Is "rent by the room" a market dependent strategy?

[Alec Jacobs]

I am looking to househack in my local area, Beaver County PA to be specific, and I know some people who have done the "rent by the room" strategy but they invest in other parts of the U.S. and I was wondering if it is market dependent or not?

It seems like you would want your property be close to amenities since it seems like you would trade the comfort of having your own space to being in a better area for a cheaper price but I could be wrong. Is it possible to rent by the room anywhere?

Any insight is greatly appreciated. Thank you!

[Jake Andronico]

@Alec Jacobs

Great question. I've house hacked and done the rent by the room strategy multiple times in Reno, NV and it's changed my life. 

I strategically chose properties close to the local University here. In my experience it is market dependent, however assuming it's in a relatively populated area it always seems that there is demand for someone looking to rent a room at a certain price. 

The challenge can be getting everyone on the same page, having clear house rules, setting expectations, etc. 

Students/young professionals seem to make up the bulk of the rent by the room occupiers (at least in Reno which is a relatively affordable market, although increasing significantly over time) 

[Justin Loveland]

I wouldn't think so. If a studio is getting $1,500 per month and the room you're renting is $800 per month you're helping someone out by saving them $$. If the rental market comes down which it rarely does the room you're renting is still a value. On the flip side of that, someone else is lowering your cost of housing, it's a mutually beneficial situation.  

[Alec Jacobs]

@Jake Andronico

@Jake AndronicoThank you for your response! 

Another question, what bedroom count do you typically go for? It seems like anything below 4 bedrooms isn't able to cashflow, at least my market. I'm assuming utilities are in your name as well since splitting up that would be strange.

[Alec Jacobs]

Thanks @Justin Loveland! That makes sense!

[Rick Albert]

Just like anything, it is about supply and demand.

What I have been doing is joining Facebook Groups for people looking for rentals. Every market has single people looking to rent a place. But if you see that some markets don't have as much engagement as others, then that is your answer. Zillow also has a rent by the room feature. It is limited, but provides some information. 

[Maz Pardhan]

This is a great strategy for students and airline crew. The latter being best. The challenge with the students is there will be constant issues that you have to deal with. If you live there you can more easily lay down the law. But do you want this hassle. I have a friend who is an airline stewardess, they rent the house and  share a bunk room.

Obviously you need to be somewhere close to an airport. 
that said, You can find sfh that have great cash flow without the headache of sharing rooms. Having gone through this it’s a headache that I don’t miss. Let me know if you want to connect about that. 

[Jake Andronico]

Quote from @Alec Jacobs:

@Jake Andronico

@Jake AndronicoThank you for your response! 

Another question, what bedroom count do you typically go for? It seems like anything below 4 bedrooms isn't able to cashflow, at least my market. I'm assuming utilities are in your name as well since splitting up that would be strange.

4-5 beds are optimal. 

Yes, keeping it in your name and splitting is what I did :) 

[Pat L.]

That was the ONLY way I could have survived back in the days of 18% interest rates.I bought homes using seller financing & had to rent every room to make the mortgage payment, cover the rehab & we split the utilities. BUT I kept a room in every home so I could come & go plus lock up the tools etc I needed for rehab. It allowed me to keep buying homes, retire early & the rest is history. 

My daughter has a couple of great roommates going on 4 years & it pays her 2.85% mortgage & they split the utilities, WIN WIN !!!

[Preston Dean]

@Alec Jacobs

yes 100% it is possible to rent by the room anywhere. Hearing that a room rents for $900 is easier to stomach for a young college student than the whole house renting for $1,800. I think your target audience for renting by the room would be college students or young working professionals. 

I have a rental here in FW and it is rented by the room 

[Josh Bowser]

Hey Alec - might not be able to do it 'anywhere', but if you're in a fairly populated area you should be able to find roommates for a house hack.

I'd focus on buying in the best location you can buy in - potential roommates will probably want to live there too.

[Jay Hinrichs]

not sure about beaver county rent by the room rents are pretty low there as it is.

[Jeremy Taggart]

@Alec Jacobs I would say it's more mainstream in higher priced markets. Pittsburgh probably only make sense if you are in the higher end city neighborhoods or A class suburbs like Cranberry/Robinson. I just think the rents are low enough to get a whole apartment outside the in demand areas that you'd have a tough time with getting quality tenants wanting to rent a room over just renting a studio or 1BR apartment. 

[Erwin McClain]

Quote from @Alec Jacobs:

I am looking to househack in my local area, Beaver County PA to be specific, and I know some people who have done the "rent by the room" strategy but they invest in other parts of the U.S. and I was wondering if it is market dependent or not?

It seems like you would want your property be close to amenities since it seems like you would trade the comfort of having your own space to being in a better area for a cheaper price but I could be wrong. Is it possible to rent by the room anywhere?

Any insight is greatly appreciated. Thank you!

 I believe room renting is possible in almost any area.  Personally, I just post on line the rental thats available and see who replies just to see if its needed in that area before I purchase

[Jay Hinrichs]

Quote from @Jeremy Taggart:

@Alec Jacobs I would say it's more mainstream in higher priced markets. Pittsburgh probably only make sense if you are in the higher end city neighborhoods or A class suburbs like Cranberry/Robinson. I just think the rents are low enough to get a whole apartment outside the in demand areas that you'd have a tough time with getting quality tenants wanting to rent a room over just renting a studio or 1BR apartment. 

agreed on the homes I have financed in Beaver county for BRRR folks rents for the whole house are 700 to maybe 1k or so..  Rent by the room to me as a bizz model I dont care for personally. too much work.. now owner occ bring in roomates that different or student housing or as other stated crash pads for airlines thats different.

[Elise Bickel]

Quote from @Alec Jacobs:

I am looking to househack in my local area, Beaver County PA to be specific, and I know some people who have done the "rent by the room" strategy but they invest in other parts of the U.S. and I was wondering if it is market dependent or not?

It seems like you would want your property be close to amenities since it seems like you would trade the comfort of having your own space to being in a better area for a cheaper price but I could be wrong. Is it possible to rent by the room anywhere?

Any insight is greatly appreciated. Thank you!

 Hey Alec,

Lots of good comments I agree with. In general, I agree in our market here in Pittsburgh "rent by the room" isn't a very profitable strategy and when we've managed for owners with this strategy it always turns out bad. The only areas that we've seen it turn out really well is around hospitals, especially for traveling nurses, doctors, patients, etc and college areas, like around Geneva or Beaver County Community College. 

Just a few thoughts for you!