Landlording & Rental Properties

Frequently Asked Questions About Renting by the Room

Expertise: Landlording & Rental Properties, Real Estate Investing Basics
19 Articles Written
renting-your-home

Well, it is that time of the year again. Merry Christmas, everyone!

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Are you on the naughty or nice list? I happen to be on the nice list this year (I think).

For anyone else who is not getting coal in their stocking, what did you ask for this year? I only had one thing on my list.

Any guesses? OK, I will tell you, but it stays between you and me.

My Christmas List:

1. More cash flow

End of list.

That is it, folks. Just more cash flow (and world peace).

Just in case Santa doesn’t deliver, I do have a backup plan. That plan is called “rent by the room,” and it has gotten a ton of people talking recently. When everyone starts talking about or asking the same questions, that is how I know I really need to address some of these common talking points.

Here are the most common questions, and answers for each, about renting by the room.

Related: 5 Pitfalls of Renting by the Room (& How to Solve Them)

Rent by the Room FAQs

How do you structure the lease?

This is the most common question I get. I tend not to share the lease I use, because each lease should be reflective of whichever state and city you are doing business in. BiggerPockets has leases for each state. That is where you want to start. (Note: These leases are $99 per state, but are a perk of the Annual Pro Membership.)

From there, all my leases are truly “by the room” and individual for each person. I do not have all the tenants on one lease. This way, if one tenant doesn’t pay, it does not affect everyone else.

Now you have a generic, individual lease in hand. I then like to add language in about respecting others’ private property and the common/shared areas. I go on to talk about how any stealing or damage to anyone else’s property will not be tolerated.

Friends watching tv and eating popcorn, rear view.

You may also want to add in points about cleaning up after yourself in the common areas and maybe even a note about no loud noise/music after a certain time. All of this is really the main differentiator.

You want to stylize it in a way that addresses the individual nature of this rental arrangement and stresses the importance of respecting the space and roommates. I go on to make clear that the rental payment for the individual bedroom is that of their own; it pays for the room, use of the common areas (bathroom, kitchen, living room, etc.), and their share of utilities (if included).

It also wouldn’t hurt to have a local attorney draft one lease that you could just tweak as you see fit. Once you have a solid lease in hand, you can make small changes as you go along and as issues arise.

How do you ensure common areas are kept clean?

Some of the best money I spend is to have my units cleaned twice a month (for college rentals) or monthly. This helps the cleanliness factor immensely.

Tenants will vary in terms of what they consider to be “clean.” I can tell you that making a cute list about who cleans what on which day usually does not work.

Paying someone to clean the units is more than just avoiding arguments about dirty dishes; it protects your investment. It may not seem like vacuuming or wiping the countertops down does much to your bottom line. But if you don’t have someone doing that for a year or two, things are going to really start getting gross.

Whether you do or do not pay for cleaning, it is money well spent to have some cleaning items in the unit for general cleaning by the tenants. Aside from that, and as mentioned before, I have also known some people to include content in the lease about cleaning and how it should be a shared responsibility.

This can get out of control quickly. If you do not have hired help cleaning the units, or language about cleaning in the lease, you may want to select the most responsible person in each unit, put them in charge of cleaning, and take $25 to $50 per month off their rent.

Where do you find people who want to rent like this?

In short, you find them in all of the same places that you find people looking for a whole unit.

I post on Zillow, Apartments.com, and sometimes Craigslist. Zillow and Apartments.com shoot the ad out to other sites like Trulia, ForRent.com, etc. I have no issues at all finding more than enough people for the rooms I am offering within those sites.

There are also dedicated rent by the room sites. I have not used them yet. They are gaining some traction, I understand.

The sites I am talking about are:

  • Roomster.com
  • Roomiapp.com
  • SpareRoom.com
  • Roomgo.net
  • Sublet.com

Related: Why Having Roommates as an Adult (and an Investor) Is the Best

Is there any drama between roommates?

Yes—nearly every time.

