Author Topic: By The Room Rental  (Read 1673 times)

Jon Bon

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By The Room Rental
« on: February 14, 2018, 07:29:59 AM »
So in my rental market I am seeing a bit of a trend towards by the room rentals. So you would rent out a 6 bedroom house for $2200, but if you rent out the six bedrooms individually it could net you say $500 a bedroom or $3000 total. So that is not income to sneeze at.  There are definitely trade offs here. You have six leases instead of one, six tenants complaining to you about the other five etc etc.

However it has advantages of more income and perhaps being easier to fill. I know some places do this and include a sink, mini-fridge and microwave in every room type deal. Why I am thinking about this?  It is MUCH easier to rent a 1 bedroom house than it is a 6 bedroom house. This is even more true as the rental window is shrinking. So you likely will not get a group of six wanting to move in a few weeks before I have a vacancy, but it is likely however that I would be able to rent to six individuals before I have a vacancy.

I have 2 questions for all y'all.

1. Has anyone done this? What experience could you share.
and
2. What items do you include in the lease that would be different from a standard lease (common spaces etc)

 

jc4

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Re: By The Room Rental
« Reply #1 on: February 14, 2018, 02:59:01 PM »
I've lived in a neighborhood that's largely rentals, and has some whole house and some single room rentals. Here's what I know.

1. HERE, it's actually against city code to rent individual rooms / have more than one lease on a property that's not zoned as a duplex. Its common anyway, and I don't know how a court would take enforcing a lease like that, but it's done all the time anyway.

2. You tend to get less desirable renters with individual rooms. They care less about who they live with, and don't have other people who want to live with them. You're tenents are strangers to one another and there's a lot less social pressure, to respect and maintain common spaces. That doesn't bode well for their care / upkeep of the property. The only two experiences I've had with people smoking in the house, was with tenants on single room leases. You can definitely mitigate this if you're renting lower quality properties / planning to depreciate or with more stringent tenant screening.

3. You'd have vacancies more often, but you'd get partial rent, so that's probably a wash.

4. You have a lot more work to do showing / meeting / etc. This is probably the biggest challenge.

waltworks

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Re: By The Room Rental
« Reply #2 on: February 14, 2018, 08:50:31 PM »
Sounds like absolute hell/tons of work for *maybe* a few hundred bucks a month (if every room is vacant for a month a year, that's half your profits...) Plus, you will need a lease that will let you sublet, which will be *very* hard to get from any landlord with half a brain.

Now, if you're a college kid looking to find roommates, learn some life lessons, and live cheap, go for it. If you're an adult with a job, stay as far away from this idea as you can.

Seriously, this is a very stupid idea.

-W


Dicey

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Re: By The Room Rental
« Reply #3 on: February 14, 2018, 11:46:19 PM »
Also you would have to hold the master lease and cover the full deposit, because the owner isn't going to juggle that. You also need the owner's explicit permission. Basically, you're the master tenant and the roommates are sub-tenants. I did it for almost a decade in a 2br apartment in L.A. and it worked well. No way in hell would I take on that much risk or hassle for $500/month.

Jon Bon

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Re: By The Room Rental
« Reply #4 on: February 15, 2018, 05:55:47 AM »
To be clear, this is not for me to live in. I own the house and wanted information about renting it out that way.

Yeah I realize its not the best of ideas. I do have some interest in the house and I still have a ton of time to get it rented but I wanted to see what peoples experience was in this. What funny is university's do this all the time! But then I guess you have a lot more exhaustive vetting of your renters!

I just wanted to get some landlord prospective on this.


waltworks

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Re: By The Room Rental
« Reply #5 on: February 15, 2018, 07:25:36 AM »
I'm torn about whether it's an even worse idea if you don't live there. On the one hand, then you don't have to put up with all the nutty antisocial people and their arguments/filth. On the other hand, you aren't there constantly to prevent people punching holes in the walls and vomiting everywhere.

It's a horrible, horrible idea, regardless. You'd make better money getting a job flipping burgers, and probably enjoy the work more as well.

-W

Jon Bon

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Re: By The Room Rental
« Reply #6 on: February 15, 2018, 11:43:54 AM »
I'm torn about whether it's an even worse idea if you don't live there. On the one hand, then you don't have to put up with all the nutty antisocial people and their arguments/filth. On the other hand, you aren't there constantly to prevent people punching holes in the walls and vomiting everywhere.

