Room renting to college students

[Kyle Tipton]

Greetings BP,

I have been running numbers and looking into renting a single rooms to college students vice entire homes to families. All the numbers I run lead to positive cash flow, but I’d love to hear from some investors that actually have experience in this area. I feel like if it were this easy, everyone would be doing it. Thanks, in advance.

[Spencer Cornelia]

@Kyle Tipton I live in a 7 bed / 5 bath house hack in Las Vegas.  I "house hack" in the sense that I have roommates, but with the number of roommates I have, I believe I fall more in line with the strategy of renting by the room.

My gross monthly is $3,650 with me living in the house.  I can add another $50 tomorrow if one of the tenants moves out and can turn the garage room/unit into AirBnB which could add another $500-$750 a month in income.  This is against an $1800-$2000 a month expense.  Point being - it's super profitable.

But what you don't see on paper is that it is very management intensive.  I can't speak specifically on managing a non owner occupied house where you're renting by the room as I have no experience, but I imagine it CAN BE similar to my experience with this house.  Remember, you're putting strangers in a house together.  You have multiple personalities, multiple ways of living, multiple comfort/discomforts, multiple lifestyles, etc potentially in the same house.  Ideally, you figure out how to manage the house well and can screen tenants not only for the ability to pay, but the ability to fit into the eco-system of the community you've built.

I'm looking to expand this strategy further as I think the returns are insanely high and worth the management.  I personally think you should live in something like this before trying to do it non owner occupied as you'll learn SO MUCH on what to look for in new tenants, what rules to implement, how you will implement the rules, what boundaries you will set, and how you will proceed with problem tenants.

Furnish the rooms. Rent by the room. Nearly everywhere in America the numbers work ON PAPER. But you will experience so much stress if you do this poorly that there may be some moments where you wonder if the 20%+ ROI is worth it. Do it correctly and it's the easiest cash you'll ever make.