However, it’s not enough to make the increased cash flow not worth it. There is going to be drama—just like you get with a regular per unit rental.

The most common issues I have are:

  • Food stealing (petty stuff like consuming one’s alcohol out of a bottle, stealing individually wrapped items like popsicles, or maybe taking leftover pizza or Chinese food)
  • Cleanliness
  • Loud/annoying guests
  • Parking (one of my biggest factors when picking out a new property—is there a lot of room for parking?)

woman looking in refrigerator with menacing grin at dessert

Nothing us landlords cannot handle. You want to nip those issues in the bud right away, though.

What I always suggest is that the roommates work it out amongst themselves first before I get involved. If I do get involved, I respectfully ask both parties that the issue stop right away and that both parties (guilty and non-guilty) respect each other, respect each other’s space, and also respect each other’s possessions.

I remind them that we are all adults here and that we should be acting like them.

What I also do is try to pair up like personalities. It does you no good to fill your last room in a unit of middle-aged, working-class women with a 21-year-old partier who bar hops on tipsy Tuesdays, thirsty Thursdays, and every weekend day, too.

While you want to be cognizant of fair housing laws, you may also want to consider simply putting the younger, less mature college guy on a floor with people who he might more closely relate.

Either way, I rarely have any of this “drama” go past me addressing it once or twice. In general, people simply want a quiet, comfortable, safe place to live and do not want any trouble.

To that end, I would be remiss to not address one last point here. Do be careful who your tenants are dating or who their friends are. While this may be hard to screen for, you should ask if there will be a significant other staying over a night or two here and there.

Also, it is not a bad idea to look up the tenant on Facebook and see what their love interest or their friends are up to. I had one tenant’s boyfriend clean out an entire unit of tenants because he was angry, aggressive, and threatening. Bad times.

Do you offer the units furnished?

This is somewhat area-specific, as I have come to realize. In the early days, I did offer units furnished; now I do not because nobody cares.

In general, my tenants bring enough to furnish their rooms, and that’s all they need. Most times, the tenants aren’t sitting around the living room holding hands and telling stories. For the most part, tenants stick to their individual rooms and are not being really social with each other.

I do put out general items though. I include garbage bins, garbage bags, some utensils, some flatware, shower curtains, bathroom mats, outside door mats, and entryway runners. You can add to or subtract from this list as you see fit.

I do not think there is a one-size-fits-all answer. It is area-specific, tenant class-specific, and also up to you.

If you want to include the whole kit and caboodle, that is great. What I think you will find if you do that is you will slowly start subtracting unused or unwanted items from that list, based on your ongoing experience. This will be great, because it will allow you to slowly refine what you want to include until you have it just right for you and your tenants’ liking.

This only works for college kids/in college towns, right?

No.

I only have one college rental. Everyone else who rents from me is a 9-5 worker. I have everyone from construction crew members to landscaping workers to hospital staff members to teachers to bank tellers to IT professionals to coffee shop workers—and beyond.

This is for anyone who is looking for an inexpensive place to call home that is safe and a good way to save money prior to moving on to something more private and/or permanent. I should say, though, that there are numerous tenants with me now who have been with me for many years.

Do not limit yourself to just college towns. What I look for are towns with low to middle income and plenty of employers like hospitals, schools, factories, and the like.

Colleges and college town certainly do work, though. While some landlords do, I do not tolerate the whole “raging college party” thing. I offer a nice and respectable place to live, and I expect that the space be kept that way.

goal-setting-together

I have run across other people doing rent by the room in expensive areas like Washington, D.C., too. There may be an affordable housing need for these more affluent areas.

Bottom line, see what other people are doing to determine if there is a need for this rental type. Aside from rural areas, I think it is “game on” with this strategy for the most part.

Is this even legal?

Yes.

Best answer here is to check with your local town on what rules they have on this. If a town has rules on this, more than likely, it is about how many people you can have in one particular unit.

