If you're worried property management fees will hurt cash flow on your rental (they can!) learn how to avoid hidden fees and negative impacts on rental income with an alternative solution.

Will Property Management Fees Hurt My Cash Flow?

Due to high costs and hidden fees, traditional property management companies can negatively impact your cash flow and ROI. However, Belong offers homeowners a modern alternative to property management that’s much better for cash flow.

Carefully calculating cash flows alongside other financial metrics will allow you to estimate rental management expenses. With this information, you can evaluate the positive potential financial impact Belong can offer homeowners. 

Cash flow is an essential financial indicator for anyone renting out a home. It’s part of a bigger picture that helps you assess the costs and profitability of managing your rental home. You can calculate the cash flow of your rental property using a simple formula. 

Cash Flow = Total Income – Total Expenses

In calculating your cash flow, it’s essential to account for all the expenses associated with your property. These include, but are not limited to:

How is cash flow related to the ROI of a rental property?

A cash flow analysis provides critical information for understanding the return on investment (ROI) of a rental property. Ideally, you’ll want your rental home to have a positive cash flow. A positive or gross cash flow confirms that you are bringing in more money than it costs to pay for and manage your rental home.  

If your rental home generates a positive cash flow, you can use it to calculate the return on investment for that property. Calculate the ROI of your rental home by dividing the annual return by your actual expenses, which include the down payment, closing costs, and any home improvements.  

What’s a good cash flow or ROI for a rental property?

An accurate cash flow analysis and ROI calculation will provide a critical indicator that can help you create a better financial plan. While each individual will have different goals and priorities, an ideal ROI is about 8%. Depending on your individual circumstances, an ROI of 6% can also be good.

How to look beyond cash flow for a complete financial picture

Once you’ve calculated the cash flow and ROI for your current or potential rental property, you can consider other financial metrics to provide more context for your investment. 

The 50% Rule offers real estate owners and investors a shortcut for calculating the ROI of a rental property. The rule assumes that 50% of your rental income will go towards operating expenses. Expenses include property taxes and insurance but do not include principal or interest payments. 

The 50% Rule should not be used in place of past expense calculations, as historical data will always provide the most accurate insights. However, you can use it as a benchmark in evaluating rental properties. If you plan to use the 50% Rule, we highly recommend that you also use other financial metrics to assess the financial well-being of your rental home. 

If your rental home currently has a mortgage, the 1% Rule (or 2% rule, both are common) is a helpful way to evaluate how the property can provide you with the desired cash flow and ROI. The rule suggests that the monthly rental income should equal or more than one-two percent of the purchase price. While the rule is not comprehensive and is often considered outdated, it offers a good starting point for assessing how much rent to charge. 

At Belong, we use even more data to consider current trends, market, and real-time property value to identify the best listing price. We also understand that local charms, unique features, and the community can impact pricing. We help you get the ideal pricing to achieve a positive cash flow. 

Read More: How to price your home on the rental market

One of the most critical real estate calculations used to evaluate the ROI of a property is cash-on-cash return. This metric measures the return on investment for a limited time, typically a year. You can also use a cash-on-cash return or cash yield calculation to forecast future earnings and expenses.

Cash-on-Cash Return= Total Cash Invested/ Annual Pre-Tax Cash Flow

A cash-on-cash return is the percent of the investment you make back on this year in cash flow. Essentially, the pre-tax calculation looks at cash flow in relation to the amount of money that has been invested in the property. Cash-on-cash measures the return on the invested money, making it ideal for properties with long-term debt borrowing. 

Factors that contribute to negative cash flow

You should continually calculate cash flow to assess a rental property’s financial success. Often, successful rental homeowners can be financially derailed thanks to a few specific factors. 

Poor cash flow calculations at the time of purchase or rent 

If you have used financial metrics incorrectly or poorly estimated potential cash flow for a rental property, it’s hard to course-correct. You may be able to reduce expenses or increase rental pricing to rectify the situation. Still, you’re unlikely to recoup all losses. Carefully calculating financial estimates is critical for avoiding negative cash flow. 

