SF - renting by room

8 Replies

It sounds like renting by the room is a great strategy for single family, but what happens when you have to move out? Correct me if I'm wrong, as I'm new to real estate and the Denver market, but I believe most surrounding areas allow up to 5 unrelated people to live in a single family house. Does that mean you are still able to rent by the room if you move out, or do you have to be living there as your primary for that to be a viable strategy?

Hey @Brian Wiggins , welcome to the forum. Do you own this home? You will have to look at the regs, but what you are proposing does work. Sometimes you have to be living on site in order to make this work.

In Colorado, each city and/or county has its own occupancy limits. Some impose greater restrictions than others; for example, Denver only allows two unrelated persons to reside in a house. When identifying properties, you should speak with an attorney regarding occupancy limits for that particular property, as well as to determine if there are restrictions imposed by an HOA, etc. Some people do choose to continue to rent by the bedroom once they move out; however, there may be limitations on this as well (e.g., based on the loan type).

*NOT LEGAL ADVICE*

@Brian Wiggins as @Drew Fein mentioned there can be some restrictions. In our area Denver and Englewood are the most restrictive on unrelated limits being set at 2 (with Denver somewhat allowing 3, but they're also working to potentially increase this). The surrounding areas vary, but the most common is 4 unrelated, followed by 5 and some that base theirs off of bedrooms sqft/count and some other factors. It's still a very viable strategy around the metro area even after moving out of the property and renting it fully.

I've got multiple clients that have moved on from their 1st, 2nd, 3rd, 4th, etc home. Find a tenant you like, make them the manager, and move out. 

There are no "unrelated tenant" police. However IF the neighbors complain, then you could have an issue. It comes down to screening tenants really well. 

@Brian Wiggins

The current non-related-adults occupancy limit in Denver is 2, which is nuts. However, there is an ordinance making its way through the process that would extend that to 5, but even that has changed and appears to be unfavorable to the house-hacking types. (Check out this thread for more details on the ordinance. Be sure to scroll to the bottom b/c the info I posted up top has changed as the legislation has progressed.)

That said, as @Matt M. said, no city's out there patrolling the streets looking for four unrelated adults living together. Really, it's all about your neighbors and whether or not they hate it. In that way, it's super important to select good tenants who won't throw ragers that attract negative attention.

Also, those interested in the occupancy limits in other cities in Colorado:

Allow 2 unrelated people
Denver, Englewood

Allow 3 unrelated people
Wheat Ridge, Littleton and Commerce City

Allow 4
Aurora, Golden, Northglenn, Thornton, Westminister

Allow 5
Castle Rock, Colorado Springs, Arvada, Lakewood & Parker

@James Carlson thanks for the info and including the occupancy limits! I realize it’s not likely to cause an issue with neighbors or the city on the surface, but I’m curious about potential liability issues. If you have more than the allowed unrelated people and say there’s an accident, some gets hurt, someone sues, major damage or a fire. Would that leave you vulnerable, and if it does how so? Thx

@Brian Wiggins

It seems like nothing is an issue until there's a problem and then anything you've done outside of the rules can be an issues. Do not take my word for it, though. I am not a lawyer -- but @Drew Fein is!