Being A Rooming House Landlord Can Be A Tough Job
Most 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.
Did 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,