Every week or month that your rental home goes unleased will negatively impact your overall cash flow. It’s essential that you quickly prepare, list, and market your home to attract ideal residents. 

Did you know Belong homeowners get guaranteed rent, even when their home is vacant? Learn more about Smooth Payments™ and see if you qualify here.

Maintenance can be a cash flow and budget breaker. While it’s challenging to plan for unforeseen expenses, it’s often delays, unresponsive service providers, and complex repairs that affect cash flow most. 

Ways to minimize the likelihood of negative cash flow

With help, you can reduce the likelihood of negative cash scenarios. Limiting the risk of a negative cash flow requires a focus on:

Conducting regular, preventive maintenance and finding competent, experienced professionals who complete work quickly and cost-effectively. 

If you're worried property management fees will hurt cash flow on your rental (they can!) learn how to avoid hidden fees and negative impacts on rental income

If you're in the market for investment property, learn about financing, credit scores, and how to choose the best mortgage lender for an investment property.

How to Choose a Lender When You Want to Buy an Investment Property

In preparation for choosing a lender for your investment property, you’ll need to familiarize yourself with loan qualifications and underwriting requirements and decide which factors to consider when choosing a lender. With some preparation, you can position yourself as an ideal candidate for lenders and be prepared to present the best offer when you find your investment property of choice.

What to know about financing an investment property 

If you are financing a rental property investment for the first time, it’s critical to understand that it will be more challenging to qualify for an investment property loan. Lenders consider real estate investment loans to be higher risk than loans for primary residents.

If you want to make the qualifying process more manageable, familiarize yourself with the underwriting standards used for investment property financing. In general, you’ll need to show that you can afford your existing mortgage and the monthly loan payments on an investment property. Underwriters will also consider your down payment amount, credit scores, and debt-to-income ratio and evaluate your current savings.  

Down payments for investment properties 

Real estate investors should expect to make a larger down payment than they might have with their primary residence. When purchasing a primary home, you may have qualified for a loan with as low as zero to 3% down. In contrast, you should expect lenders to ask for a larger down payment, often between 20% and 35%. A larger down payment will also help you secure better terms for your loan. 

As with a residential mortgage, lenders will use your credit score as a determining factor in the loan pre-approval and underwriting process. While everyone’s circumstances are different, lenders typically like to see a minimum credit score of 680. If you have a credit score at or above 740, you can expect better interest rates for your investment property loan. 

The loan underwriter for your investment property lender will use DTI to evaluate your future ability to repay your loan. DTI is calculated by measuring the percent of your monthly income that goes toward paying off debt. If you currently have a mortgage, car payment, or student loan, those debt payments will limit the amount of money your lender will be willing to offer you for an investment property loan. 

Ideally, you want a DTI that falls between 36% and 45% to qualify for a rental property mortgage. Remember that future rental income is not factored into the debt-to-income (DTI) calculations. 

In addition to reviewing your down payment, credit score, and DTI, underwriters will look to see if you have enough money in savings to cover 3-6 months of mortgage payments. Mortgage payments include the loan principal, interest, taxes, and insurance. The more savings you have access to, the more likely a lender will approve your investment property loan.

Additional underwriting requirements for real estate investment financing

In some cases, loan underwriters will ask for additional documentation for investment property financing. 

Additional underwriting requirements for investment properties can include:

Documentation that you are buying the property for business or investment purposes

Operating agreement for your business entity, if applicable 

Lease agreement (if the property already has a tenant in place)

We encourage you to discuss these requirements with your real estate agent and potential lenders. Understanding what you need for underwriting can help you be more prepared and quickly act on opportunities. 

How to Compare Mortgage Lenders for an Investment Property 

Once you have a clear idea of what factors will influence the pre-approval and underwriting process, you can begin to compare potential lenders. Finding the right lender will help eliminate headaches as you progress through the process and can ensure you make financially sound and advantageous decisions. 

Types of investment property loans a lender underwrites

As you begin your research into potential lenders, you’ll need to ensure that any potential lenders will underwrite your chosen type of loan. Not every lender will underwrite every kind of loan. Carefully research each lender's loan options, terms, and rates before moving forward. 

