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.
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,
