Room by Room Rentals — Advice?

Question

Good morning all!

Have a question regarding room-by-room rentals. We are investors in Savannah, GA, and have a lot of college students as our residents.

We noticed that most college students prefer to rent or “sub lease” rooms for semesters. So far, (although it’s more of a headache), we have had great success in being some of the only landlords to provide furnished rooms for leases as short as 3 months (we have also used this model to support a couple traveling nurses and military personnel).

For the safety of the college students, I try to only open the room rentals to other college or grad students. If I were renting a room, I certainly would feel safest with someone my age.

Question is; can I put on our listings “room rentals for college and grad students only”, legally? We welcome anyone of any age to rent the entire apartment themselves, but again, trying to do right by our college students and their parents.

Thanks again for your insight!

Joe Splitrock · Answer

When companies run student housing they require all occupants to be students and it is generally on campus or specifically built near campus as student housing. Still there have been recent supreme court rulings (2015) that could even challenge the validity of requiring students only or not allowing students with children. This situation is even different because the housing is not on campus and was not built as student housing. It is standard family housing that is being used as student housing. Situations like this are ripe for fair housing complaints and supreme court precedence would give someone a legitimate case. Fair housing is increasingly being applied in student housing on campus with things like emotional support animals being forced into the properties. Courts have said fair housing applies, which opens the door to anything being fair game.

Personally I would just rent to groups of students, which is what I did in college. The house we rented required us to apply as a group, which means we become responsible for who we chose to live with. I understand the logic behind rent by room, which is to drive up rents, but it comes with higher risk.

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Kristian Widjaja · Answer

I rent out several homes room-by-room. One thing that makes it work is to disclose the house rules early on, in the rental listing, in the lease agreement, as well as on signs in the house. This helps filter out those who disagree.

Joe Splitrock · Answer

@Kendall Vrana this is discrimination based on familial status. Additionally, age restriction is limited to senior living complexes. You would also face discrimination charges if you limit properties to male or female only.

https://www.justice.gov/crt/fair-housing-act-1

Personally, I would avoid renting by the room, because it puts too much liability on a landlord. When you select the tenant, it adds liability to you, should something go wrong. Placing strangers together can have challenges even when people are the same age and sex, but mix up those variables and it can get ugly.

I was at fair housing training and we were specifically told even advertising housing as "college housing" is discriminatory, because it implies families are not welcome.

One other caveat, if YOU are owner occupying the property, you can legally discriminate against the other occupants. But since you are not living there, this would not apply.

Kendall Vrana · Answer

Thanks for your insight, everyone! I have a lot of leads to follow.

We do try to rent out the apartments all at once, and have had difficulty doing so. There seemed to be a lot of students looking for just a room. I will be looking up some of the things advised, thank you!

Dan K. · Answer

@Kendall Vrana - I've rented rooms in Cambridge, MA (think grad students and young professionals) for many years. The key is to have a great group and then plug and play individual tenants. It's a bit more of a headache then renting to groups, but there is less of a chance of big parties, and you are offering a product that few have -- single rooms that cost less than a studio (however I bet your total rent is more than if you rented it out to a group).

Check your state's protected classes. Various states have expanded fair housing laws. As others have said, you might not trigger fair housing for a variety of reasons. Additionally, if you are discriminating on the basis of student versus non-student you might be okay. I also know plenty of landlords that don't rent to legal students -- law students are not a protected class.

Ryan Mullin · Answer

I think its 5 units or less and you can discriminate.

I wouldn't rent rooms.  Even in a college town.   One weirdo in the house and all the other rooms sit vacant.  Smoking? Drinking?  Study hours?  Who does the dishes?   Pets?

No thanks.  To much time and effort on management.

James Wise · Answer

Something most people don't know is that fair housing laws don't actually apply to all landlords. If you own a very small amount of units ( I think it's under 4 but don't quote me on that ) & are NOT a licensed professional you don't have to adhere to any fair housing laws.

Joe Splitrock · Answer

The article is talking specifically about student housing. Student housing is not a "house near campus", it is dorms and apartments built specifically for students. So the case is a little different than this, but still the point the article makes is that fair housing has now been broadly applied to include student housing. That means any protected class in fair housing is protected in student housing. The big one being familial status, so people with kids.

I was at training two years ago with a fair housing representative who told us specifically advertising houses as "student rentals" is discrimination. That is because advertising to one group implies another group is not welcome. The implication being we want students, not families, even though most likely for 50+ years families lived in that house. This is what is newer is the idea that advertising to one class is discrimination against another.

Of course since students (or non-students) are not a protected class, you could argue any student is welcome. In other words as long as they are a student you allow any race, color, religion, national origin, sex, disability or familial status.

I know today it is common practice by many landlords to advertise to students, but every year this is evolving as people continue to challenge the legality of anything that could be viewed as discriminatory. Times are changing. Girls are now in Boy Scouts, unisex bathrooms ware becoming more common.

My point is just if you rent to a group, they decide who is in the group. Once you, as a landlord, make the decision, you can be accused of discrimination. There is other problems, like what happens when one tenant brings in their ESA cat and another is allergic? Or an ESA pit bull? When you select each tenant, you are now the dispute mediator and lawsuit recipient. Too much risk for me.

Rick Baggenstoss · Answer

Good info, @Joe Splitrock.  However, it seems like this article is more about accessibility so you can't discriminate against disabled for family status in student housing.  It seems you can still advertise as a student rental to attract students who want a co-living arrangement.

Jian G. · Answer

@Kendall Vrana

You can set it up tailored to college students to attract students without saying it on the ad. For apartment student housing, some people sub lease it and then rent it out to people they know or their friends. It’s less paperwork, less management and less problems. Let them pick who they live with and for college it is usually same gender, if the house is girls it’s usually all girls.

Room by Room Rentals — Advice?

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