Down payment requirements will vary depending on the loan type but can also vary from lender to lender. Even with a seemingly similar loan, the down payment requirements can differ vastly. Carefully even with a similar loan review all the details to ensure that you compare loans accurately. 

For example, one loan may offer a lower down payment, but the interest rate will be higher. Depending on the particulars of your financial situation, you can choose a set of terms that will help you best meet your financial goals. 

Interest rates for your investment property loan will vary from lender to lender. Remember that it’s not enough to compare interest rates outright. You also need to carefully consider the terms of each loan to ensure that you are comparing loans apples to apples. With so much information, it can be overwhelming. Take your time to evaluate each lender, loan, and terms carefully. 

When choosing a lender for your investment property loan, you may also need to assess the lenders based on the minimum and maximum funding limits. These limits indicate the minimum or maximum amount of money the lender will offer to loan you if you qualify. Funding limits will be critical if you want to purchase a real estate investment in a higher-priced market.

Complexity of the lender’s underwriting process 

Finally, you should evaluate the underwriting process of each lender for its difficulty and complexity. If you have a shorter timeline for your real estate investment purchase, it may be advantageous to work with a lender who can expedite the process. If you plan to purchase an investment property in a competitive market, it may be helpful to have a lender with a smooth, efficient underwriting process. Sometimes, the more quickly you can close, the more competitive your offer will be. 

Discuss the underwriting process with your lender and your real estate agent for an ideal outcome. In some cases, there may be aspects of the underwriting process that you can begin before identifying a property. 

After you’ve found a lender for your investment property, consider Belong

Your real estate agent and lender are critical professionals who will aid you in purchasing an investment property. Once you’ve purchased and financed your investment property, you can consider what other professionals will best support your new investment. 

Belong offers you an opportunity to increase the return and limit hassles related to your new investment property. We help you price your rental home for maximum cash flow and can guarantee rental payments. When the time comes to find tenants, we attract, screen, and retain residents who will value your new property as much as you do. Finally, we assist with any maintenance or repairs that you might need. 

If you have a new investment property or want to do the maths before you commit, check out our back-of-the-napkin calculator to do some quick sums on how Belong can support your real estate investment strategy. 

Enjoy Guaranteed Rental Income

From a bigger pool of tenants to higher returns, there are plenty of reasons why landlords shouldn't overlook including pets on your next property lease.

5 Paws-itively Compelling Reasons To Consider Renting To Pet Owners

From a bigger pool of tenants to higher returns, here are five paws-itively compelling reasons why you should consider allowing pets on your next property lease.

While there are plenty of dog and cat lovers in the world, historically landlords have not fallen into this category. It's understandable why many homeowners are reluctant to rent to pet owners, from scratched floors and stains to all that chewing, there are certainly risks to your property when it comes to letting pets move in. 

But are homeowners being short-sighted when it comes to renting to pet owners? Though there are potential pitfalls, here are five compelling reasons why you should consider letting Fido and his human friends move into your rental home. 

1. Allowing pets expands the pool of rental applications

Even before the pandemic puppy boom, the number of pet owners in America was staggering. 70% of families have pets, which adds up to 85 million households. Not only that, but pet ownership is trending up with younger renters: Millennials are more likely to own pets than any other age group. 

All this means that, if you’re a homeowner, you’re cutting yourself off from a ton of desirable renters by not allowing pets in your house, building, or apartment. Of course this has always been the case, but if the trends hold, the situation will become far more pronounced over the coming years and decades. 

As a property owner, you want to find someone who will love your home as much as you do. Why limit that potential pool?

Read More: Why Belong Focuses on Long-Term Rentals 

2. Pet-friendly rentals attract a premium rate in the market

A recent study found that only 9% of housing allowed companion animals without any significant limitations on size or type and more than two-thirds (82%) of renters with animals reported having trouble finding a rental unit that would take their pet/s. This means that supply and demand is a real issue when it comes to pet-friendly rentals. When pet-friendly rentals are scarce, their value goes up .

