Best Ever Commercial Real Estate
Rethinking the Rent-by-the-Room Model ft. Johnny Wolff
Johnny Wolff is the founder of HomeRoom, a real estate investment platform that increases investors’ rent by 50% by enabling them to invest in single-family homes remotely and rent out each room separately. In this episode, Johnny walks us through how investing with the platform works, what the target markets and demographics are like, and how they identify the ideal properties for their investors.
How HomeRoom Works
HomeRoom has a method for identifying single-family homes where there is a high potential for profit in renting by the room. They then facilitate a purchase of one of these homes by a HomeRoom investor, and they remain involved in the management of the asset, helping the investor find tenants and assisting with ongoing management once the property is leased. It’s essentially a turnkey-provider-meets-Airbnb platform.
How They Identify the Best Properties
“My cofounder Mike is a data scientist from Airbnb, and so he’s built a data layer that actually helps us identify homes for increased returns in a couple of ways,” Johnny explains. They select properties based on appreciation potential first, then focus on the area’s population growth and typical rent rates. The goal is to find a property that will deliver 50% more in rent to investors on average by renting out individual rooms.
Target Markets and Demographics
Johnny says most people assume that HomeRoom rents to 20-year-old college students who are just going to “burn the house to the ground.” However, the average age that HomeRoom rents to is actually 29 — mostly young professionals. “People are delaying marriage, they’re in a lot of student debt, they’re trying to get out of that student debt, and income has not kept pace with housing prices,” he says. “So more and more people are living like this.” Many HomeRoom property tenants opt to live with roommates versus renting a studio apartment for twice the price.
Johnny believes HomeRoom’s rent-by-the-room model is ideal for any market. “The need for this type of housing is actually pretty universal,” he says, “because even in cheaper areas, people would prefer to pay 50% of the rent.” Currently, they have properties in Kansas City, Dallas, Austin, San Antonio, Tampa, Indianapolis, and Pittsburgh. Their goal is for HomeRoom to be in 1000 U.S. cities.
Johnny Wolff | Real Estate Background
Founder of HomeRoom, which focuses on remote investing via co-living apartments and buildings.
Portfolio: GP of 22 units
Based in: Kansas City, MO
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