Today, you're going to learn how to create
even more cash flow through real estate investing.
We are talking about renting by the individual room.
I am Tiffany Thomas with Wealthy
Tiffany Dotcom, and I achieved financial freedom at age thirty eight.
And if you are looking to achieve financial freedom at a young age as well,
hit that like button and hit the subscribe button and we're going to dive right in.
I recently got a comment on one of my videos asking exactly how I rent
by the room and I've gotten that comment before.
So I thought I will do a video on this and explain my full process so that you
can create more cash flow through real estate investing if you want to rent
by the room instead of renting out the entire house.
We are going to talk about the pros and cons of renting by the room and then
my actual process on how I rent by the room.
Let's first talk about why I choose
to rent by the room instead of renting out the entire house.
And like I mentioned before, the main reason is to create more cash
flow, because if you are renting out the entire house,
you're not able to charge as much as you would if you were renting by the room.
And let's use my single family home that I purchased in twenty eighteen,
for an example. I went online to see how much people were charging for rent
for properties that were in the same area where I had just purchased my single
family home and the rent prices were about eighteen hundred dollars a month.
And I thought, OK, I could do that or I could see how much I
would be able to get if I broke it up by bedrooms.
There are four bedrooms in that house.
So what I decided to do was take the two
bedrooms with private baths and rent them for six twenty five.
That was a pretty good rate.
And then the other two bedrooms, which are pretty small and they share a bathroom.
I did those at five hundred and thirty.
So if you add up six twenty five,
six twenty five, five thirty and five thirty you'll come up
with two thousand three hundred and ten dollars.
So if I were to rent individually by the room I would have a profit of five
hundred and ten dollars because if you take the total amount, that $2,310
and minus $1,800, which is what I would be able to get if I
rented out the entire house, you would get $510.
So that would be the extra cash flow
that I would be making if I rented by the room.
And to take that example a little bit further, if there were even more bedrooms
than just four, then you would be able to make even more money because,
while, yes, renting out the entire house
with more bedrooms would be a little bit more.
But the amount that you could make by renting those rooms individually would
be significantly more than if you were to rent out the entire house together.
Another reason why I like to rent
by the room is because then your house is never completely empty.
You're always collecting some type of rent each month.
If one girl were to move out,
I would still have three other renters in my four bedroom place.
And honestly, my properties don't stay vacant hardly at all.
They are fairly easy to rent,
but if they were a little bit harder to fill then for a month or two,
or maybe even three months, I would have one room that was empty,
but I would still be collecting that cash flow on the other three rooms.
So I like the idea of never having just a completely empty house and not
collecting any rent whatsoever and going along with that.
If there is one tenant that is not working out, then I can get rid of that tenant
but still have the three remaining tenants paying me rent.
And luckily I haven't had to do that yet.
Another benefit is that you don't have to go in and clean the entire house.
When someone moves out, you just go in and clean the bedroom
and bathroom that they have been using by replacing just one tenant.
It gives me a reason to come over and take a look at the property.
And another benefit of renting to single
adults is that they usually take care of the property better than kids would
just because kids are a little bit harder on the home sometimes.
And that's not to say I am against kids or anything.
I just know they can be a little bit harder on homes.
I did rent to a single mom before with two
little kids in my smaller condo, which was just fine.
So I know that not all kids are hard on the house.
I've just heard that before. All right.
Now that we've talked about some of the benefits by renting the room,
let's talk about the cons of renting by the room.
The first one is that you will show the place more often.
So I do have my tenants set up on year leases, but since there are four separate
leases, they are usually at different times.
So you're not going to just go over
to the property when the 12 year, or 12 month lease is up and clean the place
and then get a new tenant, you'll go over maybe at the third month
mark and then three months after that and then three months or something like that.
So you are going over to the place.
If that person is moving out, sometimes they do renew.
And then you won't have to worry about doing that, but when you are renting
by the room, you have four separate renters if you have a four bedroom place.
Just expect to go over to the property and show the property more often.
The next con is that there can be some roommate drama.
Sometimes I have received text messages
from my tenants complaining about other tenants in the home sometimes.
So there is that element that you have to deal with.
But honestly, the extra cash flow makes it worth it for me.
And I haven't had tons of drama.
There's just a few different times where
I've had to deal with some drama in the house and it could just be
that I am renting to females instead of males.
So maybe with males there won't be as much drama.
But that is something to consider when you
are deciding whether or not to rent by the room.
But I don't really do drama. So I acknowledge what's going on and then
try to get them to come up with a solution.
And if they aren't able to, then I provide a solution and I notify everyone.
Part of the drama could include cleanliness.
Some of the tenants might be cleaner than
other tenants and I personally just let the tenants clean the place.
But I do have a friend who invests in real
estate properties as well, and she decided to just go over
to the property and check it, I think every other week or every week or so.
And if the property isn't up to her
cleanliness standards, which she actually sets in the contract,
she's very upfront about this, that it will be a very clean place to live.
So if they are not OK with that, they do not have to sign the lease.
But she'll go over there and check.
And if it's not up to her standards,
then she will actually hire someone to come in and clean the place and then
charge the tenants for the amount that she paid to get the place cleaned.
That could be one option if you are having
trouble with the tenants keeping the place clean.
Another option would be to include an extra fee that pays for a maid service.
So you can just hire that out.
You can have someone come in every week and clean the place.
And I've heard it's around twenty five dollars an hour.
I haven't really looked at the prices myself,
but if she takes an hour and cleans every week, then you can just add an extra
twenty five dollars to rent that you are charging.
And then that way they would have a very
clean place to live in and you wouldn't have to worry about going over there
and cleaning things up or making sure that your property is kept clean,
depending on which state you are in and which city you are in.
There may be some regulations on how many
people can live in one property together that are not related.
