DFW Rent by the Room Strategy

12 Replies

Hi all, 

Been on BP for awhile, have a house hack in Plano and a second property in OKC under my belt right now.  I'm currently working on getting my sales license before my next deal next year.  With that being said, is anyone having success in the DFW market right now doing rent by the room? If you can get a 4/2 or 5/3 in a city like Plano or Carrolton and can rent out by the bedroom it makes the numbers work a lot better. That's what i'm targeting since I get can in with 5% down and keep cash in my pocket.  I'd love to get a few contacts and pick your brain before I go about on this strategy for anyone who has done it successfully. 

Harrison 

Don't buy in a neighborhood with HOA in places like Plano. Try to buy in places like Dallas or some other city that might be more friendly to that. You don't want to get it shut down when the neighbors complain....and in someplace like Plano if you buy a 5 bedroom and rent to 5 different unrelated people with 5 cars, they are going to complain.

I'd have a board certified real estate attorney draw up a lease for you if you're renting bedrooms. I don't think there are promulgated forms for that. You might also check with your insurance company to see how they cover you for bad situations like sexual assault or theft between tenants. Your standard umbrella policy may not cover you if you are renting to unrelated parties under the same roof.

Hey again Harrison, I currently have two single family homes the DFW area, one in North Dallas and another in North Irving area and using the rent by the room strategy and so far it's been working great in these areas. I chose these places specifically because the purchase price of these homes are lower compared to the Plano and Carrollton areas, and you can potentially net the same amount the rental income by the room if you purchase a nice looking rent-ready home, hopefully not paying a premium on this. I really like these areas as they are close to a ton of professional jobs and high probability of better tenants. My homes are 3/2 each, but one has an extra space that I am using as a 4th bedroom. Moving forward, I am definitely only looking at 4/2 and 5/3 and anything in between just to squeeze in more rental income. I'd say the North Dallas home was a lot easier to rent out, I had one month of vacancy on my Irving home for 1 room, which wasn't terrible as I purchased during winter season. If you would like to discuss more, would be great to chat. Seems like we're doing the same thing out here. 

I'm interested to know more about the concerns between roommates; sex assault, theft and just general bickering/fighting.  Do you find that most rent by the room applicants are low impact since they are in the situation where renting by the room is attractive to them?

On the fair housing laws side - Is it possible to try to pair up same gender and similar age range tenants without violating fair housing? Any lawful strategies here?

Matt from Oxford Mississippi

@Harrison Sharp hey Harrison, all i do is rent by the room. happy to help. my properties are not in TX though. i write for the BP blogs and have done a few articles detailing my experiences with rent by the room. happy to connect and help you out. just let me know!

Hello  Bruce!  Why do you want to get a license other than its education and networking.  Always invest long term and just do what is normal.  Room renting is a short term philosophy and might be OK but I would not count on it lasting too long.  Having a license is usually for liars and backstabbers.  I had a broker's license for about 30 years but thought I has too honest to do it full time and why I got into construction management instead.  Just have fun at whatever you choose.  There are times when they are productive and times when they are not.  Just know what you are getting into.  Some can do it and some cannot.  Do whatever makes you feel in control.  Do not try to do everything yourself.

Good luck to you!

@Harrison Sharp

I have a rental I rent by room. It’s a pain! Higher maintenance due to working with more tenants on leases, collections, splitting utilities etc. Higher turnover- about every 6 months most will leave. I don’t do more than 6 months lease starting out in case of internal bickering- they stay month to month after 6 if they’re happy there.

I do advertise for students, but have got non- students also. Over 1/2, I have had someone co-sign with them if students,no job or not enough income- so then I also have to deal with the parent/co-signer. I do screen each applicant.

It’s impossible for everyone in house to get along all the time, most conflicts involve cleaning up the common areas especially the kitchen!

You can advertise for same sex since they share common areas. I’ve had mixed & same sex. I found out when had 1 male & 1 female, it was impossible to get 3rd female- so this last year+ I’ve done female only.

Soon, I will not do by the room & just whole house only. I’m done spending too much time managing it. Sorry to be negative, but you need to be aware of more time managing it & higher turnover. Most room renters are that just to get cheaper living arrangements.

As a recent college grad, something that many landlords would do around my university is ask individual renters to find roommates. So instead of having to do rent by the room, they would rent the whole house on one lease. I'm sure this will reduce how much you make from rent, but it will also make it a lot more simple when you look at the logistics of it.