Rental Property Investor · San Diego, CA · Member since 2013 · 79 posts · 25 votes
Greetings BP,
I have been running numbers and looking into renting a single rooms to college students vice entire homes to families. All the numbers I run lead to positive cash flow, but I’d love to hear from some investors that actually have experience in this area. I feel like if it were this easy, everyone would be doing it. Thanks, in advance.
Investor · Las Vegas, NV · Member since 2017 · 321 posts · 524 votes
7y
@Kyle Tipton I live in a 7 bed / 5 bath house hack in Las Vegas. I "house hack" in the sense that I have roommates, but with the number of roommates I have, I believe I fall more in line with the strategy of renting by the room.
My gross monthly is $3,650 with me living in the house. I can add another $50 tomorrow if one of the tenants moves out and can turn the garage room/unit into AirBnB which could add another $500-$750 a month in income. This is against an $1800-$2000 a month expense. Point being - it's super profitable.
But what you don't see on paper is that it is very management intensive. I can't speak specifically on managing a non owner occupied house where you're renting by the room as I have no experience, but I imagine it CAN BE similar to my experience with this house. Remember, you're putting strangers in a house together. You have multiple personalities, multiple ways of living, multiple comfort/discomforts, multiple lifestyles, etc potentially in the same house. Ideally, you figure out how to manage the house well and can screen tenants not only for the ability to pay, but the ability to fit into the eco-system of the community you've built.
I'm looking to expand this strategy further as I think the returns are insanely high and worth the management. I personally think you should live in something like this before trying to do it non owner occupied as you'll learn SO MUCH on what to look for in new tenants, what rules to implement, how you will implement the rules, what boundaries you will set, and how you will proceed with problem tenants.
Furnish the rooms. Rent by the room. Nearly everywhere in America the numbers work ON PAPER. But you will experience so much stress if you do this poorly that there may be some moments where you wonder if the 20%+ ROI is worth it. Do it correctly and it's the easiest cash you'll ever make.
Lewisville, TX · Member since 2015 · 341 posts · 264 votes
7y
@Spencer Cornelia
That's an impressive house hack. I did a basic 4 bedroom one in Oklahoma in college & had great experience & returns & did a couple more single family rentals. I'd like to hear from someone successfully doing this in DFW with extreme commutes, prices & HOA's.
Lender · Farmington, CT · Member since 2015 · 542 posts · 321 votes
7y
@Kyle Tipton hey Kyle, i rent out a property unfurnished to college kids by the room. 0$ in damages ever, and 0 parties to my knowledge. it’s a great way to turn a property into a real cash cow. all my properties are rent by the room. that’s the way to go no question. also, i manage this property and all my other ones from 1500 miles away. if i can do it, you can do it.
i have written a few articles for BP about this and actually just wrote one specifically about college rentals. not sure if they have published it on the site yet.
please reach out to me with questions. i’m always happy to help in any way that i can.
I don't have any experience with student housing, but I have a 7 bedroom house, 3 bath, 2 kitchen and 2 laundry room SFR that I rent by the room (average $600 each room) and gross rent is $4250/month. I initially lived in the house for a year, but haven't lived on-site for the last 9 years. I do not furnish the rooms and the renters are working adults as opposed to students. Like @Spencer Cornelia said, it is super imperative that you rent based on the ability of the people to fit into the ecosystem and not just on ability to pay rent. I too could write a book just on this boarding house. Some of the crazy that has happened in the last decade:
- One of my tenants downloaded child pornography. One day the SWAT team showed up and confiscated every single computer from the house (14 computers total from 7 different renters!). Two of my innocent tenants ended up handcuffed in the back of the squad car and questioned while the search took place before they were released and let back in the house. Took about a week for everyone to get their computers back and in the meantime, no one knew who the culprit was. You can imagine how upset the other 6 tenants were to have their computers confiscated when they did nothing wrong! And on a sidenote, I believe the guilty tenant used the set-up the rental house to get off because how could anyone prove it was really him on that computer when the house was rented the way it was...
- One of my tenants who lived in the house for no more than 4 HOURS had a made a terroristic threat over his gaming system and the police dept. shut down a 4 block radius around my boarding house! This happened while I was mid-flight with my toddler son and the moment the airplane landed and my phone was turned on, my ex husband was frantically calling me. We lived the next town over and the local police had came to our personal home because they couldn't reach me while I was flying.
- Then there was the guy committing identity theft I encountered early on while I was still living there...
Those are just the highlights...it's almost comical the stuff that goes on there. Definitely could be a reality tv show :)
One thing I found most effective is I let all calls go to voicemail and no texting until I've had an actual phone conversation with the potential tenant. Over time you vet tenants better. Now I can tell from the voicemail whether or not the tenant will fit into the ecosystem. It is very management intensive, especially at the beginning, but it is lucrative and I'm working on buying another boarding house as we speak.
