Who rents out a 5 bedroom home?

Question

Hey BP, I'm looking to buying a 5bd single family home and renting out the rooms while I live there the first year. Assuming I want to stop househacking and rent it to a single family after that, I'm curious as to what kind of tenant this would attract.

I'm thinking of families who may convert a room to an office/gym or use one as a guest room. But if they can afford to pay $3-4k in rent, wouldn't they be better off just buying a house (in a more normal market than this one)? One thought is their credit may not be where it needs to be to buy just yet, but I don't know if I'd even be looking for that kind of tenant. Open to thoughts.

Nikki Stoddart · Answer

Hi there!  Depending on your market, an interesting play could be to furnish the house and rent the rooms on Airbnb long term (30 day plus). Metro areas are great for this.  If you are near a college, tech corridor, or major hospital system, even better.  I started a 6 bedroom coliving house in the SF Bay area in 2018 and am getting ready to acquire a new 5-6 bedroom home out of state for the same business model.  Cash flow is amazing.

Joaquin Camarasa · Answer

DC has also a pool of families that come for two- three years to work for the government or military and leave right after. A lot of them seem to think that is not worth to buy if they are only going to stay for one or two years and they decide to rent. The main train of thought is that they do not won't to have a property in DC because potentially they would have to manage it from out of state in the future and they do not want to be in that position.

Cassidy Burns · Answer

@Joseph S. there will always be families in the DMV who are wanting to rent in homes with 3-5 bedrooms.  This is mostly because of the every 4 year of government change. I'd recommend a 4 Bed/ 3.5 Bath Single Family in Petworth or Brookland if this is the strategy you want to do.

Best of luck.

Grant Cox · Answer

If you rent by the room, you could list it on a site like Padmapper.comIn the DMV area, we have a lot of immigrant workers who need to establish credit, and if you're flexible, that is a niche that needs to be served.

I have one person right now in this situation, and without a lot of cash to put down or a guarantor (difficult for immigrants), they can find themselves in a tough spot.

Likely, you can charge a bit of a premium if you are being flexible on credit.  (Location will be a factor due to variance of tenant rights)

Often these immigrant tenants will treat a property well in my experience, but I do not own any investment properties, so take that with a grain of salt.

If you end up renting this by the room, let me know as I come across these types of folks semi-regularly and happy to connect you.

Jack Seiden · Answer

Give it a few months you should see both rates and prices come down to where you can at least break even.

Joseph S. · Answer

Thanks for all the answers gents!@Michael Dumler - Thanks for the tip!@Patrick Drury - This one's right outside of the Washington DC market, Rentometer shows about $4k for median rent for this kind of property. @Rick Albert - property is near a big university. 3-4 years isn't bad for turnover, esp if you have good tenants.

@Nicholas Coulter - that's the idea. I'll have to see how much headache goes into doing this, but if it works, no point in changing it.

Collin Wallace · Answer

there is also the thought of renting the home out as commercial office space, a business might want to rent out the space for a period of time offering the space to workers to use as office space?

Nicholas Coulter · Answer

@Joseph S. If I were you I would keep it as a room rental after you move out. Assuming youre in an area thats high in demand you would be surprised at the tenant pool you will continue to attract! Those larger houses may get significantly less as one stand alone unit compared to renting out each room!

Rick Albert · Answer

I think it would depend on location. For example, near universities might be interesting because your tenants wouldn't generally stay more than 3-4 years while in school and you would be renting by the room.

But with this strategy, you could just fill the remaining room and move on. No need to rent out to a family until everyone moves out.

Who rents out a 5 bedroom home?

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