I’ve been renting out my rooms for nearly eight years and over those years, I had 14 different roommates. All those roommates have rented a room for varying lengths of time. On one extreme, someone has rented a room for 43 months while others have rented for as little as three months.
I want to share my data points of the varying lengths that each roommate has rented. It’s not going to be mind blowing, but it will be useful to some folks that are apprehensive about renting out a room and determine what kind of commitment roommates are looking for.
The chart below illustrates the length of time roommates have rented from me in ascending order. This was the first time I went through my records and put together data of occupants throughout my renting rooms career.
I’m going to say that person who rented a room for 43 months is an outlier. That person was in the Navy and was went to sea for several months as a time. He’s was the also perfect roommate during those months – paying rent in full and living somewhere else – something that is very rare and what every “live-in landlord” strives to find.
I’m also going to exclude the folks that only rented for 3-month renters to remove the outliers at the other end of the spectrum.
Based on my numbers, I was surprised that in between the outliers , most of my roommates typically rented for about 15 months on average. I felt like roommates stayed about 10 months on average. I guess time flies.
Why is the length of time important?
I get a lot of e-mails like this:
Hello Mike, I am thinking about purchasing a house in the near future
and renting some rooms out. I’ve completed grad school but I will
remain in the area and will likely rent out to other grad students. I
read through several of your posts. Great stuff.
First time or newbie “live-in landlords” can benefit from a roommate that’s only looking to rent for three months because it’s a short-defined trial period to see how life is with a roommate. Simply it’s a litmus test to see if you’re up to the challenge of being a “live-in landlord.” There have been a number of 3-month renters and those would be a great fit for those newbie “live-in landlords.”
If you looking to build an emergency fund or pay off debt, you’ll be looking for someone that wants to rent for a year or longer. That’s because the transitional period of finding a roommate can lead to unoccupied rooms. In the game of real estate, you want to avoid unoccupancy.
During my entire time renting out rooms thus so far, I had 7 total months where a room went unoccupied. There was never an instance where I had both rooms go unoccupied. Given that the maximum number rooms I could rent out per month is 2. And the number of months I’ve been renting out rooms is 88 months. That’s a total of 176(88 x 2) rent checks I could potentially collect.
Since, I only had a total 7 months where 1 room went unoccupied. This represents a less than 4% occupancy rate(7 months / 176 months). Additionally, I’ve only calculated the unoccupancy rate from the time I moved down to the basement and rented out both rooms. The unoccpuancy rate would be closer to 3.5% if I included the time that I only rented out one room while I was living the master bedroom.
What kills me and the aforementioned chart doesn’t show it, is that of the 7 months, there were 3 consecutive months where one room was empty. I think that’s the longest stretch that I had trouble finding someone and just a bit of bad luck. Kind of like going fishing 3 saturdays in a row and not catching a fish.
Since my unoccupancy numbers are low, it indicates that my rent price is set very competitively to the market rates. If I’m asking too much for rent, I could have longer periods or complete unoccupancy. So it’s important to set rent prices competitively with your local market.