Rent by Room Cost in Denver
Member since 2020 · 10 posts · 6 votes
Rent by Room Cost in Denver
Most Popular Reply
Greg WeikBusiness Member
Property Manager · Denver, CO · Member since 2020 · 263 posts · 327 votesHey @Anastasia Bourdon, I own a property management company and we just started managing house hack properties. One of my employees also "hacks" his own house and has for a couple of years now. It's an interesting world, to say the least.
On price: It sounds like you're pretty close to market value for how you've described the home. I highly recommend you do not split out utilities, internet, etc. The logistical application of this can be a legal nightmare for you if you ever have to evict. Accepting rent with a known violation (like non-payment of utilities) could waive your right to enforce. I've been at this for a long time (and went to law school) and I can tell you with certainty that your best bet is to have an inclusive rent price and leave it at that.
On tenants: The biggest differences I've noticed on the HH properties is that the tenants are flaky and usually less-qualified. We've had multiple tenants say they are moving forward on a property only to disappear into thin air. Believe it or not, this is pretty uncommon in our world with about 500 doors under management. Prospective tenants for HH properties seem more inclined to post selfies on FB groups and saying "contact me if you have a room" vs. seeking out a good room for rent. So the dynamic is completely switched from what we are accustomed to. I think this is fine for an owner-occupied situation where you can scour FB groups to find a good fit for your property (it's difficult for us due to scalability with this approach.)
I would highly recommend doing a thorough background and credit check on anyone you are leasing to. Make sure you have a good lease in place. I also suggest individual digital door locks for each bedroom (where you, as the landlord, retains the master key) for added security. Make sure you have solid "house rules" that everyone signs off on.
Real Estate Solutions4.4387 Reviews
25 Replies
- Rental Property Investor · Hawthorne, CA · Member since 2018 · 655 posts · 900 votes5y
I don't have any advice for your local market but a couple of thoughts come to my mind when I read your post:
1. House hacking is a business strategy and mixing business with friends is similar to mixing business with family. Unless you are willing to lose those friends you may want to rethink renting to friends. If they are balking about price now,,,that means they might be comfortable being late with the rent or even missing a month completely. Just something to think about. In business emotional ties (friends/family) usually don't work well.
2. Also research how much rent for a two bedroom 1 bathroom home in your area goes for. If it is more than $1550 a month then you are losing money that way also.
Good luck! I hope someone from your area can give you accurate prices for single rooms in your area.
- Member since 2020 · 10 posts · 6 votes5y
- Member since 2020 · 10 posts · 6 votes5y
@Damaso Bautista
Great advice, thank you! You're right about mixing friends and business. 2bd/1bath houses in the neighborhood go for $1800/month. - Rental Property Investor · Hawthorne, CA · Member since 2018 · 655 posts · 900 votes5y
I understand the reality of real life. I understand if you feel more comfortable and safer with your friends renting from you.
So those are the things you are going to have to weigh when doing this house hack.
Remember there is no right or wrong answer and you are the only one who is living in this situation.
I hope everything works out for you.
- Realtor · Denver, CO · Member since 2013 · 2k+ posts · 1k+ votes5y
Do you have great photos? I'd post it online at the higher price. If you don't get any hits, then lower it. CL and FB marketplace are free. You'll get a true sense of the market really quick.
However, I'd just ask them straight up, yes or no. If they waiver, then I'd tell them thanks for looking and move on. You might just find them coming back around.
Make sure to get a lease in place!
- Member since 2020 · 10 posts · 6 votes5y
@Matt M. I don't have great photos yet, the wood floors are getting refinished in a few days then I will be painting. Otherwise, that is a great idea once it's finished!
- 5yGreg WeikBusiness MemberProperty Manager · Denver, CO · Member since 2020 · 263 posts · 327 votes
Hey @Anastasia Bourdon, I own a property management company and we just started managing house hack properties. One of my employees also "hacks" his own house and has for a couple of years now. It's an interesting world, to say the least.