They do this mostly for safety. The last thing they want is to have a unit with three bedrooms, but you split up each bedroom into two and also converted the living room and now you have seven people in one small apartment. This could cause issues regarding safety.

I also think towns want to cut down on blight-related issues. They do not want these seven tenants’ cars crammed into one small driveway, where three of them are parking on the front lawn. This is not a good look.

Furthermore, most towns have regulations on how many square feet is required to truly have a “livable space.”

Check with your town. The last thing you want is the local building department and code enforcement officers on your tail.

What do you charge for rent?

This is no different than regular per unit rentals. Answer is: what is everyone else doing?

Check Zillow, Apartments.com, Craigslist, and those rent by the room sites. Find someone who is renting a similar space to yours, and see what they are offering it for. Copy them.

No need to reinvent the wheel. It is really that simple!

In conclusion, and as I have said many times, this strategy is not for everyone. It takes a certain temperament to be able to handle this.

You will have problems. You will have drama. You will pull your hair out. You will question yourself.

What I have yet to do is find any of these reasons, or combination thereof, as grounds to think it is not worth it—not even close.

Merry Christmas, and Happy Cash Flow!

What other questions do you have about renting by the room?

Ask me in the comment section below.

Ryan Deasy, of Deasy Property Group and RentReddy, is a long-distance landlord currently residing in Houston, T...
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    Sarah R. from North Central Florida
    Replied about 1 year ago
    Comprehensive & helpful. Thank you Ryan.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    thanks for reading! glad you found it helpful!!
    Joe Steinheiser from Lansdale, Pennsylvania
    Replied about 1 year ago
    Can you give an example and comparison of one of your properties? Rent by the room vs. what it would be by the unit in terms of cash flow.
    Devon Remington
    Replied about 1 year ago
    as an example my house if rented out as a full unit would go for between probably 1,600-1800/mo renting room by room i can pull in 2400/mo
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Hey Joe, thanks for commenting. sure can. Three family (normal per unit rent): 3600 (1200 per unit - 3 beds per unit) Three family (rent by the room rent): 5400 (600 per room x 9 rooms)
    Andrew George Dennis
    Replied about 1 year ago
    How much more do you make over standard rental practices?
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Hi Andrew, thanks for commenting. i believe it is around 1.5 times the per unit rent. at least in my area. please see my response to "Joe" above this comment.
    Nicholas Crawford
    Replied about 1 year ago
    Great article Ryan, exactly what I was looking for. One concern that I have with this method is the ability to refinance to a conventional 20% loan and purchase another property. Is there anything issue with having to keep a room open and legally the owners room? Or once it is a 20% equity and is refinanced to a USDA type loan is there no issue with renting ever room in the house per room?
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Nicholas, thanks for commenting. good question. i have a few lenders that take no issue at all with this arrangement. however, some do. i do not use those lenders. a normal, plain jane, wells fargo/bank of america conventional loan may have an issue with it. however, like i mentioned, the lenders i use are okay with it and rates are just as good, so i stick with those companies.
    Matthew Harper
    Replied about 1 year ago
    I do the same thing furnishing and advertising to college students except I put all of them and their parents (assuming not well enough established credit which is almost always the case) on the same lease, equally liable for the full rent - not individual rooms. I only accept one check/venmo of the full amount. That way, it's up to them to combine rent each month - policing each other to be on time means I NEVER have to follow up about it! It's the best of both worlds. I talk to each of them and explain the lease so there is no confusion and so they are motivated to live with good friends - you are all equally responsible for rent, damage, etc so if someone drops out and leaves - the full rent is still due. You can find another qualified tenant with my approval, but rent is always due regardless. I do think this is a great way to do it. They don't come to me with their problems because they chose their own roommates and they keep each other accountable to keep the place undamaged and rent on time.
    Matthew Harper