The same study indicates that pet owners pay on average, a premium on their rent of around 20 - 30%, on top of a pet deposit to cover any damages. With higher rental returns, you're likely to come out in front even if some damage did occur. 

3. Pet-friendly rentals attract responsible residents to your home

Anyone who’s ever owned a pet will tell you, it’s a serious commitment — which means that pet owners tend to be serious, responsible people. Not only that, but the average household income for pet owners is over $96,000 a year, which is almost $30,000 more than the average household income overall. So in terms of both psychographics and demographics, it’s much more likely that pet-owners will be good tenants who consistently pay their rent on time and keep your home well-maintained.

Discover Belong PRO: The best alternative to Property Management in Seattle, Redmond, Oakland, and many more cities across California, Florida and Washington State.

4. Tenants that secure pet-friendly rentals are more likely to stay

Moving is a painful, stressful experience for everyone, but if you’re a pet owner, it’s a uniquely excruciating experience. Not only is it harder to find another home that will accommodate your pet, but you also have to think about the effect such a dramatic change of scenery will have on the animal. You have to find a new vet, a new dog walker, a new dog run. Simply put, it’s a disruptive, alienating experience for the animal. That’s why pet owners tend to stay in one place longer than people who don’t own pets.

5. Some pets offer security for your home

Dogs make homes safer; burglars are opportunists and would not take the risk of being attacked when the house next door doesn’t have a ferocious-sounding bark coming from within. This isn’t just folklore – there’s data which supports this.

Read More: The Dos and Don’ts of Home Security in a Rental Property

If pet damage does occur, Belong PRO's 24/7 concierge service will be on hand to manage communication with the residents and organise repairs fast. Many homeowners hope to one day return to their homes again or make sure their beloved house is well cared for. With Belong, you’ll never have to worry about bad residents, late rent, cost blowouts, or 2am phone calls ever again. 

See why thousands of US homeowners are ditching outdated Property Management in San Francisco, San Diego, Los Angeles, Tampa, Jacksonville, Concord, Berkeley, Orlando and more.

We found the 9 top-rated property management companies in California, as rated by real landlords on Google. Find out why Belong outperforms them all.

We Outrank The Best Property Management Companies in California

The results are in: we found the top-rated property management companies in California, as rated by real landlords on Google. And Belong outranks them all. All things created equal, if you were to review a top-10 list of businesses rated 4.5 stars and above, by over 100 people in the Cali rental market, Belong comes in at #1. 

But it’s not equal. Because Belong should be on a new list entirely. Unfortunately, there isn’t a lot to compare against Belong services, so we have included property management companies so you can see the difference. 

When comparing property management companies in Los Angeles or San Diego, you’ll find a sea of sameness, with few unique traits between them. How much do they charge for management fees and how often you are going to get slogged for more. For a long time, the industry hasn’t offered homeowners much choice, other than going it alone.  

With Belong, there’s no comparison. Because Belong isn’t a property management company, it’s a completely unique experience that is humanizing the rental market. 

Belong's smarter, future-ready services include:

Guaranteed rent every month, regardless of if or when your residents pay

Optimized rental pricing that uses technology and real-time demand to price your home with accuracy

The Belong app that gives you and your residents access to everything you need

Innovative financial products including the option to spread maintenance payments over the term of your lease agreement

Access to dedicated landlords insurance to protect your asset (as well as coverage for your residents)

Integration with the most popular rental platforms to get your home loved faster

Instant access to an expansive vendor network of over 10,000 professionals that can handle everything from routine repairs to home upgrades

And even though Belong isn’t a property manager, the reviews outrank those who are. Check out Belong’s top-ranked listing before you compare with the rest:

Address: 100 S Ellsworth Ave Suite 400, San Mateo, CA 94401

Website: https://belonghome.com/homeowners

Google Rating: 4.8 Stars (based on 368 reviews)

Areas Served: San Francisco Bay Area, Los Angeles Area, Orange County, San Diego (plus many more across the country and growing fast!)

