Room rental to more than one person?

Room rental to more than one person?

Los Angeles, CA · Member since 2015 · 70 posts · 14 votes

House hackers: Have you noticed if many people in your area are attempting to rent rooms to more than one person (not a couple)?  I've noticed a particular demographic that is active in this area but not many others (outside of intensely competitive areas like Manhattan or parts of San Francisco).  Just talking about middle class cities with moderate land cost and strong rental demand.  

It can be very lucrative as they generally get about 50% more per room for 2 but it obviously requires active and careful management.  3 to a room is usually about 75% more and 4 to a room (very unusual) gets about double.  It only seems to work if the renters are out almost all the time because of multiple jobs and school.  And generally they are eating out as well.  Obviously this would require non-smoking, quiet and amiable tenants.  Almost all I'm seeing are only renting to women. 

This provides much lower cost housing than average to someone who just needs it for sleeping. 

You can ascertain how often this is done by doing a search by filtering by price.  Put in a minimum price filter as well to screen out the nightly renters.  That's usually enough.  Its usually a pretty narrow price range that's about 60 - 70% of the norm for a room of that size/location.  Then you'll find vaguely worded ads that often specify a certain nationality.  Renting to your own culture surely its advantageous when problems arise.  You certainly don't want any language or cultural barriers if possible. 

Now of course you're battling zoning constraints.  The way to minimize problems is to make sure your renters exit the house using all possible doors in as quiet a way as possible.  Absolutely no talking entering or exiting obviously.  If only you could get them to all dress the same!!!  That would perplex the noisy, gossipy neighbours!  

Done right the revenue can be astounding, especially if all possible rooms (LR/DR/laundry/rec room/library/etc) are rented.  No window?  Make one.   Mortgages could be paid off in 5 years or less at these interest rates. 

Now think of what you could sell that property for, say originally bought at $250,000, that is now pulling in $50,000 + a year?  

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  • Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    4y

    I have seen these in SD, usually in very nice areas where otherwise these people would not want or could not afford to live. My wife's friend lived in a (I think) three BR home in a very affluent costal beach town with 9 women (three to a room). She is a nurse and made good money, and could probably have afforded a place but it would have been a large portion of her disposable income, and may have been off the main area she wanted to be in. Instead she stayed there for ~1/5 the cost of her own place. That said you are always 100% at risk of being shut down at a moment's notice. 

    As far as your point of the sales price. The revenue stream will generate $0 of increase salability. Market conditions dictate what a home sells for, and a off radar boarding house is a risk that I would not pay more for. It may translate into a faster sale or a top sale price in the current market, but I would not pay a premium to take on the risk of being shut down tomorrow. The reward for that risk is being able to collect a lot of rent in a short period of time, and then if it was shut down being back to the normal market rate rental.

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