Estimating Rent by Room Rates

[Kevin Reinell]

Thinking about buying a SFH and starting to rent by the room to individuals. Was wondering how you can get an accurate estimate of what you should be able to charge per room?

Is it as simple as checking other local listings in the area for what market rates by room may be? Is there different source/method. Thoughts appreciated.

[James Carlson]

@Kevin Reinell

That's a great question. As with so much in real estate, there is no magic answer. Here are some of my thoughts from working with house hacking clients in Denver and Colorado Springs. 

Facebook groups
My favorite resource are Facebook groups specifically for subletting/roommates in your area. I know Colorado Springs has one group for that, for instance. Denver has two groups like that. It's usually filled with both 1. people renting out their rooms; and 2. people seeking a room to rent. You can get a sense of prices from what people are charging for their rooms and what people are offering when they seek a room. 

Check comps on Facebook marketplace, Roomster.com, Roommate.com, etc.
But just like checking real estate sold comps, you gotta be specific. Listings with crappy photos, poor furnishings and a terrible, too-short description are not really comps for your place. 

(Don't get me on my soapbox about the stupidity of spending hundreds of thousands of dollars on a home only to skip the $100 for HD photographs for your rental.)

The 65% rule?
We had a client who has done two house-hack deals in Colorado Springs down near Fort Carson, and his rule-of-thumb for rent-by-the-room is that you can get 60-65% of what a studio in that area would draw. If you could get $1,000 for a studio on Rentometer.com, then you can get $600-$650 for a room. Haven't tested it myself, but he says it works for him.

Check the deal diaries?
Can you search in the deal diaries section of BP for similar situations in your area? I know I posted a client's diary from Denver. Maybe others are doing the same.

Good luck!