On price: It sounds like you're pretty close to market value for how you've described the home. I highly recommend you do not split out utilities, internet, etc. The logistical application of this can be a legal nightmare for you if you ever have to evict. Accepting rent with a known violation (like non-payment of utilities) could waive your right to enforce. I've been at this for a long time (and went to law school) and I can tell you with certainty that your best bet is to have an inclusive rent price and leave it at that.
On tenants: The biggest differences I've noticed on the HH properties is that the tenants are flaky and usually less-qualified. We've had multiple tenants say they are moving forward on a property only to disappear into thin air. Believe it or not, this is pretty uncommon in our world with about 500 doors under management. Prospective tenants for HH properties seem more inclined to post selfies on FB groups and saying "contact me if you have a room" vs. seeking out a good room for rent. So the dynamic is completely switched from what we are accustomed to. I think this is fine for an owner-occupied situation where you can scour FB groups to find a good fit for your property (it's difficult for us due to scalability with this approach.)
I would highly recommend doing a thorough background and credit check on anyone you are leasing to. Make sure you have a good lease in place. I also suggest individual digital door locks for each bedroom (where you, as the landlord, retains the master key) for added security. Make sure you have solid "house rules" that everyone signs off on.
Real Estate Solutions4.4387 Reviews - Member since 2020 · 10 posts · 6 votes5y
@Greg Weik This is GREAT thank you for the advice!
- Developer · Atlanta GA · Member since 2020 · 30 posts · 15 votes5y
Congrats on purchasing your first house hack property. As the others above have said, I would be concerned about renting the spaces out to friends especially if they are already trying to haggle on a seemingly reasonable rent. While I understand there is a comfort level with friends, the beauty of the house hack is that you can take your time to really assess potential renters not only based on background check and income but also compatibly with yourself and other house mates without potentially violating any fair housing laws. Additionally, as new investor it would be good for you to go through the process of screening applicants, putting together a lease agreement and house rules. This will only benefit you as you scale your business and acquire additional properties. Feel free to reach out to me if you have any questions.
-Drew
- 5yJeff WhiteBusiness MemberRealtor · Denver, CO · Member since 2016 · 278 posts · 371 votes
@Anastasia Bourdon That's great that you are house hacking in Harvey Park, I currently have one over in College View, and southwest Denver is a upcoming area, especially Harvey Park.
I think your friends are trying to negotiate a better deal since they know you. Reverse it.... if they weren't your friends, would they be trying to negotiate the rent being too high for a room?
The reality is that you are pretty much right in line with the market. Your two friends will basically get an apartment to themselves, and they only have to share the bathroom with one person. For my rent by room tenants, I'm getting on average $750 per room including utilities, and my rooms are not as big as your rooms.
Also, like the above person mentioned, get everything in writing, have leases for each of them, and also, go over a common house rules addendum as well discussing drug policy, quiet hours, trash schedule, etc.
- Member since 2020 · 10 posts · 6 votes5y
@Jeff White @Drew Steusloff This is all very helpful! Thank you.
- Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes5y
@Anastasia Bourdon I think it's totally fine to rent to your friends, but I'd suggest you still run credit or at least ask for their Credit Karma reports (something).
Also, the fact that they are haggling isn't a good look and might be the start of recurring behavior, which you want to put a stop to now.
Basically, they need to understand the fundamental premise that you still need to pay the bank every month.
I hope it works out! Good luck
- Member since 2020 · 10 posts · 6 votes5y
@Ola Dantis Well said! I do feel haggling me as I'm about to close and right before move-in to be unsettling.
- Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes5y
Originally posted by @Anastasia Bourdon:
Hi All,
I'd really love some advice on pricing the rooms out in the home I am closing on next week in Harvey Park South. Its a 3bd/2bath 2000sqft home with a nice yard, corner lot, hardwood floors, and lots of natural light. I will be living in the basement and renting the top level (2bd / 1bath). I had two friends lined up to move in, and the week before closing they are haggling on the price, which was already agreed on. I was going to charge $800+utl for the larger bd (13x10) and $750+utl for the smaller bd (9x12). Basically, they have their own living room to share too since I'll be living downstairs with my own living room. It doesn't seem like this price is out of line with this market, but wanted to get some sage advice.
(1) don’t rent to “friends”. If you do, you’ll regret it... as I did. Leased a condo to my ex girlfriend early on... suffice to say, I learned my lesson.
(2) run comps on Rentometer.com then list it $100-200 below market rent... that way you’ll get plenty of interested prospects and can choose well qualified tenants. I’d rent the entire upstairs as one unit. Also, seek to split the back yard (fence) so both of you have your own sections. People pay for privacy.
(3) no matter who the prospective tenant is, ALWAYS collect and run their full rental application (run credit (600 minimum), verify employment, verify income, verify tenant history, etc). You can run credit on ctcredit.net
If you don’t do this, you may regret it and end up in eviction court and a $5,000 legal fee.
- Real Estate Agent · Colorado | stan.store/JamesCarlson · Member since 2014 · 2k+ posts · 2k+ votes5y
Congratulations on the new home! Love Harvey Park, especially the Cliff May mid-mod homes there. Pretty cool little area of Denver.
Your prices are in-line with what I'm seeing with our house-hacking clients in Denver. These buyers got $750 and $800 for two different rooms in their basement just northwest of the city. Basically the same story for these buyers as well who did a rent-by-the-room in the Barnum neighborhood.
In terms of your friends. That's tough. They're your friends. But this is why doing business with friends is tough. If these were just Facebook Marketplace tenants, you'd tell them this is the price, and that's that. You don't like it? No worries. I'll find someone else. Because you should totally be able to find someone else at that price.
There's no wrong answer here. If you want to give them a reduced rate, do it. It's not the end of the world. And maybe there is a discount in your mind for a "known quantity." They're not weirdos, right? So that's great. Another option is to say, sure I'll give you a discounted rate, but I want a longer commitment.
If you don't to reduce the rate, I wouldn't give in. It will create resentment. Just be honest with them, tell them you want them to stay as roommates, but that you don't want there to be any resentment and you bought this house with some investment-aspect in mind and you think they should pay market rate, a rate they'd have to pay if they went somewhere else.
I wish you luck. And congrats again!
- Real Estate Agent · Minneapolis · Member since 2019 · 338 posts · 219 votes5y
Originally posted by @Greg Weik:
Hey @Anastasia Bourdon, I own a property management company and we just started managing house hack properties. One of my employees also "hacks" his own house and has for a couple of years now. It's an interesting world, to say the least.
On price: It sounds like you're pretty close to market value for how you've described the home. I highly recommend you do not split out utilities, internet, etc. The logistical application of this can be a legal nightmare for you if you ever have to evict. Accepting rent with a known violation (like non-payment of utilities) could waive your right to enforce. I've been at this for a long time (and went to law school) and I can tell you with certainty that your best bet is to have an inclusive rent price and leave it at that.
On tenants: The biggest differences I've noticed on the HH properties is that the tenants are flaky and usually less-qualified. We've had multiple tenants say they are moving forward on a property only to disappear into thin air. Believe it or not, this is pretty uncommon in our world with about 500 doors under management. Prospective tenants for HH properties seem more inclined to post selfies on FB groups and saying "contact me if you have a room" vs. seeking out a good room for rent. So the dynamic is completely switched from what we are accustomed to. I think this is fine for an owner-occupied situation where you can scour FB groups to find a good fit for your property (it's difficult for us due to scalability with this approach.)
I would highly recommend doing a thorough background and credit check on anyone you are leasing to. Make sure you have a good lease in place. I also suggest individual digital door locks for each bedroom (where you, as the landlord, retains the master key) for added security. Make sure you have solid "house rules" that everyone signs off on.
