Rooming house help?

Question

Hi everyone,

I’m an investor in Cleveland. Born and raised here. I currently have 6 doors.
I just recently bought a single family home and had a contractor tell me about making it a rooming house. 4 bedrooms, 1 bath.
Wondering does anyone have any experience with this? Pros/cons/tips? OR should I keep my original plan and section8 it.
Thanks in advance

Bryan Montross · Answer

Let me caveat by saying I do not know the Cleveland market. In my personal opinion, if I was renting a room with a group of roommates, I would want more than one bathroom for 4 rooms. I don't think that is a great ratio for unrelated (even related) people. However, you would have to look at your market and see if people are interested in renting by the room and how much they would pay. If there is demand and you could get more for 4 rooms than section 8, go for it. You could even look into companies like PadSplit that help with renting by the room scenarios.

Josh Bowser · Answer

Hey Chaine - what do numbers looks like here for section 8 rents vs. total rents for all of the rooms individually?Room rentals will operate with higher expenses so please keep that in mind when you're making the decision. There is a time factor that needs to be accounted for as well.

In my opinion - you will need to be able to reasonable achieve 2-3x the rents vs. the alternative for room rentals to be worth the squeeze.

I'd check to see what other folks are renting individual rooms out for to see if it makes sense diving into.

Jacoby Atako · Answer

I have 2 properties that I rent by the room and they both have 7 tenants in them.  With only 4 rooms it wouldnt be worth it in my eyes.  In both of my houses having 1 bathroom shared between 4 people has not been an issue, but I also have maid service and a large house which helps a lot.

Other things you have to think about are parking issues, storage space for each person, and utilities which you will usually end up paying for now and that decreases your profit.

They are also not "set it and forget it" type properties.  Most of my people are long term now but I still have to fill a new room every couple of months on average.  Last Year I probably only had to fill 4 rooms, but I got a bad roommate that didnt vibe with the others.  I started him on a short lease of 3 months, and ended up not renewing, but lost 3 other tenants as a result.  So I had to fill 4 rooms in one month.

Just some things to think about.

Bob S. · Answer

HELL NO!! take your 1700ish or more and be happy .

Drew Sygit · Answer

@Chiane Martin the biggest challenge to doing Boarding Houses successfully is investing the required extra time.

LTR - take the least amount of time, but time required increases as you go from Class A, to B, to C, to D.

MTR - take more time than LTR

STR - take more time than MTR

Boarding House - can take an insane amount of time to manage! It's like trying to keep 13-year old brothers & sisters from fighting as they try to assert & explore their individuality & freedoms. Most owners don't want to pay a PMC enough.

Bob S. · Answer

100% strangers living under one roof, what could possibly go wrong LOL. I would NEVER do this in Cleveland,

Chiane Martin · Answer

You’re absolutely right. I had the same thoughts myself which brought me here. I wasn’t so sure how much of the headache I really wanted to deal with. Thank you for your insight!

Lindsay Tucker · Answer

Renting by room for 4 different tenants who don't know each other invites extra issues, headaches, in-fighting, and additional variables you won't likely have to face if you have one lease for all 4 rooms. *If* it's much more profitable to rent by room, maybe it's worth it. But managing 4 separate leases, needs, personalities, life circumstances, turnover rates, etc, will be a lot more work than renting out the whole house.

Rooming house help?

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