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You are here: Home / Archives for profiting from rooming houses

What A Rooming House Landlord Need To Know Before They Start

July 4, 2017 By Landlord Education

Being A Rooming House Landlord Can Be A Tough Job

Being a Rooming House landlordMost of the time a rooming house landlord makes it tough on themselves because they are missing some important information when they start, or they simply don’t change with the times and either of these can make their job tougher and definitely less worthwhile.

I just finished reading another article chronicling how many rooming house landlords are getting out of the business. They’re seeing less money being made, tougher regulations being put in place and less support from local governments.

The prevailing problem (or at least the problem I picked up on) was that almost all of these landlords catered to the bottom tier tenants.

Tenants that survived off of social assistance, government subsidies and basically had no other options but to live in low cost rooming house properties.

If that’s your target market, I can almost guarantee you  a) won’t last b) will become burnt out very quickly and c) will quickly get disillusioned with the business model of own rooming houses.

What A Rooming House Landlord Needs To Know To Thrive

When I started I bought into the low end rooming house market strategy with my first rooming property. I hated it…

I kicked my first drug user within a few weeks and lost a TV he pawned as well.

Shortly after that I realized low end properties were not what I wanted to do and low end tenants with tons of problems were not who I wanted to rent to. Sounds discriminatory doesn’t it. And if I screened only on that aspect it would be, so I don’t.

Instead I just raised the bar of entry.

Here’s the take away.

If you target low end tenants who can pay low end rent for your low end property you will end being a former rooming house landlord relatively quickly.

Yes I understand there is a need for spaces like that, but the challenges, the headaches and the disillusion that can accompany it aren’t worth it for a small time landlord.

Perhaps that needs some clarification.

If you plan on operating one or two properties, maybe 5-20 rooms, it’s not worth it.

If you have a larger portfolio, maybe buildings with 20 plus rooms you rent out, then perhaps you can make it work. It’s economy of scale.

On a smaller scale if you have low rents your cash flow at the end of the month won’t be high enough to offset potential losses. If you work on a bigger scale with more rooms, one or two losses won’t affect you to the same degree as you have more incoming to offset the shortages.

Changing The Rooming House Model

Rooming houses don’t have to cater to low end tenants, thats’ old school thinking. Instead, your rooming house should cater to the gaps in the market.

When I started, the gap in my area was safe, affordable, clean properties where tenants weren’t locked into long term commitments. I changed the model and was rewarded quite well for it.

rooming house landlord - higher end rentalsDid I still have headaches? Yes, but the number went down substantially.

Did I still lose money on occasion? Yes, but by charging higher rates and catering to higher end tenants I also made more money and reduced turnover, even without locking anyone into leases.

What you need to know, before you jump into the rooming house business, is that the more you break the traditional low end rooming house model and convert it into a profitable business the longer you’ll survive, the more people you’ll be able to help out and the less problems you’ll face doing it.

Want To Start Your Own Rooming House?

Rooming houses can be a profitable business, if you do it right. That’s why I put together the Basics of Rooming Houses.

It’s a beginners course to rooming houses perfect for someone interested in the business model and who wants to avoid soem costly mistakes learning on their own.

I walk you through the basics of finding out the local demand for rooming houses so you understand whether it’s a market you should pursue (imagine buying a property before you even know if it will, this helps you avoid that).

I show you how to learn the local rules so you don’t find yourself in trouble or worse shut down.

And I show you how you can start creating streams of steady clients who become a referral source for you making it easier than ever to keep vacancies low and profits high.

If you want to get off on the right foot, this investment in your rooming house education will get you started the right way.

Just click the following link to get started with this online course today,

Basics of Rooming Houses Online Course

 

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Filed Under: Landlord Information, Rooming Houses Tagged With: profiting from rooming houses, rooming house course, rooming house landlord, rooming houses

Profiting From Renting Out Rooms and Boarding Houses

December 4, 2014 By Landlord Education

Renting Out Rooms — A Rental Cash Cow

I can’t think of  a better way to explain renting out rooms than as a cash cow. Far and away room rentals have been one of the most profitable ways we’ve found to make money on rental properties.

Properties that may not have been suited to generate enough income to be attractive as rentals otherwise. That might be a bit confusing so let me explain.

With a normal half duplex that isn’t suited and where I operate out of, I may be able to get $1,000, on the low end, maybe $1,400 on the top end in monthly rent if I rented it to a family. With a mortgage payment of around $1,000, taxes of $150 per month insurance around $30, that really doesn’t make much sense as a rental property and I will probably end up losing money.

However as a rooming house with five separate rooms I rent out, everything changes.

Room rental property
They even put up Christmas decorations

I’ve got several long term tenants in this property who I’ve kept the same rent for a couple years for as they take good care of the place and treat it like a home, not a rooming house. I’ll use these numbers to give you an idea.

I have five rooms in the property. Two rent for $170 per week, one for $175 and two for $200 (the newer tenants and the current going rate).  Each week that becomes $910, in four weeks that becomes $3,640 which is significantly more than the $1,400 max I would make from a single occupant.

Now I do supply internet and cable and I do pay for all the utilities, and my maintenance costs are higher, but I still clear over $1,500 a month when it’s full. Note I did say when it’s full!

Normally in properties like this you have much higher turnover, so it’s important to stay on them and fill vacancies ASAP. This particular property though my last vacancy was almost five months ago, for a week, and before that it was probably four months prior again! Did I mention cash cow?

It’s Not All Rainbows And Unicorns Though

It’s not always like this though. I do have problems. I do have to evict tenants, there are more things that break due to more wear and tear, but when they work, they do work extremely well!

Plus, as I pointed out earlier, it takes a property that wouldn’t really work as a profitable rental and turns it into something that works like gangbusters.

So, if you’re stuck with a property that doesn’t quite cover the expenses and that you can’t sell maybe you need to entertain the prospect of running your own rooming house!

If you liked this article, you may also want to check out this one Renting Out Rooms – Rooming Houses As a Rental Option

Or check out my Rooming House Resource page by clicking on the following image,

Boarding House and Rooming House information
Rooming House Resource Page

Rooming House Tips

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Filed Under: Investing In Rental Real Estate, Landlord Business, Rooming Houses Tagged With: profiting from rooming houses, rental cash cows, renting out rooms, rooming houses

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