Room Rental Income Calculator: Rooms vs. a Whole-House Lease

A room rental income calculator answers one question: if you rent a house one bedroom at a time instead of as one unit, what is left at the end of the month? On CoRent you can answer it in two passes: the host earnings calculator compares the same house as a whole-house lease and as rooms, and the investor tools let you test the result for cash flow, cap rate, return on cash and break-even occupancy.

This post walks through both, using the example house on the host page. Every dollar figure below is one of that page's example assumptions, which you can change. None of it is a promise of what a real house will earn. This is not investment, tax or legal advice, and returns are not guaranteed.

Two calculators, two different questions

People often treat "income" and "return" as the same thing. They are not, and the two sets of tools on CoRent keep them apart.

• The host calculator asks: what does this house earn by the room compared with a whole-house lease, after operating costs? It works at the level of rent, fees, utilities, repairs, taxes, insurance and cleaning between tenants. It does not include your loan.
• The investor tools ask: given those numbers, is the deal any good? They have tabs for ROI, Cash Flow, Cap Rate, Loan / Mortgage, Break-even Occupancy, Break-even ADR and AI Rates. Each tab has an "i" button that explains what it answers, what each input means, and how to read a good or bad result.

Start with the first, then carry the output into the second.

Step 1: Run the room rental income calculator on the host page

The host page starts with a house as it is today and the same house set up for rooms. Its example looks like this:

• Whole-house lease: 4 bedrooms, 3 bathrooms, $1,650 a month.
• By the room on CoRent: 7 bedrooms, 3 bathrooms, 7 rooms at $650 a month each, for $4,550 a month.

Then it subtracts the costs that come with each model. In the example, the whole-house lease pays a property management fee, repairs, and taxes and insurance, and nets $860 a month. The room-by-room house pays CoRent's 5% platform fee ($228), utilities ($550), repairs ($300), taxes and insurance ($500), cleaning between tenants ($66) and bank costs ($35), with no booking fee and no management fee because you run the house in the app. It nets $2,872 a month.

The page lets you change every assumption: beds and baths, whole-house rent, number of rooms, rent per room, move-ins per room per year, management fee percentage, utilities, taxes and insurance, repairs for each model, cleaning cost per move-in, and the share of renters paying monthly by bank account. Replace the example numbers with your own before you draw any conclusion. The fees page lists every CoRent fee if you want to check a line.

Two lines deserve a hard look:

• Utilities. In the example, utilities move onto your books in the room model. If you turn on shared utilities, each tenant pays their share of electricity, water, gas and internet in the CoRent app, on top of rent, and that line stops coming out of your income.
• Turnover. The example assumes 1.5 move-ins per room per year. More move-ins means more cleaning, more empty days and more of your time.

Step 2: Carry the numbers into the investor tools

The net figure from the host page is close to what the investor tools call net operating income: rent minus operating costs, before any mortgage. Here is how to use it in each tab.

1. Cash Flow. Enter monthly income and every monthly bill, including the loan payment, taxes, insurance, maintenance, utilities, HOA dues and other costs such as CoRent's 5% platform fee. The result is what is left each month after everything is paid. A positive number with room for a vacant month is what you want to see.
2. Loan / Mortgage. If you have not got your loan payment yet, this tab estimates principal and interest from the loan amount, rate and term. Taxes and insurance are separate. Put the result back into Cash Flow.
3. Cap Rate. Enter a year of net operating income and the property's value. Do not subtract the mortgage. Cap rate lets you compare properties regardless of how they are financed. The tool's own guidance: a cap rate below your loan interest rate means borrowing to buy the property loses money.
4. ROI. This is simple cash-on-cash return: a year of cash flow divided by your down payment. It also asks for occupancy, the share of rent you actually collect, so you can see what a few empty rooms do to the return.

Run each tab twice: once with the whole-house numbers and once with the room numbers. The gap between the two runs is the real comparison.

Think per room, not per house

The biggest difference between the two models is what an empty bedroom does to you.

A whole-house lease is all or nothing. When the tenant leaves, rent drops to zero until the next one signs. By the room, one move-out takes away one share of the rent while the other rooms keep paying.

You can see this with the host page example. Before any loan payment, the room model's operating costs come to $1,678 a month ($4,550 minus $2,872). The rent from 3 of the 7 rooms ($1,950) covers that. The Break-even Occupancy tab is built for nightly rentals, but its explanation applies the same idea by the room: divide your monthly costs by full rent to see what share of the rooms must be filled. Add your loan payment to the costs and run it again. That is the number to compare with how full you can realistically keep the house.

The flip side is that a room model has more moving parts: more tenants, more move-ins, more shared-space wear, and more of your time. Our earlier post on rent by the room investing vs. a single-family lease covers the day-to-day differences in detail.

Read the output like a skeptic

A room rental income calculator is only as good as what you put into it. Before you trust the result, check each input against something real:

• Rent per room. What are rooms like yours actually renting for in the area? Look at the open homes on the Richmond rooms page and nearby cities.
• Number of rooms. Can the house legally and safely have that many bedrooms? Check zoning and occupancy rules with your city and a code official before you plan around them.
• Repairs and turnover. Shared homes see more wear. If you have no history, use a cautious number.
• Taxes. Rental income and expenses have their own reporting rules. The IRS explains the basics in Topic 414, Rental income and expenses and in more depth in Publication 527. Take your numbers to a tax professional.
• Financing. Your lender's rate and terms change everything below the operating line. Get real quotes.

Questions to settle before you rely on the numbers

1. Which costs did I leave at the example values, and what are the real ones?
2. What happens to cash flow if two rooms sit empty for a month?
3. Is the cap rate above my loan rate?
4. Am I willing to manage the house myself in the app, or do I need to budget for help?
5. Have I checked local rules on how many unrelated people can share the house?

When you can answer all five with numbers you trust, you have a comparison worth acting on, after you have checked it with your lender, accountant and attorney. Learn more about CoRent and who built it, or open the investor tools and run your own house.