Renting by the Room in New Hampshire
Rental Property Investor · Worcester MA · Member since 2019 · 46 posts · 18 votes
Renting by the Room in New Hampshire
Most Popular Reply
Rental Property Investor · Claremont, CA · Member since 2015 · 292 posts · 374 votes
5y@Alexander M Stanton
Some great points you bring up, I think you are in the right path of questioning here to make a smart decision. I don't know your area so I can't comment on that specifically, but I've been managing student housing room rentals since 2012 so I'll be happy to share my experiences that may pertain to your concerns.
Occupancy concerns are definitely valid, however I have not come across any issues nor do I know anyone else running the same setup who has had issues with the city. My suggestion there regardless of being within county guidelines or not is to keep your neighbors happy and don't give the city ANY excuse to look at your property. Keep the parking under control, keep the yard clean and well manicured, keep noise levels down at night and get all of your construction/permit work and inspections done before tenants move in. I also think the class of the neighborhood makes a big difference - C class areas generally mind their own business. B and A class areas will be all up in your cool aid so if it's a nicer area, you have to be extra careful not to draw attention or the ire of your neighbors. Even if your rental is legit, they can still complain and have your business license revoked if your rental become a nuisance. I give my personal cell number to all neighbors and have them text me immediately if there are concerns. It's annoying, but better to deal with annoyances than a house you can't rent out anymore.
Also just a comment on the utilities - I prefer to include everything in the rental price. I manage about 30 tenants, so collecting rent plus all the utilities would be such a pain, it's not even worth the time. I've always included furniture, house supplies, house cleaning, etc. and can charge a premium to cover all of it. Just a basic example, rental comps for one of my rentals would be $2k - $2.2k. I currently collect $4,900 on that house and pay an extra $800 in expenses, so I collect more than double but pay about 33% of the increase in expenses which means I still net out much more.
I hope this helps and I wish you the best of luck with your student housing adventure!
14 Replies
- Investor · Cincinnati, OH · Member since 2018 · 304 posts · 185 votes5y
@Alexander M Stanton what are your concerns?
- Rental Property Investor · Worcester MA · Member since 2019 · 46 posts · 18 votes5y
Originally posted by @Andrew Powers:
@Alexander M Stanton what are your concerns?
That would be a good detail for me to highlight! HA
The town bylaws state 5+ occupancy constitutes a rooming house, and I don't want the town to slap me with a bunch of fines or otherwise try to stop me from cashflowing!
- Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes5y
@Alexander M Stanton renting by the room can be an effective strategy and can create a lot of cash flow. Some things to look out for would be utility usage, and common room use. Who will stock trash bags, soap, etc.
I used to rent by the room on OSU campus, I was making alot of cash flow, but I realized, after paying utilities, and common room stock it was comparable to renting out the entire place, and way less of a management headache.
- Investor · Cincinnati, OH · Member since 2018 · 304 posts · 185 votes5y
@Alexander M Stanton in my area, IIRC, there can be a maximum of 4 different last names living in a house. So if there's something similar in your area, maybe you can rent the 5 rooms where 2 of them are rented to a pair of brothers or sisters... please check local laws though! Seems like laws around you have a occupancy # limit so that may not work.
Either way that seems like a cramped house, 5 people sharing 2 baths and no living room. Maybe the house layout is alright and I understand it's a younger crowd. Like @Steven Foster Wilson, you will need to consider how utilities, common spaces, common space items are shared. For my house hack rooming situation, I have a roommate agreement along with the lease which gets into those details... I.e. need to keep common areas clean, utilities and common-use items are split evenly among roommates no matter how much/little each person uses, etc. They sign this upfront. It's not perfect but it has worked so far.
- Rental Property Investor · Worcester MA · Member since 2019 · 46 posts · 18 votes5y
Hey guys, I really appreciate the feedback! I've already gotten the full numbers on utilities etc. and I think at the price I'm paying, with very conservative reserves, I'm gonna be able to get around 25% Cash-on-Cash with this strategy so I think I'm going to stick with it for now and if I have to reduce to 4 tenants I'll still make decent cashflow.