It's a horrible, horrible idea, regardless. You'd make better money getting a job flipping burgers, and probably enjoy the work more as well.

-W

Where on earth do you own houses Walt?!

You do bring up good points, but I know there are 'boarding house' type place that apparently work. However yeah it would take a special set of people to make it work, and a single bad apple could blow it up in a hurry.


waltworks

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Re: By The Room Rental
« Reply #7 on: February 15, 2018, 12:19:03 PM »
I sold all my rentals. Might buy more if the RE market crashes again, but not interested in owning at current price levels.

Look, have you lived in a house with lots of roommates? Do you remember what it's like? And that's usually *people who all went out and looked for house together* who already basically get along. If you're going to rent out individual bedrooms, you are not going to get those people. You will get people who nobody else wants to live with and/or are too poor to get themselves a 1 bed apartment to live by themselves. Then you are going to put 6 of them together.

But hey, it's your life/money. Do what you want.

-W

Jon Bon

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Re: By The Room Rental
« Reply #8 on: February 15, 2018, 12:26:42 PM »
Walt,

OH yes, I lived in a house with 8 dudes, it was probably a step away from being a superfund site! I was just curious if you or others had done it in the past.  I am not seriously considering it, but I wanted to see if some folks on here had some experience with it just in case.

Something along the lines of: If you put  X, Y and Z in the lease, and then check on A, B, and C, when you are there for maintenance.  I have a showing tomorrow, so hopefully none of this will be necessary.


neophyte

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Re: By The Room Rental
« Reply #9 on: February 15, 2018, 03:40:45 PM »
I do this and it's working out great for me so far.

BIG BUT: I live in the house with my roommates. I'm young-ish and single and I prefer living with other people. Living there gives me the ability to be a lot more discriminatory about who I rent to and I have a good idea what's going on in the house.  I work at a university and only advertise through the university's housing portal.  My ad is visible to grad students, postdocs, medical residents, visiting scholars, and employees, but not undergraduates. So far I have no serious complaints about any of my roommates and they don't have any serious complaints about each other.

My leases are month to month so I can hopefully get rid of someone relatively quickly if we don't get along well even without any lease violations. I'd rather have a vacancy than deal with someone I don't like. Other than that, I don't have anything particularly specific.  You'll need to check your local regulations to see if you would be required to cover utilities in your room rental scenario, you very may well be which would eat into the $500 pretty fast. 

You need to be realistic about the quality of the tenants you could attract to a room rental and whether or not you want those tenants.




Dicey

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Re: By The Room Rental
« Reply #10 on: February 16, 2018, 02:26:12 AM »
Careful Jon Bon, look where neophyte lives.
<-------------------

Jon Bon

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Re: By The Room Rental
« Reply #11 on: February 16, 2018, 05:43:56 AM »
Careful Jon Bon, look where neophyte lives.
<-------------------

This time of year I would not mind having 2 suns......


Chadbert

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Re: By The Room Rental
« Reply #12 on: February 16, 2018, 05:44:54 PM »

2. You tend to get less desirable renters with individual rooms. They care less about who they live with, and don't have other people who want to live with them. You're tenents are strangers to one another and there's a lot less social pressure, to respect and maintain common spaces. That doesn't bode well for their care / upkeep of the property. The only two experiences I've had with people smoking in the house, was with tenants on single room leases. You can definitely mitigate this if you're renting lower quality properties / planning to depreciate or with more stringent tenant
^This
I lived in a 4 plex that was rented out this way as my very first apartment on my own. The common areas, kitchens and bathrooms were disgusting, the carpet a wreck and one smoker almost burnt the place down.

Mother Fussbudget

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Re: By The Room Rental
« Reply #13 on: February 19, 2018, 08:41:08 AM »
My son was "primary renter" in a rent-by-the-room house for several years.  It worked well, and here's how:
1) Landlord designated a 'primary renter' on the lease - that renter was responsible for the entire month's recurring rent amount.
2) Primary renter, and other renters interviewed potential room mates to see if they fit in with the 'board game' / Video Game / LARP'er enthusiast community they had put together. 
3) They had no problems finding renters from the local community college, game shops, LARP events, and from referrals from friends.
4) The Primary Renter paid the rent, then went back to his housemates to get their rent.  Eventually, he tired of tracking people down, and required them to have automatic payments sent to his checking account.  The house only had a problem with rent not being paid once (1x), and that renter was out by the end of the month, and replaced by someone who would abide by the house rules.  There was another time when the check to the landlord (yes, physical check) didn't make it to the landlord's inbox on time, and the house was charged a late fee, and threatened with eviction.  The landlord eventually found the check IN their mailbox stuck to some other mail, and withdrew these requests.
5) Yes, my son was eventually the primary renter - but only after 3 years of not being primary.  My son found he didn't have the temperament to deal with the LANDLORD (the renters were all fine with each other), and eventually moved out to live with his girlfriend.

