Pros and cons of rent by the room?

Question

Up until now, we have shot down any opportunities to manage rent by the room properties; however it is a conversation I am having more often these days and considering it more seriously. What are the pros and cons of rent by the room?

Angie Castro · Answer

I know a couple of investors that rent room by room and it's work for them. It is essential that you get an absolutely foolproof rental agreement. My investor went through an attorney to draft the agreement and it is very very specific. It includes things like when and where you can have people over. How the common areas must be cleaned up by the end of the day.

Steve K. · Answer

@Maranda Tucker pros: you can charge more rent. Cons: more management intensive and higher turnover. From your perspective as a PM, you could potentially make more by charging tenant placement fees for each individual tenant and your monthly percentage will be higher due to higher gross rent, but you’ll probably also deal with more questions, issues, drama, etc.

Maranda Tucker · Answer

Dealing with more tenants and drama, on top of managing/reeducating owners on expectations as well... Not sure we would make enough for the hassle!

Maranda Tucker · Answer

Oooof. I don't feel great about the idea for these reasons.

John Underwood · Answer

Sounds like a potential for drama between tenants that don't know each other.

I've heard of people fighting over their share of the electric bill and who is using more electricity.

Maybe ok for student housing?

Pros and cons of rent by the room?

Pros and cons of rent by the room?

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