How to Set Up a Boarding House

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One way to make money as a small business owner and entrepreneur is to purchase real estate and then rent out rooms in the house. Rooms can be rented for a night or two or for months at a time. Sometimes rooms come with services such as laundry, cleaning, and meals. With the advent of online services such as Airbnb and Vrbo, starting a boarding house has become a popular way to pull in some extra cash.

Starting a Boarding House

Boarding homes can market to people with a wide variety of housing needs, from vacationers and international students to homeless people in search of permanent housing. Here are three vital things to consider when starting a boarding house:

  • Location: The location influences the type of boarding house you start. Vacationers like to be near attractions, while students need to be near their school, and people who are homeless need a central location near bus transportation.

  • Budget: Costs for starting a boarding home vary by location and whether you already own the house, are going with an existing building, or building a new structure. Remember to factor in costs for upgrades and extras to make the lodging comfortable for guests.

  • Population: If you start a boarding home for adults, your configuration and amenities are different than if you offer lodging for entire families. Wealthy travelers, students and the homeless have different needs and expectations in terms of toiletries, meals and surroundings. 

Licensing and Inspections

Check on the zoning regulations for your area as you plan your boarding house. Some areas or neighborhoods restrict how long a short-term renter is allowed to stay on your property and how many days per year you are allowed to book your rental. Some areas might allow homeless boarding houses, while others have zoning restrictions that prohibit it.

Assuming that zoning permits you to operate a boarding home where you are located, check on whether you are required to participate in any of the following licensing, permitting and tax processes:

  • Business licenses
  • Fire inspection
  • Building inspection
  • Health and human services inspection
  • Kitchen inspection
  • Permit to allow short-term renters
  • City, county or state lodging taxes

If you plan to prepare and serve food to your guests, you should also look into earning a food handler's card to prepare you for safe kitchen practices. Another option is to purchase food from a restaurant or certified kitchen instead of making it yourself.

Special Considerations

After you secure your property and complete all the necessary inspections and permitting processes, it's time to hone in on what will make your boarding home stand out. The finishing touches that make the biggest difference to your guests vary based on whom you're marketing to. Here are a few things to consider:

Vacation Rentals: Peruse other rentals in your area on Airbnb and Vrbo to see what guests like most. Maybe it's access to a swimming pool, fresh-baked donuts each morning or luxury toiletries in the bathroom. Consider these preferences and then add one or two special things that nobody else is offering.

International Student Housing: International students are likely to stay for a semester at a time. They need space to study, a place to prepare meals, and a laundry area. When possible, consider separate entrances, private bathrooms and locks on the bedroom doors.

Homeless Housing: For formerly homeless guests living in a boarding house, consider nearby access to affordable professional clothing, free bus passes and an abundance of free toiletries. When young children are involved, a few toys or games help to make a trying time a whole lot easier.