Investor · Tucson, AZ · Member since 2019 · 20 posts · 3 votes
I am currently looking to begin my investment journey here in the amazing state of Arizona! Specifically I would like to invest in the Tucson or Sierra Vista markets with a single family home aimed towards renting by the room. SO here are my questions:
How would I go about learning more about the laws concerning renting in these areas?
How would you all go about ascertaining whether or not tenants would consider renting by room?
Any recommendations on must have rehabs / renovations to make prior to putting the rooms on the market?
@Stephen Daniels I would recommend calling a REI attorney most will have a some fee for the appointment but a good one is worth their weight in gold.
Listen to the most recent bigger pockets podcast. The investor they interviewed foucs on renting by room in Seattle. There's so many gold nuggets in there
@Stephen Daniels I would recommend calling a REI attorney most will have a some fee for the appointment but a good one is worth their weight in gold.
Listen to the most recent bigger pockets podcast. The investor they interviewed foucs on renting by room in Seattle. There's so many gold nuggets in there
Not as an investor but a former U of A student, there is a demand for renting by rooms especially if you are below campus rates and the big student apartment complex rates. Furnished and with WI-Fi included would probably be your best bet and walking/cycling distance to campus. However, COVID will impact that market very strongly in this next few years.
Check your local city codes and zoning ordinances! Municipalities can limit the number of unrelated people who live in a single property, and there could be other restrictions that will affect your rentals.
Also: fully agreed on the college students! That is probably your best market for renting by the room, so stick with properties close to the campuses.
30 years ago this was one of the strategies I did for many years. It allowed me to pay down several seller financed mortgages so I could eventually qualify & refi. At the time the majority were engineers on local jobs & many had a great living allowance/stipend so life was good & the fridge was always full.
It paid off in spades & I never had to evict anyone, except for one sharing a room. His wife drove 200 miles & showed up unexpectedly @ 6am, so he had a lot of explaining to do. :)
When back in Australia in 2012 I met a lot of young kids renting rooms in upscale homes, because they simply could not afford to buy their own housing or the inflated rents of apartments or condos.
@Saxxon Rybski thanks for the Tip about the episode! I will be listening to that one very soon. Also I will be looking up a local lawyer who handles REI. 
@Jose Bermudez I could not agree with you more concerning the coronavirus impact on the student population. I most recently talked to an academic adviser at the University, and he relayed that a recent survey they sent out to future students revealed that they are expecting around a 45% drop for on campus students this year. For this reason I am cautious about purchasing investment properties until I am able to see what the market looks like in the spring.
@Pat L. I would also like to take it vantage of this strategy I think it’s a good one that could be pretty lucrative in the right area.
It’s actually funny you mention seller financing because that is the message I am trying to pursue at the moment. How easy or difficult was it to find sellers who were willing to do seller financing in your opinion?
@Jose Bermudez I could not agree with you more concerning the coronavirus impact on the student population. I most recently talked to an academic adviser at the University, and he relayed that a recent survey they sent out to future students revealed that they are expecting around a 45% drop for on campus students this year. For this reason I am cautious about purchasing investment properties until I am able to see what the market looks like in the spring.
Yeah, its going to be a drop for a while since the traditional idea of a college town has been turned upside down with COVID. It will probably take a year or 2 for stabilization and go back to growth. However, Tucson is a renter city so there will be some demand but not from the traditional college group.
Very true, I was also considering potentially moving out closer to the new Amazon warehouse where there is new construction. Hopefully locate a street or two just outside of the new construction with existing houses that could use a little bit of rehab. What are your thoughts on the strategy?
Renting by room also work very well near hospitals. Traveling doctors and nurses often need temporary housing near the hospital. hospitals are so busy now with covid it might be a good idea to look around large hospitals at this time then shif to student housing when the schools recover.
@Stephen Daniels google the Arizona Landlord-Tenant Act and read through it. You don’t have to memorize it, but you should be very familiar with its provisions.
I haven’t followed UA’s moves, but a number of universities are making their dorms single-occupancy only, which is driving some demand to off-campus housing (to the extent that students are deciding to move back to/near campus at all this semester).
