4 bed house, whole-house lease at 2,100 or four rooms at 750

I have a 4 bed 2 bath under contract in a older neighborhood about a mile from a community college. Closing in three weeks and I still haven't decided how to lease it.

Whole house comps are 2,050 to 2,150 for something in this condition. By the room, the furnished listings near campus are asking 725 to 800, so call it 750 a room, 3,000 gross if I fill all four.

What I have written down so far on the by-room side: utilities and internet about 340 a month because I'd be paying them, furniture and beds about 6,000 up front (warehouse store level stuff, nothing nice), plus a cleaner for the common areas every other week at 120 a visit. That takes 3,000 down to something like 2,400 before I touch vacancy.

So the spread is 300ish a month for four leases instead of one. That feels thin for the extra work, and I move fast on deals so I usually find out later what I missed.

What I'm unsure about: how to think about vacancy when it's per room instead of per house, and whether the 750 asking rents are actually what people are signing at. There's no HOA here, which I checked, but I haven't read the city's occupancy rules yet.

The decision in front of me is whether to buy furniture before the first tenant signs or list one room unfurnished and see what happens.

2 replies

1tylerbrooks9PassivePRO5

Your 300 a month spread is the part that should stop you, because it's the part most likely to be wrong in the wrong direction.

Per-room vacancy doesn't behave like whole-house vacancy. With one lease you're either 100% or 0%. With four you're realistically at 3.4 of 4 filled across a year once you account for the two week gaps between a room emptying and the next person moving in, and college-adjacent rooms tend to turn on a school calendar so several can empty the same month. Run it at 3,000 times 0.85 and you get 2,550, then take out your 340 and 240 and the cleaner, and you're at roughly 1,900. That's below the whole-house number.

That doesn't kill the idea. It means 750 has to be real and you need to check whether it's asking or signed. Call three of those listings as a prospective tenant and ask what's actually available today and what they took last time. Asking rents on room listings stay up long after the room fills.

Before furniture, read the city's definition of family in the zoning code. A lot of single family zones cap unrelated adults, and three is a common number. If yours caps at three, your fourth room is a problem and the whole spread disappears. A local land use attorney can tell you how the code reads for your parcel, and that's worth the hour.

On your actual question, don't buy four sets of furniture on spec. Furnish one room, list it, see what it signs at, then buy the rest.

4 bed house, whole-house lease at 2,100 or four rooms at 750

2 replies