How one mismatched tenant emptied a four room co-living house over five months, a case worth six thousand one hundred dollars

The $9,200 of furniture is the part to stare at. You spent that once and then had a house that only cleared about $200 a month over the simple version, so the furniture is a multi year payback on its own before anything else goes wrong. Did you rebuy any of it or did it hold up?

The number that decides whether this house works is the one you didn't set: a room-level vacancy assumption.

With a whole-house lease you have one lease and one turn event. Four room leases give you four independent turn events, and each one carries days empty plus a re-let cost. If a room turns on average every 11 months and each turn takes 3 weeks to fill and clean, that's roughly 6% of gross gone to vacancy before anything unusual happens. At $2,700 a month gross that's about $162 a month, or $1,950 a year, purely as a normal operating cost.

Your stated spread was $850 a month against the $1,850 whole-house alternative. Take out normal room churn at 6% and you're at roughly $690. Take out the higher utility load, the furniture depreciating on a replacement cycle, and higher cleaning and supplies in common areas, and the honest spread on a house like yours often lands somewhere between $350 and $550 a month. That is still a real advantage, and it is much thinner than the headline.

What happened to you is a correlated failure, where one bad placement caused three vacancies instead of one. That risk is specific to shared occupancy and it does not exist in a whole-unit lease. You can reduce it with written house standards and slower placement, and you cannot remove it.

The assumption everything above depends on is your average tenancy length. If your rooms hold 20 months, the model looks strong. If they hold 8, the churn cost eats most of the density advantage and you should be underwriting it as such from the start.

You let room 4 out mid-lease. Was that a written mutual release or a handshake? I ask because that's the sort of thing that comes back a year later when someone wants a deposit accounting.

Nine days to fill is the line worth underlining. Anyone working a list of 4 and 5 beds tends to assume fast fill is the win condition, and this case says the opposite.

Dumb question, when you say you had nothing written down about guests, was there no house rules document at all, or was there one and it just didn't mention guests? Trying to understand whether the fix is a longer document or a different kind of document.

@jessreyes12 I had the same question. And a second one, if the guy paid on time every month, on what grounds do you actually do anything mid-lease? Feels like once someone is in and paying, your only tool is not renewing them, which is up to a year away.

I've eaten this exact one, smaller. Three room house, filled the last room in a week because the mortgage doesn't care about my standards, and lost two good tenants over the next four months. The incentive is backwards. Empty room costs you $156 a week and it's visible. Bad room costs you three tenants and it's invisible until it isn't. So you always fill fast.

The only thing that fixed it for me was deciding in advance that I keep six weeks of one room's rent in a separate line so an empty room stops feeling urgent.

@joe_delgado5 that reframing is useful. The vacancy reserve isn't about surviving the vacancy, it's about not making a bad decision during it.

The piece I'd add is that you were the escalation path for all four tenants and there was no process. Three people texting the owner directly about a fourth person is a design problem. The process that holds up on shared houses: complaints go in writing to one channel, each one is logged with a date, and the tenant gets a written notice citing the specific lease term at issue rather than a phone call. After two written notices the non-renewal conversation starts early, also in writing. The calls you made were kind and they left you with no record. With three dated log entries and two notices on file, room 1 and room 2 might have believed something was happening and stayed.

Hollow core door replaced at $610 with a mattress, so the door was maybe $180 installed. Fine. But if a door got put through, the log @tonyv88 is describing matters more than the screening question.

Your 26 room-weeks at $156 gives $4,056, and that checks. The piece that is missing from your $6,100 is that during those weeks the house still burned full utilities. Four rooms of heat and hot water capacity for one resident. On a house billing $430 or so all in, three mostly empty months is maybe $700 of utility paid with no room revenue against it. So call the event $6,800. Also, was the $1,850 whole-house number a quote or an estimate? Comparisons like this almost always carry a soft alternative number on one side.

For anyone weighing this against a straight duplex, @rena-expert's $350 to $550 honest spread, read alongside the correlated failure point in this thread, is about as clear an answer as the question gets for now.

@aaron_fitz10 careful with that. The spread was thin on this house at these rents. Four rooms at $675 is a $2,700 house against an $1,850 alternative, which is a 46% lift. Houses where rooms price at a real premium to the whole-unit market look different, and so do houses with 3 or 4 bathrooms.