SO... it can work, but I have to agree with both neophyte, and waltworks - it really only works when the people know each other before renting together, and work out some rules vis-a-vie kitchen cleanup, laundry room & bathroom etiquette , etc.

afox

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Re: By The Room Rental
« Reply #14 on: March 07, 2018, 10:52:33 AM »

 You will get people who nobody else wants to live with and/or are too poor to get themselves a 1 bed apartment to live by themselves. Then you are going to put 6 of them together.


This is so true and cannot be emphasized enough.  Would any reasonable person want to live with 5 strangers?  NFW.

While we're at it.  Where I live everyone wants to be a homeowner.  EVERYONE.  It is shameful to be a renter.  The only people that do not own their own place are people that cannot afford to own their own place.  So the pool of renters generally sucks.  There is the occasional newby to town but they wont stay long term becuase they are just living there temporarily until they close on their new home.  My best luck has been with recent divorcee women.  They all buy a house after a year too though even though they are getting a really sweet deal with no maintence or anything in our rental.  My wife and I joke that we take em in, get em back on their feet,  and put em back into the world.  We are on divorcee number 3 in a row now.

Oh, and someone recently told me something interesting about small job contractors: The carpenter that will build some shelves for you or do other ad hoc work is the carpenter that couldnt land a long term contract doing work for a builder with steady day in and day out work.  Same goes for other trades.  If you can find a tradesperson that is not booked for a long time they are likely not the best at what they do.  Would you want to do a few hours of work here and there with no benefits or stability or predictable income?

ginjaninja

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Re: By The Room Rental
« Reply #15 on: March 07, 2018, 11:09:54 AM »
Mother Fussbudget:  I lived in almost an identical situation it sounds like.  The land lord had a stipulation that for every individual check he would charge a $10 "transaction fee."  There were 5 of us living in the house I was the primary renter in your situation.  There were 2 times that my roommates were late and my account was overdrawn.  My roommates paid my overdraft bank fee.  The saving graces that I had: wonderful roommates that I got along with really well, pictures of every inch of the house, and I would have my bank use the bill pay feature to write and send the check to my landlord.  One month my landlord claimed that he did not receive my check that "it is a different size than other mail so it probably got lost".  First off that is way too specific of a reason, so I am confident that he definitely lost it.  Secondly, I had the proof that I paid him and the bank had a record of the date the check was sent in the mail.  Once I provided this information he backed off and gave us enough time to get a second check sent and the first one cancelled.  Once he realized how organized I was he didn't try to mess with us as much in the future.  I also ended up leaving because of the landlord (there were a lot of other issues with this particular landlord).

I will not live in this situation in the future, nor do I recommend renting this way in the future unless the landlord is in the house.  If there is a way to physically change the structure so that there is a way to separate living spaces I would do that instead (I understand there is a cost here but your tenants will likely not be happy sharing a space long term with strangers)

peeps_be_peeping

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Re: By The Room Rental
« Reply #16 on: March 07, 2018, 11:46:37 AM »
I own a 3-bedroom, 1450 sq ft house and have two "house-mates." It works for me/us because I am willing to put up with a little less privacy and a little more wear and tear on my house in exchange for additional income and company. My housemates are both good friends and trustworthy people. We have a few unspoken "house rules" - i.e. no chatting in the morning before caffeine - but that's about it. In my city rents are relatively high compared to home prices, but homes are not cheap either, so there is a fairly decent pool of potential renters who are responsible people with jobs but who maybe don't want to buy a home yet or who would rather pay a less for a shared house than more to live alone in a semi-seedy rental. Many of the single people I know in their 30s who own a home have a similar arrangement.

Lmoot

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Re: By The Room Rental
« Reply #17 on: March 17, 2018, 03:11:36 AM »
Well in my area, it would have to be capped at 3 rooms since local law says no more than 3 unrelated individuals can be on a lease. So there would be a low ceiling of opportunity depending where you live.