Need Help Determining Rent

[Jonathan Feliciano]

Hi BP Community,

I'm conducting a rent analysis for my market here in Orlando, FL, and I could use some help.

Currently, I'm looking at 2 bed and 2 bath houses near the University of Central Florida. According to Rentometer, the market rent is $1,100 per month for this specific property type in this specific area. However, I'm planning on renting out each bed and bath as a unit, and not the whole house itself. According to Rentometer, a 1 bed 1 bath house rents for $750 per month.

I'm thinking I could competitively rent each unit for $700 per month.

1. Should I assume the $1,100 or $750 in my property analysis? 

2. Also, what are your thoughts on my decision to rent each unit for $700?

[Alberto Nikodimov]

Hi @Jonathan Feliciano I had friends doing this and it can either work out great or be a nightmare. I will give you few tips in order to prevent any issues and then explain how to do your research in regards to the price per room here in Orlando.

1) When you place two strangers under the same roof this can cause all kinds of problems. Best thing to do is be there to control everything. A friend of mine and I did something similar. My friend was renting a 3 bedroom. He was living in one of the rooms and renting out the other two. He was screening his tenants properly (as if they were renting a normal rental property) and he was also picking a character that matches with his so they can get along. Being at the property is very important when you rent rooms. IF you are not there is very easy to loose control and especially with university students which are living on their own for the first time you will feel like you are dealing with kids! Every time there is a small argument they will be calling you and asking you to resolve it! Example: He didn't wash his dishes. Can you call him and ask him to wash them? Now on top of that these "kids" also like to throw parties... I think you see where I'm going with this! If you are house hacking I'm 100% for it, if you are renting rooms without being there personally I will advice you to be very careful. I had a roommate in Miami for 2 years and he was paying 75% of the rent for the smaller room of a 2 bedroom apartment. I was living in a great building at almost no cost!

2) Liability - Make sure you prepare a real contract and protect yourself. Those contracts are not very easy to find. I have seen some on BP but I'm not sure who prepared them and how protected you are. When you rent to young people you need to be extra careful. Also, get yourself an insurance.

3) Turnover - Students tend to move every year. You will have a little bit of extra money if you rent the rooms separately but if you have vacancies every year that kills the point. At the end you will have much more work to do, finding 2 tenants every year and again dealing with vacancies.

4) Timing - if you rent to students in collages make sure your lease is not timed awkwardly. Most students want to go home as soon as the school year is over and come back 2 weeks before the new year begins. The summer period can cost you money if they leave and stop paying rent. This is why you need a good agreement and a contract that explains all these scenarios. If you get a vacant student housing in March or April it will be very hard for you to lease! Make sure you are looking for new tenants right before the new school year!

Now here are some tips for getting the best price possible per room and tips for making your property stand out and rent quicker!

1) The furniture plays a big role! You will most likely have to furnish the rooms with nice beds, night stands and even TVs. Those rooms are the easiest to rent. Unfurnished rooms for students are extremely hard to rent. Go with something modern and neutral - white, gray or nude colors are great. This will increase your price drastically and help you rent the rooms faster.

2) Have all utilities included and charge higher rent. This makes it easier for students because they don't want to deal with bills. You will also avoid conflicts and issues.

3) You need amazing professional pictures. This made a huge difference for me. I was working in real estate when I did this and since it was my first RE adventure I decided to do it properly and I paid $125 for 12 professional pictures of each of the rooms, living room and amenities. This made a huge difference. When people rent rooms they tent to use their phones when taking pictures.Your rooms will look so much better than everything else on the market + this is a great investment if you will be doing this for years. You can just keep reusing the pictures.

4) Best way to determine a price is to do your research! I used Spareroom and Roomie! First I determined what is the meridian price, top end price and lowest price for a room. Then I priced myself little bit lower than the top of the market. You never want to compete on price. The lower the price is the lower the quality of the tenants.

I will be happy to hop on a call and share my experience. There are probably many other things I had to mention but the post is already very long!

If you decide to just check on the normal rental price of the property you are looking to buy, you can just go to our website and insert the address and we will do the work for you and send you the market rental price with comps and some additional data!

Good luck and I hope this was helpful!