Rental Property Investor · Oahu, HI · Member since 2017 · 12 posts · 11 votes
7y
@Kyle Tipton
We’ve been renting rooms in Honolulu for the past 16 years. We have 26 tenants, young professionals and college students, in several urban core multi - family units.
Mo’ betta team. We’re very active self mangers. She manages tenants and contracts. He does remodels.
Mo’ betta cash flow. By renting rooms it’s cheaper for tenants, but better cash flow for us.
Mo’ betta risk management. We receive 3 rent payments instead of 1 big check. We’ve never had 3 late payments; rarely do we have any late rents.
Mo’ betta maintenance. We’ve learned to ‘freshen in place’. When one tenant moves out we secure permission from remaining tenants to paint, put in new flooring, or even partially remodel kitchens or baths. Remaining tenants get a new unit; the newly arriving tenants gets a small rent increase...and we rarely take an entire unit out of service.
Mo’ betta guacamole. We have 3 avocado trees and Ms. Island Mommy makes great guacamole dip for all the kids. Some tenants stay more then 5 years and those that leave always wanna come back.
We’ve been renting rooms in Honolulu for the past 16 years. We have 26 tenants, young professionals and college students, in several urban core multi - family units.
Mo’ betta team. We’re very active self mangers. She manages tenants and contracts. He does remodels.
Mo’ betta cash flow. By renting rooms it’s cheaper for tenants, but better cash flow for us.
Mo’ betta risk management. We receive 3 rent payments instead of 1 big check. We’ve never had 3 late payments; rarely do we have any late rents.
Mo’ betta maintenance. We’ve learned to ‘freshen in place’. When one tenant moves out we secure permission from remaining tenants to paint, put in new flooring, or even partially remodel kitchens or baths. Remaining tenants get a new unit; the newly arriving tenants gets a small rent increase...and we rarely take an entire unit out of service.
Mo’ betta guacamole. We have 3 avocado trees and Ms. Island Mommy makes great guacamole dip for all the kids. Some tenants stay more then 5 years and those that leave always wanna come back.
Rental Property Investor · San Diego, CA · Member since 2013 · 79 posts · 25 votes
7y
@Ola Dantis
I was definitely wanting to go with the parent Co-sign route. Have you had any issues with parents not wanting to pay when their child does something or missing rent?
Rental Property Investor · San Diego, CA · Member since 2013 · 79 posts · 25 votes
7y
@JJ P.
Great info! Sorry about your floors. Ouch!
And that makes a lot of sense. Majority of the tenants will still be teenagers and very reliant on someone else to fix their problems. I will definitely keep that in mind moving forward.
Rental Property Investor · San Diego, CA · Member since 2013 · 79 posts · 25 votes
7y
@Alexander Ball solid advice. I couldn’t agree more about “training” them from the get go. I think that’ll be the revolving door that you must keep greased properly.
Rental Property Investor · San Diego, CA · Member since 2013 · 79 posts · 25 votes
7y
@Ryan Deasy
Thanks for the great info and reaching out. I’ll look for your articles then get back to you with questions. I’m sure I’ll have them! I’ll read before I ask incase you’ve already answered them there. Thanks, again!
I was definitely wanting to go with the parent Co-sign route. Have you had any issues with parents not wanting to pay when their child does something or missing rent?
Till date, we haven't had any issues with our tenants who parents co-signing having any rent payment problems.
Think about if the kids are out of cash they will just call their parents to send them money anyway, so I think that's probably why we haven't seen that issue yet.
New to Real Estate · Bay Area, CA · Member since 2019 · 6 posts · 3 votes
6y
@JJ P - I would love to connect with you to learn more about you handle your daughter's college condo. We are about to close on a 2BR/2BA condo where our daughter will be staying for college and I am trying to figure out how to manage the lease.
Student housing is very lucrative, and often, the parents are paying the bills. So the rent isn't the biggest problem when the parents cosign or pay. I have a couple of experiences, we rent a room to offset costs in my daughter's college condo. They want to rent by the semester or school year, so the turnover is high and we've had some down time in the summer months. The income is high and it works for us.
But, students are usually young, often on their own for the first time, and definitely not likely to know how to fix anything or be the least bit inclined to do so if they know. Consider them at the "beginner level" of tenants. They don't know much. I had to help a student move the fridge cord to a different outlet to see if it would run using a different outlet. She thought we needed a new fridge. Turns out she tripped the GFI and it just needed to be turned back on. She gouged the hardwood floors moving the fridge to get to the plug. sigh...
Your student housing will run smoother if
1) You live there or have a designated person as a liaison with you.
2) You live nearby to handle the simple repairs and input needed.
3) Your lease covers the summer months