Renting out rooms in a 4 plex

[Trent VanHorn]

Hey everyone,

I'm pretty new to BP and REI in general but I am set to close on a 4 plex in December and am super excited as it's my first investment property. Each unit is 2/1. Currently the rents are anywhere from $75 to $150 under market and my plan was to do minor rehab and updates as the leases end and then bring rents up to market cost.

Just brainstorming here and asking for advice, has anyone ever had experience renting rooms in a 4 plex for a combined rent that is more than the market rent of an entire unit? Say I can get $950 for a 2/1 unit or charge $600 per room and make $1200 a month. Obviously there are pros and cons to this and I tried doing a search and found a few posts talking about this but there wasn’t a lot. Also I would need to check and make sure that is in fact legal where I live (Colorado Springs) as the other thread I found said that could be illegal.

Pros I see as more cash flow. Another thought is if someone had a roommate they weren’t familiar with it may incline them to be more tidy and take better care of the rental as someone else is living there too. I could do month to month leases so if there are issues between roommates I could get one to leave and replaced with hopefully someone who is a better fit. There may be a few other pros here so feel free to add as I know I’m not thinking of everything.

Cons are managing 8 different leases vs 4. Roommate fights and people not getting along. Tenants figuring out utilities for themselves and if one doesn’t pay up I’ll basically have to be the mediator between parties. It may also be harder to find tenants, and quality tenants at that. Now that I think about it I would probably have to furnish the place as well with at least the bare minimum a bed/couch/dresser etc. Right? Also they would need to coordinate cleaning otherwise there may be issues if one person is always leaving a mess and the other person is having to constantly clean up. And I’m sure the list goes on for the cons so feel free to add to this as well.

Listing it out it seems that it may be too much of a hassle to rent by the room and I should just be happy with my positive cash flow by bringing the unit rents to market value. But if I were to get people who got along and worked well together the extra income does seem nice. Especially if it inclines people to be more clean and take care of the place better (maybe this is just wishful thinking on my part?)

Thanks for taking the time to read this and I look forward to the responses.