24/7 Support: Yes, both landlords and tenants get 24/7 concierge support

3D/Virtual tour: Yes (included free of charge) 

Evictions: For evictions of tenants chosen by Belong (not existing leases or tenants), Belong will cover legal costs up to $15,000. 

9 top-ranked property management companies in California

Note: Details and pricing are based on internet research conducted in May 2022 and are subject to change by the companies featured, so please speak to these companies directly before making any final decisions. 

Address: 6800 Indiana Ave #110, Riverside, CA 92506

Google Rating: 4.8 (based on 1263 reviews)

Areas Served: Riverside, Moreno Valley, Perris, Corona, Eastvale, Rancho Cucamonga, Ontario, Fontana, Lake Elsinore, Menifee, Murrieta, Temecula

Evictions: $250 per day for any court appearances. In the event that a resident needs to be removed, Management One will pay for the eviction and coordinate the process up to $1200 (available with the 9% full-service plan or above only).

Address: 295 W Henderson Ave, Porterville, CA 93257

Google Rating: 4.7 (based on 236 reviews)

Areas Served: Franchised, 250+ locations in 46 states

3D/Virtual tour: Yes (premium pricing only)

Evictions: Eviction Support that covers attorney and court filing fees is available on Premium and Platinum pricing

Address: 7851 Mission Center Ct #208, San Diego, CA 92108

Google Rating: 4.7 (based on 101 reviews)

Areas Served: Southern California, San Diego area

Couldn’t be happier with the sterling staff at Belong. Everyone has been so helpful and so responsive, I have been impressed by Belong folks at every stage of the process involved in listing my home. They’re super professional and I’m confident my home is in good hands :)  Highly highly recommend!!” - Karen T

A totally hassle and hands free experience…they guided us every step of our way. They answered our questions quickly, rented out home quickly, and paid on time. Super recommended!!!" - Chunrong W

The Belong team was solution oriented, compassionate, internally coordinated / on the same page, and generally easy to work with good communicators. They set expectations high for owner, renter, and property care.” - Toby L

Think your home belongs with us on the Californian rental market? Click your area to learn more and find out if you qualify:

Earn Guaranteed Rent Every Month

We found 7 top-rated property management companies in Washington State, as rated by real landlords on Google. Find out why Belong outperforms them all.

Find Out Who Outshines The 7 Top-Rated Property Managers in Washington

From the rocky mountains to the counties across the Puget Sound, if you own a home in Washington, you need to ensure it’s well-kept and profitable on the rental market. But as you sift through Google reviews, you’d be forgiven for thinking that all of the top-rated property management companies are the same. They are. 

The sea of sameness in the market is exactly why Belong exists. To break that mold once and for all. Find out why Belong is changing the entire renting industry for both landlords and tenants — or as we prefer to say, homeowners and residents.

Belong vs property management companies in Washington

When comparing property management companies across Seattle or Washington, you’ll be looking at a handful of differences between them all. How much do they charge for management fees and how often you are going to get slogged for more (if they even tell you!). 

Here are 13 ways Belong does things differently to the average Seattle property management company: 

Guaranteed Rent: Receive your rent on time, every month, regardless of when it’s paid by residents.



24/7 Concierge Support: Both homeowners and residents have access to real-time support, going above and beyond emergency maintenance requests.



Transparent fees: No hidden costs like setup fees or lease renewal charges.



Modern-day marketing: Virtual tours and video marketing are included in every listing.



Market-driven insights: Belong utilizes market data and real-time interest to maximize the value of your home.



User-friendly app: Belong's app provides convenient access to documentation, cash flow insights, and financial and insurance solutions. 



Long-term residents: Belong takes a personalized approach to match the right people, so they stay longer and feel at home.



Innovative financial solutions: Homeowners can manage cash flow effectively, even splitting the cost of maintenance and placement fees.



Eviction protection: Owners are shielded from up to $15,000 in legal costs if we ever place the wrong people.



Extensive vendor network: Belong connects homeowners with a vetted network of over 10,000 professionals for repairs and renovations.



Comprehensive insurance solutions: Belong offers insurance options that protect homeowners, their properties, and residents.