    Replied about 1 year ago
    I've never heard of anyone combining the marketing of furnished college living with a single lease but it works extremely well. I even have them move out 2 weeks early in July to give time for cleaning/repairs (and they pay full rent for July - which you make legal by having the lease written to rent being a full amount delivered in 12 installments due on the first of each month)
    Matthew Harper
    Replied about 1 year ago
    So I have 100% occupancy, no property manager, and I pre screen potential tenants so I fill them in just a couple tours
    Abdul Imran Khan
    Replied 12 months ago
    What area do you recommend purchasing rental property?
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Matthew, thanks for this. i think what you are doing is very interesting. i like it and i like the accountability to creates. for me, i have never tried this and in my mind, with the class of tenants i have (c class - blue collar), i could see it being disastrous. i would be open to trying it in one unit though. i like the "freedom" individual leases provide my tenants. they simply cannot afford to be bothered with what anyone else pays. they would not be able to, for example, pay a portion of someone else's rent should that person be short. Who knows, could be worth a shot though.
    Miranda Paton
    Replied about 1 year ago
    I think the lease where tenants are "severally and collectively responsible" for rent works well with college students and in the localities that allow that. I have seen that language in leases in New York State (Ithaca, a college town), but not in Corvallis, OR, another college town. I have seen landlords do something like that in practice, where they ask one lessee to be the liaison for all and to send in one rent check for all. I can't see this working among post-college adults who didn't choose the roommates they'd live with and really don't interact with them. The wise landlord writes the leases that is both legal and likely to be follow-able by tenants. Do do otherwise is to sign up for drama.
    Anwer Ali from Raleigh , NC
    Replied about 1 year ago
    Hi- I currently own 4 bedroom 4 bath condos as well as 3 bedroom 3 bathrooms condos. Each room has attached bathroom and a walk in closet. I'm able to rent each bedroom for $485 and I have had 0% vacancy since 2014 (that's when I started). My 4 bedroom rents for $2000 a month and 3 bedroom rents for $1500. I only include $12.5 utilities per tenant and overage is paid by the tenant. 4 Bedroom Per Month Calculation Rent $ 1940.00 HOA $ 215.00 Insurance $ 17.33 Taxes $ 93.39 3 Bedroom Per Month Calculation Rent $ 1455.00 HOA $ 215.00 Insurance $ 17.33 Taxes $ 93.39 Utilities (water,sewage,garbage,electricity and internet) are connected under my name and each month I divide them equally amongst tenants. If I were to rent 4 bedroom as a whole unit and not as a room for rent, I would be renting it for $1350 per month instead of $1940 per month. So that's $7000 a year per unit extra in my pocket due to rent by room approach. Remember if you own more than one unit (which I do) the income is significant if you go rent by room. If I were to rent 3 bedroom as a whole unit and not as a room for rent, I would be renting it for $1150 per month instead of $1455 per month.So that's $3660 per year per unit extra in my pocket due to rent by room approach.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Anwer, wow thanks for commenting. you are doing well with these properties! thanks for sharing all of this. clearly, you understand this concept and recognize there is a significant amount of additional cash flow that is attainable. i think what you are doing makes total sense. now, if we could only get rid of that darn HOA fee!
    Jay Curley Residential Real Estate Broker from Wilmington, NC
    Replied about 1 year ago
    This seems like a great idea implement.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Jay, thank you. yes it is a great idea! if you need help implementing, just let me know.
    Brent Coleman
    Replied about 1 year ago
    As an insurance agent and investor, it is important to look at your insurance policy. Some policies will limit how many tenants per house you can have. You don't want to have a claim and find out only 2 roommates are allowed. Families are very different than having several different tenants in one house.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Brent, thanks for commenting. this is a great point. this probably should have been in my article as a point that is important to address. i appreciate your feedback here.
    Steve Graves Investor from Lancaster, California
    Replied about 1 year ago
    I've considered doing this with a 6 room house I own. I get how to handle everything except, heating and air conditioning. If my furnace or AC is ran all day long the electric and gas bill can get really hefty. Do you split the electricity and gas bills 6 ways? Curious to hear your answer. Thanks
