Student Housing / Rent By The Room Lease HELP

[Alec Hilliard]

I have converted a 3br house into a 5br house and the renovations are finished! 

It's our first deal, about 3 blocks from a decent size college.

I have 5 guys interested in renting by the room for $550/month.

Electric, Water, Wifi Included.

Question is, would you get 1 lease and get the guys to pay their buddy to pay me?

Or...treat it like an apartment and get individual leases from each of them? Another thing I've heard (and may try) is getting the parents on the lease as a co-signer.

Also, these guys have bad credit scores (under 550) - medical debt, etc.

Would this be a concern, or is this "normal" when it comes to student housing?

[Matt Nico]

Originally posted by @Alec Hilliard:

I have converted a 3br house into a 5br house and the renovations are finished! 

It's our first deal, about 3 blocks from a decent size college.

I have 5 guys interested in renting by the room for $550/month.

Electric, Water, Wifi Included.

Question is, would you get 1 lease and get the guys to pay their buddy to pay me?

Or...treat it like an apartment and get individual leases from each of them? Another thing I've heard (and may try) is getting the parents on the lease as a co-signer.

Also, these guys have bad credit scores (under 550) - medical debt, etc.

Would this be a concern, or is this "normal" when it comes to student housing?

 

@Alec Hilliard

Love the strategy Alec. I have 3 houses right now that I rent by the room. I bought all of them as a 5-bedroom and turned them into 6 bedrooms. I manage them all and here is what I can tell you about renting by the room:

1. I keep all my tenants on separate leases. It creates too many problems when 1 person cant pay. No need to get any other of the roommates involved. Literally the first line of my lease says "You are renting a room".

2. Make sure tenants clean. I have it set up where I split house chores into 6 pieces (for the 6 bedrooms). Each tenant is responsible for 1 job only. So 1 person is in charge of the trash. One is in charge of the fridge. You get the point. This way, if 1 part of the house is messy you just look who's job is it to clean that area. It avoids the whole pointing fingers crap.

3. ****Please for gods sake dont worry about what their credit score is.******

Think back to when you were 18 and leaving for college.....Did you or any of your friends even know what a credit score is, let alone know how it works? Young people have no or bad credit...Its mostly nobody's fault. Nobody in school taught them how to have good credit. It is your job to sit down every tenant you have and go over the lease. Make sure that they understand that you are the landlord and you expect payment every month. Not paying will result in an eviction.

              ^----Also what I just said above about not worrying about a credit score.....I probably will get a lot of negative feedback on this subject. For 99% of people, they rent an entire house out. Its important to understand the demographic of people that you are renting to....New adults just getting started in the real world. Your strategy of doing a cash-flow value add is amazing and incredibly smart. Dont let group think of "You have to have tenants with good credit" deter you.

If you need any help or guidance, feel free to PM me. I have a lot of experience in this.

Happy Housing,

Matt