depends on the part of NS you're referring to. I had a house across the street from a 'former' rooming house in Halifax. The owner of the rooming house turned it into an "inn", and said when it was a rooming house it was...uh, well...used on an "hourly basis by ladies who wore really high heels and a lot of makeup".
Buying a rooming house
My husband and his partner are seriously considering purchasing a rooming house in Nova Scotia (where the partner lives). We have owned and managed several rental units, but have never had anything to do with a rooming house before.
The building consists of one large commercial space on the bottom level (currently a restaurant) and nine rooms above. The numbers look really good - $5500 per month in rents, the mortgage and costs would be about $3000 a month, and the restaurant consists of $2000 in rent per month, so even if it didn't pay rent for some reason (which I consider to be the biggest risk factor here) we would still come out on top.
The previous owner of the building was also the restaurant owner. He is quite old now and is retiring. He sold the restaurant several months ago (after it being there for 15 years) and now wants to sell the building and move somewhere warmer.
Does anyone have any experience with purchasing or managing rooming houses? What are the main risk factors I should look at before we consider buying?
The building consists of one large commercial space on the bottom level (currently a restaurant) and nine rooms above. The numbers look really good - $5500 per month in rents, the mortgage and costs would be about $3000 a month, and the restaurant consists of $2000 in rent per month, so even if it didn't pay rent for some reason (which I consider to be the biggest risk factor here) we would still come out on top.
The previous owner of the building was also the restaurant owner. He is quite old now and is retiring. He sold the restaurant several months ago (after it being there for 15 years) and now wants to sell the building and move somewhere warmer.
Does anyone have any experience with purchasing or managing rooming houses? What are the main risk factors I should look at before we consider buying?
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LOL - well actually it IS in Halifax. Yeah, running a whorehouse isn't exactly the kind of investment I was looking for, but I am pretty sure that this is not one. The turnaround time is pretty high compared to the units I am used to renting, but the tenants still stay for months at a time, rather than just an hour or two ;-)
If you buy a rooming house, you are just buying yourself a PITA job. I used to own one myself. Rent collection, finding tenants, repairing damage, responding to complaints - all take a lot of time. It may have been good for the restaurant owner, since he was in the building every day. But do you want to be?
I owned a rooming house
When I was just starting out, the only way I could afford a house was to buy a rooming house. I lived on the main floor and rented out rooms in the basement and second floor. I lived there 3 years and then when I got married we kept the house. Mainly because we couldn't sell it since it is very hard to find someone who wants the responsibility of a rooming house. Here are the downsides. Renters usually stay short term. Who will clean up when they move out and rent rooms for you? What happens when you have a problem tenant? This can occur frequently with those with "modest" assets. Who will be there to settle any issues immediately? Do you have someone who will do maintenace on a quick basis in order to fix rooms for rerental? What will be your policy on eviction for non payment?
We were able to keep the house for 15 years because there was a wonderful older lady who lived next door who rented rooms for us and looked after any minor issues. But my husband was there every Sat to do maintenance and keep problems minor. If people know someone will be there regularly it does help a lot. Notice the owner lived in the building you are considering buying. We were in a residential neighborhood and the tenants knew that parties or overnight guests would not be allowed. We even had them sign a lease agreement before they were allowed to move in. This kept out ALMOST all problem tenants. All in all it provided us with a regular modest income when we were starting out and allowed me to buy my first home. It was a good, decent home for me and my tenants. Most of my tenants were good people who needed a modest home. I kept my rents low and so was able to pick and choose to a good extent and most of my tenants were long term renters. The reason we finally sold was that the city was mandating very strict fire regulation upgrades and our insurance company was going to raise our premiums over 500 %. We never made a claim but there had been a lot of fires in other rooming houses and they were doing their due diligence. We finally sold it to a realtor who was looking for a first home for her son. When the owner lives in the insurance costs are more reasonable. Make sure you look at this investment very critically because this will be very difficult to sell quickly. Good luck
When I was just starting out, the only way I could afford a house was to buy a rooming house. I lived on the main floor and rented out rooms in the basement and second floor. I lived there 3 years and then when I got married we kept the house. Mainly because we couldn't sell it since it is very hard to find someone who wants the responsibility of a rooming house. Here are the downsides. Renters usually stay short term. Who will clean up when they move out and rent rooms for you? What happens when you have a problem tenant? This can occur frequently with those with "modest" assets. Who will be there to settle any issues immediately? Do you have someone who will do maintenace on a quick basis in order to fix rooms for rerental? What will be your policy on eviction for non payment?
We were able to keep the house for 15 years because there was a wonderful older lady who lived next door who rented rooms for us and looked after any minor issues. But my husband was there every Sat to do maintenance and keep problems minor. If people know someone will be there regularly it does help a lot. Notice the owner lived in the building you are considering buying. We were in a residential neighborhood and the tenants knew that parties or overnight guests would not be allowed. We even had them sign a lease agreement before they were allowed to move in. This kept out ALMOST all problem tenants. All in all it provided us with a regular modest income when we were starting out and allowed me to buy my first home. It was a good, decent home for me and my tenants. Most of my tenants were good people who needed a modest home. I kept my rents low and so was able to pick and choose to a good extent and most of my tenants were long term renters. The reason we finally sold was that the city was mandating very strict fire regulation upgrades and our insurance company was going to raise our premiums over 500 %. We never made a claim but there had been a lot of fires in other rooming houses and they were doing their due diligence. We finally sold it to a realtor who was looking for a first home for her son. When the owner lives in the insurance costs are more reasonable. Make sure you look at this investment very critically because this will be very difficult to sell quickly. Good luck
Thanks, excellent advice. I will pass it on to my husband. The partner who lives in Halifax was going to be taking care of the house, but I am not sure how aware he is of how much work it could be. And although he is willing to be hands on, I am also not sure how capable he is at fixing things. It would be a steep learning curve for him.
Real Estate
Well… I visit your website first time and found this site very useful and interesting! Well… you guys doing nice work and I just want to say that keep rocking and keep it up!!!!
Cynthia Kurtz
Estate Planning
bd5e40d09478797ef446a7e11fc0205c
Well… I visit your website first time and found this site very useful and interesting! Well… you guys doing nice work and I just want to say that keep rocking and keep it up!!!!
Cynthia Kurtz
Estate Planning
bd5e40d09478797ef446a7e11fc0205c
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