Medium-Term Rentals

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Gaby Liu
  • Investor
  • Chino Hills, CA
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Rent room by room in Las Vegas remotely managing

Gaby Liu
  • Investor
  • Chino Hills, CA
Posted Oct 25 2022, 16:04

I have a 5b3b brand new built house in Las Vegas gated community is going to close in a few days, 2 hospital campus and a 3 year college near by, (HOA requires 90 days minimum stay) , I am debating what would be a better option;

A:Renting out the whole place as one price $2500 to long term rental , no need to furnish. hands off, but the cash flow is negative $200/month. COC negative 1.5%

Pros: less work , pay one time commission  to put tenant in place, easy for me to remotely manage , less turnover. no need to furnish

Cons: negative cash flow, 200 a month that is $2400 a year.

B: Doing it room by room, to rent it out 5 different people in one house, $900-1100/room, total gross income is $4000-4500, Cash flow will be $1000-1300/month. COC is about 7%

Pros: Cash flow is positive

Cons:

1,Furnish the house cost money and time ,if doesn't work for MTR , I have to un-furnish it to switch back to LTR.

2,It is a big house , not sure if it is easy to put 5 traveling nurses in the house at one time, if not ,then I need to add other different group of people in the house , potential raise problem ? what if tenant fight each other in the house or have room break in and sue the landlord?

I called insurance company when they hear I rent out room by room for different people they don't have policy to cover that. al

So , Since I don't live in Vegas ,So I m managing out of state , I really debating what should I do with this house, any advise is appreciated,  and I need to make decision soon to go which route. 

thank you !

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Bob Willis
  • Investor
  • Curtis, NE
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Bob Willis
  • Investor
  • Curtis, NE
Replied Oct 25 2022, 17:04

I own a 4BR 2 BA house in Tempe I rent out by the room. Utilities are included with the rent. I charge $775/month. I have no problem keeping the rooms rented, BUT my son is in one of the rooms, so I have eyes on the ground. One other thing to note, I pay for a monthly cleaning service. I rent the rooms via Zillow (which posts them on HotPad). Good luck.

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Zeona McIntyre
  • Real Estate Agent
  • Boulder, CO
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Zeona McIntyre
  • Real Estate Agent
  • Boulder, CO
Replied Oct 25 2022, 17:25

You can also rent by the room mostly unfurnished, just furnishing the kitchen and shared areas. This will keep you cash flow positive and not be as big of a furnishing job or investment. 

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Don Konipol
  • Lender
  • The Woodlands, TX
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Don Konipol
  • Lender
  • The Woodlands, TX
Replied Oct 26 2022, 01:30
Quote from @Gaby Liu:

I have a 5b3b brand new built house in Las Vegas gated community is going to close in a few days, 2 hospital campus and a 3 year college near by, (HOA requires 90 days minimum stay) , I am debating what would be a better option;

A:Renting out the whole place as one price $2500 to long term rental , no need to furnish. hands off, but the cash flow is negative $200/month. COC negative 1.5%

Pros: less work , pay one time commission  to put tenant in place, easy for me to remotely manage , less turnover. no need to furnish

Cons: negative cash flow, 200 a month that is $2400 a year.

B: Doing it room by room, to rent it out 5 different people in one house, $900-1100/room, total gross income is $4000-4500, Cash flow will be $1000-1300/month. COC is about 7%

Pros: Cash flow is positive

Cons:

1,Furnish the house cost money and time ,if doesn't work for MTR , I have to un-furnish it to switch back to LTR.

2,It is a big house , not sure if it is easy to put 5 traveling nurses in the house at one time, if not ,then I need to add other different group of people in the house , potential raise problem ? what if tenant fight each other in the house or have room break in and sue the landlord?

I called insurance company when they hear I rent out room by room for different people they don't have policy to cover that. al

So , Since I don't live in Vegas ,So I m managing out of state , I really debating what should I do with this house, any advise is appreciated,  and I need to make decision soon to go which route. 

thank you !

I’m not too sure about your cash flow assumption for renting by the room.  It’s a guess as to vacancy rate, trade off between occupancy level and room rent, property management costs and fees for billing time due to problems between tenants, insurance costs, etc.  you’re correct to be concerned with tenant infighting, damage and lawsuits.  I think it requires a whole lot of hands on management. You might find out that you have a minimum wage job instead of an investment. Btw, why are you purchasing this property?

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Drew Sygit#2 Managing Your Property Contributor
  • Property Manager
  • Birmingham, MI
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Drew Sygit#2 Managing Your Property Contributor
  • Property Manager
  • Birmingham, MI
Replied Oct 26 2022, 09:00

@Gaby Liu You should also check with the HOA about how many unrelated occupants they allow.

If you rent by room, probably better to get PMC instead of DIY.

