Large rental property seeking its first tenants

[Chabu Nsokoshi]

Hello BP,

I am a new guy in the real estate space and I partnered up with another investor to purchase a 13 bedroom house right in middle of our local area (Champaign IL). And I was wondering if anyone has any advice on how we can get our first tenants in it?

Some details:

The initial idea was to advertise the property to everyone for $550/mo + utilities per room. We figured this was a good price when compared to local rentals in the area. However, now we think it will be "harder" to attain full occupancy with individual tenants. The next option is to have the property rented  to a larger group for $6500/mo + utilities. Bonus: we'd only have one lease to deal with, but face the problem of finding a large group of tenants. So full occupancy for each room or a hard to find 'single' tenant. 

If you reading this has any tips/ advice on we should go about attracting our fist tenants or even if you've been in a similar situation, I'd be happy to hear about it. 

[Scott Dixon]

Hey @Chabu Nsokoshi congrats on the purchase!  I have done individual bedroom leases in Champaign in the past but by far prefer to sign one lease per unit.  Probably goes without saying but one lease helps to reduce the overall management of the property and "dynamics" which can arise when you are matching people up who don't have any prior relationship.  A property of that size your best bet to get one lease would be students and probably niched down into a senior house for a sorority/fraternity. To execute on this niche your location needs to be within short walk to campus and campus town. 

I am sure you are also aware that you will be targeting school year 2018/2019 (leases starting 3rd week 2018) for a group/single lease.  It is highly unlikely to get a group of that size paying the rents you want this time of year in Chambana since the school year cycle has already started.  So the question is can you do individual bedroom leases this year to reduce your 2017/2018 school year vacancy rates then push hard to get a single lease for the next school year?  Secondary alternative might be some hybrid bringing using airbnb as an option especially on big weekends like, Big Ten Football games, Mom's weekend, Dad's weekend, Graduation, etc. 

Best of Luck!