Renting my new investment by the room

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Renting my new investment by the room

Keeya WangJones
WA · Member since 2016 · 99 posts · 44 votes
Hi BP, It has been an exciting year but also a painful one. I finally bought my first investment property and put a some funds into to create a granny flat studio. Unforeseen because mostly lack of experience and it’s my first property, it has been extremely hard to rent out my house. Under some unfortunate circumstances, I lost a tenant that was doing a test 6 month trial of renting the granny flat and garage to a month-to-month lease for musIcal needs. It was a good situation until a neighbor was extremely mean to them and threaten them. Lease was immediately converted to month-to-month. Garage as storage. Long story short... I’m having a hard time renting out my house now. It attracts families and the family market do not want to share the property land usage with other people. They have very specIfIc family needs. My house has been empty for too long. Going on 3 months. I removed all restrictions such as no dogs. Therefore, now I would like to just rent my main house by the room. 3 bedroom and 1 bath. Large bedroom at 400 sq ft. I know that I‘m inviting higher turn-over but it‘s better than an empty home. Empty of people and furnishings. Has anyone start from scratch in renting by room before? Did you post the entire ad for the home or did you just post one ad per room? OR both. How did you obtain tenants? I‘m posting currently on Craigslist Essentially, the tenants are strangers. How did you deal with conflicts? How did you land your first tenant to occupy one room? How did you get the other rooms rented once you got the first one done. I WISH I COULD POST ON A ROOMMATE SITE THAT SHOWS HOMES AVAILABLE SPECIFICALLY FOR ROOMMATES. Any other advice is appreciated. I have to get my main house rented ASAP. Vacancies are taking a huge financial toll. Cheers!
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Nicole Marshall
Indian Harbour Beach, FL · Member since 2018 · 92 posts · 99 votes
7y

@Keeya WangJones I rent 3 bedrooms in my house, but I also live there, so it's definitely different than a completely "hands-off" rental. However, the process to find roommates should be similar. I post on Craigslist, Nextdoor, my work classifieds section, my college alumni classifieds, and sometimes facebook marketplace (but I get more spam and weirdos through that). I've found roommates through all platforms. You can also post through Zillow, which will automatically post for you on Hotpads and Trulia, though Zillow itself will not actually post a "single room" ad. 

When you get responses from potential renters, via email, watch the grammar. This is usually a red-flag for me, if their grammar is poor. Trust your judgment when you meet them in person. If something seems off, but you're not sure what, it's your intuition. For example, I had a very pleasant guy come look at one of my rooms. He seemed super nice, well-groomed, educated, but something felt off to me and I didn't know what. So I googled his name and yep, he had 2 arrest records in 2018, one of which was "battery by strangulation". 

You will absolutely want to do a background and credit check, and even ask for a recent paystub. You may want to ask them to get renter's insurance too, and check with your current homeowner policy as well.

Seeing as it's around the holidays... it's likely you may not find a renter until the new year. I'm having issues finding tenants right now as well, where usually I can find one within a week.

Good luck, and feel free to message if you have any questions. :)

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  • Amanda G.
    Rental Property Investor · Augusta, GA · Member since 2017 · 825 posts · 278 votes
    7y

    Hi Keeya,

    I'm not positive I understand what's going on, but I'll take a shot. It sounds like you created a studio apartment on the house? And now the whole thing is being difficult to rent. Is the 3/1 still a functional house? If so, I would try listing it as a 3/1+MIL (Mother-in-law, or whatever the correct term is for your area). Maybe find out what going rates are for a 3/1, and then tack on a extra bit for the separate apartment. 
    This is not what you asked for, but in my experience landlords rarely create roommate situations from the outside, more often sets of roommates look for a place together. Good luck!

