Please: Thoughts on Ambitious Rental Strategy from Newbie

[Tam Tamm]

Hi everyone. New here.

In case it's relevant here's a little backstory. I own a house in my home state. I landed a new job in Georgia, and I rent a room here while still carrying my mortgage back home. Of course it makes sense to rent it out, which i plan to do after i make some repairs.

I never thought I'd want to live with roommates, but since I've been out here living with two of them, I see it as a smart business deal. Having roommates live in my home isn't something I ever desired to do, but I bet the owner here doesn't have to worry about her mortgage or working her tail off to buy extra things she wants/needs.

So here's my idea.

After I rent out my original home, I'm thinking about buying a 3 BR townhouse/condo or SF here in GA and renting out two of the rooms. I'd keep one BR for myself to occupy.

Having all mortgages paid by others (if things go well), I'd save up to finance another residence and do the same thing. Get two roomies and keep a room for myself.

Then maybe I could buy (or even just rent) a place of my own. I'd still have access to both of the previous properties (with my own bedroom in each), which would allow me to stop in when I want, keep an eye on things and have repairs/modifications done to the home without having to work around their schedules.

Pros:

1. Roommates would feel like they are only living with one other roomie--not two, because I wouldn't be around that much.

2. Roomies would know that I could show up at anytime---maybe this would make a difference with how they treat the place, maybe not.

3. More rental income than if the home were rented to one person or one family.

4. No paying a property manager.

Cons:

1. Buying furniture for common areas (couch, lamps, television, dining table) for more than one household.

2. Possibility of roommates not getting along since I'd be choosing.

3. Collecting rent from 4+ different people.

So that's how I see things working from my limited vantage point. Do you think that this type model could work? I don't know much about REI yet but that's an idea I have. Thoughts and advice please from the BP vets. Thanks.

*P.S--keep in mind that im not too hip with the abbreviations and terms, yet.

[Peter M.]

Well, I think short term it can be a decent strategy at least until you get a footing on where you want to live in the new area as long as you can deal with having roommates. But keeping rooms in each place is not only time consuming (you are still responsible for the area while you are gone like cleaning) but more importantly hurts your bottom line. Leaving a room un-rented is throwing money down the toilet.

You only need one place to live so pick one and rent the other out completely. Since you are moving out of state, hire a property management company to do the "show up anytime" thing and pick a good tenant to start out since you have no experience screening people.

Also, think about buying a duplex or 4 plex if you can find them in the area. That way you have your own separate space but other people still pay the mortgage. I think your head is the the right place but practically that strategy will not work for very long. Hope that helps. Good luck