Pros and cons of rent by the room?

[Maranda Tucker]

Up until now, we have shot down any opportunities to manage rent by the room properties; however it is a conversation I am having more often these days and considering it more seriously. What are the pros and cons of rent by the room?

[Ryan Swan]

PROS

+ Potential for much higher gross and net revenue 

+ Removes the large swings in vacancy commonly associated with SFRs. Instead of being 100% occupied or 0% occupied, your vacancy rate would be more consistent (4 out of 5 rooms rented = 80%). This makes it more akin to a small multi-family property

CONS

- Potentially higher turnover

- You need to keep utilities in your name so they remain on when tenants come/go

- Potential for roommate disputes 

- Potentially more wear and tear on the home