You are deciding between buying a multifamily or a large home and renting rooms and asked the pros and cons of buying a large home and renting rooms.The first thing you want to consider is zoning and how the local government regulates rentals.Some communities limit the number of unrelated people who can rent in a property.Once you confirm how many people can rent in a property you want to have a local title company look at the deed and covenants that may limit the number of unrelated people who can live in a property as well.The pros are a property may check out that you can rent to a reasonable number of people in the property and the cost of the big house may be less than a multifamily offering a greater ROI and you are using the property for its highest and best use adding value to the community with affordable housing.To Your Success!

Are you in California where the LLC costs are crazy high?

When I phrase it like this, people understand I’m not a greedy landlord and have higher costs too not including labor and materials going way up every year.

The hilly terrain is a main reason for this and you can't really see that on a map so knowing the areas is key.We have old housing stock as well so big things like plumbing and electrical can vary cost wise if they have or haven't been updated.

Short-term rentals (Airbnb/STRs) offer higher cash flow but come with stricter zoning laws, higher management costs, and more active involvement. 

@Jeff Rabinowitz it's very common practice, doesn't cost a cent, and they absolutely do have insurance.

They are managing my long terms rentals there and their service is reasonable.

Im not a fan of seller financing unless that property is free and clear and the seller is offering reasonable terms NOT on money they have borrowed. just too many people get into this type of thing without understanding the whole picture, like title being moved into the buyer's name, due on sale clauses... etc. etc. also, just because its a very commonly overlooked guideline which makes financing on 3's and 4's a little challenging: FHA requires the property to self-sustain its own PITIMI by the rents.

I just wanted to quickly clarify what the $149/year cost for Lula includes.

This is one of the reasons the HUD FHA 203k Consultant exists.