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Steve, thanks for your question. i do both. some houses have utilities billed back and others have it included in the rent. i like including it but i do understand your concern. many people have told me they are doing a hybrid of this. they will include utilities in the rent up to X amount and anything over X is billed back to the tenants. this could be the way to go for you!
    Darren Looker Rental Property Investor from Dallas, TX
    Replied about 1 year ago
    How you decide how much to charge on a master suite vs. a standard bedroom with a shared bathroom? Do you charge a premium for a private entry?
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Darren, thanks for commenting. all of the houses i have are similar and these houses really do not have a fancy master or anything like that. the difference in the "master" versus other rooms is very minimal and i do not charge anything different. however, if there was a significant different in room size etc i would charge a premium for sure. if there are no rental comps to help support a rate for a master i would simply add 50 or 100 as a premium for those rooms and see what sort of bites i get. if i lock in someone quick at 100$ extra, then the next time it turns maybe i increase it. i am all about providing a safe and clean environment at a fair price. i do not try to take every dollar out and thats the reason i do not add any premiums but totally understand why people do it and im sure they would disagree with my reasoning. again, if there is no support in your area for this, do some trial and error work and see what happens.
    Jeff D. Real Estate Investor from Portland, Oregon
    Replied about 1 year ago
    WOW - perfect timing for this awesome article. I am literally about to market an SRO project. Shared baths and kitchen. About a dozen rooms. Was trying to anticipate how to structure the lease, and what to expect. The buzz word for this concept these days is Co-Living. And there are big time companies in the major cities like NY, LA, SF, Chicago, Seattle that are exclusively doing Co-Living projects. Remodels and ground up. Would love to see more Bigger Pockets coverage of this. As someone else mentioned - especially the perspective from a lender on how a refi might go after things are stabilized with a given project. Thanks so much for this!
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Jeff, thanks so much for commenting. i love the "co-living" buzz word. hmmm. i would like to see more coverage of it also but am happy to bring as much as i can. good luck on your project and let me know if you need any help. really glad to see other people doing this.
    Claudio Albornoz
    Replied about 1 year ago
    Hey guys. I am in the process of building a 10 bedroom condo from a 3 bedroom house in really poor shape. It should be ready in 6 months, hopefully. I have a few question: do you supply beds for people or could it be possible to rent it without them, meaning they would have to buy their own, plus bed covers and sheets? What about washing machines? Should the be free or could I charge for them?
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    hey Claudio, thanks for your questions. congrats on this conversion. i have never provided beds but i know some people do. it depends on your market a bit, and if others are. i do provide all appliances (washer, dryer, fridge, stove). i have one building that has coin operated washers and dryers. i do really like the extra income. those machines are expensive but it is nice collecting the coins. if you live in a fancy area you might get some push back. i have another nicer building where the tenants did express concern that they would have to pay for laundry and i ultimately decided not to put some spare coin operated units in there and am happy with my decision.
    Jowanna Clarkson
    Replied about 1 year ago
    I had a friend move in and she agree to pay the water bill was all that she paid she also bought her food. When she moved out she hadn't paid the water bill for 2 months left me in a bind. She got her personal items and left washer and dryer I told her she can come and get them when she paid what she owed? Well she went and got a warrent for me for thief What will they do in court?
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Hey Jowanna, that is a heck of a story. i have no idea what your option are. i would certainly talk to my attorney though and see how you can best position yourself. good luck!
    Adam Blodgett from Raleigh, North Carolina
    Replied about 1 year ago