Greg, could you point me towards anything you've written about renting by the room vs renting the entire unit. Hypothetically, if a 4BD/2BA house in Ruby Hill rents for $2,400 as an entire unit, how much do you think it would rent for by the room?
- Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes5y
Originally posted by @Tom Wagner:
Originally posted by @Greg Weik:
Hey @Anastasia Bourdon, I own a property management company and we just started managing house hack properties. One of my employees also "hacks" his own house and has for a couple of years now. It's an interesting world, to say the least.
On price: It sounds like you're pretty close to market value for how you've described the home. I highly recommend you do not split out utilities, internet, etc. The logistical application of this can be a legal nightmare for you if you ever have to evict. Accepting rent with a known violation (like non-payment of utilities) could waive your right to enforce. I've been at this for a long time (and went to law school) and I can tell you with certainty that your best bet is to have an inclusive rent price and leave it at that.
On tenants: The biggest differences I've noticed on the HH properties is that the tenants are flaky and usually less-qualified. We've had multiple tenants say they are moving forward on a property only to disappear into thin air. Believe it or not, this is pretty uncommon in our world with about 500 doors under management. Prospective tenants for HH properties seem more inclined to post selfies on FB groups and saying "contact me if you have a room" vs. seeking out a good room for rent. So the dynamic is completely switched from what we are accustomed to. I think this is fine for an owner-occupied situation where you can scour FB groups to find a good fit for your property (it's difficult for us due to scalability with this approach.)
I would highly recommend doing a thorough background and credit check on anyone you are leasing to. Make sure you have a good lease in place. I also suggest individual digital door locks for each bedroom (where you, as the landlord, retains the master key) for added security. Make sure you have solid "house rules" that everyone signs off on.
Greg, could you point me towards anything you've written about renting by the room vs renting the entire unit. Hypothetically, if a 4BD/2BA house in Ruby Hill rents for $2,400 as an entire unit, how much do you think it would rent for by the room?
Not worth the hassle... unless your property is in a Çollege town/area, and you’re interested in running a hotel. Turnover will be much higher and more hassle will arise.
If you do it, make sure they know each other... and make sure there’s a lead tenant that you deal with and draft all of them on the same lease, so they’re jointly responsible for all rent.
- 5yJames MillerPro MemberInvestor · Snohomish, WA · Member since 2015 · 139 posts · 42 votes
@Anastasia Bourdon
I’m a huge proponent of furnishedfinder.com you can furnish a room for pretty cheap. This site appeals to travel nurses and other travelers I had one person stay for a month while training at Boeing. Nurses stay for3-6 months. I’ve had great experiences. Treat them like normal tenants as far as screening but I always pay the screening fee.
Plus you can use this site for comps.
Way less hassle than Airbnb
I use my normal residential lease even though most of it is not applicable since I pay utilities and do the lawn care.
One last tip people coming to stay will be coming from out of town so having a virtual tour so they can walk through and get a feel for the space before they make a decision has helped us out immensely and sets us apart from the competition.
- 5yGreg WeikBusiness MemberProperty Manager · Denver, CO · Member since 2020 · 263 posts · 327 votes
@Jon Q. - if you have the tenants on the same lease and "joint and several liability", then it's not rent by the room. It's a single lease for the home. Lease dates for rent by the room are inherently different, rooms are different, some people rent parking in a garage, etc. -- they have to be independent leases, managed independently. The overlap is the house rules that everyone signs onto.
@Tom Wagner - My experience in the rent-by-the-room world is limited. We have a single client currently with a 6 bedroom home in Arvada that we are working on. Denver area rents (by the room) tend to range from $650-$800 depending on the location of the home and room size and parking. That range assumes all utilities (including internet) included.
As @Jon Q. said, I don't think house hacks are worth it, even from my limited exposure. It's like running MTV's "Real World" only no one wants to be a contestant. It's a classic "spreadsheet investor" pitfall. The numbers on paper look incredible, but in practice, it's almost impossible to maintain full occupancy unless you're an owner-occupier. The room rental prospective tenant is a very different tenant from the long-term tenant I'm accustomed to. Working with room rental tenants - in my experience so far - is like herding cats.
