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larrywww

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Reply with quote  #1 
How does the landlord accomplish this?   We're talking bunk beds, 5 to each bedroom.  (They even price the bottom bunks higher, since you can use the storage underneath the bed).

The real question is how he gets away with it----especially since he is making $14,000 a month in rent---and has enough to also have a resident manager.  And there are only 2 bath rooms.  They have maid service twice a week.  The interesting thing is that this one rental has flooded the neighborhood so that there is ZERO neighborhood parking.  But at $585 apiece----which is a small fraction of normal rent---most of the renters like this proposition (at least, better than renting themselves---although it sounds like most have fairly minimal incomes----some are even former homeless.

The real punchline of the radio interview was that code enforcement has been called---repeatedly---and they said there is NOTHING that can be done about it.  That surprised me, I must say.

Also, this doesn't fall under rent control because it's an SFR---not technically a multifamily.  (Although it DOES have 2 kitchens).

Here is the story.

https://www.kcrw.com/news/shows/greater-la/how-25-roommates-are-able-to-share-1-highland-park-house/how-to-afford-la-get-25-roommates

If this is accurate, then maybe running a rooming house isn't really a bad play.  (Of course, you could only have one of these megahouses per neighborhood----since you would quickly exhaust the parking).

With a gross annual rent of $168,000 (and alot of it in cash)---this doesn't sound like a bad investment.  It looks like the back yard (and front yard) are concrete---and in the back yard is an enclosed area where some of the renters congregate.  (They have photos in the article). Most of the renters are in their 20s---alot of students and lower end occupations, it sounds like.  (These aren't the kind of renters who can easily qualify for most normally priced rentals, in any case.)

On the surface, it sounds like a logistical nightmare---but somehow it seems like they are making it work.  (Highland Park, BTW, is a lower end neighborhood that is in the process of gentrifying---just like nearby Echo Park).

On the other hand, Los Angeles hasn't in the past regulated short terms rentals.  Interestingly, starting  7/1/2019, they are.  No longer can you use airbnb and be a non resident landlord.  That what may trip up this particular landlord.

Anyway, here are the new rules.

https://www.kcrw.com/news/shows/greater-la/a-pending-rule-change-for-airbnb-and-other-short-term-rentals-in-la/las-new-rules-for-short-term-rentals-who-are-the-winners-and-losers

My guess is that this rental was able to survive because Los Angeles never regulated Airbnb---and that once they apply for a license this whole scheme may come crashing down.  My suspicion is that it would have been smarter not to push the envelope---but we will see if they are able to survive.

Does anyone have an opinion on this?  Have you tried this?  It seems like Airbnb (and other websites) have supercharged the SFR rental scene potentially creating new opportunities (if your city doesn't outlaw or overregulate it). 

rickencin

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Reply with quote  #2 

The politicians are crying big crocodile tears about the poor people who can't find "reasonable" rents in one of the most desirable cities in America.  Is Bakersfield having a housing shortage?  The real question is what would the per person rent be for a 2/1 house with three people living in it, in the same neighborhood?  A thousand a piece?  Fifteen hundred?  Twenty Five hundred? Who knows?  I'm guessing it's not $600-$800 (depending on utilities included).  
You would only want to rent by the bed or bedroom in a beater house.  One that condition isn't very important.  We all know the famous phrases "beat it like a rented mule" and "I can do anything I want as long as I pay the rent".  You would not want to do this with a "pretty house".  Just assume all rooms are double occupancy (although this proves that it could be more).  The second someone gets away with saying they are single usage, the boyfriend/girlfriend will immediately move in.  As a matter of fact Bobbies girlfriend will move in, Bobby will move out, New boyfriend will move in.  Both will move out, but they have two friends to move in.  You'll never keep track of it.
It helps to have a resident House Master sympathetic to the landlord, and getting a break on rent, to keep things in line in real time.  Boots on the ground. In college this was called a Resident Assistant.  No "the landlord will never know".  Get one of those (first born?) people who think they have the right and duty to run other people's lives.  Security deposits are a huge problem.  Dan moves out and gets his $1,000 security deposit back from his friend who moves in.  He moves out and get the security deposit back from the new guy.  You evict everybody and keep all the security deposits because there is way more than that in damages.  Everybody screams at the same time that Bobby, Suzie, Ken and Jill did the damage.  Not Me!!!!!!!!!!!  Here's their phone number/address/relative/employer.  You smile and tell them, that's nice, you can collect the damages you are paying from them.  


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Rick
rickencin

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Reply with quote  #3 
Podshare:

https://start.att.net/news/read/category/news/article/cnn-this_bunk_bed_is_1200_a_month_privacy_not_included-cnn2


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Rick
larrywww

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Reply with quote  #4 
Yeah, I read about Podshare too.  Thanks for posting, Rick.

But actually this business seems to possibly serve a valuable niche market.  The advantage according to the article is you arguably have more social exposure---if you rent an apartment alone it's kind of isolating.  This is one of the lessons learned by the younger generation.  Oddly, the founder's father warned her against pursuing this business model---no one wants to share lodgings with total strangers.  But that turned out to actually be part of the attraction for the younger generation.  Go figure.

They also quoted a young student from Pakistan----who had zero credit history---but he had money behind him.

And actually the quality of their tenants seemed way higher than the ones in the above article---some of whom were just one step above being homeless.  (Actually, some of whom were former homeless---Yikes).

Some of the tenants were attracted also to be connected to other young professionals---maybe even in a way that will help them  advance in their businesses.

And podshare exists in a number of different cities---so it's an idea that might be expanding.

And even the cost factor is somewhat positive---alot better than being dinged for having multiple utility accounts---and no real long term commitments.  Which may be advisable for someone still struggling to find their permanent work situation.

The rental market may be changing.  To a generation that is sharing autos, workspace and even doing online dating, maybe this isn't that weird.   I don't know if this model works, but I can see there is at least SOME upside.
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