I just recently listened to a podcast on BP where a guy turned a duplex into a rent by room and increased his profits. I just started managing a facility where a lot of people live in these types of properties and pay between 5-700 a month in north Minneapolis (pretty bad area). When I talked to my wife about this, she said she stayed in one near the U of MN when she went to school there.
Ideally around a university would probably be better for a variety of reasons but I may need to start in the bad area since its cheaper. Luckily my current job has given me the experience of dealing with the roughneck crowd (and I can legally carry a gun.... Which is also a +) ok it's not that bad... In most parts.
A few questions:
What does it take to turn a SFH or duplex into a rent by room? Does this require getting rid of common areas like LR amd DR and creating bedrooms? Getting permits for these changes and that's it? Do I have to do anything special to get these changes approved by anyone? Anything I'm missing? Thanks in advance !
What you are describing is turning an SFH or duplex into a rooming house. The first thing to do is check the zoning for the area - are rooming houses permitted? Do they need to be licensed? What are the requirements (ratio of bedrooms to washrooms, kitchens, etc)?
If rooming houses are not explicitly permitted (or restricted) in the area, what are the City by-law restrictions around occupancy (i.e. how many unrelated adults per dwelling unit)?
The answers to the above questions will allow you to determine if, where, and what nature of rooming house you might legally create.
@Rob Grove I'm familiar with what you are asking. I'm a licensed RE agent in Minneapolis and have a few clients that do boarding houses. In MPLS, you have to have a boarding house license. To get this, you have to fill out an application, pay a fee and have an inspection done. My clients put locks on the doors of the rooms and signage on each door that state the house rules, such as no cooking in the rooms. All areas are called common shared areas which include bathroom, kitchen, dining/living room. If you go on the minneapolismn.gov site or the ci.minneapolis.mn.us site and type in "boarding house", you'll get more information on how to get the license.
In minneapolis, the city gives grants and funds to boarding houses that have a niche use such as "veterans-only", "gender specific", "refugee housing", "elderly-only", etc. You may have to do some modifications to the house depending on the group you are servicing. Each group gets a stipend to pay rent which may help as well.
One of my clients has a boarding home for "adult males only". It is a dry house, which means no alcohol or drugs are allowed in the house. Minneapolis does have wet houses, which means you are allowed to have alcohol in the house. You can keep down on the trouble tenants by implementing and enforcing rules that deter negative behavior.
I have another client that has a boarding home for "ex-prostitutes in recovery". She has a chaperon in the house and many rules to avoid the tenants causing trouble or slipping back into negative behavior. Her tenants get rent assistance which pays for their stay.
Let me know if you have any questions or maybe connect with some of the owners I know that have boarding houses.
Do you know where or how to get grants for this type of housing? If so, do you know if they would give them to a first time investor? (I own my personal residence)
Do you know anyone who wants out and is willing to seller finance? . If I had a solid business plan, I could possibly get some help with all or part of the financing from a family member of the numbers make sense.
I'd be interested in talking to anyone of your clients If they are willing to help a newbie @Tim Campbell
I work in North so I could meet for coffee or lunch anytime. Thank you for the info you have provided thus far!
Grants/funding: Check MPLS CPED
First time investor: Not likely solo. Need partner to show experience.
Seller financing: Depends. Case by case. Always marketing personally.
Your welcome. I got time for coffee. Inbox me or call to setup a time.