- Rental Property Investor · Columbus, OH · Member since 2017 · 3k+ posts · 3k+ votes5y
Originally posted by @Alexander M Stanton:
Hey guys, I really appreciate the feedback! I've already gotten the full numbers on utilities etc. and I think at the price I'm paying, with very conservative reserves, I'm gonna be able to get around 25% Cash-on-Cash with this strategy so I think I'm going to stick with it for now and if I have to reduce to 4 tenants I'll still make decent cashflow.
https://www.biggerpockets.com/... Listen to that podcast if you haven't already! Todd speaks to this and explains how he is able to really capture the true value without sacrificing quality of life.
- 5yGreg PowersPro MemberReal Estate Agent · Manchester, NH · Member since 2013 · 120 posts · 159 votes
Here is a link to the New Hampshire statutes regarding rooming houses:
http://www.gencourt.state.nh.us/rsa/html/lv/540-B/540-B-mrg.htm
If you need a referral to a good landlord/tenant attorney in NH who can answer more specific questions, let me know and I can pass along a few names.
- Rental Property Investor · Claremont, CA · Member since 2015 · 292 posts · 374 votes5y
@Alexander M Stanton
Some great points you bring up, I think you are in the right path of questioning here to make a smart decision. I don't know your area so I can't comment on that specifically, but I've been managing student housing room rentals since 2012 so I'll be happy to share my experiences that may pertain to your concerns.
Occupancy concerns are definitely valid, however I have not come across any issues nor do I know anyone else running the same setup who has had issues with the city. My suggestion there regardless of being within county guidelines or not is to keep your neighbors happy and don't give the city ANY excuse to look at your property. Keep the parking under control, keep the yard clean and well manicured, keep noise levels down at night and get all of your construction/permit work and inspections done before tenants move in. I also think the class of the neighborhood makes a big difference - C class areas generally mind their own business. B and A class areas will be all up in your cool aid so if it's a nicer area, you have to be extra careful not to draw attention or the ire of your neighbors. Even if your rental is legit, they can still complain and have your business license revoked if your rental become a nuisance. I give my personal cell number to all neighbors and have them text me immediately if there are concerns. It's annoying, but better to deal with annoyances than a house you can't rent out anymore.
Also just a comment on the utilities - I prefer to include everything in the rental price. I manage about 30 tenants, so collecting rent plus all the utilities would be such a pain, it's not even worth the time. I've always included furniture, house supplies, house cleaning, etc. and can charge a premium to cover all of it. Just a basic example, rental comps for one of my rentals would be $2k - $2.2k. I currently collect $4,900 on that house and pay an extra $800 in expenses, so I collect more than double but pay about 33% of the increase in expenses which means I still net out much more.
I hope this helps and I wish you the best of luck with your student housing adventure!
- Rental Property Investor · Worcester MA · Member since 2019 · 46 posts · 18 votes5y
Originally posted by @P.J. Bremner:
@Alexander M Stanton
Some great points you bring up, I think you are in the right path of questioning here to make a smart decision. I don't know your area so I can't comment on that specifically, but I've been managing student housing room rentals since 2012 so I'll be happy to share my experiences that may pertain to your concerns.
Occupancy concerns are definitely valid, however I have not come across any issues nor do I know anyone else running the same setup who has had issues with the city. My suggestion there regardless of being within county guidelines or not is to keep your neighbors happy and don't give the city ANY excuse to look at your property. Keep the parking under control, keep the yard clean and well manicured, keep noise levels down at night and get all of your construction/permit work and inspections done before tenants move in. I also think the class of the neighborhood makes a big difference - C class areas generally mind their own business. B and A class areas will be all up in your cool aid so if it's a nicer area, you have to be extra careful not to draw attention or the ire of your neighbors. Even if your rental is legit, they can still complain and have your business license revoked if your rental become a nuisance. I give my personal cell number to all neighbors and have them text me immediately if there are concerns. It's annoying, but better to deal with annoyances than a house you can't rent out anymore.
