Renting out per room vs. entire house

[Julie Hill]

I have a four bedroom house that I airbnb in Denver and have a friend who could live in one of the rooms for 4 months this summer (high season).  I'm tempted to say yes to her as I've heard you can make more $ renting out per room vs. the entire place but this scares the hell out of me.  What if the rooms don't rent because the demand is not there?  What if they do, but the guests hate each other and fight over the bathrooms, etc?  How do you do a turnover on 1 room but not a commonly shared bathroom or other spaces? I use airbnb all the time as I travel a lot but renting 1 room vs. an entire house does not appeal to me AT ALL.  But most of all, I feel like it's a huge gamble.  Would love to hear what others say.  Especially anyone in Denver! 

[Julie McCoy]

I don't see any reason why you should do that.  It MIGHT be more money but it'd be a lot more hassle, more risk, and it's not something you're comfortable with.  (also what would your friend think about the revolving door of strangers in the house with her?)  

The logistics of renting out a house piecemeal like that - scheduling the cleanings, etc. - sounds like a nightmare to me.

[Julie Hill]

@Julie McCoy Agreed!  Also great name.  and I'm also a cinematographer and just moved from LA :)  Actually, OC to be exact.  

[Ethan Cooke]

@Julie Hill - I agree with @Julie McCoy. I have several AirBnb’s in the San Francisco area, and have had reasonable success renting out 3BR and 4BR homes to individual groups (traveling families and groups of construction workers). I tried once to rent out rooms separately, and it did not work. It was a 2BR place, and anytime I didn’t have both rooms rented out, I was losing money.  I have found that it’s not much harder to rent out a whole place than a single room.  And often people looking for a single room are on a tight budget.  Good luck! 

[Julie McCoy]

Thanks @Julie Hill, it's nice to meet you - welcome to SoCal!  I'm an assistant director, RE is my side hustle/hobby (though those lines are rapidly becoming blurred!).  As for my name, my parents had no idea what they were doing but it sure has opened up a bunch of doors for me, LOL!

[Jamal Muhammad]

@Julie Hill If you still receive a sizeable cash flow that covers the expenses and gives a healthy NOI and rate-of-return, I say stay in your tolerance level. Both side will have their risks it's just how you manage them.

[Holly Kurtz]

Julie, I am renting my three-bedroom Denver home by the room for similar -ie personal rather than business- reasons (my boyfriend‘s son needed a place to live). The other tenant is on a month to month lease. A lot of people look for furnished rooms to rent longer term in Denver because the rents are so high. You can find them on Roomi, Craigslist, etc. It's probably less lucrative than AirBNB but it's also less work so far than my STR. If you do AirBNB by the room as a favor to your friend maybe you could ask her to take on some of the management or cleaning work or at least keep an eye on things. I AirBNBed a room in a large house over the holidays by the way and the place was run like a small hotel. Locks on every bedroom door. Cleaning fees were very low and house rules required guests to clean up the kitchen if they used it. It was a great value but not sure how much $$ it was making as most of the rooms appeared to be unoccupied.

[Michael Greenberg]

One other mention, be careful with the city and county of Denver.  Last I heard, it's a $900 per incident fine for not following the regulations.  @James Carlson is the local expert and maybe he'll chime in (knock, knock James).  

[Account Closed]

PPD - Pain Per Dollar

Its not just what you make but what it takes from you and how it positively or negatively affects the value of your real estate.

[James Carlson]

@Michael Greenberg Thanks for the mention and sorry for my delay. My wife, @Erin Spradlin, and I are traveling through southeast Asia for five weeks. (And yes, that was a not-so-subtle way to mention that fact.)

@Julie HillAs with everything, it depends on your goals. If your main goal is to help out your friend by offering a room for her to live in, then maybe it makes sense. But if your main goal is to make money while minimizing headache, then the returns of this are marginal at best, as @Julie McCoyand @Ethan Cooke mentioned.

If you had a two bedroom house, maybe you could do it so that you help out your friend and you can always get a room filled in Denver metro on Airbnb. That wouldn't be that much more work. But trying to fill more rooms -- while possible -- would also create a scheduling nightmare. 

And as Michael also mentioned, it's not legal to rent out to separate parties (i.e. each room to a separate guest.) The short-term rental enforcement guy for the city says they're getting a lot better at catching folks, so it's a gamble on that front as well.

Good luck!

[Michael Greenberg]

Originally posted by @James Carlson:

@Michael Greenberg Thanks for the mention and sorry for my delay. My wife, @Erin Spradlin, and I are traveling through southeast Asia for five weeks. (And yes, that was a not-so-subtle way to mention that fact.)

@Julie HillAs with everything, it depends on your goals. If your main goal is to help out your friend by offering a room for her to live in, then maybe it makes sense. But if your main goal is to make money while minimizing headache, then the returns of this are marginal at best, as @Julie McCoyand @Ethan Cooke mentioned.

If you had a two bedroom house, maybe you could do it so that you help out your friend and you can always get a room filled in Denver metro on Airbnb. That wouldn't be that much more work. But trying to fill more rooms -- while possible -- would also create a scheduling nightmare. 

And as Michael also mentioned, it's not legal to rent out to separate parties (i.e. each room to a separate guest.) The short-term rental enforcement guy for the city says they're getting a lot better at catching folks, so it's a gamble on that front as well.

Good luck!

 WOW James - GOOD FOR YOU!!!!

[Julie Hill]

Thanks @James Carlson!!  Have so much fun!