    This was great Ryan thank you! Closing on my 5 bedroom home on 1/14/20 and will be renting by the room. This quick blog has provided some very helpful information. I couldn't be more thankful for the mention of getting a cleaning service. Pretty sure you've mentioned that before in a previous blog but it was one of the things I was more worried about than the lease! Thanks again!
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Hey Adam! wow thanks so much for the comment. that really meant alot that i was able to help you. yes the cleaning service is a must in my opinion. it protects your investment and keeps the tenants happy. congrats on your new purchase and let me know if you need any help!
    Kathie Meyer
    Replied about 1 year ago
    Great article. I had already pretty much figured out a lot of this stuff except for the lease which seems to be a great Pro perk. I live in a small town where affordable housing is scarce, and this is a good way to rent to people to help them live where they work.
    Ryan Deasy Rental Property Investor from New Britain, CT
    Replied about 1 year ago
    Kathie, thanks for reading and commenting. yes it sounds like you may have found use for this strategy where you live. i wish you luck with it and if you need help just let me know. most importantly, i hope you are able to help people find a good, quality place to live!
    Dillon Kenniston Real Estate Agent from Sinking Spring, PA
    Replied about 1 year ago
    Thanks for this, Ryan. Helpful post. One follow-up: Could you speak to how insurance typically works on rent-by-the-room arrangements? My understanding is it's much harder to come by, and much more expensive. Has that been your experience? Thanks again!
    Dave Rav from Summerville, SC
    Replied about 1 year ago
    Useful post. I'm an REI of 12+ yrs and am considering breaking into the rent-by-room space. Currently eyeing a 10 BR home for sale at $94k - this would be perfect for the room rental!
    Jamie Pickens from Norfolk, Virginia
    Replied about 1 year ago
    Hi Ryan! Very timely blog as I am considering this for a 3\2 I have that's not been such a great cashflowing property. It's a low income area and people who need A house often can't actually afford it at $1150. I could see renting two of the bedrooms out for $650 and the upstairs for $750-800 because it is a separate sitting area, bedroom and bath! My question is, is the eviction process the same as a standard rental??
    R Williams
    Replied about 1 year ago
    I really appreciate the info that you've provided. Very helpful!
    Tomiko Graves from Washington, DC
    Replied about 1 year ago
    Hi Ryan, I really believe this article came specifically for me! I have just recently purchased a SF home that is already set up for a rooming rental. I have two questions: 1) The bedroom and dining room are bedrooms. Does it matter that I don't have a living or dining space? Based on your article, you referenced that they typically don't spend a lot of time "bonding" in the common areas, so I'm thinking it may not be an issue? 2) In your experience, what should the ratio of bedrooms to bathrooms be? My house currently has five bedrooms and one bathroom but I'm thinking about adding at least a 1/2 bath in one of the bedrooms and charging a little more for that person's room. Thoughts?
    Kristen Shook New to Real Estate from Topeka, KS
    Replied about 1 year ago
    Appreciate the insight! Gathering as much knowledge and advice as I can before I jump on board.
    Christine Charman
    Replied about 1 year ago
    Can’t find how to advertise a room on Zillow or trulia. I’m only on Craigslist and Marketplace. Insight please their websites are not user friendly. Thx
    Chad Maxwell Real Estate Agent from Plano, TX
    Replied about 1 year ago
    Hi Ryan, Thanks for sharing. I am currently under contract on a 5bd 3bth home. Something I don’t understand is the shared bathroom thing. How does a shared bathroom work? I can’t imagine sharing a bathroom with someone. Does this cause tenant arguments and what if 2 people are trying to get ready for work at the same time?
    John Mayer Flipper/Rehabber from Denver, CO
    Replied about 1 year ago
    Awesome article man! Saved this one for sure.
    Jasmine Calin Rental Property Investor from Charlotte, NC
    Replied 3 months ago
    Hey Ryan, Your articles have given me the confidence and knowledge to successfully rent by room! Quick question, what do you do about security deposits when one tenant moves out and the rest stay if they are all on different leases?
    Pat Tobin Investor from Salt Lake City
    Replied about 2 months ago
    If they are all on different leases, which they should be, each lease(person) has its own security deposit account. Do not mix tenants deposits as it a legal issue and is bad practice. They are responsible for their own rooms that they rent so each tenants each has a lease and a security deposit. Don't forget to have each tenant get renters insurance. 6 more people in your property = six times more likely to burn your property down.