A lot has changed recently in what potential tenants look for in a rental. Whereat one time, young adults moved towards building families in their 20s, they are now waiting for their 30s or even later to start families. Additionally, it is taking much longer for this younger group to be able to afford a place on their own, family or not. This presents landlords with some interesting opportunities and challenges. One way to attract these tenants who struggle to afford a place on their own is to rent individual rooms rather than a whole house or apartment. There are significant benefits and drawbacks to this type of rental, though.
Pro: Increased Revenue
One major benefit to this sort of arrangement is the potential to get more for your property than you might by renting it out on its own. While a three-bedroom house in a market might get $1500 a month, you can rent each individual room for $600 a month or more, getting a full 20% more on the house. Even a smaller per room bump can bring in a significant profit.
Con: Damage in Common Areas
Having individual contracts with each room in a house or apartment creates some issues around common spaces, particularly damage. If you walk in and see the floor torn up, who’s security deposit do you pull from? What if they claim it was there when one person moved in but not the others? These issues can be easily managed with clauses in your lease but they need to be determined ahead of time, not when something comes up.
Pro: Smaller Vacancy Gaps
While we all try to have a new tenant lined up the month after the old one moves out, the reality is that sometimes it doesn’t quite work out that way. The advantage of renting rooms is that while you have a vacancy in an apartment, the other rooms might still be filled, lowering the financial hit.
Con: Less Tenant Motivation to Fill Room
When a roommate moves out of a traditional renting situation, the remaining tenants are responsible for the missing rent. Most people would then push hard to find someone to fill the empty room, helping you out by keeping the place tour ready and maybe even helping with advertising on their social networks. If they don’t see a financial hit from an empty room, though, they might not make it quite as easy for you to fill it.
Pro: Individual Contracts for Individual Situations
Does one tenant want the stability of a year-long lease but another willing to pay more for a shorter-term contract? Individual room rentals make this incredibly easy. Not only can you rent to a wider range of tenants, creating individual contracts keeps your exceptions and choices between you, and the tenant concerned.
Con: Roommate Problems Become Your Problems
No one wants to deal with roommate squabbles, least of all, you. Renting rooms individually can run the risk of opening you up to dealing with issues that would have previously been none of your business. Someone who doesn’t do the dishes wouldn’t typically be your problem but when the common areas are now not anyone’s individual responsibility, it might fall in your lap. Having clear clauses about the use of those common areas and mediation can prevent these issues from taking up your own time.
Pro: Tenants Bring in Their Friends
It is natural for people to want to know and like their roommates. While above the drawbacks of individual rooms opening at different times were discussed, there is also a benefit. If your tenant has a friend they would like to live with, you have the chance to fill the room quickly, and, again, at that higher price point than renting the whole unit.
As you can see, there are many pros and cons to renting individual rooms rather than whole units. Either way, using PayRent to allow your tenants to pay rent online easily and securely will attract people to your units.