Investor · Sammamish, WA · Member since 2015 · 11 posts · 2 votes
What are the do's/don't of renting individual rooms of a SFH as opposed to the whole house to a single family?
What do I need to do to avoid any liability/head aches in case of tenant vs tenant conflicts?
How should I structure lease for such a house sharing set-up? Are there some standard leases for room rentals?
I see two options:
1. I take the sole responsibility of finding individual tenants for each room, and hope that the tenants will coexist peacefully and each tenant takes responsibility of paying his/her share of rent on time and fixing damages he/she causes. 2. I create a structure where the tenants are incentivized to find good apartment mates (obviously approved by me) and behave. The incentive I plan to put in place is that the rent will be $2200 per tenant if the house has only one tenant, $1200/tenant is house has 2 tenants, $900/tenant if the house has 3 tenants. It will be a win-win for all.
Any thoughts on two? Has anybody tried something like this?
Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
6y
@Karen Margrave We are currently renting our Duplex on OSU campuses, room by room. 7 rooms in total. One important thing here is finding like minded tenants. For example I have only college aged people living here, it'd be pretty weird if I had 20 year old girls and a 40 year old male.
An important rule is establishing quiet hours, this helps everyone out in the end.
Some of my tenants have complained about dishes and what not, but I encourage them to address that with their roomate, and it generally works out.
New to Real Estate · Sacramento, CA · Member since 2015 · 104 posts · 33 votes
6y
Our attorney told us that renting over five rooms (under some circumstances) qualifies as a boarding house. Might be something to watch out for if your house is really big.
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
6y
Normally, we try to avoid such arrangements, even in campus housing when it's not uncommon. It's just you never know what kind of drama will pop up with people who don't know each other (there's enough with those who do). Make sure to screen each person individually and Carrie's point about the boarding house is a good thing to look into.
Real Estate Agent · Naples, FL · Member since 2016 · 298 posts · 268 votes
6y
In my experience this is a huge nightmare. Try to avoid it even with student housing where it's a bit more common. Also some code municipalities have rules and regulations against this so check with yours first. You are basically creating a real live version of the mtvs the real world
Lender · Farmington, CT · Member since 2015 · 542 posts · 321 votes
6y
@Karan Rekhi this is all i do. i only rent by the room. anyone that tells you it’s not worth doing is wrong.
be careful about town ordinances. the town i am in only allows 4 unrelated people per unit.
as far as finding people, i do all of that although your incentive idea isn’t terrible. i have all multifamily and i basically position tenants together that will fit well. also, sometimes females will be uncomfortable living with males. for the most part, if you can get like minded people together you will be fine.
yes, depending on your class of people, you will get some drama. do your homework on your tenants and vet them well and always talk to the previous landlord.
happy to help you here. just let me know why other questions you have. you will have growing pains with this strategy but once you get the hang of it, it will be very valuable.
Investor · Sammamish, WA · Member since 2015 · 11 posts · 2 votes
6y
@Ryan Deasy. Thanks a lot. I do have a few questions for you.
I want to test this strategy on 3 bed room SFH and have a maximum of 3 occupants one in each room. I am in WA. +1 on vetting the tenants carefully to avoid drama. I also think if the existing occupants find their own room mates then the odds of dramas are lesser. Hence the incentive scheme.
What I am worried about is, if there is conflict between occupants and say one occupants goes rouge, stops paying his/her share of rent or utility bill, does damages and blames others etc. how will eviction work out in such a case? One strategy to mitigate risk could be to do month to month leases. Not a huge fan because it will increase odds of turn over and vacancy for me.
Do you have a separate lease per occupant?
How do you nominate a specific room to a specific occupant (a room doesn’t have address)?
Do you put some special clause in the lease to protect yourself in case “drama” arises?
Can you please share the lease you use for sharing setup? I will create my own lease but just want to learn from yours.
Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes
6y
@Karen Margrave We are currently renting our Duplex on OSU campuses, room by room. 7 rooms in total. One important thing here is finding like minded tenants. For example I have only college aged people living here, it'd be pretty weird if I had 20 year old girls and a 40 year old male.
An important rule is establishing quiet hours, this helps everyone out in the end.
Some of my tenants have complained about dishes and what not, but I encourage them to address that with their roomate, and it generally works out.