Educate Me - Renting Furnished Rooms

3 Replies

So 16 hours over 2 days offsite led to a few interesting conversations recently, including a short conversation in renting furnished units to interns/co-ops.  My company rotates through a lot of co-ops on a semester basis throughout the year.  One of our current co-ops was telling me about an investor down in Cinci that had a great gig going renting out individual rooms to these co-ops and it got me thinking I may want to do something up here similar... but that's a significant change from simple multi-family investing... so what do I need to know?

I thought there were tax differences between landlords and what is more considered boarding/hotels... where is that threshold?

Anyone have experience in renting out furnished apartments? 

I know someone had talked about traveling nurses and more high turn over but high occupancy situations, any thoughts there?

How do you get around fair market housing issues with gender... I'm guessing you'd want consistent gender... do you place people that way or simply let the market self select?

What else should I think through?  Renting rooms for $600 would definitely be much higher than renting units.

@Nathan Emmert  

If you search on BP, you will find past threads on rooming houses  ... I say this as I lazily do not feel like retyping everything. ;-)

We have student rooming houses.  In a nutshell: yes, they can create more revenue.

Here's the pound of flesh in exchange:

1) More capital investment - you need to furnish the properties;

2) More administration as there will be more leases.  Additionally, you are the common link between all roomers - each has a lease with you and no {social} contract with one another - and, as a consequence, you will be sucked into more roommate issues;

3) You will want to bake the use of a cleaning service into your budgeting numbers ... where the kitchen, bathrooms, laundry, living room, etc are common spaces, it is quite likely no-one will clean them properly;

4) Our experience has been that a rooming house works best if you, or someone you explicitly trust and/or who also has skin in the game, resides in the property.  My sister-in-law resides in, and is the den mother of, our larger rooming house, which is just down the street from our other one.

Gender can be an issue.  Often women will not appreciate sharing the house, especially the bathroom, with a bunch of guys.  Where we cater to international students, we encounter instances where individual are uncomfortable or unable to share accommodations with the opposite sex for cultural or religious reasons.   In our larger house, which is organised as a duplex, we try to make one unit women and the other men

I would agree with Roy on this one. I imagine it might be different if you're looking more at like an executive rental for business executives to live in for weeks or months at a time. 

Nathan, someone is already doing this in my area, I've been curious about doing this with one of my properties but since I have a busy full time job i just wont do it unless I'm living in the house as well. You can answer one of these ads and go see one of these houses as a prospective tenant and see how they're doing this.

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