    1Reply
  • Nicole Marshall
    Indian Harbour Beach, FL · Member since 2018 · 92 posts · 99 votes
    7y

    @Keeya WangJones I rent 3 bedrooms in my house, but I also live there, so it's definitely different than a completely "hands-off" rental. However, the process to find roommates should be similar. I post on Craigslist, Nextdoor, my work classifieds section, my college alumni classifieds, and sometimes facebook marketplace (but I get more spam and weirdos through that). I've found roommates through all platforms. You can also post through Zillow, which will automatically post for you on Hotpads and Trulia, though Zillow itself will not actually post a "single room" ad. 

    When you get responses from potential renters, via email, watch the grammar. This is usually a red-flag for me, if their grammar is poor. Trust your judgment when you meet them in person. If something seems off, but you're not sure what, it's your intuition. For example, I had a very pleasant guy come look at one of my rooms. He seemed super nice, well-groomed, educated, but something felt off to me and I didn't know what. So I googled his name and yep, he had 2 arrest records in 2018, one of which was "battery by strangulation". 

    You will absolutely want to do a background and credit check, and even ask for a recent paystub. You may want to ask them to get renter's insurance too, and check with your current homeowner policy as well.

    Seeing as it's around the holidays... it's likely you may not find a renter until the new year. I'm having issues finding tenants right now as well, where usually I can find one within a week.

    Good luck, and feel free to message if you have any questions. :)

    2Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    7y

    So you rented a flat and garage to a musical band type person and they use the garage for a studio?  And you are renting the house  3/1 separately?  I have a property where the single family is adjacent to a MF I own and so I have seen some of what you must be experiencing.  Families are not keen on some mixes.   Why don't you try to get some roommates in there to rent it together, that might be best/easiest for you.  We post it on student websites for that but you might word your ad to say will consider up to x unrelated persons (as your local law allows).   Another suggestion would be to consider a relocation relator listing maybe targeting relocating individuals or families. Also I explain the setup before showing. It helps avoid useless showings.

    If you rent rooms separately  you will likely need to  furnish at least the common area. Consider rental furniture or durable generic choices. Make the cost higher to include utilities.  You will need to add internet cost too.  You don't negotiate conflicts, set the expectation that they get along. Target renting to similar types of people to decrease conflict (e.g target students, target shiftworkers, etc.)  You could target traveling medical professionals, they have specific sites you post on. Set house rules.   For a roommate site you can post on craigslist under rooms/shares category and you post rooms by price, if they are mostly equal they are the same price but if you had something extra you may make the cost higher (like the master with bath).   You also need to consider parking and kitchen setup.  In a 3 /1 it  might not be the best model but you can make it work. 

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  • Keeya WangJones
    OP
    WA · Member since 2016 · 99 posts · 44 votes
    7y
    @Colleen F. @Nicole Marshall @Amanda G. Thank you all for the advice! Seems like first investment is very difficult with the learning experience. Yes, families are not ideal for this home. It is a waste of showings because they do not want to share at all resources with my granny flat. Ex: backyard and laundry on-site. I have a property manager helping me placed tenants and it has been challenging and frustrating for both of us. People were asking to split the backyard so they can have their own private yard. It’s over 800 sq ft. And the request was coming from families. Roommates are the way to go now, maybe because of this time of year it is harder. We can’t discriminate so we still have to show families and it truly is a waste of time and energy. I decided to be proactive and post a Craigslist ad only on rooms/shared with description of home and roommates wanted. No hits yet. I reactivated the house ad for housing wanted and I got two hits. You probably guessed families this time with pets. And pets are ok, but I couldn’t help feel like I put myself in a hard spot of a vicious cycle. There was no way I can rent house and granny flat because I definitely won’t make mortgage. Here in Southern California, San Diego/La Mesa area people can’t afford the entire house 2517 sq ft. They wouldn’t be able to afford the entire house if I just left it as is. So it is the reason, I did the granny flat. When our current tenants unfortunately move on, the granny flat will rent pretty fast again. The main house is my biggest challenge and pays the majority of mortgage. After trying with my tenant manager, I was like I should just rent by room. I’ll get more and be back in the positive. I can do small affordable rent increases. I now find that hard to do with asking strangers to live with strangers. It’s best if they all knew each other. Today after reading all of your responses, I reached out to the military bases and local universities. I hope to build a relationship with these organizations so I can keep the home occupied hopefully with responsible people. I do have a huge gut fear of renting to undergraduates with hardly any rental experiences for a home that was completely remodeled. Who knew the first one would be so hard?
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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    7y

