Rent out the whole house or Rent by the room?

[Susana L.]

I own a 4 bedroom house that is currently being rented by 4 friends together - great tenants, btw.  3 of them are moving out in a couple months.  The 4th person wants to stay and I would love some insight on how to make this work.  I am exploring options on how to re-rent the house once the rooms are available.  The 4 renters were friends so they were on a single lease and that was easy.  ;)  But now, I want to help the 4th stay but it seems a little more complicated.  I'll have to find some roommates for him, which I don't think will be hard.  So my question is, since they will all be strangers, should I have the current tenant plus the 3 new ones all sign a new single lease or should I rent the rooms out individually and hold individual deposits?  

Do you see potential problems that can arise with either scenario?  Any advantages to each scenario?  Which scenario would you prefer?  If each are on an individual lease, how do I manage their deposits in assessing damage when they move out?  Is it only to their room?  What if, at move-out, they leave their rooms in excellent condition but the common areas have damage?  

Any light you guys can shed on this is most appreciated!  As always, I am so thankful to be a part of this amazing community!  Thank you!  :)