Adding a Room – A Landlords Best Friend

Whether you like just enough history to give you fodder for chats with fellow real estate investors over a beer or you have discovered that information adds to your credibility, the history of rooming houses should be right up your alley if you’re looking to make your mark and turn a single family house into a communal moneymaker.

According to housing historian Alan Durning, there was a time that apartments didn’t exist and renting rooms in boarding houses helped people with little money share living expenses. Like most trends that disappear and re-emerge, you may think that renting to a single family offers a steady one-source income, but add a room to an existing abode and rent out rooms, your investment income could skyrocket. Isn’t that why you began real estate investing and set a personal goal of standing out in the Scottsdale homes for sale market?

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Why rooming houses disappeared

You’re familiar with ordinances and codes that are regularly levied against entrepreneurs seeking rental property. Sadly, village, city, county and even state housing codes were the reasons behind the extinction of rooming houses. Nails in the coffin were supplied by zoning laws that virtually eliminated this type of abode.

“In the 1800s, boarding with families was commonplace for people of all ages. As many as half of urban Americans spent part of their lives either as boarders in others’ homes or as hosts of boarders on their own,” says University of California professor Paul Groth.

But along came prosperity and upward mobility. Who wanted to live in a rooming house when they could move into an apartment minus noisy roommates? Besides, savvy real estate investing pros recognized the fact that boarding houses catered to folks seeking low-income housing and who wouldn’t want to deal instead with renters who were financially comfortable enough to live alone?

The rooming house reinvented for the 21st century

Professionals behind the website have been tracking “the return of rooming houses” of late and are enthusiastic about the revenue bump real estate investors are currently enjoying by leasing rooms in single family houses to individuals.

According to Investopedia, one of the few ways you can make more money owning a single-family property is to look upon it as a way to increase your returns substantially because you have access to multiple tenants, “which means multiple rent checks.” Bottom line: tenants save on rent and you are the recipient of their good fortune.

Show you the money

On a practical note, Investopedia puts forth a case study in which a landlord was having a problem finding a family to rent a three bedroom house that, according to neighborhood values, required generating $2,000 monthly in rent. After evaluating the Scottsdale homes for sale market and realizing that the house was located in an area ideal for single-family properties suited for multiple tenants, she jumped on it.

With three separate tenants paying the going rate of $800 per person for a private bedroom each, use of general living areas like the living room, dining room and kitchen plus bathroom, your monthly revenues have the potential to increase to $2,400.

And if one renter moves out, you don’t have to scurry around for a renter able to fork over that $2,000 because you’ve got other renters picking up part of the slack. Vacancies don’t impact landlords as dramatically in a shared housing arrangement as they would with a single tenant. For people eager to live in this type of setting, there’s always a chance that a third party could be waiting in the wings to move in.

Location, location, location

Even if you know the Scottsdale market like the back of your hand, you may not be aware of the neighborhoods that work best for turning your single-family abode into a modern day rooming house, so consider the following:

-Colleges and universities are ideal targets. Once students comply with parental wishes for living in dorms, a large majority want to move out and renting a house near campus has become the affordable way to gain the independence they crave.

-Young professionals flocking to metro areas like Scottsdale to launch careers may not be ready to pay the market rental rate associated with living near their offices. Finding a shared house is like unearthing gold for them, but you’re the recipient of this largesse.

-Some hotspots take on a life of their own and become hubs for people eager to be close to the action, whether it’s nightlife or a hospital complex. By being close to a hotspot, you can target your advertising perfectly to attract people eager to claim a trendy address without having to sell the farm to do so.

Will your property increase in value if you add a room?

Not only will your rental income increase if you add another room to your rental house, but the resale value is likely to follow suit. According to, the national average cost of adding a room addition is $48,000, but the geographic spread is remarkably wide: Costs run from $86 to $208 per square foot, and this factors in room size, labor and material quality.

In return, “Adding a room gives a great return on the investment of over 50-percent,” say researchers contributing to the site. While the addition of a bedroom is the least expensive way to expand a single-family house’s floor plan, if you make it a master bedroom suite, you will spend more on the build-out but renting a room with its own bath means you can up your rental charge for that space.

If your current single-family home has enough bedrooms to make individual room rental viable, you can still add a room that increases the chance that you will attract more tenants: By spending between $18,000 and $47,000 to add a bathroom, not only will renters find your property more desirable but so will shoppers if you decide to sell the house down the road. How much can you expect to recoup? Around 50-percent for that extra bathroom and 100-percent if you add a bedroom/bathroom suite.

Scottsdale’s market remains stable

Adding another room to accommodate renters in your 21st Century boarding house just makes sense because the market in this upscale city is so stable. Scottsdale may be one of Arizona’s most populous cities, say analysts at, but stability sought by renters is a huge draw for this type of housing solution.

“Apartment List data indicates the national median for studio apartments is $827. Some cities in Arizona come in above that mark.” Now, imagine turning your 3-bedroom property into shared living space and your capacity for making a bigger profit is evident.

We don’t have to tell you that if you make the City of Scottsdale your newest BFF, you save yourself all sorts of grief, whether you decide to add that room, check on zoning prohibitions that could put an end to your plan to make your house a home for multiple renters or just need some advice on the best way to go about your planned actions. If you are looking to buy a home in the area to invest in, The Kay-Grant Group has you covered.

Finally, the new boarding house movement is spreading fast across the U.S., so if you get in on the action, you’ll be seen as a pioneer in addition to realizing your original goal of making more money in what could be described as a very creative way.