    @Keeya WangJones Grad students are a reasonable option but there is more competition for them. There are Post docs and grad students who will rent rooms and get along but if you go by  the room particularly to this group you may do better to provide furniture in the bedrooms (considering foreign students).  One strategy might be to  price out rental furniture and offer it at a different price if they want it furnished. Here there is a campus listing site for a fee and the graduate student organization posts your ad free. For student screening google them and take only serious majors.  Although I don't allow undergrads with Pets. You are bit off season here for student rentals but it may be different there. 

    1Reply
  • Keeya WangJones
    OP
    WA · Member since 2016 · 99 posts · 44 votes
    7y
    @Colleen F. I will look into rental furniture and price it out. I can apply all rental furniture terms to the lease. Thanks for the advice!
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  • Heidi Kenefick
    Rental Property Investor · Hartford, CT · Member since 2017 · 168 posts · 163 votes
    7y
    @Keeya WangJones You actually find yourself in a situation to make 2-3x market rent, buy renting out by the room! It’s like buying a slice of pizza vs the whole pie, by the slice is always more! I did it for 3 years using Airbnb and marketing to travel nurses. They would stay for 3 months at a time and paid well. I also got some other long term people in that were doing work out of state, the longest one stayed for six months, did the dishes and walked my dog. It was a win win! You can also advertise on rotatingroom.com it is for MEDICAL STUDENTS ONLY, but they don’t charge a service fee and most Med students only need a place for 4 weeks at a time. When renting to travelers or students it must be fully furnished and include all ultilities, internet and TV. As for rent each room should cost what a one bedroom apartment is going for locally. In my area I charged $650 all inclusive and stayed full. One other option is to reach out to local social services agencies and offer full service corporate rentals for their clients (ie: blind, CP, veterans etc) that need housing. Check out www.drcashflow.net. This guy sells the course on it, I bought it but haven’t implemented it yet, but seems like an untapped way to earn a lot by the room. Good luck!
    2Reply
  • Mike Shemp
    Rental Property Investor · Stewartsville, NJ · Member since 2016 · 419 posts · 280 votes
    7y

    @Keeya WangJones - I know that on AirBnB you can rent your house room-by-room.  You would have to consider separate locks on every bedroom door, and possibly background checks for all guests to help ensure a safe environment for everyone, but it may be worth checking out and running the numbers.

    Mike

    1Reply
  • Keeya WangJones
    OP
    WA · Member since 2016 · 99 posts · 44 votes
    7y
    @Heidi Kenefick I have a horrible neighbor looking to turn me into to the city for anything. She and her wife have a personal vendetta against my wife and I because we don’t have the same views. It’s a mess. If I make it an Airbnb with multiple people coming and going it may pose a problem of annoyance. Constantly, defending myself with the city. I’m trying hard to get roommates. I want to do rent by the room but I’m not prepared for it. I also thought to just get one room going... and get that person settle in. Then work with that person to get roommates. Get some cash flow. But I open this up to strangers living with strangers. Thoughts?
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  • Daniel Banic
    Member since 2018 · 37 posts · 8 votes
    7y

    Hi , there are tons of people looking to move in on craigslist but what you should try to do is go after them , besides posting a ad , go into the looking for rooms and apartments or housing sections everyday and see what they are willing to offer. It's pretty easy to reconize the good ones if you use your God given ability to use your gut. Also praying for your ad to be answered is crucial too. There are a lot scammers but also a lot of good people on Craigslist too.

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