Considering converting low income properties to rooming houses (rent individual rooms). Several advantages to both landlord and tenant financially and otherwise. Anyone with any experience doing this in a low income area ?
When I was landlording I thought of doing that in North Philly but then I didn't like the type of customers it drew. Not my preference at all. It can generate more money than one family/person renting, which is why I looked into it. If you run a halfway house the government might offer subsidies. You have to weigh the good vs the bad and make your decision from there. My coin.
@Seth S. there are a few here in Raleigh and they do quite well. I know a guy that has a few of them. There are some legalities you may want to check into, one example is that he had to purchase the property next door and convert it to parking in order to give 9 people a place to park being the street parking wasn't enough.
Rent on 1 unit is about $450 -$600/month (different room sizes and some have private bathrooms) in downtown Raleigh, totaling $6,000+/month for one unit. Not bad if you ask me. Once you learn how things work in your specific area, you can get a few going for some nice cash. I would advise you to do all males or all women, no mixing men and women. Your resident selection will be key here.
@Seth S. I manage a property in a high demand area. Not really low income tenants but less desirable (no credit/bad credit, doesn't meet income threshold, or tenant does not want to sign a year long lease).
For me personally, as of now, no real problems. The tenants are getting along well. 2 Guys and a couple. Low turnover. They are paying more collectively for the apartment so it compensates us for 3x times the work - 3 rent checks, 3 leases, etc. It rented very quickly as a rooming house and we got more money.
I know in certain states there are VERY strict requirements on a rooming house. Be careful. In Massachusetts it's limited to 3 and under (technically not a rooming house) and if it's over three (legally a rooming house) it must adhere to many many standards and requires a license.
Normal "tenant issues" could be exasperated because of the closer proximity with other tenants. Instead of driveway issues (your car blocked mine) it would be more petty like he stole my food, they don't split toiletry costs equally, loud music, smoke, bathroom doesn't get cleaned, or someone pees on the seat, etc. (there are ways to lower these problems which I've seen many other rooming houses do - i.e. super cleans all bathrooms or stable tenant pays less but takes on chores).
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