Renting Out A SFH By the Room

[Joe White]

As a property manager, I often get requests to manage SFH's where the property owner is renting out each bedroom - by the room. I always turn down these clients due to the legalities. You simply can't rent out 8 units in a property zoned as single unit, even if it has 8 bedrooms. These guys often have a lease per bedroom & I wouldn't want to be the one standing in front of a real estate judge trying to evict one of these tenants, with an illegal contract.

But, renting out by the bedroom does produce incredible returns. These places rent out for unheard of percentages above what they would if rented out as a single unit, to say roommates.

I'm curious what solutions others have come up with that steps these illegal boarding room style investments closer to legal.