have a paper lease, and can manage all of this digitally.
As we manage the lease digitally, we’ll need a way to invite tenants to the platform. Once invited, we can keep track of their phone number, email address, and other notes for maintaining the relationship.
Open lines of communication into each room
Now that we have invited our tenants into the app, we also have a direct line of communication to them. Without an organized chat app, you’ll likely be dealing with these tenants via text message or email. This will quickly grow out of hand with weird naming schemes in your address book. Which tenant belongs to which property? What have they asked in the past? Did they send you an email about one thing, then a text about another?
In the best case, we would have an app which could consolidate all of these types of communication into a single chat interface. Emails, texts, chats, service requests, inquiries - everything goes into the same place so we have a single place to respond and look back at history.
Keep track of problems
More people create more problems, so you’ll want an app to track any issues. If you’re not around all the time, like someone who travels for business, you might want a way for your co-habitants to send you requests that are urgent so that you can get help.
When those requests come in from tenants, it can be an extremely annoying distraction in your day. Mabye you’re at work? Maybe in the middle of a meeting? Bam, there’s an issue. Do you need to step outside to call your trusted service pro? That sounds annoying. You should have an app which can forward requests to service pros with a few taps, while you pretend to keep paying attention in the meeting.
Are you writing lengthy messages to those service pros? Well you shouldn’t be. Your app should also be generating those messages to service pros for you. Your tenant already explained the issue in the message they sent you. You need to simply forward that message on, along with the contact info of that tenant so that the service pro can get in touch with them for more details if needed.
The message to the service pro should be generated, but what if you want to add some details of your own? It shouldn’t automatically go out. You get to review the message, edit it as needed, and add any details that would help explain things. Then submit directly to the service pro.
Track expenses so that you can make tax deductions
Tax time! You’ll get deductions for the expenses you incurred while renting out your properties. Many landlords find themselves searching through credit card statements looking for all those charges. Don’t set yourself up for pain. Enter the expense as it comes in. And get a nice report at tax time to view all of your expenses for the year.
Collect rent from your users
Last but not least, while Venmo or checks are nice for a few people, once the number of tenants grows beyond about 5, you might find yourself looking for a proper solution that you can actually keep track of. What if a tenant misses a payment? Do you want to be frantically checking your Venmo or Zelle history looking to verify you received each payment? Even worse with checks! Now you’re looking through your past deposits to determine if the checks have cleared. Save yourself the trouble, collect rent with software!
House hacking can bring in that second income source you’re looking for. But because you’re managing multiple rooms and multiple relationships, things can get out of control. As described above, software and automation can bring things back under control with a platform that contains a few useful tools. This is the platform we’re building at Allen. The majority of these workflows exist today, so download Allen to bring organization and ease to your house hacking!