Rent out each room or the whole house?

Question

Lets say you find a 4 bedroom house.  Would it be better to find 4 different renters and treat it like a 4plex thus never leaving you with a month of $0 rent or is it better to have less hassles and just buy 3 bedroom houses and rent out the whole house?

Account Closed · Answer

It might be illegal to rent to individuals when operating as a rooming house or other term for individual rooms rented to unrelated parties with shared facilities. It is a zoning issue mostly.

As others have said renting the whole house to a group of unrelated people is fine. Rather common in parts of CA where there are lots of young professionals and high house prices (Silicon Valley is one). I have been both the renter and the landlord in such situations.

The use of the term 4 plex would almost always refer to legally distinct living units where there are 4 units, one title to the property and each unit  is self-contained. Best not to use the term when talking about a rooming house or a a house rented to a group.

John Corey

N/A N/A · Answer

Yes, individual renting will take specific skill sets to do that you cannot expect in normal leasing.  If you are new in rei or only doing it part time, you may rethink it.

Jeff Fairchild · Answer

Ok thanks that helps :)

Richard F. · Answer

Yes, Jeff, they are typically friends...or at least acquainted. Advertising on college bulletin boards or housing offices will expose you directly to that type of prospect. Of course, there should be a college nearby! Students often walk/bike etc. to campus.

In regard to giving notice, check your local laws. Tenants are required to give some minimum notice (usually 30 days) prior to vacating if they are on a month-to-month rental agreement. OTOH, If they sign a fixed term lease, the lease should spell out what, if any, action is required at the end of the term, including renewal.

In either event, there is never any guarantee you WILL get notice, or that they will fulfill the entire term.

Also, a side note, unless I have a confirmed move-out inspection scheduled, I rarely start advertising early (at least, not paid advertising). Tenants are not particularly reliable, and often change their mind or procrastinate for days or weeks beyond what they originally state. In addition, depending on the circumstances, you may not know the extent of repairs/cleaning needed to make the place presentable. You can waste a lot of your time rescheduling showings or showing a cluttered/damaged and unattractive unit to prospects by jumping the gun.

Jeff Fairchild · Answer

I've never heard of 4 people all deciding on a place at the same time.  Are they usually just college friends or what?

So it seems like a 3 bedroom and just putting in one family would be less hassle then.  So in this situation I'm guessing you'd require them to give you notice and then you start advertising for a new renter right away so you don't have much of a lapse in rental income?

Richard F. · Answer

"Better off" is a relative term...however, I occasionally have 4 bedroom homes in certain areas that WILL generate more income if rented to a group of roommates, in my specific cases college students or recent grads. I don't, however, rent to them individually and deal with the hassle of roommates. Instead, we will rent to a group of 4 or 5 that come to us together. EVERYONE signs the applications, EVERYONE is checked out, and generally, EVERYONE has a parent sign on as guarantor. Of course, the parents are also checked out. Now I have 8 or more people with good credit and references, and they are ALL on the hook for the TOTAL, including damages etc. They are NOT only responsible for "their" 1/4th.

In this type of situation, EXPECT more noise, more trash, more cars, weekend parties, etc. and if you are ok with that, as long as at the end of the term you can be pretty confident that all charges will be paid by SOMEONE.  There is also an issue that ALWAYS arises--one roommate moves out mid term, and they want to move in another. You HAVE to get everyone signed off, and approve the new one same as originally, otherwise when its time to pay out the security deposit, you have to make the check in the original parties names ONLY, exactly as on the lease.

This has to be a conscious decision, and generally I advise against it, but some owners insist...

Trying to run a rooming house, OTOH, is a giant pain... you have personality conflicts to deal with on top of "normal" rental issues.

N/A N/A · Answer

Individual leasing can be difficult.  I currently have an individual lease with some friends, which is really good for myself.  I know that the main reason I am still living in my current apartment is because of an individual lease.

Mandy F · Answer

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