The turnover math is eating my room-by-room management product

Per-lease fee, every time. I ran a percentage model for two years and the houses with the most turnover were the ones paying me the least per hour, which is backwards. Charge a monthly that covers rent collection and maintenance coordination and then charge the turn as its own line item, 300 to 400 per room placement depending on your market. Owners understand paying for placement because they've paid a leasing fee before. What they don't understand is why five turns a year costs you more than one.

Ask the owners what their loan looks like before you sign them. Some owner-occupant loans and some insurance policies have language about the number of unrelated occupants or about renting by the room, and if a client is out of step with theirs, you inherit that mess when the claim or the escrow review happens. Whether any of it actually bites depends on the specific documents, so make them show you the policy and the note rather than telling you about it.

Rooms in my market go for 425 to 500. Eight percent of that is 36 a room. There is no version of this business out here. Just saying the model only works above a certain rent floor and you should figure out where yours is before you take a house that sits below it.

What does renting by the room actually mean on paper? Is each person signing their own lease for a bedroom, or is it one lease for the whole house and they sort it out? I've read both described as house hacking and I can't tell if they're the same thing with different words.

@juniper they're different. Separate leases per bedroom means the owner carries the vacancy on each empty room and controls who replaces them. One joint lease means the group is on the hook for the whole rent and they find their own replacement. Lantern, which one are your six houses? Because the labor picture changes completely and I think you priced the first one.

Who screens the incoming roommate when a room turns mid-lease? If the existing tenants get a veto you have a scheduling problem on top of everything else, and if they don't, you have an unhappy house. That's a real cost and I don't see it in your four hours.

I did this on two houses in my own portfolio and stopped. Not because the money was bad, the money was actually better than whole-house. It was that every room turn is a full leasing cycle and I was doing 11 of them a year across ten beds. If you're selling the service, price for 11 events, not for the calm months.

Before pricing I'd want to know how many of the six houses are in cities with occupancy caps. Plenty of places limit unrelated adults per dwelling, and the definition of family and the cap both vary by city and state, so it's a per-address question with the planning department. If two of your six can't legally hold five unrelated tenants your pipeline is four houses and the flat rate has to carry it.

Slower question. Why are you starting with the price? I'd want to know what happens on your worst house for a year first, then price off that. Take one at cost, log every hour, and you'll have a real number instead of a 40 an hour estimate you made up. It costs you a year. You're going to spend the year anyway.

Following @arbor, some ordinances also treat rooming or boarding houses as a separate use requiring a permit, and whether by-the-room renting trips that definition depends entirely on the local code, so it's worth having someone read the actual text for each jurisdiction you're operating in. I'd also want to know whether your fee structure changes if a house gets cited, because that conversation is much easier before than after.