Thanks both Paul and Kristine. I know a guy who is running half-way houses and he hires a ‘House Manager’ and has relationships with the Jails and substance abuse programs who give him tenants. He has bunk beds in the bedrooms and has Very Strict policies that are enforced by the HM. Lots of headaches, agency complaints and police issues accompany this model. But He seems to be
‘de-sensitized’ (is that a word? idunno) to the liabilities.
DJ-nyc
I’m toying with the idea myself. A friend of mine owns a rooming house and another friend manages it for him. Neither one has voiced any complaints beyond the usual landlordd/manager gripes. Both acknowledge significant cash flow.One obvious benefit is that in my state, the landlord /tenant statutes do not cover romming houses so their is no drawn out eviction process if they don;t pay. The key is good management.
Very management intense.I have owned 2, both legal rooming houses.1 in a ghetto I sold it before I got shot you would not even believe the stories if I told you.I was on first name basis with the cop who led the ninja cops who kept raiding the place when I lost control.I sold the other one with a large down payment and had to foreclose it, I am trying to sell it again.It is in a small country town,15 rooms but I can’t fill it up.No drugs but the only reason anyone wants to live there isbecause they are down and out and people like that have limited respect for the next guy so it is constantly dealing with petty issues.
There are many examples of special populations out there. College market, veterans, are two popular. Corporate Housing can also be an option.
Always consider highest and best use.
I know someone who picked up a 4 family for 60K put 10K into it. Rents it out per bedroom ave $550 the house has 14 bedrooms. She works 2 months a year and controls 85 bedrooms in the market.
Other high occ uses for big house - Posted by John Merchant
Posted by John Merchant on April 27, 2010 at 14:48:21:
A big house with lots of BRs and Baths might be ideal for some kind of Assisted Living for Srs and this is permitable almost anywhere.
Even despite neighbors objections many of these ALs have existence rights that trump other zoning and can be found in all kinds of neighborhoods from drab to glitzy.
Talk to your health and welfare depts and you can learn a lot.
Like rooming house these are businesses that take someone on site 7x24.
Other possible users are Oxford Houses, for recovering alcoholics and found in most cities and towns, or Foster Care for kids and some of these uses pay $2000 or more per resident per month.
And if won’t or can’t be the on-site operator, there are plenty of folk who’d probably love to take it over, lease long-term, buy on terms, etc.
Posted by David Krulac on April 27, 2010 at 12:05:04:
is a business not a passive investment. It can require daily supervision. Tenants stay short term, sometimes days or weeks. You has higher overhead since you have to pay all uitiities. high turnover. may not be legal according to certain zoning laws.
There was a local case where somebody built a new house with 6 bedrooms, each with private bath and a common area lving room and kitchen. Each room had a locked door and the owner rented to various transient people including truckers. neighbors complained, town shut him down as violation of zoning laws, a rooming house is not a single family house by their definition.
I like Veterans who are coming out of shelters. I also have it as a Private arrangement. In nyc you can get fines and such. (I take the risk, they have to pay for my retirement)
I have one house with rooms. You have to be careful though with conflicting personalities and overnight guests.
DJ-nyc
Re: Renting by the Room? Good idea or Yikes - Posted by Frank Chin
Posted by Frank Chin on April 27, 2010 at 06:28:31:
John:
One thing you’ll have to be careful of are local “zoning” laws restricting the number of unrelated people living together in a single housing unit, laws designed to restrict “rooming houses” in the suburbs, and some cases in the city. The housing unit can be an apartment or house.
In my mother in laws’ neigbohood, here in NYC, LL’s had purchased 2 family homes, walled off the living room, and rented the units out by room. One across the street from her was declared illegal, so the owner sold it to another unsuspecting LL for the purpose of renting it out as a rooming house, but without telling the new buyer about his problem. The new LL got into trouble again, and soon enough was in foreclosure because the owners paid too much and was counting on “renting out the place as rooms” to cover the mortgage, as the method of renitng yields more rent.
I know, I looked into doing this some years ago.
Some LL’s do it on the sly, but get into trouble when several separate tenants may have boyfriends or girlfriends coming at the same time, taking up all the neighboring parking spaces, causing neighbors to call the town. A tenant I rented to had that problem in the place he moved from, and moved because he can’t find parking in front of his own home. The house across the street from him was apparently rented by the room.
Re: Renting by the Room? Good idea or Yikes - Posted by cork horner
Posted by cork horner on April 27, 2010 at 24:44:00:
imo, good way to go.
Shared living arrangements/agreements. If necessary make it up and get a lawyers approval. I use PrePaidLegal as a member and associate.
Having done this quite a bit, the main game to think about are privacy rights of others and how ‘community space’ is utilized. especiallt food storage.
The typical stuff regarding overnight guests , drugs/alcohol/smking etc are also issues.
Ken, in other words, you were trying to rent to LOSERS!! That is always a recipe for disaster. It is not a good idea to own a property that mostly attracts LOSERS for tenants. Believe me, been there, done that!!
Puhhllllease, Paul!! A four family property (4-plex) with 14 bedrooms at $550 each is $7,700 per month, $92,400 per year. I’m not saying it’s impossible, but I really get weary of reading about situations that only come along about once in every 3.2 million years. Rather than “picked up” that property,she more likely got incredibly lucky or worked her tail off to find and get it. With all due respect, people just don’t “pick up” properties with that kind of cash flow.
Posted by Kristine-CA on April 27, 2010 at 23:00:21:
Paul: thanks for your post. I’m curious if you know more about the
business model you write about in your post. Do you know how and if
she is managing all the tenants/boarders herself? Who is
managing/responsible for the common areas? Are her tenants
students? Is she providing corporate housing? Are you in an area
where there is a special population that pays $550.00 for a bedroom?
Totally curious and interested to know more, Kristine