I have a deal closing the end of October for a 4 bedroom house. House rentals usually go for around $1100-1400 in my area but rooms rent for around $450-550. The things that makes me weary about renting rooms is that utilities are usually covered by the landlord in those situations (at least all the times I've lived in over the years), and I don't like paying someone else's utilities. Any suggestions?
@Sean Campbell Paying for utilities is a fee you need to factor into your proforma if you're going to pursue an STR strategy. If you are getting $2,000 (midpoint) renting rooms and $1,250 (midpoint) on a LT basis, even if you have to pay a $250 utility bill, you are still $500 ahead. Costs are always higher for an STR property but the revenue SHOULD more than offset it. Happy to answer any other questions you have.
@Mark Kappelman Thanks for the response. I live in a seasonal part of Canada where June, July, August are prominent for STRs so I'm just trying to figure out the best strategy for the offseason. I'm leaning more towards room rentals but want to understand all my options as best I can. Happy with any wisdom you care to share.
@Sean Campbell OK, that makes sense. Assuming you rent and rooms and furnish them, can you rent the rooms furnished to corporate travelers in the offseason? That is what we are planning to try and do in Chicago on a couple new units we are brining online in early 2019. Having said all this, if your market is truly only in demand for 3 months a year, LT renting might be the way to do. Run your numbers both ways and let the data make the decision - that's probably my best advice.
@Mark Kappelman What a lot of people do in my area is a hybrid, 3 month STR and then Month to month rentals the rest of the year. I've been looking into doing STRs year round but my province basically shuts down in the winter (a few towns close everything but gas stations in winter) so I'm not sure it's the best endeavour. I'm about 6 weeks in to my first house hack with a duplex. I rent the other side to cover my mortgage and I rent out 2 of the rooms in my side to make more cashflow and learn the room rental side of things.
We rent a fair number of furnished rooms to predominately international students, but to others as well. While utilities are included in these arrangements, we do monitor or limit tenant control over utility consumption. In buildings with central heating systems we use programmable thermostats which allow a "hard" max (heating) or min (cooling) temperature to be set. In places with electric baseboard heat, we provide programmable thermostats (some of which we can monitor remotely - rooms) and control physical access to thermostats in common areas.
On the lease side of things, we make it clear that if utilities are abused (which normally means heat), we will provide them with one warning prior to assessing a surcharge.
Similarly, in our apartment buildings with central heating plants, if we see windows open during heating season, we provide a warning and, on subsequent offences, assess a heating surcharge to the tenant. After three offences, the surcharge remains for the remainder of the heating season.
@Roy N. I like those ideas a lot thank you!