Renting by the Room?

[Jenny Gremillion]

Hello BP, I'm considering buying a rental in my town that currently rents each room, "by the room". They have each tenant sign a 6 month or yearly lease. Cash flow will be around $500-$600 per month- this will be my highest cash flowing property yet. I only own single family homes so this approach will be new to me. Any advice/pitfalls/upsides to renting by the room like this, from your experience? Each room is currently renting for $600 and one of the tenants is kind of the "mother hen". Responsible for finding new tenants if one leaves, and she gets a slight discount on her rent. There are 4 BR and 2 Baths. Thanks in advance!! Jenny

[Deanna McCormick]

You need to check city code for renting out this house, if owner occupied, then renting rooms usually is OK, IF not it needs a particular type of rental license.. DO the current owners have that now?? IF not might not be legal and you could get shut down. So due diligence in checking for the rental license requirement.  A house monitor is wise. basically making sure all are doing their fair share for cleaning and maintaining the peace.

I have a 6 room house, sober living, NO alcohol, all guys, it works. I only do month to month and would never stray from that for this type of rental arrangement. and my other buildings are all on month to month also.