Also just a comment on the utilities - I prefer to include everything in the rental price. I manage about 30 tenants, so collecting rent plus all the utilities would be such a pain, it's not even worth the time. I've always included furniture, house supplies, house cleaning, etc. and can charge a premium to cover all of it. Just a basic example, rental comps for one of my rentals would be $2k - $2.2k. I currently collect $4,900 on that house and pay an extra $800 in expenses, so I collect more than double but pay about 33% of the increase in expenses which means I still net out much more.
I hope this helps and I wish you the best of luck with your student housing adventure!
P.J. - really love this feedback my numbers look very similar. My worst-case on the deal is around $1600-1800/mo in rents, and the room rentals will get this deal to $500-4750. The current owner also converted the living room to a bedroom so it really can't be too much of a party house.
- Rental Property Investor · Worcester MA · Member since 2019 · 46 posts · 18 votes5y
Originally posted by @Steven Foster Wilson:
Originally posted by @Alexander M Stanton:
Hey guys, I really appreciate the feedback! I've already gotten the full numbers on utilities etc. and I think at the price I'm paying, with very conservative reserves, I'm gonna be able to get around 25% Cash-on-Cash with this strategy so I think I'm going to stick with it for now and if I have to reduce to 4 tenants I'll still make decent cashflow.
https://www.biggerpockets.com/... Listen to that podcast if you haven't already! Todd speaks to this and explains how he is able to really capture the true value without sacrificing quality of life.
I'll definitely listen to this one, thanks Steve!
- Rental Property Investor · Worcester MA · Member since 2019 · 46 posts · 18 votes5y
Originally posted by @Greg Powers:
Here is a link to the New Hampshire statutes regarding rooming houses:
http://www.gencourt.state.nh.u... you need a referral to a good landlord/tenant attorney in NH who can answer more specific questions, let me know and I can pass along a few names.
Hey Greg, that actually would be super helpful. I am currently operating without an attorney in NH and it would be great to get a referral.
- 5yLien VuongBusiness MemberReal Estate Agent · Boston, MA · Member since 2018 · 2k+ posts · 1k+ votes
High occupancy number like that would have some liability with dwelling insurance, risk of fires, as well as occupancy code from the city with the excess amount of guests in the home. You're 100% correct about the illegal rooming house situation. It cash flows because he squeezed everything out of that property and beared the risk, you just have to ask yourself if you're willing to do the same.
The Elle Group5153 Reviews - Member since 2020 · 20 posts · 0 votes5y
I have an 8 bedroom house, and I've had it for 12 years.
I did a similar thing, where I made the living room into an extra bedroom. So 9 bedrooms then.
It was quite a zoo, and always always something to deal with.
in the end, about 6 years ago now. A Venezuelan women who said she was a lawyer lived here, got pi8sed off for some reason or other and moved out. But before she went she called the city and said 'too many people live in this house'
So the property use inspector came over (I took the extra room out). He decided my basement suite is unauthorised, as are about 98 percent in this city.. but if I wanted to keep it I had to get it authorized... this was a giant pain it the ***
Improve this and that... some of which I'm glad I did like hardwired interconnected smoke and CO2 alarms, couple of fire egress windows..etc..
But someone way back, probably in the 80's had rigged the electricity and bypassed the meter, and so my electric bill was half of what it should have been for years.
The electrical inspector saw this and made me put a utility pole outside with meter on it. Ah well, I guess that was fair enough.
Nowadays I live on site in the house, and it's way easier! Before, yeeah I had the cash flow, but I needed it for beer and ulcer treatment due to the stress.
- Realtor · Concord, NH · Member since 2017 · 48 posts · 30 votes5y
@Alexander M Stanton Congrats!
The return on rooming houses and college tenants are definitely higher than average and with that comes risk! I own a 17 unit rooming house, so I do understand! #1 Make sure you have the correct occupancy permit for your town. Insurance is a #2 for me, mine is $6600 a year and well worth the piece of mind. Good luck!
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