@Pat L. I’ve heard tons of success stories around renting by the room. I know this is a great way to stretch the cash flow of the investment but there is also a lot more wear and tear with the more tenants you have.
Would you happen to have any tricks of the trade for making the property more tenant proof?
@Pat L. I’ve heard tons of success stories around renting by the room. I know this is a great way to stretch the cash flow of the investment but there is also a lot more wear and tear with the more tenants you have.
Would you happen to have any tricks of the trade for making the property more tenant proof?
I was buying anything in rough shape & with interest rates 18-19% everyone was jumping on seller financing. I didn't;t care too much about the roomers as they often helped with much of the rehab. Once I had it paid down I would either sell or refi to buy another. Some of the guys renting rooms would often buy in with others we picked up. It was a great 10-12years while it lasted.
I had one guy drop his asking price 20% to get my offer with a 15% rate. I rehabbed it in 3 months & a year later it appraised much higher. No pre-payment penalty so I did well. I had all the rooms rented to female engineers & had built an apt in the basement for myself to come & go as it already had a shower & toilet. I did that with all of them so I could control the transient rental situations. I still have that home & the one next door listed last year for $599k, sold in 8 days for $675k. They tore it down & rebuilt a home on the foundation & sold it for around $1.4 million.
@Stephen Daniels, I am in Central Texas and a newbie. Reading and studying and excited about REI and everything that goes with it.
I heard a pod cast with Todd Baldwin, BP podcast #392 where he discusses buying a new built home and renting by the room.
Like you, I have the same questions about laws and regulations on renting by the rooms.
Who could teach me how to execute the strategy in Texas.
I know of one strategy that is being done in Austin Texas. "Sober Homes," which rent by the room to people in a drug and, or alcohol recovery program and working a 12 step program. Renters have responsibilities to the house such as:
* performing chores on common areas;
* house meetings;
* 12 step program meetings;
* drug & alcohol testing;
* behavior expectations.
Todd Baldwin talks about a similar strategy with people not in recovery, but with young professionals. He has an all mens house and an all women's house. Check it out.
I still have the same questions and concerns. Any Intel on this is greatly appreciated.
@John Zavala This is such a golden idea! Thanks so much for sharing this perspective, I think this could actually work in my area as we are predominantly high income or low income earners here.
I have recently listened to this episode in the BP Podcast and I could agree more, its a very exciting and hopefully lucrative strategy I can't wait to get my hands on!
Have you made any progress yet in regards to making an offer on a place you have your eye on?
@Pat L. Wow! This is pretty incredible success you've had, I hope I can replicate this in the very near future!
Also, interesting perspective on offering such high interest rates, did you ever have any troubles keeping up with the payments due to lack of tenants?
@Stephen Daniels I haven't stepped up the courage yet. I'm still researching how to acquire a property with no money or little money down (approx 10k). I have the know how to manage it, but dont have the credit score to get a loan.
I am in South Scottsdale, just north of ASU. I do not rent by the room, that being said, when I look on Zillow to see what my competition is doing for remodels, I see many properties renting by the room, and you can get some great ideas of what they are doing to attract students.
@Pat L. Wow! This is pretty incredible success you've had, I hope I can replicate this in the very near future!
Also, interesting perspective on offering such high interest rates, did you ever have any troubles keeping up with the payments due to lack of tenants?
Never had a lack of tenants. In fact some would rent unfinished space in the basement until they could afford to move out.
@John Zavala Hey man I think the first step is a sharp plan so you are on the way. Just continue advancing that education and the credit score will come. I’m looking into seller / owner financing right now as which often can lead to no money down and credit score being irrelevant. Keep looking for those deals and like Brandon says ask how you can do it!
@Debbie C. Thanks for the tips! It’s funny you say that, my wife and I were on Craigslist earlier today scoping out competition pricing and got the same idea.
Looking at what’s working for others right now is soooo much easier than taking a stab at it all on your own. Btw check out Zumper.com if you are looking for rent by the room ideas.