Student housing in an SFR?

[Jon Schwartz]

Hi LA colleagues,

I'm exploring a deal and need some advice...

A seller has an 8-bedroom, 4-bathroom house near USC that he's renting to 8 students on 8 leases. The house is in very good condition; it's definitely not a slumlord situation.

I'm trying to determine how safe it is to buy this property and continue renting the 8 rooms to students or, alternatively, as monthly rentals on Airbnb.

The zoning is RD2, which limits the number of "guest rooms" to 3 based on the parcel size. So by that standard, I can only have 3 leases in place.

I've read elsewhere that LA Dept of Building and Safety has indicated that a single-family home can be rented to 5 unrelated parties; so that would allow for 5 leases.

By another metric, LA Dept of Building and Safety uses a "2+1" rule to determine maximum occupancy: 2 people per bedroom plus one more. By that standard, even if I'm technically only renting 3 "guest rooms," I'm still technically allowed to rent them to 7 people.

And finally, I've also read that LA Dept of Building and Safety doesn't enforce rules about unrelated leases so long as the space is habitable and not overcrowded. With the housing crunch in LA, LA DBS will allow eight people to live in a large house with 8 real bedrooms (and this property has 8 bedroom on assessor records).

So, does anybody have experience renting an LA single-family home by the bedroom, either to individual students or on Airbnb? Please weigh in!

Thanks so much!

Jon