Real Estate Solutions4.4387 Reviews - Investor · Berkeley, CA · Member since 2015 · 1k+ posts · 713 votes5y
Originally posted by @Greg Weik:
@Jon Q. - if you have the tenants on the same lease and "joint and several liability", then it's not rent by the room. It's a single lease for the home. Lease dates for rent by the room are inherently different, rooms are different, some people rent parking in a garage, etc. -- they have to be independent leases, managed independently. The overlap is the house rules that everyone signs onto.
@Tom Wagner - My experience in the rent-by-the-room world is limited. We have a single client currently with a 6 bedroom home in Arvada that we are working on. Denver area rents (by the room) tend to range from $650-$800 depending on the location of the home and room size and parking. That range assumes all utilities (including internet) included.
As @Jon Q. said, I don't think house hacks are worth it, even from my limited exposure. It's like running MTV's "Real World" only no one wants to be a contestant. It's a classic "spreadsheet investor" pitfall. The numbers on paper look incredible, but in practice, it's almost impossible to maintain full occupancy unless you're an owner-occupier. The room rental prospective tenant is a very different tenant from the long-term tenant I'm accustomed to. Working with room rental tenants - in my experience so far - is like herding cats.
Greg,
I understand that. I’ve managed properties nationally for 20+ years. I recommending that she does not rent by room. But instead lease the entire upstairs.
- Denver, CO · Member since 2018 · 32 posts · 50 votes5y
@Anastasia Bourdon what ended up happening with this? Did you end up renting to your friends?
While I think that it was poor form for them to ask you for a discount after agreeing to the price (and so close to closing!), I would have thought through it as follows:
1) How much of a discount are they asking for? Let’s say it’s $50/mth each, so you’d be bringing in roughly $1500 in total rent instead of $1600. Over the course of 1 year, you’ll bring in $18,000 in rent.
2) If you stand your ground and they don’t move in, how long will it take you to fill these rooms again with strangers? Hopefully less, but let’s say it’s 1 month. Over the course of 1 year, you’ll take in 11 months of rent at $1600, so $17,600 in rent.
With these (hypothetical) numbers, you actually come out $400 ahead by appeasing your friends with a discount. I rented a room to one of my best friends in my first house hack at a sizable discount and it was one of the best moves I made (I trusted her, and she even helped me with house projects). Moving is a lot of work. Setting up a house hack, especially your first one, is a lot of work. Having your first tenants taken care of is one less thing to worry about, and sometimes it’s best just to get the income coming in and you can maximize your profits as their leases expire.
- Member since 2020 · 10 posts · 6 votes5y
I did end up renting to my friends, They moved in yesterday. I just gave them a flat rate fee for the utilities and they seem happy with this. You made great points! Now I am trying to navigate the combining of furniture and excess belongings...I lean a bit minimalistic and they each seem to have a lot of stuff. Feeling a little overwhelmed by the potential clutter as they unpack. I've lived with nearly many people in a similar combined house situation though the years and never experienced the excessive stuff like I am now. Maybe it's just all the boxes unpacked in big piles but I dont know where it will all go once they are unpacked lol.
- Denver, CO · Member since 2018 · 32 posts · 50 votes5y
Congrats on your first house hack, @Anastasia Bourdon! Best of luck with the clutter! Whenever I’ve experienced such irritations, I find that quietly muttering to myself “they pay my mortgage....they pay my mortgage....they pay my mortgage” is enough to put a smile back on my face ;). In all seriousness, best of luck and congratulations.
- Member since 2020 · 10 posts · 6 votes5y
@Bridget Brazelton Haha, that's a good mantra, thanks Bridget!
Join the conversationCreate a free account to reply, vote on answers and follow this thread.