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Gaby Liu
  • Investor
  • Chino Hills, CA
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Gaby Liu
  • Investor
  • Chino Hills, CA
Replied Oct 26 2022, 10:43
Quote from @Drew Sygit:

@Gaby Liu You should also check with the HOA about how many unrelated occupants they allow.

If you rent by room, probably better to get PMC instead of DIY.


 HI Drew,

thanks for your comments, no PMC will take rent by room , they are not doing that. it must self managing.

I have seen some of my friends do that pretty well but their house has no HOA and live 10 mins away, my challenge is the house has HOA and 4 hours away.

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Gaby Liu
  • Investor
  • Chino Hills, CA
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Gaby Liu
  • Investor
  • Chino Hills, CA
Replied Oct 26 2022, 10:47
Quote from @Don Konipol:
Quote from @Gaby Liu:

I have a 5b3b brand new built house in Las Vegas gated community is going to close in a few days, 2 hospital campus and a 3 year college near by, (HOA requires 90 days minimum stay) , I am debating what would be a better option;

A:Renting out the whole place as one price $2500 to long term rental , no need to furnish. hands off, but the cash flow is negative $200/month. COC negative 1.5%

Pros: less work , pay one time commission  to put tenant in place, easy for me to remotely manage , less turnover. no need to furnish

Cons: negative cash flow, 200 a month that is $2400 a year.

B: Doing it room by room, to rent it out 5 different people in one house, $900-1100/room, total gross income is $4000-4500, Cash flow will be $1000-1300/month. COC is about 7%

Pros: Cash flow is positive

Cons:

1,Furnish the house cost money and time ,if doesn't work for MTR , I have to un-furnish it to switch back to LTR.

2,It is a big house , not sure if it is easy to put 5 traveling nurses in the house at one time, if not ,then I need to add other different group of people in the house , potential raise problem ? what if tenant fight each other in the house or have room break in and sue the landlord?

I called insurance company when they hear I rent out room by room for different people they don't have policy to cover that. al

So , Since I don't live in Vegas ,So I m managing out of state , I really debating what should I do with this house, any advise is appreciated,  and I need to make decision soon to go which route. 

thank you !

I’m not too sure about your cash flow assumption for renting by the room.  It’s a guess as to vacancy rate, trade off between occupancy level and room rent, property management costs and fees for billing time due to problems between tenants, insurance costs, etc.  you’re correct to be concerned with tenant infighting, damage and lawsuits.  I think it requires a whole lot of hands on management. You might find out that you have a minimum wage job instead of an investment. Btw, why are you purchasing this property?

the rent by room COC is base on I manage myself and with 100% occupancy rate (which is no way), if add all other cost ,the COC is 4% ,

I have several friend does this rent by room and manage themselves , not too much work actually , but they live 10 mins away from the house. and I live 200 miles from the house.

the reason I bought the house was I wanted to buy it as primary and I wanted to move there. but later I changed my mind. it was not investment house in first place. otherwise I wouldn't buy a house has HOA and have so many bedrooms.

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Gaby Liu
  • Investor
  • Chino Hills, CA
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Gaby Liu
  • Investor
  • Chino Hills, CA
Replied Oct 26 2022, 11:55
Quote from @Zeona McIntyre:

You can also rent by the room mostly unfurnished, just furnishing the kitchen and shared areas. This will keep you cash flow positive and not be as big of a furnishing job or investment. 


 Zeona, I was just listening to your podcast in BP yesterday and I loved it. You are awesome, I can't believe you commented on my post!

I just found out from the HOA that my house is not allowed to be rented by room .So I have no choice but to rent it out as a whole. Sad.

I bought a bad investment.

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Gaby Liu
  • Investor
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Gaby Liu
  • Investor
  • Chino Hills, CA
Replied Oct 26 2022, 11:56
Quote from @Drew Sygit:

@Gaby Liu You should also check with the HOA about how many unrelated occupants they allow.

If you rent by room, probably better to get PMC instead of DIY.


I just found out with HOA , not allowed to rent by room at all. I didn't read the CC&R before.

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Samuel Toma
  • Livermore, CA
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Samuel Toma
  • Livermore, CA
Replied Oct 27 2022, 13:15

Gaby, don't get down on yourself because you can't rent it out by room. I'm also in CA and also invest in Vegas. I am looking at small multifamily right now but I think SFR over there are still good long term investments. Maybe its negative right now, but you raise rents by a hundred a year and in 3 years you are positive and it will likely have appreciated if you decide you want to get out. Good luck!

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Gaby Liu
  • Investor
  • Chino Hills, CA
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Gaby Liu
  • Investor
  • Chino Hills, CA
Replied Oct 27 2022, 13:21
Quote from @Samuel Toma:

Gaby, don't get down on yourself because you can't rent it out by room. I'm also in CA and also invest in Vegas. I am looking at small multifamily right now but I think SFR over there are still good long term investments. Maybe its negative right now, but you raise rents by a hundred a year and in 3 years you are positive and it will likely have appreciated if you decide you want to get out. Good luck!


