Legally renting to 4 or 5 students?

Question

I'm about to put an offer on a single-family property less than a half mile from a very nice university in St. Louis, MO. It's a clean 5 bed/2 bath house that would be ideal to rent to students. However, St. Louis City, like many cities, states that "No more that three unrelated persons may live in the same dwelling." Based on my research on the university room rates and other area rents, I can't be competitive in rent/student and still cash flow unless I have four students in the property.

I've read that some cities allow you to request an exception to be considered a roominghouse, so I'm looking into that. I've also reached out to the real estate attorney I've been working with to get his thoughts.

In the meantime, has anyone else faced a similar situation and have some ideas or more insight for me? Thanks!

Deanna McCormick · Answer

comply or don't buy, your smart to know what the limitations are before hand

Will Gaston · Answer

@Megan Greathouse great points made by @Susan Holmes @Colleen F. and @Deanna McCormick.

The 3 unrelated persons ordinance is a huge issue in my market (Columbia, SC) and my business. I would highly recommend following the ordinances as well as there are waaaaaay too many other issues in dealing with student rentals to also have to worry about the City shutting you down as well.

Our ordinance specifically states that it's 3 unrelated per UNIT which means we can have up to 6 in a duplex, 9 in a triplex, etc. Is there a possibility that this is the case in your market? If so, would it be viable to turn it into a 6 BR duplex so that you could do it legally? We can get $500-$700 per bedroom in my market so even expensive construction costs are usually outweighed by the massive upside in rent.

Susan H. · Answer

I live in a university town with the same "no more than three unrelated persons" restriction on single family homes.  Multi-family and mixed-use zoned parcels, however, can go to four.  We're required to include this in our leases. See http://www.fayetteville-ar.gov/documentcenter/view... and http://www.fayetteville-ar.gov/documentcenter/view... for the exact wording.   Any chance the property can qualify as mixed-use?

Ironically, the current tenants in one of my homes is there because his old neighborhood was turning from homeowner-occupied to rentals and the landlords were renting to 4 or more students despite the ordinance. The result, inevitably, was that the majority of homes routinely had 6+ cars and residents.

Account Closed · Answer

@Megan Greathouse   Talking to a lawyer is your best option.  Many of the ordinances are not legally enforceable.  If that does not work you might want to consider turning it into sober living for college students.  This link explains the legal issues and the restrictions on any city ordinances trying to regulate it.

http://www.agclawfirm-alerts.com/files/Sober_Livin...

Megan Greathouse · Answer

@Anuj Anand, yeah it's frustrating. I did end up calling the city to find out about the possibility of getting approved to act as a roominghouse. I'm not sure how likely it is, but it's something to consider. Here's what I learned:

- First step is to visit City Hall to get the directions for the process and a map of homes where you must ask current residents in the neighborhood to sign a petition to support your request to rezone the property as a roominghouse.

- Once you've collected the signatures, they recommend that you meet with the alderman to ensure you'll have support from them in your rezoning request. Without their support, it's unlikely that you'll get the rezoning request accepted, so it's not really worth taking follow-on steps where you start to incur costs.

- If you get enough signatures and have support from your alderman, the next step is to apply for rezoning, which comes with a fee of about $400.

- Following your rezoning request will be an occupancy inspection, which usually costs $80 - $160, depending on the size of the home.

- Once the occupancy inspection is complete, the rezoning request is submitted to the zoning office, which will deny the request and send you to a hearing.

- The hearing costs about $200, and is where your petition, rezoning request, and alderman support should hopefully come together to help you get the rezoning approved.

So, the process can cost nearly $800 and probably takes a good month or two, at least. However, could be worth it if you have a good case and a great opportunity close to the university. Hope that's helpful!

Anuj Anand · Answer

@Megan Greathouse, I ran into the same issue when i was looking near Wash U. There was enough room for more then 3 but i couldn't have more then 3 unrelated people on the lease. I decided to pass, but that was a few years ago. Hope you have better luck.

Sam Shueh · Answer

Because of amount of people, parties, cars involved, any violation, loud music will red flag to neighbors. I will go by the book unless you want your investment to be redtagged. Another possibility is take husband and wife are related.

Drugs or even drug mfg is a concern. A number of older big buildings near a prestigious university here got condemned from drug mfg.

Jake Schulte · Answer

@Megan Greathouse I am curious, how did this end up working or you? I am looking into the same thing in the St. Louis school of pharmacy area.

Megan Greathouse · Answer

Account Closed ... thank you for the insight and links!!

Legally renting to 4 or 5 students?

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