Closing in Two Weeks - Current Landlord Rents by the Room

[Fabian Peraza]

Hey BP,

Closing on my first property (triplex 3BR 1 Ba in each unit) and have some questions on how to handle my first crop on tenants. When I move in, I will have 2 tenants in the 2nd floor unit and 2 tenants in the 3rd floor unit. I will be occupying the 1st floor and will potentially get a roommate within the first couple months. The units cater to college students but currently not rented out to students (students were in the first floor but recently moved out). The seller has been renting by the room for several years now. Obviously, I gravitate towards filling those two empty rooms in the second and third floors to immediately remove vacancies. I do envision eventually renting to students after I settle myself in with landlording. The seller (also the seller's agent) has graciously offered to fix everything I asked her to (to include portions of the roof; roof over porch and rear roof). I feel slightly uncomfortable renting rooms to tenants who don't know each other (and don't share any common bonds as college students may have) and I'm wondering whether or not I should begin to ask tenants to vacate in a slow drip in order for me to renovate and put up for rent again where the tenant will have to pay the full amount for the unit as opposed to the room (and leaving me with vacancies). If I do that, I will probably miss out on the start of the school year and perhaps find myself where I first started. I also think it'll be difficult to rent those other rooms as they are not as big as the others in the unit. One tenant has turned off the valve to the central air in order to cut cost and his roommate doesn't seem to mind. But that third potential tenant might turned away by that.

Right now, I feel like my best strategy is to continue renting to the tenants I've inherited until I get my feet wet and build a cash reserve for next year's crop of students. If I had all 6 bedrooms (or 2 units rented) I would cashflow approximately $550 after all expected expenses. With the 4 current tenants I would be short approximately $250-$350. Any advice or suggestions is much appreciated. Thanks!