Building a dedicated college rooming house

[Patrick Sears]

Hello,

Fellow SFH landlord here. Had an idea that I wanted to run by y'all. What would you think of building new (using a "build on your lot" stick builder) a single-family home that had say 6 large bedrooms, each with their own bath, plus a large kitchen (possibly with multiple ovens and microwaves) and smaller communal living room area. Then, I would rent out rooms individually for higher cash floor vs the standard one-family for one house routine? I would probably locate this next to a couple of smaller rural colleges about an hour from my residence. Designing this from scratch, I could also custom design individual storage units, maybe garage spaces for extra $$$, extra kitchen cabinets, etc... Basically, a dedicated "rooming house" or 6-plex that would let me get around apartment zoning regs, commercial loans, etc... for a SFH price and financing.

I realize managing 6 separate tenants would be more work than a standard family, but as recent BP podcasts and blogs have highlighted, the cash flow can be significantly better.

I would eventually like to get into larger apartment investing, but trying to build a bankroll for that at first and apt cap rates are garbage right now anyways.

Thoughts?

• 1

[Greg Dickerson]

Originally posted by @Patrick Sears:

Hello,

Fellow SFH landlord here. Had an idea that I wanted to run by y'all. What would you think of building new (using a "build on your lot" stick builder) a single-family home that had say 6 large bedrooms, each with their own bath, plus a large kitchen (possibly with multiple ovens and microwaves) and smaller communal living room area. Then, I would rent out rooms individually for higher cash floor vs the standard one-family for one house routine? I would probably locate this next to a couple of smaller rural colleges about an hour from my residence. Designing this from scratch, I could also custom design individual storage units, maybe garage spaces for extra $$$, extra kitchen cabinets, etc... Basically, a dedicated "rooming house" or 6-plex that would let me get around apartment zoning regs, commercial loans, etc... for a SFH price and financing.

I realize managing 6 separate tenants would be more work than a standard family, but as recent BP podcasts and blogs have highlighted, the cash flow can be significantly better.

I would eventually like to get into larger apartment investing, but trying to build a bankroll for that at first and apt cap rates are garbage right now anyways.

Thoughts?

• 1

 This is a very common practice and business model all around VCU, UVA and many other college towns. There are lots of property management companies that can educate you on that specific business model rent by the room right by the bed.