 Hi Samuel ,

After doing all the analysis , yes, LTR is the only way to go with my house in Vegas. I will just keep it . hopefully appreciate in few years.

are you looking for Multi in Vegas?

Gaby

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Zeona McIntyre
  • Real Estate Agent
  • Boulder, CO
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Zeona McIntyre
  • Real Estate Agent
  • Boulder, CO
Replied Oct 27 2022, 15:45

You could also furnish it and rent it 90 day min, but with its size and the min 90 days you would have to work hard to build relationships with placement agencies locally. It's doable but I'm not sure how much time you have on your hands. 

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Samuel Toma
  • Livermore, CA
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Samuel Toma
  • Livermore, CA
Replied Oct 27 2022, 17:13
Quote from @Gaby Liu:
Quote from @Samuel Toma:

Gaby, don't get down on yourself because you can't rent it out by room. I'm also in CA and also invest in Vegas. I am looking at small multifamily right now but I think SFR over there are still good long term investments. Maybe its negative right now, but you raise rents by a hundred a year and in 3 years you are positive and it will likely have appreciated if you decide you want to get out. Good luck!


 Hi Samuel ,

After doing all the analysis , yes, LTR is the only way to go with my house in Vegas. I will just keep it . hopefully appreciate in few years.

are you looking for Multi in Vegas?

Gaby


 Yes as long as you can handle the negative cash flow for a couple years I’m sure it will still be a good long term investment. And yes I’m looking at small multi right now but have to be a little picky in some of the Vegas areas as I’m sure you are aware.

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Gaby Liu
  • Investor
  • Chino Hills, CA
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Gaby Liu
  • Investor
  • Chino Hills, CA
Replied Nov 1 2022, 09:39
Quote from @Zeona McIntyre:

You could also furnish it and rent it 90 day min, but with its size and the min 90 days you would have to work hard to build relationships with placement agencies locally. It's doable but I'm not sure how much time you have on your hands. 


 Hi Zeona,

I agree with you , I feel the house is too big to put 5 people at one time as MTR , in your podcast you mentioned your MTR is 1b1b or 2b1b. I m going to buy your book and learn more knowledge about it.

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Bill Brandt
  • Investor
  • Las Vegas, NV
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Bill Brandt
  • Investor
  • Las Vegas, NV
Replied Nov 1 2022, 11:13

Don’t forget. If you self-manage I’m pretty sure you have to have a local “agent” in Nevada if you aren’t local. 

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Zeona McIntyre
  • Real Estate Agent
  • Boulder, CO
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Zeona McIntyre
  • Real Estate Agent
  • Boulder, CO
Replied Nov 16 2022, 11:26

@Gaby Liu there are packs of traveling nurses that travel together and families that want furnished rentals but it is a big investment in furniture and time to test it out. But if you do and it doesn't work, maybe that will inspire you to arbitrage 3 places and just move the furniture over. Could work. 

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Gaby Liu
  • Investor
  • Chino Hills, CA
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Gaby Liu
  • Investor
  • Chino Hills, CA
Replied Nov 19 2022, 13:24

Thank you, Zeona, that is a challenge, and I will think about it. could work, ,could not work, won't find out until I try.

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Joseph Ayoub
  • New to Real Estate
  • Washington, D.C.
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Joseph Ayoub
  • New to Real Estate
  • Washington, D.C.
Replied Nov 22 2022, 08:26

Hey Gaby - one thing to consider as well is that when you account for the management/showing aspect, ensure that your PM is willing to deal with a rent by the room situation. I am currently managing a rent by the room property in Washington, D.C. and am having trouble getting a property manager to take it on. One way around this is to have a consistent handyman who can do showings and you can pay them per showing, but I would reach out to a few and see if they are willing to do that. 

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Jamari Sharp
  • Las Vegas, NV
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Jamari Sharp
  • Las Vegas, NV
Replied Dec 12 2022, 17:01

Hello Gaby, are you still having this issue, or figuring out what to do? What zip code is this property in? I live in Las Vegas as well, and have an idea that I think could definitely help!

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Replied Dec 13 2022, 13:50
Quote from @Gaby Liu:
Quote from @Drew Sygit:

@Gaby Liu You should also check with the HOA about how many unrelated occupants they allow.

If you rent by room, probably better to get PMC instead of DIY.


I just found out with HOA , not allowed to rent by room at all. I didn't read the CC&R before.


Hi Gaby have you considered keeping a room for yourself and rent the rest out? Does HOA still not allow it? I doubt HOA would specifically call out all situations in their CC&R.