Lightning-fast listing responses: Belong directly integrates with top rental platforms such as Zillow and Zumper, getting you responses faster and vacancies filled. 




Homeowners referral program: Earn $1,000 by referring a qualified homeowner when they join Belong. 

If you still want to view the top-rated property management companies in Seattle and the great state of Washington, we found them. Below you’ll find a list that features companies who have been rated 4.5 stars and above, by over 100 people in the greater Seattle rental market. It bored us to tears. 

Even though Belong rated #1 on this list, it became clear we were comparing apples with oranges. Or a hospitality service for the rental market with a real estate agent. Check out Belong’s top-ranked listing before you compare with the rest:

Address: 500 Yale Ave N, Seattle WA, 98109

Website: https://belonghome.com/homeowners/seattle 

Areas Served: Seattle, WA and the surrounding areas — plus growing across the country including Miami, LA Area, Bay Area, Orange County, San Diego and more

Evictions: For evictions of tenants chosen by Belong, Belong will cover legal costs up to $15,000 and Owner shall pay any amount in excess of $15,000. Belong will not cover such expenses for any existing leases or tenants. 

7 top-ranked property management companies in Washington

Note: Details and pricing are based on internet research conducted in May 2022 and are subject to change by the companies featured, so please speak to these companies directly before making any final decisions. 

Google Rating: 4.7 (based on 200 reviews)

Areas Served: King County and Snohomish County, Washington

Evictions: Eviction Guarantee, the first $1,000 in legal costs for any eviction is covered

Address: 6131 NE Bothell Way, Kenmore, WA 98028

Google Rating: 4.6 (based on 255 reviews)

24/7 Support: Evening, Weekend, Holiday Emergency Response Service only available to premium pricing

Evictions: Eviction protection is included in premium pricing

Address: 8809 Roosevelt Way NE, Seattle, WA 98115

Google Rating: 4.6 (based on 161 reviews)

The Belong team is top notch…They have consistently pursued the best options for both the Landlord and Tenants, and are a model of what professional management companies should be. I highly recommend Belong!” - Frank L

I'm an owner who uses Belong for property management. They have been really great. Whenever there's an issue, they proactively work to find a resolution. They've also done a great job keeping the tenant happy. Their rental guarantee is why I chose them, but their customer service is what's keeping me!” - Peter G

Think your Washington home belongs with us? Find out if you qualify here.

Before opening up your rental to multiple renters, here are some important considerations.

Renting Your Single-Family Home to Multiple Residents

While renting a single-family home to multiple residents can increase your rental income, there are several legal considerations, downsides, and additional costs that you should consider. 

How does renting your single-family home to multiple residents work?

When renting a single-family home to multiple residents, each resident has their own private space, and they share access to common areas like the kitchen, bathrooms, and living spaces. When you rent a single-family home to multiple residents, you reduce the costs of rent for each individual resident. Where a single person may not be able to afford a rental home that costs $2,400 each month, they may be able to rent a room in the house for $600/month. Residents may choose to share additional expenses like wifi, and the utilities may be split equally or proportionally between residents. 

Remember that renting a single-family home to multiple residents differs from subletting a property. When you sublet a property, you rent a place you do not own while still being responsible for the rent to the landlord.

How “house-hacking” is related to renting a single-family home to multiple residents

The term “house hacking” refers to renting out a portion of your primary residence to pay the mortgage on a property. It can also refer to purchasing a multi-family property, living in one of the units onsite while renting the other unit(s) to a secondary party. It can also relate to renting out a guest house on your property. If you plan on renting your primary residence to another resident, you may want to consider many of these same benefits and challenges as renting a single family home to multiple residents.  

Legal considerations of renting to multiple residents

While there are clear benefits to renting your single-family home to more than one resident, there are several legal considerations you need to familiarize yourself with before moving forward. You may need special permission to rent a single-family home to multiple residents. You may also need to change the zoning of your rental property from single-family to multi-family to rent your property to several residents. Further, your HOA may prohibit or limit how you can rent homes in the community. In some cities and counties, you will need a special license or permit to rent your single-family home to multiple residents. In other locations, you may need to have your property inspected before renting it to multiple people.

