If you want to rent your property in Richmond, you may have considered renting it out room by room. This can be a great option for houses near universities or in other more transient areas. In this post, we discuss the pros and cons of renting your house room by room in Richmond.
Some landlords will choose to rent out their property room by room, often occupying a bedroom in the house themselves. This is great for those who are investing in a single-family house using an FHA loan requiring them to live onsite for a while after the purchase. Renting the house out room by room can seem like a lot of work but when you have the right people living there, things can be very beneficial for you. Keep reading to learn more about the pros and cons of renting your house out room by room in Richmond!
If you are renting out the entire house and your tenant decides to leave, you are left with a vacant property and no income. If you are renting your house out room by room and your tenant moves out, you will still have people occupying the other areas. The house won’t likely ever be completely vacant which helps ensure you are pulling at least some income on a consistent basis.
When you are renting out rooms, typically the landlord/owner will live onsite as well. Your tenants are renting their room and some shelf space in the kitchen. They are usually welcome to common areas as well so long as they handle their share of the upkeep.
Let’s say you have a 5 bedroom home. You live in one room and rent the others out for $500 apiece. You’re making $2k each month. However, if you were to rent the entire house out, you may not be able to get as much. It’s similar to when investors purchase a large tract of property then sell off the lots individually. When all is said and done, you may be able to make more money this way.
One solution is to look at average usage rates, then charge each tenant a flat fee. However, this can come back to haunt you if your tenants surpass average usage. At the end of the day, it’s your name on the accounts.
Arguments Among Tenants
When you have multiple tenants in one property it is inevitable that tensions can arise. Be sure that your lease is specific as possible, so it can be used to mediate differences between your tenants. The rules should be laid out in black and white and everyone needs to respect each other’s space. If these rules aren’t being adhered to, you may need to ask the tenant to find somewhere else to live.
Common Area Disputes
When you have tenants renting out their rooms individually, it leaves room for disputes over the common areas. Make sure the lease lays out some ground rules regarding noise, guests, and other things that may pose a problem.
Renting a house out room by room will usually only work if you have one person who is responsible for the property in its entirety. The landlord will usually live in the house themselves so no questions of liability come into play. It is much easier for them to manage things and to understand the day to day relationships between tenants if they are living there themselves, Plus, it is a great way to quickly pay down your mortgage using other people’s money!