How difficult is it to fill a small 4 bedroom?

16 Replies

Hello all,

I've been running the numbers on an attractive property in my area. It's close to downtown, and a major university in my city.

It's a duplex with a 4 bedroom and a 1 bedroom, and I plan on living in the 1, and renting out the 4 bedroom, or possibly filling in a spot in the 4 bedroom, if money is tight.

What I'm wondering is how can I account for vacancy with the 4 bedroom unit? Are 4 bedrooms hard to fill in student areas?

My expenses will probably be around $1450

The one bedroom rents at 600$, and I'm HOPING the 4 bed can fetch $1400~$1500. Does this seem reasonable?

All advice, and input is greatly appreciated

Why not furnish it and rent it to students, two to a room for $250-300 each?

Originally posted by @Bob Bowling:
Why not furnish it and rent it to students, two to a room for $250-300 each?

By two a room do you mean two a bedroom?

You're right I could make a little bit of profit if I live in one of the bedrooms, and rent out the other three at 300$.

Dylan, 

@Bobbowling idea would be good one extra $600 or more in rent, other then that I think the numbers are to slim at this point.

The one bathroom is the killer. 4 people and one bath that will make it hard to rent and keep people. It will also mean your bathroom will get hammered. Likely have moisture damage unless it's absolutely bullet proof. Sounds like you are planning on renting rooms out individual. In my experience 4 bed 1 bath won't fetch your $1,450 if a 1 bed only rents for $600 any other way. Students paying by the room is the only way you could get that kind of rent. You should make sure you have some independent data to support your per bedroom rent. 

Originally posted by @Dylan McLauchlan :
Originally posted by @Bob Bowling:
Why not furnish it and rent it to students, two to a room for $250-300 each?

By two a room do you mean two a bedroom?

You're right I could make a little bit of profit if I live in one of the bedrooms, and rent out the other three at 300$.

Yes, two people paying $250 each in each bedroom equals 4X$500 =$2,000 plus the $600 one bedroom for a total of $2600 although if you are in the one bedroom then you are only pulling $2000 cash. If you don't mind a bunk mate then you'd get $600 for the one bedroom and 7 people paying $250 for a total rent of $2,350.

In the Bay Area there are companies that buy houses with the plan to fill them with either students or even adults that could never afford to live in a SFH. Usually they will have one person that gets reduced rent to be house manager. They get good rents and responsible people and the appreciation.

I've read of a person that buys large luxury properties and then fills them with all the "toys" young adults want and then rents rooms at a premium. You have to be sure you don't annoy the neighbors or run afoul of the city regulations.

I guesstimated you rents based on what you said a one bedroom would rent for. You could possibly rent for more.

Where did the one bath come from?

@Dylan McLauchlan  

How far are you from the Western campus?  If you are close (walking distance) you should have no problems filling a 4-bdrm apartment.   We have 2 4+-bdrm student rentals ... May and September are your months in which they lease.  Unlike 1-bdrm and 2-bdrm, we have found the 3-bdrm and 4-bdrm student units are far harder to fill at other times of the year.

Are the units in this property separately metered?   Here the going rate for a "nice" 4-bdrm student unit w/o utilities is 1500 - 1700 a month.  With utilities that would move to 1700 - 2000 a month.   I would recommend renting the 4-bdrm as a single unit (as opposed to by the room).  Have a look in the neighbourhood and see what the prevailing rent rate is ... here it works out to ~400 - 425/rm w/o utilities and ~450 - 500 with utilities.

Be certain to run your analysis with low revenue and high expense assumptions to see if the property will carry easily and well.

@Bill S.

Great info, thanks!

I'm going to try calling some property management companies, and see if they can spare some rent information. So far I've just been checking out rent online, but it's hard to compare apples to oranges

@Roy N.

Thanks, those would be the best times to find student tenants

It's not quite walking distance from western. Probably about 3 km, but its right near a bus route.

I'll make sure to find out if it's seprately metered, and do more cash flow reasearch.

So far I've been assuming I'd pay utilities (I budgeted 500$/month which I know will be way on the high side)

@Dylan McLauchlan

Dylan,

Keep in mind that in some areas renting by the room can be considered a discriminatory housing practice because it could potentially prevent families (i.e. parents with kids) from renting. If you are going to rent by the room (or two to a room) then you may fall under boarding house regulations. These rules vary by location. Just be sure to check your local housing code.

Jaclyn

I have a 1150 sf 4/1 no garage, no basement and it rents very quickly. I thought it would attract families. It's been getting couples and single dads. All depends on the market

Originally posted by @Jaclyn B. :

@Dylan McLauchlan

Dylan,

Keep in mind that in some areas renting by the room can be considered a discriminatory housing practice because it could potentially prevent families (i.e. parents with kids) from renting. If you are going to rent by the room (or two to a room) then you may fall under boarding house regulations. These rules vary by location. Just be sure to check your local housing code.

Jaclyn

 Unlikely it will be viewed as discriminatory housing in Ontario, but quite probable it will be seen as a rooming house and, if that area of London is not zoned for rooming houses, he could have a regulatory issue.

The other Dylan will encounter is with {conventional} financing.  The Big-5 Banks, and many smaller lenders, will not take a mortgage on a rooming house.

Originally posted by @Roy N. :
Originally posted by @Jaclyn Bays:

@Dylan McLauchlan

 Unlikely it will be viewed as discriminatory housing in Ontario, but quite probable it will be seen as a rooming house and, if that area of London is not zoned for rooming houses, he could have a regulatory issue.

Thanks for clarifying. I know in Texas renting by the room can be tricky. Unless you're living in the house yourself and renting out the rooms. Then you're free to discriminate/rent to whoever you like, because the tenants would be your roommates (housemates?).

Originally posted by @Jaclyn B. :

Thanks for clarifying. I know in Texas renting by the room can be tricky. Unless you're living in the house yourself and renting out the rooms. Then you're free to discriminate/rent to whoever you like, because the tenants would be your roommates (housemates?).

 Similar in most jurisdictions in Canada (of which I am aware) ... if you live in the house, then you may be cut some slack about renting rooms.  Also, if it is your primary residence, you might still be able to obtain conventional financing.

How many bathrooms in the 4 bed side?

To many folks point, putting 4 people into a 1 bath place is just asking for trouble.  If you have more than 1, you should be all set.  If you plan on running a student rental, put in the heaviest duty bathroom items you can muster.  And expect to do a fair amount of work in there each time you turn them over. 

Students aren't bad tenants, just clueless ones.

Adding to @Aaron Montague  's bathroom advise, I would also recommend you go with a 60 - 80 gallon, quick recovery water heater.  Young people consume lots of hot water.

We have a 5-bdrm student house which has undergone a significant energy efficiency retrofit ... but ~50% of the monthly electrical consumption is hot water.

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