Re: Feasibility of Rooming Houses?? Help, please. - Posted by Sue(NC)
Posted by Sue(NC) on May 06, 1999 at 21:11:29:
We have one rooming house, and the cashflow is good…but not nearly as good as it could be because of the time involved.
Our rooming house has a higher vacancy rate than our apartment rentals. Not for lack of prospective renters. We have people who call us (no ad running, no yard signs, no units available) about twice a month.
Unfortunately, most people looking for a room have no telephone, no car, and less concern about breaking appointments than most apartment renters. For every appointment kept, three are broken. And you won’t get a phone call about it. You’ll just go for the appointment and waste your time waiting.
Rooming house tenants also break leases with great regularity. And it’s hard to collect a big security deposit up front. You won’t find many tenants if you demand one.
Since many rooming house renters are just a step above homelessness, you will almost always have to EVICT to get non-payers to move. They have no ‘one-step-down’ accomodations where they can move after leaving your house.
We need to collect rent WEEKLY from our rooming house tenants. If you miss your tenant’s payday, you might be out of luck. Some will blame YOU, the landlord, for not collecting the rent before they went out drinking Friday night. Major management headache.
So count on higher vacancy rates, more evictions, and much more management. If you’re just starting out and have time to spare, it might not be bad from a cash flow perspective. But have an exit strategy, because as your time becomes more valuable, you will find more profitable ways to spend your hours.
You will have become a landlord in a trial-by-fire fashion. And you will have heard some interesting stories!
By the way, check with your local housing/zoning authority before converting your existing building. Our city has a limit on the number of rooming houses within a certain radius. You also need special permits and inspections for rooming houses of over 4 units. There are also restrictions on the number of unrelated persons who can live in one home.