Today we want to talk about whether or not it's risky to rent out your basement
and stick around, we're gonna talk all about it right now.
Hey, friends. Stephen Michael Miller here with Limitless TV and I've got a
question here from Manveer Sandhu. Hopefully I said your
name right. A vid on the dynamics of renting your basement would be
interesting. What's it like? Do you notice the other person living in your house
much? Is it a hassle? Can you trust the person who lives in your basement?
Interesting topic, I think. Manveer, I think that's an interesting
topic as well, it's definitely something that people want to be aware of as
they're getting started with real estate investing and especially if they're
looking at potentially turning a home that they live into with a basement into
their first investment property or maybe if they're going to be renting out that
basement. So what is it like? First of all, renting out your basement
is going to be the same as you living in an apartment complex, honestly. Except for
you're the landlord that's also living in the apartment complex collecting
rents from the person below. You're gonna hear noises and sounds, you're gonna see
traffic. I mean, you're gonna see them coming in and out and so you want to be
aware of that there will be interaction with that person which is kind of the
second part of that question for you. You said you notice the person much and the
reality is it really kind of depends, right. If your schedules are parallel
with each other where you're leaving at the same time and coming home at the
same time, you're probably to see that person a lot. If they're friends of yours,
you know, then you may see them even more. If it's a family member,you may not want
to see them but you may see them even more so it just depends on whether or
not you're gonna notice that individual as to you know, what their schedule is
like and how often your paths are gonna cross. The next part that question
was, well, is it a hassle? And that's really gonna be a personal question for
you. Would it feel like a hassle for you if you have someone living in your
basement where you can't use your basement? Maybe you want to use your
basement and having someone in there would be problematic or create that kind
of hassle scenario where you don't like it. If that's the case, you may not want
to run out in the basement but if the payment that you're getting for that, if
they're covering your mortgage and that can offset whatever hassle that could be
for you, there's a huge argument for
that as well, right? So really, when you're renting at your basement in the
beginning and you're doing this kind of thing where you're living in the home
and running out the basement and allowing your basement renter to pay off
your mortgage for you, you're doing a delay of gratification play. This is
really what it is, you're willing to sacrifice some upfront
comforts of today to be able to gain more comfort tomorrow. This is
the play that you're doing so, yes, there will be some hassle there I think
associated with it, probably notice that person more than you would want to maybe
and you know, the next part that question is can you trust them? My answer for you
is you can trust them as long as you do the appropriate research and as far
as you can trust anybody, really. People are dynamic, people change, we don't
always know people necessarily that like we think we know them, I guess. But you
can do things and put things in place that can help you in that process. Doing
a proper credit check before you allow someone to rent out your basement
apartment, it's critical. Always do a credit check. I don't say that so that
you'll necessarily keep people out if they have a tingle in their credit but
it gives you a great snapshot of that person's financial responsibility or
what they've done over the last years, right. So doing that credit check can
oftentimes help you understand if they were late on other payments and so if
they are late on other payments, chances are, they may be late on yours, it can
tell you if they've got any judgments out against them, right, if they've got
any court judgments that they're paying on or different things like that so a
credit report can tell you a lot of great things. Second thing that you want
to do though besides just a credit report is do a background check, right.
You want to do a proper background check. Are they criminals? You know, did they go
to jail for the,ft you know? For breaking and entering. You may not want to
have that person in your basement so close to a door where they can get up
and break into your home if they know that you're gone. By the way they, aren't
gonna know if you're there or not, right? Especially if they're in your basement,
they can hear you upstairs walking around, talking, unless you have like
amazing soundproofing in between floors which most homes don't have that
necessarily then you'll be able to hear things, they'll be able to know if you're
there or not. So trust is a really big thing, you want
to make sure you have as high level of trust as you possibly can with the
person that you're putting in your home and oftentimes, you can gain that by
doing a good credit check and then a good background check. The next part of
that though is besides those two things is getting references for that
individual. References like work references, references like friends and
family. You know, I've had people say hey don't ask their family cause they'll just
get their family to tell you lies or to tell you something but
honestly, we've had experience where we asked family members and the family
members said no, don't rent to those people, you don't want to rent to them
because they're not gonna, you know, they're not gonna be a good tenant
for you and of course, you've got people that will say, yeah, they're great, they've
been great for years and we've got all the evidence to prove that they're gonna
be awesome for you. So if you do those three things, if you do a background
check, if you do a credit check or credit poll and credit check and if you get
references for them then you should have everything that you need if you're going
to be doing this to put the right type of person in your home and have a great
experience renting out your basement. Alright, risk assessment done. Are you
ready to write out your basement? Hopefully or do some other type of
investment but whatever you do, get in here and learn some more, go ahead and
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