The part worth examining is what the fast fill decision actually looked like at the time. Quarry, when you took the guy in nine days, did you have another applicant you passed on, or was he the only one?

The thing I keep coming back to is that you had two rooms promised for fall, which means you were solving for occupancy in a future month while filling a room in the present month. That's how the urgency got manufactured. If your leases all roll toward the same season you'll do this again.

The question to ask of any rent by the room setup is why anyone takes the paperwork of four leases over one. The $200 a month answer in this thread is clarifying.

Two bathrooms and four adults, and one of them hosting. Adding a third bath in a house like that is often a $14k to $22k job if there is stack access, less if you are converting an existing half bath. Against $6,100 of preventable loss, that math is closer than people assume. It does not fix screening. It does lower the temperature in the house.

@gregpowell66 that is the version worth pushing, but only if the added bathroom lets you raise all four rents. Otherwise $18k was spent to reduce arguments.

Worth taking the cause apart, because screening is getting blamed for a budgeting failure. Your plan said $850 a month of extra income, so $10,200 a year. Against that you carried furniture at $9,200, which on a five year replacement cycle is $1,840 a year, and in shared houses mattresses and seating go faster than five years, so call it $2,200. Room churn at @rena-expert's 6% on $32,400 gross is $1,950. Higher utilities plus common area cleaning and supplies, compared with a whole-house lease where the tenant pays, run easily $4,800 to $5,200 a year on your bill profile. Add those and you are at roughly $9,400 of extra cost against $10,200 of extra income before one thing goes wrong. Your reported outcome, about $200 a month better than the whole-house lease, is almost exactly what those three numbers predict once you add a bad quarter. The house performed as underwritten. The underwriting was wrong. That matters because the fix people are proposing in this thread, better screening, addresses a real risk and does not change the arithmetic. If a perfectly behaved fourth tenant had shown up, you would have made maybe $500 a month over the alternative on a house that takes ten times the management. That may still be worth it to you. It is a different decision than the one you thought you were making. So the number worth knowing before house two: what does a room in that submarket rent for as a percentage of the whole-house rent? Yours was 146%. It is hard to see 146% clearing the bar once you honestly load furniture, churn and utilities. These tend to work at 175% and up, and at 3 or more baths.

@hannah_west29 146% versus 175% is the most useful thing I've read this week. That's a screen I can apply before I ever look at a floor plan.

Sorry, basic, what does room-week mean here? Is it just one room empty for one week?

@megan_doyle15 yes. Four rooms empty for a week is four room weeks. That is how you compare a lot of small vacancies to one big one.

I disagree with @hannah_west29 a little. The utility load is real but you can price it into the room rent as a flat fee and most tenants accept it, which moves it from your cost line to revenue. That changes the 146% test, because the whole-house comparison usually has the tenant paying utilities directly. Compare rent-plus-fee against whole-house rent and quarry's house is maybe 170%, and then the question is only whether the flat fee covers actual usage.

Still agree the furniture and churn numbers were never in the original plan.

The part I find interesting is that three tenants came to quarry rather than to each other. Somebody is providing a service in that house whether they meant to or not.

Quarry, on the mid-lease release for room 4. If you want that to be clean, it wants to be a signed termination agreement that states the end date, the deposit handling, and that neither side owes the other anything further. A verbal release plus handing back keys leaves the term of the lease arguably running, and how that plays out depends on your state's landlord tenant statute, so have someone licensed there give you a form you can reuse. You will need it again.

Worth asking what your lender thinks four leases means on that property, separately from all this. Some loan products describe the permitted use in ways that do not contemplate room by room letting, and the only way to know is to have the loan officer point you at the section and confirm in writing.

What I take from the whole thread: the income density is real, and it comes with a correlated vacancy risk that a whole-unit lease doesn't have. @hannah_west29's percentage screen and @marcus_hale41's point about lease end dates clustering are the two things I'd carry forward. Quarry, if you run this house another year, I'd be curious what the average tenancy length turns out to be, because @rena-expert's whole answer hangs on that number and you're the only one who'll know it.