You may be at more risk if you don’t navigate the legal implications of renting your single-family home to multiple residents. Imagine what might happen if a neighbor complains to the HOA and you are not renting the property in a way that is consistent with their regulations. Similarly, consider what might happen if you evict a resident and they file a lawsuit. These types of situations can have significant implications, including financial consequences. 

Finally, as with renting any property, you’ll need to familiarize yourself with Fair Housing Laws to avoid any inadvertent violations. 

Lease agreement for renting your single-family home to multiple residents 

If your residents don’t know one another, they are unlikely to sign a single lease together. In this case, you will need each resident to sign a co-tenancy agreement that includes additional guidelines around their individual financial obligations. It’s also helpful to ensure that the lease agreement contains guidelines for pets and visitors. You may also want to consider adding policies around shared space usage. These policies may prevent potential conflicts. A peaceful, cooperative living environment will help retain residents for extended periods. 

Benefits of renting your single-family home to multiple residents 

If you can control your costs and expenses, renting your multi-family home to multiple residents can increase your rental income. Renting your single family home to more than one residents might be right for you if cash flow and increased rental income is your primary motivation. In that case, you should still carefully calculate any expenses, including the annual costs of maintenance. Your potential rental income will also depend on your location, the size of your rental property, and the number of people you plan on renting the home to. Consider researching rental pricing factors in your area as you determine how much rent to charge.

Renting to multiple residents reduces vacancies

If you rent your single-family home to multiple residents, you may also find that vacancies have less impact on your cash flow. When renting your single-family home to multiple residents, your rental income is split between several residents. If you have a vacancy, you may only lose 25% or 30% of your rental income rather than 100%. When you reduce vacancies, you can maintain a positive cash flow or limit the effect of a cash flow reduction. 

Downsides of renting your single-family home to multiple residents 

While you may be able to avoid 100% vacancies for your single-family home, you may find that you have more vacancies overall. You may find that most people will only rent a room in a single-family home as a temporary arrangement. As such, they may be more likely to stay for only a limited period. When they can rent a home on their own, they likely will. Similarly, their circumstances may be more likely to change. As a result, you may need to list your rental property and screen residents more frequently. 

You’ll need to manage several residents

If you rent your property to more than one resident, you will likely spend more time and energy managing your rental property. Adding additional residents can significantly increase your work if you self-manage your rental property. You will need to collect rent for each resident and create and manage multiple lease agreements. You will also need to establish guidelines for the property unique to cohabitating residents. 

In some states, you cannot charge tenants separately for utilities unless the usage is accurately and individually metered. You’ll need to account for the cost of utilities when you price each room in the multi-family home. Unfortunately, you won’t know exactly how much electricity or water all the residents will use, and any additional costs will be an added expense. Charging a flat rate for utilities will not incentivize residents to conserve water or energy because they know they will not pay those expenses directly. 

Damages, disputes, and potential evictions  

When you rent a home to multiple residents, you will likely receive more complaints from the individuals in your single-family home. Communal living can be very challenging. You may find yourself moderating disputes or needing to regulate or set norms around residents' behavior. If there’s not a strong culture of caring for the rental property, you will likely experience more frequent damages. As a result, the property will also need more regular maintenance. A high resident turnover rate can quickly increase your costs if things need to be replaced with each new resident.

Skip the hassles of renting to multiple residents and consider a strategy that prioritizes positive cash flow 

At Belong, we help you find residents who appreciate your single-family home as much as you do. Our unique proprietary algorithm tells you exactly how much to charge for rent. We use real-time data, expertise, and insights about your unique home to price your rental property so you can maximize the value of your real estate investment.  

Belong markets and show your property to potential residents. When we find a resident who loves your home, we conduct a credit, identity, and criminal background check and personally interview each potential resident. Best of all, we offer Guaranteed Rent, which means you’ll always get paid.

Learn more and see if your single-family home qualifies. 

Is renting a single-family home to multiple residents a good idea? Before opening up your rental to multiple renters, here are some important considerations.

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