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Updated almost 8 years ago, 12/24/2016
Renting multiple houses by the room
I'm currently renting out 2 SFR houses by the room in an area that attracts young professionals and am loving the high cash flow.
Im a little disorganized, and with having a full time job I am starting to get overwhelmed with managing utilities and turnover and am questioning if renting by the room is feasible on a large scale business model of 10+ houses.
Is there anyone out there that rents by the room on a large scale? What is the best way to manage utilities for renting by the room for multiple houses? Are their property managers that will manage by the room?
Regards ,
Mike
Ignore: vancouver Washington , San Francisco San Diego , Seattle , Houston , house hacking, college students, adu , Portland, Denver
If you get larger properties, you could convert the house in to an assisted living home. You'd rent by the room. But you get get a LOT more then than the way you are doing it now. You can hire a manager to oversee the entire operation. Some of my subscribers are getting $30,000 to $70,000 a month from ONE house doing assisted living homes.
Basically, you can do one deal then retire!
You could also set up the house as an assisted living home, then lease the whole operation to a different company who runs the business. This will still get you twice as much rent as you could get renting to a single family or person.
I have a client who has 2 homes rented by the room. The rent includes ALL utilities. He lives in one and gives a discount to someone to manage the other.
That's one way to house hack, but a concern is that in some cities, multiple leases per house is illegal for single family zoned houses. So your bacon could get cooked.
I can't find the law cited, but this has been my operating assumption for some time. Can anyone help nail down the legality of this?
Here's some recommendations I found (they recommend one lease per property): http://www.allpropertymanagement.com/blog/2012/10/...
Looks like it was legal in Bellevue until recently
http://www.citylab.com/housing/2015/04/why-a-seattle-suburb-legally-defined-what-a-family-is/389835/
It seems to differ from city to city. This article gives a good explanation.
http://www.sightline.org/2013/01/02/the-roommate-g...
For Vancouver Washington 6 seems to be the max amount. If i'm reading this correctly. Or maybe its 6+ owner.
according to municipal code 20.150.040:
Household. An individual, two or more persons related by blood or marriage, a group of two or more disabled residents protected under the Federal Fair Housing Amendment Act of 1988, adult family homes as defined under Washington State law, or a group living arrangement where six or fewer residents receive supportive services such as counseling, foster care, or medical supervision at the dwelling unit by resident or non-resident staff. Up to six residents not related by blood or marriage who live together in a single-family dwelling or in conjunction with any of the above individuals or groups, shall also be considered a household. For purposes of this definition, minors living with parent or legal guardian shall not be counted as part of the maximum number of residents.
@Mike F., this seems like a great idea from the cashflow standpoint. And it also sort of helps provide a stead-ish income stream since there are multiple tenants in each home. However, it seems like this could really backfire. Have you had any issues with this plan? Or do you put a lot of consideration into the personalities of each individual you rent out to in order to ensure they work out with the other tenants? Would love to hear more about this. I'm in the Portland area, so wea re pretty close. Let me know if you ever want to grab coffee. Its on me.
A lot of thought goes in to the compatability of the house mates. When it comes to being happy with your living environment where you live is only half as important as the people you live with. Many people will pay 20%+ over market if they can live with potential friends. Most other property owners only sale the property in their adds. I sale the property and the people who live there.
Extra effort goes in to maintaining a positive relationship with the neighbors and getting the tenants to feel ownership the house.
@Account Closed I'm instantly fascinated by your mention of sober living housing. Humanitarian work helping people struggling with mental illness and substance abuse is close to my heart, and if I could make it work as a solid investment as well, I may have to pursue it.
Anyone else have experience or knowledge of sober house investments? Not sure what goes into it.
Renting rooms from your personal residence is not a problem, but where all tenants inhabit inhabit their own rooms w/o the owner being also resident creates a "rooming" facility and that often requires a business license - - so check with the city
Mike F. What are you charging per room? I look at the rental rates that we get for an SFR and it doesn't seem like there is much room for a premium for single room occupants. If the property is close-in and is 3+ bedrooms the rent is typically over $2,000 in our market. The last three 3 bedroom houses we rented recently were for $2,625, $2,100, and $2,400. I'd have to get $1,000/room plus extra for utilities in order to take on the increased management burden in order to make it work as a business model.
Maybe the economics are different in Vancouver?
$500-700 definitely would not work for many houses and parts of town . For a 4/2 house that would rent to a family for 1650/ month. I'd get 550/ room + 600 for the master+30 for use of garage parking.
711 W 38th St, Vancouver, WA 98660. (could likely be picked up for <240k)
Which is currently being poorly marketed fits this model. I'd finish the basement with a bathroom, And market it as a private entrance suit, and get 550/ room upstairs+ 650 for the basement. Market the house as walking distance to all the micro breweries and turn it in to a 2850+/ month rental.
Mike F. I think you've got your answer right there. If you have the proclivity then I don't know what should stop you! Obviously there are some added pitfalls to be wary of like who to deduct money from for damages. What's nice though is that you are totally exposed when you have a vacancy.
Are you paying for yard maintenance or requiring the tenants? Also, what is your current setup for utility bill backs?
The yards are set up as low maintenance yards. I pay a neighbor a couple bucks to mow the lawn and do a thorough cleaning once a year or so. I pay all bills, send out an email with the monthly totals to be included with the upcoming month's rent. Not the best system but works for 2 houses.