So I would definitely check out your city ordinances and see what the regulations
are, because if you aren't able to rent more than two people that aren't related,
then this may not be a good option for you.
All right,
now that we've talked about the pros and cons of renting by the room,
let's talk about the process on how I actually do this.
I set up my ad and I do it just for the single room.
So I'll do a post online.
And I live in Utah and we use KSL a lot.
So I will post it on KSL.
There's also some Facebook groups that I
post in, which are housing groups. And in my post
I include that it is a private bedroom that you'll be renting with a private
bathroom if that's the case, or if they are sharing a bath with just one other then I
post that in my ad and then I will say it is rent plus utilities.
I charge the utilities to the tenants and the first girl that moves
into the property, she'll put the utilities in her name.
And this is worked out fine for me.
But I have heard of people that don't want to have that hassle.
So they include utilities in the rent price that they are posting.
And as far as pricing, I look online to see what a single bedroom
is going for in the area that I have my property in.
And I kind of compare if it's an older
property or a newer property, and then I decide usually to go in the middle range.
I know a lot of people go in the lower
range because it is easier to get it rented.
But I like to try to appeal to people that are going to pay on time.
And sometimes when you have that lower
price, the tenants aren't quite as reliable.
That's not always the case.
But I just choose to go in the middle
range and make a little bit more money and usually have more reliable tenants.
Once I get interest in the ad, I get people responding to it,
then I just schedule a time for them to come see the property.
All of my properties are within about
fifteen minutes of each other, so it's not that far for me to show the place.
But I did recently watch a video and I
wish I could remember her channel, but she manages a lot of properties,
so when she does her ad, she will have people fill out
an application and then she will decide who she wants to show the property
to and she'll pick a day that works for her and just schedule in the time slots.
So that could be another option.
I am a little bit more flexible and just
want to get the property rented as soon as possible, so I just respond when people
inquire about my ad and we set up a time and I go show them the place.
And if they are interested in moving in, I have them fill out a background
and a credit check to make sure everything looks OK.
And if it does, then I select who moves
and I don't give the tenants a say in who moves in.
I could if they are around when I'm
showing the place and maybe if I have a couple of girls that are interested
at the same time, I could ask the tenants, oh, which one did you like better.
But for me I just go on who has a really
good credit score who I think would be a good fit in that property.
And then I pick who I want to move
in because honestly I'm the one that will be collecting rent and if anything is
damaged in my property, then I have to take care of that.
I was running the background and credit check through Cozy DOT Co.,
but they have recently moved over
to apartments dot com, but they also decreased the price.
So it was at forty dollars.
Now it's thirty nine dollars plus tax.
So you can run the background and credit check through that website and just charge
the tenant that fee instead of you paying for that.
But if you are feeling generous or you really want that tenant to move in,
then you can say I will reimburse you that fee if you are approved and you move in.
I have done that with some people.
Once I choose who is moving in, I have them fill out a contract and I have
a 12 month contract for my tenants, except for those that are living with me.
They are month to month because it's
easier to show my own place than go somewhere else.
And if I want to get rid of a roommate, then I can do that very quickly.
But everywhere else is a 12 month lease.
And I recently heard this great idea.
If you are renting by the room, then you can stagger your leases.
So if you are renting a brand new property
and you have four open bedrooms, you can rent one for a 12 month lease
and then you could do one for a six month lease and a nine month lease,
and then you could do an 11 or even a three month lease.
And that way they are staggered.
So you aren't filling all of the rooms at the same time, but when they renew,
you can renew them at a 12 month lease so that they are still staggered.
I thought that was a really great idea.
The way I currently do it is everyone is on a 12 month lease and then for an extra
fee, they can go month to month or they can renew right after their lease is up.
But if I have two people renewing
at the same time, it would be a lot easier if they were staggered.
So I'm not posting two rooms for rent
at the same time, although after saying that I have had
people that are interested in renting with a friend.
So it may be kind of nice to have two
rooms available if two girls want to live together.
So you can just pick which way will work best for you.
And I keep track of all of the rental income that I have received and any
expenses that I've had for the property and a Google sheet and then to see
the overall picture, because I have multiple properties,
I use Personal Capital to manage all of my finances and keep an eye on everything.
So if you are interested in using Personal
Capital, it is a free app, which I find to be very convenient.
I will leave my referral link below
in the description and you can get a free twenty dollar Amazon gift card when you
set up a free account with Personal Capital.
Since my tenants are paying the utilities
themselves, then they are in charge of splitting that up and having
the roommates they are living with pay the utilities.
And if there is any problem with that,
then they send me a message and I let the tenant know that they need to pay
immediately because I add it into the lease.
So they sign the contract.
They know they have to pay the utilities
every month to the person that is on the utility bill.
When I first had tenants move
into that property, I didn't have any space regulations set up
and I had some problems since of people saying, oh,
so-and-so has half the garage, I don't have any space in there.
So I have changed that since so
that everyone gets space in the garage for storage.
So it's nice to have a few things like that set up in the beginning.
But as you can see, even if you don't,
as long as you get started, it makes a huge difference.
And then you can just make those mistakes
along the way and learn from those mistakes.
And that's why I'm creating these videos so that you can also learn
from my mistakes and learn my process and then you can improve on that.
And that's a very short breakdown on how I rent by the room. I have loved investing
in real estate. It has made the biggest difference in me being able to become
financially free and even become a millionaire.
And if you are interested in that process, I did create a video for you.
So I believe a link above and below
in the description and you can check that out later on.
Comment below and tell me if you are going to rent by the room when you are doing
real estate investing. Or if you have experience already doing this,
then comment below and share any tips that you might have.
And if you found this video helpful,
please hit that like button and share it with someone else who is interested
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Thanks so much for watching.
I'll see you in the next video.