Anyone experienced with rent-by-room in New Jersey & New York?

Question

Hi, I'm exploring the idea to buy single family home, rehab to add rooms, then rent by room. The areas are around New Jersey & New York City. Target tenants are probably young professionals who need to commute to Manhattan.

Would love to talk to any Realtor, PM or Investor experienced doing this in the above areas. Thanks a lot!

Natalie Schanne · Answer

@Zwee Dao - what would you like to know? It works just like you think it will. In some areas it’s better if you are living in the property because otherwise the towns can become unnecessarily upset with you if your neighbors complain for any reason. (New Jersey has a lot of crappy laws about getting new house inspections and certificates of occupancy “between tenants”). I’ve found the best cashflow is on houses with 6+ bedrooms. The houses will not be listed as 6 bedrooms on mls, but in general if you have 1800+ square feet you can find 6 bedrooms in the house. 2100+ square feet often 7 bedrooms. Bedroom rental prices can be $1000+ per month.

Andrew Jennings Freerks · Answer

@Zwee Dao I have a lot of experience in leasing rooms in both Astoria and the South Bronx. It is a very good way to increase your ROI. Feel free to shoot me a message if you have any specific questions.

Curt Smith · Answer

Read / study the padsplit.com site and info. Google padsplit . They are branching out to new cities probably not yours. BUT you can learn from their systematization.Natalie gave a nutshell. And hinted at the zoning, code enforcement, neighbor problems. Here in Atlanta where padsplit was founded I have friends with 30 doors on padsplit. Like Airbnb it takes alot of work to systematize all the issues. A new person can't have a day job and run a few of these, at first. Its very hands on. Without the padsplit back end AND tenant screening system, a newbie running a rooming house naked (no franchised system like padsplit) will make every mistakee in the book AND get code enforcement actions and turn out to a miserable headache (at least this is a possibility LOL).Join the local REIAs where old timer experts hang. I'm seroius, join the local REIAs you find in meetup.org. This is my very best tip for any REI issue, find locals!#2 tip is NEVER ever buy a property that can't at least break even with a long term renter. IE never do like so many vacatoin area Airbnb buyers did/do and buy full retail with a monstrous mortgage that only makes money if everything is perfect in a full Airbnb bookings. What about down turn, vacancy? Well a rooming house properly run will never have vacancy but its running one such that you don't get shut down by code enforcement, then you owe the morgage and no income.The zoning that is common is; 3 unrelated adults. Which means no mater how many rooms y9ou have, the county will only let you stay in business (once yoiu get complaints and code enforcements) in business with just 3 rooms rented... Much for you to learn and find local help. Best to all, curt

Andrew Jennings Freerks · Answer

@Edwin Park our houses make 15-20% above what they would make on the normal market. We keep a living room space for the tenants, but to be honest, no one really uses it. Mostly, they just stick to their private rooms, if not using the kitchen or bathrooms. I have tried multiple sources, but FB market place seems to get the most traction, even though there are a lot of trash leads on there. Once you sift through them you can find good renters like anywhere else. All of our rooms are unfurnished. We tried finished one time, and people kept asking if they could remove the furniture and bring their own. I hope this helps!

Edwin Park · Answer

@Andrew Jennings Freerks Hi Andrew. How much more can you make over market rates? Do the apartments you lease have any common spaces like a living room or were they all converted to bedrooms? And where do you normally list them? Craigslist? Are they furnished? Any code enforcement/zoning issues specific to NYC I need to be aware of? And would love to see a sample lease. Thanks! 🙏

Mohammed Rahman · Answer

Hey @Zwee Dao - I can't recall the exact post, but someone else in the NJ forums purchased a property with SROs and was wondering how to operate it since they're technically illegal in most parts of NJ (I believe). I'm out of my wheelhouse here but know someone who can help - @Shawn Mcenteer is your guy.