Is a room in house a good investment?

4 Replies

I have the opportunity to buy 3 room in houses (33 total units) that are in a good town and in great shape. The properties are totally renovated and have about a 12 cap. I am a seasoned investor but I have 0 experience with room in houses. I am worried about constant turnover or high vacancy rates. If anyone can add some insight, I would deeply appreciate it! Thank you

@Luis Leiva the very first thing I would do is check with Zoning and verify that it is legal to operate. Do not move forward without asking the City first.

I have friends that own them and they are a high profit and high management business. You'll likely have to deal with drama amongst tenants, monitoring the utility bills, lots of turnover, and the occasional police phone call. Is managing people one of your strengths? Because you'll likely be doing a lot of that.

Check out this thread as it may be helpful: Boarding Houses

Im not sure what they are called in Cali, but they are boarder homes, almost like a hostile but longer term occupants. every tenant gets a furnished room and they share common kitchens & baths.

Originally posted by @Will Gaston :

@Luis Leiva the very first thing I would do is check with Zoning and verify that it is legal to operate. Do not move forward without asking the City first.

I have friends that own them and they are a high profit and high management business. You'll likely have to deal with drama amongst tenants, monitoring the utility bills, lots of turnover, and the occasional police phone call. Is managing people one of your strengths? Because you'll likely be doing a lot of that.

Check out this thread as it may be helpful: Boarding Houses

 Will, I have staff that manages our real estate investments so management is cool but the turnover and vacancy is what scares me because this would be a monster mortgage payment. Thank you for the tread, I will read up!